Q2 2024 Equitable Holdings Inc Earnings Call

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equitable Holdings 2024 Second Quarter Earnings Results Conference Call.

Operator: I'll be your conference operator today.

Operator: Transcription by CastingWords At this time, I would like to welcome everyone to the Equitable Holdings 2024 Second Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the Equitable Holdings, 2024, second quarter earnings results conference call. All lines have been placed on mute to prevent any background noise.

All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one. I would now like to turn the call over to Eric Bass, Head of Investor Relations. You may begin.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star and 1.

Erik Bass: I would now like to turn the call over to Erik Bass, Head of Investor Relations. You may begin.

I would now like to turn the call over to Eric Bass, Head of Investor Relations. You may begin.

Erik James Bass: Thank you. Good morning, and welcome to Equitable Holdings' second quarter 2024 earnings call. Material for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the Safe Harbor language on slide two of our presentation for additional information.

Mark Pearson: Thank you.

Mark Pearson: Good morning and welcome to Equitable Holdings, second quarter, 2024 earnings call. Material for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results make a differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the Safe Harbor language on slide two of our presentation for additional information.

Erik James Bass: Thank you. Good morning and welcome to Equitable Holdings' second quarter 2024 earnings call. Material for today's call can be found on our website at ir.equitableholdings.com.

Speaker Change: Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure.

Speaker Change: Our results may differ materially from those expressed in, or indicated by, such forward-looking statements.

Speaker Change: Please refer to the Safe Harbor language on slide 2 of our presentation for additional information.

Mark Pearson: Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings, Robin Raju, our Chief Financial Officer, Nick Lane, President of Equitable Financial, Jackie Marks, AllianceBernstein's Chief Financial Officer, and Owner Arizona, Head of AllianceBernstein's Global Client Group and Private Wealth Business.

Erik James Bass: Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings, Robin Raju, our Chief Financial Officer, Nick Lane, President of Equitable Financial, Jackie Marks, AllianceBernstein's Chief Financial Officer, and Onur Erzan, Head of AllianceBernstein's Global Client Group and Private Wealth Business. During this call, we will be discussing certain financial measures that are not based on generally accepted Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures may be found on the investor relations portion of our website and in our earnings release slide presentation and financial supplement. I will now turn the call over to Mark.

Mark Pearson: During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures may be found on the investor relations portion of our website and in our earnings release, slide presentation, and financial supplement.

Speaker Change: During this call, we will be discussing certain financial measures that are not based on Generally Accepted Accounting Principles, also known as non-GAAP measures.

Speaker Change: Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures may be found on the Investor Relations portion of our website and in our earnings release slide presentation and financial supplement.

Mark Pearson: I will now turn the call over to Mark. Good morning, and thank you for joining today's call. Equitable Holdings, second quarter results showcase the company's building earnings momentum. Driven by strong organic growth across our retirement, asset management, and wealth management businesses. It continues to be a great time to operate in the U.S. retirement market in the Equitable and Alliance Bernstein is in a well position to capitalize on favourable demographic trends and current macro tailwinds. We provided ambitious growth targets that our investor day lost May, and the entire management team is focused on executing our strategy.

Mark Pearson: Good morning, and thank you for joining today's call. Equitable Holdings' second quarter results showcase the company's building earnings momentum, driven by strong organic growth across our retirement, asset management, and wealth management businesses. It continues to be a great time to operate in the U.S. retirement market, and Equitable and Alliance Bernstein are well positioned to capitalize on favorable demographic trends and current macro tailwinds. We provided ambitious growth targets at our investor day last May, and the entire management team is focused on executing our strategy.

I will now turn the call over to Mark.

Mark: Good morning and thank you for joining today's call. Equitable Holdings' second quarter results showcase the company's building earnings momentum, driven by strong organic growth across our retirement, asset management, and wealth management businesses.

Mark: It continues to be a great time to operate in the U.S. retirement market, and Equitable and Alliance Bernstein are well positioned to capitalize on favorable demographic trends and current macro tailwinds.

Mark: We provided ambitious growth targets at our Investor Day last May, and the entire management team is focused on executing our strategy.

Mark Pearson: As I'll discuss in a few minutes, we are tracking well against our plan, and I feel confident in our ability to deliver on our commitments to shareholders.

Mark Pearson: As I'll discuss in a few minutes, we are tracking well against our plan, and I feel confident in our ability to deliver on our commitments to shareholders. First, turning to slide three, I'll provide a few highlights from the second quarter.

Mark: As I'll discuss in a few minutes, we are tracking well against our plan, and I feel confident in our ability to deliver on our commitments to shareholders.

Mark Pearson: First, turning to slide three, I'll provide a few highlights from the second quarter. Non-GAAP operating earnings were $494 million or $1.43 per share, which is up 23% year over year on a per share basis. Adjusting for non-recurring items in the period, non-GAAP operating EPS was $1.52, which is up 20% compared to the prior year and above our 12-15% annualized growth guides. Assets under management and administration increased 11% year over year to $986 billion, supported by another quarter of favourable markets and positive net inflows across our retirement, asset management, and wealth management businesses. Turning to capital, we returned $325 million to shareholders during the quarter, which equates to a 65% payout ratio within our target range of 60% to 70%.

Mark Pearson: Non-GAAP operating earnings were $494 million, or $1.43 per share, which is up 23% year over year on a per share basis. Adjusting for non-recurring items in the period, non-GAAP operating EPS was $1.52, which is up 20% compared to the prior year and above a 12% to 15% annualized growth guidance. Assets under management and administration increased 11% year-over-year to $986 billion, supported by another quarter of favorable markets and positive net inflows across our retirement, asset management, and wealth management businesses.

Mark: Adjusting for non-recurring items in the period, non-GAAP operating EPS was $1.52, which is up 20% compared to the prior year, and above a 12 to 15% annualized growth guidance.

Mark: Assets under management and administration increased 11% year-over-year to $986 billion, supported by another quarter of favorable markets and positive net inflows across our retirement, asset management, and wealth management businesses.

Mark Pearson: Turning to capital, we returned $325 million to shareholders during the quarter, which equates to a 65% payout ratio within our target range of 60% to 70%. We continue to maintain capital flexibility, ending the quarter with $1.6 billion of cash at the holding company and a combined NAIC-RBC ratio of approximately 425 to 450 percent, above our 375 to 400 percent target. In July, we paid an ordinary dividend of $440 million from our Arizona insurance entity, and as Robin will discuss shortly, we have approval to take an additional dividend later in the year.

Speaker Change: Turning to capital, we returned $325 million to shareholders during the quarter, which equates to a 65% payout ratio within our target range of 60 to 70%.

Mark Pearson: We continue to maintain capital flexibility, ending the quarter with $1.6 billion of cash at the holding company and a combined NAICRBC ratio of approximately 425 to 450% above our $375 to 400% target. In July, we paid an ordinary dividend of $440 million for our Arizona insurance entity. And as Robin will discuss shortly, we have approval to take an additional dividend later in the year. As a result, we remain on track to generate 1.4 to 1.5 billion of cash in 2024, with approximately 50% of this coming from non-insurance businesses.

Mark: We continue to maintain capital flexibility, ending the quarter with $1.6 billion of cash at the holding company.

Speaker Change: And a combined NAIC-RBC ratio of approximately 425 to 450 percent, above 375 to 400 percent target.

Speaker Change: In July , we paid an ordinary dividend of $440 million from our Arizona insurance entity. And, as Robin will discuss shortly, we have approval to take an additional dividend later in the year.

Mark Pearson: As a result, we remain on track to generate $1.4 to $1.5 billion of cash in 2024, with approximately 50% of this coming from non-insurance businesses. Turning to our business results, we had another very strong quarter of organic growth. Our retirement businesses produce $2.3 billion of net inflows, which translates to a 7% annualized organic growth rate. The primary driver continues to be strong demand for our industry-leading Ryla product, with individual retirement sales up 23% year over year.

Mark Pearson: Turning to our business results, we had another very strong quarter of organic growth. Our retirement businesses produce 2.3 billion of net inflows, which translates to a 7% annualized organic growth rate. The primary driver continues to be strong demand for our industry-leading rider product, with individual retirement sales up 23% year-over-year. In wealth management, we reported another quarter of strong organic growth with $1.5 billion of advisory net inflows. Moving to asset management, AB reported 0.9 billion of net inflows, marking the second consecutive quarter of positive organic growth. Second quarter active net inflows were $1.3 billion, as AB continues to see good momentum in the retail channel.

Robin: Turning to our business results, we had another very strong quarter of organic growth.

Robin: Our retirement businesses produce $2.3 billion of net inflows, which translates to a 7% annualized organic growth rate.

Mark Pearson: In Wealth Management, we reported another quarter of strong organic growth with $1.5 billion of advisory net inflows. Moving to Asset Management, AB reported $0.9 billion of net inflows, marking the second consecutive quarter of positive organic growth. Second quarter active net inflows were $1.3 billion as AB continues to see good momentum in the retail channel.

Robin: Second quarter active net inflows were $1.3 billion as AB continues to see good momentum in the retail channel.

Mark Pearson: AB's adjusted operating margin also improves 380 basis points year-over-year, reflecting the benefit from the Bernstein Research deconsolidation and positive operating leverage to higher equity markets.

Robin: AB's adjusted operating margin also improves 380 basis points year over year, reflecting the benefit from the Bernstein Research deconsolidation and positive operating leverage to higher equity markets.

Mark Pearson: Finally, I want to highlight an important milestone in building out our in-plan annuity business, which we see as a key future growth opportunity for Equitable. This quarter we received inflows from the first four BlackRock LifePath Paycheck clients, which totaled over $500 million. As we've mentioned previously, these flows will be lumpy, while we don't have complete visibility into when plans will fund. We currently expect minimal new flows in the third quarter, with more plans funding in the fourth quarter and the first half of 2025. We're also having discussions with other potential asset manager partners, and we're pleased to see the recognition across the industry of the need for guaranteed income solutions within defined contributions.

Mark Pearson: AB's adjusted operating margin also improved by 380 basis points year over year, reflecting the benefit from the Bernstein Research deconsolidation and positive operating leverage to higher equity markets. Finally, I want to highlight an important milestone in building out our in-plan annuity business, which we see as a key future growth opportunity for Equitable. This quarter, we received inflows from the first four BlackRock LifePath Paycheck clients, which totaled over $500 million. As we've mentioned previously, these flows will be lumped.

Robin: Finally, I want to highlight an important milestone in building out our in-plan annuity business, which we see as a key future growth opportunity for Equitable.

Robin: This quarter, we received inflows from the first four BlackRock LifePath Paycheck clients, which totaled over $500 million.

Robin: As we have mentioned previously, these flows will be lumpy.

Mark Pearson: While we don't have complete visibility into when plans will fund, we currently expect minimal new flows in the third quarter, with more plans funding in the fourth quarter and the first half of 2025. We're also having discussions with other potential asset manager partners, and we're pleased to see the recognition across the industry of the need for guaranteed income solutions within defined contribution plans. Now, I want to take a few minutes to provide an update on how we're tracking against our Investor Day target.

Robin: We're also having discussions with other potential asset manager partners, and we're pleased to see the recognition across the industry of the need for guaranteed income solutions within defined contribution plans.

