Slide 1: Fourth Quarter and Full Year 2018 Earnings Results
Fourth Quarter and Full Year 2018 Earnings Results March 1, 2019
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: Highlights
Highlights ▪ VA capitalization at CTE98 Financial strength ▪ Combined RBC of c. 670% despite volatile markets ▪ Hedge program funded c. $3bn change in CTE98 liability ▪ Strong operating earnings Delivering on 2020 ▪ Delivering on key financial targets strategic priorities ▪ Returned over $1bn to sha
Slide 4: 2018 Financial Summary
2018 Financial Summary Full year Non-GAAP Operating Earnings1 increased 28% to $2 billion2 ▪ Fourth quarter 2018 Non-GAAP Operating EPS3 of $0.93 Positive momentum across all business segments in 2018 ▪ Individual Retirement operating earnings increased 24% ▪ Group Retirement net flows of $96 millio
Slide 5: Strategic Priorities
Strategic Priorities 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 CAGR $2.2-$2.3bn Tax reform GA Optimization Productivity Growth Strategic priorities GA Optimization Productivity Growth $160m $75m
Slide 6: Full Year 2018 Consolidated Results Summary
Full Year 2018 Consolidated Results Summary Assumption update impact1 Non-GAAP Operating Earnings Non-GAAP Operating EPS2 Financial Highlights $m $ Non-GAAP Operating Earnings 2,166 3.89 increased to $3.59 per share 2,035 3.63 169 0.30 excluding assumption updates 473 0.84 driven by: ▪ Increase in f
Slide 7: Fourth Quarter 2018 Consolidated Results Summary
Fourth Quarter 2018 Consolidated Results Summary Assumption update impact1 Non-GAAP Operating Earnings Non-GAAP Operating EPS2 Financial Highlights $m $ Non-GAAP Operating Earnings 921 1.64 decreased to $504 million excluding assumption updates driven by: 405 0.72 0.93 504 ▪ Lower account values due
Slide 8: Net Income to Non-GAAP Operating Earnings, 4Q18
Net Income to Non-GAAP Operating Earnings, 4Q18 Hedging program performed as expected in down market $m 1,938 (1,898) 504 350 114 Net Income (loss) VA Product Features All other adjustments1 Income tax expense Non-GAAP Operating Earnings All figures $m Description 4Q18 GMxB accounting asymmetry: • G
Slide 9: Hedging program effectively protected capital position
Hedging program effectively protected capital position Two-pronged program delivered despite volatile Q4 markets Target Q4 Performance Current State Dynamic ▪ Hedges economic liability ▪ Hedges funded c. $3bn ▪ Proven program performing as hedge (futures and swaps) increase to CTE98 liability expect
Slide 10: Individual Retirement
Individual Retirement Operating Earnings Highlights $m ▪ Operating earnings decline driven by: (15)% o Higher DAC amortization due to lower interest rates 408 o Fall in equity markets 348 ▪ FYP increased 15% YOY driven primarily by SCS sales ▪ Net inflows on our Current Product Offering were offset
Slide 11: Group Retirement
Group Retirement Operating Earnings Highlights $m ▪ Strong operating earnings growth primarily due +13% higher net investment income from GA optimization 102 ▪ Achieved sixth consecutive full year of positive net 90 flows despite fourth quarter outflows ▪ Gross premiums increased 7% YOY, including 1
Slide 12: Investment Management and Research (AB)
Investment Management and Research (AB) Operating Earnings Highlights $m ▪ Increase in operating earnings mainly driven by +45% o Increase in the company’s ownership of AB to 65.2% 107 and lower operating expenses o Partially offset by a decrease in revenue due to lower performance-based fees and lo
Slide 13: Protection Solutions
Protection Solutions Operating Earnings Highlights $m Assumption update impact1 ▪ Operating earnings decline primarily attributable to non-recurring items incurred ahead of the IPO ▪ Anticipate lower earnings volatility post loss- 448 recognition exit in 3Q18 405 ▪ Higher annualized premiums driven
Slide 14: Capital Position
Capital Position Capital position robust following 4Q18 equity market and interest rate decline ▪ 24.5% debt-to-capital ratio Strong and protected ▪ Maintained target of CTE98 for VA business, balance sheet 350-400% RBC for non-VA ▪ c. 670% Combined RBC as of year-end ▪ Completed transfer of AB inte
Slide 15: Capital Management
Capital Management Since IPO, returned over $1 billion to shareholders1 Capital Return $m 661 ▪ Completed accelerated share repurchase of $150m in 1Q19 69 as part of 2018 capital management program 2181 68 ▪ Announced new $800m share 130 repurchase authorization for 592 2019 73 150 ▪ Declared $0.13
Slide 16: Highlights
Highlights ▪ VA capitalization at CTE98 Financial strength ▪ Combined RBC of c. 670% despite volatile markets ▪ Hedge program funded c. $3bn change in CTE98 liability ▪ Strong operating earnings Delivering on 2020 ▪ Delivering on key financial targets strategic priorities ▪ Returned over $1bn to sha
Slide 17: Fourth Quarter and Full Year 2018 Earnings Results Appendix
Fourth Quarter and Full Year 2018 Earnings Results Appendix March 1, 2019
Slide 18: 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 Pro Forma Non-GAAP Operating ROE 5-7% 50-60% Mid-teens CAGR through 2020 by 2020 (after tax reform) AXA Equitable Life AllianceBernstein
Slide 19: General Account investment portfolio
General Account investment portfolio High quality, diversified portfolio Overall portfolio composition Fixed maturity portfolio Mortgage U.S. Treasury, < Baa Loans Gov’t and Agency 2% 15% 18% Aaa Policy Alts. & 27% Loans Baa 5% 2% Other 32% $78bn 2 $61bn Short Duration 19% Fixed Maturities1 9% Aa 38
Slide 20: Reconciliation of Non-GAAP and Other Financial Disclosures
Appendix Reconciliation of Non-GAAP and Other Financial Disclosures EQH Non-GAAP Operating Earnings Fourth Quarter Full Year 2018 2017 2018 2017 (in millions) (in millions) Net income (loss) attributable to Holdings $ 1,938 $ 483 $ 1,820 $ 834 Adjustments related to: Variable annuity product feature
Slide 21: 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) 12/31/2016 12/31/2017 03/31/2018 06/30/2018 09/30/2018 12/31/2018 12/31/2
Slide 22: Impact of Actuarial Assumption Updates on Non-GAAP Operating Earnings
Appendix Impact of Actuarial Assumption Updates on Non-GAAP Operating Earnings Quarter Ended December 31, 2018 Year Ended December 31, 2018 Individual Group Protection Corporate Individual Group Protection Corporate Non-GAAP Operating Earnings Line Retirement Retirement Solutions and Other Total Ret