00:04 Good morning. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equitable Holdings Full-Year and Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions] 00:37 It is now my pleasure to turn today’s call over to Isil Muderrisoglu. Please go ahead.

00:45 Thank you. Good morning and welcome to Equitable Holdings full-year and fourth quarter 2021 earnings call. Materials for today’s call can be found on our website at ir.equitableholdings.com. 00:59 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 materially differ from those expressed in or indicated by such forward-looking statements. So, I’d like to refer you to the Safe Harbor language on Slide 2 of our presentation for additional information. 01:24 Joining me on today’s call is Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; and Ali Dibadj, AllianceBernstein’s Chief Financial Officer and Head of Strategy. 01:42 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. Reconciliation 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. 02:06 I would now like to turn the call over to Mark and Robin for their prepared remarks.

02:11 Thank you, Isil. Good morning, everyone, and thank you for joining our call today. We are a business that exists to meet the need for retirement planning, income protection, and asset management. Over the past two years of the pandemic, these needs have been amplified. The ability of Equitable Holdings to meet these needs is unique. 02:31 We provide advice to our affiliated distribution, we have leading retirement franchises, and we have our premier asset management subsidiary AllianceBernstein. Our strategy of managing to economic realities and shifting to low capital intensive businesses has proven to be well suited to low interest rates and rising equity markets. 02:54 We are meeting both the amplified needs of our clients and building sustainable shareholder values. 2021 was a record year, as you can see on Slide 3, non-GAAP operating earnings were $2.8 billion or $6.58 per share, up 32% year-over-year. For quarter four, non-GAAP operating earnings were $649 million or $1.54 per share. 03:29 AB had a particularly strong year contributing $564 million of operating earnings to holdings, up 31% over prior year. Strong organic growth in our core retirement and asset management businesses resulted in net in-flows of $25 billion in 2021 and this combined with the benefit of market tailwinds resulted in assets under management going 12% to $908 billion, which is also an all-time record. 04:06 The balance sheet remains robust. We have an RBC ratio of approximately 440% and $1.6 billion of cash at the holding company. We successfully executed on our capital return program in 2021 returning $1.9 billion to shareholders, including an incremental $500 million of share repurchases associated with our legacy VA reinsurance transaction, and a $112 million of 2022 repurchases accelerated into the fourth quarter. 04:44 Earlier this week, our board authorized a $1.2…

14:41 Thank you, Mark. We are very supportive of the upcoming LDTI accounting reform, which will bring GAAP closer to fair value economics and will improve transparency and comparability for our industry. 14:58 On Slide 7, I would like to provide additional insights into how we beat the changes and how we are well-positioned for adoption. Before I do that, there key points to highlight. First, we expect that the impact to shareholder equity will be lower than our current AOCI balance, which was 2 billion as of year-end. 15:25 We also expect the impact will flow primarily through AOCI, taking into account year-end market conditions. Second, LDTI aligns well through our economic approach to managing the business, due to our conservative interest rate assumptions and fair value approach the setting actuarial assumptions. 15:50 And third, the enhanced LDTI disclosure, which we intend to provide in the early summer will support Equitable’s strong economic standing and competitive position in the market. I will now go through some of the drivers to provide additional details. 16:09 Our year-end estimates are primarily attributable through an uneconomic factors, non-performance risk or NPR. Under GAAP accounting today, our company's own credit spreads impact their liabilities. For example, as the company's own credit spread decreases, the company is required to hold more reserves, and vice versa, which is counter intuitive. We have seen credit spreads now over time, and the impact of NPR is currently reflected in net income. 16:43 While LDTI improved it by shifting this non-economic movement to AOCI, there is some potential sensitivity between now and the transition date in 2023. If credit spreads increased before the transition date, the NPR gains would ship from net income to AOCI. 17:07 Turning to retained earnings, we anticipate a limited transition impact based on…

28:38 Thank you, Robin. Before we turn to your questions, I would like to reiterate some highlights from our full-year and fourth quarter results. First, we delivered another year of record results, supported by the societal need for our products and services and strong equity markets. 28:57 Second, our unique business model, pairing retirement, asset management and advice, drives our strong capital position and enables us to consistently return capital to shareholders. As a result, we are pleased to announce a new authorization to deploy $1.2 billion for repurchases in 2022 and targeted total capital return of 1.5 billion this year. 29:26 Third, our fair value economic framework positions us well for LDTI implementation. Aided by our economic approach, we expect our LDTI transition impact to be within AOCI, which is $2 billion as of year-end. 29:44 And lastly, Equitable is committed to being a force for good, and we will continue to be a strong advocate for robust industry practices aligned to economic realities, with that, I'd like to open the line for your questions.

