- Solid business results with full year cash flow1 of $1.3
billion, in line with guidance
- Strong organic growth momentum with $5.3 billion of
Retirement2 net inflows and $3.0 billion in Wealth Management
advisory net inflows
- Asset Management’s Retail and Private Wealth channels
delivered full year net inflows, which was offset by Institutional
net outflows; Institutional pipeline remains strong with $12
billion
- Full year Net income of $1.3 billion, or $3.48 per share;
fourth quarter Net loss of $698 million, or $2.15 per
share
- Non-GAAP operating earnings3 of $1.7 billion, or $4.59 per
share, for the full year and $476 million, or $1.33 per share, for
the fourth quarter 2023. Adjusting for notable items4, Non-GAAP
operating earnings of $1.9 billion, or $5.13 per share, for the
full year and $479 million, or $1.34 per share, for the fourth
quarter 2023
- Returned $1.2 billion to shareholders this year, including
$315 million in the quarter, delivering on the 60-70% payout ratio
target; Board approved a new $1.3 billion share repurchase
authorization5
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, 2023.
“2023 was a momentous year for Equitable Holdings. We celebrated
our fifth anniversary as a public company while also holding our
inaugural investor day in May, where we highlighted our growth
strategy and financial goals for the next five years. Equitable
delivered solid financial results despite an uncertain macro
environment, and our businesses continue to drive predictable cash
flow to Holdings, with $1.3 billion in 2023, in line with our full
year guidance. This, in combination with $2.0 billion of cash at
Holdings, enabled us to deliver capital return consistent with our
60-70% payout ratio target and was recognized by S&P Global’s
upgrade of Equitable Holdings to A-. Higher interest rates and
favorable demographic trends have led clients to seek our
advice-centric solutions, resulting in $8.3 billion of Retirement
and Wealth Management advisory net inflows over the past year. In
asset management, we were not immune to industry-wide pressures on
net flows, but AB remains well-positioned with a global
distribution platform, strong performance track record and
strategic focus on higher-growth segments like Private Markets,”
said Mark Pearson, President and Chief Executive Officer.
Mr. Pearson concluded, “While we faced some short-term headwinds
this past year, we expect non-GAAP operating earnings per share
growth to accelerate in 2024 and project increased cash generation
of $1.4 billion to $1.5 billion6. This momentum is supported by the
combination of organic growth within our Retirement and Wealth
Management businesses and continued execution against our strategic
initiatives.”
Consolidated Results
Fourth Quarter
Full Year
(in millions, except per share amounts or
unless otherwise noted)
2023
2022
2023
2022
Total Assets Under
Management/Administration (“AUM/A”, in billions)
$
930
$
826
$
930
$
826
Net income attributable to Holdings
(698
)
62
1,302
2,153
Net income attributable to Holdings per
common share
(2.15
)
0.10
3.48
5.46
Non-GAAP operating earnings
476
348
1,694
1,726
Non-GAAP operating earnings per common
share (“EPS”)
1.33
0.87
4.59
4.33
As of December 31, 2023, total AUM/A was $930 billion, a
year-over-year increase of 13%, driven by higher markets over the
prior twelve months.
On a full year basis, Net income attributable to Holdings was
$1.3 billion in 2023 compared to $2.2 billion in 2022.
Full year Non-GAAP operating earnings were $1.7 billion in 2023
compared to $1.7 billion in 2022. Adjusting for notable items7 of
$189 million, 2023 Non-GAAP operating earnings were $1.9 billion or
$5.13 per share.
Net income attributable to Holdings for the fourth quarter of
2023 was $(698) million compared to $62 million in the fourth
quarter of 2022.
Non-GAAP operating earnings in the fourth quarter of 2023 was
$476 million compared to $348 million in the fourth quarter of
2022. Adjusting for notable items7 of $3 million, fourth quarter
2023 Non-GAAP operating earnings were $479 million or $1.34 per
share.
As of December 31, 2023, book value per common share, including
accumulated other comprehensive income (“AOCI”), was $3.26. Book
value per common share, excluding AOCI, was $26.56.
Business
Highlights
- Full year 2023 business segment highlights:
- Individual Retirement (“IR”) reported record full year net
inflows of $5.6 billion, and first year premiums were up 24% over
prior year, attributable to growth in our industry leading
spread-based RILA product.
- Group Retirement (“GR”) reported full year net outflows of $256
million. The tax-exempt channel, which includes Equitable’s
industry leading K-12 educators offering, reported net inflows of
$365 million.