Mark Pearson: Plan. Now I want to take a few minutes to provide an update on how we're tracking against our investor-day targets. On slide four, we provide a scorecard against our three primary financial targets, which ought to grow annual cash generation to $2 billion by 2027, deliver a 60-70% payout ratio, and grow non-GAAP operating earnings per share 12 to 15% annually. We expect to generate $1.4 to $1.5 billion of cash in 2024, which is up 8 to 15% from 2023 and consistent with our plan. Looking forward, we expect to steadily increase annual cash generation, driven by profitable new business growth.

Mark Pearson: On slide four, we provide a scorecard against our three primary financial targets, which are to grow annual cash generation to $2 billion by 2027, deliver a 60 to 70% payout ratio, and grow non-GAAP operating earnings per share 12% to 15% annually. We expect to generate $1.4 to $1.5 billion of cash in 2024, which is up 8 to 15% from 2023 and consistent with our plan. Looking forward, we expect to steadily increase annual cash generation, driven by profitable new business growth.

Robin: Now I want to take a few minutes to provide an update on how we're tracking against our Investor Day targets.

Robin: On slide four, we provide a scorecard against our three primary financial targets.

Robin: which are to grow annual cash generation to $2 billion by 2027.

Robin: Deliver a 60-70% payout ratio and grow non-GAAP operating earnings per share 12-15% annually.

Robin: We expect to generate $1.4 to $1.5 billion of cash in 2024, which is up 8 to 15% from 2023 and consistent with our plan.

Robin: Looking forward, we expect to steadily increase annual cash generation, driven by profitable new business growth, actions we're taking to enhance investment portfolio yields and reduce expenses, and capital release as our legacy business runs off.

Mark Pearson: Actions we're taking to enhance investment portfolio yields and reduce expenses, and Capital Release as our legacy business runs off. This strong cash flow enables us to consistently return capital to shareholders regardless of the market environment. For the past six quarters, we've had a payout ratio of 67%, at the upper end of our 60 to 70% target range. During this time period, we have reduced shares outstanding by 12%.

Mark Pearson: Actions were taken to enhance investment portfolio yields and reduce expenses, and capital release as our legacy business runs off. This strong cash flow enables us to consistently return capital to shareholders, regardless of the market environment. Over the past six quarters, we've had a payout ratio of 67% at the upper end of our 60 to 70% target range. During this time period, we have reduced shares outstanding by 12%. Turning to earnings growth, we had a slow start in 2023 due to headwinds from elevated mortality and the lagged impact of the equity market decline in 2022. However, we believe we've reached an inflection point, and non-GAAP EPS excluding notable items is up 19% year to date.

Robin: This strong cash flow enables us to consistently return capital to shareholders regardless of the market environment.

Robin: Over the past six quarters, we've had a payout ratio of 67% at the upper end of our 60-70% target range.

Robin: During this time period, we have reduced shares outstanding by 12 percent.

Mark Pearson: Turning to earnings growth, we had a slow start in 2023 due to headwinds from elevated mortality and the lagged impact of the equity market decline in 2022. However, we believe we've reached an inflection point, and non-GAAP EPS, excluding notable items, is up 19% year to date. The cumulative annualized EPS growth rate over the past six quarters is now up to 9%, and we remain confident in achieving 12 to 15% annualized growth through 2027, given healthy organic growth trends, good visibility into achieving our investment income and expense savings targets, and the ongoing benefit from share repurchase.

Robin: Turning to earnings growth.

Robin: We had a slow start in 2023 due to headwinds from elevated mortality and the lagged impact of the equity market decline in 2022.

Robin: However, we believe we've reached the inflection point and non-GAAP EPS excluding notable items is up 19% year to date.

Mark Pearson: The cumulative annualized EPS growth rate over the past six quarters is now up to 9%, and we remain confident in achieving 12 to 15% annualized growth through 2027. Given healthy organic growth trends, good visibility into achieving our investment income and expense saving targets, and the ongoing benefit from share repurchases.

Robin: The cumulative annualized EPS growth rate over the past six quarters is now up to 9% and we remain confident in achieving 12 to 15% annualized growth through 2027.

Robin: Given healthy organic growth trends, good visibility into achieving our investment income and expense saving targets, and the ongoing benefit from share repurchases.

Mark Pearson: Turning to slide five, I'll go a little deeper into some of our business segment KPIs and strategy for achieving our growth targets. The first pillar of our strategy is to defend and grow our core retirement and asset management businesses. In retirement, which includes our leading individual and group retirement segments, year-to-date organic growth is 6%, which, in combination with market tailwinds, is driving strong AUM growth. Since the start of 2023, annualized AUM growth is 21%, well ahead of our five to 7% target. In asset management, AB continues to outpace industry peers with year-to-date net inflows of 1.4 billion, and much of this growth is coming in higher-margin retail and private market segments.

Mark Pearson: Turning to slide 5, I'll go a little deeper into some of our business segment KPIs and strategy for achieving our growth target. The first pillar of our strategy is to defend and grow our core retirement and asset management business in retirement, which includes our leading individual and group retirement segments.

Robin: The first pillar of our strategy is to defend and grow our core retirement and asset management businesses.

Robin: In retirement, which includes our leading individual and group retirement segments, year-to-date organic growth is 6%, which, in combination with market tailwinds, is driving strong AUM growth.

Mark Pearson: Year-to-date organic growth is 6%, which, in combination with market tailwinds, is driving strong AUM growth. Since the start of 2023, annualized AUM growth has been 21%, well ahead of our 5 to 7% target. In Asset Management, AV continues to outpace industry peers with year-to-date net inflows of $1.4 billion, and much of this growth is coming in higher-margin retail and private market segments. ABE is also making good progress against its target to improve margins by 350 to 500 basis points by 2027.

Robin: Since the start of 2023, annualized AUM growth is 21%, well ahead of our 5 to 7% target.

Robin: In Asset Management, AB continues to outpace industry peers with year-to-date net inflows of $1.4 billion, and much of this growth is coming in higher margin retail and private market segments.

Mark Pearson: AB is also making good progress against this target to improve margins by 350 to 500 basis points by 2027. The Bernstein Research joint venture closed in April, which will boost annual margins by 200 to 250 basis points. Margins will improve by another 100 to 150 basis points, starting in the fourth quarter of 2024 from the full realization of the benefits from the national relocation.

Robin: ABE is also making good progress against its target to improve margins by 350 to 500 basis points by 2027.

Mark Pearson: The Bernstein Research Joint Venture closed in April, which will boost annual margins by 200 to 250 basis points. Margins will improve by another 100 to 150 basis points starting in the fourth quarter of 2024 due to the full realization of the benefits from the Nashville relocation. Our second area of strategic focus is scaling our wealth management and private markets business. Wealth Management closed the quarter with $94 billion in assets under administration, up 17% over the prior year.

Robin: The Bernstein Research Joint Venture closed in April , which will boost annual margins by 200 to 250 basis points.

Robin: Margins will improve by another 100 to 150 basis points starting in the fourth quarter of 2024 from the full realization of the benefits from the Nashville relocation.

Mark Pearson: Our second area of strategic focus is scaling our wealth management and private markets businesses. Wealth management closed the quarter with $94 billion in assets under administration, up 17% over a prior year. Year-to-date organic growth of 5% in the advisory channel is in line with our long-term experience. We had a particularly strong second quarter, with $1.5 billion in advisory net inflows, setting an expected outflow in quarter one. We remain confident in our 2027 target to increase earnings to $200 million annually, with a trailing 12-month operating earnings for the segment totaling $172 million. Looking forward, we expect growth in AUA and a mix shift towards higher margin advisory assets to offset any potential headwinds from lower short-term interest rates.

Robin: Our second area of strategic focus is scaling our wealth management and private markets businesses.

Robin: Wealth Management closed the quarter with $94 billion in assets under administration, up 17% over prior year.

Mark Pearson: Year-to-date organic growth of 5% in our advisory channel is in line with our long-term experience. We had a particularly strong second quarter with $1.5 billion in advisor net inflows, offsetting an expected outflow in quarter one. We remain confident in our 2027 target to increase earnings to $200 million annually, with a trailing 12-month operating earnings for the segment totaling $172 million. Looking forward, we expect growth in AUA and a mixed shift towards higher-margin advisory assets to offset any potential headwinds from lower short-term interest.

Robin: Year-to-date organic growth of 5% in our advisory channel is in line with our long-term experience.

Robin: We had a particularly strong second quarter, with $1.5 billion in advisor net inflows, offsetting an expected outflow in quarter one.

Robin: We remain confident in our 2027 target to increase earnings to $200 million annually, with a trailing 12-month operating earnings for the segment totaling $172 million.

Robin: Looking forward, we expect growth in AUA and a mixed shift towards higher margin advisory assets to offset any potential headwinds from lower short-term interest rates.

Mark Pearson: Turning to AB's private markets platform, AUM has grown 5% year over year and is now up to $64 billion. During the second quarter, Ecuador will finish deploying the first $10 billion of its $20 billion capital commitment, with $1 billion of this going to Carval. These investments have helped enhance Ecuador's General Account yield, and AB is able to leverage the seed capital to grow third-party assets. By 2027, AB expects to have $90 to $100 billion of private markets AUM, with this business accounting for 20% of its revenues.

Mark Pearson: Turning to AUM's private markets platform, AUM has grown 5% year over year and is now up to $64 billion. During the second quarter, Equitable finished deploying the first $10 billion of its $20 billion capital commitment, with $1 billion of this going to Carvel.

Robin: Turning to AUM's private markets platform, AUM has grown 5% year over year and is now up to $64 billion.

Robin: During the second quarter, Equitable finished deploying the first $10 billion of its $20 billion capital commitment, with $1 billion of this going to Carvel.

Mark Pearson: These investments have helped enhance Equitable's general account yield, and AB is able to leverage the seed capital to grow third-party assets. By 2027, AB expects to have $90 to $100 billion of private markets AUM. With this business accounting for 20% of its revenue, we are investing capital to drive growth beyond our 2027 plan. As I mentioned earlier, we are very excited about the opportunity to embed annuity auctions within 401k plans, which provides us with access to a sizable new market and new potential customers.

Robin: These investments have helped enhance Equitable's general account yield, and AB is able to leverage the seed capital to grow third-party assets.

Robin: By 2027, AB expects to have $90 to $100 billion of private markets AUM, with this business accounting for 20% of its revenues.

Mark Pearson: Finally, we are investing capital to drive growth beyond our 2027 plan. As I mentioned earlier, we are very excited about the opportunity to embed annuity options within 401k plans, which provides equitable access to a sizable new market and new potential customers. We currently have offerings with AB and BlackRock, and our discussions with additional asset managers. We received over $500 million of inflows from BlackRock in the second quarter and are encouraged by the initial plan sponsor interest in its life-path paycheck solution. AB also reached a milestone in the first half of the year by successfully launching its first fund in China.

Robin: Finally, we are investing capital to drive growth beyond our 2027 plan.

Robin: As I mentioned earlier, we are very excited about the opportunity to embed annuity auctions within 401k plans.

Robin: which provides equitable with access to a sizable new market and new potential customers.

Mark Pearson: We currently have offerings with AB and BlackRock and are in discussions with additional asset managers. We received over $500 million inflows from BlackRock in the second quarter and are encouraged by the initial plan sponsor interest in its Life Path Paycheck Solution. AB also reached a milestone in the first half of the year by successfully launching its first fund in China. While this market may take time to materialize, AB has a differentiated brand and distribution in Asia and should be poised to benefit when investor sentiment on China improves.

Speaker Change: We currently have offerings with AB and BlackRock and are in discussions with additional asset managers.

