Equitable Holdings Q4 2025 Equitable Holdings Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Equitable Holdings Inc Earnings Call
Speaker #1: question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the If you would like to ask a call over to Erik Bass, Head of Investor Relations.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Holdings, Full Year, and Fourth Quarter. Good morning and welcome to the Equitable Holdings Q4 2025 Earnings Call. Materials for today's call can be found on our website. I would like to note that some of the forward-looking information we present today is subject to certain SEC rules and regulations regarding disclosure.
Erik Bass: Good morning and welcome to Equitable Holdings full year and fourth quarter 2025 earnings call. Materials 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. 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; Onur Erzan, President of AllianceBernstein; and Tom Simeone, Chief Financial Officer for AllianceBernstein.
Erik Bass: Good morning and welcome to Equitable Holdings full year and fourth quarter 2025 earnings call. Materials 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. 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; Onur Erzan, President of AllianceBernstein; and Tom Simeone, Chief Financial Officer for AllianceBernstein.
Speaker #2: 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.
Speaker #2: call are Mark Pearson, President Joining me on today's Holdings; Robin Raju, our Chief Financial Officer; and Chief Executive Officer of Equitable Nick Lane, President of Equitable Financial; Omar Erzan, President of Alliance Bernstein; and Tom Simeone, Chief Financial Officer for Alliance Bernstein.
Erik Bass: 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. Reconciliations of these Non-GAAP measures to the most directly comparable GAAP measures and related definitions 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. Good morning, and thank you for joining today's call. Before diving into our 2025 results and 2026 outlook, I want to take a step back to reflect on the journey Equitable Holdings has been on since our IPO. We have been intentional about refining our business mix to focus on three core growth engines: US retirement, asset management, and wealth management.
Erik Bass: 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. Reconciliations of these Non-GAAP measures to the most directly comparable GAAP measures and related definitions 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.
Speaker #2: discussing certain financial measures that During this call, we will be are not based on generally accepted accounting principles. Also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our slide presentation and financial website and in our earnings release supplement.
Speaker #2: I will now turn the call over to Mark.
Mark Pearson: Good morning, and thank you for joining today's call. Before diving into our 2025 results and 2026 outlook, I want to take a step back to reflect on the journey Equitable Holdings has been on since our IPO. We have been intentional about refining our business mix to focus on three core growth engines: US retirement, asset management, and wealth management.
Speaker #3: Good morning, and thank you for joining today's call. Before diving into our 2025 results and 2026 outlook, I want to take a journey through the path Equitable Holdings has been on since our IPO.
Speaker #3: We have been intentional about refining, stepping back to reflect on our business mix to focus on three core growth engines: U.S. retirement, asset management, and wealth management.
Speaker #3: These are very attractive and growing markets, and they are integral to our mission of helping our clients secure their financial well-being and live long and fulfilling lives.
Erik Bass: These are very attractive and growing markets, and they are integral to our mission of helping our clients secure their financial well-being and live long and fulfilling lives. Our integrated model positions us well to be one of the long-term winners in each of them. At the same time, we have been reshaping our balance sheet to become more capital-light, reduce exposure to legacy insurance risks, and increase the quality of cash flows. You saw further evidence of this in 2025 with the execution of our life reinsurance transaction with RGA, and we believe these actions will create a more valuable company. Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets. Turning to slide 3, I will provide some brief highlights from our 2025 results.
Mark Pearson: These are very attractive and growing markets, and they are integral to our mission of helping our clients secure their financial well-being and live long and fulfilling lives. Our integrated model positions us well to be one of the long-term winners in each of them. At the same time, we have been reshaping our balance sheet to become more capital-light, reduce exposure to legacy insurance risks, and increase the quality of cash flows. You saw further evidence of this in 2025 with the execution of our life reinsurance transaction with RGA, and we believe these actions will create a more valuable company. Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets. Turning to slide 3, I will provide some brief highlights from our 2025 results.
Speaker #3: Our integrated model positions us well to be one of the long-term winners in each of them. At the same time, we have been reshaping our balance sheet to become more capital-light, reduce exposure to legacy insurance risks, and increase the quality of cash flows.
Speaker #3: You saw further evidence of this in 2025 with the execution of our live-three insurance transaction with RGA, and we believe these actions will create a more valuable company.
Speaker #3: Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets. Turning to slide three, I will provide some brief highlights from our 2025 results.
Speaker #3: Full-year non-GAAP operating earnings were $5.64 per share, or $6.21 per share after adjusting for notable items. This was up 1% over 2024, as growth was held back by elevated mortality claims.
Erik Bass: Full-year non-GAAP operating earnings were $5.64 per share, or $6.21 per share after adjusting for notable items. This was up 1% over 2024 as growth was held back by elevated mortality claims. The past two quarters have shown increased earnings power, and we expect EPS growth to accelerate in 2026. We produced full-year organic cash generation of $1.6 billion, consistent with our $1.6 to 1.7 billion guidance range. In 2026, we expect this to increase to approximately $1.8 billion, and we remain on track to reach $2 billion in 2027. Assets under management and administration ended 2025 at a record $1.1 trillion, up 10% year-over-year, which will support growth in fee and spread-based earnings. Finally, we returned $1.8 billion to shareholders in 2025, which includes $500 million of additional share repurchases executed following the life reinsurance transaction.
Mark Pearson: Full-year non-GAAP operating earnings were $5.64 per share, or $6.21 per share after adjusting for notable items. This was up 1% over 2024 as growth was held back by elevated mortality claims. The past two quarters have shown increased earnings power, and we expect EPS growth to accelerate in 2026. We produced full-year organic cash generation of $1.6 billion, consistent with our $1.6 to 1.7 billion guidance range. In 2026, we expect this to increase to approximately $1.8 billion, and we remain on track to reach $2 billion in 2027. Assets under management and administration ended 2025 at a record $1.1 trillion, up 10% year-over-year, which will support growth in fee and spread-based earnings. Finally, we returned $1.8 billion to shareholders in 2025, which includes $500 million of additional share repurchases executed following the life reinsurance transaction.
Speaker #3: The past two quarters have shown increased earnings power and we expect EPS growth to accelerate in 2026. We produced full-year organic cash generation of $1.6 billion, consistent with our $1.6 to $1.7 billion guidance range.
Speaker #3: In 2026, we expect this to increase to approximately $1.8 billion, and we remain on track to reach $2 billion in 2027. Assets under management and administration ended 2025 at a record trillion, up 10% year over $1.1 year.
Speaker #3: fee and spread-based earnings. Which will support growth in Finally, we returned $1.8 billion to shareholders in 2025, which includes $500 million of additional share repurchases transaction.
Erik Bass: Excluding these incremental buybacks, our payout ratio was 68% at the high end of our 60% to 70% target range. Moving to organic growth, we continue to see healthy trends despite competitive market conditions. In retirement, we produced $5.9 billion of net flows in 2025, a 4% organic growth rate helped by another year of record RILA sales. We also leaned into the funding agreement-backed note market to take advantage of attractive spreads and had $5 billion of new issuance. This is not reflected in our retirement net flows but will help support growth in spread-based earnings. Wealth management also continues to see strong momentum, with full-year net inflows of $8.4 billion, a 13% organic growth rate. The number of wealth planners who are our most productive advisors, focused on holistic wealth planning, increased by 12%. AllianceBernstein experienced mixed dynamics in 2025.
Mark Pearson: Excluding these incremental buybacks, our payout ratio was 68% at the high end of our 60% to 70% target range. Moving to organic growth, we continue to see healthy trends despite competitive market conditions. In retirement, we produced $5.9 billion of net flows in 2025, a 4% organic growth rate helped by another year of record RILA sales. We also leaned into the funding agreement-backed note market to take advantage of attractive spreads and had $5 billion of new issuance. This is not reflected in our retirement net flows but will help support growth in spread-based earnings. Wealth management also continues to see strong momentum, with full-year net inflows of $8.4 billion, a 13% organic growth rate. The number of wealth planners who are our most productive advisors, focused on holistic wealth planning, increased by 12%. AllianceBernstein experienced mixed dynamics in 2025.
Speaker #3: these incremental Excluding buybacks, our payout ratio was 68% at the high end of our 60 to 70% target range. Moving to organic growth, we continue to see healthy trends despite competitive market produced $5.9 conditions.
Speaker #3: billion of net flows in 2025, a 4% organic growth rate, helped by another year of record In retirement, we Lila sales. We also leaned into the funding agreement-backed note market to take advantage of attractive spreads.
Speaker #3: And had $5 billion of not reflected in our retirement new issuance. This has net flows, but will help support growth in spread-based earnings. Wealth management also continues to see strong momentum, with full-year net inflows of $8.4 billion a 13% organic growth rate.
Speaker #3: The number of wealth planners who are our most productive advisors focused on holistic wealth planning increased by 12%. Alliance Bernstein experienced mixed dynamics in had overall net outflows of 2025.
Erik Bass: It had overall net outflows of $11.3 billion, which includes $4 billion of low-fee outflows related to the RGA transaction. On the other hand, AB continues to see strong momentum in its private markets business, which increased AUM by 18% to $82 billion and is well positioned to achieve its target of $90 to $100 billion in AUM by the end of 2027. AB ended 2025 with an institutional pipeline of $20 billion, and it has over $3 billion of additional insurance wins that are also expected to fund in 2026. One incremental growth opportunity is commercial real estate lending. AB is making investments to enhance its platform and will onboard more than $10 billion of Equitable's commercial mortgage loan portfolio in the second half of the year. This is a win for both companies and is another good example of the flywheel benefits between Equitable and AB.
Mark Pearson: It had overall net outflows of $11.3 billion, which includes $4 billion of low-fee outflows related to the RGA transaction. On the other hand, AB continues to see strong momentum in its private markets business, which increased AUM by 18% to $82 billion and is well positioned to achieve its target of $90 to $100 billion in AUM by the end of 2027. AB ended 2025 with an institutional pipeline of $20 billion, and it has over $3 billion of additional insurance wins that are also expected to fund in 2026. One incremental growth opportunity is commercial real estate lending. AB is making investments to enhance its platform and will onboard more than $10 billion of Equitable's commercial mortgage loan portfolio in the second half of the year. This is a win for both companies and is another good example of the flywheel benefits between Equitable and AB.
Speaker #3: which includes $4 billion of $11.3 billion, low-fee outflows related to the On the other hand, AB continues to see strong momentum in its private markets business.
Speaker #3: AUM increased by 18% to $82 billion, and is well positioned to achieve its target of $90 to $100 billion in AUM by the end of 2027.
Speaker #3: AB ended 2025 with an institutional pipeline of $20 billion, and it has over $3 billion of additional insurance wins that are also expected to fund in 2026.
Speaker #3: One incremental growth opportunity is commercial real estate lending. AB is making investments to enhance its platform and will equitize its commercial mortgage loan portfolio in the second half of the year.
Speaker #3: This is a win for both companies, and is another good example of the flywheel benefits between equitable and AB. Finally, we continue to make strong onboard more than $10 billion of progress on our strategic initiatives.
Erik Bass: Finally, we continue to make strong progress on our strategic initiatives. I already mentioned the life reinsurance transaction with RGA, which freed $2 billion of capital and reduced our mortality exposure by 75%. We used a portion of the proceeds to help drive growth in asset and wealth management by increasing our ownership stake in AB, funding and investment in the FCA re sidecar, and the acquisition of Stifel Independent Advisors. We are also on track to realize our targeted $150 million of expense savings by 2027, with $120 million currently in our run rate results. We have already achieved our $110 million target for incremental investment income from shifting to private markets and see opportunity for further upside. Moving to slide 4, we highlight some of the key performance indicators for our growth strategy and the progress since our 2023 investor day.
Mark Pearson: Finally, we continue to make strong progress on our strategic initiatives. I already mentioned the life reinsurance transaction with RGA, which freed $2 billion of capital and reduced our mortality exposure by 75%. We used a portion of the proceeds to help drive growth in asset and wealth management by increasing our ownership stake in AB, funding and investment in the FCA re sidecar, and the acquisition of Stifel Independent Advisors. We are also on track to realize our targeted $150 million of expense savings by 2027, with $120 million currently in our run rate results. We have already achieved our $110 million target for incremental investment income from shifting to private markets and see opportunity for further upside. Moving to slide 4, we highlight some of the key performance indicators for our growth strategy and the progress since our 2023 investor day.
Speaker #3: I already mentioned the live-three insurance transaction with RGA, which freed $2 billion of capital and reduced our mortality exposure by 75%. We used a portion of the proceeds to help drive growth in asset and wealth management by increasing our ownership stake in AB and funding an investment in the FCA Re Sidecar and the acquisition of Stifel Independent Advisors.
Speaker #3: We are also on track to realize our targeted $150 million of expense savings by 2027, with $120 million currently in our run-rate results. We have already achieved our $110 million target for incremental investment income from shifting to private markets, and see opportunity for further upside.
Speaker #3: Moving to slide four, we highlight some of the key performance indicators for our growth strategy, and the progress since our 2023 Investor Day. I've already mentioned several of these, so I'll just focus on a couple of areas.
Erik Bass: I've already mentioned several of these, so I'll just focus on a couple of areas. In retirement, net flows and AUM growth are running ahead of investor day forecasts. We also are making progress in growing our institutional business, which had over $600 million of net inflows in 2025 across in-plan annuities and HSAs. We expect a similar level of inflows in 2026 and forecast this to ramp further over time. In wealth management, we achieved our target of $200 million in annual earnings two years ahead of plan, and the business has excellent momentum given top quartile organic growth and rising advisor productivity. We expect wealth management to sustain double-digit annual earnings growth, assuming normal market conditions. Finally, AB has done a good job in executing on its margin initiatives, and it reported a 33.7% adjusted operating margin in 2025 at the upper end of its targeted range.
Mark Pearson: I've already mentioned several of these, so I'll just focus on a couple of areas. In retirement, net flows and AUM growth are running ahead of investor day forecasts. We also are making progress in growing our institutional business, which had over $600 million of net inflows in 2025 across in-plan annuities and HSAs. We expect a similar level of inflows in 2026 and forecast this to ramp further over time. In wealth management, we achieved our target of $200 million in annual earnings two years ahead of plan, and the business has excellent momentum given top quartile organic growth and rising advisor productivity. We expect wealth management to sustain double-digit annual earnings growth, assuming normal market conditions. Finally, AB has done a good job in executing on its margin initiatives, and it reported a 33.7% adjusted operating margin in 2025 at the upper end of its targeted range.