- Investment Management and Research (AllianceBernstein or “AB”)8
reported full year net outflows of $7.0 billion, with Institutional
channel outflows partially offset by organic growth in Retail and
Private Wealth.
- Protection Solutions (“PS”) reported $3.1 billion of full year
gross written premiums with accumulation-oriented VUL first year
premiums up 10% and Employee Benefits first year premiums up 27%
over the prior year.
- Wealth Management (“WM”) reported full year advisory net
inflows of $3.0 billion with a continued shift toward fee-based
advice supported by approximately 750 dedicated wealth planners, up
7% over prior year.
- Legacy (“L”) reported $2.3 billion of full year net outflows
and continues to run-off at $2-$3 billion annually.
- Capital management program:
- The Company returned $1.2 billion to shareholders, including
$315 million in the fourth quarter of 2023, delivering on its
payout ratio target of 60-70% of Non-GAAP operating earnings.
Looking ahead, the Board of Directors authorized a new $1.3 billion
share repurchase program9.
- The Company continues to benefit from diverse businesses which
drive predictable cash flow with $1.3 billion to the Holding
company this year, in line with 2023 guidance. The Company expects
$1.4 billion to $1.5 billion of cash generation in 202410,
supported by organic growth across retirement, asset and wealth
management.
- The Company reported cash and liquid assets of $2.0 billion at
Holdings, which remains above the $500 million minimum target. The
combined NAIC RBC ratio was approximately 400%-425% at year end,
above the Company’s target of 375-400%.
- Delivering shareholder value:
- The Company has deployed $9 billion of its $20 billion capital
commitment to AB, supporting growth in AB’s Private Markets
business, which currently has $61 billion in assets under
management.
- The Company achieved $38 million of its targeted $150 million
of net expense savings by 2027 and $52 million of its targeted $110
million of incremental income for the Company’s general account by
2027.
Business Segment
Results
Individual Retirement
(in millions, unless otherwise noted)
Q4 2023
Q4 2022
Account value (in billions)
$
91.7
$
74.3
Segment net flows (in billions)
1.5
0.8
Operating earnings (loss)
206
190
- Account value increased by 23% primarily due to market
performance and net inflows over the prior twelve months.
- Net inflows of $1.5 billion in the quarter were higher over the
prior year quarter with sales of $3.8 billion.
- Operating earnings increased from $190 million in the prior
year quarter to $206 million, primarily driven by higher net
interest margin due to higher interest rates and higher SCS asset
balances.
- Operating earnings adjusting for notable items11 increased from
$188 million in the prior year quarter to $211 million. Notable
items of $5 million in the current period reflects lower net
investment income from alternatives and prepayments.
Group Retirement
(in millions, unless otherwise noted)
Q4 2023
Q4 2022
Account value (in billions)
$
36.5
$
32.0
Segment net flows
(135
)
24
Operating earnings (loss)
98
92
- Account value increased by 14% primarily due to market
performance over the prior twelve months.
- Net outflows of $135 million in the fourth quarter, primarily
attributable to non-core channels; the core tax-exempt channel
delivered $115 million of net inflows.
- Operating earnings increased from $92 million in the prior year
quarter to $98 million, primarily due to higher net investment
income and higher fee income, partially offset by higher interest
credited.
- Operating earnings adjusting for notable items11 increased from
$98 million in the prior year quarter to $109 million. Notable
items of $11 million reflect lower net investment income from
alternatives and prepayments.
AllianceBernstein
(in millions, unless otherwise noted)
Q4 2023
Q4 2022
Total AUM (in billions)
$
725.2
$
646.4
Segment net flows (in billions)
(1.8
)
(1.9
)
Operating earnings (loss)
114
94
- AUM increased by 12% due to market performance over the prior
twelve months.
- Net outflows of $1.8 billion in the quarter, with net inflows
in the Retail channel of $1.3 billion, led by taxable fixed income
and municipals, partially offset by Institutional channel net
outflows of $2.5 billion and Private Wealth net outflows of $0.6
billion.
- Operating earnings increased from $94 million in the prior year
quarter to $114 million, primarily due to higher base fees on
higher average AUM, higher performance fees and a lower tax
rate.
- Operating earnings adjusting for notable items12 increased from
$94 million in the prior year quarter to $100 million. Notable
items of $14 million reflects a favorable tax item in the
quarter.