Robin: We received over $500 million of inflows from BlackRock in second quarter and are encouraged by the initial plan sponsor interest in its Life Path Paycheck Solution.

AB: AB also reached a milestone in the first half of the year by successfully launching its first fund in China.

Mark Pearson: While this market may take time to materialize, AB has a differentiated brand and distribution in Asia and should be poised to benefit when investor sentiment on China improves.

AB: While this market may take time to materialize, AB has a differentiated brand and distribution in Asia and should be poised to benefit when investor sentiment on China improves.

Mark Pearson: Summing up, I am pleased with the progress we have made against our strategic objectives to date, and we remain focused on achieving our investor date commitments.

Mark Pearson: Summing up, I'm pleased with the progress we've made against our strategic objectives to date, and we remain focused on achieving our Invest Today commitment. I'll now turn the call over to Robin to go through our second quarter results in more detail.

AB: Summing up, I'm pleased with the progress we've made against our strategic objectives to date, and we remain focused on achieving our Invest Today commitments.

Robin Raju: I will now turn the call over to Robin to go through our second quarter results in more detail. Thank you, Mark. Turning to slide six, I'll highlight results from the quarter. On a consolidated basis, Equitable Holdings reported non-GAAP operating earnings of 494 million into quarter or $1.43 per share, up 23% year over year. Notable items in the quarter were 10 cents, which includes 3 cents per share of expenses related to the early termination of debt and 7 cents per share of the low plan alternative investment income. Adjusting for these items, non-GAAP EPS was a $1.52 per share for up 20% year over year driven by healthy organic growth, favorable markets, and ongoing share repurchases.

Robin Matthew Raju: Thank you, Mark. Turning to slide 6, I will highlight the results from the quarter. On a consolidated basis, Equitable Holdings reported non-GAAP operating earnings of $494 million in the quarter, or $1.43 per share, up 23% year-over-year. Notable items in the quarter were $0.10, which included $0.03 per share of expenses related to the early termination of debt and $0.07 per share of below-plan alternative investment income. Adjusting for these items, non-GAAP EPS was $1.52 per share, or up 20% year-over-year, driven by healthy organic growth, favorable markets, and ongoing share repurchases.

AB: I'll now turn the call over to Robin to go through our second quarter results in more detail.

Robin: Thank you, Mark. Turning to slide 6, I will highlight results from the quarter. On a consolidated basis, Equitable Holdings reported non-GAAP operating earnings of $494 million in the quarter, or $1.43 per share, up 23% year-over-year.

Speaker Change: Notable items in the quarter were 10 cents.

Speaker Change: Which includes 3 cents per share of expenses related to the early termination of debt. And 7 cents per share of the low plan alternative investment income.

Speaker Change: Adjusting for these items, non-GAAP EPS was $1.52 per share, for up 20% year-over-year, driven by healthy organic growth, favorable markets, and ongoing share repurchases.

Robin Raju: Gap net income with 428 million into quarter, reflecting modest impacts from our hedge program and minimal realized gains and losses on investments. Details by segment are included in the appendix, but there are few items I want to highlight. Investment income increased over 160 million year over year as based net investment income continues to benefit from growth into general count assets and higher interest rates. During the quarter, we invested new money at 5.6%, up at 120 basis points above the portfolio yield. The annualized return on our alternative investments portfolio was approximately 5% during the second quarter, which was consistent with our guidance, but below 8% to 12% in long term resumption.

Robin Matthew Raju: Gap net income was $428 million in the quarter, reflecting modest impacts from our hedge program and minimal realized gains and losses on investment. Details by segment are included in the appendix, but there are a few items I want to highlight.

Speaker Change: Gap net income was $428 million in the quarter, reflecting modest impacts from our hedge program and minimal realized gains and losses on investments.

Speaker Change: Details by segment are included in the appendix, but there are a few items I want to highlight.

Robin Matthew Raju: Investment income increased by over $160 million year-over-year as base net investment income continues to benefit from growth in the general account assets and higher interest rates. During the quarter, we invested new money at 5.6%, about 120 basis points above the portfolio yield. The annualized return on our Alternative Investments Portfolio was approximately 5% during the second quarter, which was consistent with our guidance but below our 8 to 12% long-term assumption. Individual life mortality was in line with a normal range of expectations, which continues the recent trend of stabilizing claims activity.

Speaker Change: Investment income increased over $160 million year-over-year as base net investment income continues to benefit from growth in the general account assets and higher interest rates.

Robin Raju: Individual life mortality was in line with a normal range of expectations, which continues the recent trend of stabilizing claims activity. Adjusting for below plan, variable investment income, the protection segment earnings for the first half of the year were 123 million, tracking in line with our 2 to 300 million guidance range for the year. Finally, our consolidated tax rate was 19% in the second quarter, consistent with our full-year guidance. However, the insurance businesses benefited from a favorable state tax true-up this quarter. And a 15% rate reported this quarter is below the 17% rate we expect to report for the full year.

Robin Matthew Raju: Adjusting for below-planned variable investment income, the protection segment earnings for the first half of the year were $123 million, tracking in line with our $200 million to $300 million guidance range for the year. Finally, our consolidated tax rate was 19% in the second quarter, consistent with our full year guidance. However, the insurance businesses benefited from a favorable state tax true-up this quarter, and the 15% rate reported this quarter is below the 17% rate we expect to report for the full year.

Speaker Change: However, the insurance businesses benefited from a favorable state tax true-up this quarter, and a 15 percent rate reported this quarter is below the 17 percent rate we expect to report for the full year.

Robin Raju: On the other hand, AB reported a 30% tax rate for the quarter above our 27% guidance. And we now project AB's go forward tax rate to be approximately 29% due to higher state tax payments for their private wealth businesses. For wealth management, we're assuming a 26% tax rate going forward, slightly lower than the rate in the second quarter, but similar to the year-to-date result.

Robin Matthew Raju: On the other hand, AB reported a 30% tax rate for the quarter, above our 27% guidance. And we now project AV's go-forward tax rate to be approximately 29% due to higher state tax payments for their private wealth businesses. For wealth management, we're assuming a 26% tax rate going forward, slightly lower than the rate in the second quarter, but similar to the year-to-date results. Turning to slide 7, I'll provide more details on the drivers of our earnings growth.

Speaker Change: On the other hand, AB reported a 30% tax rate for the quarter, above our 27% guidance.

Robin Raju: Turn into slide 7. I'll provide more details on the drivers of our earnings growth. Spread income rose 17% year-over-year in individual retirement and 4% in group retirement. This reflects a shift in our retirement businesses towards our more spread-based products, most notably from our growth in the RILA assets. As we discuss last quarter, the RILA product needs a policyholder need for protected retirement solutions, while also providing good economic returns for shareholders with a narrow range of outcomes. Individual retirement spreads have likely peaked as we don't see further tailwinds on that investment income from higher interest rates on floating rate assets, and new business margins have normalized.

Robin Matthew Raju: Spread income rose 17% year-over-year in individual retirement and 4% in group retirement. This reflects a shift in our retirement businesses towards a more spread-based product, most notably from our growth into RILA assets. As we discussed last quarter, the Ryla product meets a policyholder need for protected retirement solutions while also providing good economic returns for shareholders with a narrow range of outcomes. Individual retirement spreads have likely peaked as we don't see further tailwinds on net investment income from higher interest rates on floating rate assets, and new business margins have normalized.

Speaker Change: This reflects a shift in our retirement businesses towards a more spread-based product.

Speaker Change: While also providing good economic returns for shareholders with a narrow range of outcomes.

Speaker Change: Individual retirement spreads have likely peaked as we don't see further tailwinds on net investment income from higher interest rates on floating rate assets, and new business margins have normalized.

Robin Raju: However, we expect spread income to continue growing along with the general count assets. Turning to group retirement, we expect to see steady growth in spreading income, particularly as net flows and assets filled for in-plan annuities. The growth in spread-based products also directly benefits AB, which manages the vast majority of equitable general count. With the help of Equitable, AB's private markets business has grown 64 billion and remained on track to reach 90 to 100 billion by 2027. This is a good example of the synergy between the companies, as equitable benefits from higher yields in our portfolio, and AB benefits from building a high growth and high margin business.

Robin Matthew Raju: However, we expect spread income to continue growing along with the general account assets. Turning to group retirement, we expect to see steady growth in spread income, particularly as net flows and assets build for in-plan annuities. The growth in spread-based products also directly benefits AB, which manages the vast majority of Equitable's general accounts. With the help of Equitable, AB's private markets business has grown to $64 billion and remains on track to reach $90 to $100 billion by 2027.

Speaker Change: However, we expect spread income to continue growing along with the general account assets.

Speaker Change: Turning to group retirement, we expect to see steady growth in spread income, particularly as net flows and assets build for in-plan annuities.

Robin Matthew Raju: This is a good example of the synergy between the companies as equitable benefits from higher yields in our portfolio. NAV benefits from building a high growth and high margin business. For example, Equitable has now invested $1 billion in strategies managed by Carvel, helping it grow assets and deliver on the value promise of the acquisition. While Equitable's retirement-in-force mix has shifted more towards spread-based products, we still generate a meaningful amount of fee-based income across the enterprise, and have benefited from both the rise in markets and net inflows from AB and Wealth Management. Fees are charged on average AUM levels, so they should continue to trend higher if markets remain at or above current levels.

Speaker Change: This is a good example of the synergy between the companies, as equitable benefits from higher yields in our portfolio, and AB benefits from building a high-growth and high-margin business.

Robin Raju: For example, Equitable has now invested 1 billion in strategies managed by Carval, helping it grow assets and deliver on the value promise of the acquisition. While equitable retirement in-force mix has shifted more towards spread-based products, we still generate a meaningful amount of fee-based income across the enterprise and have benefited from both rise in markets and net inflows from AB in wealth management. Feeds are charged on average AUM levels, so they should continue to trend higher if markets remain at or above current levels.

Speaker Change: For example, Equitable has now invested $1 billion in strategies managed by Carvel, helping it grow assets and deliver on the value promise of the acquisition.

Speaker Change: While Equitable's retirement-in-force mix has shifted more towards spread-based products, we still generate a meaningful amount of fee-based income across the enterprise, and have benefited from both rise in markets and net inflows from A, B, and wealth management.

Speaker Change: Fees are charged on average AUM levels, so they should continue to trend higher if markets remain at or above current levels.

Robin Raju: Finally, I want to provide an update on our outlook for variable investment income. Our alternatives portfolio produced an annualized return of 5% into second quarter and year-to-date. We currently project returns from approximately 5% to 6% into the third quarter.

Robin Matthew Raju: Finally, I want to provide an update on our outlook for variable investment income. Our alternative portfolio produced an annualized return of 5% for the second quarter and year-to-date. We currently project returns of approximately 5 to 6% into the third quarter. Moving to slide 8, I want to cover Equitable's capital position and cash flow outlook. During the second quarter, we returned $325 million, which equates to a 65% payout ratio of non-GAAP earnings x notable items, consistent with our 60 to 70% target.

Speaker Change: Finally, I want to provide an update on our outlook for variable investment income.

Speaker Change: Our alternatives portfolio produced an annualized return of 5% in the second quarter and year-to-date. We currently project returns of approximately 5 to 6% in the third quarter.

