AXA Equitable Holdings, Inc. Stock

All right. We are going to get started with the next session. So it's great to have -- I think we're referring to it as the new Equitable for now. We have Mark Costantini, the CEO of Corebridge and soon to be the CEO of the new Equitable. And then we have Robin Raju, who is the current CFO of Equitable and will be the CFO of the combined company post-merger when it closes. So get started.

Maybe just to start, just stepping back, why did Corebridge and Equitable ultimately decide to merge? And what's your new vision for the new company going forward and the financial benefits that you expect to emerge from this merger?

Yes. Ryan, thank you. It's great to see you, and thanks to everybody for attending, and it's great for Robin and I to be with all of you. So I mean, taking a step back, there's a significant amount of tailwind in our business, right? It's very cliché, but a number of people are retiring every year, reaching age 65. And I think the worries of people have gone from worrying from dying too soon to living too long.

And then when you look at the businesses that both Corebridge and Equitable had, they're extremely complementary. And it's a bit obvious, but when you look at doing transactions such as this one and the size of this one, you really have to strive for 1 plus 1 equals 3. And when you look at the complementary nature of the businesses from the asset management business, the advisory business and the former Equitable Advisors and the Corebridge Advisors, the group retirement business and the institutional markets business and what it could do for our balance sheet.

And last but not least, the Individual Retirement business and the extremely complementary nature of, obviously, Equitable being the market leader in the RILA space and Corebridge obviously having a top 5 position in the fixed annuity and fixed index annuity. And overarching all of that is world-class distribution, right? And it's vital in our business to have world-class distribution in the form of retail wholesaling in the form of direct to advisory and worksite.

So it's very complementary. And you bring these 2 platforms together and there's scale advantages, which I'm sure we'll talk about it, but the scale manifests itself in many different ways. But it's going to be a company that will have a market cap of north of $30 billion and over $25 billion of statutory capital tied to it. And so it's great financials, which I'm sure Robin will add some comments here, but that's what brought these 2 great companies together.

Yes. And before we get into the financials, one good thing when these companies come together, and Marc talks about it a lot is the impact we're going to have on clients and the reach we're going to have on clients. Together, we're going to serve over 10 million-plus clients, the combined company. So that's compelling because more customers mean more opportunities to grow.

Purely from a financial side, I couldn't think of a more compelling transaction when it comes down to it. We're going to be the #1 U.S. insurer in terms of U.S.-based earnings and cash flow. I wouldn't want exposure to any other retirement market. And if that's the source of our earnings and cash flows, that's a great position to be with the tailwinds in the market that Marc spoke about. We're going to have $5 billion of operating earnings, the combined business, $4 billion of cash flows, and we're going to deliver a 15% return on equity. So this is going to be a compelling transaction for shareholders, but we're really excited about what we're going to be doing for customers going forward.

I think it's been almost 6 months now since the merger was announced. Can you give a little color on what you've been able to accomplish so far as you prepare for the day 1 of the merger close? And also just what the reaction has been from employees and distributors and other business partners.

Yes. So I would say when we announced the transaction in late March, we were quite prescriptive, Mark Pearson, Robin and myself about what it would do to our balance sheet and all that. But first and foremost, we said as well, we have to get the organization going, right? So we're sitting here today in early September, and we've announced the 3 most senior layers of the organization. That's 500 executives that have been appointed to the firm.

And those executives basically are running their day-to-day kind of responsibilities delivering on '26 until year-end when we are expecting to close, but as well planning for the future. So in line with that, we've got this integration and transformation office we put in place. It's been staffed, and it's well on its way of orchestrating all of the integration activities that need to take place to hit the ground running on Jan 1 when we hope to close.

What it's done as well is we've secured, obviously, a number of our approvals. So the FINRA has approved the transaction. Our shareholders have approved the transaction. The antitrust process has taken place. Obviously, our shareholders approved the transaction last month or in July. And so we're working through the regulatory process now, and there's 4 or 5 key states that oversee and govern the activity of both Equitable and Corebridge that we're actively engaged in, and there's a couple of international regulatory bodies tied to AllianceBernstein that we're dealing with. But we are sitting here confident that we're marching towards the close at the end of the year, and then we'll hit the ground running very quickly in terms of bringing together a lot of the synergies that Robin speaks so well about, but as well the growth.

This is a growth story, right? In our comments, we just made the first question, this is all about growth. It's about serving more customers. It's about getting ahead of the retirement curve and really delivering solutions to the end consumer, as Robin said. And in terms of distributors, we have had a number of discussions across both firms with distributors. And we haven't heard of any revenue dis-synergies, I guess, as people refer to them too.

I think the large distributors are embracing this. The largest distributors want to have long-standing, deep companies and manufacturers that know this business have been there through various cycles and deliver on their promises. And obviously, you're staring at a company that does all of that when we come together and have done so historically in each of our cases.

So the employees, I mean, it's a merger. So it creates 100% anxiety across both platforms, right? And our responsibility as management is to engage with the employees to be transparent, to be quick, as I mentioned, to make decisions and be -- and treat everybody the way you'd like to be treated, whether you've got a go-forward role or whether you've got a different role or whether you're leaving the organization, how the organization treats you says a lot more about who we are, and we're working very hard to make sure that's the case, and there's a lot of transparency as we're marching towards the merger. So...

Great. I want to dig into some of the targets. So one -- you guided to 10% plus accretion. A component of that -- the biggest component of that was $500 million of expense synergies. Can you talk more about the sequencing of -- and the key components to drive that? And then -- I guess, how big of a technology upgrade does that expense save target contemplate as well?

Sure. So we announced of the 10% plus accretion, we said about 6% to 8% is going to come from the expense synergies that we have across both firms. I break it into 4 buckets. Headcount, obviously, you have duplication in roles, so there'll only be 1 person in 1 seat. That's probably going to be where you get the front-loaded savings in any merger that we have.

And as Marc said, we've already announced the first 3 layers of the organization. So we already know that we're very highly confident in that number coming through based on where we are today, which is a great sign of our success and our confidence in achieving the overall $500 million. The other areas are going to be vendor consolidation. If you think about where you get benefits from scale, you get really pricing power with your vendors.

Now we can't do that yet. Some of that we have to wait, obviously, to January 1. But let's -- but we know, Marc and I know that together both firms, and we know by the inbounds that we get from a lot of our vendors that we're going to have the ability to get at scale pricing, which is going to drive bottom line savings.

The third category would be IT consolidation. That's going to be a big piece of work that we do from now to year-end on picking what platforms that we're going to integrate. That's why it's so important that we get the leaders that are going to be accountable for that decision upfront. So now the people that are accountable for the different businesses, for the different corporate functions, they will have to make the decisions on what are the best systems and IT integration that we'll do.

And that will come through probably more so in 2028 than 2027 because that's going to take time in planning and process. But our Head of IT, he gets -- he has this phrase, he wants to integrate, transform and innovate. You can't do all at once, but we have to sequence it properly to make sure that we can run faster going forward post this. And then obviously, with any merger, you're going to have some real estate consolidation as well. So that will be something that we pick up naturally, whether it's in New York or other areas, but that's going to be another piece that will come through later in 2028.

But where we sit here today, Marc and I and the Board, we're highly confident in achieving that expense synergy number. And it's really down to the actions that we have already in place and putting us in a position where we can make decisions come 2027 and start running right away.

Great. So the other component of the EPS accretion was a 2% to 4% contribution from capital and tax synergies. What are those synergies more specifically resulting from? And then how quickly will they emerge? Is that going to be pretty quickly and free up capital that can be redeployed? Or does it occur over time?

Sure. Well, both occur -- will occur over the 2 years. So within the 2% to 4% accretion that's part of the 10% plus accretion from the merger, there'll be a portion related to cash tax savings, and that's us leveraging the non-life DTAs on Corebridge's balance sheet to offset some of the non-life earnings that we have from AllianceBernstein and the Wealth Management business. So that's going to be real cash savings that we achieve post close.

Then we will have capital synergies, and we'll have some between the first 2 years, and I anticipate we'll have more later. Some capital synergies come from if we decide to consolidate legal entities, but we can get it even without consolidation through internal reinsurance in some areas. So that, again, will probably happen in 2028, where you get the cash tax savings immediately.

And then post 2028, I mean, you've seen both companies, Corebridge and Equitable. We've had a good track record of capital optimization and making sure we can deliver value to shareholders and invest in growth. And so anticipate that's just going to be part of our DNA as a management team to unlock capital value and allocate it to the best sources.

Then on revenue synergies, you haven't officially given us a quantification of the revenue synergies, and they weren't part of the accretion guidance, but you have talked about some of the areas that you think will provide synergies. I guess, can you review what those are and how meaningful you think they can be?

Yes. And it's interesting because we had a lot of discussions leading up to the announcement in March as to where we would focus kind of our guidance. And we agreed on expense synergies and some of these capital and tax that Robin just walked through because they're tangible and a lot of people in this room and others could put tangible value on it.

And very quickly, when people grasp what Robin just said, we started getting peppered, Robin and I, with all the questions about growth. And we did guide when we said we announced the merger that we were going to direct like $90 billion to $100 billion of assets that are on Corebridge's balance sheet, both the general account and separate accounts to AllianceBernstein along the same time lines that Robin just mentioned. And that's net flows of $90 billion to $100 billion that AllianceBernstein would otherwise have received, right? So that -- right there, that's a 10% to 12% increase into their asset base and their margins and revenue.

That does not include as well bringing all these great origination teams together, the ones at Corebridge, at Equitable and AllianceBernstein under one plateau. And what I -- one of the things I think we need to step back and reflect on is that when you look at the production that Equitable has and you add it to the production that Corebridge has across our retail market and our institutional market, you're looking at an engine here that's going to generate over $60 billion a year of institutional and retail spread business.

And that creates a lot of origination capability that creates a lot of access to investment that otherwise would not be available to each firm, right? So that's a [ smatter ] numbers. And then you look at what we're going to do on the group retirement side plus the advisory business plus just AB itself, you see a lot of revenue flow that way.

And the synergies as well is through the distribution. Equitable Advisors, I think Robin has said many times, does like $2-ish billion or so of fixed annuities and fixed intensive annuities that now will have, let's say, proprietary offering to do so. Equitable has a VUL product that was on our design table, so we could quickly introduce that product into our distribution at Corebridge.

And then you have the advisers and the penetration of the 403(b) plans. If you listen to a lot of what we say, we need to cross-sell, upsell those plans. And with the number of advisers a collective firm will have, we'll be able to accelerate the growth of the penetration and service that these clients deserve. And on the institutional market side, the sheer side of the balance sheet that will be in the circa $500 billion of on-balance sheet assets will give an appetite for a lot bigger, I would say, PRT business and a lot bigger appetite for the GIC FABN products.

So we see a lot of growth opportunities on the revenue side. And I would say the story that's not said enough, and you'll hear Robin and I say a lot more next year when we march towards Investor Day is that this is all about growth. It's all about serving more customers. It's all about growth and the expense synergies obviously fall into place for all the reasons that Robin said.

Great. So Equitable recently announced the sale of its employee benefits business. Are there other divestitures that you would consider from here of the combined companies? I guess the one thing that comes to mind is kind of the remaining life exposure that the legacy Equitable had? Or do you feel pretty set on the business mix at this point going forward?

Yes. So look, this merger, it all comes back to scale. And scale matters in the businesses that we were in. Let me touch first the Equitable Employee Benefits transaction. We actually like the employee benefits market. We think it's a good market. We just weren't at scale and we weren't profitable. So it's tough to compete. When you have to allocate capital to these other businesses, trying to grow a business as a greenfield at scale, it was going to take too much time.

And so -- the Hartford, when they approached us, it was clear that they're a better owner of the business. They're in the small business market. They can leverage our platform to go in. So I think there was a win-win, which is what you want in a transaction for both. But it doesn't mean that we didn't like the employee benefits market. It's just an at scale point. If you look broader post-merger, like as Marc just mentioned, this is a growth story. We really want to allocate capital to fund growth to support Americans retire going forward.

Sure, you may see some more cleanup reinsurance transactions. That's what I spoke about earlier. That's like capital optimization. But when Marc and I get together, believe me, we don't talk about, oh, should we do reinsurance here, should we do reinsurance there? That's -- I think both companies successfully use reinsurance to shift the balance sheet. And we're at a place where it's not needed at this time, and it's really how do we fund the growth ambitions that we have for both companies by allocating capital appropriately.

All right. So we're shifting more to growth then. In the annuity business, so volumes have doubled basically in the retail annuity market, but it has also attracted a lot more competition at the same time. I guess, can you talk about how you're viewing competitive conditions today in the retail annuity market and how the new combined company is positioned within that?

Yes. We like our chances. I say that because we will have the broadest product portfolio. I would say, look at the manufacturing capabilities of the new Equitable and compare it to any other player in the industry and look at the history have proven success in manufacturing those products profitably, while serving customers better and delivering value to shareholders. I don't think anybody compares to this NewCo.

Look at the distribution depth and breadth of the new firm. Pretty much every retail outlet that serves a retirement need and a retirement end consumer will be touched by our distribution. People talk about scale. And to me, scale is an ability to touch every customer you can manufacture a solution for profitably, while delivering extreme value to that customer and serving the shareholder well. I don't think other companies compare to that.

So is there increased competition in some of the space? Yes, there is. But I mean, I've been tied to this business for the better part of 36 years. There's always been robust competition, right? And it's a matter of what's the, I would say, capital and thoughtful capital that's coming to the market for serving clients' needs. And that capital needs to have an ability to originate assets to bank those liabilities, but needs to understand the liabilities they're writing as well. And this firm has deep experience on both sides of that balance sheet.

So we feel we're in it for the long run. And from the discussions we've had with distributors, I would say, for many of the years, we're as important to them as they are important to us, which puts the relationship in a very good step, right? And that scale that we talk about, that matters, right? Because not having a new Equitable on your shelf is not something that many distributors would find appealing, right? And that puts us in a very good spot.

Now I think you're implicitly referring to some of the newer entrants that are asset-intensive or funded by alts and all that. And I think they pick their spots. They operate in distributions that maybe we have access to and they have access to, but they don't have the presence and the depth and the history behind their promises that we have. So we welcome rational competition. We welcome rational competition. Yes.

It's going to be difficult to compete with us though. if you think we're going to have one of the lowest unit costs in the industry, we're going to have great asset capabilities from AllianceBernstein, Blackstone, BlackRock to get a good risk-adjusted yield, and we have world-class distribution. So it's going to be really hard to be competitive on a disciplined way versus us. So we expect we're going to grow, but also deliver great returns given those attributes.

I guess somewhat related, but -- and maybe I don't know if this is a combined question or one for each of you at this point since the merger hasn't closed. But can you talk about the spread dynamics in, I guess, each company's retirement business at this point in time and how to think about the near-term trajectory there?

Yes, I can give you maybe the Corebridge perspective and to your point about that we're operating independently. So I think if you have been listening and following Corebridge, it's been a story of a transition and a pivot in our group retirement business, right? The group retirement business has a circa $130 billion of assets tied to it. $80 billion is in the retirement space and $50 billion is in the out-of-plan business.

We've been obviously cross servicing and cross-penetrating our plans basically and growing our advisory business that is in excess of $20 billion now of that $50 billion. And we have 1.5 million participants in plan that we're trying to penetrate and serve and cross serve, and that's created like 300,000 of these out-of-plan members that have the $50 billion of asset.

And we are approaching it in terms of taking our business from a largely spread-based business to a fee-based business. And as you have seen in Q2, we basically clipped 50-50 kind of approach there. So we are in a good position, and we're growing and cross-pollinating. I think the merger will even bring more attention and ability to penetrate those plans.

As a stand-alone company, we felt there was a $30 billion opportunity there in terms of upside of cross-selling and upselling in our plans. With the merger, I think that accelerates. So to the spread comment, we -- leading up to year-end and into Q1, we were defending that we had floating rate assets. And we were saying, hey, if there's contraction, if rates are going down, it's about $20 million, $25 million for every 25 basis points. Well, the same thing happens when rates go up. So that's a tailwind to our spreads.

And I think we guided when we started the year to $2.55 billion of absolute spread income. We are sitting here confident that we will achieve that. So I think our spread business is doing well. I think the block of business is behaving overall as we intended, including our individual retirement business here as I talk about the spread business. So I think we're sitting here in a good position, and we feel confident, obviously, bringing Equitable with Corebridge that will only accelerate some of the dynamics I just mentioned for our block.

One of the areas I'm excited about the merger, too, is innovation that's going to come out of both businesses. And when you innovate, you can get outsized margins early. And that's a little bit what happened with Equitable with our RILA product. We were first to the market. We were educating advisers on the need to have equity exposure as you're nearing retirement. But we were the only ones there. And so we had outsized margins. We're writing new business at 20% plus IRRs for many years. And then everybody came to the market. Now the pie has gotten bigger, and we've continued to grow and maintained our market share, but margins have normalized.

And so now we're writing what I would call at scale margins, 15% IRRs on that RILA product. But from the pre-2020 business, we had big margins on it, that business rolls off and now margins have stabilized. And so that's the spread compression that you saw. And you also saw in the first 2 quarters now, as we guided, driving margins have stabilized. Spreads have stabilized in that business, overall.

So going forward, we expect spreads to continue to be stable and NIM, net interest margin to grow as book value grows ex-embedded derivatives. And that's how we are confident with that as we've seen in the last few quarters. And the RILA block the pre-2020 is now less than 10% of the total block. So it's not really significant at this point.

Got it. And then the variable component of spread. Any updated comments from either company on third quarter expectations for variable investment income at this point?

Sure. I can start. Alts continues to be a volatile category for sure, as you've seen over the last few years with interest rates and change in dynamics with where public equity markets are, we underperformed our long-term target the last few years.

In the third quarter, we're expecting 4% to 5% growth, so a rebound from the lower second quarter that we have. So we should be at a 4% to 5% annualized growth rate for the third quarter. The drag in the portfolio is really coming from real estate equity at this time and some of the venture investments where you're seeing some of the growth equity funds have more recovery with the delay in equity markets. And then we'd expect if markets are normalized, that returns should come back to longer-term targets over time.

You have 4% to 5% return. Is that correct?

Correct.

So for Corebridge, I think coming in and out of Q2, we guided to very soft, I would say, VII results for the balance of the year. I would say that for Q3, we will exceed the guidance we mentioned and we'll be more in the ZIP code that Robin just mentioned, north of 5% for the quarter for VII. So I think that's a positive versus what we had guided.

Now what I would say as well, and I want to give perspective to the audience here, both companies, alts exposure is way less than the industry average. And our view, and it's very much aligned with Equitable is that the alts play a role in people's portfolio. And when I say people at the company's portfolio because if you're issuing, let's say, a liability, a life liability or a pension risk transfer that has liabilities that exceed 25, 30 years, there's no good spread assets available, right?

And economically, alts are the right assets to defeat that liability until you can move those assets to some good spread assets, right? So -- and it's -- each of us personally, if you have a 30-year outlook, that you invest in fixed income or you invest in equities, right? So it's the same economic equation. It's just that the accounting makes it flow through operating income, which creates that volatility. But if you're buy and hold and you get the capital appreciation and the actual return and investment income over the course of time, which is what we're both saying here, it's a great asset to defeat that long-tail liability, which is why we buy it to start.

Shifting to the wealth business. So Equitable's wealth management business has had very good momentum across financial metrics. Can you speak a bit about what's been driving that and the continued runway for revenue growth and margin expansion?

And then, I guess, as a related follow-up, Marc touched on this a little bit, but just how can that all be accelerated with the wealth platform that will be then kind of connected with Corebridge?

We're really excited about the wealth business at Equitable. It's doubled in earnings since our Investor Day, and it hit our target 2 years below plan. Why is that? I think it comes down to the people and the advice that we provide. So one thing that's unique to Equitable, I think, than many other wealth managers there is we recruit new people to the business, and we hire experienced hires.

That's important because it ensures that we maintain discipline. And what really separates us is the training. So we have holistic life planning training programs, and we help our advisers transition from they start in the schools and they become wealth planners over time. And that's the best way we seen to increase productivity. The proof is you've seen the double-digit productivity that we've had every year since we broke that business out as a segment. And the way we've done it is really unique because we do have these 2 levels of recruiting and the training that we provide overall.

And I think that is really the secret sauce of Equitable. It's that strong performance culture and people helping each other out and trying to touch more customers overall. If you look from a net flow perspective, we've had double-digit organic growth in that business. I would say it's like top quartile. I can't find anyone that has better organic growth in their wealth business than we do in Equitable Advisors. And that's a proof point of more customers touching us and the productivity that we have in that business overall.

We also have another wealth management business, too, that we are excited about is the private wealth business at AllianceBernstein. That's a real gem inside AllianceBernstein that not a lot of people speak about that really provides a unique solution orientation towards ultra-high net worth as well. So both businesses together, we touch clients in the mass affluent and we touch clients in the high net worth area, and that excites us going forward. And Marc, you should touch about it. You've met now, I think, some of the Equitable advisers and some of the people, what your thoughts are around that.

Yes. No, I would say that as a somewhat objective assessment, when we started having a dialogue with Equitable I would say my view and my strong view was that Equitable Advisors was a gem and the private wealth business at AllianceBernstein was a gem. And I would say the last 6 months have only proven to make it my belief they're even stronger based on all the dynamics that Robin has said. And I have met 30-odd-plus people of the leadership there and some of the people on the ground in the branches. And it's amazing how they go after doing what's right for the customers first and packaging the right solutions for their financial needs and how the culture there is incredible.

Now I would say we have 1,000 or so advisers at Corebridge. And we invited some of the leadership of Equitable Advisors to one of our main national meetings a few months ago. And the similar culture kind of runs to the Corebridge Advisors to the point where a very senior leader at Equitable Advisors I was there said, if I close my eyes, I think I was at an Equitable Advisors meeting given the cultural assessment and as well.

So the challenge for both organizations is you got to bring those 2 together and you're dealing with personalities that don't like to disrupt their book, right? So we got to be thoughtful how we bring it together and make sure that 1 plus 1 equals 3. But obviously, the platform and the success that Equitable Advisors has had is incredibly attractive for our future and speaks volume about why we're bullish on the value proposition we'll have going forward.

Then on the Institutional Markets business, so both companies have been generating double-digit growth in balances, Equitable is more focused on spread lending. I think there's more PRT as part of the Corebridge portfolio along with other liabilities. Do you see the merger changing much on the growth rates of those businesses? Can you do more as a combined company? Or should we just think about it as you can continue to grow in that double-digit type range?

I think we're going to increase the growth rate across all of our businesses with the revenue synergies that we have. If you think -- Marc mentioned it on the spread lending businesses, now you have a bigger balance sheet, you can do more and you could be disciplined. From an Equitable perspective, one thing that was interesting is we did want to broaden out our liabilities.

And an institutional business is a great way to allocate capital in a disciplined manner. And you saw me outside in looking at Corebridge in the second quarter, how they were disciplined in allocating capital between institutional and retail depending on where cost of funds is. Now we can do it at a much bigger and broader scale.

So having an institutional business at that scale, outside in looking at Corebridge's PRT business, that's a good business that we would have loved to get into. But again, we can't do it at scale. And now we're at the merger. We can do it at scale. So having these different businesses plays an important part in terms of capital allocation. And it really drives discipline that Equitable couldn't do by itself today or would have taken years, 10 years to develop our institutional business where Corebridge is at today.

So from my perspective, like it really helps increase the growth rate, but also allows us to be very disciplined capital allocators as well.

I guess, Marc, on the Individual Life business, you've been pretty positive on that business and its potential since from the get-go since you came into Corebridge. I guess what's driving the optimism there? And then what have you been doing to position that business to have better growth?

Yes. So I am bullish on the life business. And I'm bullish on the Life business at Corebridge and the new Eco based on a couple of facts that I'm going to mention here. First of all, if you look at -- and I looked at it objectively when I joined the firm last December, if you look at the last 12, 16 quarters, the Corebridge's life business has printed mortality gains. Okay? So what does that mean? Okay?

That means a few things. That means the business has been well underwritten and the business is performing and mortality is improving, right? Because that's versus expected, right? And then you look at what's the market segment we're serving versus other market segments. And it's serving, I would say, the mid-market and the emerging affluent market, right?

So -- and that slice -- and you can -- we can talk about it, I mean, actually about what's driving that mortality, and I'm happy to do so if we had more time. But that bodes well for the life business. Then I look at -- I went to the new business area, and I said, hey, how are we processing business? How is our STP, show me how the firms think of our operations. And we had very low grades.

