Executive Summary / Key Takeaways

• Strategic Transformation Underway: Equitable Holdings is actively reshaping its business mix, notably through the landmark RGA Individual Life reinsurance transaction, which frees over $2 billion in capital and significantly reduces mortality earnings volatility, paving the way for more predictable, fee-based income streams.
• Integrated Business Model Driving Growth: The company's "flywheel" model, integrating retirement product manufacturing, AllianceBernstein's asset management, and Equitable Advisors' wealth management, fosters strong organic growth, evidenced by consistent net inflows and rising Assets Under Management (AUM) and Assets Under Administration (AUA).
• Robust Capital Deployment & Financial Flexibility: With a pro forma NAIC RBC ratio exceeding 500% post-reinsurance and planned dividends, Equitable is committed to returning capital to shareholders, including $500 million in incremental share repurchases in H2 2025, while maintaining flexibility for strategic investments and debt reduction.
• Innovation as a Competitive Edge: Equitable's pioneering role in RILA products, expansion into in-plan guarantees (e.g., BlackRock LifePath Paycheck, JPMorgan partnership), and leveraging AI for operational efficiency and enhanced advisory services underscore its commitment to customer-led innovation.
• Outlook for Accelerated EPS Growth: Despite recent headwinds from elevated mortality and market volatility, management anticipates accelerated Non-GAAP operating EPS growth in the second half of 2025, targeting 12-15% annually through 2027, supported by market recovery, reduced mortality exposure, and strategic capital redeployment.

Equitable Holdings: Forging a Future in the U.S. Retirement Landscape

Equitable Holdings, Inc. ($EQH), founded in 1859, has evolved into a diversified financial services powerhouse, strategically positioned to capitalize on the burgeoning U.S. retirement market. The company's core strategy revolves around an integrated business model, often referred to as a "flywheel," which seamlessly connects its Individual Retirement, Group Retirement, Asset Management (through AllianceBernstein (AB)), and Wealth Management segments. This synergistic approach allows Equitable to participate across the entire retirement value chain, from product manufacturing and distribution to asset management, providing a distinct competitive advantage in an increasingly crowded marketplace.

The U.S. retirement market presents a compelling opportunity, driven by powerful demographic tailwinds. Each year, approximately 4 million Americans turn 65, contributing to a growing need for sophisticated retirement savings and income solutions. This demographic shift, coupled with an estimated $600 billion of assets annually transitioning out of 401(k) plans, underscores the sustained demand for the advice and products Equitable offers. Regulatory support, notably through the bipartisan SECURE Acts, further expands access to workplace retirement savings and encourages the inclusion of annuities within 401(k) plans, opening a significant new market for insurers to tap into the estimated $7 trillion of assets currently held in these plans.

Equitable's competitive positioning is built on several pillars, allowing it to differentiate itself from rivals like Prudential Financial (PRU), MetLife (MET), Lincoln National Corporation (LNC), and Principal Financial Group (PFG). While these competitors offer broad portfolios, Equitable's integrated model and customer-led innovation provide a unique edge. Its proprietary distribution network, Equitable Advisors, offers better persistency and a lower cost of funds compared to third-party channels, enabling the company to retain more economics and innovate new products like the RILA. This contrasts with firms like MetLife, which, despite its extensive distribution, may face challenges in offering the same level of tailored, research-backed solutions for affluent segments. Equitable's expense ratio in individual retirement is also top quartile, suggesting operational efficiency.

Strategic Pillars and Technological Edge

Equitable's strategic narrative is deeply intertwined with its technological differentiation and innovation, which are not confined to a single product but permeate its product design, distribution, and operational efficiency. The company's pioneering role in the Registered Index-Linked Annuity (RILA) market, for instance, is a testament to its customer-led innovation. RILAs, or buffered annuities, provide policyholders with downside protection while allowing participation in market upside, a value proposition that resonates strongly during periods of market volatility. This product innovation has allowed Equitable to capture a significant share of a rapidly growing market, with RILA sales up 9% year-over-year in Q2 2025, contributing to a $60 billion RILA business.