30:05 [Operator Instructions] Your first question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open.

30:21 Thank you. On capital returns, you gave us the 1.2 billion authorization for the year, how should we think about just the cadence between the quarters and would it just be more active depending upon your share price?

30:41 Good morning, Elyse. Thank you for the question. As you recall, we returned 1.9 billion in 2021 that included [hundred and so million] [ph] of accelerated share repurchase that we're counting towards 2022. And the 1.2 billion future authorization that the board approved this year, allows us to continue to execute against our 50% to 60% capital return under normal market conditions. Expect us to be in the market consistently throughout the year and the authorization that the board gives us allows us to adjust flexibility to program if we see any share price deviations as well.

31:13 And then on thinking about [indiscernible] relative to that 50% to 60%, you would look at the [1.5 plus the 1.12] [ph] that you pull forward as putting you within that 50% to 60% target, correct?

31:27 That's right.

31:29 Okay. And then in terms of protection solutions, you guys have been running with earnings of around 75 million on an adjusted basis. And I think last quarter you had said, you could see there with some – with more elevated mortality, you were just below this quarter. So, just how should we think about the earnings trajectory for protection solutions just given that we're probably at lease for a little bit longer in elevated mortality period?

32:08 Sure. So, we increased the guidance to 75 million last quarter. That's a result of continued productivity in the business and benefiting from the [GA rebounding] [ph] that we've done throughout the years. With that 75 million what we said expect volatility around that 75 million, up or down as mortality evolves. 32:30 In the quarter, if you look on a normalized basis, excluding the elevated mortality related to COVID and the alternative benefit, we ran about a 92 million normalized earnings for the quarter. 32:43 The COVID guidance, you know we're saddened by the continued debt related [Technical Difficulty] U.S. debts.

32:50 Okay. Thanks for color. Your next question is from the line of Ryan Krueger with KBW. Your line is open.

33:01 Hi, good morning. Thanks for the LDTI impacts. I guess, I'll be greedy and ask for one more thing [indiscernible] how it may impact GAAP operating earnings? Can you give any comment on [Technical Difficulty] the potential impact there?

33:27 Sure, Ryan. Let me first start by emphasizing what I mentioned earlier. Our economic approach to managing the business and fair value approach to setting assumptions allows us to have a limited impact on the transition balance for LDTI, as it aligns well through our fair value approach in our economic model. 33:51 The ongoing operating earnings and some of the other details with the LDTI, you will have to wait till our – and we expect the economic earnings of this business to continue to grow based on the strong fundamentals we see across all of our business lines under our EQH.

34:08 Got it. Thanks. And then could you give an update on your efforts to mitigate the remaining [indiscernible] impact, and if you think you can get that offset by the end of 2022?

34:24 Sure. So, as you recall, we took significant action during the year. It started by receiving the primitive practice from the regulator, restructuring, the insurance company cash flows where 50% of the cash flow is going forward of that 1.5 billion will be unregulated and we just completed and closed in December, the [triple x] [ph] reinsurance transaction, which allowed us to unlock 1 billion of value decreasing the redundant reserves of [indiscernible] to about 1 billion going forward. That remaining billion will be phased in over the next several years. 34:58 So it gives us time and flexibility to continue to explore internal and external reinsurance opportunities if they are accretive on an economic basis and drive value to shareholders. We are targeting and we continue to be adamant about pursuing all options on the table and expect that to continue to address it as the year goes by.

35:20 Thank you.

35:24 Your next question is from Tom Gallagher with Evercore. Your line is open.

35:31 Good morning. First question, Rob, and if I go back to the second quarter, you're estimated – you haven't taken any dividends out, but I know there's been a lot of movement [Technical Difficulty] things like C1 and other things going on, but curious if you can comment on what happened to organic capital generation and both for, I guess, non-insurance and insurance over that period of time?

36:03 Sure. So, organic capital generation and again, business fundamentals are very strong during the year. There are a few things that change from a statutory basis. As you recall, as I just mentioned [Technical Difficulty] to a holding company. So, that is no [Technical Difficulty] resolved. From an RBC perspective during the year, as we continue to shift to general accounting [Technical Difficulty] did see an increase in the C1 [Technical Difficulty] reform capital charges that had about an 18 point impact on RBC as of year-end. But if you exclude that and exclude the mortality, we still see strong cash flow generation in the insurance company. 36:49 It should translate to about 750 million in an annual basis and then AllianceBernstein and our unregulated cash flows posted to a holding company, making up the rest of the 750 to bring the total to 1.5 billion to the holding company.