I'm going, okay, we're writing a decent amount of business. We're printing mortality margins, and we are less than appealing operationally. If we make ourselves appealing operationally and we make ourselves the easiest to do business and we create connectivity with the distribution and the end adviser, then we can easily accelerate the growth without putting any margin at risk. And the margin of the business are attractive and they naturally diversify your balance sheet because we're obviously writing a lot of longevity business on the annuity side.

Now the balance sheet of Corebridge is still net long mortality, meaning you got more mortality risk and longevity risk. I like that. I like that a lot because if I went to the casino and red was living longer and black was dying sooner, I put my money on red based on all the money that's going into biotech and developments. I think there will be a nonlinear shift in the mortality curve, and I'm happy to talk about that in detail as well. So that's why I'm bullish on mortality, I'm bullish on mortality written thoughtfully and at good margins. And I think that's what we have at Corebridge.

So is the main driver of better growth potential there, the operational improvement?

Yes, the operational -- without changing the product margins without necessarily doing -- putting yourself in a position where you're writing a business that you'll find an appealing down the road. So that doesn't mean we won't have assumption updates based on policy or [ behavior ] on older blocks or other blocks. I'm just telling you that the business we're writing in the [indiscernible] that's printing mortality margins is an attractive one.

So at AllianceBernstein, it's already achieved the private markets AUM target ahead of schedule. The margins are within the target range. Like what are the key milestones maybe from here now that you've achieved those 2 things?

Yes. So at Investor Day, we announced that we want to grow AB's private credit business to $90 billion to $100 billion. Ryan, as you mentioned, we achieved that well in advance of our target. AB has done a good job of building new capabilities and leveraging the Equitable insurance capabilities to accelerate growth. So we hired a private ABS team that came over that was able to produce good risk-adjusted returns to us. They've now also built out their CML platform that allowed us to move $12 billion in CML assets to them in July.

That's a huge differentiator for AB that other traditional asset managers don't have. They have an insurer to help build new capabilities. And then AB has unique distribution. Private wealth, we talked about, but also in Asia, where they're local in the markets and they have 25-plus years of history, a strong brand, where they can now distribute these products to third parties. That's going to be accretive to margins over time. Right now, new business at AB generates about 45% to 50% incremental margin that we put on.

So that's a good tailwind for us as we want margins to grow over time as well. But AB, as we mentioned, has been a differentiator for Equitable with this flywheel effect. It's just going to now run faster with the Corebridge merger now $90 billion to $100 billion of assets, general account and separate account moving over. As Marc mentioned earlier, that would take 10 years to do. So now we can make AllianceBernstein a $1 trillion asset manager after this merger. That's going to be -- put them and separate them in terms of their growth profile and where they want to invest going forward as well.

I mean the only thing I would add to that great story is to make it even better is that when you look at the combined firm, there'll be like $80 billion to $90 billion of origination a year demand, right? There's the new business flow, plus there's a $500 billion asset that rolls over, right?

And some of that will need to be redeployed. So you're looking at, in addition to all of what we're doing off balance sheet, just the on-balance sheet origination need will be north of $80 billion. So that arms AB and everything Robin said with a lot of opportunities.

And just on the regulatory front, like any particular key issues or debates you're focused on that could either impact the industry or Equitable/Corebridge?

Well, a hot topic right now, I guess, always on the regulatory side of it. And one thing I know Marc agrees with me, like the one thing the combined companies want to do is advocate for a healthier industry. Like we need to do our part, write good business, print good margins, be disciplined allocators of capital. But we want to advocate for a good healthy industry overall.

And you've seen Equitable do that. We started with VM21 under reversion to mean. That took a long time, and [ kept Ryan ], to become effective, but that's now in place. We did structure capital charges. So you see that impacting below BBB and below CLO businesses, and that has changed. You've seen some companies indicate that's going to change their risk profile for those securities overall. And then also reinsurance. We're advocates of reinsurance. Both companies leverage Bermuda because we believe it's an economic regime and a disciplined regime.

But our local regulators should have disclosures and understand what assets are moving offshore and why they're moving offshore and have good visibility with that as well. And I think where the NAIC and where the industry is moving to is transparency. And I think transparency is important to build trust.

And ultimately, if the whole industry wants to re-rate and have a higher rating going forward as a PE multiple, we need to have more trust, more trust from clients and more trust from shareholders. And I think a healthier industry and continue to advocate for a healthy industry is important for all of us.

All right. Excellent. We're going to wrap it up there. Thank you to the new Equitable team.

Thank you, Ryan.

Hello, everyone. Thank you for joining us, and welcome to Equitable Holdings, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Erik Bass, Chief Strategy Officer and Head of Investor Relations. Erik, please go ahead.

Thank you. Good morning, and welcome to Equitable Holdings Second Quarter 2026 Earnings Call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure.

Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on Slide 2 of our presentation for additional information.

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Onur Erzan, President of AllianceBernstein; and Tom Simeone, Chief Financial Officer of AllianceBernstein.

During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our earnings release, slide presentation and financial supplement. We will also refer to the pending transaction with Corebridge. Any statements about the transaction made during this call are not an offer of securities. A registration statement containing a prospectus will be filed with the SEC in connection with the transaction. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. During the second quarter, Equitable made significant progress in advancing our transformational merger with Corebridge, while also delivering strong growth in earnings and positive net flows across each of our segments. Last week, the shareholders of both companies approved the merger, and we remain on track to close by year-end. Slide 4 highlights why we are so excited about the opportunity for the new Equitable and our strategy for accelerating growth and driving shareholder value. We will win with customers by being the easiest company to do business with, while leveraging our scale advantages and formidable distribution to deliver a full range of attractive product solutions across multiple channels.

We compete in attractive growing markets across U.S. Retirement, life insurance, institutional and asset and wealth management, and the merged company will have the capabilities, distribution breadth and scale needed to be a long-term winner in each of them. The new Equitable will deliver at least 10% accretion to earnings and cash flow per share by the end of 2028 and produce a 15% plus ROE on a capital base of over $30 billion. We are confident that as we execute the merger and validate our competitive advantages, it will translate into a higher valuation over time.

Turning to Slide 5. I'll start by providing an update on the progress we have made on achieving merger approvals and beginning to integrate the 2 companies. On July 30, shareholders of both Equitable and Corebridge approved the merger, with over 97% voting in support of the transaction. We have also completed the federal antitrust review process and have filed for all required regulatory approvals. We continue to expect the transaction to close by the end of 2026. During the quarter, we established the organization structure for the new company, including the first 3 levels of management.

This has enabled us to commence integration planning and map out how we will achieve meaningful expense, revenue and capital synergies. We remain confident in delivering on all of the financial targets provided at the time of announcement. While looking forward to day 1 for the new Equitable, we remain focused on achieving our 2026 financial targets and are not treating this as a gap year.

In the second quarter, we reported non-GAAP operating earnings per share of $1.70 or $1.75, excluding notable items. This represents a 24% year-over-year increase, consistent with our guidance of EPS growth of greater than 15% in 2026.

We ended the quarter with record assets under management and administration of $1.2 trillion, up 10% year-over-year, driven by positive net flows and uplift from favorable equity markets. During the quarter, we returned $449 million of capital to shareholders, including $366 million of share repurchases. This represents a 92% payout ratio as we took advantage of our attractive valuation to accelerate buybacks after being in blackout for a portion of the first quarter.

As Robin will discuss, we expect to achieve our targeted 60% to 70% payout ratio in 2026. Turning to our businesses. We continue to see healthy organic growth trends with each of our businesses delivering positive net flows in the second quarter. Starting with Retirement, we reported $1.7 billion of net inflows, driven by 10% growth in RILA sales and increased institutional volumes.

These flows do not include the impact of our spread lending business, which had $2.6 billion of net issuance in the second quarter. In Wealth Management, we had $2 billion of advisory inflows in the quarter. The business has a trailing 12-month organic growth rate of 11%, which compares favorably with peers.

Finally, organic growth at AllianceBernstein returned to positive territory with net inflows of $0.8 billion. Retail flows benefited from a $9 billion sub-advisory mandate win from Equitable separate accounts, which is another example of the flywheel benefits between Equitable and AB. Institutional flows were also positive in the quarter, and we expect the momentum to continue in the second half of the year.

In July, AB onboarded $12 billion of commercial mortgage loans from Equitable, and it has an additional unfunded pipeline of $14 billion. Private markets remains a bright spot with AUM up 18% year-over-year to $91 billion at June 30, reaching the $90 billion to $100 billion target level over a year ahead of schedule.

Moving to Slide 6. I will provide some more details on how we are executing on our growth strategy. As a reminder, this entails defending and growing our core Retirement and asset management businesses, scaling adjacent businesses like Wealth Management and AB Private Markets and seeding future growth in high potential new markets. Our Retirement business has produced positive net flows every year since our IPO, and the annualized organic growth rate in the first half of 2026 was 4%.

If we include our spread lending business, which is producing very attractive IRRs in the current spread environment, the organic growth rate increases to 6%. In Retirement, we also continue to invest in fast-growing new institutional markets like in-plan annuities and HSAs. We expect over $500 million of institutional flows in 2026 with potential flows to accelerate meaningfully over the next few years.

We are excited that the Corebridge merger will expand our presence in institutional markets, adding capabilities like pension risk transfer and structured settlements and the combined company's larger balance sheet provides additional capacity for future growth.

Turning to Wealth Management. The business delivered 10% annual organic growth in the first half of the year. Adviser productivity increased 13% and total AUA is up 27% to $141 billion. We closed on the Stifel Independent Advisors acquisition in the first quarter, and the Corebridge merger will add an additional $20 billion of AUA, helping to scale our platform.

Finally, AB has strong momentum in target growth areas like private markets, insurance and active ETFs. Equitable has invested nearly $25 billion of capital in AB's private market strategies above our initial $20 billion commitment, and AB is making good progress in scaling these with third-party investors.

As I mentioned earlier, total private markets AUM ended the quarter at $91 billion and is on track to exceed the original target of $90 billion to $100 billion by the end of 2027. Insurance continues to be a strong source of flows with 7 new relationships added year-to-date and total third-party insurance AUM of $61 billion is up 16% year-over-year.

While most of the new flows relate to general account wins, as this quarter showed, AB and Equitable can also work together to drive additional separate account flows. AB also continues to drive inflows in its active ETF platform, which now consists of 31 strategies with over $20 billion of AUM and generates approximately $100 million of annual fee income.

On Slide 7, we show progress towards achieving the Investor Day targets laid out in 2023. We remain committed to delivering on our stand-alone growth targets so that the new Equitable can hit the ground running in 2027. We are on track to generate approximately $1.8 billion of cash flow to the holding company in 2026 and $2 billion in 2027.

During the quarter, we received approval to pay up to $0.9 billion of insurance subsidiary dividends during the second half of the year, giving us clear line of sight to achieving our targets.

Our payout ratio was 70% in the first half of 2026, consistent with our 60% to 70% target. The cumulative payout since Investor Day has been 68%, highlighting our commitment to returning capital to shareholders.

Finally, we delivered 25% growth in EPS in the first half of the year. This puts our cumulative growth rate at 10%, slightly below our 12% to 15% target range. Based on our business momentum and outlook, we expect to be at the low end of the range by the end of 2026. Putting it all together, we have good momentum and are entering the merger with Corebridge from a position of strength. I will now turn the call over to Robin to discuss Equitable's second quarter results in more detail.

Thanks, Mark. On Slide 8, I'll provide some more detail on our second quarter results. On a consolidated basis, non-GAAP operating earnings were $488 million or $1.70 per share. We reported a net loss of $453 million, driven by noneconomic impacts from our hedge portfolio resulting from strong equity markets. We had 2 notable items in the quarter, $49 million of below-plan alternative investment returns, which was partially offset by a $35 million benefit from favorable tax items. Adjusting for these, non-GAAP operating earnings per share was $1.75, up 24% year-over-year.

Our alternative investments portfolio, which is about 2% of our total general account, produced an annualized return of slightly over 1% in the quarter as results were pressured by the lag impact of first quarter market declines on our private equity holdings. Looking to the second half of the year, we expect returns to be higher than the first half, but we will be in a position to better provide guidance later in the quarter.

Our consolidated tax rate of 15% benefited from some opportunistic tax planning. We forecast returning to a more normal tax rate of approximately 20% in the third quarter. For the first half of 2026, earnings per share, excluding notable items, increased about 25%, putting us on track to achieve our guidance of earnings per share growth of greater than 15% for the full year. Adjusted book value per share ex AOCI with our AB ownership stake at market value was $30.92.

As a reminder, at the close of the merger with Corebridge, our GAAP shareholders' equity will reflect the fair value of assets and liabilities. This will result in a more meaningful book value, return on equity and leverage ratio.

Finally, before going deeper into the drivers of our results, I want to provide a few comments on the recently announced sale of our Employee Benefits business to The Hartford. We entered the Employee Benefits business in 2015 as a greenfield build, focused on serving small businesses with a unique technology platform. We have grown to over 800,000 customers and approximately $500 million of premiums to date, but the business is not yet profitable due to the lack of scale.

Given our focus on executing a successful merger with Corebridge and allocating capital to our at-scale businesses, we felt this was the right time to reevaluate our strategy. When we were approached by The Hartford, it was clear that they were a more natural owner for the business and would be a good home for our customers and employees. The transaction will have a neutral to slightly positive impact on near-term earnings, and we will use the proceeds to invest in growing our other at-scale businesses.

Turning to Slide 9. I'll provide some more details on our segment level earnings drivers. In Retirement, second quarter earnings, excluding notable items, were $408 million. Net interest margin or NIM increased 11% year-over-year and 1% sequentially despite lower alternative investment income. Core spreads, excluding alternatives, increased by 1 basis point sequentially to 174 basis points. While there can be some quarterly volatility, we expect core spreads to remain near the current levels moving forward.

Fee-based revenues also increased on a year-over-year and sequential basis, helped by strong equity markets. We expect additional improvement in the third quarter based on higher average asset levels.

Turning to Asset Management. AB reported earnings of $158 million, up 21% year-over-year. Assets ended the quarter at a record $906 billion, which bodes well for fee earnings moving forward. While the average base fee rate of 37.7 basis points has declined modestly due to mix shift, we continue to produce an attractive incremental margin on new revenues.

We also raised our forecast for the full year 2026 performance fees from $95 million to $115 million to $115 million to $135 million, with most of that benefit expected in the fourth quarter. Moving to Wealth Management. Earnings increased 26% year-over-year as the business continues to deliver strong organic growth and increased adviser productivity.

As a reminder, wealth management advisory fees get calculated on a 1 quarter lag, so the benefit on the equity market rally will show up in the third quarter results. We continue to expect double-digit annual growth in Wealth Management earnings. Finally, in Corporate and Other, we reported a loss of $106 million in the quarter after adjusting for notable items. This is slightly higher than the range implied by our full year guidance of $350 million to $400 million loss.

In the quarter, we had a larger-than-normal accrual for long-term compensation expense due to the 19% increase in our stock price. In addition, mortality was modestly elevated in the quarter due to a few large claims. For the first half of the year, the corporate loss ex notable items was $204 million, close to the expectations.

On Slide 10, I'll highlight Equitable's strong balance sheet and cash flow, which enables us to be a consistent returner of capital to shareholders. We ended the second quarter with $800 million of cash and liquid assets at the holding company, and our estimated combined NAIC RBC ratio was well above our target operating level of 400% as of midyear. We are on track to achieve our 2026 cash generation target of approximately $1.8 billion, which includes about $900 million of insurance company dividends that would be paid in the second half of 2026.

We have received the required regulatory approvals from Arizona for all planned extraordinary dividends. During the second quarter, we returned $449 million of capital to shareholders, including $366 million of share repurchases. Our payout ratio was 92% for the quarter as we took advantage of our attractive valuation and caught up on foregone purchases from earlier in the year when we were in blackout due to the pending merger announcement.

We had a 70% payout ratio for the first half of 2026 and expect to have a full year payout ratio of 60% to 70%. Now that shareholders have approved the merger, we have no restrictions on share repurchases outside of standard blackout periods and the return on buybacks continues to be compelling. Overall, we feel good about the growth trends across our businesses and remain confident in our cash generation and earnings per share growth guidance for 2026. As Mark discussed, we are laser-focused on delivering our 2026 commitments so that we enter the merger with strong momentum. I will now turn the call back over to Mark for some closing comments.

Thanks, Robin. I want to end this call where I started, which is by looking ahead to the tremendous opportunity for the new Equitable. As shown on Slide 11, we have made significant progress in defining the go-forward organization structure, getting approvals from key stakeholders and starting the integration process. We are on track to close the merger by year-end and hit the ground running in January.

The combined company will be uniquely positioned to win across the Retirement, Insurance, Asset Management and Wealth Management markets. After the merger is complete, we will have scale, distribution and flywheel benefits that few others possess. This will drive value for customers and strong financial results. We are confident it will also translate into compelling returns for shareholders. We now look forward to taking your questions.

[Operator Instructions] Your first question comes from the line of Ryan Krueger from KBW.

I know it's still early in the process, but have you started to advance the integration planning and also continue to talk to external distributors about the merger. Can you just provide an update on any key learnings so far, reactions and maybe any surprises that you've come across to date?

Ryan, thank you very much for the question. Firstly, on the merger, we're very pleased that we have shown that we're able to both progress the merger approvals and at the same time, keep focused on the 2026 results. I mean I think that's the key takeaway from this quarter. In terms of the merger itself, a lot of work underway in establishing the organization structure. We're down to the third level of management now. So that's like the top 500 positions in place and really advancing on the tech stack as well, which will be the next big decisions that we make. I think what I'd say there is a lot of hard work, but we remain very, very confident on being able to achieve those expense synergies.

On the revenue side, that's obviously a key focus for us. I think as we've said many times, the benefit of this merger is not just in the expense synergies. It's going to be in the revenue synergies as well. More to come on that at the Investor Day in the first half of 2027, but the reach out to distribution partners today has been positive and really our partners were leaning in to say, how can we make this work and how can we move forward with you there. So, so far, so good, Ryan. We're very pleased with the progress on the merger and what it signs for going forward.

And then I have a quick question on Wealth Management. Your margins have been in the mid-teens recently. As you look out longer term, where do you see the margin potential of that business at Equitable?

Yes. This is Nick. First, look, we're very encouraged by the momentum in the business as our value proposition is resonating with advisers and clients. The strong growth in advisory assets, $2 billion in net flows for the quarter and an 11% trailing 12-month organic growth rate.

As we continue to look forward and scale the business, we would expect that to translate to growth in margins. You've seen continued improvement over the last 2 years as we built up that business and would point to, as Mark noted, the growth in earnings, which are up 26% and the fundamental underlying growth drivers in both productivity advisers, which are up 13% and the growth of advisory assets.

So we would expect that the growth in margins to translate with the growth of assets as we continue to build scale within the business.

Your next question comes from the line of Suneet Kamath from Jefferies.

So I wanted to ask on Equitable Advisors and the ability to add the Corebridge product to that channel. Is that something that you need to wait until close to do? Or can you start flipping that switch now? And if it's something that you have to wait till close, is that going to take some time even after the close to get that going? Or is that something that you could -- when you use that phrase hit the ground running that can start on day 1?

Thanks, Suneet. So as Mark mentioned earlier, we're definitely focused on the revenue synergies and how to come to fruition and the planning across them. Overall, we're pretty confident on the expense synergies, but the revenue synergies is what will lead to a faster growth rate and higher multiple for us going forward. We've laid out several initiatives on them, one of them being -- having the opportunity to distribute Corebridge products through Equitable Advisors. As you mentioned, Equitable Advisors, they sell approximately $2 billion of fixed annuities today, and we expect to capture some of that volume's.

In addition, our advisors will also be able to sell the Corebridge Term Life and IUL products as well. So that's a good thing. Remember, the merger isn't closed yet, so the both companies have to operate independently from now to close. But the planning behind the scenes in terms of all the revenue synergies, whether it's selling through Equitable Advisors, moving assets to AllianceBernstein or scaling at AB's platform more and commercializing some of Corebridge's asset capabilities, that's a big focus for us now, and we'd expect to hit the ground running come the first quarter of next year.

But more to come at Investor Day, but we still have to operate as independent companies from now to close. And then once the close comes in, then we can execute against all the planning that we're doing through the integration that Mark spoke about.

Okay. And then I guess on the investment portfolio, it looks like private credit is 19%, 20% of total assets at this point. Is there a practical limit in terms of how big that can get to? Just curious how much more runway you have.

Sure. Look, we're disciplined in terms of asset allocation across the investment portfolio. We're really looking at risk-adjusted returns and also the liquidity required from underlying products that we have. I think at the -- we're at 19% now in the general account. When you look into that -- of that 19%, it's highly investment grade, almost 50% of that is in private placement. So it's in high-quality oriented private credit as well.

That can certainly increase a bit from here, but it really depends on the liability of the portfolio that we source. So if you think of the RILA product, where we're #1 in and we've had record sales in the quarter, there, we probably want to have more liquidity than an FABN issuance, where if you look on our spread lending business, we wrote $2.6 billion of liabilities in this quarter. So there, we can have a little bit more liquid. So it's really dependent on the liabilities that we write, and we want to make sure that we're ALM unmatched.

Your next question comes from the line of Tom Gallagher from Evercore ISI.

First question, the $12 billion of onboarding of CML mandates to AB in July. What's the source of the $12 billion? Where is that coming from? And also, how does that compare to the fee rate on the CMLs? How does that compare to the average fee rate at AB of 37 basis points?

Sure. I'll start, and I'll pass it to Onur and Tom who are on the line. Look, I think one of the big successes and why you should feel confident in the revenue synergies that we have in the merger is the flywheel effects that we have between Equitable and AllianceBernstein.

If you look in the quarter on the separate account side, we're able to move $9 billion of fixed income assets from the separate account to AllianceBernstein. And then in July, as you mentioned, we moved $12 billion on the commercial mortgage loan portfolio to AllianceBernstein in the general account. So that's over $20 billion in two quarters. So when we talk about moving $100 billion over the next few years from Corebridge and general account and separate accounts, to AllianceBernstein. That brings us a lot of confidence.

The CML specifically were managed by a third-party manager that we've historically used due to some of our historical ownership that we had prior to IPO. And now that's been successfully moved over to AllianceBernstein. And it was done in a pretty smart way because we've had -- we built this capability in AllianceBernstein. We've been investing in that capability, and we got to the point where we knew that they can handle the $12 billion flow of the CMLs prudently and continue to deliver good returns.

I'll pass it to Onur, Tom, on the fee rates.

Yes, I'll take that one, Robin. Thank you. And thank you for the question, Tom. The book came over in the high single-digit fee rate. So that does compare at a lower rate than our firm-wide fee rate that we reported in 2Q. I'd also want to highlight that it doesn't attract fees until 4Q because Equitable is still paying the third party that was holding the book prior to this.

So they're paying for 3Q, but we do pick up the fees and start turning those on in 4Q. Also, even though we took on the book in the high single digits, that excludes origination fees, so that fee rate will pick up as we start to originate new business going forward.

Got you. And then -- my follow-up is just on the ramp-up of institutional spread sales. How should we think about that? That's -- we also saw something similar from Corebridge this quarter? Is there kind of a broader view that now is a good time to be really putting the pedal to the metal on that business? And how should we think about that part of the business progressing over the next couple of years?

Sure. Look, we're really happy we're able to source $2.6 billion in spread-based liabilities through FABN and Farmer Mac. We were pretty active in this space. And I think Marc Costantini I imagine will mention it later today in their call, like both firms are very disciplined in capital allocation. If you look, spreads were wider in the first quarter, so we were disciplined. So we're light in that space. Spreads tightened this quarter, so we're able to source liabilities at a low cost of funds and both companies leaned into the market. And that's a place where IRRs are very attractive where we can source funds at a low cost and then leverage our investment capabilities to generate an attractive spread.

And I think going forward, this is another area where we can continue to grow at a faster clip. The combined balance sheet is going to be much bigger. And so we'll have much more capacity to grow spread lending oriented and overall institutional markets businesses but it really focused our discipline in capital allocation and looking to see where we can get the lowest cost of funds, match it with attractive assets and generate a good return for shareholders.

Your next question comes from the line of Wes Carmichael from Wells Fargo.

My first question is just on Retirement. I wanted to touch on your commentary about NIM and core spreads. I think, Robin, you mentioned core spreads remaining around this level, and I think that's probably a little bit better than your original guidance for stabilization in the second half of this year. So just any thoughts on what you've seen since you set guidance, anything that could also move that core spread around over the next couple of quarters in your mind?

