Equitable(EQH) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year non-GAAP operating earnings were $2 billion or$5.93 per share, up 29% year-over-year on a per share basis [8] - Non-GAAP operating EPS was $6.18, which is up 20$1.5 billion, with a forecast of $1.6 billion to$1.7 billion for 2025, continuing the ramp to $2 billion by 2027 [9][50] - The company returned$1.3 billion to shareholders in 2024, equating to a 66% payout ratio, consistent with the 60% to 70% target range [10] Business Segment Data and Key Metrics Changes - Retirement segment reported full year net inflows of $7.1 billion, while wealth management saw$4 billion in net inflows [12] - AllianceBernstein (AB) reported full year active net inflows of $4.3 billion, achieving its second highest year ever for firmwide sales [12] - AB increased private markets AUM by 14$70 billion, supported by investments from Equitable's general account [13] Market Data and Key Metrics Changes - Assets under management and administration increased 10% year-over-year, exceeding $1 trillion [9] - The company established itself as a leader in the emerging in-plan guarantee market, highlighted by over$600 million net inflows from BlackRock's LifePath Paycheck offering [13] Company Strategy and Development Direction - The company is focused on defending and growing its core retirement and asset management businesses while scaling adjacent high-growth businesses [15] - Plans to seed future growth by exploring new emerging market opportunities, including in-plan guarantees and expansion in insurance asset management [16] - The integrated business model is expected to generate better economics by participating in the full value chain across retirement, asset management, and wealth management [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 12% to 15% annualized growth through 2027, with a strong cash flow and balance sheet enabling consistent capital returns to shareholders [21][50] - The company anticipates continued growth momentum in 2025, driven by favorable market conditions and strong demand for retirement solutions [44] Other Important Information - The company achieved $100 million of run-rate expense savings by year-end 2024, with plans to exceed$150 million by 2027 [10] - The establishment of a new Bermuda reinsurance subsidiary is expected to provide optionality for reinsuring in-force liabilities and support future growth [50] Q&A Session Summary Question: Bermuda entity's role in sustaining payout ratio - Management indicated that the Bermuda entity will support consistent cash flow and provide optionality for reinsuring in-force business and supporting new business growth [59] Question: C-corp conversion consideration for AllianceBernstein - AB's analysis suggests that its current structure is in the best interest of unitholders, and a conversion to a C-corp would lead to higher tax rates and significant dilution [66][68] Question: Guidance on protection earnings - Management guided protection earnings for 2025 to be at the lower end of the $200 million to$300 million range, citing volatility in mortality claims [72] Question: Update on BlackRock's LifePath Paycheck product - Expected similar inflows in 2025 as received in 2024, with significant growth potential in the $8 trillion 401(k) market for in-plan guaranteed solutions [76] Question: Trends in group retirement business - Positive flows in tax-exempt and institutional segments, with outflows primarily from legacy corporate segments [122] Question: Overall tax rates and expectations - Favorable audit results contributed to a lower tax rate in the quarter, with expectations for normalization going forward [128]