- Solid full year results, consistent cash flow generation1
and $1.3bn of capital return2 demonstrate resilient business
model
- Record new business value and $10bn of net inflows across
Core Retirement, Wealth and Asset Management3
- Net income of $1.8bn; Net income per share of $4.49
- Non-GAAP operating earnings4 of $2.0bn, or $5.08 per share;
adjusting for notable items5, Non-GAAP operating earnings of
$2.2bn, or $5.55 per share
- Achieved $180m incremental investment income target a full
year ahead of schedule
- Economic management supports combined RBC ratio of 425%,
above 375-400% target
Equitable Holdings, Inc. (“Equitable Holdings”, “Holdings”, or
the “Company”) (NYSE: EQH) today announced financial results for
the full year and fourth quarter ended December 31, 2022.
“We delivered strong results despite turbulent markets this
year. Full year Non-GAAP operating earnings were $5.08 per share,
or $5.55 per share after adjusting for notable items, down 8% in
the year. These results reflect equity markets down 20% and bond
values down 13% partially offset by capital return. Managing what
is within our control is important particularly in these markets;
we have achieved our $180 million incremental general account
investment income target one year ahead of schedule and realized
net expense savings of $50 million,” said Mark Pearson, President
and Chief Executive Officer.
Mr. Pearson continued, “In these more volatile times, we have
seen heightened client demand for retirement and asset management
solutions. Retirement sales were up 6% year-over-year and we
continue to see organic growth in asset management with a shift
into private markets and multi-asset solutions resulting in a 3%
fee rate improvement year-over-year. We also continue to benefit
from rising interest rates, with new investments generating an
incremental 190 basis points above our current general account
yield, supporting record levels of new business value.”
Mr. Pearson concluded, "While full year mortality experience
remained more favorable than expectations, we experienced
heightened mortality in the fourth quarter given COVID persistency
and seasonal flu impacts. The benefits of our economic management
and hedging program continue to support a combined RBC ratio above
our target range and consistent capital returns of $1.3 billion in
the year, delivering 15% growth in free cash flow6 per share.
Looking ahead, we remain confident about the resilience of our
business model and are committed to our capital management program
with $2.0 billion of cash and liquid assets at Holdings and an
estimated $1.3 billion of cash generation1 supporting financial
flexibility and consistent capital return in 2023."
Consolidated Results
Fourth Quarter
Full Year
(in millions, except per share amounts or
unless otherwise noted)
2022
2021
2022
2021
Total Assets Under Management (“AUM”, in
billions)
$
754
$
908
$
754
$
908
Net income (loss) attributable to
Holdings
(789
)
254
1,785
(439
)
Net income (loss) attributable to Holdings
per common share
(2.21
)
0.56
4.49
(1.24
)
Non-GAAP operating earnings (loss)
436
649
2,009
2,825
Non-GAAP operating earnings (loss) per
common share (“EPS”)
1.11
1.54
5.08
6.58
As of December 31, 2022, total AUM was $754 billion, a
year-over-year decrease of 17.0%, driven by lower markets over the
prior twelve months.
On a full year basis Net income (loss) attributable to Holdings
improved from $(0.4) billion in 2021 to $1.8 billion in 2022
primarily driven by non-economic market impacts from hedging and
non-performance risk under U.S. GAAP accounting.
Full year Non-GAAP operating earnings decreased to $2.0 billion
from $2.8 billion in 2021. Adjusting for notable items7 of $178
million, 2022 Non-GAAP operating earnings were $2.2 billion or
$5.55 per share.
The Net income (loss) attributable to Holdings for the fourth
quarter of 2022 was $(789) million compared to $254 million in the
fourth quarter of 2021 driven primarily by non-economic market
impacts from hedging under U.S. GAAP accounting.
Non-GAAP operating earnings in the fourth quarter of 2022 was
$436 million compared to $649 million in the fourth quarter of
2021. Adjusting for notable items7 of $93 million, fourth quarter
2022 Non-GAAP operating earnings were $529 million or $1.36 per
share.
As of December 31, 2022, book value per common share, including
accumulated other comprehensive income (“AOCI”), was $0.26. Book
value per common share, excluding AOCI, was $24.46.
