Equitable Holdings Reinsures Life Block with RGA, Boosting Growth in Retirement & Wealth Management
Equitable Holdings, Inc. (NYSE: EQH), a leading financial services holding company overseeing Equitable, AllianceBernstein, and Equitable Advisors, has announced a significant reinsurance transaction with RGA Reinsurance Company (“RGA”). This agreement involves reinsuring 75% of Equitable’s in-force individual life insurance block (the “Block”) on a pro-rata basis. The deal is expected to generate over $2 billion in value for Equitable Holdings, comprising a positive ceding commission and the release of capital.
Strategic Implications of the Reinsurance Transaction
The transaction represents a strategic move by Equitable Holdings to optimize its capital deployment and focus on high-return businesses. By transferring a substantial portion of its individual life insurance liabilities to RGA, Equitable can reallocate capital to segments with higher growth potential, including Retirement, Asset Management, and Wealth Management.
Mark Pearson, President and Chief Executive Officer of Equitable Holdings, expressed confidence in the deal, stating, “We are very pleased to have reached an agreement with RGA on this transaction, which creates compelling strategic and financial value for Equitable. This move Wealth Management is accretive to our 2027 financial targets and represents a favorable outcome for our policyholders. The transaction enhances our ability to focus on businesses with strong capital efficiency and robust growth prospects. We firmly believe that combining insurance and asset management generates long-term value, and this transaction supports that vision.”
The agreement has received approval from the Equitable Holdings Board of Directors and is expected to be finalized by mid-2025, pending customary closing conditions and regulatory approvals.
Financial Impacts and Key Highlights
Transaction Terms:
- Equitable Holdings is ceding 75% of its individual life insurance block to RGA.
- AllianceBernstein (AB) will continue managing approximately 70% of the general account assets tied to the reinsured policies, ensuring continuity in asset management strategies.
Financial Outcomes:
- The transaction is projected to unlock over $2 billion in value for Equitable Holdings, stemming from a positive ceding commission and the release of associated capital.
- Based on prevailing market conditions, Equitable anticipates a GAAP net loss at the time of closing and a reduction in book value, excluding accumulated other comprehensive income (AOCI).
- Once capital is redeployed, the transaction Wealth Management is expected to have a minimal impact on Non-GAAP operating earnings and cash generation. However, it is projected to be accretive to Non-GAAP operating earnings per share in the long term.
Equitable Holdings engaged Barclays as its financial advisor, with Willkie Farr & Gallagher LLP serving as legal counsel for the transaction. Additionally, Oliver Wyman acted as the actuarial advisor, ensuring a rigorous evaluation of financial and risk implications.
Equitable Holdings’ Increased Ownership in AllianceBernstein
In a parallel strategic move, Equitable Holdings has also announced its intention to increase its ownership stake in AllianceBernstein Holdings L.P. (AB). This will be executed through a tender offer to purchase up to $1.8 billion of AB units.
AB, a global investment management and research firm, plays a crucial role in Equitable Holdings’ overall financial ecosystem. Strengthening its stake in AB allows Equitable to capitalize on synergies between insurance and asset management, reinforcing its competitive edge.
Additional Share Repurchase Program
Following the completion of the reinsurance transaction, Equitable Holdings plans to implement an additional $500 million in share repurchases. This is in excess of the company’s 60-70% payout ratio target, reflecting a commitment to shareholder returns and capital efficiency.
Mark Pearson emphasized the strategic importance of these initiatives, stating, “We’re particularly excited about the opportunity to increase our ownership in AllianceBernstein. We strongly believe in the combined value of insurance and asset management, and by reinforcing our position in AB, we can drive further synergies that benefit our shareholders and clients alike.”
Industry Context and Strategic Positioning
Equitable Holdings’ latest transactions align with broader industry trends where insurers are increasingly leveraging reinsurance arrangements to optimize capital efficiency and focus on core strengths. By partnering with RGA, a well-established global reinsurer, Equitable mitigates risk exposure while freeing up resources to invest in areas with strong growth potential.
This transaction also reflects a broader shift towards capital-light business models in the insurance industry. Insurers are seeking to improve return on equity (ROE) by divesting capital-intensive blocks Wealth Management while strengthening their presence in asset management Wealth Management and financial advisory services. Equitable’s strategic emphasis on Retirement, Asset Management, and Wealth Management positions it well for sustained profitability.
To provide further insights into the transaction, Equitable Holdings will host a conference call at 8 a.m. ET on Monday, February 24, 2025. During the call, company Wealth Management executives will discuss the financial and strategic implications of the deal. Interested parties can access the webcast and presentation through the company’s Investor Relations Participants are encouraged to log in at least 15 minutes before the call to ensure smooth access.
Equitable Holdings’ reinsurance agreement with RGA marks a significant milestone in its ongoing efforts to enhance financial flexibility and focus on high-growth areas. By unlocking over $2 billion in value, increasing its stake in AllianceBernstein, and executing additional Wealth Management share repurchases, the company is reinforcing its commitment to capital efficiency, shareholder value, and long-term strategic growth. As the transaction progresses towards completion in mid-2025, Equitable Holdings is well-positioned to strengthen its market leadership and drive sustainable financial performance in the years ahead.