Speaker #3: In retirement, net flows and AUM growth are running ahead of investor day forecasts. We also are making progress in growing our institutional $600 million of net business, which had over inflows in 2025 across in-plan annuities and HSAs.
Speaker #3: We expect a similar level of inflows in 2026 and forecast this to ramp further over time. In wealth management, we achieved our target of $200 million in annual earnings two years ahead of plan, and the business has excellent momentum given top quartile organic growth and rising advisor productivity.
Speaker #3: We expect wealth management to sustain double-digit annual earnings growth, assuming normal market conditions. Finally, AB has done a good job in executing on its margin initiatives, and it reported a 33.7% adjusted operating margin in 2025 at the upper end of its targeted range.
Erik Bass: At the same time, it is seeing benefits from growth investments in areas such as private markets, insurance asset management, and active ETFs. Overall, we see good commercial growth momentum, which will support further growth in earnings and cash flows. Slide five provides an update on progress against our 2027 financial targets. Starting with cash generation, we remain on track to reach $2 billion in 2027. As I mentioned earlier, we forecast $1.8 billion of cash generation in 2026, which represents greater than 10% year-over-year growth. Over 50% of cash flow is coming from asset and wealth management, and we now have a track record of paying dividends from our Arizona insurance entity, giving us good visibility into future cash flows. Through 12 quarters, our payout ratio is 67% at the high end of our targeted 60 to 70% range.
Mark Pearson: At the same time, it is seeing benefits from growth investments in areas such as private markets, insurance asset management, and active ETFs. Overall, we see good commercial growth momentum, which will support further growth in earnings and cash flows. Slide five provides an update on progress against our 2027 financial targets. Starting with cash generation, we remain on track to reach $2 billion in 2027. As I mentioned earlier, we forecast $1.8 billion of cash generation in 2026, which represents greater than 10% year-over-year growth. Over 50% of cash flow is coming from asset and wealth management, and we now have a track record of paying dividends from our Arizona insurance entity, giving us good visibility into future cash flows. Through 12 quarters, our payout ratio is 67% at the high end of our targeted 60 to 70% range.
Speaker #3: same time, it is seeing benefits from growth investments in areas such At the as private markets, insurance asset management, and Overall, we see good active ETFs.
Speaker #3: commercial growth momentum, which will support further growth in earnings and flows. Slide five provides an update on progress against our cash 2027 financial targets.
Speaker #3: Starting with cash generation, we remain on track to reach $2 billion in 2027. As I mentioned earlier, we forecast $1.8 billion of cash generation in 2026, which represents greater than 10% year-over-year growth.
Speaker #3: Over 50% of cash flow is coming we now have a track record of paying from asset and wealth management, and dividends from our Arizona insurance entity giving us good visibility into future cash flows.
Speaker #3: The 12 quarters are payout ratios 67% at the high end of our range. Note that this does not include the $500 million of incremental share repurchases funded by the RGA transaction.
Erik Bass: Note that this does not include the $500 million of incremental share repurchases funded by the RGA transaction. The one area where we are currently below our target is earnings per share growth, which has been 8% through the first three years of our plan. We attribute this primarily to the elevated mortality claims experienced in 2025. Our exposure to mortality is significantly reduced following the life reinsurance transaction, and we expect EPS growth to improve in 2026, getting us back on track. Turning to slide 6, I want to highlight some of the reasons we feel confident in projecting strong growth in 2026. First, we ended 2025 with a record level of assets under management across each of our business segments, which bodes well for growth in fee and spread-based earnings.
Mark Pearson: Note that this does not include the $500 million of incremental share repurchases funded by the RGA transaction. The one area where we are currently below our target is earnings per share growth, which has been 8% through the first three years of our plan. We attribute this primarily to the elevated mortality claims experienced in 2025. Our exposure to mortality is significantly reduced following the life reinsurance transaction, and we expect EPS growth to improve in 2026, getting us back on track. Turning to slide 6, I want to highlight some of the reasons we feel confident in projecting strong growth in 2026. First, we ended 2025 with a record level of assets under management across each of our business segments, which bodes well for growth in fee and spread-based earnings.
Speaker #3: The one area we are currently below our target is earnings per share growth, which has been 8% through the first three years of our plan.
Speaker #3: We attribute this primarily to the elevated mortality claims experienced in 2025. Our exposure to reduced following the live-three insurance transaction. And we expect EPS growth to improve in 2026, getting us back on track.
Speaker #3: Turning to slide six, I want to highlight some of the reasons we feel confident in projecting strong growth in 2026. First, we ended 2025 with a record level of assets under management across each of our business segments.
Speaker #3: Which bodes well for growth in fee- and spread-based earnings. Given the healthy organic growth momentum we have discussed, particularly in retirement and wealth management, we expect continued growth in assets under management and advice moving forward.
Erik Bass: Given the healthy organic growth momentum we have discussed, particularly in retirement and wealth management, we expect continued growth in assets under management and advice moving forward. Importantly, we also have significantly less exposure to future fluctuations in mortality claims. The RGA transaction reduced our net mortality exposure by 75%, so even if 2025's experience were to recur, the bottom line impact would be materially reduced. Finally, we will get the full benefit from the additional share repurchases executed in the second half of 2025. We've reduced our share count by 9% over the past year, which provides a nice tailwind for EPS growth in 2026. Equitable is well positioned in attractive growing markets, and I'm confident in our ability to execute on the opportunity in front of us. I will now turn the call over to Robin to discuss our fourth quarter results and outlook in more detail.
Mark Pearson: Given the healthy organic growth momentum we have discussed, particularly in retirement and wealth management, we expect continued growth in assets under management and advice moving forward. Importantly, we also have significantly less exposure to future fluctuations in mortality claims. The RGA transaction reduced our net mortality exposure by 75%, so even if 2025's experience were to recur, the bottom line impact would be materially reduced. Finally, we will get the full benefit from the additional share repurchases executed in the second half of 2025. We've reduced our share count by 9% over the past year, which provides a nice tailwind for EPS growth in 2026. Equitable is well positioned in attractive growing markets, and I'm confident in our ability to execute on the opportunity in front of us. I will now turn the call over to Robin to discuss our fourth quarter results and outlook in more detail.
Speaker #3: Importantly, we also have significantly less exposure to future fluctuations in mortality claims, the RGA transaction reduced our net mortality exposure by 75%. So even if 2025's experience were to recur, the bottom line impact would be materially reduced.
Speaker #3: Finally, we will get the full benefit from the additional share repurchases executed in the second half of 2025. We've reduced our share count by 9% over the past year, which provides a nice tailwind for EPS growth in 2026.
Speaker #3: Equitable is well I'm confident in our ability to execute on the opportunity in front of positioned in attractive growing markets and us. I will now turn the call over to Robin, to discuss our fourth quarter results and outlook in more detail.
Speaker #2: Thank you, Mark. Turning to slide seven, I'll provide some more detail on our fourth quarter results. On a consolidated basis, non-GAAP operating earnings were $513 million, share.
Erik Bass: Thank you, Mark. Turning to slide seven, I'll provide some more detail on our fourth quarter results. On a consolidated basis, non-GAAP operating earnings were $513 million, or $1.73 per share, and we reported net income of $215 million. The only notable item we had in the quarter was $10 million of non-cash expense in corporate and other related to the write-off of a legacy software investment. Excluding this, non-GAAP operating earnings per share would have been $1.76, up 8% year-over-year. Our consolidated tax rate was approximately 18% this quarter, consistent with the guidance we provided. Total assets under management and administration increased 10% year-over-year to a record $1.1 trillion, which provides a tailwind for earnings as we enter 2026. Adjusted book value per share ex AOCI and with AB at market value was $33.84.
Robin Raju: Thank you, Mark. Turning to slide seven, I'll provide some more detail on our fourth quarter results. On a consolidated basis, non-GAAP operating earnings were $513 million, or $1.73 per share, and we reported net income of $215 million. The only notable item we had in the quarter was $10 million of non-cash expense in corporate and other related to the write-off of a legacy software investment. Excluding this, non-GAAP operating earnings per share would have been $1.76, up 8% year-over-year. Our consolidated tax rate was approximately 18% this quarter, consistent with the guidance we provided. Total assets under management and administration increased 10% year-over-year to a record $1.1 trillion, which provides a tailwind for earnings as we enter 2026. Adjusted book value per share ex AOCI and with AB at market value was $33.84.
Speaker #2: And we reported net or $1.73 per million. The only notable item we had in the quarter was expense in corporate and other, related to the write-off of a legacy software investment.
Speaker #2: Excluding this, non-GAAP operating earnings per share would have been $1.76, up up 8% year over year. Our consolidated tax rate was approximately 18% this quarter, consistent with the guidance we provided.
Speaker #2: Total assets under management and administration increased 10% year over year to a record $1.1 trillion. Which provides a tailwind for earnings as we enter 2026.
Speaker #2: XAOCI and would aid Adjusted book value per share the market value, was $33.84. In our view, this is a more meaningful number than reported book value per share, which significantly understates the fair value of our AB stake.
Erik Bass: In our view, this is a more meaningful number than reported book value per share, which significantly understates the fair value of our AB stake. On this basis, our adjusted debt to capital ratio ended the year at 25%. On slide 8, I'll provide some further details on our segment-level earnings drivers. In retirement, Q4 earnings increased 4% year-over-year and 2% sequentially after adjusting for notable items. Given differences in tax rates across different periods, I'll focus on pre-tax results. Net interest margin, or NIM, increased 2% sequentially, driven by the growth in general account assets. As expected, our NIM spread compressed modestly versus Q3, reflecting the runoff of our very profitable older RILA block and some timing noise in investment income. We expect some additional spread compression in the first half of 2026, but anticipate spreads will stabilize after that.
Robin Raju: In our view, this is a more meaningful number than reported book value per share, which significantly understates the fair value of our AB stake. On this basis, our adjusted debt to capital ratio ended the year at 25%. On slide 8, I'll provide some further details on our segment-level earnings drivers. In retirement, Q4 earnings increased 4% year-over-year and 2% sequentially after adjusting for notable items. Given differences in tax rates across different periods, I'll focus on pre-tax results. Net interest margin, or NIM, increased 2% sequentially, driven by the growth in general account assets. As expected, our NIM spread compressed modestly versus Q3, reflecting the runoff of our very profitable older RILA block and some timing noise in investment income. We expect some additional spread compression in the first half of 2026, but anticipate spreads will stabilize after that.
Speaker #2: adjusted debt to capital ratio On this basis, our end of the year at 25%. On slide eight, I'll provide some further details on our segment-level earnings drivers.
Speaker #2: In Retirement, fourth quarter earnings increased 4% year over year, and 2% sequentially, after adjusting for notable items. Given differences in tax rates across different periods, I'll focus on pre-tax results.
Speaker #2: Net interest margin or NIM increased 2% sequentially, driven by the growth in general account assets. As expected, our NIM spread compressed modestly versus the third quarter.
Speaker #2: Reflecting the runoff of our very profitable older Riley block and some timing noise in investment income. We expect some additional spread compression in the first half of 2026.
Speaker #2: spreads will stabilize after But anticipate that. Over time, we expect quarterly NIM growth to roughly track the growth in general account assets excluding embedded derivatives.
Erik Bass: Over time, we expect quarterly NIM growth to roughly track the growth in general account assets, excluding embedded derivatives. Fee-based revenues increased 8% sequentially, driven by higher average separate account AUM as well as a favorable catch-up adjustment. Offsetting the growth in revenues was higher commission expense. While we expect commissions to trend higher over time with increased sales, the sequential growth was inflated by an allocation drop with wealth management. This shifted some earnings between segments but had a neutral impact at a total company level. Putting it all together, we viewed this quarter's level of pre-tax retirement earnings as a reasonable starting point from which to project future growth. Turning to asset management, AB reported strong fourth quarter results with earnings up 4% sequentially. Base fees continue to benefit from growth in average AUM, and performance fees of $82 million came in above our guidance.
Robin Raju: Over time, we expect quarterly NIM growth to roughly track the growth in general account assets, excluding embedded derivatives. Fee-based revenues increased 8% sequentially, driven by higher average separate account AUM as well as a favorable catch-up adjustment. Offsetting the growth in revenues was higher commission expense. While we expect commissions to trend higher over time with increased sales, the sequential growth was inflated by an allocation drop with wealth management. This shifted some earnings between segments but had a neutral impact at a total company level. Putting it all together, we viewed this quarter's level of pre-tax retirement earnings as a reasonable starting point from which to project future growth. Turning to asset management, AB reported strong fourth quarter results with earnings up 4% sequentially. Base fees continue to benefit from growth in average AUM, and performance fees of $82 million came in above our guidance.
Speaker #2: Fee-based revenues increased 8% sequentially, driven by higher average separate account AUM, as well as favorable catch-up adjustments. Offsetting the growth in revenues with higher commission expense.
Speaker #2: While we expect commissions to trend higher over time with increased sales, the sequential growth with inflated by an allocation trough with wealth management. This shifted some earnings between segments but had a neutral impact at a total company level.
Speaker #2: Putting it all together, we view this quarter's level of pre-tax retirement earnings as a reasonable starting point from which to project future growth. Turning to Asset Management, AB reported strong fourth-quarter results.
Speaker #2: With earnings up 4% sequentially, base fees continued to benefit from growth in average AUM, and performance fees of $82 million came in above our guidance.
Speaker #2: AB delivered a full year margin of 33.7%. At the upper end of our 30 to 35% guidance range provided at investor day. As a reminder, AB has seasonality in results, giving the timing of performance fees.
Erik Bass: AB delivered a full-year margin of 33.7% at the upper end of our 30% to 35% guidance range provided at investor day. As a reminder, AB has seasonality in results, given the timing of performance fees, but the business is entering 2026 with solid earnings momentum. Moving to wealth management, fourth quarter earnings increased 40% year over year, and the business exceeded our target of $200 million in annual earnings two years ahead of schedule. Results in this quarter benefited from a favorable commission adjustment from retirement and elevated transaction fees, and we view $60 million of quarterly earnings as a better run rate. We continue to forecast double-digit earnings growth moving forward, supported by steady increases in AUA and advisor productivity. Wealth management attracted $2.1 billion of advisory net flows in the quarter and $8.4 billion for the full year, a 13% organic growth rate.