Business
Highlights
- Full year 2022 business segment highlights:
- Individual Retirement continues to report strong first year
premiums of $11.5 billion, driven by Structured Capital Strategies
up 12% year-over-year8, leading to current product offering inflows
of $3.9 billion, up 51% compared to 2021.
- Group Retirement reported premiums of $4.4 billion, up 16% over
the prior year. Segment net inflows were $634 million supported by
tax-exempt inflows and the introduction of the institutional
channel.
- Investment Management and Research (AllianceBernstein or “AB”)9
reported net inflows of $0.9 billion10. Continued strategic growth
in Private Markets resulted in $56 billion of AUM, supported by the
CarVal acquisition, contributing to a 3% fee rate improvement over
the prior year.
- Protection Solutions reported gross written premiums of $3.1
billion driven by continued focus on accumulation-oriented Variable
Universal Life with total premiums and first-year premiums up 3%
and 8% year-over-year, respectively.
- Capital management program:
- The Company returned $1.3 billion to shareholders11, including
$224 million in the fourth quarter of 2022, successfully delivering
on its 50-60% payout ratio target12 for 2022.
- The Company reported cash and liquid assets of $2.0 billion at
Holdings, which remains above the $500 million minimum target, as
it continues to maximize financial flexibility to consistently
deliver on its capital return targets.
- The Board of Directors also authorized a new $0.7 billion share
repurchase program13 bringing available share repurchase
authorization to c. $1 billion.
- The Company maintained its strong financial condition reporting
a combined RBC ratio of approximately 425% at year end, above the
minimum combined RBC target of 375-400%.
- The Company expects c. $1.3 billion of cash generation14 in
2023 supporting the continued execution of its capital management
program.
- Delivering long-term shareholder value:
- The Company continued to deliver significant value for
shareholders with strong cash flows and consistent capital return
resulting in free cash flow15 per share growth of c. 15% this
year.
- The Company achieved its general account investment income
target of $180 million as of year end, ahead of schedule, while
also continuing to benefit from higher interest rates with new
money yields 190 basis points above yields on its general account
portfolio.
- The Company’s wholly-owned subsidiary, Equitable Financial, has
also realized $50 million of net expense savings as of year end and
expects to complete its $80 million net expense savings target in
2023.
Business Segment
Results
Individual Retirement
(in millions, unless otherwise noted)
Q4 2022
Q4 2021
Account value (in billions)
$
95.8
$
111.9
Segment net
flows
Current Product Offering
838
574
Legacy
(589
)
(787
)
Total segment net flows
249
(213
)
Operating earnings (loss)
303
351
- Account value decreased by 14% primarily due to lower markets,
partially offset by continued demand for protected equity products
through volatile markets.
- Net inflows of $249 million were led by inflows of $838 million
from our current product offering of less capital-intensive
products which was partially offset by outflows from the legacy VA
block of $589 million.
- Operating earnings decreased from $351 million in the prior
year quarter to $303 million, primarily driven by lower fee-type
revenue on lower average account values partially offset by higher
net investment income due to higher SCS asset balances and lower
expenses.
- In the current period, results were $5 million lower due to
notable items primarily reflecting lower net investment income from
alternatives. Operating earnings after adjusting for notable
items16 decreased from $328 million in the prior year quarter to
$308 million.
Group Retirement
(in millions, unless otherwise noted)
Q4 2022
Q4 2021
Account value (in billions) (1)
$
32.0
$
47.8
Segment net flows (2)
24
(109
)
Operating earnings (loss)
110
117
(1) Effective October 3, 2022, AV excludes activity related to
ceded AV to Global Atlantic. In addition, roll-forward reflects the
AV ceded to Global Atlantic as of the transaction date. (2) For the
three months ended December 31, 2022, net out flows of $179 million
are excluded as these amounts are related to ceded AV to Global
Atlantic.
- Account value decreased by 33% driven primarily by the
reinsurance transaction with Global Atlantic, which reduced account
value by c. $9.4 billion, and market performance over the prior
twelve months.
- Net inflows of $24 million improved versus the prior year
quarter with tax-exempt channel inflows supported by premiums of
$693 million and lower redemptions due to reinsured policies.
- Operating earnings decreased from $117 million in the prior
year quarter to $110 million primarily due to lower net investment
income from alternatives income and lower fee-type revenue on lower
average account values partially offset by lower expenses. In the
quarter, the Company experienced c. $4 million lower operating
earnings from the Global Atlantic reinsurance transaction.