37:06 Got it. That's helpful. What is your [Technical Difficulty]

37:08 As I mentioned in the call, it's going to be 1.5 billion across all of our subsidiaries, and we expect the [Technical Difficulty].

37:17 Got it. So, based on how year-end stat, but do you think the allowable normal dividends will be over 750 million or is that still not clear?

37:33 That's what I expect. [Technical Difficulty] In a few weeks as we'll have that number [Technical Difficulty] 150 million bringing the total 1.5 billion.

37:44 Got you. And just one last one if I could, the LDTI book value impact that you mentioned, the less than 2 billion, you mentioned that was year-end 2021 when [Technical Difficulty] would it make much of a difference if you were to mark that to market today? I assume we go down, but if so, if you could sensitize it at all, would it be meaningful? And then, when you implement the initial 2023, will you be using rate levels from year-end 2021 or what period do you use the initial implementation interest rate from [Technical Difficulty]?

38:40 Sure. So, Tom, the good thing about LDTI again, it's fair value. So at point of transition, it moves to the rate that that specific period. Overall, that's the benefit of fair value and that's where we hedge our balance sheet. The impact as of year-end, we said it's less that to 2 billion AOCI balance, and it's across the industry. 39:00 It will be sensitive to equities, interest rates, and credit spreads. Those are probably the three biggest sensitivities, where we sit today, it is lower than what we've – the number we had as of year-end, but it is sensitive to those three elements. So, we'll continue to give updates as the year progresses. 39:20 Keep in mind; those liability numbers may move. They're always going to be within the AOCI balance we believe, and we have derivative gains that offset that potentialize the business.

39:33 Okay, great. Thanks.

39:37 Your next question is from Andrew Kligerman with Credit Suisse. Your line is open.

39:48 Hey good morning. So, in individual retirement, another outstanding quarter in terms of volumes, I think buffer the SCS product was up 36% year-over-year. Wondering if you could, just given the incredible competition that's plugged feature that the most current SCS stands out for or is there some new distribution that's driving this growth, maybe you could give a little color behind this robust sales growth?

40:27 Thanks Andrew for the question. We have Nick Lane here, today he heads up all of our commercial lines. We’ll give Robin a little bit of rest and let’s pass it to you Nick.

40:36 Great. Thanks Mark. First, as you mentioned core results are strong, positive 2.5 billion for the year, 500 million for the quarter. Sales up 55% and another record SCS, you know what is sustaining and elevating that? First is our differentiated distribution position, both Equitable Advisors, as well as our third-party partnerships? We've been there from the beginning with consistent strong relationships. As we highlighted in the past, we continue to innovate in that space relative to new functionalities such as [to direction] [ph]. So, we're confident that we will continue to maintain our position going forward and help consumers navigate these volatile markets.

41:31 You mentioned new functionalities such as dual direction, could you give a little more color on that?

41:36 Sure. Dual direction is an enhancement to the segment the clients can address relative to their perception of the markets. So, as you know, we provide upside protection, upside potential with downside protection, but all these new segments are perfectly ALM matches and we've been a leader and getting feedback from our clients and advisors on what they're looking to invest in.

42:17 Ask you look for Reg 213 solutions and understand that 18% of the individual retirement block is only legacy VA, what areas of business are you talking to potential, looking at for potential solutions? Is it possible to move the legacy, the remaining legacy VA given its housed in New York? Are there very different product areas, as you did with [Reg XXX] [ph], what areas are you looking at to solve for this 213? And maybe what's the interest level in working with you on it?

43:05 Sure, Andrew. I think the way to think about it is, we're looking at across being forth all products and where we can drive economic accretion in gains relative to an external internal transaction. That's why we started with the XXX reinsurance transaction. We don't always have to just address the VA book. 43:25 If there are opportunities to reduce that 18% legacy AUM further that economically accretive will certainly execute that, but if there are opportunities across other lines as well, we'll have a look, but everything is on the table as we continue to address the redundant reserves, but it needs to be economically accretive for shareholders.

43:46 Yeah, I like accretives. Thanks.

43:52 Your next question comes from the line of Tracy Benguigui with Barclays. Your line is open.

43:59 Thank you. Good morning. Sorry. Lost the connection a little bit. Okay. Hold on. Bear with me.

44:15 You're coming through clear, Tracy.

44:18 Okay. Yes. So one of your competitors talked about policy holder appetite [indiscernible] buyout program, and, I’m curious if you can show your thoughts on the economics of offering these ones on payments to annuity holders [indiscernible] perhaps accelerate efforts to producing the proportion of capital intensive business or if that could help in any way reduce Reg 213 redundancy reserves? But I heard others in the past, they are less expensive.