Robin Raju: AB delivered a full-year margin of 33.7% at the upper end of our 30% to 35% guidance range provided at investor day. As a reminder, AB has seasonality in results, given the timing of performance fees, but the business is entering 2026 with solid earnings momentum. Moving to wealth management, fourth quarter earnings increased 40% year over year, and the business exceeded our target of $200 million in annual earnings two years ahead of schedule. Results in this quarter benefited from a favorable commission adjustment from retirement and elevated transaction fees, and we view $60 million of quarterly earnings as a better run rate. We continue to forecast double-digit earnings growth moving forward, supported by steady increases in AUA and advisor productivity. Wealth management attracted $2.1 billion of advisory net flows in the quarter and $8.4 billion for the full year, a 13% organic growth rate.
Speaker #2: But the business is entering 2026 with solid earnings momentum. Moving to increased 40% year over wealth management, fourth quarter earnings year, and the business exceeded our target of $200 million in annual earnings two years ahead of schedule.
Speaker #2: quarter benefited from a favorable commission Results in this adjustment from retirement and elevated transaction fees, and we view $60 million of quarterly earnings as a better run rate.
Speaker #2: We continue to forecast double-digit earnings growth moving forward, supported by steady increases in AUA and advisor productivity. Wealth Management attracted $2.1 billion of advisory net flows in the quarter, and $8.4 billion for the full year—a 13% organic growth rate.
Speaker #2: This compares favorably versus industry peers, and we are excited about the outlook for 2026. Finally, corporate and other reported a loss of $123 million in the quarter.
Erik Bass: This compares favorably versus industry peers, and we are excited about the outlook for 2026. Finally, corporate and other reported a loss of $123 million in the quarter. This was higher than our expectation due to $10 million of one-time expenses, approximately $25 million of elevated mortality, and a lower tax rate. The adverse mortality experience was concentrated in December and resulted from a high number of small claims with less reinsurance coverage. While we still retain some exposure to fluctuations in mortality, the RGA transaction has significantly narrowed the range of potential outcomes going forward. Turning to slide 9, I'll highlight Equitable's capital management program and cash flow outlook. In Q4, we returned $354 million to shareholders, including $277 million of share repurchases.
Robin Raju: This compares favorably versus industry peers, and we are excited about the outlook for 2026. Finally, corporate and other reported a loss of $123 million in the quarter. This was higher than our expectation due to $10 million of one-time expenses, approximately $25 million of elevated mortality, and a lower tax rate. The adverse mortality experience was concentrated in December and resulted from a high number of small claims with less reinsurance coverage. While we still retain some exposure to fluctuations in mortality, the RGA transaction has significantly narrowed the range of potential outcomes going forward. Turning to slide 9, I'll highlight Equitable's capital management program and cash flow outlook. In Q4, we returned $354 million to shareholders, including $277 million of share repurchases.
Speaker #2: This was higher than our expectation, due to $10 million of one-time expenses, approximately $25 million of elevated mortality, and a lower tax rate. The adverse mortality experience was concentrated in December and resulted from a high number of small claims with less reinsurance coverage.
Speaker #2: While we still retain some exposure to fluctuations in mortality, the RGA transaction has significantly narrowed the range of potential outcomes going forward. Turning to slide nine, I'll highlight equitable capital management programs and cash flow outlook.
Speaker #2: In the fourth quarter, we returned shareholders, including $277 $354 million to million of share repurchases. For the full year, we reduced shares outstanding by million of incremental share repurchases, funded by proceeds from our individual life reinsurance transactions.
Erik Bass: For the full year, we reduced shares outstanding by 9%, which included $500 million of incremental share repurchases funded by proceeds from our individual life reinsurance transactions. Our full-year payout ratio was 95%, or 68% excluding the additional $500 million of buybacks. We ended the year with $1.1 billion of cash at the holding company, up from $800 million at the end of Q3, and comfortably above our $500 million minimum target. During Q4, we received approximately $600 million of subsidiary dividends, including the annual distribution from our wealth management business. As a reminder, our holding company cash position tends to be elevated at year-end due to timing of subsidiary distribution, and we expect it to trend lower in the first half of 2026. For the full year, we had total cash generation of $2.6 billion, which includes $1 billion of proceeds from the RGA transaction.
Robin Raju: For the full year, we reduced shares outstanding by 9%, which included $500 million of incremental share repurchases funded by proceeds from our individual life reinsurance transactions. Our full-year payout ratio was 95%, or 68% excluding the additional $500 million of buybacks. We ended the year with $1.1 billion of cash at the holding company, up from $800 million at the end of Q3, and comfortably above our $500 million minimum target. During Q4, we received approximately $600 million of subsidiary dividends, including the annual distribution from our wealth management business. As a reminder, our holding company cash position tends to be elevated at year-end due to timing of subsidiary distribution, and we expect it to trend lower in the first half of 2026. For the full year, we had total cash generation of $2.6 billion, which includes $1 billion of proceeds from the RGA transaction.
Speaker #2: full year payout ratio was Our or 68% excluding the 95%, additional $500 million of buybacks. We ended the year with $1.1 billion company, up from $800 million at the end of the third quarter, and comfortably above our $500 million minimum target.
Speaker #2: During the fourth quarter, we received approximately $600 million of subsidiary dividends, including the annual distribution from our Wealth segment.
Speaker #1: Management
Speaker #1: .
Speaker #2: As a reminder, as a holding company, cash tends to be elevated at year-end due to timing of subsidiary distributions, and we expect the cash position to be elevated in the first half of 2026 due to lower subsidiary distributions at year-end.
Speaker #2: expect And we the trend lower in the first half 2026 full year , distributions of 2.6 billion , we had which includes of from the RGA 1 billion of proceeds transaction .
Erik Bass: Organic cash generation was modestly above $1.6 billion and in line with our guidance range. As Mark mentioned, we expect approximately $1.8 billion of cash generation in 2026, and we remain on track to achieve $2 billion of annual cash generation in 2027. Finally, we expect our year-end 2025 combined NAIC/RBC Ratio to be approximately 475%, above our target of 400%+. This year-over-year increase reflects the benefit of the RGA transaction and provides us with ample capital flexibility moving forward. On slide 10, we highlight the value of new business, or VNB, which is generated mainly in our retirement business. VNB represents the present value of expected future cash flows from new sales, which is above and beyond the capital deployed to fund growth. It is intended to provide investors with some visibility into the drivers of future growth in cash flow from our insurance subsidiaries.
Robin Raju: Organic cash generation was modestly above $1.6 billion and in line with our guidance range. As Mark mentioned, we expect approximately $1.8 billion of cash generation in 2026, and we remain on track to achieve $2 billion of annual cash generation in 2027. Finally, we expect our year-end 2025 combined NAIC/RBC Ratio to be approximately 475%, above our target of 400%+. This year-over-year increase reflects the benefit of the RGA transaction and provides us with ample capital flexibility moving forward. On slide 10, we highlight the value of new business, or VNB, which is generated mainly in our retirement business. VNB represents the present value of expected future cash flows from new sales, which is above and beyond the capital deployed to fund growth. It is intended to provide investors with some visibility into the drivers of future growth in cash flow from our insurance subsidiaries.
Speaker #2: cash generation was modestly 1.6 billion , above in line with our and Organic guidance range we expect . As Marc mentioned , approximately 1.8 billion of cash generation and in 2026 , on remain we track to achieve annual cash 2 billion of 2027 .
Speaker #2: Finally , we expect our year 2025 combined end , RBC ratio to Naic be approximately generation 475% above our of target 400% , this year increase plus RGA year over transaction and with ample capital , provides us flexibility , moving forward .
Speaker #2: On slide ten , highlight the value of new business , or , which is mainly in our BMB business represents the present generated of expected future .
Speaker #2: from flows new sales , which is above and capital Vnb fund deployed to . It is growth provide investors with some into the drivers of future growth visibility and cash flow from our insurance subsidiaries .
Erik Bass: In 2025, we had record retirement sales, which helped drive an increase in VNB to $600 million. We deployed about $580 million of capital to support these sales. While our VNB margin declined modestly due to a shift in sales mix and a low spread environment, we continue to generate a 15%+ IRR on new business. We are able to achieve above-industry returns as a result of our unique distribution model, which leverages Equitable Advisors and results in a lower average cost of funds and a top quartile expense ratio in our retirement business. I would also note VNB did not include the impact of distribution fees earned in our wealth management business or investment management fees earned by AB. These are additional benefits of our integrated business model that show up as non-insurance earnings and cash flows.
Robin Raju: In 2025, we had record retirement sales, which helped drive an increase in VNB to $600 million. We deployed about $580 million of capital to support these sales. While our VNB margin declined modestly due to a shift in sales mix and a low spread environment, we continue to generate a 15%+ IRR on new business. We are able to achieve above-industry returns as a result of our unique distribution model, which leverages Equitable Advisors and results in a lower average cost of funds and a top quartile expense ratio in our retirement business. I would also note VNB did not include the impact of distribution fees earned in our wealth management business or investment management fees earned by AB. These are additional benefits of our integrated business model that show up as non-insurance earnings and cash flows.
Speaker #2: In 2025 , we had record retirement sales , which helped increase in drive an BMB We to 600 million . about deployed support these to sales 580 million of capital our margin .
Speaker #2: declined While to a shift in sales modestly due a low spread environment . mix and We to generate a 15% plus continue IRR on new business are achieve above to able .
Speaker #2: industry returns as a result of our model , which equitable unique distribution advisors and results in a lower average cost of top a funds expense ratio in our retirement business .
Speaker #2: I would also BMB note distribution impact a earned in our wealth business management or investment fees management earned by AB . These are benefits of our additional integrated business model show that as up Non-insurance earnings and cash flows .
Erik Bass: Turning to slide 11, I want to conclude by providing some additional guidance to help you forecast our results for 2026 and beyond. This assumes an 8% total return for equity markets and interest rates following the forward curve. We also forecast an 8% to 9% return for our alternative portfolio. Starting with retirement, we expect mid to high single-digit growth in pre-tax earnings, with spreads stabilizing in the second half of the year. Asset management results will be highly sensitive to markets, but we have provided some baseline guidance for the compensation ratio and non-comp expenses. In addition, AB has good visibility into achieving performance fees of at least $80 to $100 million in 2026. In wealth management, we forecast double-digit growth in earnings from the full-year 2025 level. Turning to corporate and other, we project a full-year loss in the $350 to $400 million range.
Robin Raju: Turning to slide 11, I want to conclude by providing some additional guidance to help you forecast our results for 2026 and beyond. This assumes an 8% total return for equity markets and interest rates following the forward curve. We also forecast an 8% to 9% return for our alternative portfolio. Starting with retirement, we expect mid to high single-digit growth in pre-tax earnings, with spreads stabilizing in the second half of the year. Asset management results will be highly sensitive to markets, but we have provided some baseline guidance for the compensation ratio and non-comp expenses. In addition, AB has good visibility into achieving performance fees of at least $80 to $100 million in 2026. In wealth management, we forecast double-digit growth in earnings from the full-year 2025 level. Turning to corporate and other, we project a full-year loss in the $350 to $400 million range.
Speaker #2: Turning to slide 11. I want to conclude by providing additional guidance to some of our results for forecast to help you in 2026 and beyond.
Speaker #2: This 8% total return for assumes an markets and interest equity following the forward curve . We also forecast an 8 to 9% return for our alternative portfolio , starting with retirement .
Speaker #2: We expect mid digit growth to high single pre-tax earnings in spreads with stabilizing year in the second half of the management results as sensitive to But will be we have provided some markets .
Speaker #2: baseline guidance for the compensation and ratio non-comp expenses addition , AB has good . visibility into achieving performance of at In 80 to 100 million in 2026 .
Speaker #2: In highly forecast wealth, digit growth in earnings, we full year fees 2025 level. Turning to Corporate and Other, project a full year loss in the $350 to $400 million range.
Erik Bass: There will be some quarterly volatility in results based on the seasonal pattern of mortality, with higher expected claims in the first and fourth quarters of the year. We have also increased our baseline gap assumption for mortality to incorporate recent experience. Finally, we expect a total company tax rate of approximately 20% and segment tax rates of 16% for retirement, 26% for wealth management, and 28% for asset management. We may have opportunity to execute on additional opportunistic tax planning initiatives in the first half of 2026, which could reduce our consolidated tax rate below the 20% level. Putting it all together, we expect growth in 2026 earnings per share, excluding notable items, to exceed our 12% to 15% target. I will now turn the call back over to Mark. Mark?
Robin Raju: There will be some quarterly volatility in results based on the seasonal pattern of mortality, with higher expected claims in the first and fourth quarters of the year. We have also increased our baseline gap assumption for mortality to incorporate recent experience. Finally, we expect a total company tax rate of approximately 20% and segment tax rates of 16% for retirement, 26% for wealth management, and 28% for asset management. We may have opportunity to execute on additional opportunistic tax planning initiatives in the first half of 2026, which could reduce our consolidated tax rate below the 20% level. Putting it all together, we expect growth in 2026 earnings per share, excluding notable items, to exceed our 12% to 15% target. I will now turn the call back over to Mark. Mark?
Speaker #2: There will be quarterly some volatility and results based on the seasonality of mortality; higher is expected within the first and fourth quarters of the year, with the first claims.
Speaker #2: We have increased our also GAAP baseline pattern to mortality incorporate recent assumption experience we . Finally , expect that tax rate of company total 20% and segment of rates approximately retirement , 16% for 26% for wealth management , and 28% for asset management .
Speaker #2: We opportunity to execute on may have tax planning opportunistic tax initiatives in the first half of 2026 , could which reduce our tax rate the below 20% level .
Speaker #2: Putting it all together , we expect growth in 2026 . Earnings excluding notable items to share , per exceed 12 to 15% target .
Mark Pearson: Thanks, Robin. As I mentioned at the beginning of the call, Equitable has been on a journey since our IPO to build a more profitable and faster-growing company, and we enter 2026 with solid momentum. We have a strong balance sheet and continue to increase our organic cash generation. This has enabled us to consistently return capital to shareholders while also investing for growth. You can see this in the strong net flows we are generating across retirement, wealth management, and AB private markets, and each of our business segments ended the year with record AUM. As Robin and I have both discussed, we have tailwinds that should drive stronger earnings per share growth in 2026, and we remain focused on achieving our 2027 financial targets. We will now open the line to take your questions.
Mark Pearson: Thanks, Robin. As I mentioned at the beginning of the call, Equitable has been on a journey since our IPO to build a more profitable and faster-growing company, and we enter 2026 with solid momentum. We have a strong balance sheet and continue to increase our organic cash generation. This has enabled us to consistently return capital to shareholders while also investing for growth. You can see this in the strong net flows we are generating across retirement, wealth management, and AB private markets, and each of our business segments ended the year with record AUM. As Robin and I have both discussed, we have tailwinds that should drive stronger earnings per share growth in 2026, and we remain focused on achieving our 2027 financial targets. We will now open the line to take your questions.