Sure. Thank you, Wes. So just taking a step back, we evaluate profitability on our spread-based Retirement products by looking at net interest margin, or NIM. And that increased 11% year-over-year. And excluding the impact of alternatives, our core NIM improved by 5% sequentially.

Over time, we expect that core spread income to roughly track the growth in general account assets, excluding the embedded derivatives. If we look at core NIM as a percentage of average general account assets, which is the best proxy of spreads, we did see a 1 basis point spread improvement in the quarter. And we look at -- compared to when I gave the original guidance, we were watching the runoff of our pre-2020 RILA block, which is very profitable, as you recall. Remember, we were at first, we created that market. We had 100% market share for a long time. And as a result, you can have very profitable business above your normal return hurdles.

And as that business has run off, at the same time, we've been very disciplined on the new business that we put on enabling us to, one, manage the run off of that business, but write new business at attractive IRRs as well that led to that spread stabilization. So I think it's the maturity of the book now and also give -- have to give the teams on the frontline credit there discipline in pricing is leading us to deliver good core spreads that should continue to grow now as the general account increases.

Got it. That's helpful. And just switching gears. You had a peer this quarter a bit big in the retail annuity space that was talking about some developments at the NAIC, I think around regulatory arbitrage very recently, and particularly, Cayman. Just curious for your view there, if you're thinking regulatory change can be meaningful in the near term, are you thinking that could be a positive for Equitable as well?

Well, look, I think Equitable has been at the forefront of advocating for a healthier industry over time. We were the first one to advocating to eliminate the reversion to the mean interest rates to be in '21 that we started at in like 2017, 2018. It took a long time, but it's in effect now, and that leads to a more economic framework. We were advocates of making sure that regulators understood what we moved offshore as well. And we were very happy as well.

As you saw last year, we moved to Bermuda where it allowed us to manage economically. And we think if you're going to move offshore, I mean, our perspective is Bermuda is the best place and most economic regulatory regime to do so, and we are very impressed with their regime as well.

So there continue to be work done on the asset side, as well on CLO charges that the NAIC has done. They've moved much faster on that front, which is a good sign and that will help ensure that we have a healthier industry overall. So we think the progression and regulation is a positive -- it's hard to keep up with the innovation for the regulators, but I think it's positive that they continue to look to strengthen the industry and make sure it's healthy over time.

Your next question comes from the line of Pablo Singzon from JPMorgan.

So actually just one for me. It's about competition in the annuity market. So it seems like some of your peers are sort of deemphasizing more vanilla products like MYGAs and FIAs. Do you think that motion will ultimately push more insurers into the RILA market, and I think it's just even more competitive than it is?

Yes. This is Nick. Look, overall, we had another strong quarter of both sales and volumes with RILA sales up 10% year-over-year. And $1.4 billion of net flows, translating to a 5% trailing 12-month organic growth rate. We're always mindful of competitive trends as we mentioned last quarter. We saw a majority of new entrants revert back to more rational pricing. So we've seen no material change in competitive activity in this quarter.

Looking forward, we continue to see strong demand for RILAs driven by the favorable demographics and the heightened macro instability. So the pie is continuing to grow. And we believe we have a durable edge to capture it, which is hard to replicate. First, we generate attractive returns through AB. Second, we have differentiated distribution with Equitable Advisors and shelf space and third party that we've built over the past decade, which attracts lower cost liabilities. And finally, we have deep relationships and scale, and the merger should further extend the edge of product breadth, as Mark said, as well as build additional scale to extend our edge.

And so over the last 3 years, we've more than doubled our RILA sales as the pie continues to grow. And as we look forward, we believe we're in a privileged position to capture a disproportionate share of the value being created in the space.

Your next question comes from the line of Yaron Kinar from Mizuho.

Going back to Retirement and the base spreads there. Maybe less about the spread income, more about the spread itself. Is there a reason why we wouldn't -- we shouldn't expect that to continue to improve from here given what we've seen in the first half of the year? And given that spreads have come in a little bit better, is there maybe increased appetite to grow in Retirement?

Sure, Yaron. Look, a few things on spreads. Excluding alt, the way I look at it, and that's where you saw us improve 1% sequentially. You know, that could move 1 or 2 basis points that's going to be noise in any given quarter. But there's nothing I see now that would say that spread should differ in terms of remaining stable over the next year as the business runs off and we continue to write profitable business.

As Nick just mentioned, I mean, the Retirement market is a great market for us and we continue to excel in capturing that opportunity through Equitable Advisors and our retirement offerings. And so there's no reason to believe that the general account won't continue to grow as new business and organic growth rates continue to come in. And that'll continue to improve our earnings on the business as well.

Right. No, I understand that there's definitely an appetite to grow. I guess my question is, has that appetite increased? Or is it still stable relative to your expectations at the beginning of the year?

That appetite continues to increase every quarter that we can print IRRs that are above -- well above our cost of equity. So we think it's an attractive move for shareholders.

Got it. And then in Wealth Management, the margin there, I appreciate that you expect that margin to expand on scale and based on improved advisor productivity. But I guess, why did we not see that this quarter or this year -- or first half of the year?

Yes. So we did see an increase in margin quarter-over-quarter. Year-over-year, there's some seasonality. We would expect that to continue to improve as we continue to scale the business over time as we've done in the past.

Your next question comes from the line of Tracy Benguigui from Wolfe Research.

On the $100 billion of AUM, you're targeting for AB through the merger, what asset specialties and fee advantages does AB bring that make in-sourcing the new liabilities, the right call? BlackRock is tough to beat on public fixed income fees. And Blackstone is known for private credit, structured credit, real estate lending. And Corebridge has an internal team that keeps the alts like PE and CRE in-house. So where is AB's edge? And is it fair to assume that AUM will come from new liabilities and not a shift in current asset allocation?

Sure. So I'll pass to Onur in a second. He can talk about AB's investment capabilities that they build up. And I think you've heard Mark mention AB's growth in managing insurance assets for other partners as well as that continues to grow. And I think that's another proof point of their edge and capabilities outside of just equitable.

But a reminder, we're going to move $100 billion of general account and separate account AUM to AllianceBernstein. And it will be a combination of shift in assets but also new flows as well will support that. But Onur, I'll pass it to you or Tom, sorry, you can take it.

Yes. I think, Robin, you summed it up well. We're going to be able to service every asset class though. We don't know what asset classes are going to be coming over to us just yet. But we believe that we have a right to win and compete in every asset class and strategy that we employ here. And I think our fee rates are just as favorable as our peers. And also some of that will flow back to the new equitable through our distributions as well. So there's a lot of synergies here.

Yes. And on the private side, I would just add that AB is a really differentiated insurance asset manager. Obviously, Blackstone is a market leader in real estate equity in a lot of segments, but AB brings in a differentiated offering on the insurance asset management side as with evidenced with the growth in third-party insurance.

Great. Actually, a follow-up on private credit. It looks like private credit and the general account rose sequentially with lower allocations to private placements and higher allocations to private ABS, I think, on the new team ramp. So what's the target allocation from here? And particularly as you look at the sub classes in private credit? And what's driving private ABS preference, how does it spread in ratings profile compared to the private placements it's replacing?

Yes. Again, I wouldn't read too much into it. Quarter-over-quarter, it increased 1%, and it's probably rounding if anything, as I mentioned, the asset allocation that --the asset allocation that we have is a function of the liabilities that we source, so we sourced about $2.6 billion. We really leaned into the spread lending market, which leads to more stickier private credit oriented assets. So really think of it as the liabilities we source will dictate the assets that go behind it. And if you have spread lending assets, which are essentially bullets in the marketplace, you can have more illiquid assets along with their high quality around them that generate good risk-adjusted returns. So that's where it sits.

Okay. But do you have sublimits in the types of private credit, like direct lending, infrastructure, ABS?

We do -- I mean, you could see it in the portfolio, you're not going to see major shifts and direct lending, for instance, represents 3% of the private credit portfolio, less than 1% in the general accounts. So it's pretty immaterial from that perspective overall. Within private ABS, private ABS is a big category. So you're going to look within the individual names, and we do have limits on, of course, as you would expect, limits by individual name to assume -- to make sure that we're diversified across sectors include aircraft lease and music royalties, data centers, oil, gas, everything. We want to make sure we're diversified, but we do have sublimits and also diversification and single name limits as well.

Your next question comes from the line of Wilma Burdis from Raymond James.

Regarding the outlook for spreads, just wondering if you've been actively rebalancing. I think Corebridge noted some actions to lean in during wider spreads in 2Q '26. So just wondering if that was something that was involved and how much that may have helped?

Sure. Thanks, Wilma. We didn't have any big active rebalancing in the quarter. The spreads itself, the improvement was just a function of -- to run off the pre-2020 RILA block continue to be very almost immaterial now in terms of as a percentage of account value and then the discipline in pricing of new business. And in addition, as I mentioned earlier, we wrote -- we printed very good IRRs on the spread lending business in the quarter, which helps.

Okay. And I realize this may be a question for next year. But how do you think about the opportunity to expand institutional business once you have a larger balance sheet when combined with Corebridge?

Sure. This is a big growth area for -- going to be a big growth area for the business going forward. And their Corebridge's institutional business is much bigger than Equitable's with being a leader in the PRT space along with GICs and stable value. And then if you combine that with a bigger balance sheet, Equitable in-plan annuities, I think we're well positioned to be a fast grower in terms of earnings and growth in the business going forward.

Your last question comes from the line of Maxwell Fritscher from Truist.

I'm calling in for Mark Hughes. Just one quick one from me. You noted that you expect the returns on the Alt portfolio to improve in the second half. What's giving you confidence in that? And what kind of line of sight do you have there?

Sure. Thank you for the question. The Alt portfolio, just as a reminder, is about 2% to 3% of the total general account. It had a 1% annualized return in the quarter, and that was really hampered by the first quarter market returns, which impacted the private equity returns this quarter, because you have that lag in terms of the private equity portfolio.

Real estate equity continues to have valuation challenges there, and so that still hasn't recovered. In the third quarter, though, what gives us confidence in terms of improvement is the second quarter return. So we'd expect that private equity portfolio to grow from here with real estate equity lagging. But we'd expect the private equity portfolio to still have good growth from here. We have insight about a quarter of our funds today for the quarter, so that's why I mentioned on the call, we'll get better guidance at the conferences in September as we'll have more insight into the underlying funds by then.

There are no further questions at this time, and we have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to the Equitable Holdings Q1 2026 Earnings and Conferencing Call. [Operator Instructions] I will now hand the conference over to Eric Bass Chief Strategy Officer and Head of Investor Relations. Eric, please go ahead.

Thank you. Good morning, and welcome to Equitable Holdings First Quarter 2026 Earnings Call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on Slide 2 of our presentation for additional information. .

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Onur Erzan, President of AllianceBernstein; and Tom Simioni, Chief Financial Officer of AllianceBernstein. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website in our earnings release, slide presentation and financial supplement. We will also refer to the pending transaction with Core Bridge. Any statements about the transaction made during this call are not an offer of securities. Registration statement containing a prospectus will be filed with the SEC in connection with the transaction. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. The first quarter marked an extraordinary moment in Equitable's 166-year history, with the announcement of our planned merger with Corebridge, which will create a world-class platform to help our customers plan, save for and achieve secure financial futures. This morning, I will spend some time discussing why we believe that by leveraging the complementary strengths of Equitable and core bridge, the combined company will deliver tremendous value for both our customers and shareholders.

On Slide 4, I will start by providing a few highlights from our first quarter results. We reported non-GAAP operating earnings of $1.62 per share or $1.68 per share after adjusting for notable items. This increased 25% versus the first quarter of 2025, driven by healthy organic growth momentum, improved mortality experience and a lower share count. We continue to expect earnings per share growth to exceed the high end of our 12% to 15% target range in 2026.

Assets under management ended the quarter at $1.1 trillion, up 9% year-over-year. While equity markets declined modestly in the first quarter, they have since recovered, and higher average AUM versus 2025 levels should continue to provide a near-term tailwind for earnings. Our balance sheet remains a core strength with a combined NAIC RBC ratio of approximately 475% and $1.2 billion of holding company liquidity. Our credit portfolio continues to perform well. And as Robert will walk through, we are positioned to handle even a severe stress scenario.

We remain committed to being a consistent return of capital and executing the share buybacks assumed in our 2026 financial plan. Turning to organic growth. We see good momentum in retirement sales and flows even as the level of competition has increased. Total sales increased 10% year-over-year, driven by strength in Riles and we have $1.3 billion of net inflows. Wealth Management delivered another strong growth quarter with $2 billion of advisory net inflows.

Over the last 12 months, the business produced a 13% organic growth rate. During the quarter, we also closed on the acquisition of Stifel Independent Advisors, which is a good example of how we can use bolt-on M&A to help scale our wealth management business. Asset management earnings grew 11% year-over-year, driven by higher AUM and increased ownership. AB had net outflows of $7.1 billion in the first quarter, driven primarily by active equities and taxable fixed income. Private wealth and private markets remain bright spots as both had positive flows in the period.

Total private markets AUM increased 13% year-over-year to $85 billion. and AB remains on track to meet or exceed its target of $90 billion to $100 billion in AUM by the end of 2027. While near-term flows may remain volatile, AB has a record institutional pipeline of nearly $28 billion, which includes several large insurance mandates that will fund over the next few quarters. AB will also be a meaningful beneficiary of the Core bridge merger as we expect it to receive at least $100 billion of incremental assets over the next few years.

As I will walk through over the next few slides, the motivating factor behind the Corebridge merger is our belief that it will accelerate our growth strategy and position us to be a long-term winner across all the markets we compete in. The companies have complementary strengths with limited overlap across products. We have already begun the integration planning process and have high confidence in achieving at least $500 million of expense synergies and -- as a result, the merger will be immediately accretive to earnings per share, and we expect to deliver 10% plus accretion on a run rate basis by the end of 2028. And with potential upside from revenue synergies.

Moving to Slide 5. Before talking about the merger, I want to highlight 5 attributes we believe are critical for long-term success and which we use when evaluating any strategic option, including this merger. Underlying everything, of course, is providing an exceptional customer experience. Customers that are easy to do business with and offer the products and advice needed to transform complex financial risks into simple, reliable outcomes will attract clients and distributors. Developing deep brand loyalty will help create predictable and growing value for shareholders.

Second, in intermediated markets like financial services, having strong distribution is critical as clients want local access to expert, personalized advice. Privileged shelf space, particularly in channels with high barriers to entry, provides a meaningful competitive advantage in acquiring new customers while also managing the cost of funds. Third is the imperative of competitive scale, size matters. Being able to invest in technology and automation will improve efficiency and result in lower unit costs and a lower expense ratio. This provides capacity to reinvest in growth while simultaneously delivering higher profit margins.

Fourth, we know that shareholders value consistent growth in earnings and cash flow across different market cycles and having diversified sources of earnings and capital enhances the ability to deliver this. Disciplined risk management is also critical to give clients and investors confidence in the resilience of the balance sheet, especially during periods of macro uncertainty and market stress.

Finally, we see significant value in owning insurance, asset management and wealth management businesses to participate in the full value chain and benefit from the significant demographic tailwinds driving growth across each of these markets. It also means that shareholders capture the high multiple fee earnings generated by distributing and managing the assets associated with insurance and retirement solutions that are manufactured. By attracting the very best talent and aligning to these 5 convictions, we ensure that when our clients win, our shareholders win.

Turning to Slide 6. I will highlight why the merger with Corebridge aligns to these convictions and will drive growth and shareholder value. The merger brings together 3 outstanding franchises to create a diversified financial services company with over 12 million customers, $1.5 trillion in AUM and leading positions across retirement, life insurance, asset management and wealth management. Equitable and Corebridge complement each other well with different strengths and limited overlap. We intend to capitalize on our scale advantages to reduce unit costs and achieve a lower cost of capital.

We expect to have a top quartile expense ratio, and we'll be able to combine our resources when making growth investments. This will make us more profitable, drive more cash generation and increase our return on capital. We will have formidable distribution capabilities and leading positions across the retail, institutional and worksite channels. The depth and breadth of our distribution should enable us to expand our offerings while achieving a lower average cost of funds, resulting in more profitable new business.

We will also have flexibility to allocate capital where we see the best risk-adjusted returns and customer demand. In addition, our integrated business model allows us to capture the full value chain by acting as a product manufacturer, distributor and asset manager. This differentiates us from our competitors, most of whom only participate in 1 or 2 of these verticals. While the merger will shift our mix more towards retirement, it also helps scale AB and wealth management, enhancing the value of these high-multiple businesses. We remain focused on maximizing the flywheel benefits inherent in our model.

Finally, the new Equitable will have a robust balance sheet and is expected to generate over $4 billion of cash flow annually. We are aligned and having strong financial principles that govern how we operate starting with economic management of the balance sheet and a focus on cash generation. Ultimately, we want to produce consistent results and cash flow across market cycles, so that we can provide attractive returns to shareholders while also investing for growth.

I will conclude on Slide 7 by providing some clear examples of how the merger will help accelerate growth across all our businesses. Starting with Retirement and Institutional, the combined firm will have approximately $540 billion of AUM and unmatched breadth across products and distribution. We knew that Equitable would need to become more diversified over time in order to fully participate in the growing U.S. retirement market and combining with Corebridge makes us a top 3 provider of fixed and indexed annuities and expands our institutional capabilities, notably in pension risk transfer.

It also adds a strong life business that provides earnings and capital diversification and should benefit from selling through equitable advisers. In addition, the merger doubles our third-party distribution network to approximately 900 firms expanding our ability to reach new customers. The combined firm will originate $70 billion to $80 billion of liabilities annually, highlighting the size and scale of our platform. We will have a more balanced business mix that provides liquidity benefits and positions us well to generate consistent growth across market cycles while deploying capital where we can earn the most attractive returns.

Moving to Asset Management. AB will also benefit from the merger in multiple ways. We expect AB to add at least $100 billion of Corebridge general and separate account assets over the next couple of years, resulting in total AUM of nearly $1 trillion. AB will also benefit from the combined firms increased liability generation, which should drive higher ongoing net inflows. We also see an opportunity to commercialize some of Corebridge's internal asset origination capabilities, particularly for real estate and commercial mortgage loans by leveraging AB's global distribution.

Over time, we expect to find additional sources of incremental revenues and net flows, including the potential to develop new commercial partnerships. Lastly, the addition of Corebridge Advisors accelerates the path to scaling our wealth management business and adds approximately $20 billion of AUA. The merger will expand our proprietary product offering to include fixed and indexed annuities and indexed universal life, which will be a win for advisers, particularly our emerging sales force. We will have a more attractive platform and more financial resources, which should enhance our ability to recruit and develop new and experienced financial advisers.

Overall, the key message I want to leave you with is that having increased scale would provide competitive advantages that translate into stronger and more consistent growth and enhances our profitability. I will now turn the call over to Robin to highlight the financial benefits from the merger and discuss our first quarter results in more detail.

Thanks, Mark. I want to echo my excitement about the merger and the ways in which it will accelerate our growth strategy and deliver attractive financial outcomes for our shareholders. On Slide 8, we highlight some of the key financial benefits. First, the combined company will have a robust balance sheet with significant capital. As of year-end 2025, pro forma GAAP book value exceeded $30 billion and the company has had over $25 billion of statutory capital. The pro forma leverage ratio is approximately 26%, which provides financial flexibility. .

Second, we will have a more diversified business mix with equal contribution from fee and spread-based earnings. This should help us generate more consistent earnings in different market environments. Third, we project at least 10% accretion to EPS and cash generation on a run rate basis by year-end 2028, driven by expense, capital and tax synergies. We also expect to have a 15% plus return on equity. These projections do not include any benefit from the anticipated revenue synergies.

Finally, we forecast over $5 billion of annual earnings power and over $4 billion of cash flows to the holding company, which will make us the most profitable company in the sector based on U.S. earnings. Turning to Slide 9. I will provide some more detail on first quarter results. On a consolidated basis, non-GAAP operating earnings were $472 million, or $1.62 per share, and we reported net income of $621 million or $2.14 per share. Notable items in the quarter included $32 million of below plan alternatives and a $13 million benefit from the purchase of tax credits.

Adjusting for these items, non-GAAP operating earnings per share was $1.68, up 25% year-over-year. This is consistent with our earnings per share growth guidance of above 12% to 15% for 2026. The 25% increase in earnings per share was driven by a 9% year-over-year increase in total AUM AUA, lower mortality claims, the benefit of our increased ownership stake in AllianceBernstein, and a lower share count, which reflects the incremental buyback executed following the RGA transaction.

In the first quarter of 2026, our alt portfolio, which is 2% of our general account produced an annualized return of 3.5%, with results pressured by lower CLO equity returns. Given weaker market conditions in the first quarter, we currently project our portfolio to have a return of 2% to 3% in the second quarter. While it's premature to predict what will happen in the second half of 2026, based on the lower returns for the first half of the year, we now expect the full year return to be below our prior 8% to 9% guidance.

Adjusted book value per share ex AOCI with ABM market value was $34.70, we view this as a more meaningful number than reported book value per share, which significantly understates the fair value of our AB stake. On this basis, our adjusted debt-to-capital ratio was 24.5%, down 40 basis points sequentially. On Slide 10, I'll provide some more details on segment level earnings drivers. In Retirement, first quarter earnings, excluding notable items, were $394 million. Net interest margin or NIM, increased 3% sequentially as lower alternative investment income was offset by growth in general account assets.

Excluding alternatives, our NIM spread improved by 5 basis points sequentially, helped by a 4 basis point benefit from a modest recovery in MDA. This reverses the downward trend in spreads we experienced over the past year and supports our view that spreads are beginning to stabilize. On a sequential basis, the growth in NIM was partially offset by lower fee-based revenues as market declines pressured average separate account AUM.

Turning to Asset Management. AB reported earnings of $140 million, up 11% year-over-year as a result of higher base fees and our increased ownership percentage. While base fees benefited from a 7% year-over-year increase in AUM, this was partially offset by lower fee rate due to a shift in asset mix. As expected, performance fees were relatively modest in this quarter, but we raised our full year forecast from $80 million to $100 million to $95 million to $115 million.

Moving to Wealth Management. We experienced strong year-over-year growth in advisory fees and transaction revenues, driving a 22% increase in earnings. As a reminder, fourth quarter 2025 results benefited from favorable onetime items. And this quarter, we had seasonally higher expenses and a couple of million of costs related with the Stifel acquisition. We still expect double-digit earnings growth in 2026. Finally, Corporate & Other reported a loss of $98 million in the quarter after adjusting for notable items, which is consistent with our 2026 guidance. Mortality was slightly favorable in the quarter and improved versus previous periods.

On Slide 11, I'll highlight Equitable's strong balance sheet and cash flows, which enable us to be a consistent returner of capital to shareholders. We know there has been a lot of focus on credit risk. So we've updated our investment portfolio stress test to reflect our holdings as of year-end 2025. This assumes a hypothetical severe credit stress scenario, at least as bad as the global financial crisis and a decline of 40% in equity markets. We estimate slightly less than a 50-point decline in RBC ratio, which from a starting point of 475% still leaves us comfortably above our 400% target. As a result, we are well positioned to handle a potential downturn in credit markets.

That being said, today, we do not see any signs of weakness in our portfolio. In the appendix, we provided updated disclosures on our private credit portfolio, which represents 18% of our general account and is 95% investment-grade assets that match well against our liabilities. Let me now turn to cash. We ended the first quarter with $1.2 billion of cash at the holding company above our $500 million target, and we remain on track to achieve our target of 2026 cash generation of $1.8 billion.

During the first quarter, we returned $223 million to shareholders including $147 million of share repurchases. We were blacked out from buying back shares for the second half of the quarter due to the merger with Corebridge, which depressed our payout ratio for the period. We remain committed to delivering our 60% to 70% payout ratio target for 2026 and recognize that share buybacks look extremely compelling at the current valuation. We plan to be in the market purchasing shares during the open windows between now and the closing of the transaction.

On Slide 12, we show a time line with key dates related to the merger and a specific time period of when we will be able to repurchase stock. Both Equitable and Corebridge trade at a significant discount relative to where we believe they should be valued making buybacks meaningfully accretive to shareholders. As a result, you can expect that we will be active in the market during the windows that are available to us. We expect to file the initial merger proxy statement today after market close, and we can repurchase shares from that point until we mail the final proxy. There is not a set date for that mailing, but we do not expect it to occur until at least early June.