Protection Solutions
(in millions)
Q4 2023
Q4 2022
Gross written premiums
$
821
$
776
Annualized premiums
102
74
Operating earnings (loss)
28
(41
)
- Annualized premiums increased 38% year-over-year, driven by an
40% increase in Life and a 32% increase in Employee Benefits.
- Operating earnings increased from a $41 million loss in the
prior year quarter to $28 million, primarily due to improved
mortality compared to the prior year quarter and higher fee type
revenue from Employee Benefits premium growth.
- Operating earnings adjusting for notable items12 increased from
$58 million in the prior year quarter to $68 million. Notable items
of $40 million reflect lower net investment income from
alternatives and prepayments and a one-time model update.
Wealth Management
(in millions, unless otherwise noted)
Q4 2023
Q4 2022
Total AUA (in billions)
$
87.0
$
72.4
Advisory Net Flows (in billions)
0.5
0.2
Operating earnings (loss)
45
23
- AUA increased by 20% due to market performance and net inflows
over the last twelve months.
- Advisory net inflows of $0.5 billion in the quarter.
- Operating earnings increased from $23 million in the prior year
quarter to $45 million, primarily due to higher distribution fees
and increased advisory fees on higher average asset balances.
Legacy
(in millions)
Q4 2023
Q4 2022
Account value (in billions)
$
22.2
$
21.5
Net Flows (1)
(643
)
(589
)
Operating earnings (loss)
40
65
(1)
Net flows excluded as it relates
to AV ceded to Venerable for the discrete periods of December 31,
2023 and December 31, 2022 were $(324) million and $(292) million,
respectively.
- Account value was flat year-over-year with expected net
outflows offset by positive market performance over the prior
twelve months.
- Net outflows of $643 million were in line with expectations as
this business continues to run-off at $2 billion to $3 billion
annually.
- Operating earnings decreased from $65 million in the prior year
quarter to $40 million, primarily due to higher operating expenses
and lower net investment income as the business continues to run
off.
- Operating earnings adjusting for notable items13 decreased from
$67 million in the prior year quarter to $41 million. Notable items
of $1 million in the current period reflects lower net investment
income from alternatives and prepayments partially offset by a
one-time model update.
Corporate and Other (“C&O”)
The operating loss of $55 million in the fourth quarter
decreased from an operating loss of $75 million in the prior year
quarter, primarily driven by the benefit from a favorable
out-of-period adjustment related to derivatives reporting.
Operating loss after adjusting for notable items13 increased from
$89 million in the prior year quarter to $95 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)
2023
2022
2023
2022
Non-GAAP Operating Earnings
476
$
348
$
1,694
$
1,726
Post-tax Adjustments related to notable
items:
Individual Retirement
5
(2
)
10
23
Group Retirement
11
6
24
16
Investment Management and Research
(14
)
—
(23
)
—
Protection Solutions
40
99
211
213
Wealth Management
—
—
—
—
Legacy
1
2
10
(1
)
Corporate & Other
(40
)
(14
)
(31
)
(8
)
Notable items subtotal
3
91
201
243
Less: impact of actuarial assumption
update
—
—
(12
)
1
Non-GAAP Operating Earnings, less Notable
Items
$
479
$
439
$
1,883
$
1,970
Impact of notable items by item category:
Three Months Ended
December 31,
Year Ended
December 31,
(in millions)
2023
2022
2023
2022
Non-GAAP Operating Earnings
476
$
348
$
1,694
$
1,726
Pre-tax adjustments related to Notable
Items:
Actuarial and Model Updates
14
1
(2
)
6
Mortality
—
84
151
209
Expenses
—
—
—
42
Net Investment Income
9
27
117
30
Subtotal
23
112
265
287
Post-tax impact of Notable Items
3
91
201
243
Less: impact of actuarial assumption
update
—
—
(12
)
1
Non-GAAP Operating Earnings, less Notable
Items
$
479
$
439
$
1,883
$
1,970
Earnings Conference Call
Equitable Holdings will host a conference call at 8 a.m. ET on
February 7, 2024 to discuss its full year and fourth quarter 2023
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 2023 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 9,100
employees and financial professionals, $930 billion in assets under
management and administration (as of 12/31/2023) 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. These
forward-looking statements include, but not limited to, statements
regarding projections, estimates, forecasts and other financial and
performance metrics and projections of market expectations.“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)
recruitment and retention of key employees and experienced and
productive financial professionals; (ix) subjectivity of the
determination of the amount of allowances and impairments taken on
our investments; (x) legal and regulatory risks, including federal
and state legislation affecting financial institutions, insurance
regulation and tax reform; (xi) risks related to our common stock
and (xii) general risks, including strong industry competition,
information systems failing or being compromised and protecting our
intellectual property.