Speaker #2: I will now turn the to Marc . Marc . Thanks , Robin .
Speaker #3: mentioned at the I As beginning of the call , equitable has been on a journey since our IPO a more to build and faster profitable growing company , and we
Speaker #3: 2026 with solid
Speaker #3: momentum . We have a strong balance and continue to sheet organic call cash generation has consistently enabled us to return capital to while growth investing for shareholders .
Speaker #3: You also can see this in the strong we are generating retirement net flows management and AB markets . And each of business our ended the year record with , as Robin and I are both discussed , we have tailwinds that should drive stronger earnings per private share 2026 , growth in and we remain focused on achieving 2027 financial our targets We will now open the to take your line questions .
Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Suneet Kamath from Jefferies. Your line is open. Please go ahead.
Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Suneet Kamath from Jefferies. Your line is open. Please go ahead.
Speaker #4: will now We begin the answer question and session . Please one yourself to . If you up ask a would like to question and question , one follow limit please Star one on your .
Speaker #4: keypad withdraw your To telephone question , press star one . press , please pick up handset Again your question when muted locally to unmute your device .
Speaker #4: Stand by, please, while we compile the Q&A roster. A question comes from the line of Camus Suneet. Your line is open.
Suneet Kamath: Great, thanks. I just wanted to start with private credit again. It seems like your stock trades like a private equity company except on the days when those stocks go up. And I know you have some slides in the back talking about private credit, but can you just talk a little bit about how you're feeling about the quality of what you have in the portfolio? I don't know if you have a watchlist, if you can talk about some of the sectors that you're particularly focused on. It just seems like this is an ongoing kind of overhang on the stock. Thanks.
Suneet Kamath: Great, thanks. I just wanted to start with private credit again. It seems like your stock trades like a private equity company except on the days when those stocks go up. And I know you have some slides in the back talking about private credit, but can you just talk a little bit about how you're feeling about the quality of what you have in the portfolio? I don't know if you have a watchlist, if you can talk about some of the sectors that you're particularly focused on. It just seems like this is an ongoing kind of overhang on the stock. Thanks.
Speaker #4: Please go ahead . .
Speaker #5: Great . Thanks . just wanted to private I credit start with again . It seems like trades your stock private equity like a except on the days when those stocks go and up I know you have some
Speaker #5: you're about the quality in the what you have of portfolio ? I don't know if you have a If you can talk about some of the watch list .
Robin Raju: Sure. Morning, Suneet. And we look forward to the multiple of those private credit companies for Equitable over time. But we added slide 16 in the earnings presentation to give some a little bit more disclosure on our private credit portfolio. So private credit, if you take a step back, it's about 16% of our total GA. Within that, almost 50% of that is within corporate private placements, which is nothing new for insurance companies over time. There has been some recent noise about software. That's typically found in the direct lending portion of the portfolio. That's about 4% of the private credit portfolio, or 1% direct lending is 1% of the total GA. Software specifically within the direct lending is a small portion of that. It's 15 basis points of the total general account.
Robin Raju: Sure. Morning, Suneet. And we look forward to the multiple of those private credit companies for Equitable over time. But we added slide 16 in the earnings presentation to give some a little bit more disclosure on our private credit portfolio. So private credit, if you take a step back, it's about 16% of our total GA. Within that, almost 50% of that is within corporate private placements, which is nothing new for insurance companies over time. There has been some recent noise about software. That's typically found in the direct lending portion of the portfolio. That's about 4% of the private credit portfolio, or 1% direct lending is 1% of the total GA. Software specifically within the direct lending is a small portion of that. It's 15 basis points of the total general account.
Speaker #5: it just seems like on , particularly this is about kind of overhang focused Thanks stock . .
Speaker #6: Sure remember and . Morning , those . Private multiple of the credit we look equitable forward to for But time . we added on 16 in the earnings to give some a little bit more disclosure on our private credit private portfolio .
Speaker #6: if you take a step back . It's So about 16% of our . Within , almost 50% of that is within that private GA placements , which corporate is nothing insurance .
Speaker #6: Over there has been time, recent, some noise about companies' software new for that's typically found in the direct lending portion of the portfolio.
Speaker #6: about That's private credit 4% of the portfolio , or Direct lending is 1% of the total GA . Software , specifically direct lending within the small portion of that .
Robin Raju: So it's really immaterial for us, and we're underweight the industry benchmarks on our software exposure within that for Equitable on the general account. Maybe I'll pass to Onur to speak about private credit at AllianceBernstein within the broader client portfolios as well. Onur?
Robin Raju: So it's really immaterial for us, and we're underweight the industry benchmarks on our software exposure within that for Equitable on the general account. Maybe I'll pass to Onur to speak about private credit at AllianceBernstein within the broader client portfolios as well. Onur?
Speaker #6: It's 15 basis points of the total . General account . So it's really a for us . And we're underweight benchmarks on the our software within equitable for industry that account .
Speaker #6: under general Maybe I'll pass honor to speak about private credit at Alliancebernstein . the broader client 1% . Owner well . .
Onur Erzan: Yeah. Thanks, Robin. Just to start with the broader context, if you think about our AUM, which is approaching $900 billion, private credit broadly defined makes up roughly $82 billion, both in terms of fee-paying and fee-eligible assets. Within that, the corporate direct lending that Robin mentioned makes up roughly 25% of that $82. So within the grand scheme of things, it's also a relatively small exposure to AB overall as a category. And within that, we have some exposure to software in line with the other corporate direct lending franchises. But our experience so far has been spectacular over the last decade plus. We have deployed $15 billion with software companies. We had zero net losses in that. When we look at our current portfolio, our elevated risk rating is only 3% of those companies that is in our portfolio.
Onur Erzan: Yeah. Thanks, Robin. Just to start with the broader context, if you think about our AUM, which is approaching $900 billion, private credit broadly defined makes up roughly $82 billion, both in terms of fee-paying and fee-eligible assets. Within that, the corporate direct lending that Robin mentioned makes up roughly 25% of that $82. So within the grand scheme of things, it's also a relatively small exposure to AB overall as a category. And within that, we have some exposure to software in line with the other corporate direct lending franchises. But our experience so far has been spectacular over the last decade plus. We have deployed $15 billion with software companies. We had zero net losses in that. When we look at our current portfolio, our elevated risk rating is only 3% of those companies that is in our portfolio.
Speaker #7: thanks Within , Robin to start with ,
Speaker #7: about our which is approaching $900 billion private credit , broadly defined , makes up portfolios as roughly both in terms of fee $82 billion , eligible assets that , the paying and fee lending .
Speaker #7: relatively also within to AB a overall as And within category . that it's exposure to as a other with corporate direct lending franchises .
Speaker #7: But our experience far has been spectacular over , the last plus so , we have deployed $15 billion with software companies . decade zero net losses in We had that .
Speaker #7: we look at our current portfolio elevated risk is only 3% of When as a a big exposure for us either . Second , we feel .
Onur Erzan: So as a result, A, it's not a big exposure for us either. Second, we feel confident about our history of underwriting discipline. And then third, we are remaining very confident about the health of our current portfolio. So overall, it's not a big event for us so far. So we remain relatively constructive.
Onur Erzan: So as a result, A, it's not a big exposure for us either. Second, we feel confident about our history of underwriting discipline. And then third, we are remaining very confident about the health of our current portfolio. So overall, it's not a big event for us so far. So we remain relatively constructive.
Speaker #7: confident So about our history of underwriting discipline . And then third , we are remaining confident about the health of our current very portfolio .
Suneet Kamath: Okay. And Suneet, just to wrap it up, look, yeah, private credit, it's an important asset class for us. The liabilities within the insurance company fit well with private credit. With AB, as Onur mentioned, we get a good direct look at the underwriting. That makes us comfortable with the risk in there, and it delivers good risk-adjusted returns for us. So it's an asset class that we think it's important for insurance companies to invest in. They're important for the economy, and they're important for our clients at AB. And so we'll maintain our discipline and ensure we deliver good risk-adjusted returns for our clients. Okay. Appreciate that. And then just shifting gears to wealth management, one of the things we're hearing is competition for advisors has been increasing, and then there's pretty sizable packages being offered.
Mark Pearson: Okay. And Suneet, just to wrap it up, look, yeah, private credit, it's an important asset class for us. The liabilities within the insurance company fit well with private credit. With AB, as Onur mentioned, we get a good direct look at the underwriting. That makes us comfortable with the risk in there, and it delivers good risk-adjusted returns for us. So it's an asset class that we think it's important for insurance companies to invest in. They're important for the economy, and they're important for our clients at AB. And so we'll maintain our discipline and ensure we deliver good risk-adjusted returns for our clients.
Speaker #7: So overall, results and events for big U.S. so far. So we remain constructive.
Speaker #6: that makes us with the risk in there . And delivers good it risk adjusted So it's us . asset class that we an important returns for for companies to invest in insurance .
Suneet Kamath: Okay. Appreciate that. And then just shifting gears to wealth management, one of the things we're hearing is competition for advisors has been increasing, and then there's pretty sizable packages being offered.
Speaker #6: the economy and they're important clients for our at They're so our important for ensure discipline and we deliver good risk adjusted returns for our clients
Speaker #6: we'll maintain Yeah
Speaker #5: that . And then just Appreciate
Speaker #5: shifting gears to wealth management , you know , hearing one of the things we're competition for know , been is , you increasing .
Speaker #5: shifting gears to wealth management , you know , hearing one of the things we're competition for know , been advisors sizable pretty packages being when I look at your in wealth planning has , just curious how much of that is coming external hires versus internal promotions .
Suneet Kamath: When I look at your 12% growth in wealth planning, just curious how much of that is coming from external hires versus internal promotions. And what is your sort of target market in terms of the practices that you go after? Thanks.
Suneet Kamath: When I look at your 12% growth in wealth planning, just curious how much of that is coming from external hires versus internal promotions. And what is your sort of target market in terms of the practices that you go after? Thanks.
Nick Lane: Yeah. Thanks. This is Nick. Look, we're very encouraged by our organic growth rate that we see coming from our existing advisors. That was $8.4 billion of net flows for the year. We bring a distinct model out to the space given our people, our planning, and our platform. We're one of the few platforms that continue to bring new advisors into the industry, and that gives us a pipeline to grow wealth planners, as Mark highlighted, which were up 12% year-over-year and have more than doubled since we IPOed back in 2018. We're very pleased with the progress of our EXP hiring efforts. We recruited $1.4 billion in assets for the year in 2025. As context, it's a large addressable market. There are about 150,000 Series 7 producers. About 12,000 a year are looking for new homes.
Nick Lane: Yeah. Thanks. This is Nick. Look, we're very encouraged by our organic growth rate that we see coming from our existing advisors. That was $8.4 billion of net flows for the year. We bring a distinct model out to the space given our people, our planning, and our platform. We're one of the few platforms that continue to bring new advisors into the industry, and that gives us a pipeline to grow wealth planners, as Mark highlighted, which were up 12% year-over-year and have more than doubled since we IPOed back in 2018. We're very pleased with the progress of our EXP hiring efforts. We recruited $1.4 billion in assets for the year in 2025. As context, it's a large addressable market. There are about 150,000 Series 7 producers. About 12,000 a year are looking for new homes.
Speaker #5: And target market in terms of who you go after? Thanks.
Speaker #8: Look , This is Nick . we're very encouraged by our organic growth that we rate see
Speaker #8: . practices that That was 8.4 billion of net flows for the bring a model to the space . Given . people , our our We planning and our platform .
Speaker #8: year We're one of the few continue to bring platforms that into the from industry , and that gives pipeline advisors grow wealth . Mark highlighted , which 12% year over were up have more to since we than and 2018 .
Speaker #8: Very the progress of our ESP efforts. Hiring in $1.4 billion in assets for the year in 2025. As context, a large addressable market.
Nick Lane: We hired a 20-year veteran to run our EXP Hires, who knows the market well, and has built a disciplined approach here at Equitable. We are very intentional about the type of advisors we target and believe we have a distinct model for EXP Hires who are looking to grow their businesses or transition their practices to other advisors. So we've got an edge. We'll remain disciplined. We're very bullish about our organic growth drivers and productivity in wealth planners, and we see EXPs as a force multiple on top of that.
Nick Lane: We hired a 20-year veteran to run our EXP Hires, who knows the market well, and has built a disciplined approach here at Equitable. We are very intentional about the type of advisors we target and believe we have a distinct model for EXP Hires who are looking to grow their businesses or transition their practices to other advisors. So we've got an edge. We'll remain disciplined. We're very bullish about our organic growth drivers and productivity in wealth planners, and we see EXPs as a force multiple on top of that.
Speaker #8: There are about 150,000 series producers; about 12,000 a year are looking for new opportunities. We hired a 20-year veteran to run our team.
Speaker #8: Hires Exp market well and knows the a homes . approach equitable . here at We are very has built about advisors we of the type and target have a believe we distinct model for Exp hires who are looking to grow their businesses or transition their practices to other advisors .
Speaker #8: So we've got an edge. We'll remain disciplined, very bullish about our organic growth drivers and productivity, and wealth planners see exp as intentional.
Suneet Kamath: All right. Thanks.
Suneet Kamath: All right. Thanks.
Speaker #8: multiplier
Speaker #8: On that .
Operator: Your next question comes from the line of Tom Gallagher from Evercore ISI. Your line is open. Please go ahead.
Operator: Your next question comes from the line of Tom Gallagher from Evercore ISI. Your line is open. Please go ahead.
Speaker #5: All Thanks right .
Speaker #4: Your next question comes from the line of Tom
Speaker #4: Gallagher from Evercore . Your
Tom Gallagher: Good morning. First question is, when I look at the value of your AB stake now and I compare it to the value of the Equitable stock, everyone looks at that, tracks it from time to time. That valuation spread is probably as big as it's been in a very long time because AB's done well. Equitable, not so much. Is there anything structurally you can do to close that valuation gap when you think about potential corporate strategies, or is that more of a theoretical gap that you're just going to have to live with and hope it closes over time?
Tom Gallagher: Good morning. First question is, when I look at the value of your AB stake now and I compare it to the value of the Equitable stock, everyone looks at that, tracks it from time to time. That valuation spread is probably as big as it's been in a very long time because AB's done well. Equitable, not so much. Is there anything structurally you can do to close that valuation gap when you think about potential corporate strategies, or is that more of a theoretical gap that you're just going to have to live with and hope it closes over time?
Speaker #4: line is ISI Please go ahead .
