Equitable Holdings, Inc. · NYSE:EQH
Equitable — AXA Equitable Holdings — Barclays Global Financial Services Conference 2018
28 slides from Equitable's conference presentation, Sep 12, 2018
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Mark Pearson Chief Executive Officer September 12, 2018
Slide 2: Note Regarding Forward-Looking Statements
Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that
Slide 3: AXA Equitable Holdings
AXA Equitable Holdings Established in 1859, now one of America’s leading financial services companies Our mission Since 1859, we have been providing advice and solutions that help our clients retire with dignity, protect their families and prepare for their financial future with confidence. Our heri
Slide 4: Operating through two well-established and iconic brands
AXA Equitable Holdings Operating through two well-established and iconic brands NYSE: EQH Mkt cap.: $12.6bn¹ 100% 65% owned owned NYSE: AB Mkt cap.: $8.5bn2 Employees & c. 8,600 c. 3,500 Advisors # Clients 2.8m3 2.6m4 AUM5 $207bn6 $540bn 69% of General Account with AB Connected and 27% of Separate A
Slide 5: Strategic priorities
Strategic priorities We aim to be the most trusted partner to our clients by providing advice and solutions that help them retire with dignity, protect their families and prepare for their financial future with confidence Growth Productivity Capital optimization ▪ Focus on less capital intensive ▪ U
Slide 6: Market dynamics
Market dynamics Long-term trends will continue to favorably impact our business Every day until 2030, 10,000 people will reach age 652 Rapid growth in U.S. retirees On average, 50% of those who reach age 65 will live another 20 years2 Global investable assets reached 70% of assets held by retirees /
Slide 7: Market dynamics, cont.
Market dynamics, cont. But industry headwinds require agility and innovation to succeed ✓ Advice Increasing regulation ✓ Advocacy Capital-intensive and low ✓ Less capital intensive interest rates ✓ Diverse business model ✓ Technology to augment advice Technology as a disruptor ✓ AXA Venture Partners
Slide 8: Differentiated industry leader
Differentiated industry leader Recognized for the breadth of our business and strength of our balance sheet 1 Leading positions in select markets with premier multi-channel distribution 2 Repositioned business towards less capital-intensive segments 3 Robust cash flow generation drives capital retur
Slide 9: Leading positions in select markets with premier multi-channel distribution
1 Leading positions in select markets with premier multi-channel distribution Focus where we have scale, strong value propositions and competitive advantages Clients1 Value proposition Market position ▪ Innovative product manufacturing Individual 766k ▪ Certainty of retirement income #3 Retirement C
Slide 10: Diversified business mix across four core segments
1 Leading positions in select markets with premier multi-channel distribution Diversified business mix across four core segments 2017 Individual Retirement Non-GAAP Group Retirement Operating Earnings1 ▪ Account value: $103bn ▪ Account value: $34bn ▪ Return on Assets2: 1.78% ▪ Return on Assets2: 1.1
Slide 11: Distribution platform provides access to over 150,000 advisors
1 Leading positions in select markets with premier multi-channel distribution Distribution platform provides access to over 150,000 advisors Affiliated Third-party partners 1,000 agreements with banks, 4,500+ AXA Advisors financial broker-dealers, insurance carriers, professionals & 200 AB advisors
Slide 12: Repositioned business towards less capital-intensive segments
2 Repositioned business towards less capital-intensive segments Significant change to Individual Retirement in-force and new business mix 2008 2017 Non-GMxB 65% Fixed rate Non-GMxB GMxB 1% New 90% ROP Death Fixed rate business $11bn Benefit Only GMxB $7bn 9% (FYP) 1% Floating Rate GMxB ROP Death 30%
Slide 13: AB provides a good source of non-regulated cash flows
2 Repositioned business towards less capital-intensive segments AB provides a good source of non-regulated cash flows AB margin expansion ▪ EQH ownership of AB increased to 65% Adjusted Operating Margin (%)1 ▪ Repositioning mix of business and 27.7 24.2 24.5 25.3 geographic source of funds 24.1 ‒ $1
Slide 14: Distributable earnings positive in the near-term across market environments
3 Robust cash flow generation drives capital return Distributable earnings positive in the near-term across market environments1 2018-2020 VA distributable earnings ($bn) PV of VA free cash flows and assets ($bn)2 17.5 12.9 9.2 8.6 6.3 4.1 4.3 3.1 2.9 1.6 Base Case Upside Downside Extreme Lapse Shoc