We would then be able to repurchase shares again after the shareholder vote. If any repurchases from our 2026 capital plan are not completed prior to the merger close. We plan to execute them as part of an ASR shortly after the closing. As a reminder, the exchange ratio for the merger is fixed and will not be affected by any share repurchases executed by either company. I will now turn the call back over to Mark for some closing comments. Mark?

Thanks, Robert. Equitable delivered solid first quarter results, and we remain confident in achieving our EPS growth and cash generation guidance for 2026, even with the volatile market backdrop. Looking forward, I am incredibly excited about the powerhouse franchise we are creating through the merger with Corebridge. As we have talked about this morning, the combined company will have the scale, distribution strength and product with to deliver differentiated growth and returns. I am confident that this merger positions us to win with customers and deliver superior value to shareholders over time. We will now open the line to take your questions. .

[Operator Instructions] Your first question comes from the line of Wes Carmichael with Wells Fargo.

Good morning. Thank you. My first question was on the Retirement segment. And you had a pretty good earnings result in the quarter. And previously, I think you talked about spread compression abating in the second half of 2026, at least on a percentage basis. So do you still think that's the case, given the mix of the book here? And maybe you could just talk a little bit about what you're seeing on the cost of fund side from a competitive dynamic.

Thank you for your question. We were happy to see spread stabilized here in the first quarter. If you look quarter-over-quarter, spread income, NIM was up $11 million quarter-over-quarter. If you exclude all to is up even more and excluding some of the MBA benefit, it was up about 1 basis point net. So -- if you look at it, it's about 1.69 or 169 basis points. And I think that's the level you can probably expect at this point, and you can expect spread income to grow as the general account, excluding embedded derivatives growth. .

I mean 2 primary factors that you see, yes, with the abatement of some of the higher-margin imports that's run off. That's a smaller part of the business mix, but also the discipline in the new business underwriting that we're seeing despite what you hear on the competition, Rail sales were up 14% year-over-year and the pricing discipline has been maintained and the margins have been good. So the combination of that with the runoff of the in-force should lead to stabilization of spreads going forward.

Got it. And then maybe just a more broad question. But on the Equitable Corebridge merger, I know you reiterated the EPS guidance with materials. Just wondering if you've done a bit more work, I guess, in earnest on progress towards the merger. Have any of your expectations change in terms of the financial impact? And maybe anywhere you seeing more or less opportunity relative to, I guess, a little bit more than a month ago when the deal was announced.

Thanks, Wes, it's Mark Pearson. Yes, I think the things we'd say is the integration planning process is well under way now with the top or so leaders from each of the organizations. We really are confirming through that the complementarity of the 2 businesses. We are stronger together in terms of our product breadth, in terms of our distribution in terms of the scale. So that is confirming everything we've told you in terms of the synergy opportunities and look forward.

We are also pretty excited on the revenue synergy side, but we're going to save telling you that until first half of 2027 when we've done the work and we can start to quantify it for you. But confirming the expense synergies now and then also starting to work on the revenue side as well.

Your next question comes from the line of Suneet Kamath with Jefferies.

I just wanted to start on the buybacks with the window opening, I guess, later tonight. How should we think about the pace of buybacks here over the next month? And is there any sort of restrictions or coordination that's required with Corebridge? Or are you guys just kind of operating at your own sort of speed?

Sure. Thanks, Suneet. Yes, look, as we laid out in the presentation, we're excited to say we're going to be back in the market with share buybacks -- we expect to file the proxy this evening, and that enables us to open up the window again until the final mailing that will happen in June. Within that time period, expect us to be active in the market. The returns on a share buyback are very attractive at this point in time. So that's 1 of the reasons why we wanted to be back in and both us and Corebridge will coordinate together to make sure that share buybacks maintain accretion for shareholders throughout the period. .

And then as I laid out in the presentation, after the shareholder vote that will open up the next window for share buybacks. And then anything that's not completed by the closing will be completed as an ASR if needed. But shareholders should expect the same level of capital return from both companies that they would have otherwise received and we're happy to say we're going to be back in the market because buybacks are accretive given that both stocks will cheap right now.

Okay. That's helpful. And then, I guess, on the $70 billion to $80 billion of originated liabilities that you guys are sort of talking about, is there a practical limit in terms of how much assets AB can originate in order to back those liabilities?

No, we're fortunate. With $70 billion to $80 billion of liabilities, we're going to have 4 asset managers that we're going to leverage. So obviously, Alliance Bernstein, our in-house. Also, we get to benefit from some of the capabilities that Corebridge brings to the merger, so Blackstone BlackRock and their internal capabilities as well. $70 million to $80 billion provides lots of assets to put to work and allows us to be disciplined on the general account and getting the best risk-adjusted returns on those assets across the board.

So I would expect everybody to benefit. Obviously, AB will benefit from the broader revenue synergies as well. That doesn't take into account the future growth. That's the $100 billion in separate account and general account assets that will move over to AB as a starting point. And then there'll be upside from there with the future growth of the $70 billion to $80 billion, benefiting AB and our other asset managers as well.

Your next question comes from the line of Ryan Krueger with KBW.

In the merger call, you talked about 2% to 4% synergies from capital and taxes that were part of the 10% plus overall synergies. I wanted to, I guess, ask if -- is that a true best estimate? Or did you embed some conservatism there? And you could possibly, as you do more work, see some upside to the capital benefits of the merger.

Thanks, Ryan. So some of the benefits that we spoke about the merger, I think it's just important to repeat. So it's going to be day 1 accretive and 10% plus going forward after everything at a run rate basis. In addition to diversification of both businesses together means we'll have more stability in earnings and cash flows, which I think will lead to a lower cost of capital and a better profile for us going forward. .

To your question on the 10% plus synergies, we referenced 6% to 8% coming from expense synergies there, we said we at least expect to at least get $500 million. There should be upside to that and then the remainder will be from tax and capital, which I would say is our best estimate at this point in time. We'll always do more work going forward. You can see both companies Equitable and Corebridge, very active in terms of capital management since the IPO. So you could expect that to continue going forward.

Most importantly though, as Mark mentioned earlier, these numbers do not include the benefit of revenue synergies. I think that's what's going to differentiate this transaction on a go-forward basis, is the more assets and revenues going to AllianceBernstein, leveraging Corebridges, index IUL and fixed annuity products with Equitable advisers and leveraging our VUL product with their third-party distribution if we can be successful in capturing more revenue with the 2 companies together, this will be a stronger franchise that deserves a higher multiple going forward.

And then just 1 question on the PGAAP impacts. I mean I understand that it's -- it's contingent on where interest rates are, and there's probably a lot of work to be done on this. But maybe just directionally, can you give any sense of like if the merger closed now would this be more -- would this be more likely to be a positive or negative potential impact to your GAAP earnings?

I think it's too early to say at this point in time. As we put together the PGAAP, we'll finalize that prior to close, and we'll certainly give you that guidance. I think there will be moving parts into PGAAP1 on the balance sheet basis. Obviously, the book value of the combined companies will be the figure, and that will just be reflective of wherever the market cap of Equitable is at that standpoint. On the income side, there will be moving parts between VOBA DAC and then fair value of some of the assets. And we'll do that work. And as we do that work, we'll disclose it as we get closer to the close of the transaction. .

Your next question comes from the line of Tom Gallagher with Evercore ISI.

One question about the quarter and then 1 about the merger. On the quarter, the MVA gains that you had in retirement, Robin, can you comment on absolute dollars of earnings that, that represented this quarter? And would you expect there to be any sustainability there? Was there something unusual about why they were higher? .

Sure. Thanks. Yes, we were -- again, a key point for me is that spreads stabilized ex all to next the MVA, so about a 1 basis point improvement the MVA was about approximately $10 million in the quarter. We don't expect benefits on a go-forward basis. That's something we don't include in our forecast or budgeting. As you've seen, that's been positive or negative through different periods over time. But excluding the MVA and excluding the impact of alts, spreads improved by 1 basis point quarter-over-quarter.

Got you. So $10 million was the earnings contribution?

Yes, approximately. .

Got you. And the -- my question on the merger, I listened closely to what you've been saying about the revenue synergies. I haven't heard much of an emphasis on your institutional spread business, which I know is small for you, it's bigger for Corebridge. But is that an opportunity? Because when I look at you and Corebridge on a stand-alone basis, you're probably half of the size or maybe 30% or 40% of the size of that business compared to like the Mets and the cruise of the world. So I'm just wondering, is that a business that we should expect you to really scale up.

Sure. I think for corporate and Equitable, the FAB end market has been attractive, it's generated good returns for us. It's obviously spread dependent. So depending on where our spreads trade at different time periods that allows us to go in and out. And then obviously, with the balance sheet being much bigger, it gives us more capacity to lean in, in that market given that spreads are there and pricing is there. So it's certainly an opportunity for us with the larger balance sheet going forward. .

Your next question comes from the line of Joel Hurwitz with Dowling & Partners.

Robin, first, can you just unpack what you guys saw from a mortality perspective in the quarter. It looked pretty good with the reported benefit ratio at 83.1%.

Yes, it was nice to have a nice quarter on mortality this quarter. Our benefit ratio is 83%. That's the lowest it's been in any quarter over the last year, which is good. Overall, we saw our lower claims and less high-face amount claims as well, specifically which benefited us this quarter. And so going forward, we think with the guidance that we've given to the market captures appropriately what we'd expect to see in mortality and we look forward to speaking more about good mortality and focusing on the growth in the other businesses as well going forward. .

Got it. And then in retirement, it looks like you're starting to utilize flow reinsurance for some of your spread business. Can you just talk about what products that's on, how much I guess, you plan to do and the economics for Equitable?

Sure. Yes. We did -- in the fourth quarter, we started a bit to do some flow reinsurance on our Rila product. Flow reinsurance is a tool that we think is helpful for us when making products accretive going forward. So it's an important tool in the toolkit. We could look at for reinsurance and other products as well and even post merger, corporate does some flow reinsurance as well.

So as long as it's accretive for us versus not doing it, it's something that we'll look at selectively in different products. As you know, it's important to have a good counterparty, which we have and also we try to make sure AV continues to manage a portion of the assets for us going forward. We also have Bermuda as a tool in our toolkit as well. We'll look at that for flow reinsurance for selected products, for our internal products and also potentially for third-party opportunities going forward as well. So Flow reinsurance is something that we'll always look at across our businesses.

Your next question comes from the line of Alex Scott with Barclays.

First 1 I have is on cash flow. I wanted to see if you could talk a bit about just the cash generation of the business and how that will trend through the integration process with just some higher expenses related to the integration itself and probably some sort of hockey stick dynamic. Could you help us think through the way that, that will progress over the next few years?

Yes. It's probably a little bit too early to give you too many specifics. I'd say both companies obviously have strong cash flow generation across on the equitable side, we continue to feel comfortable with our $1.8 billion guidance that we provided this year and to $2 billion for 2027, expect that to be in addition to the investments that we have in growth to help grow our new business franchises across the board.

As part of the integration, we will target $500 million plus in expense synergies and expect that will be a 1.5x investment with a very good payback associated with it. That investment is put between cash and noncash and the timing of that, we'll provide further updates as we get closer to the close of the transaction and the integration planning is more complete.

Got it. That's helpful. And then I guess, a related topic is just the excess capital levels that you have right now, particularly at the OpCo level, pretty significant in Corebridge, has a pretty significant menaces Capital as well. How will this transaction change the way you approach it all to the amount of excess capital you hold over time. I mean, I think it's been a while now that you've sort of sat on a pretty high level. And you mentioned the stress test doesn't even take you down that close to your -- your buffer at this point, and that was a pretty extreme stress test. So are you thinking about that differently with the transaction coming on?

Yes. I think again, going forward, we will have an Investor Day in 2027, where we'll give further guidance on all those metrics. But look, if you take a step back, as we mentioned, the 2 companies are stronger together, the balance sheet are more resilient, they're more diversified across each other. There will be a lower cost of equity across the company, and we'll be well positioned to maintain different cycles in the market, whether that be credit or equity because of the diversification of the businesses.

So what does that do? That allows us to leverage excess capital for best use for shareholders. Obviously, share buybacks are very attractive use at this time given the valuations of both companies, but it also allows us to invest in growth. We see very good returns across in the Ryland market and the other markets across both companies. So the more we can invest in growth and grow earnings going forward, which will translate into growth in cash, that will benefit shareholders over the long term. So we'll evaluate all those investment in growth, investment in share buybacks. And for uses of excess capital as the 2 companies come together.

Your next question comes from the line of Yaron Kinar with Mizuho.

Just a couple of on capital deployment. So if the windows end up being a bit narrower than expected or in light and ultimately, you have to complete the the buyback through an ASR at the end of the year. Is that 15-plus percent EPS growth target still achievable?

Yes. I think we're pretty comfortable. If you look where we -- the quarter, we standed at plus 25% on an EPS basis overall. That was with a lower share buyback in the first quarter. If you look at the windows that we have available to us, we can -- we believe we can deploy a lot of capital in the markets to buy back stock at these levels and keeping within our 60% to 70% payout ratio by year-end. So the windows that we have are pretty broad, and we think, give us the availability and the timing needed to deploy our capital plan.

And anything that is left will complete it in an ASR and -- so we feel comfortable with the guidance. Remember, the guidance for this year is that we'd be above our 12% to 15%, and we still expect to be above our 12% to 15% as we progress during the year.

Great. And then the second 1 also on capital deployment. So with the Stifel deal done, I think you've expressed interest in continuing to grow that the Wealth business, both organically and inorganically I'm assuming, though, that given where the share price is today, buybacks would be a far more attractive capital deployment than you then -- or avenue than doing a deal in wealth?

Well, look, I don't know if I'd say it all is deal-specific. Ultimately, we're in a fortunate position where the company can execute on its capital return program for shareholders and investor growth. That's a position of strength that we're in right now. So obviously, we want the Stifel transaction to complete disclosure, the advisers will transition to our platform later this year. We can also look for opportunities in at AllianceBernstein to grow on the asset management side as well.

Obviously, where the share price is now, it needs to be accretive for shareholders as you see this deal was as well with the merger that we announced. But ultimately, we're well positioned because we can buy back stock at this price and deploy excess capital to fuel future growth and make us a stronger company going forward.

Your next question comes from the line of Will Maertas with Raymond James.

Given the one-off buybacks will be Mac sometime in June. Maybe if you could just drill down a little bit, is there any limit to the amount equitable could buy given limitations on the percentage of daily trading volume -- and if you could just help us a little bit with the math there. I was just giving it a shot myself but didn't quite get there.

Yes, look, we obviously have some limitations on average daily trading volume that we have to we have to keep. But we feel as though, and I think corporate would say the same, the windows that we have available to us provide us the flexibility that we need to be in the market to buy back stock. We'll have this, again, we'll have this time period between when we file the proxy tonight versus the final proxy in June to complete a decent amount of share buybacks, and then we'll also have the ability, again, post the shareholder vote.

And so we think we can -- we feel pretty comfortable to execute within a reasonable average daily trading volume, our capital plans this year. And so we'd expect to end with the ASR at our 60% to 70% payout ratio and no change in the amount of capital returned to shareholders for this year.

Okay. If there's any way you can give a little bit more detail just on the restrictions there? Just as a quick follow-up there. And then second question, I think the commentary that you guys have implied on the capital and tax benefits, I calculated it to around $500 million to $1.5 billion of capital that would be freed up by the deal any way to tell us that estimate is somewhere in the ballpark.

I don't know if there's any other color I gave on the share buybacks at this time. On the capital and tax benefits of the deal, as we mentioned, the EPS accretion will be 6% to 8% from the expenses, hopefully, more than that. We'd expect it to be more given the size of synergy potential that we have between both organizations and then we'll have capital and tax benefits as well that we're not going to give nominal amounts at this time. But again, going forward, as we get into the Investor Day next year, I think you could expect more information on those numbers and also the revenue synergies.

Don't forget that's the big part that we get excited about internally of what this brings to AllianceBernstein, what just brings to our wealth management business and what this does for a broader product distribution across both companies that will lead to a higher multiple over time.

Your next question comes from the line of Pablo Sanson with JPMorgan.

Just a follow-up on mortality. So 1Q and 40 tends to be the highest mortality quarter for you. So given do you expect corporate loss to be there sequentially? Or was 1Q just too favorable.

Look, in 1 quarter, we did have some favorability in mortality, as we mentioned, the benefits ratio with 83%. That's lower than it was last quarter, as you could see in the supplement and also lower than it was over the last year. The corporate and other guidance that we gave for the full year was the $350 million to $400 million. We expect to be within that guidance, if you look on a normalized basis this quarter.

And also keep in mind, going forward, the benefit of the RGA transaction really limits the volatility related to mortality for us going forward. So I think you're starting to see those benefits come through, and we do expect that to continue.

And then second question is to the implementation of V-22, -- do you see that having any material impact whether from a price or capital standpoint on the fixed annuity block you're getting from Corebridge?

Yes. I'd ike to let Cobridge add to that on the VM20 side. Look, we've done -- obviously, you can look across both sides have done diligence on each other and whether that be on the asset side or the liability and potential regulation, and we feel comfortable where both companies combined are positioned ahead of any regulation or asset changes. .

Your next question comes from the line of Tracy Benguigui with Wolfe Research.

Going back to the PGAAP changes you mentioned, some of the moving parts, but I want to touch on AB. It seems like a big thing that folks misunderstand about Equitable is your asset leverage. They're not looking at the right denominator, my personal view of statutory capital matters more. Now with this merger coming up, I understand that your PGAAP,you could mark up AB. So my question is, how should we expect a large goodwill asset and I'm also curious if doing the deal the only way to mechanically recognize AB's equity value? .

Sure. Thanks, Tracy. I think you're right. I think the way to look at it is not GAAP leverage, but obviously, stat is a bigger piece of and something that a lot of people don't look at. Now on the GAAP side, you're right, it doesn't capture the full market value of AlinsBernstein outside of a transaction like and with PGAAP, I don't think you can. Since we own the linesBernstein, we can't write up the asset as it exists today. So that is 1 of the benefits of the transaction. it will lead to some addition of goodwill, but there are a lot of moving parts related to the PGAAP.

So it's too early to give you precise numbers on how to peak up works. But ultimately, both companies, if you look, as I mentioned, the statutory capital is going to be $25 billion of the pro forma company. The GAAP equity is going to be above $30 billion. So we feel very well positioned in terms of the size of both balance sheets and especially well positioned having AB, a wealth management franchise and a broader retirement platform to grow sales.

Staying with EB, I'm curious if the combined company's plans, are to change the 68% stake.

No. Currently, right now, we're quite happy with our ownership of AllianceBernstein at 68%, 69%. AB is a key part of the flywheel and expect it to grow. Again, the synergy potential of AB is pretty sign. Maybe I'll ask Onur to talk about the revenue that potential if they align Bernstein, but I think that's a big part of this deal is the benefits of the line Bernstein and getting the $100 billion of seratonin general account assets. .

Yes. Thanks, Bob, and I'll also let to catch your breath a bit after multiple questions. Definitely, we are very excited about the $100 billion plus that Mark and Robin mentioned. Obviously, it's going to come from both the general count and the separate account businesses as well as funds and retirement plans. So we have multiple opportunities to do work over the next 7, 8 months before the merger closes. So have a very actionable bankable bottom-up plan and that comes on top of a record pipeline we had before the Corebridge Equitable merger. So it's built on a very sizable pipeline that already exists. So very excited about that and also like the fact that it's a diverse set of asset classes ranging from public to private fixed income, multi-asset equities. So it will allow us to scale multiple platforms or at the same time.

So would you -- would you want to take that stake up, if you like, the business?

No change right now in our stake of AllianceBersten. I think we've been clear that after we purchased the increase last year, we went from 62% to approximately 68%, 69%. So -- we have no other plans at this time. We're really focused to combined firms are really focused on execution of this merger. We're pretty excited. We -- as Mark mentioned on the call, we established the integration office. We got our teams together and everybody is focused on planning to execute the expense and revenue synergies and making sure we have the right people in the right seats. So that's our focus at this time. .

Your next question comes from the line of Mark Hughes with Truist.

Yes. In the Rail business, sales were pretty strong. I wonder if you could discuss the competitive environment and then maybe touch on the biggest impact, biggest benefit from the merger on distribution?

Great. This is Nick. As you mentioned, overall, we had a strong quarter in sales and volume with Ryals up 14% and $1.3 billion of net flows translating to a 6% trailing 12-month organic growth rate. Look, we're very mindful of competitive trends. As we mentioned last quarter, we saw new entrants in 2025 for back to more rational pricing in the fourth quarter, and we don't see any material change in competitive activity this quarter. .

Looking forward, we continue to see strong demand for rails driven by favorable demographics and the macro uncertainty. I'd highlight consumer sentiment is at an all-time low, so people are looking for protected equity stories. And we believe we've got a durable edge to capture it. This is both generating attractive yields through AB, our differentiated distribution with Equitable advisers and our third-party networks. As Robin and Mark alluded to, the merger will even expand our reach in that area. And finally, we have deep relationships and scale.

As the pie has grown, we've nearly doubled our sales over the last 3 years, and this was another first quarter in record sales and volume, so just impacting the benefits on distribution, better reach deeper relationships. And as Mark mentioned, we see scale becoming equally increasingly important to generate profitable growth and protect margins. Corebridge will give us both of this immediately. So as such, we think we're in a privileged position to capture the disproportional share of value in the growing retirement market.

Understood. Then the $70 billion to $80 billion in liability origination capacity, how much of that is third party versus owned distribution?

Yes. So, the way to look about it is the $70 million to $80 million is the combined companies post merger today and for Equitable, about 35% of our sales in the retirement business come through Equitable advisers. So -- that's the way to look at it. .

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us and welcome to the Equitable Holdings Full Year and Fourth Quarter Earnings Call. [Operator Instructions]

I will now hand the call over to Erik Bass Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Equitable Holdings Full Year and Fourth Quarter 2025 Earnings Call. Materials for today's call can be found on our website at ir.equitableholdings.com.

Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on Slide 2 of our presentation for additional information.

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Onur Erzan, President of AllianceBernstein; and [ Tom Simeone ], Chief Financial Officer for AllianceBernstein.

During this call, we will be discussing certain financial measures that are not based on Generally Accepted Accounting Principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our earnings release slide presentation and financial supplement. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. Before diving into our 2025 results and 2026 outlook, I want to take a step back to reflect on the journey Equitable Holdings has been on since our IPO.

We have been intentional about refining our business mix to focus on three core growth engines: U.S. retirement, asset management and wealth management. These are very attractive and growing markets, and they are integral to our mission of helping our clients secure their financial well-being and the long and fulfilling lives.

Our integrated model positions us well to be one of the long-term winners in each of them. At the same time, we have been reshaping our balance sheet to become more capital light reduce exposure to legacy insurance risks and increase the quality of cash flows.

You saw further evidence of this in 2025 with the execution of our life reinsurance transaction with RGA and we believe these actions will create a more valuable company. Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets.

Turning to Slide 3. I will provide some brief highlights from our 2025 results. Full year non-GAAP operating earnings were $5.64 per share or $6.21 per share after adjusting for notable items. This was up 1% over 2024 as growth was held back by elevated mortality claims. The past 2 quarters have shown increased earnings power, and we expect EPS growth to accelerate in 2026.

We produced full year organic cash generation of $1.6 billion consistent with our $1.6 billion to $1.7 billion guidance range. In 2026, we expect this to increase to approximately $1.8 billion and we remain on track to reach $2 billion in 2027.

Assets under management and administration ended 2025 at a record $1.1 trillion, up 10% year-over-year, which will support growth in fee and spread-based earnings.

Finally, we returned $1.8 billion to shareholders in 2025. And which includes $500 million of additional share repurchases executed following the life reinsurance transaction. Excluding these incremental buybacks, our payout ratio was 68% and at the high end of our 60% to 70% target range.

Moving to organic growth. We continue to see healthy trends despite competitive market conditions. In retirement, we produced $5.9 billion of net flows in 2025, a 4% organic growth rate, helped by another year of record wireless sales.

We also leaned into the funding agreement-backed note market to take advantage of attractive spreads and had $5 billion of new issuance. This is not reflected in our retirement net flows but will help support growth in spread-based earnings.

Wealth Management also continues to see strong momentum with full year net inflows of $8.4 billion, a 13% organic growth rate. The number of wealth planners who are our most productive advisers focused on holistic wealth planning increased by 12%.

AllianceBernstein experienced mixed dynamics in 2025. It had overall net outflows of $11.3 billion, which includes $4 billion of low fee outflows related to the RGA transaction.