Speaker #9: Good morning First question . is when I look at the top of value your of stake . Now and I compare it to the value of the equitable stock , you know , everyone AB that , tracks it from time to That time .
Speaker #9: valuation probably been as it's in a , because spread is AB has done well , as big equitable , much . Is there anything very long structurally you to close can do that valuation time gap ?
Speaker #9: When you think about corporate strategies , or is that more of a theoretical you're have to live with just going to it and hope closes over time gap that ?
Onur Erzan: Morning, Tom. It's Mark. Thank you very much for the question. Yes, we see the gap as well, and it is perplexing from time to time. But having said that, AB has done incredibly well in the last year or so, the last years or so. And part of the benefit in AB is this integrated model that we talk about, this flywheel, this ability for Equitable to help seed strategies in AB, and they've executed extremely well over there. Looking at our valuation, I think there's two or three things which would point to investors. One, attractive and growing markets. Being in US retirement, asset management, and wealth management, having record AUM there, it's a good place to be. We're very pleased with the way the integrated model is working now. This flywheel, we can point to really, really strong benefits on that.
Mark Pearson: Morning, Tom. It's Mark. Thank you very much for the question. Yes, we see the gap as well, and it is perplexing from time to time. But having said that, AB has done incredibly well in the last year or so, the last years or so. And part of the benefit in AB is this integrated model that we talk about, this flywheel, this ability for Equitable to help seed strategies in AB, and they've executed extremely well over there. Looking at our valuation, I think there's two or three things which would point to investors. One, attractive and growing markets. Being in US retirement, asset management, and wealth management, having record AUM there, it's a good place to be. We're very pleased with the way the integrated model is working now. This flywheel, we can point to really, really strong benefits on that.
Speaker #3: Morning , It's Mark , very much Tom . for for the question . we see And it is perplexing from as well . , you know , from Yes , we see time to time .
Speaker #3: But you know , that , having AB AB has done incredibly in the well the last years or so or or so , and the last AB is this integrated model that we talk about this flywheel , this ability for equitable in to help seed strategies AB .
Speaker #3: And they've executed extremely well over and over. Looking there, I think there's—looking at our investors, I think there are 2 or 3 things which we'd point to: valuation.
Speaker #3: One . and markets . growing You know Attractive in the US retirement asset and wealth management record AUM there . management good it's a good place It's a to be very .
Speaker #3: pleased with way the the the integrated model We're is flywheel , This we can point to really really , strong on working that .
Onur Erzan: And we have a good track record of execution. So, I mean, putting it all together, we can see upside here, and we can see upside in the valuation for EQH. It certainly is not an expensive stock now. It's 6 times future earnings. And what we have to do is the management team is really, really focused on the things that we can control, and that's growing the business, making sure that a flywheel works, being disciplined on the expenses, and increasing that cash generation. And I'm sure that will close the gap.
Mark Pearson: And we have a good track record of execution. So, I mean, putting it all together, we can see upside here, and we can see upside in the valuation for EQH. It certainly is not an expensive stock now. It's 6 times future earnings. And what we have to do is the management team is really, really focused on the things that we can control, and that's growing the business, making sure that a flywheel works, being disciplined on the expenses, and increasing that cash generation. And I'm sure that will close the gap.
Speaker #3: good track have a good , execution . you know , we I mean , putting all it together can see upside can see upside here and we for EQ .
Speaker #3: , we in the now . record have to do is the management team is really , really focused on things that we can control .
Speaker #3: And growing the that's making sure that business , works , flywheel the being and the increasing generation . that cash It I'm sure close the gap that will .
Tom Gallagher: Thanks for that, Mark. My follow-up is just on mortality exposure. I guess, Robin, two-part question. One, can you just give us an idea of the embedded earnings in the corporate loss that's related to life insurance now? And secondly, is there any opportunity to further reduce your exposure to mortality? Could you potentially get RGA to buy out the remaining 25%, or is the expectation you're just going to keep that exposure going forward? Thanks.
Tom Gallagher: Thanks for that, Mark. My follow-up is just on mortality exposure. I guess, Robin, two-part question. One, can you just give us an idea of the embedded earnings in the corporate loss that's related to life insurance now? And secondly, is there any opportunity to further reduce your exposure to mortality? Could you potentially get RGA to buy out the remaining 25%, or is the expectation you're just going to keep that exposure going forward? Thanks.
Speaker #3: And
Speaker #9: Thanks for Thanks . that , My expenses Mark . my follow up is
Speaker #9: on . I guess . Robin , exposure one two part question one can you just idea of
Speaker #9: the corporate earnings in That's related to life insurance now ? And loss ? secondly there any , is further reduce exposure in mortality you stock .
Speaker #9: buy out the RGA to get
Speaker #9: remaining is that is the just going to keep that exposure forward ? the 25% , or Thanks Now .
Robin Raju: Thanks, Tom. So let me just touch on mortality a bit, taking a step back. So in the quarter, we did see a mix of some large claims, also smaller claims that we didn't have reinsurance coverage on before the RGA transaction benefits kick in. So this led to about $25 million adverse mortality in the quarter that we mentioned. And for 2026, we felt that it was prudent to include in our corporate and other guide of $350 to 400 million and increase GAAP guidance of about $50 million in terms of mortality. Now, that may be conservative because it's slightly worse than our three-year average, but it's closer to recent experience. So we felt it was prudent to include that in the guidance that we've given.
Robin Raju: Thanks, Tom. So let me just touch on mortality a bit, taking a step back. So in the quarter, we did see a mix of some large claims, also smaller claims that we didn't have reinsurance coverage on before the RGA transaction benefits kick in. So this led to about $25 million adverse mortality in the quarter that we mentioned. And for 2026, we felt that it was prudent to include in our corporate and other guide of $350 to 400 million and increase GAAP guidance of about $50 million in terms of mortality. Now, that may be conservative because it's slightly worse than our three-year average, but it's closer to recent experience. So we felt it was prudent to include that in the guidance that we've given.
Speaker #6: Tom . So let Thanks , touch expectation you're on mortality a me just Taking a So in bit . we did some mix of see a claims .
Speaker #6: smaller claims didn't have Also large reinsurance before the RGA transaction benefits kick in . So to coverage in the quarter that we mentioned .
Speaker #6: on felt that it was prudent to include in our corporate and other of that we increased 350 to 400 million and and GAAP guidance of about mortality .
Speaker #6: Fifty million in terms of May, and, to be conservative, slightly—this led to worse than our three-year average. But it’s to be experienced.
Robin Raju: We're not going to disclose subsegments within corporate and other because there's noise within there, but I think that's the best you can look at is the 350 to 400. That includes some prudence in it. I think over time, in 2027, we expect that to improve as we expect the life earnings to improve and some of the other pieces in corporate and other to improve as well. If you think about our remaining 25% of the exposure, it's much smaller now than it was previously. We feel as though the volatility that we have is manageable. It's small, even in an adverse quarter like this where it was $25 million. That being said, we'll always look at different solutions if we think it's pertinent, and we want to continue to drive execution and shareholder value.
Robin Raju: We're not going to disclose subsegments within corporate and other because there's noise within there, but I think that's the best you can look at is the 350 to 400. That includes some prudence in it. I think over time, in 2027, we expect that to improve as we expect the life earnings to improve and some of the other pieces in corporate and other to improve as well. If you think about our remaining 25% of the exposure, it's much smaller now than it was previously. We feel as though the volatility that we have is manageable. It's small, even in an adverse quarter like this where it was $25 million. That being said, we'll always look at different solutions if we think it's pertinent, and we want to continue to drive execution and shareholder value.
Speaker #6: So, we felt it recent to closer include that was in guide in given. We're not guidance that going to disclose like subsegments within we've corporate and other there's because within there.
Speaker #6: But I think can look at is a best you prudence in 350 to 400 that includes over time in . 2027 , we And expect that to improve as we expect a life some corporate other and to improve If pieces in if you earnings to you other our some of the remaining 25% of the it's than smaller than it exposure , now it's much feel as volatility that we have is though the even in small an this , quarter like where it was 25 million .
Speaker #6: That being said , we're always look at Previously . different We think it's was . it's if we think it's pertinent and we continue to drive want to execution and shareholder value .
Robin Raju: So we'll always look to see where we can do that.
Robin Raju: So we'll always look to see where we can do that.
Tom Gallagher: Okay. Thanks.
Tom Gallagher: Okay. Thanks.
Speaker #6: So where we look to see.
Operator: Your next question comes from the line of Wes Carmichael from Wells Fargo. Please go ahead. Your line is open.
Operator: Your next question comes from the line of Wes Carmichael from Wells Fargo. Please go ahead. Your line is open.
Speaker #9: Okay . solutions . Thanks .
Speaker #4: Your next question comes from the of line Carmichael Wells
Suneet Kamath: Hey. Thank you. Good morning. Maybe a bit more of a specific question for Robin, but in the retirement segment, realizing you had pretty strong sales this quarter, but the commission and distribution expense line picked up, I think, sequentially about $25 million. I'm just curious if you think there's a higher ratio of commission and distribution expense relative to sales going forward.
Wes Carmichael: Hey. Thank you. Good morning. Maybe a bit more of a specific question for Robin, but in the retirement segment, realizing you had pretty strong sales this quarter, but the commission and distribution expense line picked up, I think, sequentially about $25 million. I'm just curious if you think there's a higher ratio of commission and distribution expense relative to sales going forward.
Speaker #4: Ahead. Please go from 'is.'
Speaker #4: .
Speaker #10: Good Hey . morning .
Speaker #10: bit more Maybe specific question for Robin , retirement
Speaker #10: quarter . expense line picked up , I think distribution sequentially about curious there's a if you think ratio of commission distribution 25 million .
Robin Raju: Sure. So as Mark mentioned in the call, I'm sure Nick can go deeper on, but we've seen great growth in the retirement business, 4% organic growth in it. We've seen good top-line growth in SES as well. As you recall, the mix of where that sales come from, whether it's Equitable Advisors or third-party channels, the commissions that come up upfront, as we can DAC less in Equitable Advisors. So that's a big portion of the drive. That being said, going forward, with less upfront DAC, that means less DAC amortization. So we expect over time the earnings from the retirement business to exceed well and beyond the commission expense that we have, along with the NIM growth that we'll see going forward.
Robin Raju: Sure. So as Mark mentioned in the call, I'm sure Nick can go deeper on, but we've seen great growth in the retirement business, 4% organic growth in it. We've seen good top-line growth in SES as well. As you recall, the mix of where that sales come from, whether it's Equitable Advisors or third-party channels, the commissions that come up upfront, as we can DAC less in Equitable Advisors. So that's a big portion of the drive. That being said, going forward, with less upfront DAC, that means less DAC amortization. So we expect over time the earnings from the retirement business to exceed well and beyond the commission expense that we have, along with the NIM growth that we'll see going forward.
Speaker #10: expense , relative to forward sales going segment open
Speaker #6: So mentioned in the call as Mark Sure . sure Nick , I'm can go seen great
Speaker #6: So mentioned in the call
Speaker #6: but we've in the retirement I'm just . deeper on , it we've line in growth seen good SES as well . you As recall the mix of where that come from , sales it's equitable .
Speaker #6: changes . The commissions that come up growth upfront as can dak less inequitable So big portion of the drive . That being said , going forward , you know , advisors .
Speaker #6: with that means less DAC amortization . So we expect over time the earnings from the deck , retirement business to well exceed well and the beyond commission expense that we have , we along with the Nim growth that we'll see going forward .
Suneet Kamath: Okay. Thanks. That's helpful. And just remember.
Suneet Kamath: Okay. Thanks. That's helpful. And just remember.
Robin Raju: Wes, remember we also had that one-time true-up. Wes, just remember we had that one-time true-up as well that I mentioned between Retirement and Wealth Management on the call.
Robin Raju: Wes, remember we also had that one-time true-up. Wes, just remember we had that one-time true-up as well that I mentioned between Retirement and Wealth Management on the call.
Speaker #10: Helpful. Thanks. That's okay.
Speaker #10: And We
Speaker #6: that one time . Yeah , also had just we had that well that one time through up as I between in between retirement and wealth mentioned management on the remember
Suneet Kamath: Yep. Thank you. My follow-up was on the FABN program. I know you've been more active there recently, additional spread source. Could you talk about maybe how meaningfully you think you can grow that program from here and what the issuance environment looks like in 2026? I know in 2025 was kind of a record year for the industry.
Wes Carmichael: Yep. Thank you. My follow-up was on the FABN program. I know you've been more active there recently, additional spread source. Could you talk about maybe how meaningfully you think you can grow that program from here and what the issuance environment looks like in 2026? I know in 2025 was kind of a record year for the industry.
Speaker #6: call
Speaker #10: . My Thank you
Speaker #10: . My Thank you follow up was on the program . been more you've . I know active there Yep . source . recently .
Speaker #10: Additional spread—could you talk about maybe things you meaningfully can grow there? How, and what the issuance environment looks like in 2026?
Robin Raju: Sure. We've been able to lean in on the FABN program in 2025, almost $5 billion in issuances. It comes with very attractive IRRs and good spread earnings, also benefiting the flywheel as AB manages those assets. So we get good risk-adjusted returns from that program overall. As a reminder, the FABN flows aren't included in the retirement 4% organic growth rate that we gave. If it was, it would be about 7% organic growth rate. So it's incremental to retirement earnings and helps us grow going forward. As long as FABN, it's a very disciplined liability that we have. If the pricing's there, we'll go and execute an issue if we can get the IRRs that we want. If it's not there, we won't. So we'll be disciplined in that market. And it really depends on where Equitable spreads trade relative to broader industry spreads.
Robin Raju: Sure. We've been able to lean in on the FABN program in 2025, almost $5 billion in issuances. It comes with very attractive IRRs and good spread earnings, also benefiting the flywheel as AB manages those assets. So we get good risk-adjusted returns from that program overall. As a reminder, the FABN flows aren't included in the retirement 4% organic growth rate that we gave. If it was, it would be about 7% organic growth rate. So it's incremental to retirement earnings and helps us grow going forward. As long as FABN, it's a very disciplined liability that we have. If the pricing's there, we'll go and execute an issue if we can get the IRRs that we want. If it's not there, we won't. So we'll be disciplined in that market. And it really depends on where Equitable spreads trade relative to broader industry spreads.
Speaker #10: I know in 2025 was kind of a record year for the industry
Speaker #6: Been able to in on the Fabienne program almost in 2025 issuances. It comes with very attractive and good spread earnings, also IRR, benefiting the flywheel of manages those assets.