- In the current period, results were $5 million lower due to
notable items primarily reflecting lower net investment income from
alternatives. Operating earnings after adjusting for notable
items16 decreased from $153 million in the prior year quarter to
$115 million.
AllianceBernstein
(in millions, unless otherwise noted)
Q4 2022
Q4 2021
Total AUM (in billions)
$
646.4
$
778.6
Segment net flows (in billions)
(1.9
)
7.4
Operating earnings (loss)
94
183
- AUM decreased by 17% due to market performance over the prior
twelve months.
- Fourth quarter net outflows of $1.9 billion were driven by net
outflows of $3.4 billion in Retail, with continued industry-wide
pressure on taxable fixed income, partially offset by Institutional
net inflows of $1.7 billion supported by a custom retirement
solutions mandate.
- Operating earnings decreased from $183 million in the prior
year quarter to $94 million, primarily due to lower base fees on
lower average AUM and lower performance fees partially offset by
lower operating expenses in addition to a 5% fee rate improvement
over prior year quarter benefiting from favorable asset mix shift
and CarVal acquisition.
Protection Solutions
(in millions)
Q4 2022
Q4 2021
Gross written premiums
$
776
$
801
Annualized premiums
74
84
Operating earnings (loss)
(29
)
53
- Gross written premiums decreased 3% year-over-year with lower
Life premiums partially offset by Employee Benefits premiums up
compared to prior year quarter.
- Operating earnings decreased from $53 million in the prior year
quarter to a $29 million loss, primarily due higher than expected
mortality and 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 $98 million lower due to
notable items primarily reflecting elevated mortality and lower net
investment income from alternatives. Operating earnings after
adjusting for notable items17 decreased from $92 million in the
prior year quarter to $69 million.
Corporate and Other (“C&O”)
Operating loss of $42 million in the fourth quarter improved
compared to operating loss of $55 million in the prior year
quarter, primarily driven by favorable assumed policyholder
benefits in the period. Operating loss after adjusting for notable
items17 decreased from $65 million in the prior year quarter to $57
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 December
31,
Year Ended December
31,
(in millions)
2022
2021
2022
2021
Non-GAAP Operating Earnings
436
$
649
$
2,009
$
2,825
Post-tax Adjustments related to notable
items:
Individual Retirement
5
(23
)
56
(83
)
Group Retirement
5
36
21
(9
)
Investment Management and Research
—
—
—
—
Protection Solutions
98
39
134
(24
)
Corporate & Other
(15
)
(10
)
(11
)
(92
)
Notable items subtotal
93
42
201
(208
)
Less: impact of actuarial assumption
update
—
—
(23
)
(6
)
Non-GAAP Operating Earnings, less Notable
Items
$
529
$
691
$
2,187
$
2,611
Impact of notable items by item category:
Three Months Ended December
31,
Year Ended December
31,
(in millions)
2022
2021
2022
2021
Non-GAAP Operating Earnings
436
$
649
$
2,009
$
2,825
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
(18
)
24
(107
)
Mortality
84
77
109
205
Expenses
—
50
42
50
Net Investment Income
27
(62
)
31
(410
)
Subtotal
111
47
206
(262
)
Post-tax impact of Notable Items
93
42
201
(208
)
Less: impact of actuarial assumption
update
—
—
(23
)
(6
)
Non-GAAP Operating Earnings, less Notable
Items
$
529
$
691
$
2,187
$
2,611
Impact of Notable Items by segment and corporate &
other:
Three months ended 12/31/2022
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
303
110
94
(29
)
(42
)
436
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
—
—
—
Mortality
—
—
—
111
(27
)
84
Expenses
—
—
—
—
—
—
Net Investment Income
6
6
—
9
5
27
Pre-tax Subtotal
6
6
—
120
(22
)
111
Tax adjustment
(1
)
(1
)
—
(23
)
7
(18
)
Post-tax impact of Notable
Items
5
5
—
98
(15
)
93
Impact of Actuarial Assumption Update
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
308
115
94
69
(57
)
529
Three months ended 12/31/2021
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
351
117
183
53
(55
)
649
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
(18
)
—
(18
)
Mortality
—
—
—
77
—
77
Expenses
—
50
—
—
—
50
Net Investment Income
(32
)
(8
)
—
(13
)
(10
)
(62
)
Pre-tax Subtotal
(32
)
42
—
46
(10
)
46
Tax adjustment
9
(6
)
—
(7
)
—
(5
)
Post-tax impact of Notable
Items
(23
)
36
—
39
(10
)
42
Impact of Actuarial Assumption Update
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
328
153
183
92
(65
)