Beyond product innovation, Equitable is leveraging technology to enhance its operational capabilities and expand into new markets. The company is actively exploring the use of Generative AI (GenAI), primarily for operational efficiency by automating "mundane tasks." However, management's vision extends to using AI for "value-added services such as how we produce alpha or our advice model," recognizing that "people that use AI are going to replace people that don't." This strategic adoption aims to enhance advisor productivity and client engagement, a critical differentiator against competitors who may lag in digital transformation. A concrete example of this is Equitable's new Plan Build API capability, integrated into its digital EB360® employee benefits platform, designed to simplify benefits plan setup for brokers and clients, offering greater speed and efficiency.

The company's strategic partnerships in the in-plan guarantee market further highlight its innovative approach. Following over $800 million in inflows since the Q2 2024 launch of the BlackRock (BLK) LifePath Paycheck product, Equitable announced a new collaboration with JPMorgan (JPM) Asset Management for a "smart retirement, lifetime income offering." These initiatives position Equitable as a leader in an emerging market, providing protected equity solutions and guaranteed income within 401(k) plans. This proactive stance in developing new markets and leveraging partnerships demonstrates a technological and strategic agility that helps Equitable maintain its competitive edge against broader financial services firms.

Financial Performance and Operational Momentum

Equitable Holdings' financial performance in the first half of 2025 reflects both underlying business strength and the impact of strategic realignments. For the six months ended June 30, 2025, the company reported Non-GAAP operating earnings of $773 million, down from $972 million in the prior year period. This decline was primarily driven by elevated individual life mortality claims and lower average equity market levels in the first half of 2025. However, adjusting for notable items, Non-GAAP operating EPS was down 5% year-to-date. Management noted that if the RGA reinsurance transaction had been in effect from January 1, 2025, and mortality claims were reduced by 75%, Non-GAAP operating EPS growth would have been 3% in the first half of the year.

Consolidated revenues for the six months ended June 30, 2025, stood at $6,938 million, up from $5,737 million in the prior year period. This growth was supported by increased net investment income and net derivative gains. Net investment income rose to $2,603 million from $2,377 million, driven by higher average asset balances and alternative investment income. However, net derivative gains/losses swung from a gain of $1,584 million in H1 2024 to a gain of $575 million in H1 2025, primarily due to lower equity market appreciation.

The Individual Retirement segment saw operating earnings of $431 million for the first six months of 2025, down from $484 million in the prior year. This was influenced by a 3% decline in fee-based revenues in Q2 2025 due to lower average separate account balances and the maturation of older, higher-margin RILA segments. Net Interest Margin (NIM) was flat year-over-year in Q2 2025, as strong net investment income growth was offset by higher interest credited and a decline in market value adjustments (MDAs) to essentially zero. Management projects a Q3 2025 baseline of $220 million to $225 million for Individual Retirement earnings, assuming normal markets and no MDAs, with NIM spreads expected to stabilize.

Asset Management (AB) delivered strong results, with operating earnings of $257 million for the first six months of 2025, up from $207 million. AB's adjusted operating margin was 33.7% in Q1 2025, up 340 basis points from Q1 2024, and is on track for a 33% full-year margin in 2025. Assets Under Management (AUM) reached a record $829.1 billion by June 30, 2025, up 5.7% from March 31, 2025, driven by market appreciation despite Q2 2025 net outflows of $6.7 billion (active net outflows of $4.8 billion). AB's private markets AUM grew 20% year-over-year to $77 billion.

Wealth Management continued its robust performance, with operating earnings of $97 million for the first six months of 2025, up from $87 million. The segment reported $2 billion in advisory net inflows in Q2 2025, with a trailing 12-month organic growth rate of 12%. Advisor productivity increased 8% year-over-year.