Robin Raju: Moving to slide 8, I want to cover equitable capital position and cash flow outlook. During the second quarter, we returned 325 million, which equates to a 65% payout ratio of non-GAAP earnings ex-notable items, consistent with our 60% to 70% target. Five acts continue to be an attractive use of capital, and we have reduced our share count by approximately 8% over the last 12 months. We have also raised our common dividend, effective into second quarter. We ended the quarter with 1.6 billion of cash and liquid assets at Holdings, which declined on a sequential basis due to capital allocated to buybacks and interest expenses on debt offsetting asset management cash flows.

Speaker Change: Moving to Slide 8, I want to cover Equitable's Capital Position and Cash Flow Outlook.

Robin Matthew Raju: Buybacks continue to be an attractive use of capital, and we have reduced our share count by approximately 8% over the last 12 months. We have also raised our common dividend, effective in the second quarter. We ended the quarter with $1.6 billion of cash and liquid assets at holdings, which declined on a sequential basis due to capital allocated to buyback and interest expenses on debt offsetting asset management cash flows. However, we still remain comfortably above our minimum target.

Speaker Change: Buybacks continue to be an attractive use of capital and we have reduced our share count by approximately 8% over the last 12 months.

Speaker Change: We ended the quarter with $1.6 billion of cash and liquid assets at holdings, which declined on a sequential basis due to capital allocated to buybacks and interest expenses on debt offsetting asset management cash flows.

Robin Raju: We still remain comfortably above our minimum part. Our insurance subsidiaries are also well-capitalized, with an estimated combined NAIC RBC ratio of 425 to 450% as of June 30th, above our 375 to 400% target. As a reminder, we focus on the NAIC basis RBC ratio as it continues to adjust for some New York specific items we consider non-economic and better reflects future dividend capacity. In July, we paid a $440 million ordinary dividend from our Arizona insurance entity to the Holdings Company. We also received permission from the Arizona regulator for an extraordinary dividend, which we plan to take later in the year.

Robin Matthew Raju: Our insurance subsidiaries are also well capitalized, with an estimated combined NAICRVC ratio of 425 to 450% as of June 30th, above our 375 to 400% target. As a reminder, we focus on the NAIC basis RBC ratio as it continues to adjust for some New York-specific items we consider non-economic, and it better reflects future dividend capacity.

Speaker Change: As a reminder, we focus on the NAIC basis RBC ratio, as it continues to adjust for some New York-specific items we consider non-economic, and it better reflects future dividend capacity.

Robin Matthew Raju: In July, we paid a $440 million ordinary dividend from our Arizona insurance entity to the holding company. We also received permission from the Arizona regulator for an extraordinary dividend, which we plan to take later in the year. This puts us on pace to achieve our target of 1.4 to 1.5 billion of cash generation for the full year, with about 50% of that coming from our asset and wealth management business. Our predictable cash generation positions Equitable Wealth to be a consistent returner of capital, while also investing at attractive returns to take advantage of the phenomenal growth in the retirement market. Now, let me turn it back over to Mark for closing remarks. Mark.

Speaker Change: In July , we paid a $440 million ordinary dividend from our Arizona insurance entity to the holding company.

Robin Raju: This puts us on pace to achieve our target at 1.4 to 1.5 billion of cash generation for the full year, with about 50% of that coming from our asset and wealth management businesses. Our predictable cash generation positions equitable well to be a consistent returner of capital while also investing at attractive returns to take advantage of the phenomenal growth into retirement market.

Speaker Change: This puts us on pace to achieve our target of $1.4 to $1.5 billion of cash generation for the full year, with about 50% of that coming from our asset and wealth management businesses.

Speaker Change: Our predictable cash generation positions equitable wealth to be a consistent returner of capital, while also investing at attractive returns to take advantage of the phenomenal growth in the retirement market.

Mark Pearson: Now, let me turn it back over to Mark for closing remarks. Mark? Thanks, Robin. In closing, equitable second quarter results highlight the healthy organic growth momentum across our retirement, asset management, and wealth management businesses, which is driving strong bottom line results. Excluding notable items, non-GAAP EPS increased 20% compared to the prior year quarter, and we expect to deliver 12 to 15% annual EPS growth through 2027. We're also on track to generate 1.4 to 1.5 billion of cash in 2024 and grow this to $2 billion annually by 2027. Our predictable cash flow, half of which comes from non-insurance businesses, enables us to fund organic growth while also consistently paying out 60 to 70% of our earnings to shareholders.

Speaker Change: Now, let me turn it back over to Mark for closing remarks. Mark.

Mark Pearson: Thanks Robin. In closing, Equitable's second quarter results highlight the healthy organic growth momentum across our retirement, asset management, and wealth management businesses, which is driving strong bottom-line results. Excluding notable items, non-GAAP EPS increased 20% compared to the prior year quarter, and we expect to deliver 12 to 15% annual EPS growth through 2027. We're also on track to generate $1.4 to $1.5 billion of cash in 2024 and grow this to $2 billion annually by 2027.

Mark: Thanks, Robin. In closing, Equitable's second quarter results highlight the healthy organic growth momentum across our retirement, asset management, and wealth management businesses, which is driving strong bottom-line results.

Mark: Excluding notable items, non-GAP EPS increased 20% compared to the prior year quarter, and we expect to deliver 12 to 15% annual EPS growth through 2027.

Speaker Change: We're also on track to generate $1.4 billion to $1.5 billion of cash in 2024 and grow this to $2 billion annually by 2027.

Mark Pearson: Our predictable cash flow, half of which comes from non-insurance businesses, enables us to fund organic growth while also consistently paying out 60 to 70% of our earnings to shareholders. Putting it all together, I believe Equitable has the right business model and strategy to take advantage of the current favorable environment for growth and deliver value to all our stakeholders. We'll now open the line for questions.

Speaker Change: Our predictable cash flow, half of which comes from non-insurance businesses, enables us to fund organic growth while also consistently paying out 60 to 70% of our earnings to shareholders.

Mark Pearson: Putting it all together, I believe Equitable has the right business model and strategy to take advantage of the current favorable environment for growth and deliver value to all our stakeholders.

Speaker Change: Putting it all together, I believe Equitable has the right business model and strategy to take advantage of the current favourable environment for growth and deliver value to all our stakeholders.

Operator: We'll now open the line for questions. At this time, I would like to remind everyone that in order to ask a question, press star in the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Speaker Change: We'll now open the line for questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Please limit your questions to one initial and one follow-up question. Your first question comes from the line of Suneet Kamath with Jeffreys. Your line is open. Thanks.

Speaker Change: At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Please limit your questions to one initial and one follow-up question.

Operator: Please limit your questions to one initial and one follow-up question.

Sunit Kamath: Your first question comes from the line of Sunit Kamas with Jeffries. Your line is open.

Speaker Change: Your first question comes from the line of Suneet Kamath with Jeffreys. Your line is open.

Suneet Laxman L. Kamath: Thanks. Good morning.

Sunit Kamath: Thanks.

Nicholas Lane: Good morning. I wanted to start on individual retirement sales. I think last quarter you guys talked about a lot of the sales being funded by 401k rollovers. I just want to get a sense of is that still happening, and then somewhat relatedly, how sensitive do you think the sales would be if the Fed starts cutting short term in?

Suneet Laxman L. Kamath: Thanks. Good morning. I wanted to start on individual retirement sales.

Suneet Laxman L. Kamath: I think last quarter you guys talked about a lot of the sales being funded by 401k rollovers. I just want to get a sense of, is that still happening? And then somewhat relatedly, how sensitive do you think the sales would be if the Fed starts cutting short-term interest rates?

Nicholas Lane: Thank you for the question, Mrs. Nick. First, we see structural demographic changes coupled with a heightened and persistent sense of macro instability from consumers continuing to drive robust growth for buffer denuities. As you mentioned, America's growing retirement population is looking for new solutions, and we see them shifting out of target date funds and into protected equity and income solutions. For reference, the limerow projects the Ryla market to grow at high single digits annually over the next two years, making it the fastest growing segment. As Mark highlighted, we continue to see that coming through, and Ryla sales up 20% year over year and 1.9 billion in positive net flows.

Suneet Laxman L. Kamath: I wanted to start on individual retirement sales. I think last quarter you guys talked about a lot of the sales being funded by 401k rollovers. I just want to get a sense of whether that is still happening? And then, somewhat relatedly, how sensitive do you think the sales would be if the Fed starts cutting short-term interest rates?

Nicholas Burritt Lane: Great. Thank you for the question. This is Nick.

Suneet Laxman L. Kamath: Great. Thank you for the question. This is Nick. First, we see structural demographic changes coupled with a heightened and persistent sense of

Suneet Laxman L. Kamath: Macro instability from consumers continuing to drive robust growth for buffered annuities.

Nicholas Burritt Lane: First, we see structural demographic changes coupled with a heightened and persistent sense of macro instability from consumers continuing to drive robust growth for buffered annuities. As you mentioned, America's growing retirement population is looking for new solutions, and we see them shifting out of target date funds and into protected equity and income solutions. For reference, Lymra projects the Ryla market to grow at high single digits annually over the next two years, making it the fastest-growing segment.

Suneet Laxman L. Kamath: As you mentioned, America's growing retirement population is looking for new solutions and we see them shifting out of target date funds.

Suneet Laxman L. Kamath: and Into Protected Equity and Income Solutions. For reference, LIMRA projects the Ryla market to grow at high single digits annually over the next two years, making it the fastest growing segment.

Nicholas Burritt Lane: As Mark highlighted, we continue to see that coming through in RILA sales up 20% year over year and $1.9 billion in positive net flows. We view RILAs as offering strong returns with a simple spread return profile. As a reminder, we reprice every two weeks to reflect interest rates and option pricing in the credit spread environment. As a pioneer in this market over a decade ago in low interest rate environments, we think the core value proposition of protected equities continues to resonate.

Speaker Change: As Mark highlighted, we continue to see that coming through in Ryla sales up 20% year over year and $1.9 billion in positive net flows.

Nicholas Lane: We view Ryla as offering strong returns with a simple spread return profile. As a reminder, we reprice every two weeks to reflect interest rates, option pricing in the credit spread environment. As a pioneer in this market over a decade ago in low interest rate environments, we think the core value proposition of protected equities continues to resonate out there. And then the sensitivity to rates if the Fed starts cutting. On the sensitivity to rates, I think that has more of an impact on fixed annuity sales than on Ryla sales. The value proposition for Ryla's or protected equity story allows you exposure to markets but gives you a downside protection for any unforeseen events out there.

Speaker Change: We view Ryla's as offering strong returns with a simple spread return profile. As a reminder, we reprice every two weeks to reflect interest rates.

Speaker Change: Option pricing in the credit spread environment as a pioneer in this market over a decade ago in low interest rate environments, we think the core value proposition of protected equities continue to resonate out there.

Nicholas Burritt Lane: And then there is the sensitivity to rates if the Fed starts cutting.

Speaker Change: And then the sensitivity to rates if the Fed starts cutting.

Nicholas Burritt Lane: On the sensitivity to rates, I think that has more of an impact on fixed annuity sales than on RILA sales because the value proposition for RILAs is a protected equity story. It allows you exposure to the markets but gives you downside protection for any unforeseen events out there. And that's a powerful value proposition in any environment. We believe that the privileged distribution Network that we've created with both equitable advisors and our third-party networks in communicating that value proposition through many macro, I would say, events over the last 10 years puts us in a privileged position to continue to capture a disproportionate share of the value in the market.

Speaker Change: On the sensitivity to rates, I think that has more of an impact on fixed annuity sales than on RILA sales. The value proposition for RILAs are a protected equity story. It allows you exposure to the markets, but gives you a downside protection.

