Equitable Holdings, Inc. · NYSE:EQH
Equitable — Q1 2020 Earnings Presentation
23 slides from Equitable's earnings presentation, May 8, 2020
Slide 1: Equitable Holdings First Quarter 2020 Earnings Results
Equitable Holdings First Quarter 2020 Earnings Results May 8, 2020 Equitable
Slide 2: Note Regarding Forward-Looking and Non-GAAP Financial Measures
Note Regarding Forward-Looking and Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estima
Slide 3: First Quarter 2020 Highlights
First Quarter 2020 Highlights Supporting our people, clients and communities • Enhanced digital connectivity and comprehensive “Stay Well” program for our people • Magnifying our outreach through new digital planning tools and Equitable Foundation Resilient balance sheet • Fully hedged against econo
Slide 4: Resilient balance sheet: hedged to economic liabilities
Resilient balance sheet: hedged to economic liabilities Interest Rates (assumption standards) 1Q20 gain/loss: GAAP vs. Stat. vs. Economic $bn ■ Economic liability ■ Assets ■ Net G/L after hedges U.S. GAAP ▪ Current: Fair value: mark-to-market 12 SOP: Reversion to mean 10 (industry practices vary) 5
Slide 5: Resilient balance sheet: decade long program of risk management
Resilient balance sheet: decade long program of risk management Actions Impact AUM; increased passive assets from 5% to 60%, eliminated added risk framework to fund line-up and inforce management $31bn unhedgeable assets and reduced basis risk by 85-90% 2009 launched volatility managed strategies (A
Slide 6: First Quarter 2020 Financial Summary
First Quarter 2020 Financial Summary Non-GAAP operating earnings1 of $515m or $1.08 per common share, up 10% YOY Net income of $5.4bn driven primarily by hedging gains Solid business segment performance: • Operating earnings of $372m up 1% year-over-year ▪ Individual Retirement • Structured Capital
Slide 7: Net Income to Non-GAAP Operating Earnings, 1Q20
Net Income to Non-GAAP Operating Earnings, 1Q20 $m 1 VA product features 5,410 (8,329) 515 1,303 2 663 1,468 Net income GMxB hedging Realignment of long- All other adjustments1 Income tax expense Non-GAAP (economic hedges> term GAAP interest (incl. non-VA realignment of operating earnings GAAP liabi
Slide 8: Resilient balance sheet: strong capitalization and liquidity
Resilient balance sheet: strong capitalization and liquidity Capital position stable despite headwinds Robust liquidity and capital management ■ RBC Ratio ▬ S&P 500 ▬ US10Y Diverse liquidity sources Reminder: RBC ratio reflects early adoption of NAIC VA reform ▪ Cash & liquid assets of $1bn at Holdi
Slide 9: High quality investment portfolio able to withstand severe shocks
High quality investment portfolio able to withstand severe shocks Stress scenarios 2x worse than 2008 Conservative relative to industry High quality investment composition Stress Scenario1 Deep Stress2 as of 3/31/20 2008 impact 2008-2010 2x 2008 2x 2008-2010 ▪ Average portfolio rating of A2, credit
Slide 10: Focused on supporting our clients, communities, and people
Focused on supporting our clients, communities, and people Our clients Our communities Our people Being a trusted partner Magnifying our outreach Ensuring Employee well-being ▪ Affiliated advisors directly ▪ Launched #PlanWhatWeCan ▪ Enhanced usage digital meeting critical advice need program to hel
Slide 11: Robust business model demonstrating strength and durability
Robust business model demonstrating strength and durability Business model built on three pillars… … resilient amidst volatility Equitable Life (April 2020 activity indicators) ▪ Demand remains strong: 20% uptick in Products economically sound and in demand client engagement activities ▪ New busines
Slide 12: First Quarter 2020 Highlights
First Quarter 2020 Highlights Supporting our people, clients and communities • Enhanced digital connectivity and comprehensive “Stay Well” program for our people • Magnifying our outreach through new digital planning tools and Equitable Foundation Resilient balance sheet • Fully hedged against econo
Slide 13: Appendix
Appendix Equitable Holdings First Quarter 2020 Earnings Results
Slide 14: First Quarter Consolidated Results Summary
First Quarter Consolidated Results Summary Non-GAAP Operating Earnings Non-GAAP Operating EPS Financial Highlights $m $ Non-GAAP operating EPS of $1.08 +1% +10% increased 10% from the prior year period, driven primarily by: 509 515 1.08 0.98 ▪ Higher fee-type revenue on higher average account values
Slide 15: Individual Retirement
Individual Retirement Operating Earnings Highlights $m ▪ Operating earnings increase driven by higher net investment +1% income due to higher SCS account values and our GA rebalancing 370 372 ▪ Increase in FYP driven by 11% YOY growth in SCS sales ▪ Net inflows on our Current Product Offering of $61
Slide 16: Group Retirement
Group Retirement Operating Earnings Highlights $m ▪ Operating earnings increased primarily due to higher net +31% investment income and fee-type revenue on higher average account values 106 81 ▪ Net flows improved by 20% year-over-year driven by a 10% increase in gross premiums ▪ Gross premium growt
Slide 17: Investment Management and Research (AB)
Investment Management and Research (AB) Operating Earnings Highlights $m ▪ Operating earnings growth driven by higher base fees on +23% higher average AUM and an increase in Bernstein research revenue on higher trading volumes 95 77 ▪ First quarter net flows of $(5.6) billion driven by retail fixed
Slide 18: Protection Solutions
Protection Solutions Operating Earnings Highlights $m ▪ Operating earnings decline driven primarily by unfavorable -22% mortality experience, partially offset by higher net investment income due to GA rebalancing 49 38 ▪ Notable items1 of $(31) million primarily related to unfavorable mortality ▪ Gr
Slide 19: Investment Portfolio Overview
Investment Portfolio Overview Overall portfolio composition Fixed maturity portfolio <Baa U.S. Treasury, Gov’t and Agency 2% 16% Other Fixed Maturities Baa 4% 32% 6% Short Duration 1 Corporates 54% $88bn 2 Fixed Maturities $65bn 14% 66% Mortgage Loans Aaa, Aa, A 2% 4% Policy Loans Alts. & Other Aver
Slide 20: Statutory Interest Rate Scenario Generator: Avg. 20-year UST rate
Post-NAIC VA reform Statutory Interest Rate Scenario Generator # of scenarios (of 10,000) 0 100 200 300 400 500 600 700 800 900 Over 5.0% 4.8% 4.6% 4.4% Avg. rates higher (100.0% of NAIC scenarios) 4.2% Avg. 20-year UST rate 4.0% 3.8% 3.6% 3.4% 3.2% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% 1.8% 1.6% 1.4% 1.2%
Slide 21: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Non-GAAP Operating Earnings Three Months Ended March 31, 2020 2019 (in millions) Net income (loss) attributable to Holdings $ 5,410 $ (775) Adjustments related to: Variable annuity product features (6,861) 1,540 Investment (gain
Slide 22: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures Three Months Ended Net impact of economic interest rate hedging and assumption update, ($m) March 31, 2020 Net income (loss) attributable to Holdings $ 5,377 Items included in Net income (loss) attributable to Holdings: Economic int
Slide 23: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Non-GAAP Operating Return on Equity Balances as of (in millions, unless otherwise indicated) 06/30/2018 09/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Equity Reconciliation Total equity attributable to