Speaker #6: So we get good risk returns from that program . Overall . As a Sure , we've Fabienne reminder , the flows aren't in the lean retirement 4% organic growth rate that we gave .
Speaker #6: If it was , it would be about growth rate . 7% organic So it's earnings and helps grow going forward . As long as you incremental to Fabienne , is a very disciplined we have .
Speaker #6: the If pricing is there , we'll go and and issue . If we can get the liability that won't . So we'll be disciplined in really market and it spreads trade on depends where to relative broader indices .
Robin Raju: And so that's what we'll look in. But from where we sit here today, we still see opportunities to grow that FABN business going forward.
Robin Raju: And so that's what we'll look in. But from where we sit here today, we still see opportunities to grow that FABN business going forward.
Speaker #6: Equitable spreads. And what we're looking at. But from where we sit here today, we still see opportunities to grow that Fabienne business going forward.
Suneet Kamath: Thanks, Robin.
Wes Carmichael: Thanks, Robin.
Operator: Your next question comes from the line of Alex Scott from Barclays. Please go ahead. Your line is open.
Operator: Your next question comes from the line of Alex Scott from Barclays. Please go ahead. Your line is open.
Speaker #10: Robin
Speaker #10: . . Thanks ,
Speaker #4: Your next from the line of Scott Alex question comes Barclays . Please go ahead . line is Your .
Alex Scott: Hey. Good morning. I have one on cash flow and just the conversion of earnings. I guess just inherent in you guys confirming the cash flow targets that you've laid out, but not necessarily the absolute earnings levels, it sort of suggests that cash conversion is improving. So I just wanted to make sure I understand that correctly. And can you talk about some of the underlying drivers, the types of businesses you're shifting towards? Will you actually change sort of the guidance that you've talked about in terms of conversion over time? And what kind of upside is there as you continue to shift?
Alex Scott: Hey. Good morning. I have one on cash flow and just the conversion of earnings. I guess just inherent in you guys confirming the cash flow targets that you've laid out, but not necessarily the absolute earnings levels, it sort of suggests that cash conversion is improving. So I just wanted to make sure I understand that correctly. And can you talk about some of the underlying drivers, the types of businesses you're shifting towards? Will you actually change sort of the guidance that you've talked about in terms of conversion over time? And what kind of upside is there as you continue to shift?
Speaker #11: cash flow
Speaker #11: that you've laid out , but not necessarily the guys absolute earnings of that cash conversion is improving . So I just wanted to make understand that .
Speaker #11: correctly can you talk And underlying the sure I the types of open businesses you make , towards ? actually Will you sort of the guidance that talked you've about in terms of over time conversion drivers , there as you change continue to make shift ?
Robin Raju: Sure. I think I got it. You came in a little broken up, but it was about the cash generation, the mix, and the conversion. So just taking a step back, we were able to upstream $2.6 billion of cash this past year in 2025. $1 billion of that related to the benefit from the RGA transaction. So $1.6 billion of organic cash generation, 50% of that is coming from asset and wealth businesses. So that's close to 90% conversion rate on those businesses that you'll see. Going forward, we expect to grow cash flows 10% next year to $1.8 billion. This growth is driven by higher asset and wealth earnings and larger expected retirement dividends as well, reflecting the profitable growth in the business that we see. Now, keep in mind one factor that we have is the capital release from the runoff legacy block.
Robin Raju: Sure. I think I got it. You came in a little broken up, but it was about the cash generation, the mix, and the conversion. So just taking a step back, we were able to upstream $2.6 billion of cash this past year in 2025. $1 billion of that related to the benefit from the RGA transaction. So $1.6 billion of organic cash generation, 50% of that is coming from asset and wealth businesses. So that's close to 90% conversion rate on those businesses that you'll see. Going forward, we expect to grow cash flows 10% next year to $1.8 billion. This growth is driven by higher asset and wealth earnings and larger expected retirement dividends as well, reflecting the profitable growth in the business that we see. Now, keep in mind one factor that we have is the capital release from the runoff legacy block.
Speaker #11: upside is
Speaker #6: I think I , I think I got it . You came in a little broken up , but it was about the
Speaker #6: the mix and the So just taking as
Speaker #6: the mix and the So just taking as conversion . we were upstream and ? this past targets year . 2.6 billion of 2025 , a billion of that related to the benefit from the RGA transaction cash generation , coming from and wealth businesses .
Speaker #6: 50% of that So that's close to In 90% conversion rate on those businesses that you'll see going We expect to able to forward .
Speaker #6: 10% next year to 1.8 billion . This growth is driven by higher flows asset wealth earnings and larger to expected retirement well , reflecting the in the profitable business that dividends , as we is now .
Speaker #6: and cash feel still very confident on the 2 billion target . You can see that naturally come through . And we're excited about the future .
Robin Raju: That has a very high conversion rate. So that's why, uniquely in our IR day plan, you saw cash growing faster than earnings because we're getting the benefit of the capital release on the legacy block that we see. So we still feel very confident on the $2 billion target. You can see that naturally come through, and we're excited about the future.
Robin Raju: That has a very high conversion rate. So that's why, uniquely in our IR day plan, you saw cash growing faster than earnings because we're getting the benefit of the capital release on the legacy block that we see. So we still feel very confident on the $2 billion target. You can see that naturally come through, and we're excited about the future.
Speaker #6: Keep in mind, in the block, we have capital release from the runoff legacy, and we see a very high conversion rate. That's unique in our plan. On IR day, you saw us growing, and one factor for that is because we're getting the earnings benefit from capital release on the legacy block that we see.
Alex Scott: Got it. If we could go back to retirement and the spread, what are some of the dynamics that'll cause that to stabilize in the mid-part of the year? I mean, does that have to do with the market value adjustments, or is that more related to the 2020 runoff and what you see there? I just wanted to better understand it.
Alex Scott: Got it. If we could go back to retirement and the spread, what are some of the dynamics that'll cause that to stabilize in the mid-part of the year? I mean, does that have to do with the market value adjustments, or is that more related to the 2020 runoff and what you see there? I just wanted to better understand it.
Speaker #11: it . If we could go back to Got retirement and the spread . What are dynamics that will cause that to stabilize in the mid year ?
Speaker #11: I mean , does that have do with the market to value adjustments , or is that more related to the 2020 runoff . And what you see there ?
Robin Raju: Yeah. So the question was on spread in retirement and whether it's in when the market value adjustments, MVAs, or in terms of runoff. So it's a little bit of both that you saw in 2025. We saw a year-over-year decrease in MVAs. We don't assume any benefits from MVAs going forward. And then we see the runoff of that very profitable RILA block. As you recall, we were the only ones in the market, so we had very strong margins. And now, margins have normalized to 15%+ IRRs on that business. That business is less than 15% of our total RILA blocks, so that continues to run off. And we expect some less spread compression going forward. If you look at this quarter versus last quarter, it was about 3 basis points of spread compression.
Robin Raju: Yeah. So the question was on spread in retirement and whether it's in when the market value adjustments, MVAs, or in terms of runoff. So it's a little bit of both that you saw in 2025. We saw a year-over-year decrease in MVAs. We don't assume any benefits from MVAs going forward. And then we see the runoff of that very profitable RILA block. As you recall, we were the only ones in the market, so we had very strong margins. And now, margins have normalized to 15%+ IRRs on that business. That business is less than 15% of our total RILA blocks, so that continues to run off. And we expect some less spread compression going forward. If you look at this quarter versus last quarter, it was about 3 basis points of spread compression.
Speaker #11: I just wanted to better understand it
Speaker #6: Yeah . So the question on spread and retirement and was whether when the it's in value market or from the runoff . So it's a little bit of MBAs you adjustments in , in 2025 .
Speaker #6: We saw year over year decrease in Mvas . We don't benefits from mvas assume any going forward . And then we see the runoff of that very block .
Speaker #6: We saw year over year decrease in Mvas . We don't benefits from mvas assume any going forward . And then we see the runoff of that very Rylo recall , we were the only ones in the market .
Speaker #6: So, we had strong margins, and now margins have normalized to 15% plus—that IRR on business. That business is then less Rylo block.
Speaker #6: So that continues to run off. And we expect less spread compression going forward. If you look quarter versus at this last quarter, it was about three basis points of compression.
Robin Raju: I think that's anywhere from 2 to 4 in the first half of 2026, I think, is fair. And then going forward, you're going to see spreads move in line and grow, NIM grow with the general account balance in the retirement business. And then keep in mind as well, taking a step, even if you saw spread compression quarter-over-quarter, NIM is growing. So we're actually growing nominal value in terms of earnings in that retirement business, and that'll continue going forward with the strong organic growth. So all in all, retirement business, we feel comfortable with. We expect that, as you saw in our guidance, to grow on a pre-tax basis between mid-single to high-single digits. And so we're excited about the future growth coming through.
Robin Raju: I think that's anywhere from 2 to 4 in the first half of 2026, I think, is fair. And then going forward, you're going to see spreads move in line and grow, NIM grow with the general account balance in the retirement business. And then keep in mind as well, taking a step, even if you saw spread compression quarter-over-quarter, NIM is growing. So we're actually growing nominal value in terms of earnings in that retirement business, and that'll continue going forward with the strong organic growth. So all in all, retirement business, we feel comfortable with. We expect that, as you saw in our guidance, to grow on a pre-tax basis between mid-single to high-single digits. And so we're excited about the future growth coming through.
Speaker #6: I that's think , you know , of spread anywhere from 2 to 4 in next year of 2026 . I think is fair .
Speaker #6: Then going forward, you're going to see in the first half the line and the general account balance and the retirement business.
Speaker #6: spreads move and in mind as then keep well , taking grow . a step , even if you sort of Nim grow with compression quarter , quarter over is Nim So we're growing .
Speaker #6: actually nominal growing value in terms of that retirement business . will continue going forward with the strong And that growth . So all organic retirement business , we feel with , we comfortable expect that , saw in our as you guidance to grow on a pre-tax between mid-single to high digits .
Alex Scott: Okay. Thanks.
Alex Scott: Okay. Thanks.
Speaker #6: And so, we're excited about future single growth coming through.
Operator: Your next question comes from Jimmy Bhullar from J.P. Morgan. Your line is open. Please go ahead.
Operator: Your next question comes from Jimmy Bhullar from J.P. Morgan. Your line is open. Please go ahead.
Speaker #11: Thanks .
Jimmy Bhullar: Hi. Hi. I had a question on individual life. But before that, I think, obviously, you guys have done a good job of de-risking the business, including the RGA deal. But some of the disclosure changes you've made recently, they make it harder to analyze your results. And I don't know anybody who would want individual life bumped into corporate where you can't see what the hell's going on with that business. I doubt you're within the company analyzing it that way. But from the outside, that's how people have to do it. But the question is on maybe if you could go into a little bit more detail on what you've seen in the business that's caused the results to get worse, maybe either by policy type or issue age.
Jimmy Bhullar: Hi. Hi. I had a question on individual life. But before that, I think, obviously, you guys have done a good job of de-risking the business, including the RGA deal. But some of the disclosure changes you've made recently, they make it harder to analyze your results. And I don't know anybody who would want individual life bumped into corporate where you can't see what the hell's going on with that business. I doubt you're within the company analyzing it that way. But from the outside, that's how people have to do it. But the question is on maybe if you could go into a little bit more detail on what you've seen in the business that's caused the results to get worse, maybe either by policy type or issue age.
Speaker #4: next question comes from Jimmy Your
Speaker #4: next question comes from
Speaker #4: next
Speaker #4: go ahead .
Speaker #12: question on Hi .
Speaker #12: question on Hi . individual life , but before that I think
Speaker #12: obviously you guys have done a good job of de-risking the business , including the the RGA Please some of the disclosure changes recently , line is you've made make it harder to analyze your results .
Speaker #12: And I don't know anybody who want, would life individual bumped like into where you can see what the hell is corporate, that business.
Speaker #12: you're I doubt in within the company analyzing it that way . from the outside , that's have to do it . how people But But the question Okay .
Jimmy Bhullar: And is it more of an aberration, or is there something with pricing or the macro environment that's made the business perform worse, and what caused you to maybe increase your or reduce your earnings or increase your loss assumption for that block?
Jimmy Bhullar: And is it more of an aberration, or is there something with pricing or the macro environment that's made the business perform worse, and what caused you to maybe increase your or reduce your earnings or increase your loss assumption for that block?
Speaker #12: what a little in the you've seen business , that's caused the results to get worse , maybe either policy type or age in all , is it more of an is there with aberration , or or the made the environment that's pricing or business anything , perform worse what issue ?
Speaker #12: And caused you to increase or mark your earnings or loss—your assumption for that block?
Robin Raju: Sure. Thanks, Jimmy. So, taking a step back, I think it's most important for us, and we tell you and investors, focus on cash. I mean, that's the most important metric that we can give you out in the street. Cash flow has grown from $1.6 billion to $1.8 billion next year and to $2 billion by 2027. So that's the most important metric I can give you because that's what's really coming through into businesses versus some of the noise that you'll see in the GAAP reporting overall. The life business specifically, as we've talked about historically, mortality, we have volatility because we have large face amounts, and we have older issue ages within that block. So as a result, there's some volatility within when those policies die. The underlying economics, the economics of it, are good.
Robin Raju: Sure. Thanks, Jimmy. So, taking a step back, I think it's most important for us, and we tell you and investors, focus on cash. I mean, that's the most important metric that we can give you out in the street. Cash flow has grown from $1.6 billion to $1.8 billion next year and to $2 billion by 2027. So that's the most important metric I can give you because that's what's really coming through into businesses versus some of the noise that you'll see in the GAAP reporting overall. The life business specifically, as we've talked about historically, mortality, we have volatility because we have large face amounts, and we have older issue ages within that block. So as a result, there's some volatility within when those policies die. The underlying economics, the economics of it, are good.
Speaker #6: Sure . Thanks . Thanks , Jimmy . So taking a it's most I think us . And we tell you and step back , focus on investors I mean that's the most important for important you out in the metric that we Cash flow has grown can give from 1.6 to 1.8 billion next year , and to 2 billion by 2027 .
Speaker #6: Sure . Thanks . Thanks , Jimmy . So taking a it's most I think us . And we tell you and step back , focus on investors I mean that's the most important for important you out in the metric that we Cash flow has grown can give
Speaker #6: that's the most important metric I I can give you , that's what's because coming can into really businesses versus some of the noise that in the gap overall , the life business reporting specifically , as talked about historically , you know , mortality , we have volatility because we have large amounts .
Speaker #6: And we face ages within that block . So as a result , there's some have volatility within windows policies die . The underlying economics the economics of it good to cash is okay because the assumptions older issue are in GAAP conservative on something from that volatility perspective .
