Equitable(US:EQH)2021-11-03 16:00PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents Equitable Holdings, Inc.'s unaudited consolidated financial statements, encompassing balance sheets, income, equity, and cash flow statements, along with detailed notes Consolidated Balance Sheets Total Assets increased to $284.6 billion, Total Liabilities rose to $271.3 billion, while Total Equity decreased to $13.2 billion as of September 30, 2021 Consolidated Balance Sheet Highlights (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | $284,579 | $275,397 | | Total Investments | $102,007 | $109,087 | | Separate Accounts assets | $142,093 | $135,950 | | Total Liabilities | $271,264 | $258,077 | | Policyholders' account balances | $75,909 | $66,820 | | Separate Accounts liabilities | $142,093 | $135,950 | | Total Equity | $13,172 | $17,177 | | Retained earnings | $8,857 | $10,699 | | Accumulated other comprehensive income (loss) | $1,876 | $3,863 | Consolidated Statements of Income (Loss) Net Income Attributable to Holdings significantly improved to $672 million in Q3 2021, while the nine-month period saw a net loss of $693 million, largely due to derivative volatility Income Statement Summary (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $3,615 | $1,840 | $7,718 | $11,899 | | Net derivative gains (losses) | $(185) | $(1,472) | $(3,930) | $1,890 | | Net Income (Loss) Attributable to Holdings | $672 | $(779) | $(693) | $590 | | Diluted EPS | $1.59 | $(1.77) | $(1.76) | $1.22 | Consolidated Statements of Cash Flows Net cash used in operating activities was $354 million for 9M 2021, with significant cash used in investing activities and provided by financing activities Cash Flow Summary (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(354) | $5 | | Net cash provided by (used in) investing activities | $(10,775) | $(3,968) | | Net cash provided by (used in) financing activities | $10,181 | $8,176 | | Change in cash and cash equivalents | $(963) | $4,214 | Notes to Consolidated Financial Statements These notes provide detailed explanations of the financial statements, covering accounting policies, investments, derivatives, insurance liabilities, and segment information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, including an executive summary, analysis of key factors, consolidated and segment performance, and liquidity and capital resources Executive Summary The company operates across four segments, completed a significant variable annuity reinsurance entity sale to de-risk its balance sheet, and generates revenue primarily from fees, premiums, and investment income - On June 1, 2021, the company completed the sale of CSLRC to Venerable, receiving a $215 million cash purchase price and ceding a legacy block of variable annuity policies sold between 2006-2008381383384 - The company's primary revenue sources are fee income from retirement/protection products and investment management, premiums from insurance products, and investment income from its General Account389 Consolidated Results of Operations Net Income Attributable to Holdings improved significantly in Q3 2021, while the nine-month period saw a net loss, largely influenced by derivative movements, with Non-GAAP Operating Earnings increasing for both periods Net Income (Loss) Attributable to Holdings (in millions) | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Q3 | $672 | $(779) | +$1,451 | | 9 Months | $(693) | $590 | -$1,283 | Non-GAAP Operating Earnings (in millions) | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Q3 | $818 | $568 | +$250 | | 9 Months | $2,176 | $1,554 | +$622 | Results of Operations by Segment This section reviews operating earnings across all business segments, highlighting strong performance in Group Retirement, Investment Management, and Protection Solutions for Q3 and 9M 2021 Operating Earnings by Segment (in millions) | Segment | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | Individual Retirement | $316 | $371 | $1,093 | $1,094 | | Group Retirement | $192 | $129 | $514 | $325 | | Investment Management & Research | $134 | $104 | $381 | $291 | | Protection Solutions | $160 | $51 | $264 | $88 | | Corporate and Other | $16 | $(87) | $(76) | $(244) | | Total Non-GAAP Operating Earnings | $818 | $568 | $2,176 | $1,554 | Liquidity and Capital Resources The company manages liquidity at holding and subsidiary levels, holding $2.5 billion in liquid assets, with significant cash uses for shareholder returns and capital contributions, supported by a $1.5 billion revolving credit facility - As of September 30, 2021, the holding company held $2.5 billion in highly liquid assets, a decrease of $566 million from the beginning of the year585587 - Key uses of cash in the first nine months of 2021 were $1.2 billion for share repurchases and $224 million for common stock dividends585 - The company maintains a $1.5 billion five-year senior unsecured revolving credit facility maturing in June 2026 and was in compliance with all covenants as of September 30, 2021598600 Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's quantitative and qualitative disclosures regarding market risk since the 2020 Annual Report on Form 10-K - There were no material changes to market risk disclosures from the 2020 Form 10-K654 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective656 - No material changes to internal control over financial reporting occurred during the third quarter of 2021657 PART II - OTHER INFORMATION Item 1. Legal Proceedings Information regarding pending legal proceedings against the company is detailed in Note 13 of the Consolidated Financial Statements - Information on legal proceedings is detailed in Note 13 of the financial statements659 Item 1A. Risk Factors This section refers readers to the comprehensive discussion of risk factors in the company's 2020 Annual Report on Form 10-K - The company refers to its 2020 Form 10-K for a detailed description of risk factors660 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Equitable Holdings repurchased 15.6 million shares of common stock in Q3 2021, with $462 million remaining for future repurchases under authorized programs Share Repurchases (Q3 2021) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2021 | 7,881,773 | $30.45 | | August 2021 | 0 | $0.00 | | September 2021 | 7,710,633 | $28.53 | | Total | 15,592,406 | $29.50 | - As of September 30, 2021, approximately $462 million remained authorized for future share repurchases661