44:48 Sure, Tracy. You know, buyout of legacy annuity policies were one at a first de-risking actions we deployed back in 2011. We've executed that along with moving the majority of that legacy AUM to passive index funds. Those were key de-risking levers that we utilized over 10 years ago and that led us to the successful de-risking for the Venerable transaction. 45:13 So, that playbook had been utilized here already and now we're focused really on external and internal reinsurance as potential opportunities as that can really drive accretion for shareholders.

45:27 I think we've had three programs or buyback over the last ten years. So, it's something we’re aware of, we've acted on. It's been successful for us, but we've moved on a bit now. We're looking at reinsurance in other ways to de-risk.

45:43 Great. Thank you. I know it's been asked already, but just wanted to touch upon your COVID losses, particularly, what we've seen is a shift in age cohort, now there's a little bit more of a bias on the older population, the 4Q versus 3Q. I'm wondering if that has anything to do with you running your losses a little bit higher into the range? If you are going to pass [indiscernible] the bottom end of the range. And if you could also share, if you received any benefit from a longevity offset this quarter, maybe individual retirement?

46:16 Sure. Again, I just want to emphasize, as I mentioned earlier, we are saddened by the fact that the pandemic still impacts many to people that we interact with and so many of our clients that we have, but it also shows the benefit to the products that Equitable Holdings have to offer in providing protection needs for American consumers. 46:38 In the quarter, as you saw fourth quarter mortality in the U.S. was elevated versus third quarter, and we did see some [big comment older age] [ph] debt which we do have exposure to older age policies, but if you exclude that for the full-year, we are in the middle of our COVID guidance that we provided to the market and that's where we'd expect to be going forward.

47:04 Okay. And then maybe on the longevity offset, are you see any of that?

47:08 We did not in the quarter.

47:11 Thank you.

47:15 Your next question comes from the line of Alex Scott with Goldman Sachs. Your line is open.

47:23 Good morning. First question I had is on the flow reinsurance market. I think you made some comments already about potential block deals. I'd just be interested in your view on the flow reinsurance market and it seems like there's some new third parties popping up there and how do you view using that as a potential lever to increase cash conversion?

47:51 Sure. Thank you, Alex. You know, as – and Nick mentioned it earlier, the products that we write today are all capitalized, very efficient, and generate good economic value for shareholders. So, when we think about levers, flow reinsurance is in one of them that we consider as an opportunity to benefit our shareholders because we'd essentially be passing some of the value that we have for shareholders to someone else. 48:15 The products that we write today are economically found, assumptions are based on current experience and their ALM matched. So, as a result, we don't need to pass on the value to others. And so, we fully believe in the products that we write today in the value that they generate and we want to retain those for our shareholders.

48:35 Got it. Thanks. And as a follow-up, I guess, just on inflation, I know from a capital standpoint, and if rates were to move higher, that's an obvious benefit I think for variable annuity companies generally, but just thinking more specifically about expenses, can you help us think through wage inflation and some of the pressure there and if we should expect to see anything in 2022?

49:00 Thanks Alex, it's Mark. Yes, we – obviously two things. Firstly, our focus will be on expenses and making sure that we can identify productivity improvements to offset any inflation. Hasn't really hit us up to the end of 2021, but we’re alert and watching it closely. I think the other thing to say though, Alex is the types of products that we offer, you know the right to talk about internally of all-weather products. 49:30 So, if you look at some of the things that AB offers in ultimate and real assets, this can be attracted to consumers and as Nick has just explained, on some of the products we've got like SCS and dual direction that can help consumers. So, we look at it three ways. As you say, balance sheet first, making sure we’re [indiscernible]. 49:52 And secondly, productivity to offset per share on inflation if it comes, and then thirdly what other products we can help our clients with helping them and economically sound for us as well. So, that's how we think of inflation.

50:08 Thanks.

50:13 Your next question is from the line of Jimmy Bhullar with J.P. Morgan. Your line is open.

50:19 Good morning. I had a couple of questions. First, on the group retirement business, I guess with the SEC settlement that you're going to pay a fine and then increase disclosure, but do you see any sort of ongoing impacts of this either on your business or on competitors that greater disclosure leads to maybe fee pressure or something else, but any comments on how you – whether you expect any ongoing impact from this?

