Equitable Holdings’s SWOT analysis: insurance stock poised for transformation after protection sale

Equitable Holdings Inc. (EQH) stands at a pivotal moment in its corporate journey as it prepares to divest a significant portion of its protection business while maintaining strong capital metrics. The North America-based insurance and financial services provider continues to attract positive analyst sentiment despite recent earnings challenges, with strategic moves potentially reshaping its future trajectory. According to InvestingPro data, analysts maintain a strong buy consensus recommendation of 1.54, despite the stock’s 15.68% decline over the past six months.

Company Overview and Recent Performance

Equitable Holdings operates as a diversified financial services company offering various products for retirement, protection, and investment needs. The company reported first-quarter 2025 operating earnings per share of $1.30, or $1.35 when excluding unfavorable alternative investment income. These results fell short of consensus estimates of $1.47, primarily due to worse mortality experience in the Protection Solutions segment, which had approximately a $0.10 impact versus consensus expectations.

The earnings miss also reflected modestly higher expenses in the Individual Retirement and Legacy segments during the quarter. This performance comes at a time when the company is undergoing significant strategic changes, including the planned divestiture of approximately 75% of its Protection business to Reinsurance Group of America (RGA), a transaction expected to close by mid-year 2025.

Strategic Repositioning

The partial sale of the Protection business represents a major strategic shift for Equitable. The transaction, scheduled to conclude in mid-2025, is anticipated to generate an incremental $2 billion capital benefit upon closing. This move appears designed to streamline operations and focus on core strengths while bolstering the company’s already robust capital position.

The timing of this divestiture is notable, as it follows a quarter where the Protection Solutions segment experienced worse-than-expected mortality results. The decision to sell a majority stake in this business could be interpreted as a strategic pivot away from segments with higher volatility or less predictable outcomes.

Capital Position and Financial Outlook

Equitable maintains strong capital metrics with pro forma holding company cash of approximately $1.1 billion, significantly exceeding the company’s target of $0.5 billion. This strong capital foundation is expected to be further enhanced by the anticipated $2 billion capital benefit from the Protection business sale.

The company’s market capitalization stands at $14.27 billion as of late October 2025. Looking ahead, analysts project earnings per share of $5.92 for the current fiscal year, with an increase to $8.05 for the following fiscal year. This projected earnings growth suggests confidence in Equitable’s ability to improve profitability after completing its strategic repositioning.

Industry Context

Equitable operates within the North America Insurance/Life sector, which faces both opportunities and challenges in the current economic environment. Analysts maintain a positive industry view, suggesting favorable conditions for well-positioned companies in this space. Equitable’s strategic moves, including the Protection business sale, appear aligned with broader industry trends toward focusing on higher-margin, less capital-intensive business lines.

Bear Case

Could the mortality experience issues in Protection Solutions have lasting impacts beyond the divestiture?

While Equitable is selling approximately 75% of its Protection business to RGA, the company will retain a 25% stake in this segment. The worse-than-expected mortality experience that contributed to the earnings miss in Q1 2025 raises questions about potential ongoing exposure to similar challenges. If mortality trends continue to deviate negatively from actuarial expectations, the remaining 25% ownership could still create earnings volatility for Equitable.

Additionally, the $0.10 per share impact from Protection Solutions mortality experience demonstrates how significantly this factor can affect overall results. Investors may question whether the company has adequately addressed the underlying issues or if similar challenges could affect other segments of the business.

Do higher expenses in Individual Retirement and Legacy segments signal broader operational inefficiencies?

The modestly higher expenses reported in the Individual Retirement and Legacy segments during Q1 2025 warrant scrutiny. These increased costs could reflect temporary factors or point to more persistent operational challenges. If expense growth outpaces revenue expansion, profit margins could face pressure regardless of the strategic benefits from the Protection business sale.

The timing of these higher expenses—coinciding with a major strategic transaction—raises questions about management’s ability to maintain operational discipline during periods of corporate transformation. Investors may seek greater clarity on expense management strategies and whether the company has identified specific initiatives to improve operational efficiency across remaining business segments.

Bull Case

How will the substantial capital infusion strengthen Equitable’s competitive position?

The anticipated $2 billion capital benefit from the Protection business sale represents a significant financial windfall for Equitable. This capital infusion, combined with the company’s already strong holding company cash position of approximately $1.1 billion (well above its $0.5 billion target), provides substantial financial flexibility.

This enhanced capital position could enable Equitable to pursue various value-creating strategies, including share repurchases, dividend increases, debt reduction, or strategic acquisitions. The company’s ability to deploy this capital effectively could accelerate growth in remaining business segments and potentially drive shareholder returns. The substantial capital cushion also provides a safety margin against market volatility or unexpected challenges.

What does the projected EPS growth from FY1 to FY2 indicate about future profitability?

Analysts project Equitable’s earnings per share to increase from $5.92 in the current fiscal year to $8.05 in the following fiscal year. This substantial projected growth of approximately 36% suggests strong confidence in the company’s ability to improve profitability after completing its strategic repositioning.

The significant EPS expansion likely reflects expectations that the Protection business sale will allow management to focus on higher-margin segments with more predictable earnings streams. This projected earnings trajectory also indicates that analysts believe the company can overcome the challenges observed in Q1 2025, including the mortality experience issues and higher expenses in certain segments.

SWOT Analysis

Strengths

• Strong capital position with holding company cash of $1.1 billion, exceeding $0.5 billion target
• Strategic repositioning through Protection business sale to focus on core strengths
• Positive analyst sentiment with "Overweight" ratings
• Projected substantial EPS growth from current fiscal year to next

Weaknesses

• Q1 2025 earnings miss due to worse Protection Solutions mortality experience
• Higher expenses in Individual Retirement and Legacy segments
• Continued 25% exposure to Protection business after partial sale
• Execution risks associated with major business divestiture

Opportunities

• $2 billion capital benefit from Protection business sale enabling strategic flexibility
• Potential for share repurchases, dividend increases, or strategic acquisitions
• Ability to focus resources on higher-margin, more predictable business segments
• Industry trends favoring companies with strong capital positions

Threats

• Potential for continued adverse mortality experience in remaining Protection business
• Regulatory changes affecting insurance and financial services sectors
• Competitive pressures in retirement and investment products
• Market volatility impacting investment returns
• Integration challenges following strategic repositioning

Analysts Targets

• Barclays Capital Inc. (BCI) - October 30, 2025: "Overweight" rating with a price target of $63.00
• BMO Capital Markets Corp. - April 30, 2025: "Overweight" rating, price target not specified

This analysis is based on information available through October 30, 2025.

InvestingPro: Smarter Decisions, Better Returns

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