Executive Summary / Key Takeaways

• Equitable Holdings (EQH) is strategically focused on its integrated business model across Retirement, Asset Management, and Wealth Management, leveraging synergies to drive predictable cash flows and long-term shareholder value.
• The recent Individual Life reinsurance transaction with RGA (RGA) significantly reduced mortality volatility and freed over $2 billion in capital, which is being redeployed into higher-growth, capital-light businesses.
• EQH exhibits strong organic growth momentum, with record RILA sales, robust advisory net inflows in Wealth Management, and AllianceBernstein (AB) on track to meet private markets AUM targets.
• The company maintains a strong capital position, with a pro forma combined NAIC RBC ratio above 500% and a commitment to a 60% to 70% payout ratio, including incremental share repurchases.
• Technological advancements, particularly in operational efficiency and AI integration, are enhancing competitive advantages and advisor productivity across segments, reinforcing EQH's market positioning.

The Integrated Flywheel: Equitable's Strategic Foundation

Equitable Holdings, Inc. (EQH) operates as a diversified financial services company with a strategic emphasis on the U.S. retirement market. Founded in 1859, the company has evolved significantly, notably through its demutualization in 1992 and its pioneering role in the Registered Index-Linked Annuities (RILA) market over a decade ago. This history has shaped its current "flywheel" business model, which integrates Retirement, Asset Management (through AllianceBernstein, or AB), and Wealth Management segments to capture the full retirement value chain. The company's overarching strategy is built on four pillars: defending and growing its core businesses, scaling high-growth adjacent areas, seeding future opportunities, and delivering on its mission to enhance clients' financial well-being.

The U.S. retirement landscape presents a compelling opportunity, driven by favorable demographics and a heightened need for financial advice. Approximately 4 million Americans turn 65 each year, and over $600 billion of assets annually flow out of 401(k) plans, creating substantial demand for retirement and investment solutions. Research indicates that 65% of Americans are seeking investment advice, and advisor-mediated assets have grown twice as fast as overall U.S. financial assets. This environment underscores the value of Equitable's "all-weather product portfolio," which offers solutions ranging from protected equity RILAs to guaranteed income products, designed to help clients navigate market volatility and secure their financial futures.

Equitable's technological approach, while not centered on a single "hard tech" product, focuses on enhancing operational efficiency, product innovation, and advisory capabilities. The company is actively integrating AI to improve operational tasks and explore value-added services, including potential applications in alpha generation and its advice model. This strategic intent aims to empower advisors, with management noting that "people that use AI are going to replace people that don't". Furthermore, Equitable has launched new API capabilities to streamline benefits plan setup, enhancing speed and efficiency for brokers and clients on its digital EB360® employee benefits platform. These advancements contribute to a competitive moat by improving advisor productivity, fostering client-centric product innovation, and strengthening risk management through sophisticated economic hedging programs.

In the competitive landscape, Equitable Holdings faces formidable rivals such as Prudential Financial (PRU), MetLife (MET), Lincoln National Corporation (LNC), and Principal Financial Group (PFG). While these competitors often boast greater global scale and broader market penetration, Equitable differentiates itself through its specialized focus on affluent clients, its leadership in the RILA market, and the unique synergies derived from its integrated business model. The company's proprietary distribution network, Equitable Advisors, provides a stable source of revenue flows and real-time feedback for product innovation, offering a competitive advantage over firms relying solely on third-party channels. This integrated approach, coupled with AB's private credit capabilities, positions Equitable to be competitive even against new entrants with aggressive asset-backed offerings.

Strategic Evolution and Financial Momentum

Equitable's recent history is marked by strategic actions aimed at optimizing its business mix and capital structure. A pivotal moment was the July 2025 reinsurance transaction with RGA, where Equitable ceded a 75% quota share of its in-force individual life insurance block and Closed Block. This landmark deal transferred $11.60 billion in assets, resulting in a $1.10 billion loss recorded in investment gains, but crucially freed over $2 billion in capital and significantly reduced exposure to mortality volatility. Management views this as a highly attractive valuation, representing approximately 20 times the lost earnings, enabling a strategic shift from a low-return, volatile life business to faster-growing segments.

The capital freed from the RGA transaction is being strategically redeployed. In April 2025, Equitable increased its economic interest in AllianceBernstein (AB) from 62% to 69% by purchasing 19.70 million AB Holding Units for $758 million. This move aims to capture more of AB's economics and leverage the deep synergies between the two entities. Further capital deployment includes $500 million in incremental share repurchases, a $500 million debt tender, and the redemption of $165 million in Series B preferred stock. In October 2025, Equitable also announced the acquisition of Stifel Independent Advisors (SF), a bolt-on transaction expected to add approximately $10 million to Wealth Management earnings by 2027. These actions underscore a commitment to driving EPS accretion and enhancing shareholder value through targeted investments and capital returns.

The company's financial performance in the first nine months of 2025 reflects these strategic shifts and ongoing market dynamics. Non-GAAP operating earnings for the third quarter of 2025 were $455 million, or $1.48 per share, a 6% year-over-year decrease on a per-share basis. However, adjusting for notable items, non-GAAP operating EPS increased 2% to $1.67, demonstrating underlying strength. The GAAP net loss of $1.3 billion in Q3 2025 was primarily due to the one-time impact of asset transfers from the RGA reinsurance transaction, with an offsetting adjustment to Accumulated Other Comprehensive Income (AOCI). The annual assumption review in Q3 2025 had a minimal $1 million positive impact on operating earnings, validating the company's conservative approach.