Robin Raju: The cash is okay because the assumptions are more conservative on cash than they are in GAAP. From that volatility perspective, we did the RGA transaction to reduce 75% of that volatility going forward. We think the guide that we're giving is prudent. It's conservative versus a three-year average. But from what we've seen recently, we thought it was prudent to give you a guide that gave us an opportunity to ensure that we hit the numbers even if we have some volatility, but also provides upside for 2027 compared if that improves. So all in all, we feel good about the business where it is with the reinsurance transactions that we've done. Also, the lower retention rate on new business that we have minimizes that volatility going forward. So we feel okay with that.
Robin Raju: The cash is okay because the assumptions are more conservative on cash than they are in GAAP. From that volatility perspective, we did the RGA transaction to reduce 75% of that volatility going forward. We think the guide that we're giving is prudent. It's conservative versus a three-year average. But from what we've seen recently, we thought it was prudent to give you a guide that gave us an opportunity to ensure that we hit the numbers even if we have some volatility, but also provides upside for 2027 compared if that improves. So all in all, we feel good about the business where it is with the reinsurance transactions that we've done. Also, the lower retention rate on new business that we have minimizes that volatility going forward. So we feel okay with that.
Speaker #6: We did the RGA transaction to reduce 75% of that volatility going forward. The guide that we're giving is prudent. It's conservative versus, you know, average.
Speaker #6: We did RGA transaction to reduce 75% of that volatility going forward . We the guide that we're giving is prudent . You it's conservative versus know , think But you cash seen recently what we've was prudent to guide we thought it give you a us an that gave opportunity to ensure that we hit the numbers , even if we have volatility .
Speaker #6: also provides upside some for if that improves . But So all 2027 compared we in all , feel feel good we business is with where it about the reinsurance we've transactions that done .
Speaker #6: the lower Also , retention rate on new have we minimizes that volatility forward . So we feel okay , we're there .
Jimmy Bhullar: And then, maybe just following up with Nick on the RILA market, it seems like more and more companies have entered the market in recent years, including some of the guys backed by PE insurers. Are you seeing competition disciplined, or are some of the carriers being more aggressive beyond just offering maybe introductory specials and whatever else? How do you feel about the competitive environment in the RILA market?
Jimmy Bhullar: And then, maybe just following up with Nick on the RILA market, it seems like more and more companies have entered the market in recent years, including some of the guys backed by PE insurers. Are you seeing competition disciplined, or are some of the carriers being more aggressive beyond just offering maybe introductory specials and whatever else? How do you feel about the competitive environment in the RILA market?
Speaker #12: And then maybe just following up with Nick on the market seems more and companies have entered the market in recent years , guys including some of by PE the insurers .
Speaker #12: Are you seeing competition disciplined, or are some of your carriers being more aggressive, maybe offering introductory specials or whatever else? How do you feel about the competitive environment in the—
Nick Lane: Yeah. Thanks for the question. Look, first, we continue to see growing demand for RILAs given the demographics and heightened by the current period of macro uncertainty. It's a product that's right for the times. As Mark highlighted, Q4 RILA sales were robust across all channels, up 12% year-over-year, another record high with $1.4 billion of net flows. Look, as the market leader with a durable edge, we have a track record of benefiting from this growing demand. You've seen us more than double our RILA sales in the last three years, and we've delivered record sales in 9 out of the last 10 quarters. To your point on competitive intensity, we saw players enter at the tail end of 2024. So we've been operating, what I would say, in this new normal for over a year. We're always vigilant on competitive trends, especially on pricing.
Nick Lane: Yeah. Thanks for the question. Look, first, we continue to see growing demand for RILAs given the demographics and heightened by the current period of macro uncertainty. It's a product that's right for the times. As Mark highlighted, Q4 RILA sales were robust across all channels, up 12% year-over-year, another record high with $1.4 billion of net flows. Look, as the market leader with a durable edge, we have a track record of benefiting from this growing demand. You've seen us more than double our RILA sales in the last three years, and we've delivered record sales in 9 out of the last 10 quarters. To your point on competitive intensity, we saw players enter at the tail end of 2024. So we've been operating, what I would say, in this new normal for over a year. We're always vigilant on competitive trends, especially on pricing.
Speaker #8: question .
Speaker #8: uncertainty . that's right demographics product . As times Mark fourth quarter sales were highlighted , Rila robust all It's the for channels , up 12% year over year .
Speaker #8: Another across record with 1.4 billion of net flows , look as the market leader with a edge , durable a track we have this growing demand .
Speaker #8: You've seen us double, benefiting from more than annuity sales in three years, and a record of delivered record sales in each of the last ten quarters.
Speaker #8: last To your competitive Look , we saw players enter at tail of 2024 . operating what I been say in this new normal for over a year .
Speaker #8: last To your competitive Look , we saw players enter at tail of 2024 . operating what I been say in this new normal for over a year So we've vigilant on competitive trends , on pricing end .
Nick Lane: Traditionally, we see new entrants offer teaser rates and then revert to more sustainable levels. We saw this dynamic in Q4 for those who entered in the beginning of the year. We have conviction that given our Equitable flywheel, this gives us an edge. We have the differentiated distribution with Equitable Advisors and privileged third-party networks, which attract lower costs of liabilities. We generate attractive yields and have line of sight for how we do that through AB. We have scale as the number one player and decades-long relationships. I think we have a track record of innovation to continue to meet emerging needs that we see in the marketplace. We believe that's hard to replicate. Looking forward, we'll continue to be vigilant on competition.
Nick Lane: Traditionally, we see new entrants offer teaser rates and then revert to more sustainable levels. We saw this dynamic in Q4 for those who entered in the beginning of the year. We have conviction that given our Equitable flywheel, this gives us an edge. We have the differentiated distribution with Equitable Advisors and privileged third-party networks, which attract lower costs of liabilities. We generate attractive yields and have line of sight for how we do that through AB. We have scale as the number one player and decades-long relationships. I think we have a track record of innovation to continue to meet emerging needs that we see in the marketplace. We believe that's hard to replicate. Looking forward, we'll continue to be vigilant on competition.
Speaker #8: we see Traditionally , new entrants offer rates and then revert to more sustainable teaser levels . dynamic in And we the fourth quarter .
Speaker #8: Those who entered saw this in the beginning, beginning of the year, have conviction that, given our flywheel, gives us this—an edge.
Speaker #8: those who entered saw this in the beginning beginning of the year have conviction that given our flywheel , gives us this an edge . have the differentiated advisors and equitable privileged .
Speaker #8: , we attractive yields and have sight we do for how that . line of AB , have scale we number one player and as the long relationships , and I we have a track think record of decades innovation to to meet needs that our the marketplace .
Nick Lane: We're confident in our momentum, and we have conviction that we're in a privileged position to capture a disproportionate share of the value being created in that space.
Nick Lane: We're confident in our momentum, and we have conviction that we're in a privileged position to capture a disproportionate share of the value being created in that space.
Speaker #8: Hard to replicate. We will continue to be so vigilant on competition. We're confident. We have momentum, and we have conviction that we're in a privileged position to capture a disproportionate share of the value being created.
Jimmy Bhullar: Thank you.
Jimmy Bhullar: Thank you.
Operator: Your next question comes from the line of Joel Hurwitz from Dowling & Partners. Your line is open. Please go ahead.
Operator: Your next question comes from the line of Joel Hurwitz from Dowling & Partners. Your line is open. Please go ahead.
Speaker #13: you Thank
Speaker #13: .
Speaker #4: question line of Your next comes Joel Dowling and from Partners line is . Your Please go .
Joel Hurwitz: Hey. Good morning. Robin, wanted to get an update on the 27 targets. Last quarter, I think you said the midpoint of that 12% to 15% EPS CAGR was achievable. I guess, do you still think that's the case, especially with the mortality outlook?
Joel Hurwitz: Hey. Good morning. Robin, wanted to get an update on the 27 targets. Last quarter, I think you said the midpoint of that 12% to 15% EPS CAGR was achievable. I guess, do you still think that's the case, especially with the mortality outlook?
Speaker #14: Hey , morning good . Robin get an
Speaker #14: Hey ,
Speaker #14: said the that 12 to 15% EPs open . kegger was guess . Do that's the case ? Especially with achievable . you still the mortality outlook I the
Robin Raju: Sure, Joel. We're very focused on delivering all of our 2027 targets. As Mark mentioned, we remain on track for the $2 billion of cash, the 60% to 70% payout ratio. And we're lagging, to your point, on the earnings per share growth. I think the guidance that we've given you in this quarter should allow you to get to that range on the 12% to 15%. I think the guidance we give you probably gets us to the lower end of the range, which would be fair. Keep in mind, though, depending on how we track during the year, we still have levers in place such as expenses to get in that range.
Robin Raju: Sure, Joel. We're very focused on delivering all of our 2027 targets. As Mark mentioned, we remain on track for the $2 billion of cash, the 60% to 70% payout ratio. And we're lagging, to your point, on the earnings per share growth. I think the guidance that we've given you in this quarter should allow you to get to that range on the 12% to 15%. I think the guidance we give you probably gets us to the lower end of the range, which would be fair. Keep in mind, though, depending on how we track during the year, we still have levers in place such as expenses to get in that range.
Speaker #6: Sure . Joe we're very focused on delivering all of our 2027 targets as mentioned , we remain on track for the
Speaker #6: . Mark The 60 to 70% payout think And we're we're lagging to your point is earnings per share growth , I think the ratio .
Speaker #6: Given you in this, in this quarter should from the you to get to that, that, to range on a 12 to 15%.
Speaker #6: I think guidance would give you probably gets lower us to the end of the range , which which would be fair . Keep in mind , though , depending on how during the track year , we still in levers place we such as expenses to to that what we're range .
Robin Raju: So that's what we're focused on delivering: the 12% to 15%, but also ensuring that the business continues to grow going forward, even post-2027, so we can continue to drive cash flows and earnings growth for shareholders.
Robin Raju: So that's what we're focused on delivering: the 12% to 15%, but also ensuring that the business continues to grow going forward, even post-2027, so we can continue to drive cash flows and earnings growth for shareholders.
Speaker #6: focused on delivering So that's Is . 12 to 15% , also but continues to grow going Even forward . ensuring that post 2027 .
Joel Hurwitz: Got you. That's helpful. And then just on the payout ratio, with cash generation moving to $1.8 billion, and I think what you're implying on earnings, why shouldn't the payout ratio be moving up? I know we have to take out interest expense, but I feel like if I do that, cash generation X interest expense is more towards the mid-70% of your operating earnings.
Joel Hurwitz: Got you. That's helpful. And then just on the payout ratio, with cash generation moving to $1.8 billion, and I think what you're implying on earnings, why shouldn't the payout ratio be moving up? I know we have to take out interest expense, but I feel like if I do that, cash generation X interest expense is more towards the mid-70% of your operating earnings.
Speaker #6: So, we continue to drive cash flows and earnings growth for shareholders.
Speaker #14: Got that's helpful . And then just on on the payout ratio with with generation cash moving to 1.8 billion I think what you're you're implying on earnings why why shouldn't the payout ratio be moving we have to up .
Speaker #14: take out interest expense , but I feel do like if I I know that cash X generation interest expense is more towards like mid the 70% of your operating .
Robin Raju: Yeah. So if you look on the payout ratio, since our IPO, it's been on the higher end of the range that we deliver on. And I think if you look at where the stock is trading and relative to expectations, you can expect us to be probably in the higher end of the range. But keep in mind, though, the opportunities to invest in growth are the best that we've seen in some time, with interest rates where they are, the consumer needs. For us to grow in the retirement business, asset management, and wealth businesses, there are a lot of good investment opportunities that deliver very strong returns for shareholders as well. So we'll continue to buy back a good amount of stock at these levels.
Robin Raju: Yeah. So if you look on the payout ratio, since our IPO, it's been on the higher end of the range that we deliver on. And I think if you look at where the stock is trading and relative to expectations, you can expect us to be probably in the higher end of the range. But keep in mind, though, the opportunities to invest in growth are the best that we've seen in some time, with interest rates where they are, the consumer needs. For us to grow in the retirement business, asset management, and wealth businesses, there are a lot of good investment opportunities that deliver very strong returns for shareholders as well. So we'll continue to buy back a good amount of stock at these levels.
Speaker #14: earnings
Speaker #6: Yeah . So if you payout the ratio , since our IPO has been on the higher end of the range that and I think from if you look at where on , the stock is trading and relative to you can expectations , expect us to probably be in the higher end of the range .
Speaker #6: But keep mind that the in opportunities to invest in growth are the in some best that time . With interest rates where they are consumer to needs .
Speaker #6: For us to grow into business and asset management and wealth retirement , businesses . There are a lot investment of good opportunities that deliver very returns for strong shareholders as well .
Robin Raju: But more importantly, we're investing for future growth to ensure that we continue to capture the retirement opportunity in the US and continue to grow in asset and wealth.
Robin Raju: But more importantly, we're investing for future growth to ensure that we continue to capture the retirement opportunity in the US and continue to grow in asset and wealth.
Speaker #6: we'll So continue to buy back a good amount of stock at these levels . But more we're importantly , investing for future growth to ensure that we continue to capture the retirement opportunity in the US and continue to grow in asset and wealth .
Joel Hurwitz: Okay. Thanks, Robin.
Joel Hurwitz: Okay. Thanks, Robin.
Operator: Your next question comes from the line of Ryan Krueger from Mizuho. Your line is open. Please go ahead.
Operator: Your next question comes from the line of Ryan Krueger from Mizuho. Your line is open. Please go ahead.
Speaker #14: Okay. Thanks, Robin.
Speaker #4: Your next question comes from the line of Canar Mizuho. Your line is open. Please go ahead.
Joel Hurwitz: Thanks. Good morning. You mentioned the durable edge you have in the RILA market. That being said, market share for Equitable and new sales is shrinking, albeit from an enviable market-leading position due to the increased competition. So I'm assuming you're not willing to compromise on IRRs here. And would that potentially mean that one of the company's growth engines moderates in coming years, even as the RILA market continues to grow?
Yaron Kinar: Thanks. Good morning. You mentioned the durable edge you have in the RILA market. That being said, market share for Equitable and new sales is shrinking, albeit from an enviable market-leading position due to the increased competition. So I'm assuming you're not willing to compromise on IRRs here. And would that potentially mean that one of the company's growth engines moderates in coming years, even as the RILA market continues to grow?
