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Introduction & Market Context
Equitable Holdings (NYSE:EQH) released its second quarter 2025 earnings presentation on August 5, revealing mixed financial results as the company continues its strategic shift to reduce mortality exposure. The insurer reported non-GAAP operating earnings of $1.10 per share, or $1.41 when adjusted for notable items, down 8% year-over-year on an adjusted basis. Despite these pressures, Equitable’s shares rose 1.42% in after-hours trading, suggesting investors are focusing on the company’s strategic initiatives rather than near-term earnings challenges.
The Q2 results follow a disappointing first quarter where Equitable missed earnings expectations, with elevated mortality claims continuing to impact performance. However, the company has now completed a significant life insurance transaction that substantially reduces this exposure going forward.
Quarterly Performance Highlights
Equitable’s second quarter showed a mixed performance across business segments. Total (EPA:TTEF) assets under management and administration reached $1.1 trillion, increasing 8% year-over-year and 5% year-to-date, driven by favorable equity markets.
As shown in the following comprehensive overview of key results:
The company’s retirement business demonstrated solid organic growth with net inflows of $1.9 billion, supported by Registered Index-Linked Annuity (RILA) products and BlackRock (NYSE:BLK) LifePath Paycheck. Wealth Management delivered strong advisory net inflows of $2.0 billion. However, Asset Management experienced active net outflows of $4.8 billion, concentrated primarily in April.
Mortality claims continued to pressure earnings, with approximately $35 million in post-tax claims above normal expectations, driven by higher-than-expected large individual life claims. This follows a similar pattern from Q1 2025, where elevated mortality reduced EPS by $0.20.
The consolidated results summary provides a clear breakdown of performance by segment:
Strategic Initiatives
The most significant development in Q2 was the completion of Equitable’s Individual Life transaction, which closed on July 31. This strategic move reinsured 75% of the in-force individual life insurance block to RGA on a pro-rata basis, generating approximately $2 billion in value and reducing mortality exposure by 75%.
The following chart illustrates the impact of this transaction on shareholder value:
The transaction significantly reduces Equitable’s exposure to mortality risk while freeing up capital for redeployment. Management plans to allocate the $2+ billion in proceeds toward growth investments, additional share buybacks, AB unit tender ($760 million completed in April 2025), and debt repayment ($500 million planned for 2H 2025).
Equitable also executed other capital management initiatives, including a Bermuda internal reinsurance transaction that ceded approximately $30 billion of annuity liabilities to its Bermuda entity, enhancing visibility into future cash generation.
The company’s capital management strategy continues to prioritize shareholder returns, as shown in this detailed breakdown:
In Q2, Equitable returned $318 million to shareholders, including $236 million in share repurchases, representing a 74% payout ratio that exceeds its 60-70% target. The company expects to take $1.7 billion in dividends to Holdings in the second half of 2025, including $1.0 billion from the life transaction proceeds.
Business Segment Performance
Equitable’s business segments showed varying performance in Q2. The company continues to execute on its growth strategy across multiple business lines:
Individual Retirement operating earnings adjusted for notable items decreased to $217 million from $250 million in Q2 2024, primarily due to lower fee-based earnings and higher commission expenses from increased sales. However, the segment achieved net inflows of $1.7 billion, representing an 8% organic growth rate on a trailing twelve-month basis.
Group Retirement operating earnings were relatively stable at $127 million compared to $129 million in the prior year quarter. The segment recorded net inflows of $217 million, including $100 million of tax-exempt net inflows.
Asset Management (AllianceBernstein (NYSE:AB)) showed strong growth in operating earnings, increasing to $131 million from $101 million in Q2 2024, driven by higher base fees and increased ownership percentage. The adjusted operating margin improved by 150 basis points year-over-year to 32.3%, though the segment experienced active net outflows of $4.8 billion, concentrated in April.
Investment Portfolio
Equitable maintains a conservative, high-quality investment portfolio, which provides stability amid market volatility. The general account investment portfolio totals $117 billion, with 98% of fixed maturity securities rated as investment grade.
The following chart details the composition and quality of the investment portfolio:
The portfolio has an average credit rating of A2, with 69% of fixed maturity securities rated Aaa, Aa, or A. Corporate bonds represent 46% of the general account, invested across more than 1,000 names and diversified by geography and sector. Structured credit accounts for 22% of the portfolio, while mortgage loans represent 18%.
Forward-Looking Statements
Equitable remains confident in achieving its 2027 financial targets despite near-term earnings pressure. The company is tracking toward its investor day targets across key metrics:
Management expects cash generation of $1.6-1.7 billion in 2025, progressing toward the 2027 target of $2.0 billion. The company’s payout ratio of 77% for the first half of 2025 exceeds its 60-70% target, demonstrating a commitment to returning capital to shareholders.
While EPS growth has been modest at 3% for the first half of 2025, below the 12-15% CAGR target, management expects growth to accelerate in the second half of the year as the benefits of the Individual Life transaction begin to materialize and mortality exposure decreases.
Equitable’s CEO emphasized the company’s strong organic growth momentum, reduced earnings volatility, improved business mix, and significant capital flexibility to deliver shareholder value. With the completion of the Individual Life transaction and other strategic initiatives, Equitable is positioning itself for more consistent earnings growth and reduced sensitivity to mortality claims going forward.
Full presentation:
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