Equitable Holdings, Inc. · NYSE:EQH
Equitable — Q2 2020 Earnings Presentation
19 slides from Equitable's earnings presentation, Aug 7, 2020
Slide 1: Second Quarter 2020 Earnings Results
Equitable Holdings Second Quarter 2020 Earnings Results August 5, 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: Second Quarter 2020 Highlights
Second Quarter 2020 Highlights Leading with our values • Prioritizing the health and well-being of our people, clients and communities • Accelerating actions to advance racial equity Results demonstrating business model resilience • Non-GAAP operating earnings1 of $459m, or $1.00 per common share •
Slide 4: Demonstrating business resilience
Demonstrating business resilience Managing through headwinds Adapting for the future ▪ Strong firmwide net flows: AB net flows ▪ Market leader in product innovation: SCS excluding expected AXA redemptions of $4.6bn1 sales up 7% in retail channel YOY; introducing and retirement net inflows of $163m2
Slide 5: Prudent and robust risk management practices
Prudent and robust risk management practices Under GAAP, GMxB hedge gains net positive through 1H20 Fully hedged to economic liabilities YTD below-the-line adjustments to VA Product Features ($bn) Q1 Q2 ► Economic framework uses forward Realignment of LT GAAP rate assumption curve and risk-neutral s
Slide 6: Second Quarter Consolidated Results Summary
Second Quarter Consolidated Results Summary Non-GAAP Operating Earnings Non-GAAP Operating EPS Financial Highlights $m $ Non-GAAP operating EPS of $1.00 -18% -12% decreased 12% from the prior year period, driven primarily by: 559 1.14 459 1.00 ▪ Lower fee-type revenue on lower average account values
Slide 7: Individual Retirement
Individual Retirement Operating Earnings Highlights $m ▪ Operating earnings decline driven by lower fee type revenue -3% on lower average account values and lower net investment income on alternatives performance 359 350 ▪ Improved net flows driven by greater retention, partially offset by lower fir
Slide 8: Group Retirement
Group Retirement Operating Earnings Highlights $m ▪ Operating earnings decrease driven primarily by lower net -5% investment income on alternatives performance 95 90 ▪ Net flows increased $52m to $216m driven by strong renewal contributions and improved retention ▪ Increase in renewal contributions
Slide 9: Investment Management and Research (AB)
Investment Management and Research (AB) Operating Earnings Highlights $m ▪ Operating earnings growth driven primarily by lower +15% operating expenses 92 ▪ Net inflows of $4.6bn excluding expected low-fee AXA 80 redemptions, representing 3% annualized organic growth ▪ Gross sales of $31.8bn up 16% y
Slide 10: Protection Solutions
Protection Solutions Operating Earnings Highlights $m ▪ Operating earnings decline driven primarily by excess claims related to COVID-19 (c. $60m impact in current quarter) and lower net investment income on alternatives performance 106 ▪ Ongoing earnings volatility expected due to LRT ▪ Decrease in
Slide 11: Strong capitalization and liquidity enabling capital return
Strong capitalization and liquidity enabling capital return Robust capitalization and liquidity Continuing to deliver on 50-60% payout ratio ▪ RBC ratio of c. 415% reflects early adoption of Dividends Repurchase from AXA NAIC VA reform and impact of Equitable 633 Repurchases from market Financial di
Slide 12: Investments: responding to volatility with speed and discipline
Investments: responding to volatility with speed and discipline Taking action… Improving risk-adjusted outcomes Capitalizing on market 1 dislocations: $2.5 billion ✓ Executed on window of opportunity with elevated spreads: picked up additional c. 120bps rebalance from U.S. Treasuries to Corporates a
Slide 13: Second Quarter 2020 Highlights
Second Quarter 2020 Highlights Leading with our values • Prioritizing the health and well-being of our people, clients and communities • Accelerating actions to advance racial equity Results demonstrating business model resilience • Non-GAAP operating earnings1 of $459m, or $1.00 per common share •
Slide 14: Appendix
Appendix Equitable Holdings Second Quarter 2020 Earnings Results
Slide 15: Net Income to Non-GAAP Operating Earnings, 2Q20
Net Income to Non-GAAP Operating Earnings, 2Q20 $m (48) (1,192) 459 (4,028) 5,727 Net loss VA Product Features All other adjustments1 Income tax expense Non-GAAP operating earnings All figures $m Description 2Q20 GMxB accounting asymmetry: • GMxB hedging 1,729 • Static hedge cash option cost 46 VA P
Slide 16: Net Income to Non-GAAP Operating Earnings, 1H20
Net Income to Non-GAAP Operating Earnings, 1H20 $m 1,382 974 111 (1,134) 615 Net income VA Product Features All other adjustments1 Income tax expense Non-GAAP operating earnings All figures $m Description 1H20 GMxB accounting asymmetry: • GMxB hedging (1,805) • Static hedge cash option cost 94 Short
Slide 17: Investment Portfolio Overview
Investment Portfolio Overview General Account Investment Portfolio Fixed maturity portfolio <Baa U.S. Treasury, Gov’t and Agency 3% 14% Other Fixed Maturities Baa 5% 31% 6% Short Duration 1 Corporates 54% $91bn 2 Fixed Maturities $67bn 14% 66% Mortgage Loans Aaa, Aa, A 2% 4% Policy Loans Alts. & Oth
Slide 18: 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 June 30, 2020 2019 (in millions) Net income (loss) attributable to Holdings $ (4,028) $ 363 Adjustments related to: Variable annuity product features 5,727 200 Investment (gains) lo
Slide 19: 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) 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 Total equity attributable to Holdings (ex. AOCI and