Forward-looking statements, including any financial guidance,
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.
Forward-looking Non-GAAP Metrics
The Company has presented forward-looking statements regarding
Non-GAAP operating earnings, Non-GAAP operating earnings per share
and Adjusted Operating Margin at AB. These non-GAAP financial
measures are derived by excluding certain amounts, expenses or
income, from the corresponding financial measures determined in
accordance with GAAP. The determination of the amounts that are
excluded from these non-GAAP financial measures is a matter of
management judgment and depends upon, among other factors, the
nature of the underlying expense or income amounts recognized in a
given period. We are unable to present a quantitative
reconciliation of forward-looking adjusted operating earnings per
share and payout ratio targeted to non-GAAP operating earnings to
their most directly comparable forward-looking GAAP financial
measures because such information is not available, and management
cannot reliably predict all of the necessary components of such
GAAP measures without unreasonable effort or expense. In addition,
we believe such reconciliations would imply a degree of precision
that would be confusing or misleading to investors. The unavailable
information could have a significant impact on the Company’s future
financial results. These non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others changes in connection with quarter-end and
year-end adjustments. Any variations between the Company’s actual
results and preliminary financial data set forth above may be
material.
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
the variable annuity product MRBs. 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) changes in the fair value of market risk benefits and
purchased market risk benefits, including the related attributed
fees and claims, offset by derivatives and other securities used to
hedge the market risk benefits which result in residual net income
volatility as the change in fair value of certain securities is
reflected in OCI and due to our statutory capital hedge program;
and (ii) market adjustments to deposit asset or liability accounts
arising from reinsurance agreements which do not expose the
reinsurer to a reasonable possibility of a significant loss from
insurance risk;
- 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; 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, impact of the annual actuarial
assumption updates attributable to LFPB; 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 and a decrease of deferred tax
valuation allowance.
In the third quarter 2023, the Company updated its operating
earnings measure to exclude the impact of the annual actuarial
assumption update attributable to LFPB as the majority of the
earnings volatility attributable to these assumption updates relate
to the Company’s Legacy and non-business segment products and as
such do not represent the Company’s ongoing revenue generating
activities or future business strategy, and impedes comparability
of operating results period over period. Operating earnings were
favorably impacted by this change in the amount of $61 million for
the year ended December 31, 2023. The presentation of operating
earnings in prior periods was not revised to reflect this
modification because the impact to those periods was
immaterial.
Also, in the fourth quarter of 2023, the Company updated its
operating earnings measure to exclude the impact of realized
amounts related to equity classified instruments. The recognition
of the realized capital gains and losses from investments in
current net investment income is generally considered distortive
and not reflective of the ongoing core business activities of the
segments. Operating earnings were favorably impacted in the amount
of $8 million for the year ended December 31, 2023. The
presentation of operating earnings in prior periods was not revised
to reflect this modification. The impact to operating earnings
would have been $36 million favorable for the year ended December
31, 2022 and $50 million unfavorable for the year ended December
31, 2021.
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, 2023 and 2022:
Three Months Ended
December 31,
Year Ended
December 31,
(in millions)
2023
2022
2023
2022
Net income (loss) attributable to
Holdings
$
(698
)
$
62
$
1,302
$
2,153
Adjustments related to:
Variable annuity product features
1,191
129
607
(2,193
)
Investment (gains) losses
159
55
713
945
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
13
25
39
82
Other adjustments (1) (2)
153
150
351
605
Income tax expense (benefit) related to
above adjustments
(319
)
(76
)
(359
)
118
Non-recurring tax items (3)
(23
)
3
(959
)
16
Non-GAAP Operating Earnings
$
476
$
348
$
1,694
$
1,726
_______________
(1)
Includes certain gross legal
expenses related to the cost of insurance litigation, and claims
related to a commercial relationship of $109 million, $50 million,
$144 million and $218 million for the three months and years ended
December 31, 2023 and 2022, 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.
(2)
Includes Non-GMxB related
derivative hedge losses of $33 million, $26 million, $34 million
and ($34) million for the three months and years ended December 31,
2023 and 2022, respectively.
