Equitable Holdings, Inc. (EQH) Q2 2026 Earnings Report, Transcript and Summary

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.