Introduction#
Equitable Holdings, Inc. (EQH delivered its Q2 2025 earnings amid a complex environment shaped by elevated mortality claims and a landmark reinsurance deal with RGA. Despite an 8% year-over-year decline in adjusted EPS to $1.41, the company surpassed analyst expectations of $1.33 per share, demonstrating operational resilience. This earnings report reflects a strategic pivot towards risk mitigation and capital enhancement, essential for navigating current industry headwinds.
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Key Developments in Q2 2025 Earnings#
EQH's Q2 2025 adjusted non-GAAP operating earnings fell approximately 28.9% from $495 million in Q2 2024 to $352 million, primarily due to elevated mortality claims in the Protection Solutions segment. This segment swung from a profit of $72 million to a loss of $58 million, driven by mortality claims exceeding expectations by $35 million post-tax.
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Revenue totaled $2.36 billion, missing analyst estimates, influenced by lower fee income and net outflows in Asset Management. However, Retirement and Wealth Management segments showed organic growth with net inflows of $1.9 billion and advisory net inflows of $2.0 billion, respectively. Operating earnings in Retirement declined to $217 million from $250 million, reflecting lower fee-based income and increased commissions. Asset Management, despite net outflows, improved operating earnings to $131 million and expanded margins by 150 basis points to 32.3%.
The pre-tax profit margin deteriorated to -15.4%, signaling ongoing margin pressures across segments impacted by external mortality and market conditions.
Financial Performance and Strategic Implications#
The EPS decline, while significant, was partly mitigated by the company's strategic reinsurance transaction with RGA completed on July 31, 2025. This deal reduced EQH's mortality risk exposure by approximately 75%, freeing over $2 billion in capital and raising the pro-forma NAIC RBC ratio above 500%. Such capital enhancement bolsters EQH's financial flexibility, enabling planned share repurchases and debt reduction initiatives totaling at least $500 million before year-end.
The reinsurance deal also reinsures roughly $30 billion of group annuity liabilities to Bermuda, improving cash flow visibility and reducing earnings volatility associated with mortality fluctuations. Management anticipates that these strategic moves will accelerate EPS growth in H2 2025 and support the company’s 2027 targets, including $2 billion in annual cash generation and a 12-15% EPS compound annual growth rate (CAGR).
Comparative Financial Metrics Table: FY 2024 vs. FY 2023#
| Metric | FY 2024 | FY 2023 | Change |
|---|---|---|---|
| Revenue | $12.44B | $10.53B | +18.13% |
| Operating Income | $2.34B | $966M | +142.86% |
| Net Income | $1.31B | $1.3B | +0.38% |
| Gross Profit Ratio | 80.37% | 27.2% | +53.17 pts |
| Operating Income Ratio | 18.79% | 9.18% | +9.61 pts |
| Net Income Ratio | 10.51% | 12.37% | -1.86 pts |
| Selling, General & Admin Exp | $2.44B | $2.33B | +4.72% |
Source: Monexa AI
The substantial increase in operating income and gross profit ratio year-over-year underscores operational efficiency improvements despite net income ratio compression due to segment-specific pressures.
Balance Sheet Strength and Capital Position#
As of December 31, 2024, EQH reported total assets of $295.87 billion, up from $276.81 billion in 2023, with cash and short-term investments increasing to $83.61 billion. Total liabilities rose to $292.3 billion, with long-term debt increasing modestly to $6.54 billion. Notably, net debt was negative at -$1.01 billion, reflecting a strong liquidity position.
Total stockholders’ equity decreased to $1.58 billion from $2.65 billion, influenced by share repurchases and dividend payments. The company’s total retained earnings increased to $10.65 billion, indicative of ongoing earnings retention despite dividend distributions.