Suneet Laxman L. Kamath: Got it. And then my second question is, I guess, for Robin.

Nicholas Lane: And that's a powerful value proposition in any environment. We believe the privileged distribution network that we've created with both equitable advisors and our third party networks in communicating that value proposition through many macro, I would say events over the last 10 years puts us in a privileged position to continue to capture a disproportionate share of the value in the market.

Speaker Change: For any unforeseen events out there, and that's a powerful value proposition in any environment. We believe that the Privileged Distribution Network that we've created, with both equitable advisors and our third-party networks,

Speaker Change: In communicating that value proposition through many macro, I would say, events over the last 10 years puts us in a privileged position to continue to capture a disproportionate share of the value in the market.

Robin Matthew Raju: So you've been writing a lot of individual retirement products. Now you're writing a lot of group products with LPP. Does capital strain become an issue at some point, or could you sell even more product if the demand was there?

Robin Raju: Got it. And then my second question is, I guess, for Robin. So you've been writing a lot of individual retirement products. Now you're writing a lot of group with LPP.

Speaker Change: Got it. And then my second question is, I guess, for Robin. So you've been writing a lot of individual retirement product. Now you're writing a lot of group with LPP. Does capital strain become an issue at some point? Or could you sell even more product if the demand was there? Thanks.

Robin Raju: Does capital strain become an issue at some point, or could you sell even more product if the demand was there? Thanks. So we've been very intentional as part of our strategy to focus on capital-like products like the Ryla SES offering that Nick spoke about. And so, two days we haven't had to choose between returning capital to the shareholders or growth because the growth that we're funding is capital light. So it makes it very efficient for us. We do view growth at a 15% IRR as a good investment that will drive future cash flows and future earnings for us.

Suneet Laxman L. Kamath: Thanks. Thanks, Suneet.

Robin Matthew Raju: Thanks, Suneet. So we've been very intentional as part of our strategy to focus on capital light products like the Ryla SCS offering that Nick spoke about. And so to date, we haven't had to choose between returning capital to shareholders or growth because the growth that we're funding is capital light. So it makes it very efficient for us. We do view growth at a 15% IRR as a good investment as it will drive future cash flows and future earnings for us.

Robin: Thanks, Suneet. So we've been very intentional as part of our strategy to focus on capitalized products like the Ryla SES offering that Nick spoke about.

Robin: And so to date, we haven't had to choose between returning capital to shareholders or growth because the growth that we're funding is capital light, so it makes it very efficient for us. We do view growth at a 15% IRR as a good investment, as it will drive future cash flows and future earnings for us.

Robin Raju: That being said, we're fully committed to the IRR data targets. We're turning 60 to 70% to shareholders and a 2 billion of cash generation. If we do see upside in terms of implant annuities coming in relative to our plan, we'll continue to focus on capital optimization initiatives, and we think we'd be an attractive partner to source third party capital to fund that growth as well. So we think we have everything into toolkit and the strategy is proving out to drive the cash flows that we need and to support the future growth.

Robin Matthew Raju: That being said, you know, we're fully committed to the IRR day targets, returning 60 to 70% to shareholders and the $2 billion in cash generation. If we do see upside in terms of in-plan annuities coming in relative to our plan, we'll continue to focus on capital optimization initiatives. And we think we'd be an attractive partner to source third-party capital to fund that growth as well. So we think we have everything in the toolkit and the strategy is working out to drive the cash flows that we need and to support future growth.

Speaker Change: That being said, you know, we're fully committed to the IRA day targets.

Speaker Change: Returning 60-70% of shareholders into $2 billion of cash generation.

Speaker Change: If we do see upside in terms of in-plan annuities coming in relative to our plan, we'll continue to focus on capital optimization initiatives and we think we'd be an attractive partner to source third-party capital to fund that growth as well. So we think we have everything in the toolkit and the strategy is proving out to drive the cash flows that we need and to support the future growth.

Robin Raju: Very good. Thank you.

Speaker Change: Very good, thank you.

Thomas George Gallagher: Your next question comes from the line of Tom Gallagher with Evercore. Your line is open.

Tom Gallagher: Your next question comes from the line of Tom Gallagher with Evercore. Your line is open.

Speaker Change: Your next question comes from the line of Tom Gallagher with Evercore. Your line is open.

Tom Gallagher: Morning.

Thomas George Gallagher: Morning. The first question is, are you still planning on some type of solution to reduce mortality volatility for protection despite the improved results recently?

Robin Raju: First question is, are you still planning on some type of solution to reduce mortality volatility for protection despite the improved results recently? Yeah, Tom, so just put him protection in context. It's about 10% of our earnings. Our guide for the year is 200 to 300 million of earnings, and through to first half, we're at 120 million. So we're in a good position to achieve that guidance that we've given. But to your point, given our large face amounts and retention, you should still expect some quarterly volatility. So, as a result, we continue to explore solutions to improve the return on capital on that business and reduce volatility.

Thomas George Gallagher: Morning. First question is, are you still planning on some type of solution to reduce mortality volatility for protection despite the improved results recently?

Robin Matthew Raju: Yeah, Tom, so just to put protection in context, it's about 10% of our earnings; our guide for the year is 200 to 300 million in earnings. And through the first half, we're at 120 million.

Speaker Change: Yeah, Tom, so just to put in protection and context, it's about 10% of our earnings. Our guide for the year is 200 to 300 million of earnings, and through the first half, we're at 120 million. So we're in a good position to achieve that guidance that we've given. But to your point, given our large face amounts and retention, you should still expect some quarterly volatility. So as a result, we continue to explore solutions to improve the return on capital on that business and reduce volatility. I wouldn't expect anything, any material updates from us until early 2025, but we are exploring multiple solutions to improve the returns on this business.

Robin Matthew Raju: So we're in a good position to achieve that guidance that we've given. But to your point, given our large face amounts and retention, you should still expect some quarterly volatility. So as a result, we continue to explore solutions to improve the return on capital on that business and reduce volatility. I wouldn't expect anything, or any material updates from us until early 2025. But we are exploring multiple solutions to improve the returns on this business.

Robin Raju: I wouldn't expect do anything, any material updates from us until early 2025, but we are exploring multiple solutions to improve the returns on this business.

Robin Raju: And Robin, I get it on timing. These things can take a while, but can you comment a little further on the range of things you're looking at? Is it from you to sidecar where it would be something you would do internally? Hopefully, is it full on risk transfer where you might do something third party, or are you looking at XOL re-insurance?

Thomas George Gallagher: And Robin, I get it on timing, these things can take a while, but Can you comment a little further on the range of things you're looking at? Is it the Bermuda sidecar where it would be something you would do internally? Is it full on risk transfer, where you might do something third party, or you're looking at XOL reinsurance, you know, any, or you're leaning in one direction when you think about potential solutions?

Speaker Change: And Robin, I get it on timing, these things can take a while, but...

Robin: Can you comment a little further on the range of things you're looking at? Is it Bermuda sidecar where it would be something you would do internally? Is it...

Robin: Full-on risk transfer, where you might do something third-party, or you're looking at XOL reinsurance, you know, or you're leaning in one direction when you think about potential solutions.

Robin Raju: Are you leaning in one direction when you think about potential solutions? Yeah, so when I think about, I look at what's going to provide the best shareholder value and return on capital. So that could simply start with just getting after expenses and making sure we're efficient to improve the returns on the business. Second, as you know, we've looked at excess re-insurance with re-insurers that's given up some economic costs, but we'll also look at sidecars, Bermuda, third party solutions. So we have to look at everything as we work to return to return, work to improve the returns on capital for this business.

Robin Matthew Raju: Yeah, so when I think about it, I look at what's going to provide the best shareholder value and return on capital. So that could simply start with just getting after expenses and making sure we're efficient to improve the returns on the business. Second, as you know, we've looked at excess reinsurance for reinsurers that have given up some economic costs, but we'll also look at sidecars, Bermuda, third-party solutions. So we have to look at everything as it looks as we work to return the capital return, work to improve the returns on capital for this business. So everything.

Speaker Change: Yeah, so when I think about it, I look at what's going to provide the best shareholder value and return on capital. So that could simply start with just getting after expenses and making sure we're efficient to improve the returns on the business.

Robin: Second, as you know, we've looked at excess reinsurance for reinsurers that's given up some economic costs, but we'll also look at sidecars, Bermuda, third-party solutions. So we have to look at everything as it looks as we work to improve the returns on capital for this business.

Robin Raju: So everything.

Thomas George Gallagher: Okay, thanks. And just one final one, if I could sneak it in.

Robin Raju: Okay, thanks.

Robin Raju: And just one final one, if I could sneak it in. The partnership with BlackRock, what type of ROI are ROI getting on those products? Is it below RILA? Maybe just talk about where pricing is right now and how that will affect your overall ROI. Thanks.

Robin: So, everything.

Speaker Change: Okay, thanks. And just one final one, if I could sneak it in. The partnership with BlackRock, what type of ROE or ROI are you getting on those products? Is it below RILA? Maybe just talk about

Thomas George Gallagher: The partnership with BlackRock, what type of ROE or ROI are you getting on those products? Is it below RILA? Maybe just talk about where pricing is right now and how that will affect your overall ROE or ROI. Yeah, still early days on that.

Speaker Change: You know, where pricing is right now and how that will affect your overall ROE, ROI. Thanks.

Nicholas Burritt Lane: Yeah, still early days on that product. We're excited. It's a monumental time for us to get that first $500 million of inflows. Pricing is expected to be just similar to our other products. We're looking to get above a 15% IRR for that product.

Robin Raju: Yes, still early days on that product. We're excited. It's a monumental time for us to get that first 500 million of inflows. Pricing expected just similar to our other products. We're looking to get above 15% IRR for that product.

Speaker Change: Yeah, still early days on that product. We're excited. It's a monumental time for us to get that first 500 million of inflows. Pricing expected just similar to our other products. We're looking to get above a 15% IRR for that product.

Jimmy Puehler: Thanks. And your next question comes from the line of Jimmy Puehler with JP Morgan. Your line is open. Hi, so first a question on this competition on the RILA market, and a lot of other companies have come into the business. Obviously, over the last few years, the markets expanded enough to absorb the added supply. But can you comment on what you're seeing some of the newer competitors doing in terms of terms and conditions, and are they being disciplined, or are you seeing competition pick up on the fringes specifically in RILA? Sure. Look, in the second quarter, we don't see any material change in the competitive dynamics.

Speaker Change: Thanks.

Operator: And your next question comes from the line of Jimmy Bhullar with J.P. Morgan. Your line is open.

Speaker Change: And I'll see you next time.

Speaker Change: And your next question comes from the line of Jimmy Bhullar with J.P. Morgan. Your line is open.

Jamminder Singh Bhullar: Hi, so first a question on this competition in the Ryla market. A lot of other companies have come into the business, and obviously, over the last few years, the market's expanded enough to absorb the added supply, but can you comment on what you're seeing some of the newer competitors doing in terms of terms and conditions, and are they being disciplined, or are you seeing competition pick up on the fringes, specifically in Ryla?

Jamminder Singh Bhullar: Hi. So, first a question on this competition in the Raila market. A lot of other companies have come into the business and obviously over the last few years the market's expanded enough to absorb the added supply, but can you comment on what you're seeing some of the newer competitors doing in terms of terms and conditions and are they being disciplined or are you seeing...

Speaker Change: competition pick up on the fringes specifically in Ryla.