Slide 15: Mature VA book drives release of CTE98 leading to capital return
3 Robust cash flow generation drives capital return Mature VA book drives release of CTE98 leading to capital return VA portfolio is mature, concentrated pre-20091 VA funding lifecycle: Expect to release capital Premium ($bn) Majority Peak Fixed GMxB “Up the funding Floating GMxB curve” CTE 98 “Down
Slide 16: Target payout ratio: 40% – 60% of Non-GAAP Operating Earnings
3 Robust cash flow generation drives capital return Target payout ratio: 40% – 60% of 2018 Non-GAAP Operating Earnings to shareholders on an annualized basis Launch of capital management program… … While maintaining financial targets at June 30 1,200 Per share common stock dividend ▪ Estimated combi
Slide 17: Strong balance sheet and sophisticated risk management practices
4 Strong balance sheet and sophisticated risk management practices Provides confidence for clients and investors and a strong foundation to grow Lower capital standard Higher capital standard Range of peers (A-D) CTE95 CTE97 CTE98 A B C D (700+% RBC) ▪ Capital management approach ‒ CTE98 for VAs and
Slide 18: Multiple organic levers to drive earnings growth
5 Multiple organic levers to drive earnings growth After tax reform, Non-GAAP Operating Earnings growth is expected to result in Non- GAAP Operating ROE in the mid-teens by 2020 5-7% Target Non-GAAP Operating Earnings CAGR1 $2.2-$2.3bn $1.9bn1 Tax reform GA Optimization Productivity Growth Financial
Slide 19: First half 2018 consolidated results
First half 2018 consolidated results Non-GAAP Operating Earnings Non-GAAP Operating Earnings Per Share1 $m $ +38% +38% 970 1.73 703 1.25 1H17 1H18 1H17 1H18 Total AUM Pro Forma Non-GAAP Operating ROE 2 $bn +4% +230bps 631 656 14.6% 12.3% 1H17 1H18 YE 2017 2Q18 1 Non-GAAP Operating Earnings Per Share
Slide 20: Key financial targets
Key financial targets Maintain strong balance sheet while delivering disciplined financial growth AXA Equitable Holdings Non-GAAP Op. Earnings growth Payout ratio1 Non-GAAP Operating ROE 5-7% 40-60% Mid-teens CAGR through 2020 by 2020 (after tax reform) AXA Equitable Life AllianceBernstein Target ca
Slide 21: Differentiated industry leader
Differentiated industry leader Recognized for the breadth of our business and strength of our balance sheet 1 Leading positions in select markets with premier multi-channel distribution 2 Repositioned business towards less capital-intensive segments 3 Robust cash flow generation drives capital retur
Slide 22: Appendix
Equitable ya Holdings Appendix
Slide 23: Reconciliation of Net Income to Non-GAAP Operating Earnings
Appendix Reconciliation of Net Income to Non-GAAP Operating Earnings ($ million) Historical Pro forma 2015 2016 2017 2017 Net income (loss) attributable to Holdings $333 $1,272 $850 $840 Adjustments: Adjustments related to GMxB features $1,697 $2,068 $1,244 $1,250 Investment (gains) losses 15 (1,983
Slide 24: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Pro Forma Non-GAAP Operating Return on Equity (ROE) Twelve Months Ended Twelve Months Ended or As of (in millions USD, unless otherwise indicated) 12/31/2016 12/31/2017 12/31/2017 Net Income to Pro forma Net Income Net income (l
Slide 25: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Pro Forma Non-GAAP Operating Return on Equity (ROE) Three months Ended or As of Twelve Months Ended or As of (in millions USD, unless otherwise indicated) 06/30/2017 09/30/2017 12/31/2017 03/31/2018 06/30/2018 03/31/2018 06/30/2
Slide 26: Protection Solutions Segment Operating Earnings adjustments for non-recurring items
Appendix Protection Solutions Segment Operating Earnings adjustments for non-recurring items ($ million) 2017 Policyholders’ benefits $956 Pre-tax adjustments in policyholders’ benefits Actuarial assumptions updates and model changes 677 Change in mortality table (70) Policyholders’ benefits excludi
Slide 27: Protection Solutions Segment Operating Earnings adjustments for non-recurring items
Appendix Protection Solutions Segment Operating Earnings adjustments for non-recurring items ($ million) 2017 Operating Earnings $536 Pre-tax adjustments in policyholders’ benefits Actuarial assumptions updates and model changes ($677) Change in mortality table 70 Pre-tax adjustments in DAC amortiza
Slide 28: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Non-GAAP Operating Earnings Six Months Ended June 30, 2018 2017 (in millions) Net income (loss) attributable to Holdings $ 326 $ 318 Adjustments related to: Variable annuity product features1 492 251 Investment (gains) losses (8
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