Cash Flow and Capital Allocation#
EQH's free cash flow surged by +670.15% year-over-year, reaching $1.85 billion in 2024, supported by a 1064.42% increase in operating cash flow to $2.01 billion. Capital expenditures remained controlled at $153 million. Financing activities reflected $1.01 billion in common stock repurchases and $382 million in dividends paid, demonstrating a balanced approach to shareholder returns and capital reinvestment.
Market and Competitive Landscape#
EQH operates in a competitive insurance and financial services sector alongside peers such as Prudential Financial (PRU, Lincoln National (LNC, and MetLife (MET.
While EQH faced margin pressures from mortality claims, Prudential reported a net income of $533 million with an EPS of $3.58, Lincoln posted net income of $699 million and EPS of $2.36, and MetLife's upcoming earnings are anticipated to reflect similar industry challenges. EQH’s proactive reinsurance transaction distinguishes it by significantly mitigating mortality risk and enhancing capital, positioning the company favorably amid sector volatility.
What Drives EQH’s EPS Decline Despite Strategic Actions?#
EQH’s adjusted EPS decline of 8% to $1.41 in Q2 2025 is chiefly attributable to elevated mortality claims in the Protection Solutions segment, which added approximately $35 million post-tax losses above normal expectations. Additionally, fee income softness and higher commissions in Retirement, coupled with asset management outflows, exerted downward pressure on profitability.
Nonetheless, the EPS beat against analyst estimates highlights management’s effective operational adjustments and risk mitigation strategies. The RGA reinsurance deal's impact is expected to manifest more fully in H2 2025, underpinning an anticipated EPS growth acceleration.
Future-Oriented Strategic Outlook#
Post-reinsurance, EQH is positioned to leverage its enhanced capital base to pursue organic growth in Retirement and Wealth Management while maintaining disciplined risk management. Management’s reaffirmed 2027 targets include generating $2 billion in annual cash flow and achieving a 12-15% EPS CAGR, supported by a payout ratio maintained between 60-70%.
Capital deployment plans emphasize at least $500 million in share repurchases and debt reduction in H2 2025, reflecting confidence in financial flexibility. The company’s focus on operational efficiency and segment diversification aims to offset mortality-related volatility and sustain shareholder value.
Key Financial Metrics Summary Table#
| Metric | Q2 2025 Actual | Q2 2024 Actual | YoY Change |
|---|---|---|---|
| Adjusted EPS | $1.41 | $1.53 | -7.84% |
| Revenue | $2.36B | (Not Disclosed) | Missed Est. |
| Protection Solutions Op. Loss | -$58M | $72M | Negative Swing |
| Retirement Net Inflows | $1.9B | (Not Disclosed) | Positive |
| Wealth Management Advisory Net Inflows | $2.0B | (Not Disclosed) | Positive |
| Asset Management Op. Earnings | $131M | $101M | +29.7% |
What This Means For Investors#
Investors should recognize EQH’s Q2 2025 earnings as a reflection of transitional challenges compounded by external mortality shocks but balanced by strategic capital management and risk mitigation. The RGA reinsurance transaction marks a pivotal shift, materially reducing mortality risk exposure and fortifying the company’s capital position.
Ongoing organic growth in Retirement and Wealth Management segments provides a positive counterbalance to Protection Solutions pressures. The company’s disciplined capital allocation, including dividends and share repurchases, signals confidence in its financial trajectory.
Monitoring the full impact of reinsurance benefits and segment recovery in H2 2025 will be critical for assessing EQH's path toward its 2027 financial targets.
Conclusion#
Equitable Holdings' Q2 2025 results underscore a company navigating mortality-driven profitability challenges through strategic reinsurance and capital strengthening. The successful RGA deal significantly de-risks mortality exposure and enhances financial flexibility, positioning EQH to pursue sustainable growth in core segments. While EPS pressures persist, particularly from Protection Solutions, management’s guidance and capital deployment plans reflect a proactive approach to value creation.
Investors should weigh these developments within the broader competitive landscape where peers face similar headwinds but lack EQH’s recent capital-enhancing transactions.