Nicholas Burritt Lane: In the second quarter, we didn't see any material change in the competitive dynamics. We do hear people exploring the market, but we haven't seen any net new entrants in the last six months. At Equitable, we continue to be focused on profitable growth, as Robin highlighted, and continue to price to achieve mid-teen IRRs on our new business. At NetNet, we still view any competitive competition as raising advisor and consumer awareness, further growing the pie.

Speaker Change: Sure. Look, in the second quarter we don't see any material change in the competitive dynamics. We do hear people exploring the market, but we haven't seen any net new entrants in the last six months.

Jimmy Puehler: We do hear people exploring the market, but we hadn't seen any net new entrants in the last six months.

Nicholas Lane: At Equitable, we continue to be focused on profitable growth, as Robin highlighted, and continue to price to achieve a mid-teen IRRs on our new business. NetNet, we still view any competitive competition as raising advisor and consumer awareness. Further growing the pie, as a pioneer in the space, we believe we're in a privileged position given our distribution networks. Both Equitable Advisors and third parties, which are very difficult to replicate, our track record of innovation. We continue to average insights we get from our distribution networks on new segments or new value propositions and our partnership with AB.

Speaker Change: At Equitable, we continue to be focused on profitable growth, as Robin highlighted, and continue to price to achieve a mid-teen IRRs on our new business. At NetNet, we still view any competitive competition as raising advisor and consumer awareness.

Nicholas Burritt Lane: As a pioneer in this space, we believe we're in a privileged position, given our distribution network, both equitable advisors and third parties, which are very difficult to replicate. Given our track record of innovation, we continue to leverage insights we get from our distribution networks on new segments or new value propositions. And our partnership with AB will continue to capture a disproportionate share. So it's easy to file a product. It's very difficult to get a distribution network, to get advisors. Traditionally, advisors will work with re-carriers as they think through the different segments. They get repriced every two weeks.

Speaker Change: Further growing the pie. As a pioneer in the space, we believe we're in a privileged position given our distribution networks.

Speaker Change: Equitable Advisors and Third Parties, which are very difficult to replicate. Our track record of innovation, we continue to...

Speaker Change: Coverage Insights we get from our distribution networks on new segments or new value propositions and our partnership with AB.

Nicholas Lane: We continue to capture a disproportionate share. So it's easy to file a product.

Speaker Change: to continue to capture disproportionate share. So it's easy to file a product. It's very difficult to get a distribution network, and it's very difficult.

Nicholas Lane: It's very difficult to get a distribution network, and it's very difficult to get advisors.

Speaker Change: To get advisors, traditionally advisors will work with three carriers as they think through the different segments. They get repriced every two weeks.

Nicholas Lane: Traditionally, advisors will work with three carriers as they think through the different segments. They get reprised every two weeks. And then on group retirement, obviously your flows benefited from LifePath. If I take the life path number out, you would have been at negative flows, and it's been negative flows to the past several quarters.

Jamminder Singh Bhullar: And then on group retirement, obviously, your flows benefited from life path. If I take the life path number out, you would have been in negative flows for the past several quarters. So if you could just unpack what's going on in that market, because I would have thought with wage inflation and the good labor market, there would have been some sort of a tailwind to the business overall.

Speaker Change: Thank you.

Speaker Change: And then on group retirement, obviously your flows benefited from LifePath. If I take the LifePath number out,

Speaker Change: You would have been at negative flows and it's been negative flows for the past several quarters. So if you could just unpack what's going on in that market, because I would have thought with wage inflation, the good labor market, there would have been some sort of a tailwind to the business overall.

Nicholas Lane: So if you could just unpack what's going on in that market because I would have thought with wage inflation, the good labor market, there would have been some sort of a tailwind to the business overall. Sure, to unpack that, our group retirement business is comprised of three lines or tax exempt business or corporate and then our new institutional line, which Mark reference. In tax exempt, we are the number one provider of retirement plans, regardless of through 12th grade educators. Here we continue to see growing demand for advice and solutions. Educators electing to work with advisors contribute 70% more to their retirement plans on an annual basis.

Nicholas Burritt Lane: Sure. To unpack that, our group retirement business is comprised of three lines. Our tax-exempt business, our corporate, and then our new institutional line, which Mark referenced. In tax-exempt, we are the number one provider of retirement plans to kindergarten through 12th grade educators. Here, we continue to see growing demand for advice and solutions. Educators electing to work with advisors contribute 70% more to their retirement plans on an annual basis. We serve this market through a worksite advice model with over 1,000 advisors dedicated to over 9,000 school districts around the country where we have payroll slots, delivering, I think, a unique solution that can't be replicated.

Speaker Change: To unpack that, our group retirement business is comprised of three lines, our tax exempt business, our corporate, and then our new institutional.

Speaker Change: In tax-exempt, we are the number one provider of retirement plans.

Speaker Change: Undergarden through 12th grade educators. Here we continue to see growing demand for advice and solutions.

Speaker Change: Educators electing to work with advisors contribute 70% more to their retirement plans on an annual basis.

Nicholas Lane: And we serve this market through a worksite advice model with over a thousand advisors dedicated to over 9,000 school districts around the country where we have payroll slots delivering, I think, a unique solution that can't be replicated from a performance standpoint.

Speaker Change: And we serve this market through a worksite advice model with over a thousand advisors dedicated to over 9,000 school districts around the country where we have payroll slots.

Speaker Change: Delivering, I think, a unique solution that can't be replicated.

Nicholas Burritt Lane: From a performance standpoint, second-quarter results in our core markets were positive, up 18% in both tax-exempt and corporate. Within tax-exempt specifically, we continue to see positive net flows of roughly $91 million in the quarter. Like most of the industry, higher interest rates and higher account balances have impacted flows, with higher surrenders offsetting premium growth in the corporate market. However, I would highlight 25% of those outflows were participant-driven, as people used the product as intended, and of the actual outflows, 50% are being retained by equitable advisors and other solutions, speaking to the power of our integrated model.

Nicholas Lane: Second quarter results in our core markets were positive: 18% of both tax exempt and corporate. Within tax exempt specifically, we continue to see positive net flows of roughly $91 million in the quarter. The outflows are driven in our non-corps sort of 401k channels and run off from the older products. Like most of the industry, higher interest rates and higher account balances have impacted flows, with higher surrenders offsetting premium growth in the corporate market. However, I would highlight 25% of those outflows were participate driven as people use the product as intended, and of the actual outflows, 50% are being retained by equitable advisors and other solutions, speaking to the power of our integrated model.

Speaker Change: From a performance standpoint, second quarter results in our core markets were positive, up 18% in both tax-exempt and corporate.

Speaker Change: Within tax exempt specifically, we continue to see positive net flows of roughly $91 million in the quarter. The outflows are driven in our non-core sort of 401k channels and runoff from our older products.

Speaker Change: Like most of the industry, higher interest rates and higher account balances have impacted flows with higher surrenders offsetting premium growth in the corporate market.

Speaker Change: However, I would highlight 25% of those outflows were participate-driven, as people used the product as intended, and of the actual outflows, 50%...

Speaker Change: are being retained by Equitable Advisors and other solutions, speaking to the power of our integrated model.

Nicholas Lane: Thank you.

Speaker Change: Okay, thank you.

Ryan Krueger: And your next question comes from the line of Ryan Krueger with KBW. Your line is open. Okay, thanks for morning.

Operator: And your next question comes from the line of Ryan Krueger with KBW. Your line is open.

Speaker Change: And your next question comes from the line of Ryan Krueger with KBW. Your line is open.

Ryan Joel Krueger: Hey, thanks. Good morning.

Ryan Krueger: First question was on Individual Retirement. Red, Robin, I know you said they likely peaked. I just wanted to confirm: would you expect them to be pretty stable from here? Or could there be some modest downside?

Ryan Joel Krueger: Hey, thanks. Good morning. First question was on individual retirement spread. Robin, I know you said they likely peaked. I just wanted to confirm, would you expect them to be pretty stable from here, or could there be some modest downside?

Robin Raju: Yes, thank you, Ryan. So just overall individual retirement earnings of 5% year-of-year normalized. The net investment spread was up 17% year-of-year. But, as I mentioned on the call, spreads have peaked as we see left tailwind from higher interest rates. So going forward, we would see NIMS spread would probably grow more in line with the general camp book value. We do have some exposure to floating rate assets, but we managed that tactically from quarter to quarter. So you may get some noise, but going forward, I'd expect NIMS to stabilize, NIMS spread to stabilize, and to grow with book value.

Robin: Yes, thank you, Ryan. So just overall individual retirement earnings of 5% year-over-year normalized.

Speaker Change: The net investment spread was up 17% year-over-year, but as I mentioned on the call, spreads have peaked as we see less tailwind from higher interest rates. So going forward, we would see NIMS spread would probably grow more in line with the general account book value.

Speaker Change: We do have some exposure to floating rate assets, but we manage that tactically from quarter to quarter, so you may get some noise, but going forward, I'd expect NIM to stabilize, NIM spread to stabilize and to grow at book value.

Ryan Joel Krueger: The first question was on individual retirement spread. Robin, I know you said they likely peaked, but I just wanted to confirm. Would you expect them to be pretty stable from here, or could there be some modest downside?

Speaker Change: Okay, great. Thanks. And then, just on the LightPath Paycheck product,

Speaker Change: Can you, just from a capital requirement standpoint, so I know it's a spread product and the capital requirement is...

Robin Raju: So if you're not using COF, like there would be on a traditional fixed annuity.

Speaker Change: I think there's also no distribution costs like there would be on a traditional fixed annuity. So does any can you provide any perspective on how to think about the capital strain from growth in that product?

Robin Raju: So can you provide any perspective on how to think about the capital strain from growth in that product? Sure, Ryan. You know, I don't want to get too much into details on the product. It's a new product. It's growing. It's still small, but we're happy with the 500 million. Generally, as you see on our SES Capital I product, it's about a 2 to 3% required capital related to general count. This one is slightly higher as we get more general count assets, less acquisition expense. But more, it's more of this; it's more like a fixed annuity from that sense.

Unknown Executive: Ryan Krueger, Onur Erzan, Jian Huang, Cave Montazeri, AXA Equitable Holdings, Inc. Transcribed by https://otter.ai

Ryan Joel Krueger: Okay, great. Thanks.

Speaker Change: Sure, Ryan. You know, I don't want to get too much in details on the product. It's a new product. It's growing. It's still small, but we're happy with the $500 million. Generally, as you see on our SES Capital Light product, it's about a 2% to 3% required capital related to general account. This one is slightly higher as we get more general account assets, less acquisition expense, but it's more like a fixed annuity from that sense. That being said, we price it at a 15% plus IRR.

Ryan Joel Krueger: And then, just on the Lifepath Paycheck product... Can you just from a capital requirement standpoint, so I know it's a spread product, and the capital requirement is higher typically, but I think there's also no distribution costs like there would be on a traditional fixed annuity. So can you provide any perspective on how to think about the capital strain from growth in that product?

Robin Matthew Raju: Sure, Ryan. You know, I don't want to get too much detail on the product. It's a new product. It's growing.

Robin Matthew Raju: It's still small, but we're happy with the $500 million. Generally, as you see on our SES Capital Light product, it's about 2% to 3% required capital related to general account. This one is slightly higher as we get more general account assets and less acquisition expense, but it's more like a fixed annuity in that sense. That being said, we price it at 15% plus IRR. Okay, thank you. Your next question?

Robin Raju: That being said, we price it at a 15% plus IRR.