691
Twelve months ended 12/31/2022
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
1,140
525
424
179
(259
)
2,009
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
15
3
—
7
—
24
Mortality
—
—
—
136
(27
)
109
Expenses
6
11
—
8
17
42
Net Investment Income
19
4
—
6
3
31
Pre-tax Subtotal
39
17
—
157
(7
)
206
Tax adjustment
17
4
—
(23
)
(4
)
(6
)
Post-tax impact of Notable
Items
56
21
—
134
(11
)
201
Impact of Actuarial Assumption Update
10
(27
)
—
(6
)
—
(23
)
Non-GAAP Operating Earnings, less
Notable Items
1,206
520
424
307
(270
)
2,187
Twelve months ended 12/31/2021
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
1,444
631
564
317
(131
)
2,825
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
(107
)
—
(107
)
Mortality
21
—
—
162
22
205
Expenses
—
50
—
—
—
50
Net Investment Income
(128
)
(64
)
—
(86
)
(132
)
(410
)
Pre-tax Subtotal
(107
)
(14
)
—
(30
)
(110
)
(262
)
Tax adjustment
24
5
—
6
18
54
Post-tax impact of Notable
Items
(83
)
(9
)
—
(24
)
(92
)
(208
)
Impact of Actuarial Assumption Update
37
(27
)
—
(16
)
—
(6
)
Non-GAAP Operating Earnings, less
Notable Items
1,398
595
564
277
(223
)
2,611
Earnings Conference Call
Equitable Holdings will host a conference call at 8 a.m. ET
February 9, 2023 to discuss its full year and fourth 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 Full Year and Fourth 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 12,400
employees and financial professionals, $754 billion in assets under
management (as of 12/31/2022) 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 plateauing or decreasing economic growth
and geopolitical conflicts 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,
potential strategic transactions, changes in accounting standards,
and catastrophic events, such as the outbreak of pandemic diseases
including COVID-19; (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, lease write-offs related to
non-recurring restructuring activities, 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 and realized capital gains/losses from sales or
disposals of select 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 years ended December 31, 2022 and 2021:
Three Months Ended December
31,
Year Ended December
31,
(in millions)
2022
2021
2022
2021
Net income (loss) attributable to
Holdings
$
(789
)
$
254
$
1,785
$
(439
)
Adjustments related to:
Variable annuity product features
1,324
513
(1,315
)
4,145
Investment (gains) losses
55
(100
)
945
(867
)
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
25
33
82
120
Other adjustments (1) (2) (3)
144
45
552
717
Income tax expense (benefit) related to
above adjustments
(326
)
(103
)
(56
)
(864
)
Non-recurring tax items
3
7
16
13
Non-GAAP Operating Earnings
$
436
$
649
$
2,009
$
2,825
_______________
(1)
Includes separation costs of $20 million and $82 million for the
three months and year ended December 31, 2021, respectively.
Separation costs were completed during 2021.
(2)
Includes certain gross legal expenses related to the cost of
insurance litigation, and claims related to a commercial
relationship of $50 million, $27 million, $218 million and $207
million for the three months and year ended December 31, 2022 and
2021, respectively. Includes policyholder benefit costs of $0
million and $75 million for the three months and year ended
December 31, 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 $34 million,
($75) million, ($34) million and $65 million for the three months
and year ended December 31, 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 stock 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 years ended December 31, 2022 and 2021.
Three Months Ended December
31,
Year Ended December
31,
(per share amounts)
2022
2021
2022
2021
Net income (loss) attributable to Holdings
(1)
$
(2.14
)
$
0.63
$
4.70
$
(1.05
)
Less: Preferred stock dividend
0.07
0.07
0.21
0.20
Net Income (loss) available to common
shareholders
(2.21
)
0.56
4.49
(1.24
)
Adjustments related to:
Variable annuity product features
3.59
1.27
(3.46
)
9.93
Investment (gains) losses
0.14
(0.25
)
2.49
(2.08
)
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
0.07
0.08
0.22
0.29
Other adjustments (2) (3) (4)
0.39
0.11
1.45
1.72
Income tax expense (benefit) related to
above adjustments
(0.88
)
(0.25
)
(0.15
)
(2.07
)
Non-recurring tax items
0.01
0.02
0.04
0.03
Non-GAAP Operating Earnings
$
1.11
$
1.54
$
5.08
$
6.58
_______________
(1)
For periods presented with a net loss, basic shares are used for
EPS .