On the other hand, AB continues to see strong momentum in its private markets business, which increased AUM by 18% to $82 billion and is well positioned to achieve its target of $90 billion to $100 billion in AUM by the end of 2027.

AB ended 2025 with an institutional pipeline of $20 billion, and it has over $3 billion of additional insurance wins that are also expected to fund in 2026.

One incremental growth opportunity is commercial real estate lending. AB is making investments to enhance its platform and will onboard more than $10 billion of Equitable's commercial mortgage loan portfolio in the second half of the year.

This is a win for both companies and is another good example of the flywheel benefits between Equitable and AB.

Finally, we continue to make strong progress on our strategic initiatives. I already mentioned the life reinsurance transaction with RGA, which create $2 billion of capital and reduced our mortality exposure by 75%. We used a portion of the proceeds to help drive growth in assets and wealth management by increasing our ownership stake in AB and funding and investment in the FCA Re Sidecar and the acquisition of Stifel Independent Advisers.

We are also on track to realize our targeted $150 million of expense savings by 2027 with $120 million currently in our run rate results. We have already achieved our $110 million target for incremental investment income from shifting to private markets and see opportunity for further upside.

Moving to Slide 4. We highlight some of the key performance indicators for our growth strategy and the progress since our 2023 Investor Day. I've already mentioned several of these, so I'll just focus on a couple of areas.

In Retirement, net flows and AUM growth are running ahead of Investor Day forecasts. We also are making progress in growing our institutional business which had over $600 million of net inflows in 2025, across implant annuities and HSA. We expect a similar level of inflows in 2026 and forecast this to ramp further over time.

In Wealth Management, we achieved our target of $200 million in annual earnings 2 years ahead of plan, and the business has excellent momentum given top quartile organic growth and rising adviser productivity. We expect Wealth Management to sustain double-digit annual earnings growth, assuming normal market conditions.

Finally, AB has done a good job in executing on its margin initiatives. And it reported a 33.7% adjusted operating margin in 2025 at the upper end of its targeted range. At the same time, it is seeing benefits from growth investments in areas such as private markets, insurance asset management and active ETFs.

Overall, we see good commercial growth momentum, which will support further growth in earnings and cash flows.

Slide 5 provides an update on progress against our 2027 financial targets. Starting with cash generation. We remain on track to reach $2 billion in 2027. As I mentioned earlier, we forecast $1.8 billion of cash generation in 2026, which represents greater than 10% year-over-year growth.

Over 50% of cash flow is coming from assets and wealth management, and we now have a track record of paying dividends from our Arizona insurance entity, giving us good visibility into future cash flows.

Through 12 quarters, our payout ratio was 67% at the high end of our targeted 60% to 70% range. Note that this does not include the $500 million of incremental share repurchases funded by the RGA transaction. The one area where we are currently below our target is earnings per share growth, which has been 8% through the first 3 years of our plan.

We attribute this primarily to the elevated mortality claims experienced in 2025. Our exposure to mortality is significantly reduced following the life reinsurance transaction, and we expect EPS growth to improve in 2026, getting us back on track.

Turning to Slide 6. I want to highlight some of the reasons we feel confident in projecting strong growth in 2026. First, we ended 2025 with a record level of assets under management across each of our business segments, which bodes well for growth in fee and spread-based earnings. Given the healthy organic growth momentum we have discussed, particularly in retirement and wealth management, we expect continued growth in assets under management and advice moving forward.

Importantly, we also have significantly less exposure to future fluctuations in mortality claims. The RGA transaction reduced our net mortality exposure by 75%. So even if 2025's experience were to recur, the bottom line impact would be materially reduced.

Finally, we will get the full benefit from the additional share repurchases executed in the second half of 2025. We reduced our share count by 9% over the past year, which provides a nice tailwind in for EPS growth in 2026. Equitable is well positioned in attractive growing markets, and I'm confident in our ability to execute on the opportunity in front of us. I will now turn the call over to Robin to discuss our fourth quarter results and outlook in more detail.

Thank you, Mark. Turning to Slide 7. I'll provide some more detail on our fourth quarter results. On a consolidated basis, non-GAAP operating earnings were $513 million or $1.73 per share, and we reported net income of $215 million. The only notable item we had in the quarter was $10 million of noncash expense in Corporate and Other related to the write-off of a legacy software investment. Excluding this, non-GAAP operating earnings per share would have been $1.76 a up 8% year-over-year.

Our consolidated tax rate was approximately 18% this quarter, consistent with the guidance we provided.

Total assets under management and administration increased 10% year-over-year to a record $1.1 trillion, which provides a tailwind for earnings as we enter 2026. Adjusted book value per share ex AOCI and with AB at market value was $33.84. In our view, this is a more meaningful number than reported book value per share which significantly understates the fair value of our AB stake.

On this basis, our adjusted debt-to-capital ratio ended the year at 25%.

On Slide 8, I'll provide some further details on our segment level earnings drivers. In Retirement, fourth quarter earnings increased 4% year-over-year and 2% sequentially, and after adjusting for notable items. Given differences in tax rates across different periods, I'll focus on pretax results.

Net interest margin or NIM increased 2% sequentially and driven by the growth in general account assets. As expected, our NIM spread compressed modestly versus the third quarter, reflecting the runoff of our very profitable older RILA block and some timing noise in investment income. We expect some additional spread compression in the first half of 2026, but anticipate spreads will stabilize after that.

Over time, we expect quarterly NIM growth to roughly track the growth in general account assets, excluding embedded derivatives.

Fee-based revenues increased 8% sequentially and driven by higher average separate account AUM as well as a favorable catch-up adjustment.

Offsetting the growth in revenues was higher commission expense. While we expect commissions to trend higher over time with increased sales, the sequential growth was inflated by an allocation true-up with wealth management. This shifted some earnings between segments but had a neutral impact at a total company level.

Putting it all together, we view this quarter's level of pretax retirement earnings at a reasonable starting point from which to project future growth.

Turning to Asset Management. AB reported strong fourth quarter results with earnings up 4% sequentially. Base fees continue to benefit from growth in average AUM and performance fees of $82 million came in above our guidance. AB delivered a full year margin of 33.7% and at the upper end of our 30% to 35% guidance range provided at Investor Day.

As a reminder, AB as seasonality and results given the timing of performance fees, but the business is entering 2026 with solid earnings momentum.

Moving to Wealth Management. Fourth quarter earnings increased 40% year-over-year and the business exceeded our target of $200 million in annual earnings, 2 years ahead of schedule. Results in this quarter benefited from a favorable commission adjustment from retirement and elevated transaction fees and we view $60 million of quarterly earnings as a better run rate.

We continue to forecast double-digit earnings growth moving forward, supported by steady increases in AUA and adviser productivity. Wealth Management attracted $2.1 billion of advisory net flows in the quarter and $8.4 billion for the full year, a 13% organic growth rate. This compares favorably versus industry peers, and we are excited about the outlook for 2026.

Finally, Corporate & Other reported a loss of $123 million in the quarter. This was higher than our expectations due to $10 million of onetime expenses, approximately $25 million of elevated mortality and a lower tax rate. The adverse mortality experience was concentrated in December and resulted from a high number of small claims with less reinsurance coverage.

While we still retain some exposure to fluctuations in mortality, the RGA transaction has significantly narrowed the range of potential outcomes going forward.

Turning to Slide 9. I'll highlight Equitable's capital management program and cash flow outlook. In the fourth quarter, we returned $354 million to shareholders, including $277 million of share repurchases, for the full year, we reduced shares outstanding by 9%, which included [ 500 million ] of incremental share repurchases funded by proceeds from our individual life reinsurance transaction.

Our full year payout ratio was 95% or 68% excluding the additional $500 million of buybacks. We ended the year with $1.1 billion of cash at the holding company, up from $800 million at the end of the third quarter and comfortably above our $500 million minimum target.

During the fourth quarter, we received approximately $600 million of subsidiary dividends, including the annual distribution from our Wealth Management business. As a reminder, our holding company cash position tends to be elevated at year-end due to timing of subsidiary distribution, and we expect it to trend lower in the first half of 2026.

For the full year, we had total cash generation of $2.6 billion, which includes $1 billion of proceeds from the RGA transaction. Organic cash generation was modestly above $1.6 billion and in line with our guidance range.

As Mark mentioned, we expect approximately $1.8 billion of cash generation in 2026. The and we remain on track to achieve $2 billion of annual cash generation in 2027. Finally, we expect our year-end 2025 combined NAIC RBC ratio to be approximately 475%, above our target of 400% plus. This year-over-year increase reflects the benefit of the RGA transaction and provides us with ample capital flexibility moving forward.

On Slide 10, we highlight the value of new business, or VNB, which is generated mainly in our retirement business. VNB represents the present value of expected future cash flows from new sales, which is above and beyond the capital deployed to fund growth. It is intended to provide investors with some visibility into the drivers of future growth and cash flow from our insurance subsidiaries.

In 2025, we had record retirement sales. which helped drive an increase in VNB to $600 million. We deployed about $580 million of capital to support these sales.

While our VNB margin declined modestly due to a shift in sales mix, and a low spread environment, we continue to generate a 15%-plus IRR on new business. We are able to achieve above-industry returns as a result of our unique distribution model, which leverages Equitable advisers and results in a lower average cost of funds and a top quartile expense ratio in our retirement business.

I would also note VNB did not include the impact of distribution fees earned in our wealth management business or investment management fees earned by AB. These are additional benefits of our integrated business model that show up as noninsurance earnings and cash flows.

Turning to Slide 11. I want to conclude by providing some additional guidance to help you forecast our results to 2026 and beyond. This assumes an 8% total return for equity markets and interest rates following the forward curve. We also forecast an 8% to 9% return for our alternative portfolio.

Starting with retirement. We expect mid- to high single-digit growth in pretax earnings, with spreads stabilizing in the second half of the year. Asset Management results will be highly sensitive to market. but we have provided some baseline guidance for the compensation ratio and noncomp expenses.

In addition, AB has good visibility into achieving performance fees of at least $80 million to $100 million in 2026.

In Wealth Management, we forecast double-digit growth in earnings from the full year 2025 level.

Turning to Corporate and Other. We project a full year loss in the $350 million to $400 million range. There will be some quarterly volatility in results based on the seasonal pattern of mortality. With higher expected claims in the first and fourth quarters of the year. We have also increased our baseline GAAP assumption for mortality to incorporate recent experience.

Finally, we expect a total company tax rate of approximately 20% and segment tax rate up 16% for retirement, 26% for Wealth Management and 28% for asset management. We may have opportunity to execute on additional opportunistic tax planning initiatives in the first half of 2026, which could reduce our consolidated tax rate below the 20% level.

Putting it all together, we expect growth in 2026 earnings per share, excluding notable items, to exceed our 12% to 15% target. I will now turn the call back over to Mark. Mark?

Thanks, Robin. As I mentioned at the beginning of the call, Equitable has been on a journey since our IPO to build a more profitable and faster-growing company, and we enter 2026 with solid momentum. We have a strong balance sheet and continue to increase our organic cash generation. This has enabled us to consistently return capital to shareholders while also investing for growth.

You can see this in the strong net flows we are generating across retirement, wealth management and AB private markets, and each of our business segments ended the year with record AUM.

As Robin and I have both discussed, we have tailwinds that should drive stronger earnings per share growth in 2026, and we remain focused on achieving our 2027 financial targets. We will now open the line to take your questions.

[Operator Instructions] Your first question comes from the line of Suneet Kamath from Jefferies.

I just wanted to start with private credit again. It seems like your stock trades like a private equity company except on the days when those stocks go up. And I know you have some slides in the back talking about private credit, but can you just talk a little bit about how you're feeling about the quality of what you have in the portfolio. I don't know if you have a watch list, if you can talk about some of the sectors that you're particularly focused on. It just seems like this is an ongoing kind of overhang on the stock.

Sure net, we look forward to the multiple of those private credit companies for Equitable over time. But we added on Slide 16 in the earnings presentation gives them a little bit more disclosure on our private credit portfolio.

So private credit, if you take a step back, it's about 16% of our total GA. Within that, almost 50% of that is within corporate private placements, which is nothing new for insurance companies over time. There has been some recent noise about software. That's typically found in the direct lending portion of the portfolio. That's about 4% and of the private credit portfolio or 1% direct lending is 1% of the total GA software specifically within the direct lending is a small portion of that. It's 15 basis points of the total general account. So it's really immaterial for us, and we're underweight the industry benchmarks on our software exposure within that for Equitable on the general account.

Maybe I'll pass to Onur to speak about private credit at AllianceBernstein within the broader client portfolios as well. Onur?

Yes. Thanks, Robin. Just to start with the broader context, if you think about our AUM, which is approaching $900 billion, private credit brought the defined makes up roughly $82 billion, both in terms of fee paying and fee eligible assets. Within that, the corporate direct lending that Robin mentioned, makes up roughly 25% of that $82 million. So within the grand scheme of things, it's also relatively small exposure to AB overall as a category.

And within that, we have some exposure to software in line with other corporate direct lending franchises. But our experience so far has been spectacular over the last decade plus.

We have deployed $15 billion with software companies. We had 0 net losses in that. When we look at our current portfolio, our elevated risk rating is only 3% of those companies that is in our portfolio. So as a result, A, it's not a big exposure for us either. Second, we feel confident about our history of underwriting discipline. And then third, we are remaining very confident about the health of our current portfolio. So overall, it's not a big event for us so far. So we remain relatively constructive.

And I need just to wrap it up with private credit, it's an important asset class for us. The liabilities within the insurance company fit well. with private credit with AB, as Onur mentioned, we get a good direct look at the underwriting that makes us comfortable risk in there and it delivers good risk-adjusted returns for us. So it's an asset class that we think it's important for insurance companies to invest in. They're important for the economy and they're point for our clients at AB. And so we'll maintain our discipline and ensure we deliver good risk-adjusted returns for our clients.

Okay. Appreciate that. And then just shifting gears to Wealth Management. One of the things we're hearing is competition for advisers has been increasing and then there's pretty sizable packages being offered. When I look at your 12% growth in wealth planning, just curious how much of that is coming from external hires versus internal promotions? And what is your sort of target market in terms of the practices that you go after?

Yes. Thanks. This is Nick. Look, we're very encouraged by our organic growth rate that we see coming from our existing advisers. That was $8.4 billion of net flows for the year. We bring a distinct model out to the space, given our people, our planning and our platform. We're one of the few platforms that continue to bring new advisers into the industry, and that gives us a pipeline to grow wealth planners, as Mark highlighted, which were up 12% year-over-year and have more than doubled since we IPO-ed back in 2018.

We're very pleased with the progress of our [ EXP ] hiring efforts. We recruited $1.4 billion in assets for the year in 2025. As context, it's a large addressable market. There are about 150,000 Series 7 producers, about 12,000 a year looking for new homes. We hired a 20-year veteran to run our [ EXP ] hires, knows the market well and has built a disciplined approach here at Equitable, we are very intentional about the type of advisers we target believe we have a distinct model for [ EXP ] hires who are looking to grow our businesses or transition their practices to other advisers.

So we've got an edge. We'll remain disciplined. We're very bullish about our organic growth drivers and productivity and wealth planners, and we see as a force multiple on top of that.

Your next question comes from the line of Tom Gallagher from Evercore ISI.

Good morning. First question is, when I look at the value of your AB stake now and I compare it to the value of the equitable stock, everyone looks at that tracks it from time to time. That valuation spread is probably as big as it's been in a very long time because AB has done well, equitable, not so much. Is there anything structurally you can do to close that valuation gap when you think about potential corporate strategies? Or is that more of a theoretical gap that you're just going to have to live with and hope it closes over time?

Tom, it's Mark. Thank you very much for the question. Yes, we see the gap as well, and it is perplexing from time to time. But having said that, AB has done incredibly well in the last year or so or the last years or so. And part of the benefit in AB is this integrated model that we talk about, this flywheel, this ability for Equitable to help seed strategies in AB and they've executed extremely well over there.

Looking at our valuation, I think there's two or three things which would point to investors. One, attractive and growing markets, being in U.S. retirement, asset management and wealth management, having record AUM there, it's a good place to be. We're very pleased with the way the integrated model is working now. This flywheel we can point to really, really strong benefits on that. And we have a good track record of execution.

So I mean putting it all together, we can see upside here, and we can see upside in the valuation for EQH, it certainly is not an expensive stock now at 6x future earnings. And what we have to do is the management team is really, really focused on the things that we can control and that's growing the business, making sure that a flywheel works being disciplined on the expenses and increasing that cash generation. And I'm sure that will close the gap.

My follow-up is just on mortality exposure, I guess, Rob and one, but Two-part question. One, can you just give us an idea of the embedded earnings in the corporate loss that's related to life insurance now?

And secondly, is there any opportunity to further reduce your exposure to mortality? Like could you potentially get RGA to buy out the remaining 25%? Or is that -- is the expectation you're just going to keep that exposure going forward?

Thanks, Tom. So let me just touch on mortality, a bit taking a step back. So in the quarter, we did see a mix of some large claims also smaller claims that we didn't have reinsurance coverage on before the RGA transaction benefits kick in. So this led to about $25 million adverse mortality in the quarter that we mentioned. And for '26, we felt that it was prudent to include in our corporate and other guide of $350 million to $400 million and increased GAAP guidance of about $50 million in terms of mortality.

Now that may be conservative because it's slightly worse than our 3-year average, but it's closer to recent experience. So we felt it was prudent to include that in the guidance that we've given. We're not going to disclose like subsegments within corporate and other because noise within there. But I think that's the best you can look at is the $350 million to $400 million. That includes some prudence in it. And I think over time, in 2027, we expect that to improve as -- we expect the life earnings to improve and some of the other pieces in corporate and other to improve as well.

If you think about our remaining 25% of the exposure, it's much smaller now than it was previously. We feel as though the volatility that we have is manageable. It's small even in an adverse quarter like this. where it was $25 million. That being said, we always look at different solutions if we think it's permanent, and we want to continue to drive execution and shareholder value. So we'll always look to see where we can do that.

Your next question comes from the line of Wes Carmichael from Wells Fargo.

Maybe a bit more of a specific question for Robin. But in the Retirement segment, realizing you had pretty strong sales this quarter, but the commission and distribution expense line picked up, I think, sequentially about $25 million. I'm just curious if you think there's a higher ratio of commission and distribution expense relative to sales going forward?

Sure. So as Mark mentioned on the call, on Nick can go deep on, but we've seen great growth in the retirement business. 4% organic growth in it. We've seen good top line growth in SCS as well. As you recall, the mix of where that sales come from, whether it's Equitable advisers or third-party changes the commissions that come up upfront as we can back less in Equitable advisers. So that's a big portion of the drive. That being said, going forward, with less upfront DAC, that means less DAC amortization. So we expect over time earnings from the Retirement business to exceed well and beyond the commission expense that we have along with the NIM growth that we'll see going forward.

And Wes, remember, we also had a onetime true-up as well that I mentioned between retirement and wealth management on the call.

My follow-up was on the FABN program. I know you've been more active there recently, additional spread source. Could you talk about maybe how meaningful you think you can grow that program from here and what the issuance environment looks like in 2026. I know in 2025 was kind of a record year for the industry.

Sure. We've been able to lean in on the FABN program in 2025. And almost $5 billion in issuances. It comes with very attractive IRRs and good spread earnings, also benefiting the flywheel at AB manages those assets so we get good risk-adjusted returns from that program.

Overall, as a reminder, the FABN flows aren't included in the retirement 4% organic growth rate that we gave if it was, it would be about 7% organic growth rate. So it's incremental to retirement earnings and helps us grow going forward.

As long as FABN, it's a very disciplined liability that we have. If the pricing is there, we'll go and execute an issue if we can get the IRRs that we want. If it's not there, we won't. So we'll be disciplined in that market, and it really depends on where equitable spreads trade relative to broader industry spreads. And so that's what we're looking. But from where we sit here today, we still see opportunities to grow that FABN business going forward.

Your next question comes from the line of Alex Scott from Barclays.

I have one on cash flow and just the conversion of earnings. I guess just inherent in you guys confirming the cash flow targets that you've laid out but not necessarily the absolute earnings level. It sort of suggests that cash conversion is improving.

So I just wanted to make sure I understand that correctly. And can you talk about some of the underlying drivers, the types of businesses you make shifting towards Will you actually changed sort of the guidance talked about in terms of conversion over time? And what kind of upside is there as you continue to mix shift?

Sure, Alex. I think I got it. You came in a little broken up, but it was about the cash generation, the mix and the conversion. So just taking a step back, we were able to upstream and $2.6 billion of cash this past year in 2025, the $1 billion of that related to the benefit from the RGA transaction to $1.6 billion of organic cash generation, 50% of that is coming from asset and wealth businesses. So that's close to 90% conversion of rates on those businesses that you'll see.

Going forward, we expect to grow cash flow of 10% next year to $1.8 billion. This growth is driven by higher asset and wealth earnings and larger expected retirement dividends as well, reflecting the profitable growth in the business. that we see.

Now keep in mind, the one factor that we have is the capital release from the runoff legacy block, that has a very high conversion rate. So that's why uniquely in our IR Day plan, you saw cash growing faster than earnings because we're getting the benefit of the capital release on the legacy block that we see. So we still feel very confident on the $2 billion target. You can see that naturally come through, and we're excited about the future.

Got it. if we can go back to retirement and the spread, what are some of the dynamics that will cause that to stabilize in the mid part of the year? I mean, does that have the new with the market value adjustments? Or is that more related to the [ 2020 ] runoff and what you see there? I just wanted to better understand.

Yes. So the question was on spread in retirement and whether it's -- when the market value adjustments to MBAs runoff. So it's a little bit of both that you saw in 2025. We saw a year-over-year decrease in MBAs. We don't assume any benefits from MBAs going forward. And then we see the runoff of that very profitable RILA block.

As you recall, we were the only ones in the market, so we had very strong margins and now margins have normalized to 15% plus IRRs on that business. That business is less than 15% of our total RILA block, so that continues to run off. And we expect some less spread compression going forward. If you look at this quarter versus last quarter, it was about 3 basis points of spread compression. I think that's anywhere from 2 to 4 in the first half of next -- of 2026. I think it's fair.

And then going forward, you're going to see spreads move in line and grow NIM grow with the general account balance in the retirement business. So -- and then keep in mind as well, take stuff, even if you saw spread compression quarter-over-quarter, NIM is grown. So we're actually growing nominal value in terms of earnings in that retirement business, and that will continue going forward with a strong organic growth.

So all in all, retirement business, we feel comfortable with. We expect that, as you saw in our guidance to grow on a pretax basis between mid-single to high single digits. And so we're excited about the future growth coming through.

Your next question comes from Jimmy Bhullar from JPMorgan.

I had a question on individual life. But before that, I think, obviously, you guys have done a good job of derisking the business, including the RGA deal, but some of the disclosure changes you've made recently they make it harder to analyze your results and not a anybody who would want individual life bumped into like corporate, where you can see what the helps going on with that business, I doubt you're in within the company analyzing it that way. But from the outside, that's how people have to do it.

But the question is on like maybe if you could go into a little bit more detail on what you've seen in the business that's caused the results to get worse, maybe either by policy type or issue? And is it more of an aberration? Or is there something with pricing or anything or the macro environment that's made the business perform worse and what caused you to maybe increase your -- or reduce your earnings or increase your loss assumption for that block?

Sure. Thanks, Jimmy. So just taking a step back, I think it's most important for us and we tell you and investors focus on cash. I mean that's the most important metric that we can give you out in the Street. Cash flow has grown from $1.6 billion to $1.8 billion next year and to $2 billion by 2027. So that's the most important metric I can give you because that's what's really coming through in the businesses for some of the noise that you'll see in the GAAP reporting overall.

The life business specifically, as we've talked about historically, mortality, we have volatility because we have large base amounts, and we have older issue ages within that block. So as a result, there's some volatility within windows policies die. The underlying economics, the economics of it are good. The cash is okay because the assumptions are more conservative on cash than they are in GAAP.

From that volatility perspective, we did the RGA transaction to reduce 75% of that volatility going forward. We think the guide that we're giving is prudent it's conservative versus the 3-year average. But from what we've seen recently, we thought it was prudent to give you a guide that gave us an opportunity to ensure that we hit the numbers, even if we have some volatility also provides upside for 2027 compared if that improves.

So all in all, we feel good about the business where it is with the reinsurance transactions that we've done also the lower retention rate on new business that we have minimizes that volatility going forward. So we feel okay over there.