Ryan Krueger: Okay, thank you.

Wilma Burdis: Your next question comes from the line of Wilma Bertis with Raven James. Your line is open. Hey, good morning.

Operator: Your next question comes from the line of Wilma Burdis with Raven James. Your line is open. Hey, good morning. Has there been any shift in thinking on the legacy block? It seems like it's generating good cash flow, and there's no pressing need to make any

Speaker Change: Your next question comes from the line of Wilma Burdis with Raven James. Your line is open.

Wilma Burdis: Has there been any shift in thinking on the legacy block? It seems like it's generating good cash flow, and there's no pressing need to make any divestress, but has anything changed there? Thanks.

Wilma Carter Jackson Burdis: Hey, good morning. Has there been any shift in thinking on the legacy block? It seems like it's generating good cash flow and there's no pressing need to make any divestitures, but has anything changed there? Thanks.

Robin Raju: Hey, Wilma, yet nothing's changed from when we mentioned that IR Day continues to run off. It's going to be 5% of our earnings by 2027. Be free cash flow creative as it releases capital during that time. And so going forward, we're focused on the growth ambitions and the growth opportunity that we have in the retirement market and aligns Bernstein, and we'll let that business run off.

Wilma Carter Jackson Burdis: Hey, Wilma, again, nothing's changed from what we mentioned at IR Day. It continues to run off. It's going to be 5% of our earnings by 2027 and will be free cash flow accretive as it releases capital during that time. And so going forward, we're focused on the growth ambitions and the growth opportunity that we have in the retirement market and Alliance Bernstein. And we'll let that business run if there are opportunities to accelerate down the line. We'll certainly evaluate it if it's shareholder accretive as well, but it's not a core part of our strategy at all. Could you talk about the opportunity?

Speaker Change: Hey Wilma, nothing's changed from what we mentioned at IR Day, it continues to run off, it's going to be 5% of our earnings by 2027, be free cash flow accretive as it releases capital during that time, and so going forward we're focused on the growth ambitions and the growth opportunity that we have in the retirement market and Alliance Bernstein and we'll let that business run off, if there are opportunities to accelerate down the line we'll certainly evaluate it as a shareholder accretive as well, but it's not a core part of our strategy at all.

Robin Raju: If there are opportunities to accelerate down the line, we'll certainly evaluate it if it's your older creative as well, but it's not a core part of our strategy at all.

Wilma Burdis: Could you talk about the opportunity or the pipeline to add additional kinds of relationships like the Black Rock relationship? Is it kind of a long sales process? Just maybe talk a little bit about that and where you're seeing out there.

Speaker Change: Could you talk about the opportunity or the pipeline to add additional, you know, kind of relationships like the BlackRock relationship? Is it kind of a long sales process? Just maybe talk a little bit about that and what you're seeing out there. Thanks.

Mark Pearson: Thanks very much, Wilma. It's Mark. Look, we’re very excited about the opportunity for implant annuities within 401(k) plans. And as you know, there's been a lot of media interest in this, a lot of discussion across the marketplace. So we're very happy to be in the position of having two partnerships already with AB and now with BlackRock, with the over 500 million and coming in, in net new flows in this quarter. We are talking to other fund managers, but you are right; there was a long lead time on these types of products. And that's, again, one of the reasons why we put out; you should expect flows here to be lumpy, both from the existing relationships and indeed if we land any future new ones.

Wilma Carter Jackson Burdis: Thanks very much, Wilma. It's Mark.

Speaker Change: Thanks very much, Wilma, it's Mark. Look, we're very excited about the opportunity for in-plan annuities within 401k plans, and as you know,

Mark Pearson: Look, we're very excited about the opportunity for in-plan annuities within 401k plans. And as you know, there's been a lot of media interest in this, and a lot of discussion across the marketplace. So we're very happy to be in the position of having two partnerships already with AB and now with BlackRock with the over $500 million coming in net new flows in this quarter. We are talking to other fund managers, but you are right; there was a long lead time on these types of products. And that's, again, one of the reasons why we put out that you should expect flows here to be lumpy, both from the existing relationships and, indeed, if we land any future ones.

Speaker Change: There's been a lot of media interest in this, a lot of discussion across the marketplace.

Speaker Change: So, we're very happy to be in the position of having two partnerships already with AB and now with BlackRock with the over $500 million coming in.

Speaker Change: We are talking to other fund managers, but you are right, there was a long lead time on these types of products.

Speaker Change: And that's, again, one of the reasons why we put out you should expect flows here to be lumpy, both from the existing relationships and, indeed, if we land any future new ones.

Wilma Burdis: Thank you.

Operator: Your next question comes from the line of Mark Hughes with Truist Securities. Your line is open.

Speaker Change: Thank you.

Martin Hughes: Your next question comes from the line of Martin Hughes with True Securities. Your line is open.

Speaker Change: Your next question comes from the line of Mark Hughes with Truist Securities. Your line is open.

Mark Douglas Hughes: Yeah, thank you. Good morning.

Martin Hughes: Yeah, thank you.

Martin Hughes: Good morning. The life path you suggested probably not much activity in the third quarter, but more likely to be 4Q or 1Q would want to expect the size of any inflows to be similar in future quarters. We can't get too much more color on what we've got because we don't know, or we know at this stage, is that third quarter is likely to be quite low, and then we should expect more flows to come back on in quarter four and in the first half of 2025. But we're not in a position to give you an accurate number at the moment.

Mark Douglas Hughes: Yeah, thank you. Good morning.

Mark Douglas Hughes: The life path you suggested probably not much activity in the third quarter but more likely to be 4Q or 1Q. Would one expect the size of any inflows to be similar in future quarters?

Mark Douglas Hughes: The life path, you suggested probably not much activity in the third quarter, but more likely to be 4Q or 1Q. Would one expect the size of any inflows to be similar in future quarters?

Mark Pearson: We can't give too much more color on what we've got because we don't know. All we know at this stage is that the third quarter is likely to be quite low, and then we should expect more flows to come back on in quarter four and in the first half of 2025. But we're not in a position to give you an accurate number at the moment.

Speaker Change: We can't give too much more color on what we've got because we don't know. All we know at this stage is that third quarter is likely to be quite low.

Mark Douglas Hughes: And then we should expect more flows to come back on in quarter four and in the first half of 2025. But we're not in a position to give you an accurate number at the moment.

Martin Hughes: Then we think about the wealth management business. You suggested the growth and assets, maybe a mixed shift, could help offset declining short-term rates.

Mark Douglas Hughes: Then we think about the wealth management business; you suggested the growth in assets, maybe a mixed shift could help offset declining short-term rates. Does wealth management kind of take a pause in growth as those things work out, or are they able to sustain it? Still, a good positive moment.

Speaker Change: Then when we think about the wealth management business, you suggested the growth in assets, maybe a mixed shift could help offset.

Nicholas Lane: Does wealth management kind of take a pause in growth? Is those things work out or are you able to sustain still a good positive momentum?

Speaker Change: Declining short-term rates. Does wealth management kind of take a pause in growth as those things work out or are you able to sustain?

Speaker Change: Still a good positive momentum.

Nicholas Lane: Yeah, this is Nick. As Mark mentioned, we see wealth management earnings is growing in robust, maybe on color just related to cash today. Only 20% of our pre-tax earnings are driven by cash sweeps compared to other industry players out there. Total cash balances said less than six billion across solutions such as sweeps for immediate liquidity to money market funds, and it's remained relatively constant. Looking forward, we see strong organic growth and advisory as highlighted by our 1.5 billion in net flows this quarter, driven by advisor productivity that's up 10%. We believe our wealth management business brings a unique edge to the market to meet the growing demand for advice, both for consumers and for advisors looking to grow their practice. Based on the last 12-month run rate, we're tracking well of how to plan to reach 200 million post-tax earnings by 2027 communicated on a master day.

Nicholas Burritt Lane: Yeah, this is Nick. As Mark mentioned, we see wealth management earnings growing robustly, maybe on color, just related to cash. Today, only 20% of our pre-tax earnings are driven by cash sweeps compared to other industry players out there. The total cash balance is set at less than $6 billion across solutions such as sweeps for immediate liquidity to money market funds, and it's remained relatively constant. Looking forward, we see strong organic growth in advisory, as highlighted by our $1.5 billion in net flows this quarter, driven by advisor productivity that's up 10%.

Nick: Yeah, this is Nick. As Mark mentioned, we see wealth management earnings as growing and robust. Maybe on color, just related to cash today, only 20% of our pre-tax earnings are driven by cash sweeps compared to other industry players out there.

Nick: Bye-bye.

Speaker Change: Total cash balance is set at less than $6 billion across solutions such as sweeps for immediate liquidity to money market funds.

Speaker Change: It's remained relatively constant. Looking forward, we see strong organic growth and advisory.

Speaker Change: As highlighted by our $1.5 billion in net flows this quarter, driven by...

Speaker Change: Adviser productivity that's up 10%. We believe our wealth management business brings a unique edge to the market to meet the growing demand for advice.

Nicholas Burritt Lane: We believe our wealth management business brings a unique edge to the market to meet the growing demand for advice, both for consumers and for advisors looking to grow their practice. And based on the last 12-month run rate we're tracking, we'll have had a plan to reach $200 million in post-tax earnings by 2027, as communicated on Investor Day. So we see that as a source of growth and momentum going forward.

Speaker Change: both for consumers and for advisors looking to grow their practice and based on the last 12 month

Nick: Run rate we're tracking, we'll have had a plan to reach $200 million in post-tax earnings by 2027, communicated on Ambassador Day. So we see that as a source of growth and momentum going forward.

Nicholas Lane: So we see that as a source of growth and momentum going forward.

Nicholas Lane: Thank you very much.

Mike Ward: And your final question comes from the line of Mike Ward with City. Your line is open.

Speaker Change: Thank you very much.

Operator: And your final question comes from the line of Mike Ward with Citi. Your line is open.

Speaker Change: And your final question comes from the line of Mike Ward with Citi, your line is open.

Mike Ward: I was wondering; I noticed GNA expenses are comp and benefits types of expenses were seen fairly low in the quarter.

Michael Augustus Ward: Thanks, guys. I was wondering if G&A expenses or comp and benefit types of expenses seemed fairly low in the quarter. I was just wondering if there's anything, you know, any kind of concerted effort across the business or just sort of normal expense management.

Michael Augustus Ward: Thanks, guys. I was wondering, I noticed G&A expenses are comp and benefit.

Speaker Change: , , , , , , , , , , , , , ,

Robin Raju: I was just wondering if there's anything, you know, any kind of concerted effort across the business or just something like that. What sort of normal expense management?

Robin Raju: Hey Mike, so for Investor Day when we came out with our targets to grow cash, the two billion to grow earnings and have our EPS grow from 12 to 15%. And behind that were plans to obviously to have organic growth, which you're seeing come through, but obviously to manage our expenses across Equitable and A.B. So you're seeing expense productivity across both firms. We'll get the big real estate savings in A.B., starting later in the year. And then we'll also continue to reach our efficiency targets in equitable as well. In addition, you're going to see the deconsolidation from BRS Discordr that comes through on A.B.

Robin Matthew Raju: Hey, Mike, on Investor Day, when we came out with our targets to grow cash to $2 billion, to grow earnings, and have our UPS grow from 12 to 15%, and behind that were plans to obviously have organic growth, which you're seeing come through, but obviously to manage our expenses across equitable and A-B efficiently and grow to net investment income. So you're seeing expense productivity across both firms. We'll get the big real estate savings in A-B starting later in the year, and then we'll also continue to reach our efficiency targets in equitable as well.