(2)
The impact per common share is $0.06 and $0.20 for the three months
and year ended December 31, 2021. Separation costs were completed
during 2021.
(3)
Includes certain gross legal expenses related to the cost of
insurance litigation and claims related to a commercial
relationship of $50 million, $27 million, $218 million and $207
million for the three months and year ended December 31, 2022 and
2021, respectively. Includes policyholder benefit costs of $75
million for the year ended December 31, 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 $0.14, $0.00, $0.57 and
$0.50 for the three months and years ended December 31, 2022 and
2021, respectively. Includes policyholder benefit costs of $0.20
and $0.00 for the years ended December 31, 2022 and 2021 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 ($0.09), $0.14
and ($0.90) for the years ended December 31, 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.
December 31,
2022
December 31, 2021
Book value per common share
$
0.26
$
25.45
Per share impact of AOCI
24.20
(5.12
)
Book Value per common share, excluding
AOCI
$
24.46
$
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 December
31,
Year Ended December
31,
2022
2021
2022
2021
(in millions)
REVENUES
Policy charges and fee income
$
792
$
882
$
3,241
$
3,637
Premiums
250
231
994
960
Net derivative gains (losses)
(1,422
)
(535
)
1,696
(4,465
)
Net investment income (loss)
958
932
3,315
3,846
Investment gains (losses), net:
Credit losses on available-for-sale debt
securities and loans
(48
)
(2
)
(314
)
2
Other investment gains (losses), net
(7
)
103
(631
)
866
Total investment gains (losses), net
(55
)
101
(945
)
868
Investment management and service fees
1,160
1,497
4,891
5,395
Other income
213
210
825
795
Total revenues
1,896
3,318
14,017
11,036
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
786
700
3,385
3,218
Interest credited to policyholders’
account balances
407
314
1,409
1,219
Compensation and benefits
520
598
2,199
2,360
Commissions and distribution-related
payments
383
447
1,567
1,662
Interest expense
53
60
201
244
Amortization of deferred policy
acquisition costs
96
136
542
393
Other operating costs and expenses
572
598
2,189
2,109
Total benefits and other deductions
2,817
2,853
11,492
11,205
Income (loss) from continuing operations,
before income taxes
(921
)
465
2,525
(169
)
Income tax (expense) benefit
208
(77
)
(499
)
145
Net income (loss)
(713
)
388
2,026
(24
)
Less: Net income (loss) attributable to
the noncontrolling interest
76
134
241
415
Net income (loss) attributable to
Holdings
(789
)
254
1,785
(439
)
Less: Preferred stock dividends
26
26
80
79
Net income (loss) available to Holdings’
common shareholders
$
(815
)
$
228
$
1,705
$
(518
)
Earnings
Per Common Share
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
(in millions)
Earnings per common share
Basic
$
(2.21
)
$
0.57
$
4.52
$
(1.24
)
Diluted
$
(2.21
)
$
0.56
$
4.49
$
(1.24
)
Weighted average shares
Weighted average common stock outstanding
for basic earnings per common share
368.6
400.4
377.6
417.4
Weighted average common stock outstanding
for diluted earnings per common share (1)
368.6
404.3
379.9
417.4
(1)
Due to net loss for the year ended December 31, 2021 approximately
3.8 million share awards were excluded from the diluted EPS
calculation.
Results
of Operations by Segment
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
(in millions)
Operating earnings (loss) by
segment:
Individual Retirement
$
303
$
351
$
1,140
$
1,444
Group Retirement
110
117
525
631
Investment Management and Research
94
183
424
564
Protection Solutions
(29
)
53
179
317
Corporate and Other (1)
(42
)
(55
)
(259
)
(131
)
Non-GAAP Operating Earnings
$
436
$
649
$
2,009
$
2,825
(1)
Includes interest expense and financing fees of $49 million, $61
million, $205 million and $241 million for the three months and
year ended December 31, 2022, and 2021 respectively.