50:46 Thanks Jimmy, it's Mark. Yes, we've been incorporated with SEC on that industry wide investigation. As you know, that's been on for a little while here. I think you are also aware of settlement into buy some of our peer companies as well on this one. And we have, as you say, reached the settlement in principle on it as we go. And it is around our quarterly account disclosure statement. 51:17 Obviously, we disclosed our fees and charges in our perspective. The SEC would like us to be clearer if you like on the statements and we fully agree we should be as clear and as transparent as we possibly can. Look, we're very proud of the service we offer to our teachers. 51:38 If you look at the fee income, what does it cover? It really covers the advice we give, of course, we know that teachers who receive advice end up with 49% more in their retirement accounts than those teaches that don't get advice. So there’s really, really a benefit to teachers. In addition, of course, we help them with getting teachers into the right investment solutions. We help them with loan forgiveness. They do have access inside their funds to safe harbor funds, guaranteed funds, if the market gets too rocky. So, I think the way we look at this Jimmy, do we justify our fees and we are very confident that we do. We can see the benefits [indiscernible] teachers.

52:28 Okay. And then on the SEC product and just a buffer annuity market in general, there's a lot of other companies that have come out with similar products and you – so obviously the market is a lot more crowded than it was, but are you seeing the other companies be rational in terms of terms, conditions, and the benefits that they're offering or are some of them being aggressive on features as well?

52:53 Great, this is Nick. Currently we're seeing rational pricing out there. We continue to see growth in this space both driven by the demographics and volatile markets. And as we've said, we think competitors entering helps validate the solutions for advisors and consumers out there.

53:14 And Jim you remember, anybody can copy our product, but they can't copy our distribution through Equitable Advisors and the third-party affiliated agreements that we have. So, that’s are differentiator and that's what makes us win in the market.

53:28 Thank you.

53:31 Your final question comes from the line of Suneet Kamath with Jefferies. Your line is open.

53:38 Great. Thanks. I wanted to start on Slide 8 that lower pie chart there, just to make sure I'm reading this right. Are you basically saying that the legacy VA block is about 15% of total company earnings maybe a third of individual retirement earnings? Is that kind of in the ballpark?

53:58 Yes. What we said is in the slide and what you see is the legacy VA is about 18% of our retirement AUM. And that's the function of the historic de-risking, but also the good core flow that we received. 2.5 billion in the year, up 20% year-over-year. From an earnings perspective, we haven't disclosed earnings by specific products and we won't enhance disclosures until post LDTI, and we'll look to provide greater clarity, but if you wanted to take a look at something right now, the best we can give you is AUM as a ballpark. So, that's probably the right way to look at it right now.

54:35 Okay, got it. And I guess Robin, I haven't heard anyone else use the words excited in an LDTI in the same sentence and it sounds like you're going to provide a lot more disclosure, I guess in your early summary, is that, is your view that this is just going to shed a new life on how people think about your individual retirement business? Because when I think about like the valuation of the company to me, that's always been the biggest source of upside if people just get a better handle on the risk profile of this block. Is that kind of what you're leading us towards?

55:10 Yes. I think that's right. I think there's two issues Suneet. Excitement and accounting change is not normally two words you put into one sentence, but look, why we say that is number one, go back to Jimmy’s question earlier. Is there rational pricing? We would argue very strongly that the current accounting basis, but particularly where you can use a reversion to being on interest rates, can high [indiscernible] pricing, we think that's wrong. We think that people are pricing rationally. It should be disclosed as such. 55:48 It's up to every insurance company where they want to price, but it shouldn't be hidden by the accounting system. And secondly, companies that have hedged their book to real economic liabilities we would argue, we should have less capital needs than those who don’t. 56:09 Of course, management teams have to decide the risk they want to take, but it should be disclosed properly. We are not saying us is the only way or the best way, but we are saying you should disclose it probably so that investors can make an informed choice. That's why we're excited about it. The disclosure leads to better comparability and a recognition of economically what's happening.

56:32 Okay. Got it. And maybe I’ll sneak one more in real quick. Just on the wealth management segment, we can see the account value growth or AUA growth, but we can't really see the organic growth. So, can you maybe just give us a sense of what the organic growth looks in that business and maybe how it's tracked over the past few years?

56:52 Great. Thanks for the question. We're very pleased with the progress we’re seeing the Wealth Management segment. As you highlighted [234%]] we're now at 83 billion. In 2021, we had 3 billion of gross sales, we've originally expressed as we enhanced our disclosures, when the AUA ranges got to about 125 billion with VA meaningful segment and these target and aspirations [saw all true] [ph].

57:28 Alright. I'll follow-up. Thanks.

57:34 There are no further questions at this time. Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.