Equitable Holdings, Inc. (EQH) Earnings

Management highlights

- Merger with CoreBridge (Corbridge) - Both companies' shareholders approved the merger on July 30, 2026, with over 97% voter support. Federal antitrust review is complete, and all required regulatory approvals have been filed. The merger remains on track to close by the end of 2026. - The first three levels of management (top 500 positions) for the combined company have been finalized, and integration planning is underway. Management reaffirmed confidence in meeting all previously announced financial and synergy targets for the transaction. - Projected benefits for the merged company include at least 10% accretion to earnings and cash flow per share by the end of 2028, 15%+ return on equity (ROE) on a capital base over $30 billion, and expanded scale, distribution breadth and capabilities across U.S. retirement, life insurance, institutional and wealth/asset management. - Capital Return to Shareholders - Returned $449 million of capital to shareholders in Q2 2026, including $366 million in share repurchases, for a 92% quarterly payout ratio. The accelerated buyback followed a first quarter blackout period, and management reaffirms a full-year 2026 target payout ratio of 60-70%. - Holding company ended the quarter with $800 million in cash and liquid assets, and the combined NAIC-RBC ratio is well above the 400% operating target. The company expects to generate ~$1.8 billion in holding company cash flow in 2026 and $2 billion in 2027, with all required regulatory approvals received for planned second half 2026 insurance subsidiary dividends. - Strategic Growth Execution - Core strategy focuses on growing core retirement and asset management businesses, scaling adjacent wealth management and AB private markets, and seeding growth in high-potential new markets. The company entered 2026 with strong organic momentum, with all segments delivering positive net inflows in Q2. - Retirement: Annualized organic growth of 4% in H1 2026, rising to 6% including spread lending. The company is investing in fast-growing new institutional segments (in-plan annuities, HSAs) targeting over $500 million in institutional flows in 2026, with growth expected to accelerate post-merger. - Alliance Bernstein: Private markets AUM reached the $90-100 billion target over one year ahead of schedule. Third-party insurance AUM rose 16% year-over-year to $61 billion, and the active ETF platform now has 31 strategies, $20 billion AUM, and generates ~$100 million in annual fee income. In July 2026, AB onboarded $12 billion of commercial mortgage loans from Equitable, with an additional $14 billion unfunded pipeline. - Recent Disposals: Equitable sold its small business-focused employee benefits business to The Hartford. The business grew to ~500 million in annual premiums but lacked scale to reach profitability, and proceeds from the sale will be reallocated to existing at-scale growth businesses, with a neutral to slightly positive near-term earnings impact. - Consolidated Results - Q2 2026 non-GAAP operating EPS was $1.70, or $1.75 adjusting for notable items, representing 24% year-over-year growth. H1 2026 adjusted EPS grew 25% year-over-year, putting the company on track to meet full-year guidance of over 15% EPS growth. Total assets under management and administration (AUMA) hit a record $1.2 trillion, up 10% year-over-year.

Guidance

- Full year 2026 EPS growth is maintained at greater than 15% year-over-year, with management expecting to hit the low end of the cumulative 12-15% EPS growth target range set at the 2023 Investor Day by the end of 2026. - Full year 2026 performance fees for Alliance Bernstein have been revised upward from the prior range of $95-115 million to $115-135 million, with most of the increase expected to be realized in the fourth quarter. - Core spreads for the retirement segment are expected to remain stable near current 174 basis point levels for the foreseeable future, with only minor 1-2 basis point quarterly volatility expected. - The full year 2026 payout ratio is maintained at 60-70%, with the elevated Q2 payout representing catch-up from the prior quarter buyback blackout. - Holding company cash flow guidance is maintained at ~$1.8 billion for 2026 and $2 billion for 2027. The full year 2026 Corporate & Other loss guidance is maintained at $350-400 million. - Annual wealth management earnings growth is expected to remain in the double-digits, with margins expected to expand gradually as the business scales.