Segment-wise, the Retirement business saw revenues increase to $4,527 million for the nine months ended September 30, 2025, from $4,055 million in the prior year. Operating earnings in this segment, however, decreased to $1,129 million from $1,208 million, influenced by lower market value adjustment gains and spread compression from older RILA blocks. Despite this, net interest margin (NIM) increased 4% sequentially in Q3 2025, and is expected to continue growing, driven by general account asset expansion. RILA sales remain robust, with a 7% increase in Q3 2025, achieving record highs. The company's Funding Agreement-Backed Notes (FABN) business has issued $4.5 billion year-to-date, with $10 billion outstanding, leveraging Equitable's strong rating and AB's origination capabilities.

The Asset Management segment, through AB, delivered strong results, with operating earnings increasing to $411 million for the nine months ended September 30, 2025, compared to $318 million in the prior year. This 39% year-over-year increase in Q3 2025 earnings benefited from Equitable's increased ownership and favorable market conditions, driving a 6% sequential rise in fee revenue. AB's adjusted operating margin improved by 290 basis points year-over-year to 34.2% in Q3 2025, and is projected to exceed 33% for the full year. Assets Under Management (AUM) reached a record $860.1 billion by September 30, 2025. AB's private markets AUM grew 17% year-over-year to $80 billion, on track to meet its $90 billion to $100 billion target by 2027. Strategic sidecar investments, such as the $100 million allocation to FCA Re, further expand AB's private credit and insurance asset management capabilities, leveraging Equitable's insurance expertise.

Wealth Management demonstrated strong momentum, with operating earnings rising to $154 million for the nine months ended September 30, 2025, from $135 million in the prior year. Advisory net inflows reached $6.2 billion year-to-date, contributing to a 12% trailing 12-month organic growth rate. Advisor productivity increased 8% year-over-year. The segment's earnings are on track to reach $200 million in 2025, two years ahead of schedule. The acquisition of Stifel Independent Advisors is expected to further scale this high-growth business.

Corporate and Other reported an operating loss of $466 million for the nine months ended September 30, 2025, compared to a loss of $172 million in the prior year. This was impacted by notable items and adverse mortality, although the RGA transaction is expected to significantly mute mortality's impact going forward. The alternatives portfolio generated an 8% annualized return in Q3 2025, exceeding guidance due to a strategic investment gain.

Outlook, Risks, and Competitive Edge

Equitable Holdings remains confident in achieving its 2027 financial targets, including growing annual cash generation to $2 billion, maintaining a 60% to 70% payout ratio, and delivering 12% to 15% annual non-GAAP operating EPS growth. For 2025, management forecasts total cash upstream to the holding company of $2.6 billion to $2.7 billion, including $1.6 billion to $1.7 billion of organic cash generation and $1 billion from the life reinsurance transaction. Over 50% of this organic cash flow now originates from the Asset and Wealth Management segments, highlighting the diversified business model's robustness. The full-year consolidated tax rate is expected to be in the high teens for 2025, normalizing to 20% in 2026.

The company's strong capital position is a key differentiator. Post the RGA transaction and planned extraordinary dividends, the pro forma combined NAIC RBC ratio is expected to be over 500%, well above the 400% minimum target. Holdings ended Q3 2025 with $800 million in cash, exceeding its $500 million target. The establishment of a Bermuda reinsurance subsidiary in January 2025 further enhances capital management flexibility, aligning with Equitable's economic hedging program to provide consistent cash flows. This entity offers optionality for future flow reinsurance and potential third-party deals post-2027.

Despite a generally crowded market, Equitable's competitive advantages are clear. Its pioneering role and continued innovation in RILAs, such as the recent launch of SCS Premier, allow it to capture a disproportionate share of a growing market. The integrated model, with AB generating attractive yields and Equitable Advisors providing privileged distribution, creates a sustainable edge. In wealth management, the company's differentiated advice value proposition, strong advisor recruiting, and productivity gains position it for double-digit earnings growth. AB's diversified asset mix, leadership in private wealth and Asia, and strategic partnerships further bolster its competitive standing.

However, risks persist. Macroeconomic volatility, including interest rate fluctuations and equity market declines, can impact fee income and hedging costs. While Equitable employs a market-neutral hedging approach to protect its capital from market movements, net income can still experience volatility due to accounting mismatches. Credit risk in the investment portfolio, particularly concerning structured securities like CLOs, is under increased scrutiny from regulators, requiring robust underwriting capabilities. Legal and regulatory risks, including the evolving DOL Fiduciary Rule and NAIC regulations on reinsurance and capital, could also impact operations and profitability.

Conclusion

Equitable Holdings is executing a clear and compelling strategy, leveraging its integrated business model and a history of innovation to capitalize on the robust U.S. retirement market. The transformative RGA reinsurance transaction, coupled with strategic investments in AllianceBernstein and Wealth Management, underscores a disciplined approach to capital allocation aimed at driving higher-quality, more predictable earnings. With strong organic growth momentum across its core segments, a robust capital position, and a commitment to shareholder returns, Equitable is well-positioned to deliver on its 2027 financial targets. The company's ability to combine sophisticated product design, efficient capital management, and a differentiated distribution network, supported by ongoing technological enhancements, forms a powerful competitive moat, signaling continued value creation for investors.