(3)
For the three and twelve months
ended December 31, 2023, non-recurring tax items reflect primarily
the effect of uncertain tax positions for a given audit period and
tax valuation allowance decreases of $30 million and $1 billion,
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, 2023 and 2022.
Three Months Ended
December 31,
Year Ended
December 31,
(per share amounts)
2023
2022
2023
2022
Net income (loss) attributable to Holdings
(1)
$
(2.07
)
$
0.17
$
3.70
$
5.67
Less: Preferred stock dividend
0.08
0.07
0.22
0.21
Net Income (loss) available to common
shareholders
(2.15
)
0.10
3.48
5.46
Adjustments related to:
Variable annuity product features
3.53
0.35
1.73
(5.77
)
Investment (gains) losses
0.47
0.15
2.03
2.49
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
0.04
0.07
0.11
0.22
Other adjustments (2) (3)
0.46
0.39
0.99
1.58
Income tax expense (benefit) related to
above adjustments
(0.95
)
(0.20
)
(1.02
)
0.31
Non-recurring tax items (4)
(0.07
)
0.01
(2.73
)
0.04
Non-GAAP Operating Earnings
$
1.33
$
0.87
$
4.59
$
4.33
_______________
(1)
For periods presented with a net
loss, basic shares are used for EPS.
(2)
The legal accruals impact per
common share is $0.32, $0.13, $0.41 and $0.57 for the three months
and years ended December 31, 2023 and 2022, respectively. Includes
policyholder benefit costs of $0.20 per common share 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.
(3)
Includes Non-GMxB related
derivative hedge losses impact per common share is $0.10, $0.07,
$0.09 and $(0.09) for the three months and years ended December 31,
2023 and 2022, respectively.
(4)
For the three and twelve months
ended December 31, 2023, non-recurring tax items reflect primarily
the effect of uncertain tax positions for a given audit period and
tax valuation allowance decreases of $0.09 and $2.84 per common
share, 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,
2023
December 31,
2022
Book value per common share
$
3.26
$
(0.44
)
Per share impact of AOCI
23.30
24.63
Book Value per common share, excluding
AOCI
$
26.56
$
24.19
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.
Assets Under Management (“AUA”)
AUA means advisory and brokerage investment assets included in
the Company’s Wealth Management segment.
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,
2023
2022
2023
2022
(in millions)
REVENUES
Policy charges and fee income
$
599
$
581
$
2,380
$
2,454
Premiums
281
250
1,104
994
Net derivative gains (losses)
(1,254
)
(1,309
)
(2,397
)
907
Net investment income (loss)
1,223
958
4,320
3,315
Investment gains (losses), net:
Credit losses on available-for-sale debt
securities and loans
(75
)
(48
)
(220
)
(314
)
Other investment gains (losses), net
(84
)
(7
)
(493
)
(631
)
Total investment gains (losses), net
(159
)
(55
)
(713
)
(945
)
Investment management and service fees
1,241
1,160
4,820
4,891
Other income
239
231
1,014
1,028
Total revenues
2,170
1,816
10,528
12,644
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
647
696
2,754
2,716
Remeasurement of liability for future
policy benefits
29
12
75
66
Change in market risk benefits and
purchased market risk benefits
(35
)
(1,136
)
(1,807
)
(1,280
)
Interest credited to policyholders’
account balances
563
409
2,083
1,410
Compensation and benefits
586
519
2,328
2,201
Commissions and distribution-related
payments
412
383
1,590
1,567
Interest expense
57
53
228
201
Amortization of deferred policy
acquisition costs
169
150
641
586
Other operating costs and expenses
559
572
1,898
2,185
Total benefits and other deductions
2,987
1,658
9,790
9,652
Income (loss) from continuing operations,
before income taxes
(817
)
158
738
2,992
Income tax (expense) benefit
228
(20
)
905
(598
)
Net income (loss)
(589
)
138
1,643
2,394
Less: Net income (loss) attributable to
the noncontrolling interest
109
76
341
241
Net income (loss) attributable to
Holdings
(698
)
62
1,302
2,153
Less: Preferred stock dividends
26
26
80
80
Net income (loss) available to Holdings’
common shareholders
$
(724
)
$
36
$
1,222
$
2,073
Earnings Per Common
Share
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
(in millions)
Earnings per common share
Basic
$
(2.15
)
$
0.10
$
3.49
$
5.49
Diluted
$
(2.15
)
$
0.10
$
3.48
$
5.46
Weighted average shares
Weighted average common stock outstanding
for basic earnings per common share
337.2
368.6
350.1
377.6
Weighted average common stock outstanding
for diluted earnings per common share (1)
337.2
371.5
351.6
379.9
(1)
Due to net loss for the three
months ended December 31, 2023 approximately 2.0 million share
awards were excluded from the diluted EPS calculation.