The Protection Solutions segment reported an operating loss of $75 million for the first six months of 2025, compared to earnings of $116 million in the prior year. This was primarily due to elevated mortality claims, including $74 million after-tax of negative one-time items in Q2 2025 from late-reported COLI claims. This volatility underscored the strategic importance of the RGA (RGA) reinsurance transaction.
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Capital Management and Balance Sheet Strength

Equitable's capital management strategy is designed to maintain financial strength, support business growth, and consistently return capital to shareholders. The company ended Q2 2025 with approximately $800 million of cash at the holding company, comfortably above its $500 million minimum target. The year-end 2024 combined NAIC RBC ratio was approximately 425%, exceeding the 375-400% target.

A cornerstone of Equitable's capital strategy is the Individual Life reinsurance transaction with RGA, which closed on July 31, 2025. This deal reinsures 75% of Equitable's in-force individual life block, freeing over $2 billion of capital. Management views this as a highly attractive valuation, representing approximately 20x the lost earnings from the ceded block. This freed capital is being strategically redeployed: $760 million was used to increase Equitable's economic ownership in AB from 62% to 69% through a tender offer completed in April 2025. The company also plans to execute at least $500 million of incremental share repurchases in the second half of 2025, on top of its 60-70% payout ratio target, and will look to repay some debt to manage its leverage ratio. Post-transaction and planned dividends, Equitable expects a pro forma combined NAIC RBC ratio of over 500%, providing significant capital cushion.

In June 2025, Equitable also completed its first internal reinsurance transaction to a new Bermuda entity, reinsuring approximately $30 billion of group annuity contracts. While not impacting excess capital, this move enhances visibility into future cash generation and aligns with Equitable's economic hedging framework, supporting consistent cash flows to the holding company. This Bermuda entity offers future optionality for seeding additional in-force or new business, and potentially third-party reinsurance.

For the six months ended June 30, 2025, Equitable returned $318 million to shareholders, including $236 million in share repurchases, representing a 74% payout ratio. For the full year 2024, the company generated $1.5 billion in cash flow to the holding company, with over 50% from non-insurance businesses, and returned $1.3 billion to shareholders (66% payout ratio). The company is on track for $1.6 billion to $1.7 billion of organic cash generation in 2025, with a clear line of sight to achieving its $2 billion target by 2027.

Strategic Initiatives and Future Outlook

Equitable's outlook is anchored by its strategic initiatives and a confident management team. The company expects Non-GAAP operating EPS growth to accelerate in the second half of 2025, driven by recovering markets, reduced mortality exposure from the RGA transaction, higher investment portfolio yields, benefits from expense actions, and incremental share repurchases. Management projects 2025 EPS growth to be consistent with its 12-15% target, with a baseline of $220-225 million for Individual Retirement earnings in Q3 2025.

The RGA reinsurance transaction is a pivotal move, not only for capital release but for fundamentally altering Equitable's risk profile towards more predictable earnings. This strategic shift is expected to enhance returns on capital and be accretive to earnings and cash flow per share. The increased ownership in AB further strengthens the integrated model, allowing Equitable to capture more of the "flywheel benefits" where AB's strong investment returns enable attractive annuity solutions, driving sales and asset flows back to AB.

AB itself is focused on growing its private markets platform to $90-100 billion of AUM by 2027, which would drive over 20% of its revenues. Its active ETF platform has already grown to $8 billion in AUM. The partnership with RGA, including a $1 billion investment management agreement for private credit strategies, exemplifies the synergistic value creation.

Competitive Dynamics

Equitable operates in a highly competitive financial services landscape. Its integrated business model, encompassing product manufacturing, proprietary distribution through Equitable Advisors, and asset management via AB, provides a distinct competitive advantage. This allows Equitable to capture more of the economic value chain compared to pure product manufacturers.

Compared to Prudential Financial, Equitable's strength lies in its specialized U.S. retirement solutions and product innovation, particularly in RILAs. While PRU boasts greater global scale and diversified revenue streams, Equitable's focused approach for affluent clients and its ability to leverage AB for competitive risk-adjusted yields offer a compelling domestic value proposition. PRU's TTM Net Profit Margin of 4% slightly exceeds EQH's 3.51%, but EQH's strategic realignments aim to close this gap by enhancing earnings quality.