Speaker #4: line is
Speaker #15: Thanks . Good morning . You
Speaker #15: the the durable edge you have in the Rila market . That being said , market equitable and new sales is shrinking , from an enviable market leading position albeit due to increased the competition .
Speaker #15: willing to I'm compromise on IRR is here and what would that potentially mean ? That one of the company's growth engines moderates in coming years , even as the market continues to grow ?
Nick Lane: This is Nick. Look, obviously, the competitive landscape has changed from a decade ago since we were a pioneer in launching the RILA market and had a 100% share in that market. As we highlighted, look, we see the pie continuing to grow given the demographics and the nature of the product in these times. We would expect to continue to maintain our leadership position in the space. We are very intentional, and I think this speaks to the power of our distribution of being able to pivot our sales based on where we see consumer value and shareholder value. So as you mentioned, we are extremely disciplined in IRRs. We're delivering our targeted IRRs today, and we continue to see strong momentum, as Mark highlighted, in our sales and flows.
Nick Lane: This is Nick. Look, obviously, the competitive landscape has changed from a decade ago since we were a pioneer in launching the RILA market and had a 100% share in that market. As we highlighted, look, we see the pie continuing to grow given the demographics and the nature of the product in these times. We would expect to continue to maintain our leadership position in the space. We are very intentional, and I think this speaks to the power of our distribution of being able to pivot our sales based on where we see consumer value and shareholder value. So as you mentioned, we are extremely disciplined in IRRs. We're delivering our targeted IRRs today, and we continue to see strong momentum, as Mark highlighted, in our sales and flows.
Speaker #8: This is Nick . Look , obviously the competitive landscape has changed from a decade ago since we were pioneer and launching the market in 100 , 100% share in that market .
Speaker #8: As we highlighted . Look , we see the pie continuing to grow the given demographics and the nature of the product in these times , we would expect to continue to maintain our leadership position in this space .
Speaker #8: We are very intentional , and I think this speaks to the power of our distribution of being able to pivot our our sales based on what we see , where we see consumer shareholder in value value .
Speaker #8: you So as we we mentioned , are extremely disciplined in our we're delivering our targeted today IRR . And we continue to see strong momentum as highlighted in our Mark sales and flows .
Joel Hurwitz: I think it's Mark here. I'll just add a couple of things which is unique to the RILA market. Firstly, there's about $600 billion of assets coming out of 401(k)s a year going precisely into this type of market. So it's not necessarily coming out of disposable income for consumers. It's coming out of their savings vehicles. So that protects it from some of the economic issues we see consumers have. And then secondly, to Nick's point, we've had this product a long time. We don't look at market share. We look at sales growth, and sales growth is at record levels. So we're happy with that one. But one of the things that gives us comfort on RILA is that we know it works in low and high interest rates. There are some annuity products that work incredibly well in high interest rates, and not in low interest rates.
Mark Pearson: I think it's Mark here. I'll just add a couple of things which is unique to the RILA market. Firstly, there's about $600 billion of assets coming out of 401(k)s a year going precisely into this type of market. So it's not necessarily coming out of disposable income for consumers. It's coming out of their savings vehicles. So that protects it from some of the economic issues we see consumers have. And then secondly, to Nick's point, we've had this product a long time. We don't look at market share. We look at sales growth, and sales growth is at record levels. So we're happy with that one. But one of the things that gives us comfort on RILA is that we know it works in low and high interest rates. There are some annuity products that work incredibly well in high interest rates, and not in low interest rates.
Speaker #3: I think it's Mark . Yeah I'll just add a couple of things , which is unique to the market . Firstly , there's about $600 billion of assets coming out of 400 and 1SA year , going precisely into this type of market .
Speaker #3: So , you know , it's not it's not necessarily coming out of disposable income for consumers . It's coming out of their savings vehicles .
Speaker #3: So that protects it from some of the economic issues we see consumers have . And then secondly , to Nick's point , we've we've had this product a long time .
Speaker #3: We don't look at market share. We look at sales growth, and sales growth is at record levels. So we're happy with that one.
Speaker #3: But one of the things that gives us on on comfort Rilo is that we know it works in low interest and high rates .
Joel Hurwitz: But we've seen RILA through the cycle, Nick, and we know it as a very strong customer proposition when rates are low as well as when rates are high. So it's a good part of the retirement market to be in. Thank you. That makes sense. And then my follow-up, just going back to slide 10, the VNBs. Has the VNB payback period changed over time? Can you give us any quantification of that?
Mark Pearson: But we've seen RILA through the cycle, Nick, and we know it as a very strong customer proposition when rates are low as well as when rates are high. So it's a good part of the retirement market to be in.
Speaker #3: annuity There are some products that work incredibly well in high interest rates and not in low interest rates , but we've seen really through the through the cycle , Nick .
Speaker #3: And you know , we know we know it has a very strong customer proposition when rates are low as well as when rates are high .
Yaron Kinar: Thank you. That makes sense. And then my follow-up, just going back to slide 10, the VNBs. Has the VNB payback period changed over time? Can you give us any quantification of that?
Speaker #3: So it's a good part of the retirement market to be in .
Speaker #15: Thank you . That makes sense . And then my follow up , just going back to slide ten , the NBS has the Vnb payback period changed over time .
Robin Raju: Sure. We haven't disclosed payback period, but our VNB over time and payback period; it has come down over time, and IRRs have gone up. If you look, the RILA product is specifically what we just spoke about. It's a shorter duration product compared to most of the longer duration products that we've been selling. We exited the individual third-party life market last year. That's longer duration. So much shorter duration, faster payback periods, faster cash conversion on the product portfolio that we sell today versus what we sold years ago.
Robin Raju: Sure. We haven't disclosed payback period, but our VNB over time and payback period; it has come down over time, and IRRs have gone up. If you look, the RILA product is specifically what we just spoke about. It's a shorter duration product compared to most of the longer duration products that we've been selling. We exited the individual third-party life market last year. That's longer duration. So much shorter duration, faster payback periods, faster cash conversion on the product portfolio that we sell today versus what we sold years ago.
Speaker #15: Can you give us any quantification of that ?
Speaker #6: Sure . We haven't disclosed payback here , but our vnb over time has . And payback period has come down over time and the IRR has have gone up .
Speaker #6: If you look, the product is specifically what we just spoke about—it's a shorter duration product compared to most of the longer duration products that we've also been selling.
Speaker #6: , we We're exited the life individual third party market last year . longer That's duration . So shorter much duration , faster period , faster cash conversion on the product portfolio that we sell today versus what we sold years ago .
Joel Hurwitz: Okay. But you can't quantify it at this point?
Yaron Kinar: Okay. But you can't quantify it at this point?
Robin Raju: We haven't disclosed it, but it's materially lower than it was years ago.
Robin Raju: We haven't disclosed it, but it's materially lower than it was years ago.
Speaker #15: Okay . But you can't quantify it at this point .
Joel Hurwitz: Thank you.
Yaron Kinar: Thank you.
Speaker #6: We haven't but it's materially lower than what it used to be years ago .
Operator: Your next question comes from the line of Mike Ward from Citigroup. Your line is open. Please go ahead.
Operator: Your next question comes from the line of Mike Ward from Citigroup. Your line is open. Please go ahead.
Speaker #15: Thank you .
Speaker #4: Your next question comes from the line of Mike Ward from UBS . Your line is open . Please go ahead .
Mike Ward: Thanks, guys. Good morning. I was just wondering, you mentioned the rolloff of the profitable RILA, I think, being 15% of the total. How long do you expect that to take to roll off?
Mike Ward: Thanks, guys. Good morning. I was just wondering, you mentioned the rolloff of the profitable RILA, I think, being 15% of the total. How long do you expect that to take to roll off?
Speaker #16: Thanks , guys . Good morning . I was just wondering , you mentioned the roll off of the profitable Rila . I think being 15% of the total , just how long do you expect that to take to roll off ?
Robin Raju: Hey, Mike. It's the rolloff of the very profitable RILA because that was the portion when we were the only ones in the market across. So we'd expect that to still drive a little bit of spread compression. You start 3 basis points this quarter and overall through the first half of this year, probably in similar magnitude, anywhere from 2 to 4 basis points a quarter. But come the second half of the year, we expect those spreads to stabilize, and NIM will grow with the general account book value excluding embedded derivatives going forward. So I think at half point this year, we'd expect that to be immaterial and not drive spread compression in the business anymore.
Robin Raju: Hey, Mike. It's the rolloff of the very profitable RILA because that was the portion when we were the only ones in the market across. So we'd expect that to still drive a little bit of spread compression. You start 3 basis points this quarter and overall through the first half of this year, probably in similar magnitude, anywhere from 2 to 4 basis points a quarter. But come the second half of the year, we expect those spreads to stabilize, and NIM will grow with the general account book value excluding embedded derivatives going forward. So I think at half point this year, we'd expect that to be immaterial and not drive spread compression in the business anymore.
Speaker #6: Hey , Mike . Yeah , it's the the roll off of the the very profitable Rila because that was the were only portion when we the only in the market ones across .
Speaker #6: we'd So expect that to still drive a little spread compression . bit of You saw three basis points this quarter in overall through the first half of of this year .
Speaker #6: Probably in similar magnitude , anywhere from 2 to 4 basis points , a quarter . But come the second half of the year , we expect those spreads to stabilize .
Speaker #6: And Nim will grow with the general account book value . Executing embedded going derivatives forward . So I think half point this year , we'd expect at that to be in material and not drive spread compression in the business anymore .
Mike Ward: Okay. Thanks. And then just switching to the sort of defined contribution world, it seems like there's been kind of more of a push to open up the different asset classes and help employers, plan sponsors get more comfortable with some of this stuff. You guys have obviously been involved in that for some time. Just curious how the uptake in some of those products and plan annuities, LifePath Paycheck kind of stuff, is trending more recently.
Mike Ward: Okay. Thanks. And then just switching to the sort of defined contribution world, it seems like there's been kind of more of a push to open up the different asset classes and help employers, plan sponsors get more comfortable with some of this stuff. You guys have obviously been involved in that for some time. Just curious how the uptake in some of those products and plan annuities, LifePath Paycheck kind of stuff, is trending more recently.
Speaker #16: Okay . Thanks . And then just switching to the sort of define contribution world , it seems like there's been kind of a , know , more of you a push to open up to different asset classes and help employers plan sponsors get more comfortable with some of this stuff .
Speaker #16: You guys have obviously been involved in that . You know , for some , for some time . Just curious how the uptake in some of those products and plan annuities life life path , paycheck kind of stuff .
Nick Lane: Great. I'll start with that one. Look, we continue to remain bullish on the untapped potential in the long-term growth for secure income or in-plan annuities. It's a $8 trillion DC market. We see the potential adjustable market being about $400 to 600 billion for in-plan solutions. We're still in the early innings, but I would say there is momentum. We have the policy or the regulatory tailwinds. This is Secure 1.0. This is Secure 2.0, where people want more durable retirement solutions. I think that's going to amplify as we approach Social Security going into 2030. We have products and partnerships with the target date funds, and the record keeper platforms exist to provide those products. So we're really in this four-step now of engaging plan sponsors. This is a subject of all discussions. I think we see there are first movers, then fast followers, and then laggards.
Nick Lane: Great. I'll start with that one. Look, we continue to remain bullish on the untapped potential in the long-term growth for secure income or in-plan annuities. It's a $8 trillion DC market. We see the potential adjustable market being about $400 to 600 billion for in-plan solutions. We're still in the early innings, but I would say there is momentum. We have the policy or the regulatory tailwinds. This is Secure 1.0. This is Secure 2.0, where people want more durable retirement solutions. I think that's going to amplify as we approach Social Security going into 2030. We have products and partnerships with the target date funds, and the record keeper platforms exist to provide those products. So we're really in this four-step now of engaging plan sponsors. This is a subject of all discussions. I think we see there are first movers, then fast followers, and then laggards.
Speaker #16: Is it trending more recently?
Speaker #8: Great . I'll start with that one . Look , we continue to remain bullish on the untapped potential in the long term growth for secure income or implant annuities .
Speaker #8: $2 trillion DC market. We see the potential adjustable market as being about $400 to $600 billion for implant solutions. We're still in the early innings, but I would say there is momentum.
Speaker #8: We have the policy or the regulatory tailwinds. This is SECURE 1.0. This is SECURE 2.0, where people want more durable retirement solutions.
Speaker #8: I think that's going to amplify as we approach Social Security 2030, going into products and having partnerships with the target date funds, and the recordkeeper platforms exist to provide those products.
Speaker #8: So we're really in this four step now of plan engaging sponsors . This is a subject of all discussions . I think we see there are first movers and then fast followers .
Nick Lane: But we're encouraged by the momentum. We had roughly $920 million in sales in our broader institutional business for the year and have about $1.8 billion in AUM since we launched an institutional. Looking forward, I believe we're in a very strong position as the market continues to emerge, given our partnership network that you referenced. That's AB, BlackRock, and JPMorgan that are building a track record as the market expands. So going forward, we get confirmation about 60 to 90 days prior to transfer. This is going to still be lumpy. While we don't expect material inflows in Q1, we've got a strong pipeline for 2026.
Nick Lane: But we're encouraged by the momentum. We had roughly $920 million in sales in our broader institutional business for the year and have about $1.8 billion in AUM since we launched an institutional. Looking forward, I believe we're in a very strong position as the market continues to emerge, given our partnership network that you referenced. That's AB, BlackRock, and JPMorgan that are building a track record as the market expands. So going forward, we get confirmation about 60 to 90 days prior to transfer. This is going to still be lumpy. While we don't expect material inflows in Q1, we've got a strong pipeline for 2026.
Speaker #8: And then laggards . But we're encouraged by the momentum we had roughly 920 million in sales . And our broader institutional business for the year .
Speaker #8: And have about 1.8 billion in AUM since we launched in institutional . Looking forward , you know , our belief we're in a very strong position as the market continues to emerge , given our partnership network that you referenced , that's AB , Blackrock and JP Morgan that are building a track record as the market expands .
Speaker #8: So going forward , we get confirmation 60 to 90 days transfer . This is going about to still be lumpy . While we don't expect material inflows in the first quarter , we've got a strong pipeline for 2026 .
Mike Ward: Thank you.
Mike Ward: Thank you.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Speaker #16: Thank you .
Speaker #4: This concludes today's call for . Thank you attending . You may now disconnect .
Erik Bass: This event has now concluded. Access the Equitable Holdings, Inc. IR website for more information. This line will now disconnect.
Erik Bass: This event has now concluded. Access the Equitable Holdings, Inc. IR website for more information. This line will now disconnect.