And then maybe just following up with Nick on the RILA market. seems like more and more companies have entered the market in recent years, including some of the guys backed by PE insurers. Are you seeing competition disciplined? Or are you -- are some of the carriers being more aggressive we aren't just offering maybe introductory specials and whatever else? Like how do you feel about the competitive environment in the RILA market?

Yes. Thanks for the question. Look, first, we continue to see growing demand for [indiscernible], given the demographics and heightened by the current period of macro uncertainty. It's a product that's right for the times. As Mark highlighted, fourth quarter RILA sales were robust across all channels, up 12% year-over-year, another record high with $1.4 billion of net flows.

Look, as the market leader with the durable edge, we have a track record of benefiting from the growing demand. You've seen us more than double our RILA sales in the last 3 years. we delivered record sales in 9 out of the last 10 quarters.

To your point on competitive intensity, we saw players enter at the tail end of 2024, so we've been operating what I would say in this new normal for over a year. We're always vigilant on competitive trends, especially on pricing. Traditionally, we see new entrants offer teaser rates and then revert to more sustainable levels. And we saw this dynamic in the fourth quarter for those who entered in the beginning of the year.

We have conviction that given our equitable flywheel, this gives us an edge. We have the differentiated distribution with Equitable advisers and privileged third-party networks, which attract lower cost of liabilities. We generate attractive yields and a line of sight for how we do that through AB. We have scale as the #1 player and decades-long relationships. And I think we have a track record of innovation to continue to meet emerging needs that we see in the marketplace. So we believe that's hard to replicate.

So looking forward, we'll continue to be vigilant on competition. We're confident in our momentum and we have conviction that we're in a privileged position to capture a disproportionate share of the value being created in that space.

Your next question comes from the line of Joel Hurwitz from Dowling & Partners.

Robin, I wanted to get an update on the '27 targets. Last quarter, I think you said the midpoint of that 12% to 15% EPS CAGR was achievable. I guess, do you still think that's the case, especially with the mortality outlook?

Sure, Joel. We're very focused on delivering all of our 2027 targets. As Mark mentioned, we remain on track for the $2 billion of cash, the 60% to 70% payout ratio and where we're lagging, to your point, is on the earnings per share growth. I think the guidance that we've given you in this quarter should allow you to get to that range on the 12% to 15%. I think the guidance would give you probably gets us to the lower end of the range, which would be fair.

Keep in mind, though, depending on how we track during the year, we still have levers in place such as expenses to get in that range. So that's where we're focused on delivering is the 12% to 15%, but also ensuring that the business continues to grow going forward even post 2027, so we continue to drive cash flows and earnings growth for shareholders.

Got you. That's helpful. And then just on the payout ratio, with cash generation moving to $1.8 billion, I think what you're implying on earnings why shouldn't the payout ratio be moving up? I know we have to take out interest expense, but I feel like if I do that, cash generation ex interest expense is more towards like the mid-70% of your operating earnings?

Yes. So if you look on the payout ratio since our IPO has been on the higher end of the range, that we deliver on. And I think from -- if you look at where the stock is trading and relative to expectations, you can expect us to be probably in the higher end of the range.

But keep in mind though, the opportunities to invest in growth are the best that we've seen in some time when interest rates were there are the consumer needs for us to grow in the retirement business and asset management and wealth businesses. There are a lot of good investment opportunities that deliver very strong returns for shareholders as well.

So we'll continue to buy back a good amount of stock at these levels. But more importantly, we're investing for future growth to ensure that we continue to capture the retirement opportunity in the U.S. and continue to grow in asset and wealth.

Your next question comes from the line of Yaron Kinar from Mizuho.

You mentioned the durable edge you have in the RILA market. That being said, market share for equitable in on new sales is shrinking, albeit from an enviable market-leading position. due to the increased competition. So I'm assuming you're not willing to compromise on IRRs here. And would that potentially mean that one of the company's growth engines moderate in coming years even as the RILA market continues to grow?

This is Nick. Look, obviously, the competitive landscape has changed from a decade ago since we were a pioneer in launching the RILA market and net 100% share in that market. As we highlighted, look, we see the pie continuing to grow, given the demographics and the nature of the product in these times. We would expect to continue to maintain our leadership position in this space.

We are very intentional, and I think this speaks to the power of our distribution being able to pivot our sales based on we see -- where we see consumer value and shareholder value. So as you mentioned, we are extremely disciplined on IRRs. We're delivering our targeted IRRs today, and we continue to see strong momentum, as Mark highlighted, in our sales and flows.

I think -- it's Mark here. I'll just add a couple of things, which is unique to the while market. Firstly, there's about $600 billion of assets coming out of 401(k)s a year, going precisely into this type of market. So it's not necessarily coming out of disposable income for consumers that's coming out of their savings vehicles. So that protects it from some of the economic issues we see consumers have.

And then secondly, to Nick's point, we've had this product a long time. We don't look at market share. We look at sales growth and sales growth at a record level. So we're happy with that one. But one of the things that gives us comfort on RILA is that we know it works in low and high interest rates. There were some annuity products that work incredibly well in high interest rates and not in low interest rates. But we've seen RILA through the cycle, Nick. And we know it is a very strong customer proposition when rates are low as well as when rates are high. So it's a good part of the retirement market to be in.

Makes sense. And then my follow-up, just going back to Slide 10, the VNBs. Has the VNB payback period changed over time? Can you give us any quantification of that?

Sure. We haven't disclosed a beer, but our VNB over time as -- and payback period, it has come down over time and IRRs have gone up. If you look RILA product is specifically what we just spoke about is a shorter duration product compared to most of the longer duration products that we've been selling. We're also -- we exited the individual third-party life market last year. That's longer duration. So much shorter duration, faster payback periods, faster cash conversion on the product portfolio that we sell today versus what we sold years ago.

Okay. But you can't quantify it at this point?

We haven't disclosed it, but it's materially lower than what [indiscernible].

Your next question comes from the line of Mike Ward from UBS.

I was just wondering, you mentioned the roll-off of the profitable RILA, I think, being 15% of the total, just -- how long do you expect that to take to roll out?

Mike, it's the roll off of the very profitable all because that was the force of whom we are only the only ones in the market across it. We'd expect that to still drive a little bit of spread compression. You start 3 basis points this quarter. And overall, through the first half of this year, probably in similar magnitude anywhere from 2 to 4 basis points a quarter.

But come the second half of the year, we expect those spreads to stabilize and NIM will grow with the general account book value in embedded derivatives going forward. So I think at 0.5 point this year, we'd expect that to be immaterial and not drive spread compression in the business anymore.

Okay. And then just switching to the sort of defined contribution world. It seems like there's been kind of more of a push to open up to different asset classes and help employers the plan sponsors get more comfortable with some of this stuff. You guys have obviously been involved in that for some time. Just curious how the uptake in some of those products and in-plan annuities life path paycheck kind of stuff is trending more recently.

Great. I'll start with that one. Look, we continue to remain bullish on the untapped potential in the long-term growth for secure income or implant annuities. It's an $8 trillion DC market. We see the potential addressable market being about $400 million to $600 million for implant solutions. We're still in the early innings, but I would say there is momentum. We have the policy or the regulatory tailwinds, this is Secure 1.0. This is Secure 2.0, where people want more durable retirement solutions. I think that's going to amplify as we approach Social Security going into 2030. We have products and partnerships with the target date funds and record keeper platform exists to provide those products. So we're really in this for step now of engaging plan sponsors.

This is a subject of all discussions. I think we see their first movers and then fast followers and then laggards, but we're encouraged by the momentum. We had roughly $920 million in sales in our broader institutional business for the year and have about $1.8 billion in AUM since we launched an institutional.

Looking forward, our belief we're in a very strong position as market continues to emerge, given our partnership ment network that you referenced, that's AB, BlackRock and JPMorgan that are building a track record as the market expands. So going forward, we get confirmation about 60 to 90 days prior to transfer. This is going to still be lumpy, while we don't expect material inflows in the first quarter, we've got a strong pipeline for 2026.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to Equitable Holdings Inc. Third Quarter Earnings Call. Please note that this call is being recorded. After the speaker's prepared remarks, there will be a question-and-answer session. [Operator Instructions]

I'd now like to hand the call over to Erik Bass, Head of Investor Relations. You may now go ahead, please.

Thank you. Good morning, and welcome to Equitable Holdings Third Quarter 2025 Earnings Call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on Slide 2 of our presentation for additional information.

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Seth Bernstein, AllianceBernstein's President and Chief Executive Officer; and Tom Simeone, AllianceBernstein's Chief Financial Officer.

During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our earnings release, slide presentation and financial supplement.

I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. Equitable Holdings delivered solid third quarter results marked by continued organic growth momentum and increased earnings power across our business. We also allocated $1.5 billion of capital to drive shareholder value and future growth, successfully redeploying a large portion of the proceeds from our individual life reinsurance transaction with RGA. This includes approximately $200 million of investments to help accelerate growth in asset and wealth management. .

Looking forward, our integrated business model positions us well to be a long-term winner in retirement, asset management and wealth management, and we remain confident in achieving each of our 2027 financial targets.

On Slide 3, I'll provide a few highlights from the third quarter. Non-GAAP operating earnings were $455 million or $1.48 per share, down 6% year-over-year on a per share basis. Adjusting for notable items, non-GAAP operating EPS was $1.67, which is up 2% compared to the prior year. As expected, earnings rebounded from the first half of the year, helped by growth in each of our core businesses and the completion of the life reinsurance transaction. I'm also pleased that we saw only small impacts from our annual assumption review, validating our conservative approach to assumption setting. We ended the quarter with record assets under management of $1.1 trillion, up 4% sequentially, which bodes well for future growth in earnings.

We will also see additional benefits from management actions to enhance yields in our investment portfolio and drive productivity savings. Organic growth momentum remains strong, supported by our flywheel business model. Our retirement businesses generated $1.1 billion of net flows during the quarter, driven by continued growth in wireless sales. As a reminder, flows tend to be lower in the third quarter due to seasonality in the K-12 teachers business, and we did not have any material institutional flows in the period. Wealth Management had another strong quarter with $2.2 billion of advisory net inflows, a 12% annualized growth rate. Adviser productivity increased 8% year-over-year.

Turning to Asset Management. AB reported total net outflows of $2.3 billion, which includes $4 billion of low-fee assets transferred to RGA as part of the life reinsurance transaction. Excluding this, AB had net inflows of $1.7 billion, driven by the private wealth and institutional channels. Private markets assets increased 17% year-over-year to $80 billion and are on track to achieve AB's $90 billion to $100 billion target by 2027.

Moving to capital deployment. We used $1.5 billion to drive shareholder value and make investments for future growth. During the quarter, we returned $757 million to shareholders, including $676 million of share repurchases. We completed most of our planned $500 million of incremental buybacks and expect our full year payout ratio to be at the upper end of our 60% to 70% target range. We also reduced outstanding debt by $500 million to manage our leverage ratio and give us more capital flexibility moving forward. Finally, we announced 2 strategic transactions that help scale our Wealth Management and AB Private Markets businesses.

We are acquiring Stifel independent advisers, which has over 110 advisers and $9 billion of advisory assets. In addition, we are allocating $100 million to support AB's investment in FCA Re, an Asia-focused sidecar established by Fortitude Re and Carlyle. AB will become a key investment partner for Fortitude and initially manage $1.5 billion of private credit assets for FCA. I will discuss these transactions in more details in a minute but they both offer attractive IRRs and are consistent with our strategy to scale adjacent businesses.

Turning to Slide 4. We highlight our strategy to drive growth and create shareholder value. We are focused on 3 core growth businesses: Retirement, asset management and wealth management that have synergies and provide flywheel benefits. Participating in all 3 of these businesses allows us to capture the full retirement value chain. There were 4 key pillars to our strategy. Number one, defend and grow our retirement and asset management businesses. Secondly, scale, our high growth and high multiple wealth management and private markets businesses. Third, seed future growth by investing in high potential opportunities by annuities and 401(k) plans and emerging asset management markets. And finally, be a force for good and deliver on our mission to help our clients secure their financial well-being so they can live long and fulfilling lives.

On the next 2 slides, I will provide a deeper dive into our strategy for scaling adjacent businesses. First, I will focus on our Wealth Management business, which is a key growth driver for the company. Having affiliated distribution also provides a significant competitive advantage for Equitable's retirement businesses. Wealth Management has strong growth momentum with $6.2 billion of year-to-date advisory net inputs. Adviser productivity is up 8% year-over-year and 24% since 2022. Earnings are on track to reach $200 million in 2025, 2 years ahead of plan. We are also allocating capital to enhance the strong organic growth momentum. We have increased our investment in experienced adviser recruiting, bringing in over $1.1 billion of recruited assets over the past 12 months.

Earlier this year, we hired a new Head of Business Development to build out our platform, and we have a strong pipeline and expect to ramp up recruited AUA over time. As I mentioned earlier, we also recently announced the acquisition of Stifel independent advisers, which has over 110 advisers and $9 billion of AUM. Stifel's advisers have similar characteristics to Equitable's advisers, creating a nice cultural fit. There are also meaningful operational synergies. We expect the transaction to close in the first half of 2026 and forecast it to add about $10 million to Wealth Management earnings in 2027. This is a good example of the type of bolt-on acquisitions we will look at to help scale our Wealth Management business at a reasonable cost. Looking forward, assuming normal markets, we forecast Wealth Management earnings to continue growing at a double-digit rate, driven by asset growth and further advisory productivity improvement.

In addition, margins should expand over time as the business scales. I would also note that our business does not have significant exposure to lower short-term interest rates. Cash sweep income has accounted for only 15% of the segment's year-to-date earnings and 100 basis points of Fed rate cuts would reduce annual earnings by only about circa $15 million.

Turning to Slide 6. I want to highlight some examples of our equitability of deploying capital to support growth at AB. Having access to Equitable's balance sheet is a competitive advantage for AB relative to most traditional asset managers and the investments we make yield flywheel benefits across EQH. Our investments come in 3 primary forms: number one, allocations from Equitable's general account portfolio which can be used to seed capital to launch new strategies or permanent capital to scale existing offerings. To date, we have deployed over $17 billion of our $20 billion commitment to AB's private markets platform. Number two, in addition, we support team lift-outs that bring new capabilities to AB. For example, in the past year, AB added private ABS and residential mortgage teams to expand its private market offering, and Equitable was able to provide them with immediate capital to invest.

Number three, finally, we helped finance M&A or strategic investments, either by providing cash or issuing AB units. We did this with the acquisition of CarVal in 2022 and more recently with the investments in the Ruby Re and FCA reside cost. These sidecar investments highlight some of the unique synergies between AB and Equitable. AB leveraged Equitable's insurance expertise and the due diligence process and both firms benefit from developing a strategic partnership with the sponsor. These investments also provide Equitable with exposure to new insurance markets, such as pension restate and Asia. AB has been able to leverage these investments to help deliver strong growth in private markets and third-party insurance, 2 key strategic focus areas for the company: private markets AUM and has grown at a 12% CAGR since 2022 and is on track to meet to exceed the $90 billion to $100 billion target by 2027.

Third-party insurance general account AUM is up 36% since 2021, and AB has added 6 new mandates year-to-date. Stepping back, the recent actions we've taken to support the growth of AB and Wealth Management are good examples of us executing on our strategy and leveraging our unique flywheel benefits.

I will now turn the call over to Robin to go through our financial results in more detail.

Thanks, Mark. Turning to Slide 7. I will provide some more detail on our third quarter results. On a consolidated basis, non-GAAP operating earnings were $455 million or $1.48 per share. We reported a GAAP net loss of $1.3 billion, primarily driven by a onetime impact from asset transfers at the closing of our individual life reinsurance transaction. There is an offsetting adjustment to AOCI. We had a few notable items in the quarter. First was a $36 million adjustment for July mortality experience, most of which was covered under our reinsurance agreement with RGA. The transaction had an effective date of April 1, so it covers claims in July. However, the reinsurance benefit is not reflected under U.S. GAAP as we did not close the transaction until July 31. .

Accordingly, there is a difference between our GAAP results and our cash results. Going forward, we expect to see significantly less volatility in our life results, which are now reported in Corporate and Other. We also had $24 million of onetime expenses in corporate and other. Finally, we had a $4 million benefit in Wealth Management from our reserve release which reflects better emerging experience on the loans we've made to recruit experienced advisers. Our annual assumption review had a $1 million positive net impact on operating earnings.

As Mark mentioned earlier, this validates our conservative approach to assumption setting. Adjusting for these items, non-GAAP operating earnings per share was $1.67, up 2% year-over-year. Total assets under management and administration rose 7% year-over-year to $1.1 trillion, which bodes well for future earnings growth. In addition, we'll see further benefits from expense initiatives that will contribute to the bottom line over time. Adjusted book value per share ex AOCI and with ABF market value was $33.59. In our view, this is more meaningful than reported book value per share, which reflects our AB holding at book value. On this basis, our adjusted debt-to-capital ratio was 24.5%.

On Slide 8, I'll provide some more details on our segment level earnings drivers. Starting with retirement Earnings declined from the third quarter 2024, but increased 9% sequentially after adjusting for notable items in both periods. Net interest margin, or NIM, was down year-over-year due to a lower level of market value adjustment gains and some spread compression as our pre-2020 RILA block runs off, but it did increase 4% sequentially. As discussed last quarter, we do not assume any benefit from MVAs going forward, and we expect spread pressure from the old RILA block to be de minimis by mid-2026. NIM should continue to increase from the third quarter level driven by growth in general account assets.

We also saw fee-based revenues increased 4% from the second quarter due to strong equity markets. Separate account balances ended the quarter 4% higher, which bodes well for further growth in fee revenues in the fourth quarter. Growth in revenues was partially offset by higher DAC amortization which reflects growth in the block and increased surrenders. This quarter is a good baseline for amortization moving forward, and we expect it to increase by approximately $4 million per quarter.

Moving to Asset Management. AB delivered a strong quarter with earnings up 39% year-over-year. This includes the benefit of increasing our ownership from 62% to 69%. We Fee revenue increased 6% sequentially, driven by favorable markets and a higher base fee rate. The adjusted margin improved 290 basis points year-over-year to 34.2% and is expected to come in above the 33% target for the full year. AUM ended the third quarter at a record $860 billion, which should support future growth in base fees and we now project full year performance fees of $130 million to $155 million, up from our prior forecast of $110 million to $130 million.

Turning to Wealth Management. We delivered strong earnings and net flows. Earnings increased 12% year-over-year, excluding the reserve release and 12% annualized organic growth compares very favorably with peers. We expect segment earnings to continue growing at a double-digit rate moving forward. Finally, results in Corporate and Other were negatively affected by the notable items I mentioned earlier and adverse mortality throughout the quarter. We expect to see much more muted impact from mortality in future periods as we get the full benefit of the life reinsurance transaction. We will also see incremental benefits from our expense efficiency initiatives. Our alternatives portfolio generated an 8% annualized return in the quarter consistent with our 8% to 12% long-term expectation. This exceeded our guidance of a 6% return due to a gain on a strategic investment. We expect returns at the low end of our 8% to 12% target range again in the fourth quarter.

Lastly, the consolidated tax rate for the quarter was 17%, below our normal expectation of 20% and due to some favorable items. We now expect a full year consolidated tax rate to be in the high teens. Looking to 2026, we still expect the full year overall company tax rate to go back to 20%. Putting it all together, we see good momentum heading into the fourth quarter and remain focused on controlling what we can control to drive higher earnings in the future.

Turning to Slide 9. I'll highlight Equitable's capital management program. During the quarter, we returned $757 million to shareholders. including $676 million of share repurchases. We completed most of the planned $500 million of incremental buybacks in the third quarter. For the full year, we expect our payout ratio, excluding the onetime buyback to be at the higher end of our 60% to 70% guidance range. Over the past 4 quarters, we have reduced our share count by approximately 8%, helping to drive growth in earnings per share. We ended the quarter with $800 million of cash at the holding company, above our $500 million minimum target. During the quarter, Holdings received $1.6 billion in subsidiary dividends, including $1.3 billion from our Arizona insurance entity. We used this to fund the capital return to shareholders, tender for $500 million of debt. and redeemed the remaining $165 million of our Series B preferred.

In the fourth quarter, we expect to take an additional dividend from our Arizona subsidiary and we'll also receive distributions from our asset and wealth management businesses. For the full year, we expect total cash upstream to the holding company to be $2.6 billion to $2.7 billion. This includes $1.6 billion to $1.7 billion of organic cash generation in 2025, in line with our guidance. In addition, we will upstream $1 billion of proceeds from the life reinsurance transaction. Importantly, over 50% of our organic cash generation is coming from asset and wealth management businesses, highlighting our diversified business model. We will provide additional guidance on our 2026 cash flow outlook early next year and remain on track to achieve the $2 billion of annual cash generation by 2027.

I will now turn the call back over to Mark.

Thanks, Robin. Equitable as healthy organic growth momentum and higher assets under management are driving increased earnings power across our retirement, asset management and wealth management businesses. I'm also pleased with the progress we've made in redeploying the $2 billion of proceeds from the life reinsurance transaction to drive shareholder value and make strategic growth investments to scale our wealth management and AB Private Markets businesses. Looking forward, we expect EPS growth to accelerate and remain confident in achieving our 2027 financial targets. We will now open the line for your questions. .

[Operator Instructions] Your first question comes from the line of Suneet Kamath of Jefferies.

I wanted to start with private credit. And if we take a step back, we have some people outside the insurance industry pointing fingers at the insurance industry, some folks within the industry saying refined. So I wanted to get your perspectives on 2 things. One, what your view of the environment is? And I guess the bigger question is, as you start to add private credit assets, can you talk about the process that you go through with CarVal just to understand what the requirements and criteria are, whether you want to talk about ratings or who rates the securities? Just want to get some color on the background there.

Sure, thanks for the question. I think on the broader environment and carve-out sets on the line, so I'll let them touch that, but let me talk quickly about how we think about it at equitable holdings. We do think private credit and broader credit is a good asset class for clients and investors at Equitable and AllianceBernstein, and we want to make sure we're compensated for the risk we take.

For Equitable's general accounts, specifically, this is a business in insurance that we have sticky liabilities and where you want to take some liquidity risk and as a result, private credit is an attractive asset class that matches well with our liabilities. We invest in investment-grade assets, and we pick up in a liquidity premium as a result. Specifically on the ratings, as I know this has come up in some of the calls, about 90% of our fixed maturity portfolio is rated by at least 1 of the big 3 rating agencies. We have 8% at DBRS and our Kroll and 2% is NAIC only.

We only have $200 million that's rated by Egon Jones, and that's really within our middle market lending portfolio. So that's about less than 20 basis points of our total portfolio. Just importantly, ratings is an output, but we don't rely on ratings. Where we rely on at Equitable Holdings is the underwriting capability within our general account team and at AllianceBernstein. And that's really the benefit of our flywheel here as we have direct access of underwriting. And so we need to get comfortable first with the underwriting of the portfolio that we're being compensated for any risk that there is, and then you would get the rating.

So the overall portfolio, the general account, it's about 98% investment-grade and A2 rating, but it's the output of the good underwriting that takes place between Equitable and AllianceBernstein. And we continue to view even in this environment, private credit as an attractive asset class, but both private and public credit for the general account does come with risk. That's our role. We want to take good risk and make sure that our shareholders are being compensated for it, and we feel comfortable where we are today for the general account at Equitable. Maybe I'll pass to Seth, so we could talk about AB, broader credit and CarVal as well.

Okay. And Suneet, let me just make the broader statement, which is as we look at our private credit businesses, which CarVal is one of several. Our overall investment performance, including recent results, has been as expected or better. We've seen pretty strong results across the board, certainly recovering, particularly in commercial real estate. But I would say, generally, that given the amount of money that's moved into private about it, we've certainly seen some reduction in the strength of the covenant structures and it's clear that people are reaching for risks in what has been in a very strong demand market. .

That being said, we stay very close to home in the risks we underwrite, whether at CarVal or our middle market lending business. And those processes are bottoms up due diligence intensive and highly negotiated structures, which to date have protected us pretty well. We've been pretty prudent at stepping aside where we think the terms and the structure or the management team are not giving us like the visibility that we would think is essential for us to take a favorable decision in that regard.

So yes, there are signs of exuberance. And obviously, there have been indications of fraud at least in 2 cases. that are out there, but we think we're well protected and we're comfortable with the positions we have, both in the general account of Equitable, but also more broadly for our third-party clients.