Against MetLife, a leader in insurance and employee benefits, Equitable differentiates through its research-driven investment management and tailored solutions for high-net-worth individuals. MET's extensive distribution network and strong group benefits presence give it a scale advantage. MET's TTM Net Profit Margin of 6% is higher than EQH's, indicating greater overall profitability efficiency, which Equitable is addressing through capital optimization and expense management.

Lincoln National Corporation and Principal Financial Group are significant competitors in annuities, life insurance, and retirement services. Equitable's RILA products offer advanced features, potentially leading to stronger client loyalty in research-backed services compared to LNC's more cost-effective offerings. PFG's strong foothold in group retirement plans and investment solutions provides a scale advantage in institutional markets. EQH's TTM Debt/Equity ratio of 3.77 is higher than LNC's 0.77 and PFG's 0.37, highlighting a focus area for debt reduction to improve financial flexibility. However, EQH's strategic pivot towards capital-light products and its integrated model are designed to generate superior returns on new business, with a target of 15% IRRs for RILAs, which is competitive in the industry.

Equitable's technological differentiation in product design (RILA), digital platforms (API capability), and AI adoption for advisory services provides a competitive moat. This allows it to offer "protected equity" solutions that are particularly attractive during volatile markets, a niche that many broader competitors may not address with the same depth. The company's ability to innovate and leverage its internal ecosystem (e.g., AB's private credit capabilities for Equitable's general account) further strengthens its position against rivals.

Risks and Challenges

Despite a compelling investment thesis, Equitable Holdings faces several risks. Mortality volatility in the individual life insurance block has historically impacted earnings, as seen in Q1 and Q2 2025. While the RGA reinsurance transaction significantly mitigates this going forward, the residual exposure and the potential for large, infrequent claims remain.

Market volatility and interest rate fluctuations continue to influence fee-based earnings and investment income. A 10% change in equity markets can impact annual after-tax earnings by approximately $150 million, and a 50 basis point parallel shift in the yield curve can affect earnings by $40-45 million. While Equitable's hedging programs protect its balance sheet, earnings remain sensitive.

Regulatory risks are also pertinent, including ongoing NAIC evaluations of structured securities like CLOs, enhanced asset adequacy testing for offshore reinsurance, and evolving fiduciary rules. Changes in these regulations could impact capital requirements, operational costs, and product distribution. The litigation-driven stay on the DOL's new fiduciary definition creates uncertainty for the sale of insurance products to retirement investors.

Competition in the RILA market is intensifying, with new entrants potentially leading to aggressive pricing. While Equitable maintains discipline in pricing for 15% IRRs, sustained aggressive competition could pressure margins or market share. The company's ability to continuously innovate and leverage its integrated model will be crucial to counter these pressures.

Conclusion

Equitable Holdings is undergoing a profound strategic transformation, shedding non-core, volatile businesses to sharpen its focus on the high-growth U.S. retirement, asset management, and wealth management markets. The landmark RGA reinsurance transaction, coupled with the establishment of a Bermuda reinsurance entity and increased ownership in AllianceBernstein, fundamentally reshapes Equitable's risk profile, promising more predictable, fee-based earnings and robust cash flow generation. These strategic realignments, underpinned by a disciplined capital management program and a commitment to shareholder returns, position Equitable to accelerate EPS growth and achieve its ambitious 2027 financial targets.

The company's integrated business model, characterized by its "flywheel" synergies and a strong emphasis on customer-led innovation in products like RILAs and in-plan guarantees, provides a durable competitive advantage. While market volatility and competitive pressures persist, Equitable's technological differentiation in product design, digital capabilities, and the strategic application of AI for efficiency and enhanced advisory services will be critical in sustaining its growth trajectory. Investors should view Equitable Holdings as a compelling opportunity, poised to unlock significant value through its strategic focus, operational excellence, and leadership in addressing the evolving needs of the U.S. retirement landscape.