Equitable Holdings, Inc. (EQH-PA)

Equitable Holdings is a diversified financial-services firm with roots tracing to 1859 and The Equitable Life Insurance Society of the United States. Today it operates three main lines of business: life insurance (mostly targeted at affluent individuals), retirement income solutions (including variable annuities), and wealth management. The company serves high-net-worth individuals, institutions, and corporate clients, and is one of the larger players in the U.S. life insurance and retirement-income market. Its common stock trades on the New York Stock Exchange under the ticker EQH, while its preferred shares—including the EQH-PA series—trade separately, offering investors exposure to the company’s capital at a different risk and return profile.

A storied institution modernizing for today

The Equitable Life Insurance Society was founded in 1859 and grew throughout the 20th century as one of America’s premier insurers, known for conservative underwriting and a strong policyholder base. For much of its history it was a mutual company—owned by its policyholders rather than by shareholders—which gave it a long-term, patient capital base but limited its ability to raise external capital and grow rapidly. In 2004, Equitable demutualised, converting from a mutual to a stock corporation, which allowed existing policyholders a payout and enabled the company to raise equity capital for growth.

The years since demutualisation have been marked by strategic repositioning. The company has shed consumer-facing lines (like auto and home insurance) and consolidated around higher-margin businesses: variable annuities for retirement savers, life insurance for the affluent, and wealth management. It acquired Equitable Advisors (formerly AXA Advisors), a network of financial advisors, which became a key distribution channel. The net result is a company much smaller and more focused than the sprawling conglomerate it once was, but with higher profitability and clearer capital discipline.

Life insurance, annuities, and wealth management

Equitable’s revenue comes from three primary sources, each with a different economics profile. Life insurance—individual term and whole-life policies targeted at affluent customers—generates premium revenue with relatively stable claims. The company prices policies based on actuarial mortality tables and health underwriting, and earns a spread between the premium and the claims it pays, plus investment income on the reserves it holds.

Variable annuities are the strategic growth engine. A variable annuity is a complex retirement product: a customer deposits a lump sum, which is invested in a portfolio of mutual funds, and the insurance company guarantees a minimum income level in retirement, regardless of how the underlying investments perform. The insurer collects fees on the assets under management and sells the policyholder on the insurance protection (the guaranteed income floor). But the insurer also carries the investment risk—if the market crashes, the company must still pay the guaranteed benefit. This creates significant balance-sheet risk that Equitable manages through reinsurance and dynamic hedging with derivatives.

Wealth management, through the Equitable Advisors network, serves high-net-worth clients and generates recurring advisory fees based on assets under management. This segment is less cyclical than insurance during rate changes and provides stable, predictable revenue.

How Equitable funds and deploys capital

Like other insurers, Equitable collects premiums upfront and invests them until claims are paid. That float—the amount of money collected but not yet deployed—funds the company’s securities portfolio and generates investment returns that boost earnings. A strong investment portfolio enhances profitability; a struggling one (from low yields or credit losses) erodes it.

The company generates strong free cash flow from operations and uses that cash to fund growth, pay dividends on common and preferred shares, and repurchase shares. Preferred shares like EQH-PA offer investors a preferred dividend (a fixed or floating-rate distribution) before the common shareholders get paid, and have priority in a bankruptcy scenario. This makes them suitable for income-focused investors seeking a higher coupon than bonds but with equity risk characteristics—preferred shares can be called (redeemed by the issuer) and are junior to bonds.

A meaningful portion of Equitable’s capital comes from retained earnings. The business generates earnings from underwriting (premiums minus claims and expenses) and from investment returns. By retaining those earnings rather than paying them out entirely as dividends, the company grows its capital base and can grow the in-force book of business and take on more insurance risk.

Risks: interest rates, markets, and regulation

Equitable’s profitability is highly sensitive to interest rates. Variable annuities are particularly exposed: when yields fall, the company finds it harder to achieve the returns needed to support the guaranteed benefit, and its hedging costs can rise. Long-duration liability mismatches can also burn the company if rates spike suddenly. The investment portfolio is another pressure point: if credit spreads widen or equities fall sharply, the company’s portfolio can suffer rapid losses.

Life insurance faces longevity risk—if mortality is better than expected (people live longer), claims are deferred or avoided, which is good for the balance sheet. But if mortality is worse than expected (catastrophic illness, pandemic), claims rise unexpectedly. The 2020 pandemic tested this: while life insurers overall survived it, the episode highlighted the tail risk.

Regulatory changes also matter significantly. Regulators in the United States and abroad continue to scrutinize variable annuities and their complexity, asking whether the guaranteed benefits and hedging strategies are fair to customers and whether the company adequately discloses risks. Changes to reserve requirements or capital rules can force the company to hold more capital, reducing the amount available for dividends and buybacks.

How to research Equitable Holdings

Investors interested in Equitable should begin with the company’s annual 10-K filing (SEC CIK 0001333986) and quarterly 10-Q filings. These documents spell out the business segments, in-force policies by type, and the investment portfolio composition. Quarterly earnings calls reveal management’s outlook on sales of new business, net investment income, and any changes to hedging strategies or capital plans.

Key metrics include adjusted return on equity (earnings divided by capital, adjusted for one-time items), which shows how efficiently the company deploys capital; statutory surplus and the statutory surplus ratio, which are how regulators measure capital adequacy; and the percentage of variable annuity sales that carry guaranteed benefits, which indicates the company’s appetite for taking on investment risk. Also track the trajectory of net investment income, which reflects the company’s ability to earn returns on its float and capital.

For preferred shareholders specifically, pay attention to any changes to dividend policy (most preferred shares have call provisions and could be redeemed if rates rise and the company finds it cheaper to refinance) and to credit-rating changes, which affect the relative value of the preferred compared to bonds. As with any equity security, Equitable Holdings shares—common and preferred—trade at market prices, and nothing here is a recommendation to buy or sell, only a framework for understanding how the company deploys insurance risk and capital.