Okay. My second question is on the RILA market. And I know about half of your sales are somewhat protected given Equitable advisers and some of the P&C companies that you sell through but I wanted to focus on the other half and where I think there's probably more competition. I just wanted you to talk to maybe 2 things. One, how are you differentiated in that other half? And then second, are you seeing anything in terms of terms and conditions that start to make you a little bit worried about aggressive features, things that we saw in the kind of the mid-2000s. Just want to make sure that doesn't kind of creep up on us.

Great. Thanks, Suneet as you highlighted, first, we do see continued strong demand for RILAs across the space, driven by the demographics and this macro uncertainty, and that resonates across all channels. As Mark highlighted, overall RILA sales were up 7%, another record high for us in the quarter. We think our flywheel gives us a sustainable durable edge in 3 ways across the different markets. One, we generate attractive yields through AB.

The second, as you highlighted, which is we have our privileged distribution through Equitable advisers but we have a track record as a pioneer, having been the first to launch this product over a decade ago and continue to deliver on the value proposition, consistent stories and the relationships with over 15,000 advisers in the third-party space. And then finally, we have the scale, given our wholesaler footprint our #1 position. When we look at how we are continuing to evolve in the market, we have a successful track record of innovation that's really anchored both from the insights we get from Equitable advisers that we translate on consumer need to other markets as well as anchoring our products in our economic that ensures we deliver attractive returns.

So our focus has been on prudent innovation relative to both within the segments in RILAs. We were the first to launch stool direction. These are new segments that into different needs as well as new versions that open up new markets. For example, August, we launched our SES Premier product, which allows consumers to pay a fee for a higher cap which is fitting a new need that others are looking at. So I would say, going forward, we believe we're in a privileged position to capture a disproportionate share of the value being created in this fast-growing market.

Your next question comes from the line of Tom Gallagher of Evercore ISI.

First question, Robin, beyond the $35 million onetime adjustment for mortality, you mentioned underlying mortality experience was also unfavorable. Can you comment on how much below your expectation kind of underlying mortality experience was in the quarter and why you're confident that should normalize going forward? I think you said you expect less volatility. Was it maybe a little more color on what drove it this quarter and why you're comfortable that should normalize?

Sure. Thanks, Tom. So we did call out about $36 million or $0.12 per share as a notable item for July mortality experience. And this is to reflect economic benefit from the reinsurance transaction that was not reflected in the GAAP results. Mortality was a bit elevated in August and September. And broader across the whole quarter, we saw higher severity in the quarter as it relates to mortality but our retained experience, which is net after the benefit of the RGA transaction was only about $10 million worse than expected for the months of August and September.

So did weigh on earnings for Corporate and Other, the impact was relatively modest, underscoring the benefit of the reinsurance transaction. So we don't expect it to be highly volatile like it was previously going forward that we have RGA in place.

Okay. That seems fairly modest. The follow-up question is just about capital. And I heard your comment about you have a $500 million holdco target. You have $800 million currently. I guess, historically, you ran with this like giant buffer at the holding company, $2 billion plus. And -- but now things have changed. I think you've significantly improved cash flow outside of the insurance entities, is $800 million a good kind of level? I know you have a $500 million target, but should we be thinking about in normal course, you're going to run with some buffer on top of that is $800 million reasonable to think about it as a base case? And then also, how much is left from the RGA deal? Is it around $300 million that you would have in addition to normal cash flow?

Sure, Tom. So on cash flows, look, our cash flow position is very robust. If you recall back going back when we IPO-ed, only 17% of the cash flows were coming from asset and wealth businesses, and now it's over 50%. And that's reflective of our distinct strategy and growing our asset and wealth businesses as we capture a bigger share in the overall flywheel that we have at Equitable Holdings. For the holdco, we want to target $500 million.

Yes, at time to always have a little bit more but not substantially, just to manage volatility within results. So I wouldn't think that we -- I wouldn't take away that we have a higher target than the $500 million. But yes, sure, we're always going to have a little bit more as you want to manage any cash flows better needs, whether it's for interest expense or timing of upstreams from the holding company as well. As it relates from -- for the RGA transaction, we're happy that we completed and closed the transaction effective July 31. And reminder, $2 billion in total value. We used that value and that shift to really move our business away from long-dated, highly volatile business to faster-growing businesses in asset and wealth.

You saw that in this quarter as well. So we invested about $800 million to increase our stake in Alliance Bernstein from 62% to 69%. We had $500 million of incremental share buybacks on top of our 60% to 70%. That's going to be helpful for go-forward EPS growth. We also reduced our debt position by $500 million. And in this quarter, we invested approximately $200 million to scale our wealth management business a bit more with the Stifel acquisition. That's about 110 advisers, $9 billion of AUM, AUA, so that's good for our growth in our Wealth Management business going forward and continue to invest in [ Sicar ] to grow AB's private credit business. So that's the $2 billion of proceeds right there. There's about $300 million of left that we said we will deploy, and that will be deployed in due time either in growth investments or additional share buybacks depending on where we are in the market.

Your next question comes from the line of Ryan Krueger of KBW.

I think you called out $10 million of unfavorable mortality in August and September that impacted the corporate segment. Was there anything else that would you consider somewhat unusual this quarter when you -- I think you called -- you showed kind of a $98 million loss. It sounds like there was a $10 million mortality impact. Anything else you would you point out that maybe caused that to be worse than you normally expect?

Nothing else I would call out. But look, at corporate and other, there's always a little bit of a noise, and we will provide earnings guidance for Corporate and Other next quarter as we discuss our 2026 outlook. But you should expect the quarterly loss to be smaller than the $100 million per quarter that we had guided to prior to the resegmentation.

Okay. Got it. And then can you go into the sidecar strategy a little bit more in terms of investing in terms of AB investing in third-party sidecars. You've done a few things now is something you'll continue to do beyond what you've already done? Or is that most of what you think you'll do?

Well, why don't I start? This is Seth Bernstein. We have done to that we've announced. We are talking with others, and there's ultimately a limit on what we would be willing to do here depending on the opportunities but we're quite mindful of the overall risk we're prepared to take on the balance sheet with respect to insurance risk. And again, we do this in partnership with equitable utilizing their extensive underwriting capabilities, which we don't have here in-house as well as outside consultants that we use to evaluate the opportunities.

So this is going to be, I think, a continuing attribute of private credit markets. given insurers, particularly life insurers' desire to access capital to continue to expand their businesses and do so in the most cost-effective way. It has proven to be a pretty attractive way for us to deploy and deploy new assets and develop new client relationships. But ultimately, there is a limit on the amount we're prepared to do. And perhaps, Robin, I don't know if you have a perspective from the equitable level.

Yes. Look, from an EQH perspective, side cards fit quite well into the flywheel. We can underwrite insurance liabilities and AB can invest in private credit. Just to double-click a little bit where we've invested so far, if you look at the RGA Sicar were, we're getting into an asset-intensive sidecar, PRT liabilities. Those are liabilities that Equitable is not directly in, but can help underwrite the AB team and AB can invest and leverage their private credit capabilities. And then if you look at the FCA side car. Well, that's now an international market, Asia as liabilities, we can help underwrite and again, leveraging AB's private credit capabilities.

So as we look at these opportunities, we want to make sure the equity stands by itself that it delivers good risk-adjusted IRRs. And then also it builds on the capabilities that we have at AllianceBernstein to grow our private markets business, which is now $80 billion and well on track to the $90 billion to $100 billion we laid out at Investor Day. So we like the sidecar strategy. It leverages the flywheel, and we'll do more of them if we see that they fit the needs between equitable and AV.

Your next question comes from the line of Joel Hurwitz of Dowling.

In retirement, the DAC amortization jumped $10 million quarter-over-quarter. Robin, you mentioned, I think, in your prepared remarks that surrenders was a driver. But I guess are surrenders getting worse than expectations? I thought that was the driver of the jump a year ago.

Yes, that's right. Some -- well, 2 things driving higher DAC amortization, I mentioned higher growth in sales which obviously, we capitalize and have to amortize and then some higher surrenders as well. Nick, you could provide some color on it as well.

Yes. So just on overall flows. As a reminder, our Retirement segment now encompasses both our individual retirement as well as our group retirement business lines. So breaking that down, first, with an individual retirement, we achieved $1.4 billion of net flows, driven by $3.9 billion of RILA sales. In the last 9 out of the last 10 quarters, we've had record sales. So we continue to see momentum. Next, as was sort of highlighted in the previous remarks. This was partially offset by our expected seasonal outflows in Group Retirement which is comprised of our tax exempt institutional and our corporate business.

In exempt, this is our teachers business. We experienced modest outflows consistent with seasonal expectations, given that teachers pause contributions during the summer months. As a reminder, this is where we have our 1,200 advisers that work with close to 900,000 educators in school districts on supplemental retirement lands. We would expect this line to continue to achieve single-digit growth with strong ROAs and be positive for the year. Institutional, we didn't have any material flows in the third quarter.

However, we've gathered over $800 million in assets year-to-date. And then finally, in our corporate business, this is our legacy 401(k) lower margin. It's sort of been in structural runoff. We would remind you that 20% of the outflows are for retirement distributions and the remainder were capturing 50% given our flywheel model through Equitable advisers. So looking forward in the retirement business, we expect to continue to generate strong flows supporting the future growth of our earnings and cash flow.

And where we did just where we did see the renders the actual rate -- surrender rate didn't increase, so it's more the benefit of higher markets, so higher account values overall. So the surrender rate itself was okay. .

Got it. That's helpful. And then, Nick, just following up on, I guess, institutional, any expectations for Q4? And maybe can you comment on expectations for the sales of the fixed annuity product that you launched? .

Sure. We continue to be bullish on the untapped potential for long-term growth in the institutional market. Just to frame, it's an $8 trillion defined contribution market with a potential addressable market for implant annuities probably between $400 billion and $600 billion longer term. Still in the early innings. We have the policy support, that's the regulatory tailwinds through the SecureX. We have the products. We have the partnerships now with the target date funds and the record keepers.

So we're really now on that fourth step engaging plan sponsors. We're encouraged by the momentum having gathered over $800 million since we launched the BlackRock partnership last year and believe that going forward, we're in a strong position with the first-mover advantage. This is both our expertise in the product design as well as our partnership network with AB. AB has been in this space for over a decade and BlackRock. This is allowing us to build a track record that we think the fast followers are going to look at when they start to adopt these solutions. Specifically for the next quarter, we don't expect material sales. We get visibility about 30 to 60 days prior to transfer, but there is a strong pipeline for 2026.

Your next question comes from the line of Alex Scott of Barclays.

I just wanted to make sure I had it clear on sort of the movement in holdco liquidity. It sounded like there's still some cash being taken up. So just wanted to see if you could walk us through like what does that look like on more of a pro forma basis for what you're expecting in 4Q? And the higher sort of incremental share repurchases are more complete at this point? Then how would you stack up like set of priorities for potentially deploying more?

Sure. So we ended the quarter at $800 million at the holdco. We put a chart on Slide 9 of the deck that highlights the walk from last quarter to this quarter, it included the subsidiary dividends to capital return to debt tender the preferreds and some interest expense. In the fourth quarter, you should expect that we'll continue to get upstreams from both the Arizona insurance entity and also AB, our wealth management business and the asset management contracts that we have that should total around $700 million, and then we'll have capital return as well in the quarter and interest expense on top of that as well.

So we should end the quarter probably above $1 billion in holdco cash as well. And then going forward, as we think of next year, we'll give guidance on our cash lost next year. But obviously, we're committed to the 60% to 70% payout ratio and we want to continue to find attractive bolt-on opportunities to fuel growth in the business as well, similar to what you saw this quarter.

Got it. That's helpful. And in Wealth Management, as I think about some of the other peer companies out there that have built up their wealth management groups, I think team lift has been a big part of it. Can you talk about that as part of your strategy? Is that something that you're deploying capital towards and using it to build it up over time? I guess it would be a little more organically?

Sure. First is we're excited by the Stifel transaction. These are high-quality advisers that are a strong cultural fit. We see the opportunity for them to continue to accelerate the growth of their practices on our platform. As Mark highlighted with 110 advisers, $9 billion of AUA, this is a good example of the bolt-on acquisitions where we're deploying capital to augment our strong organic growth as we continue to build scale.

Looking forward, we see continued momentum in our underlying organic growth drivers. We're one of the few in the industry that continues to bring in new advisers or new talents into the industry, which allows us to be disciplined in our experienced hire efforts we think we're well positioned to meet this growing demand for advice and are very encouraged with the momentum that we have.

Your next question comes from the line of Jimmy Bhullar of JPMorgan.

First, I just had a quick follow-up question for Nick around your comments on competition in the rail market. I'm not sure I missed what you said. But I realize you guys have a unique distribution and obviously, scale in the product line as well. But the market is a lot more crowded than it was a few years ago, and some of your competitors have alluded to an increase in competition. So what is it that you're seeing competitors do in the market? And are you seeing any that are offering maybe overly generous terms and conditions? Or is it just that there are more companies and it gets harder to sell as a result?

Yes. So obviously, as you mentioned, the competitive landscape has changed since we pioneered the product a decade ago. with the majority of carriers now having launched a product. We're very mindful of competitive trends on pricing, usually new entrants offer a teaser rate and they revert back because it's not sustainable. But we remain focused on profitable growth as the market leader with the durable edge, we're continuing to benefit from that growing pie as more advisers and consumers become familiar with the value of buffered annuities as an asset class in their portfolio. .

I'd highlight over the last 3 years, our RILA sales have almost doubled, and we've produced record sales in 9 of the last 10 quarters. So we continue to focus on, I would say, innovation anchored in our economic model, and you'll see us delivering, I would say, sustainable growth within that market.

And then just maybe on individual life. Obviously, your exposure going forward to the block is going to decline given the reinsurance contracts but if you think about the underlying policies, margins have deteriorated over time. And they've been especially weak in the last few years. And do you view that as more of an aberration and just normal volatility in the business? Or is there something about the type of policies or terms in the block that are -- that have been pressuring results in recent years that might be more sustainable?

Sure. So when we think about the Individual Life business, let's just take a high level, where our focus is on Equitable advisers. And the reason being is we don't find the third-party business as being attractive. And a lot of the volatility we see from the results was a function of third-party sales, pre-global financial crisis that had very high face amounts and had a low ROE on it. And that's why we did the RGA transaction.

It takes 5% ROE business and reinvested in higher growth businesses for Equitable to drive our strategy going forward. We are perfectly economically reserved. We manage the business on an economic basis. So the reserves are all good. there is some noise in the GAAP accounting with volatility. And part of the reason we did the RGA transaction was to reduce that volatility going forward. But we don't see anything else other than volatility at this time. Their older age policies, high face amount. So if someone dies -- if they don't die this year, it's likely they're going to die soon and then you're going to see that volatility come in. So as a result, we feel good of where we set our reserves economically, and we feel very good about the RGA transaction because this helps accelerate our strategy into these faster-growing businesses.

Your next question comes from the line of Elyse Greenspan of Wells Fargo.

My first question is on the $300 million, I guess, the capital left from the RGA deal, right, that you just haven't fully earmarked. How do we think about you guys balancing using that right for M&A versus buyback? And will you just, I guess, make the decision if it goes to incremental buyback once you kind of get through what you've already outlined as the extra buyback?

Sure. I just think of the $300 million, I mean, we're not going to be tracking it going forward. It's going to be returned a normal course of business as part of our 60% to 70% payout ratio. So if you see it at the high end of the payout ratio, it may be because of some of the $300 million, but I wouldn't anchor on the $300 million so much as we have excess capital in the system, so we can do both. We can return capital to shareholders and do bolt-on acquisitions, invest in side cards to fuel growth for our business going forward. We want to drive earnings growth in the business and we want to drive EPS accretion. So we have the ability to do both because of our unique business model.

And then you guys had last said you were in the middle of that 12% to 15% EPS CAGR. That's where you thought you would be right with the financial plan. Is that still where we sit today post Q3?

Yes, we still feel comfortable with the 12% to 15% in the middle of the range as part of our 2027 target. We feel comfortable with all of our 2027 targets to be frank, to the $2 billion of cash flows. We can see the visibility on that. We're in the $1.6 billion to $1.7 billion this year. That will go up next year, and we're on track for the $2 billion. You can see since our Investor Day, we're well on track to the high end of the payout ratio of 60% to 70%. And where we were below on the EPS growth.

If you normalize as of last quarter, we showed we're at 11%. We'll continue to hold ourselves accountable, and we see the benefit of record AUM at $1.1 trillion, organic growth coming in through all of our businesses, expense initiatives, investment initiatives, all will come through to support the 12% to 15% growth going forward in addition to the additional buybacks, which helped reduce our share count. So we feel quite comfortable with the 12% to 15% target.

Your next question comes from the line of Jack Matten of BMO Capital Markets.

Just one on your -- the spread lending business. Just wondering if you can talk a little bit more about the growth opportunities there? And how big do you think that business can be for equitable and any thoughts on current market conditions?

Sure. So we launched a FAB business, specifically in 2020. We issued about $4.5 billion so far year-to-date, and it's about $10 billion in total. We have a lot of capacity to continue to grow that business. this business directly benefits again from the flywheel as we can benefit the strength of Equitable and having a strong rating, borrow at a low cost of funds and take that and invest it at attractive risk-adjusted yields at AllianceBernstein.

So it's really a function of the flywheel. And the FABN business is just a secondary benefit of the growth in our RILA business, as Nick spoke about earlier, as our general account continues to grow. Our RILA sales continue to grow, attract more customers, it gives us more capacity to do FABN as long as the returns are there. So we'll continue to be a benchmark issuer in the market but it's a function of our overall growth strategy that helps drive our ability to have FABN.

Got it. And then just a follow-up on your Bermuda entity. I know you excluded a large transaction earlier this year, but just wondering if there's an thoughts or any update on your thoughts around further transactions, whether it's in-force flow reinsurance sort of down the line, maybe third-party deals and kind of over what time frame do you expect to do more with that intended?

Yes. We're really excited to have our Bermuda entity set up and also very thankful for the people in our Bermuda company that are help operating that as we have people on Island at this time as well. And we'll continue to grow our presence there over the next few years. The Bermuda business, we did our [indiscernible] transaction this year on our group side. We -- it's a lever in our toolkit for capital management. We can use it for flow reinsurance, which is something we'll look at for 2026. And then post 2027, we'll look at to see if we can leverage it for further growth, whether it be third-party or broader markets to help our growth profile overall.

So I think it's a good framework. It's an economic framework. We like the regulatory regime in Bermuda, it's very close to our economic framework that we manage internally. So it's going to help us sustain cash flows on a go-forward basis as well. So we're happy to have Bermuda, and we're going to leverage it as part of our toolkit.

Your next question comes from the line of Tracy Benguigui of Wolfe Research.

Very basic question. So when AB partnered with RGA to create the Ruby Re, I was thinking that makes sense since RGA doesn't have real asset management capabilities. But turning to FCA REIT, [indiscernible] has asset management capabilities with Carlyle. And on the 4 press release, they said the vehicle should add $10 billion of fee earning AUM to Carlyle. So could you add some color on how AB won that mandate for private alternative management and where essentially that is outsourced? And what is the related AUM? .

Let me try and answer that. This is Seth Bernstein. We want it because we have an existing relationship with Fortitude and no one another pretty well. And they approached us as they were looking for raising capital for this particular vehicle. And we were prepared to just given the quality of the insurance risk they were taking in the market particularly attractive market for us given our broader reach within Asia and our desire to grow our insurance activities in that region. And the result is that we believe for the amount of money we put in, we will raise, I think, about $1.5 billion of incremental private alternatives to manage for them in areas that are complementary, I believe, to what Carlyle already does for them.

Okay. Awesome. And then when you did the Ruby Re deal and that enhanced relationship with RGA, do you see this relationship with Fortitude may be enhancing future risk transfer deal with that partner?

I'm sorry, can you ask the question again? .

Okay. So when you created the Ruby REI deal with RGA, that enhanced your relationship with RGA. And I'm just curious, given this deal with Fortitude as you're looking to optimize your blocks. Right now, you still have New York legacy and I'm wondering if perhaps this could enhance your relationship with [indiscernible]?

Right. Now I'll hand it over to Robin to answer that.

Yes. Sure, Tracy. We look at these on a stand-alone basis. We don't have any other -- we've done the big block deals at Equitable. We did the legacy VA transaction. We did the largest life reinsurance transaction in the industry. At this point in time, we're looking to grow the different business lines. And we look at [indiscernible] as a way to grow AB's private credit business while getting good returns on the equity that we invest. So I wouldn't read into our sidecar investments leading to future reinsurance deals with any partner. If we're going to do reinsurance, we'd obviously look at all the partners in the different industry and get the best returns for shareholders.

Thank you. We have reached the end of our Q&A session and the end of our session for today. Thank you so much for attending today's call. You may now disconnect. Goodbye.

All right. We are going to get started, everyone. If you could please take your seats. I'm Ryan Krueger, Life Insurance Analyst at KBW. It's great to have Equitable back with us. On stage up with me is Robin Raju, the CFO. I also want to recognize Erik Bass, Head of Strategy and Investor Relations and other members of the team I see in the back somewhere.

Robin, to start it off, in 2023, Equitable established 5-year financial targets through 2027. Can you update on the progress that you've made towards those targets so far? And any key considerations to think about going forward that may have differed at all from the original expectation?

Yes. First, thanks for having us again here, Ryan. It's great to be back. So in 2023 at our Investor Day, we really laid out a growth strategy for Equitable. And what underpinned it was the markets that we operate in and growing retirement, asset management and while and specifically the U.S. retirement market, which really benefits from tailwinds related to demographics and legislation.

You have 4 million Americans that retire every year. You have $600 billion of assets in motion. And we think Equitable is differentiated operating an integrated model to having asset wealth and retirement together really enables us and puts us in a position to differentiate and win in that market and capture an outside portion of that growth. In addition, I think Equitable has done a good job in terms of execution. We've hit every number that we've laid out to the Street since our IPO, and we'll continue to do that.

There's a strong culture of execution focus internally in the company. And so in 2023, the output of that growth strategy because that's what we really laid out, was 3 main financial targets. We're going to grow cash flows to $2 billion. We're going to have a payout ratio of 60% to 70%, and we're going to grow earnings per share by 12% to 15%.

So if I take each 1 of those on cash flows, this year, we're guiding to $1.6 billion to $1.7 billion of cash flows. We're on track to achieve that. That's about a 10% growth from prior year. And so that gives us clear line of sight to $2 billion by 2027. The $2 billion is going to come from organic growth coming from our retirement businesses and then also release of legacy capital as well.

A reminder, 1 thing, again, that differentiates Equitable, 50% of those cash flows come from asset and wealth businesses. That should get a higher multiple for overall and improved valuation over time. So having 50% of the cash flow come from asset and wealth that allows and gives us consistency in our payout ratio across the Board. So we have a 60% to 70% target. If you look through the first 10 quarters since our 2023 Investor Day, we're at 68% at the higher end of that range. And in addition, keep in mind, we have a $500 million additional share repurchase that we're going to do related to the RGA transaction on top of that base in the second half of the year.

And then the third target was the 12% to 15% earnings per share growth. So through the year-end 2024, we achieved a 12% growth from our IPO in the first half of the year. This year, earnings were lower than we expected, primarily due to 2 things. One is the mortality volatility that we had in the business. Now we resolved that with the RGA transaction. But that mortality volatility was about $95 million below our expectations in the first half of the year at $0.23 per share. If you take into account the RGA transaction was in place in January, our year-to-date earnings per share growth, cumulative since the Investor Day would be around 11%.

So still a little bit lower than the 12% to 15%. Now going forward, we do feel as though we have good levers for the growth to hit the 12% to 15%, both in later after this year and then go forward. That's going to come from markets, which are higher and led to record AUM levels, which mean higher fee-based and spread-based income. We have continuous efforts in expense efficiency within the business. The Life transaction means that we won't have exposure to that mortality at least for 75% of that exposure.

And then in addition to 500 million incremental share buyback should provide earnings per share growth. So, we think from here, we have good line of sight to that 12% to 15% CAGR, and we feel comfortable across the Board around all of our targets, supporting the growth strategy for Equitable Holdings.

I had a follow-up on the 12% to 15%. When you had announced the RGA Life transaction, I think you had said you think -- that you thought that may push you up towards the higher end. Is that still your view? Or I mean, there's been a number of moving parts or should we just think about the 12% to 15% kind of overall target?