Results of Operations
by Segment
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
(in millions)
Operating earnings (loss) by
segment:
Individual Retirement
$
206
$
190
$
850
$
762
Group Retirement
98
92
399
446
Investment Management and Research
114
94
411
424
Protection Solutions
28
(41
)
51
97
Wealth Management
45
23
159
101
Legacy
40
65
186
235
Corporate and Other (1)
(55
)
(75
)
(362
)
(339
)
Non-GAAP Operating Earnings
$
476
$
348
$
1,694
$
1,726
(1)
Includes interest expense and
financing fees of $56 million, $49 million, $229 million and $205
million for the three months and year ended December 31, 2023, and
2022 respectively.
Select Balance Sheet
Statistics
December 31,
2023
December 31,
2022
(in millions)
ASSETS
Total investments and cash and cash
equivalents
$
110,412
$
97,378
Separate Accounts assets
127,251
114,853
Total assets
276,814
252,702
LIABILITIES
Long-term debt
$
3,820
$
3,322
Future policy benefits and other
policyholders' liabilities
17,363
16,603
Policyholders’ account balances
95,673
83,866
Total liabilities
271,656
249,106
EQUITY
Preferred stock
1,562
1,562
Accumulated other comprehensive income
(loss)
(7,777
)
(8,992
)
Total equity attributable to Holdings
$
2,649
$
1,401
Total equity attributable to Holdings'
common shareholders (ex. AOCI)
8,864
8,831
Assets Under
Management (Unaudited)
December 31,
2023
December 31,
2022
(in billions)
Assets Under Management
AB AUM
$
725.2
$
646.4
Exclusion for General Account and other
Affiliated Accounts
(75.0
)
(66.8
)
Exclusion for Separate Accounts
(44.5
)
(38.2
)
AB third party
$
605.7
$
541.4
Total company AUM
AB third party
$
605.7
$
541.4
General Account and other Affiliated
Accounts (1) (3) (4)
110.4
97.4
Separate Accounts (2) (3) (4)
127.3
114.9
Total AUM
$
843.4
$
753.6
_______________
(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, 2023 and
December 31, 2022, Separate Account and General Account AUM is
inclusive of $12.5 billion and $49 million as well as $12.1 billion
and $56 million, respectively, Account Value ceded to Venerable.
For additional information on the Venerable transaction see Note 13
of the Notes to Consolidated Financial Statements within the
10-K.
(4)
As of December 31, 2023 and
December 31, 2022, Separate Account and General Account AUM is
inclusive of $6.4 billion and $3.6 billion as well as $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 flow is net dividends and distributions
to Equitable Holdings from its subsidiaries. 2 Includes Individual
Retirement and Group Retirement segments. 3 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. 4 Please refer to Exhibit 1 for a detailed
reconciliation and definitions related to notable items. 5 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. 6 Cash generation is the cash flow
from asset and wealth management subsidiaries, along with capital
generated in excess of the target combined NAIC RBC ratio at the
insurance subsidiaries. Financial guidance assumes normal market
conditions including 6% equity return, 2% dividend yield and
interest rates following the forward curve. 7 Please refer to
Exhibit 1 for detailed reconciliation and definitions related to
notable items. 8 Refers to AllianceBernstein L.P. and
AllianceBernstein Holding L.P., collectively. 9 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. 10 Cash generation is the cash flow
from asset and wealth management subsidiaries, along with capital
generated in excess of the target combined NAIC RBC ratio at the
insurance subsidiaries. Financial guidance assumes normal market
conditions including 6% equity return, 2% dividend yield and
interest rates following the forward curve. 11 Please refer to
Exhibit 1 for a detailed reconciliation and definitions related to
notable items. 12 Please refer to Exhibit 1 for a detailed
reconciliation and definitions related to notable items. 13 Please
refer to Exhibit 1 for a detailed reconciliation and definitions
related to notable items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206677619/en/
Investor Relations Erik Bass (212) 314-2476
IR@equitable.com
Media Relations Sophia Kim (212) 314-2010
mediarelations@equitable.com
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