Equitable Holdings, Inc. 2026 Q2 Earnings Call

Good morning and welcome to Equitable Holdings Second Quarter 2026 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 of AllianceBernstein. 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. We will also refer to the pending transaction with Corbridge. Any statements about the transaction made during this call are not an offer of securities. A registration statement containing a prospectus will be filed with the SEC in connection with the transaction. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. During the second quarter, Equitable made significant progress in advancing our transformational merger with Corbridge, while also delivering strong growth in earnings and positive net flows across each of our segments. Last week, the shareholders of both companies approved the merger, and we remain on track to close by year-end. Slide four highlights why we are so excited about the opportunity for the new Equitable and our strategy for accelerating growth and driving shareholder value. We will win with customers by being the easiest company to do business with while leveraging our scale advantages and formidable distribution to deliver a full range of attractive product solutions across multiple channels.

We compete in attractive, growing markets across U.S. retirement, life insurance, institutional, and asset and wealth management. The merged company will have the capabilities, distribution breadth, and scale needed to be a long-term winner in each of them. The new Equitable will deliver at least 10% accretion to earnings and cash flow per share by the end of 2028 and produce a 15% plus ROE on a capital base of over $30 billion. We are confident that as we execute the merger and validate our competitive advantages, it will translate into a higher valuation over time. Turning to slide five. I will start by providing an update on the progress we have made on achieving merger approvals and beginning to integrate the two companies. On July 30th, shareholders of both Equitable and Corebridge approved the merger, with over 97% voting in support of the transaction.

We have also completed the federal antitrust review process and have filed for all required regulatory approvals. We continue to expect the transaction to close by the end of 2026. During the quarter, we established the organization structure for the new company, including the first 3 levels of management. This has enabled us to commence integration planning and map out how we will achieve meaningful expense, revenue, and capital synergies. We remain confident in delivering on all of the financial targets provided at the time of announcement. While looking forward to day one for the new Equitable, we remain focused on achieving our 2026 financial targets and are not treating this as a gap year. In the second quarter, we reported non-GAAP operating earnings per share of $1.70 or $1.75 excluding notable items.

This represents a 24% year-over-year increase, consistent with our guidance of EPS growth of greater than 15% in 2026. We ended the quarter with record assets under management and administration of $1.2 trillion, up 10% year-over-year, driven by positive net flows and uplift from favorable equity markets. During the quarter, we returned $449 million of capital to shareholders, including $366 million of share repurchases. This represents a 92% payout ratio as we took advantage of our attractive valuation to accelerate buybacks after being in blackout for a portion of the first quarter. As Robin will discuss, we expect to achieve our targeted 60%-70% payout ratio in 2026. Turning to our businesses, we continue to see healthy organic growth trends with each of our businesses delivering positive net flows in the second quarter.

Starting with Retirement, we reported $1.7 billion of net inflows, driven by 10% growth in RILA sales and increased institutional volumes. These flows do not include the impact of our spread lending business, which had $2.6 billion of net issuance in the second quarter. In Wealth Management, we had $2 billion of advisory inflows in the quarter. The business has a trailing 12-month organic growth rate of 11%, which compares favorably with peers. Finally, organic growth at AllianceBernstein returned to positive territory with net inflows of $0.8 billion. Retail flows benefited from a $9 billion sub-advisory mandate win from Equitable separate accounts, which is another example of the flywheel benefits between Equitable and AB. Institutional flows were also positive in the quarter, and we expect the momentum to continue in the second half of the year.

In July, AB onboarded $12 billion of commercial mortgage loans from Equitable, and it has an additional unfunded pipeline of $14 billion. Private markets remains a bright spot, with AUM up 18% year-over-year to $91 billion at June 30th, reaching the $90 billion to $100 billion target level over a year ahead of schedule. Moving to slide six, I will provide some more details on how we are executing on our growth strategy. As a reminder, this entails defending and growing our core Retirement and Asset Management businesses, scaling adjacent businesses like Wealth Management and AB Private Markets, and seeding future growth in high-potential new markets. Our Retirement business has produced positive net flows every year since our IPO, and the annualized organic growth rate in the first half of 2026 was 4%.

If we include our spread lending business, which is producing very attractive IRRs in the current spread environment, the organic growth rate increases to 6%. In Retirement, we also continue to invest in fast-growing new institutional markets like in-plan annuities and HSAs. We expect over $500 million of institutional flows in 2026, with potential flows to accelerate meaningfully over the next few years. We are excited that the Corebridge merger will expand our presence in institutional markets, adding capabilities like pension risk transfer and structured settlements, and the combined company's larger balance sheet provides additional capacity for future growth. Turning to Wealth Management, the business delivered 10% annual organic growth in the first half of the year. Advisor productivity increased 13%, and total AUA is up 27% to $141 billion.

We closed on the Stifel independent advisors acquisition in the first quarter, and the Corebridge merger will add an additional $20 billion of AUA, helping to scale our platform. Finally, AB has strong momentum in target growth areas like private markets, insurance, and active ETFs. Equitable has invested nearly $25 billion of capital in AB's private market strategies above our initial $20 billion commitment, and AB is making good progress in scaling these with third-party investors. As I mentioned earlier, total private markets AUM ended the quarter at $91 billion and is on track to exceed the original target of $90 billion to $100 billion by the end of 2027. Insurance continues to be a strong source of flows, with seven new relationships added year-to-date, and total third-party insurance AUM of $61 billion is up 16% year-over-year.

While most of the new flows relate to general account wins, as this quarter showed, AB and Equitable can also work together to drive additional separate account flows. AB also continues to drive inflows in its active ETF platform, which now consists of 31 strategies with over $20 billion of AUM and generates approximately $100 million of annual fee income. On slide seven, we show progress towards achieving the Investor Day targets laid out in 2023. We remain committed to delivering on our standalone growth targets so that the new Equitable can hit the ground running in 2027. We are on track to generate approximately $1.8 billion of cash flow to the holding company in 2026 and $2 billion in 2027.

During the quarter, we received approval to pay up to $0.9 billion of insurance subsidiary dividends during the second half of the year, giving us clear line of sight to achieving our targets. Our payout ratio was 70% in the first half of 2026, consistent with our 60%-70% target. The cumulative payout since Investor Day has been 68%, highlighting our commitment to returning capital to shareholders. Finally, we delivered 25% growth in EPS in the first half of the year. This puts our cumulative growth rate at 10%, slightly below our 12%-15% target range. Based on our business momentum and outlook, we expect to be at the low end of the range by the end of 2026. Putting it all together, we have good momentum and are entering the merger with Corebridge from a position of strength.

I will now turn the call over to Robin to discuss Equitable's second quarter results in more detail.