Yes. I think now, I'd say, it would be in the mid-range of that 12% to 15%. So there are a few key components that change from the announcement of that transaction. We assume that we'd get a $1.8 billion full tender of AllianceBernstein stock. We had $760 million. So that means, we have lower exposure to AllianceBernstein than originally planned; second, the life mortality that I mentioned. And then also our Individual Retirement business had lower market value adjustments. Dow is about over $20 million lower year-over-year. And that had a $10 million -- we assumed -- we used to assume that there was a $10 million incremental every quarter that we're no longer assuming. So as a result, we think we'll be in the midpoint of the range. But, now keep in mind, we're going to be on an outsized -- we're going to have outside growth in 2026 compared to the low end of 2025 because of the first half of the year, but we expect over the period, we should be in the midpoint of the range.

Got it. One more on the Life transaction. So it freed up $2.3 billion. You mentioned the $800 million to tender for a higher ownership of AB. You've committed $500 million to incremental buybacks, and you've recently announced a $500 million tender for debt. So that still leaves about $500 million unaccounted for how are you thinking about both the timing of deploying that $500 million in the potential uses?

Sure. So the Life transaction, the exact number is $2 billion that are freed up in capital and the $2.3 billion that we deploy assumes that we're going to draw down from some excess capital as well within that. So from the $2.3 billion overall that we intend to deploy, as you laid out, we did approximately $800 million in increasing our share of AllianceBernstein. That's strategic for us because that allows us to capture the full benefits of our flywheel model and enhancing the synergy value of AllianceBernstein, where we did -- we announced the $500 million incremental share buyback that we'll have in the second half of the year and the $500 million tender that we most recently announced last week to help reduce our leverage ratios. .

So that leaves us roughly to $500 million remaining. We're going to look at growth investments and share repurchases depending on what provides most value for shareholders. For growth investments, we think about bolt-on acquisitions within the wealth management space or investments into Sidecars that advance AllianceBernstein's business. And then share repurchases would always be something that we'll look at as well.

So expect us to fully deploy the proceeds probably in the first half of 2026. But we think across, if you think about the life transaction overall, it's going to be -- our target is for to be accretive for shareholders relative to previous expectations.

On bolt-on wealth M&A, are you interested in adding particular capabilities? Or would it be more opportunistic potentially looking to just add scale to the business that you have?

Yes. So the -- well, let's talk about the wealth business, Equitable Advisors specifically first. It's -- we're very happy and thrilled with the growth that we saw in that business. So at IPO, that business was $40 million in 2018 in AUA. It's now $110 billion. We've grown at a 12% organic growth rate the last 12 months. That organic growth rate is better than most peers that we see in the market. So I consider that best-in-class in growth rate in the market.

And now we also announced at our Investor Day in 2023 that we doubled earnings in that business from $100 million to $200 million by 2027. We're already on target to achieve that $200 million. That's 2 years ahead of schedule. So we're very excited about the growth in that business. The growth so far has really come from organic investments that we've made, specifically in training and upskilling our adviser force, really moving them more towards wealth planners, which are 2 to 3x more productive than our existing advisers.

We also made an investment early in this year in hiring the head of new business development at Ameriprise to expand our experience higher recruiting that's worked out well year-to-date. We've added over $700 million in experienced higher recruiting AUM. Now, when looking at bolt-on acquisitions, I think it would be advisers that compare wealth-management-oriented businesses with retirement products.

The reason being is that helps grow the wealth business, but also to expand our distribution of retirement and asset management products as well. So advisers that fit both retirement and wealth space are sweet spots for us in Equitable Advisors. Now, a lot of these valuations are expensive. So you'd have to be very disciplined. That's why smaller bolt-on valuations seem somewhat more reasonable at times, but we'll be very disciplined in ensuring that we add value for shareholders or cost of whenever we use shareholder capital.

And then you had mentioned potential Sidecar investments with AB. Would that be more to help AB fund investments in other insurance company Sidecars? Or would this be more of an Equitable-type sponsored Sidecar?

Mainly growing AB's insurance business. So similar to Ruby Re, AllianceBernstein made $100 million investment through Equitable. Equitable supplying the capital through ownership in AllianceBernstein. So they did a $100 million investment. They gained $1 billion in assets in private credit assets with Ruby Re. Those were assets coincidentally, that Equitable already funded for the seed capital program. So proof point of the synergy value between Equitable and AB. Those are the type of Sidecar investments that we think are attractive. Those investments typically have low mid-teens IRRs. But if you add the fees from the investment management agreements as well, you get to mid-teen IRR. So those are attractive investments for AllianceBernstein and growing in the insurance business.

The interesting part of those is usually once you're with the partner and you have multiple strategies in place, you've now operationalized your investment capability into their system. So a lot of times, it leads to more upside going forward as well. So those are the reasons why we like Sidecar investments to help grow AB's insurance platform.

And then financially for Equitable, are those held as like an alternative investment in the general account? Or is it more like a holding company investment?

Right now, we've done it actually through AB's balance sheet. So we funded it through equity and then AB would put it on their balance sheet and hold it in.

Got it. So I think you're going to make some financial disclosure changes following the Life transaction. Can you give us any kind of preview of the types of things that you -- and how you're going to go about changing the disclosures.

So the RJ transaction gave us an opportunity to relook of how we're disclosing our financials to the Street, and we really want to simplify our disclosures focused on asset retirement and wealth. So if you look currently in our businesses, we have 6 segments that we report, 4 of which are insurance. And we're really focused on 1 broad retirement market.

So some of the changes that we're going to make. If you look post the transaction, both the protection and legacy business have less than 5% of earnings contribution for Equitable. So that's going to move into corporate and other. So that's 1 component that will move in. That helps simplify those. There's a small runoffs, and those aren't going to be material for us going forward. .

The other change we're going to make, we're going to combine our group retirement and individual retirement into 1 broad retirement segment. The reason we're doing that is we really operate across the full retirement spectrum. Also within the businesses, they're blurring lines between group and individual retirement. Take our K-12 leadership position in the 403(b) market. That's reported in the Group Retirement business, but it's actually an individual sale. And the margins are more similar to that of the individual market, very different from the corporate 401(k) market.

Now in combining those, we're going to still provide everybody separate account, general count, net flows, product sales. So we'll provide all the underlying detail. We'll also include more information on spread assets and payout reserves. So people can appropriately model net investment income as well.

The other change we're going to make is to our allocation process. So how we allocate net investment income, specifically our spread business. So our FABN FHLB business, which is currently allocated across all the segments, that's now going to be fully allocated to the retirement segment. The reason being is the capacity to grow those businesses is dependent on your general account assets. And our general account assets are primarily coming from the retirement business. So we think it's better alignment within that.

Now, we will provide information to the Street to appropriately model that for both sell side and buy side. So we'll put out an 8-K about 2 weeks before earnings that will recast financials for 6 quarters that enable you to model it, so you all have time before we come out with earnings going forward. But we think this simplifies the story focuses us on the growth drivers for Equitable asset retirement and wealth and aligns better with the strategy for us going forward.

I want to shift to the individual annuity business and RILA, in particular, it is still much more concentrated market than the fixed and fixed indexed annuity markets, but we have seen the amount of competitors gradually increase over time. How would you characterize the competitive environment right now in RILA as well as your ability to continue to earn targeted returns?

Well, it's definitely more competitive since we were the only ones in the market back in 2010. So we created that market in 2010, really through our Equitable Advisors distribution. That's the benefit again of owning a wealth management business is you can test new products with that distribution before we expand into third-party distribution overall. The RILA market, though, is a growing part of the market. I mean it's up 40% year-over-year in 2024. It's up 20% this year, so it was up $65 billion. It's a huge piece of our business.

We had $7 billion of sales year-to-date in the RILA business. So we continue to see growth in that aspect. But we do operate in broad retirement. So we have RILA product, we also have income products. We also have investment-only VA products. And we also launched a fixed index annuity -- fixed annuity product exclusive to our Equitable Advisors distribution as well as to take advantage of that low cost of funds distribution outlet overall. So we like the RILA market. The reason why we like it, it's a simple solution for clients. Clients like the product. It's your nearing retirement. It offers you downside protection with upside potential. Clients need to stay invested in equities. So this client, this product really serves a client need as they near retirement, and we're the innovator in that market. We created it and we're going to continue to expand with the pie in that market.

Now, as competition comes in, you're always going to see new competitors come in with teaser rates. But it's hard to displace people that have innovated and that have been in that market for a while. So we own the shelf space and Equitable Advisors, obviously. We also have 10% to 15% of our sales come from privileged third-party distribution where they may only have 2 to 3 players. So that's 50% of that our sales are coming from what I'd say, low cost of funds channels for us.

So if you look at Equitable overall, we have the lowest cost of funds for RILA products. We operate on a top-quartile expense ratio for our individual retirement business and we benefited from the investment capabilities of AllianceBernstein having that flywheel effect. So we think that gives us a competitive advantage to win in the RILA market. As competitors have come in, you've seen the pie increase, which is good.

Equitable's maintained #1 position, and we've continued to benefit from that pie, and we continue to price products at a 15% IRR. Now, the return -- the margins of the product are very different from when we were the only ones in there, even much higher at that time, but we think the margins are still attractive at a 15% IRR even at this time.

The RILA market and obviously, Equitable as the creator of the market was originally really focused on accumulation, but there have been more guaranteed income options that have been added to the RILA product over time. I guess some -- I've gotten some questions about that just given what happened with the variable annuity industry. So what gives you comfort that the guaranteed income options that are being added now are appropriately structured and priced?

Sure. So I can speak from Equitable's perspective, accumulation-oriented RILA products are still the dominance out there. We launched an SCS income product, that's about 10% of our RILA sales, that's really offering a withdrawal benefit feature for clients with the downside protection of the RILA. So it gives someone the RILA feature that they like, but also an income option as well. I think the income market is quite interesting at this time because most competitors have left the market.

So that means the margins are much better with income-oriented products right now. Now Equitable has a unique advantage. We have tons of history in that space. We price the products conservatively. So we assume any utilization benefits are in the customers' interest. We're not assuming customers don't maximize their benefit where ALM matched overall and the products designed around a narrow range of outcome.

So for us, we think that market is quite attractive. There are not a lot of players in it at this time. But I think it's important you keep your discipline and you don't get over your skis on that market as well. And if we see the market getting too hot, we'd pull back from it. We're not here to chase guarantees. We're here to provide customers value propositions, and that's our goal, and that's our mission.

On the -- is the product that you are rolling out to your advisers, that's a MYGA product.

Yes.

Is that -- they never sold that, I think before, or at least not an Equitable MYGA. Is that something that you think will be material or be more of a gradual build over time?

Well, we just started. I think the opportunity is there. We offer third-party MYGA is in Equitable Advisors now because we haven't historically been there. So having an Equitable MYGA product resonates a lot with our field. So we think that's in addition to the tool kit for an adviser providing planning for their clients as well. So we hope there's a big opportunity. We just started just like when we started with RILA was very small to begin with, and it took years to get big. So we hope, over time, it will get bigger.

In the individual annuity business, your earnings growth has been lagging the account value growth over the last 1 to 2 years. Can you, I guess, review the reasons that, that has been happening and also going forward, how should we think about the earnings growth or the ROA trends or how to just -- you've given some kind of guidance on your earnings expectations for the third quarter. I'm thinking more about the jump-off point and how to think about the growth of that business going forward?

Yes. So Individual Retirement is our largest segment. That's our biggest business growth engine across the Board. It had 8% organic growth, $7 billion of net flows over the trailing 12-month period as well. So that's a business that's going to drive much of Equitable going forward. We've disclosed to the market that in the third quarter, we expect about $220 million to $225 million, that's higher than we had previously. We were lower, as Ryan indicated earlier this year and probably for a few reasons. One, markets were lower. That impacts our fee-based business. Our fee-based business does have a higher ROA. So the markets lower in the first half impacted the fees on that relative to last year.

Second, in net investment income, we have 2 things happening there. One, we are seeing some spread compression. As the old RILA business when there are a few competitors, and we had big margins on the business rolls off, that's competing against a new business that we write on, which is still good margin, 15% IRR. But lower than the previous margins when we own the market to ourselves. That's about 15% of our total RILA account value. And so we expect that to continue to drag down NIM relative to assets in the short term, and that should turn probably early to mid next year in terms of when you'd expect NIM to continue to grow back at the same rate as general account book value.

The second component we had is market value adjustments. We were over -- like $20 million and plus lower year-over-year in market value adjustments. Going forward, we assume 0 benefit from market value adjustments as well. But that we expect will rebound across the board NIM with the growth in the general account overall.

So we think if you take those components, those are transitory, I would say, in some sense. And we think that going forward, we'll continue to see growth in that business benefiting again from the low cost of funds to privileged distribution that we have and the capabilities in asset management at AllianceBernstein. So we'd expect growth with the $220 million to $225 million in the third quarter, continue to grow earnings from there. But the ROAs, as we shift from fee-based to spread base will move a little bit lower, but they'll also be less sensitive to markets as well.

Got it. And then just that legacy RILA higher profitability piece, the 15%, that should be most -- you said that in the next few quarters, that should be mostly runoff.

Exactly.

Okay. Moving more to the Group Retirement business, you've been working on some emerging growth opportunities there, in-plan annuities, HSA, what time frame do you think those products will become a more meaningful contributor to Equitable? And also just what -- can you maybe just talk a little bit about the outlook for both of those?

Yes. So let me start with in-plan annuities because we're really optimistic about this growth going forward. So we have partnerships with AllianceBernstein. They were first in the market actually and innovated more than before regulation was there more than 10 years ago, and then we had the partnership with BlackRock, LifePath Paycheck, we've achieved over $1 billion in flows in those products already. We think it's a huge market opportunity.

If you think of the overall retirement market, there's no decumulation solution in the market today. It's a huge need in society. And we've partnered with asset managers to address this need through in-plan annuities. If you look at the 401(k) market, it's an $8 trillion market. Target date funds are about 50% of that market, so about $4 trillion. When target date funds were first launched, they weren't 50% of the market. It took time to leg in. So we think this will take time as well to legend, but we think both from a plan standpoint, being comfortable with the performance, the track record of these in-plan annuities; and second, the operational integration with the planned administrators or the record keepers as well as those all come together, we think there's a lot more upside.

And we think in-plan annuities will be a core part of target day fund offerings in the future. I think every target date fund out there will need to have an in-plan annuity in the future. Now it's not going to be in the near term, but it will be later on to address the decumulation need for clients.

We're also working on new solutions with in-plan annuities. We've recently announced a partnership with JPMorgan. That's more of a stable value orientation solution, and we continue to talk to other asset managers as well.

This year, we also announced flows related to a partnership with an HSA partner. That's more of a spread-based products, a different type institutional product, more spread-oriented ROA versus the in-plan annuities probably have higher margins to them over time. That will have stable flows. That's not as much of a growth potential as the in-plan annuities, but still will be sticky and good, stable flows for us. Probably the biggest piece that we don't talk about, and you'll see it more is our spread-based lightening business, FABN and FHLB. We had about $9 billion outstanding in the year. That's a bigger driver of overall earnings, which I think of is historical institutional businesses for us, and that will continue to be a growth level going forward.

That's now remember, going to be allocated, as I mentioned earlier, to the Retirement segment. And we'll continue to disclose that balance. And so you can forecast the spreads and model that as well. So those are the 3 components that we see.

Now having in-plan annuity capabilities allow us to leverage that for other markets as well. If we think about our capabilities with AllianceBernstein, our underwriting capabilities, that gives us potential to expand in other parts of the retirement market that are bigger and institutional as well over time, but we'll be opportunistic about that as they come.

Actually, I guess just 1 follow-up. Like are there -- are there other areas you're considering that you can share now or that you could enter into the into the spread lending or other institutional space? Or is it more things that are in the future?

Well, we're big in this spread lending now. The FAB, we have $9 billion of exposure there. We'll continue to grow in spread lending. That's a very attractive business for us as we can really benefit from the flywheel and AllianceBernstein's capability and the low-cost liability of the insurance companies. We'll look at the bigger institutional markets as well. We have the capabilities with our underwriting and asset management skills, but we don't have any like plans right now to enter into those markets.

Similar -- we looked at the MYGA market for some time, and we started that with Equitable Advisors. We'll certainly look at other parts in the institutional market. And if we see attractive entry points, we have the capabilities to go into past. It's not going to be a huge investment for us considering we have the capability set up.

Got it. Moving to AllianceBernstein. Can you discuss their private markets business and you have some goals there for 2027, the progress you're making towards them?

Yes. So we're really excited about the private markets business at AllianceBernstein. It's now $77 billion. That's up 20% year-over-year. Our target for 2027 is to reach $90 billion to $100 billion. That means it's about 20% of AB's revenues by 2027. So that's a good mark for us. That's being funded in part by Equitable's commitment in seed capital to grow their private credit business. Equitable has committed $20 billion, of which we deployed $15 billion to date, and we expect to fully deploy the $20 billion by 2027.

Of interest, some of the strategies that we have seeded and recruit teams, that's been value for us. We seeded $1.4 billion in -- or allocated $1.4 billion to AB carve-outs resi mortgage capabilities. We've also allocated over $2 billion to private structured assets like NAV loans, ABS, specialty finance. So we continue to see that opportunity to grow both for AllianceBernstein, but the yield also comes back into the retirement business and to grow the retirement business. That's the flywheel effect.

Now the real value is AB is able to grow for every dollar Equitable has put in, AB has been able to grow $3 to $4 of third-party capital. And that's really valuable for EQH shareholders because they're getting the full benefit of the value chain between owning retirement and asset management together.

AB acquired CarVal a few years ago to enhance the private market capabilities. Are there other M&A opportunities similar to that or that, that could be of interest to AB going forward?

Yes. I think I think of 3 areas within AB that we think about. One is private credit. Obviously, that's probably our primary focus because there are a lot of synergies. Second is their private wealth business and third being Sidecars, which we spoke about. So within private credit, AB has had a tremendous history of team lift outs, that's differentiated because they can attract teams, they know Equitable is going to provide them fun.

So we have teams with a track record funds they want and they can go out and raise their party money. That's a $3 to $4 that I mentioned earlier in terms of leverage we get from the capital we put in. Part of the CarVal acquisition, CarVal is attracted to come to be paired with an insurance business as well. So we think we're differentiated in acquiring private credit, but we have much of the capabilities we need in private credit and maybe there are things like infrastructure debt that we don't have that we look at over time.

AB's private wealth business is probably something that's not spoken about as much as it should be. The private wealth business is at scale. It's focused on the ultra-high net worth. So really $5 million to $10 million plus individuals. Our plans there, we think we can grow our adviser base by 2 to 3x from here, specifically taking advantage of opportunities we see in some geographies and some segments in the private wealth space. We'd also look at small bolt-on type RAs within that business that fit that can sell private credit orientation. So that continues to be a place that we think we can grow in AB's private wealth channel.

And then third, Sidecar investments. We did the Ruby Re one. I think that was a win-win for Ruby Re for AB, benefiting from AB's capabilities. We'll continue to look to expand AB's insurance capabilities for future Sidecar type investments more so as we talked about from AB side of it so that they can participate in the insurance value chain. And those are probably the 3 areas that we'd focus on, but primarily private credit would be our #1 focus.

Is there a, I think you've been asked this before, but just -- do you think there could eventually be some synergies between Equitable's advisory -- Equitable's Wealth Management business and the private wealth business at AB or the segments you're targeting just 2 different?

Yes, exactly. The segments that we're targeting are very different. Equitable Advisors is more mass affluent, $3 million below. AB is more private wealth. They're not material synergies between the 2.

Got it. You talked more earlier about the growth and success you're having in the wealth business. Just 1 follow-up on that from a margin standpoint. Do you have any like, I think you're around a 15% margin right now. Do you feel like that's a good level for the business? Or is your -- in your focus on just growing earnings and revenue? Or could you see margins expand over time?

Yes. I think in the short term, we're really focused on making the investments to grow earnings and revenue in that business. That includes experience hiring, like I spoke about earlier, with the new hire that we brought in from Ameriprise. Experience hires is a great way to grow that business because it has a good IRR, short payback period. As I mentioned earlier, we had $700 million recruited year-to-date already.

So we're seeing wins on that. But those are investments that we're making in the business right now. The business is -- it's at $110 billion, which is great from the $40 billion it was, but it's still relatively small to other wealth managers out there. We do think there are opportunities to expand margins to the high mid-teens or low 20s, but that will over time, and that's a lot of scale that's needed in that. So in the short term, we're really focused on investing in the business, growing the platform, increasing the number of advisers that we have and then smaller bolt-ons as we see fit and value accretive for shareholders.

On the second quarter call, you gave a preliminary expectation for alternative investment returns in the third quarter, I guess, as we've gone forward a little bit, do you have an updated view there?

Yes. I think all returns for the first half of the year, we're about 6% for Equitable. I think in the third quarter, it should be similar, maybe a small upside potential on it, but it should be similar to how I sit here today and see it. I think by year-end, we should be able to get to the low end of our 8% to 12% range. It's really dependent on activity in the marketplace. So we are seeing better performance in private equity. Real estate has been somewhat muted. Now, we have seen more real estate transactions.

So I think the market somewhat bottoms out based on the transactions that we're seeing. So we're hoping to see improvement in that space. The IPO market has opened as many of you have seen. There are a lot more IPOs occurring, and we see that as a good tailwind as well for the private equity portfolio overall. But if you take a step back, our returns since our IPO are about 10%, so in the midrange of our 8% to 12% range we hope to get back into that range for the full year in 2026, but that depends on the transaction activity that we spoke about earlier.

But going forward, our liability profile of much shorter duration with RILA. So alternatives don't really have the same positioning as it did in our liability profile when it had a longer duration.

So as a result, for every unit, every marginal dollar is going to be going more into private credit then would be alternative versus historical because of that liability profile. So alts are about less than 3% of our general account today and I expect it to decrease over time. But still, reaching back to that 8% to 12% over the long term.

And then it's a much smaller business for you now, so you may not have anything, but I figured I'd check at least on the life side of the business, if you had anything to say on mortality or anything like that for the third quarter?

Thankfully, no because hopefully, no longer, we will provide updates on it.

Okay. Great. And then you established an affiliated Bermuda reinsurer. You had -- last quarter, you seeded $30 billion of liabilities there of annuity liabilities. I think you had said there's no real upfront change to your view of capital. But can you maybe just provide a little bit more insight into if there is no upfront benefit from that, what was the reason and rationale for doing it?

Sure. So we launched a Bermuda company earlier this year. We completed our first in-force transaction to it as Ryan mentioned, it was about $30 billion of liabilities. And the real focus for us is we like the Bermuda framework because it actually aligns pretty well with how we manage economically. It's the only framework we see outside of Solvency II in Europe that really looks at fair value reserving, and that aligns better with our hedge program. So the real benefit that we have because there's no economic change in capital for us.

The real benefit is really allowing matching with our hedging program. And that's what the Bermuda framework allowed you to do because you have fair value reserving. So you don't have volatility related to your hedging program on the statutory results.

Bermuda for us, though, going forward, I think it provides us a lot of optionality in our toolkit. Flow reinsurance would be something we look at for some of our internal products. We can look to other in-force transactions if we thought it helped the consistency of cash flows. And then over the long term, we think there's potential to do third-party reinsurance as well in our Bermuda company.

So that's probably more of a post-2027 thing, but we think there are opportunities there. If you take a step back there, our capital management strategy since IPO has really been focused on economic management. We want to manage to book economically. Like if you think at IPO, we started with just a New York company then we move business from New York to Arizona and now we move to Bermuda.

The key focus for us is always economic management. We want to protect policyholders and we want to make sure we're providing good returns for shareholders across the board. And now even post RGA transaction, you can look across our businesses. We have a Bermuda entity that's set up. We have the consolidated RBC ratio is above 500%. All of our insurance subsidiaries post RGA transaction are above their target levels. But this is a deliberate strategy to manage the business economically, not towards U.S. GAAP, not even towards U.S. GAAP. We want to manage economically to protect policyholders and drive good cash flows for shareholders as well.

We have just a small amount of time left. I just want to check if there's any questions in the audience.

Is Bermuda for the annuities?

It is for group annuities. $30 billion of group annuities.

Maybe I'll just actually -- just circle back to 1 thing you said. So I guess I don't know if you have the number off the top of your head. But I guess with that RGA transaction. I assume the size of your alt portfolio will likely be smaller going forward because some of that was included in the transaction. Is that correct?

It -- there are -- Alt's portfolio was not transferred in the transaction. So that will stay on Equitable balance sheet, but as a result, that will decrease over time because obviously, the liability profile is much shorter.

Okay. Got it. Understood. All right. Well, we are running out of time. So we're going to wrap it up there. Thank you very much to Robin and the Equitable team.

Thank you, Ryan.