Segment performance

1. Retirement: Second quarter adjusted earnings were $408 million. Net Interest Margin (NIM) increased 11% year-over-year and 1% sequentially, with core spreads (excluding alternatives) rising 1 basis point sequentially to 174 basis points. Fee-based revenues grew year-over-year and sequentially, supported by strong equity markets. The segment recorded $1.7 billion of net inflows, or $4.3 billion including $2.6 billion of net issuance from the spread lending business. It contributed 77.4% of total adjusted operating earnings. 2. Asset Management (Alliance Bernstein, AB): Second quarter earnings were $158 million, up 21% year-over-year. Record AUM reached $906 billion at quarter end. The average base fee rate declined modestly to 37.7 basis points due to mix shift, but the segment maintains attractive incremental margins on new revenue. AB recorded $0.8 billion of net inflows in the quarter, with private markets AUM hitting $91 billion, up 18% year-over-year. It contributed 30% of total adjusted operating earnings. 3. Wealth Management: Earnings increased 26% year-over-year, driven by strong organic growth and higher advisor productivity. The segment recorded $2 billion of advisory net inflows in the quarter, with a trailing 12-month organic growth rate of 11% and 10% annual organic growth in H1 2026. Total assets under administration (AUA) rose 27% year-over-year to $141 billion, and advisor productivity increased 13%. The company expects sustained double-digit annual earnings growth for this segment. It contributed ~12.7% of total adjusted operating earnings before corporate losses. 4. Corporate & Other: Reported an adjusted loss of $106 million for the quarter, slightly above the full-year guidance implied range of $350-400 million annual loss. The larger loss stemmed from higher-than-normal long-term compensation accruals tied to a 19% stock price increase and modestly elevated mortality from large one-off claims. H1 2026 adjusted loss was $204 million, in line with expectations.

Risks & headwinds

- Integration of the Corbridge merger is still in early stages, with final go-to-market plans for revenue synergies not expected to be released until the 2027 Investor Day. There is inherent execution risk associated with achieving planned synergy targets. - Private equity holdings in the alternative investment portfolio are subject to valuation lags, with Q2 results pressured by prior quarter market declines, and full visibility into second half performance will not be available until September 2026. The portfolio also has ongoing valuation challenges in real estate equity holdings. - Quarterly volatility in core retirement spreads and corporate expenses is normal, and mortality or compensation costs can lead to quarterly deviations from full year expected losses in Corporate & Other. - While private credit allocation is flexible, growth is constrained by liability profile matching requirements and internal sublimits by asset class and individual name to manage diversification. The company must maintain balance between attractive risk-adjusted returns and required liquidity for different product lines. - Increased competitive entry into the growing RILA annuity market could pressure pricing or market share over time, though management notes most recent new entrants have reverted to more rational pricing.

Analyst Q&A

• Q: What progress has been made on Corbridge merger integration planning, and what has the reaction from external distribution partners been? /

  A: The company has already finalized the first three levels of management (top 500 roles) for the combined company, with ongoing work on technology stack decisions. Management remains fully confident in hitting the targeted expense synergies, and is prioritizing planning for revenue synergies that will be a key driver of long-term growth. Outreach to external distribution partners has been broadly positive, with partners eager to move forward with the combined company. A full update on synergy and go-to-market plans will be provided at an investor day in H1 2027. The company has maintained focus on hitting 2026 standalone targets throughout the approval process.

• Q: When can Equitable Advisors start selling Corbridge products after merger close, and how much advance planning has been done? /

  A: All pre-close integration planning for revenue synergy initiatives (including distributing Corbridge products via Equitable Advisors, and moving assets to AB) is already underway. Because the merger has not closed, both firms must operate independently until completion, so execution of these plans will not start until after close. The company expects to hit the ground running and launch all planned initiatives in Q1 2027. Expected benefits include capturing additional annuity, term life and IUL sales volume through Equitable Advisors' existing distribution.

• Q: What is the source of the $12 billion in commercial mortgage loans (CML) moved to AB in July, and how does the fee rate compare to AB's average? /

  A: The CML portfolio was previously managed by an external third-party manager, a holdover from pre-IPO ownership. Equitable had built the in-house capability at AB to manage the portfolio prudently, so the transfer was completed as part of the company's flywheel strategy between Equitable and AB. The fee rate for the portfolio is in the high single-digits, which is lower than AB's firm-wide 37.7 basis point average. Fees will not start accruing to AB until Q4 2026, and the fee rate will increase over time when new origination activity begins.

• Q: If peers are moving away from vanilla annuity products, will increased competition in the RILA space erode Equitable's position? /

  A: Equitable delivered another strong quarter of RILA growth, with sales up 10% year-over-year and 5% trailing 12-month organic growth. Management notes that most new entrants to the RILA space have already reverted to more rational pricing, with no material change in competitive dynamics in Q2. Strong demographic demand and macro instability continue to grow the overall RILA market, and Equitable has durable competitive advantages (attractive returns via AB, low-cost differentiated distribution, scale) that are hard to replicate. The Corbridge merger will further extend these advantages via expanded product breadth.