Speaker Change: Hey, Mike. So for Investor Day, when we came out with our targets to grow cash to $2 billion, to grow earnings and have our UPS grow from 12% to 15%,

Speaker Change: And behind that, we're planned to, obviously, to have organic growth, which you're seeing come through, but obviously to manage our expenses across equitable and A-B efficiently and grow to net investment income. So you're seeing expense productivity across both firms. We'll get the big real estate savings in A-B starting later in the year. And then we'll also continue to reach our efficiency targets in equitable as well. In addition, you're going to see the deconsolidation from BRS this quarter that comes through on A-B side, and it'll flow through. That's improved margins at Alliance Bernstein as well for the quarter. And at run rate basis, over 200 basis points at A-B. So we feel quite good about the efficiency.

Robin Matthew Raju: In addition, you're going to see the deconsolidation from BRS this quarter that comes through on the A-B side, and it'll flow through. That improves margins at Alliance Bernstein as well for the quarter, and at run rate basis, over 200 basis points at A-B. So we feel quite good about the efficiency that we managed to organize.

Robin Raju: side, and it'll flow through. That's improved margins at Alliance Bernstein as well for the quarter and a run rate basis over 200 basis points at A.B. So we feel quite good about the efficiency that we manage to organization.

Speaker Change: Thank you for your time. Thank you.

Robin Raju: Thank you, Robin.

Michael Augustus Ward: Thank you, Robin. And then maybe, maybe a question for AB on AB flows. Sorry. I was wondering, you know, how you guys are seeing your ability to consistently lead peers in terms of new business, and kind of wondering how you guys see the outlook for private credit. It seems like that's the class that just keeps getting more attention.

Mike Ward: And then maybe a question for A.B. on A.B. flow. Sorry.

Speaker Change: Thank you, Robin. And then maybe a question for AB Flows. Sorry. I was wondering how you guys are seeing your ability to consistently lead peers in terms of new business and kind of wondering how you guys see the outlook for private credit. It seems like that's...

Mike Ward: I was wondering how you guys are seeing your ability to consistently lead peers in terms of new business and kind of wondering how you guys see the outlook for private credit and things like that. And at the cross, it just keeps getting more attention. Sure. Thanks, Mike. We remain confident in our ability to outpace our directly comparable peers, which are the other publicly traded traditional asset managers for the most part. If you look at the last five years, we delivered positive organic active flows consistently, and that was always a couple of hundred percentage points ahead of the peers at the minimum.

Speaker Change: And at the class, it just keeps getting more attention.

Onur Erzan: Sure, thanks, Mike. We remain confident in our ability to outpace our directly comparable peers, which are other publicly traded traditional asset managers for the most part. If you look at the last five years, we've delivered positive organic active flows consistently, and that was always a couple of hundred percentage points ahead of the peers at the minimum. If you look at the first half of 24, we had $5 billion of active net flows, and we had two positive quarters, both first and second, in terms of active net flows.

Speaker Change: Sure. Thanks, Mike. We remain confident in our ability to outpace our directly comparable peers, which are the other publicly traded.

Speaker Change: Traditional Asset Managers for the most part. If you look at the last five years, we delivered positive, organic.

Speaker Change: Active flows consistently, and that was...

Speaker Change: Always a couple of hundred percentage points ahead of the peers at the minimum.

Mike Ward: If you look at the first half of 24, we had $5 billion of active net flows, and we had two positive quarters, both first and second, in terms of the active net flows. In terms of the outlook, our global retail franchise continues to deliver strong sales growth and flows. If you look at our sales, it's up in global retail 40% year over year, and it's wide based road based. If you look at the drivers, we continue to gain market share in US retail, particularly through our tax-exempt franchise. If you look at our ETFs, less than two years after our first product, we hit $4.6 billion of assets.

Speaker Change: If you look at the first half of 2004, we had $5 billion of active net flows.

Speaker Change: And we had two positive quarters, both first and second, in terms of the active net flows.

Onur Erzan: In terms of the outlook, our global retail franchise continues to deliver strong sales growth and flows. If you look at our sales, it's up in global retail by 40% year-over-year, and it's wide-based and road-based. If you look at the drivers, we continue to gain market share in U.S. retail, particularly through our tax-exempt franchise. If you look at our ETFs, less than two years after our first product, we hit $4.6 billion in assets. That makes us a top 20 active ETF provider.

Speaker Change: In terms of the outlook, our global retail franchise continues to deliver strong sales growth and flows. If you look at our sales, it's up in global retail 40% year-over-year.

Speaker Change: And it's wide-based, road-based, if you look at the drivers, we continue to gain market share in U.S. retail, particularly through our tax-exempt franchise.

Speaker Change: If you look at our ETFs, less than two years after our first product, we hit $4.6 billion of assets. That makes us a top 20 active ETF provider.

Mike Ward: That makes us a top 20 active ETF provider. In Asia, Japan, taxable fixed income franchise, which is our signature, continues to do well. And remember the Asian investors are income oriented. They are less sensitive to the current rates than some other markets. Hence, we are constructive on the outlook for particularly global high yield and other taxable fixed income strategies. Remarkably, we had active equity retail net flows in the second quarter, and we see continued demand for active equity strategies, particularly in our strong Japan retail franchise.

Onur Erzan: In Asia-X, Japan, the taxable fixed-income franchise, which is our signature, continues to do well. And remember, Asian investors are income-oriented, so they are less sensitive to the current rates vis-a-vis some other markets, so hence we are constructive on the outlook for, particularly, global high-yield and other taxable fixed-income strategies. And remarkably, we had active equity retail net flows in the second quarter, and we see continued demand for active equity strategies, particularly in our strong Japan retail franchise.

Speaker Change: In AsiaX Japan, taxable fixed income franchise, which is our signature, continues to do well. And remember, the Asian investors are income-oriented, so they are less sensitive to...

Speaker Change: The current rates vis-a-vis some other markets, hence we are constructive on the outlook for particularly global high yield and other taxable fixed income strategies.

Speaker Change: And remarkably, we had active equity retail net flows in the second quarter, and we see continued demand for active equity strategies.

Mike Ward: Overall, global retail will continue to be an area of strength, and definitely there is more seasonal upside in our first in private wealth, wealth management business, given the second quarter tends to be seasonally low with tax payments. We had records of private Alps cap rates in that channel. Private credit, last thing I'll say, our alternative assets are up mid single digits year over year. That's very healthy, with three plus billion dollars of deployments in the second quarter, which means you start earning fees on that. If you look at our strategy expanding into new channels, that's going to pick momentum with new semi-dequit rappers.

Onur Erzan: So overall, global retail will continue to be an area of strength, and definitely, there is more seasonal upside in our first-in-private wealth management business, given the second quarter tends to be seasonally low with tax payments, and we had record private alts cap rates in that channel. Private credit, last thing I'll say; our alternative assets are up mid-single digits year-over-year. That's very healthy with $3-plus billion of deployments in the second quarter, which means, And if you look at our strategy, expanding into new channels, that's going to pick up momentum with new semi-liquid wrappers we are launching, both in the U.S. and overseas, as well as some of the insurance-oriented IG strategies in addition to our flagship products. So private credit remains on track relative to our Investor Day 2027 goals of

Speaker Change: particularly in our strong Japan retail franchise. So overall, global retail will continue to be an area of strength and definitely there is more seasonal upside in our bursting private wealth, wealth management business, given second quarter tends to be seasonally low with tax payments.

Speaker Change: And we had record private alts cap raise in that channel.

Speaker Change: Private credit, last thing I'll say.

Speaker Change: Our alternative assets are up mid-single digits year-over-year. That's very healthy with $3-plus billion of deployments in the second quarter, which means you start earning fees on that.

Speaker Change: And if you look at our strategy, expanding into new channels, that's going to pick momentum with new semi-liquid wrappers we are launching, both in the U.S. and overseas.

Mike Ward: We are launching both in the US and overseas, as well as some of the insurance-oriented IG strategies in addition to our flagship products. So private credits remains on track relative to our investor day. 2027 goals are achieving 90 to 100 billion dollars in private dollars. Great.

Speaker Change: As well as some of the insurance-oriented IG strategies in addition to our flagship products. So private credit remains on track relative to our Investor Day 2027 goals of achieving $90 to $100 billion in private debt.

Michael Augustus Ward: Great. Thank you. And I think I'm the last question, so I hope to have one follow-up just on CRE. I'm wondering if you guys could give us any update or specifics in terms of resolution activity on office loans in the general account. Sure, Mike. So, our CRE...

Mike Ward: Thank you.

Mike Ward: And I think I'm the last question. So I hope to have one follow-up just on CRE. I'm wondering if you guys could give us any update or specifics in terms of resolution activity on office loans in the general account. Thank you.

Speaker Change: Great. Thank you. And I think I'm the last question, so I hope to have one follow-up just on CRE. I'm wondering if you guys could give us any update or specifics in terms of resolution activity on office loans in the general account. Thank you.

Mike Ward: Sure, Mike. So our CRE portfolio remains healthy. The office sector, though, and aggregate obviously is a sector that we have to be careful. And watch continuously and work with our offices to make sure that they stay in good standing. We currently have about a 90% occupancy rate, 2.3 times that the service coverage ratio on the offices. That's above where it was last year. So we feel good about the underlying fundamentals. We had four loans coming up this year. We extended one in the first quarter at market rates, and we continued to work on the other three.

Unknown Executive: Sure, Mike. So our CRE portfolio remains healthy. The office sector, though, and aggregate, obviously, is a sector that we have to be careful for and, you know, watch continuously and work with our offices to make sure that they stay in good standing. We currently have about a 90% occupancy rate, 2.3 times the service coverage ratio on the offices. That's above where it was last year.

Speaker Change: Sure, Mike. So our CRE portfolio remains healthy. The office sector, though, and aggregate, obviously, is a sector that we have to be careful for and, you know, watch continuously and work with our offices to make sure that they stay in good standing. We currently have about a 90 percent occupancy rate, 2.3 times that the service coverage ratio on the offices. That's above where it was last year. So we feel good about the underlying fundamentals. We had four loans coming up this year. We extended one in the first quarter at market rates.

Unknown Executive: So we feel good about the underlying fundamentals. We have four loans coming up this year. We extended one in the first quarter at market rates, and we continue to work on the other three. So we feel good about the loans that we have coming up this year, and we'll continue to work through the overall portfolio.

Mike Ward: So we feel good about the loans that we have coming up this year, and we'll continue to work through the overall portfolio.

Speaker Change: And we continue to work on the other three. So we feel good about the loans that we have coming up this year. And we'll continue to work through the overall portfolio.

Operator: Thank you, guys.

Speaker Change: Thank you guys.

Operator: Thank you so much.

Operator: Thank you so much. Any additional questions can be directed to the Equitable Holdings Investor Relations Team. This does conclude today's conference call. You may now disconnect.

Operator: Any additional questions can be directed to the Equitable Holdings investor relations team.

Speaker Change: Thank you so much. Any additional questions can be directed to the Equitable Holdings Investor Relations team. This does conclude today's conference call. You may now disconnect.

Operator: This does conclude today's conference call.

Operator: You may now disconnect. Please wait.

Operator: Please wait; the conference will begin shortly.

Speaker Change: Please wait, the conference will begin shortly. Thank you.

Operator: The conference will begin shortly. Thank you.