Select
Balance Sheet Statistics
December 31,
2022
December 31, 2021
(in millions)
ASSETS
Total investments and cash and cash
equivalents
$
97,378
$
110,299
Separate Accounts assets
114,853
147,306
Total assets
253,468
292,262
LIABILITIES
Long-term debt
$
3,322
$
3,931
Future policy benefits and other
policyholders' liabilities
34,124
36,717
Policyholders’ account balances
83,855
79,357
Total liabilities
249,615
278,699
EQUITY
Preferred stock
1,562
1,562
Accumulated other comprehensive income
(loss)
(8,834
)
2,004
Total equity attributable to Holdings
$
1,658
$
11,519
Total equity attributable to Holdings'
common shareholders (ex. AOCI)
8,930
7,953
Assets
Under Management (Unaudited)
December 31,
2022
December 31, 2021
(in billions)
Assets Under
Management
AB AUM
$
646.4
$
778.6
Exclusion for General Account and other
Affiliated Accounts
(66.8
)
(79.7
)
Exclusion for Separate Accounts
(38.2
)
(48.8
)
AB third party
$
541.4
$
650.1
Total company AUM
AB third party
$
541.4
$
650.1
General Account and other Affiliated
Accounts (1) (3) (4)
97.4
110.3
Separate Accounts (2) (3) (4)
114.9
147.3
Total AUM
$
753.6
$
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 December 31, 2021, March 31,
2022, June 30, 2022, September 30, 2022 and December 31, 2022,
Separate Account and General Account AUM is inclusive of $16.6
billion, $61 million, $15.1 billion, $60 million, $12.7 billion,
$60 million, $11.7 billion, $58 million, $12.1 billion and $56
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-K. (4)
As of December 31, 2022, Separate Account and General Account AUM
is inclusive $5.6 billion and $3.9 billion, respectively, Account
Value ceded to Global Atlantic. For additional information on the
Global Atlantic transaction see MD&A - Executive Summary
“Global Atlantic Reinsurance Transaction" within the 10-K.
__________________________________ 1 Cash generation is net
annual dividends and distributions to Equitable Holdings from its
subsidiaries; expected cash generation based on 12/31/22 market
levels. 2 2022 capital return includes $112 million of repurchases
accelerated from first quarter 2022 into fourth quarter 2021. 3 Net
inflows include $4.6 billion of Core Retirement inflows,
representing Individual Retirement Current Product Offering and
Group Retirement, $4.5 billion of Wealth Management advisory and
brokerage inflows from Equitable Advisors and $0.9 billion of
AllianceBernstein inflows, ex. $4.5 billion of AXA redemptions. 4
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. 5 Please refer to
Exhibit 1 for detailed reconciliation and definitions related to
notable items. 6 Free Cash Flow is net annual dividends and
distributions 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
Includes $0.6 billion of first year premiums associated with SCS
Income currently reported in Other. 9 Refers to AllianceBernstein
L.P. and AllianceBernstein Holding L.P., collectively. 10 Excludes
$4.5 billion of expected low-fee outflows from AXA. 11 2022 capital
return includes $112 million of repurchases accelerated from first
quarter 2022 into fourth quarter 2021. 12 Payout ratio target is
total capital returns to common shareholders as a percentage of
Non-GAAP operating earnings adjusted for notable items 13 Under
this authorization, the Company may, from time to time, purchase
shares of its common stock through various means including open
market transactions, privately negotiated transactions, forward,
derivative, accelerated repurchase, or automatic share repurchase
transactions, or tender offers. The authorization for the share
repurchase program may be terminated, increased or decreased by the
board of directors at any time. 14 Cash generation is net annual
dividends and distributions to Equitable Holdings from its
subsidiaries; expected cash generation based on 12/31/22 market
levels. 15 Free Cash Flow is net annual dividends and distributions
to Equitable Holdings from its subsidiaries less annual Holding
Company expenses. 16 Please refer to Exhibit 1 for detailed
reconciliation and definitions related to notable items. 17 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/20230208005783/en/
Investor Relations Işıl Müderrisoğlu (212) 314-2476
IR@equitable.com
Media Relations Sophia Kim (212) 314-2010
mediarelations@equitable.com
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