Equitable Holdings (EQH) risk factors, 2025 10-K

Other

1. 01Our Organizational Structure
2. 02We are organized into six segments: Individual Retirement, Group Retirement, Asset Management, Protection Solutions, Wealth Management, and Legacy. We report certain activities and items that are not included in our segments in Corporate and Other
3. 03Total FYP $ 18,560 $ 14,226 $ 11,363
4. 04Open Architecture Mutual Fund Platform
5. 05We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets
6. 06AB provides asset management and related services to a wide variety of individual retail investors globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”)
7. 07Private Wealth Management
8. 08Bernstein Research Services
9. 09AB’s U.S.-based broker-dealer subsidiary acts as custodian for substantially all of AB’s Private Wealth Management AUM and some of its Institutional AUM. Other custodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions
10. 10Total $ 792.2 $ 725.2 $ 646.4
11. 11(3)Approximately $12.1 billion of private placements was transferred from Taxable Fixed Income into Alternatives/Multi-Asset during the three months ended September 30, 2024 to better align with standard industry practice for asset class reporting purposes
12. 12Total net long-term inflows (outflows) $ (2.2) $ (7.0) $ (3.6)
13. 13Total $ 768.5 $ 680.3 $ 686.5
14. 14Our Protection Solutions segment includes our life insurance and employee benefits businesses
15. 15We work with employees of EIMG to identify and include appropriate underlying investment options in our variable life products, as well as to control the costs of these options
16. 16(1)VUL includes variable life insurance and COLI
17. 17(2)For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed
18. 18(4)Does not include Protection Solutions Reserves for our employee benefits business
19. 19Beginning in 2025, our life insurance products will be primarily distributed through Equitable Advisors. We also use third-party firms to distribute our COLI product
20. 20Our product offering includes: a suite of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability, Long-Term Disability, Critical Illness, Accident and Hospital Indemnity insurance products
21. 21Our underwriting guidelines consider the following factors, among others: case size, industry, plan design and employer-specific factors. The application of our underwriting guidelines is continuously monitored through internal underwriting controls and audits to achieve high standards of underwriting and consistency
22. 22The following three pillars of Equitable Advisors’s value proposition are unique as they are designed around deep client relationships, integrated technology and “supported independence,” the sum of which we believe is not replicated in the industry
23. 23Increasing Productivity of Existing Advisor Base
24. 24Advisor Retention and Recruiting
25. 25Support the returns associated with the SIO
26. 26Equitable Financial reinsured all of its variable annuity contracts issued outside the State of New York prior to October 1, 2022 to its affiliate, Equitable America, effective April 1, 2023, on a combination of coinsurance funds withheld and modified coinsurance basis
27. 27Equitable Financial reinsured all of its net retained liabilities relating to EQUI-VEST variable annuity contracts issued outside the State of New York prior to February 1, 2023 to its affiliate, Equitable America, effective April 1, 2023, on a combined coinsurance funds withheld and modified coinsurance basis
28. 28We have set up reinsurance pools with highly rated unaffiliated reinsurers that obligate the pool participants to pay death claim amounts in excess of our retention limits for an agreed-upon premium
29. 29Equitable Financial reinsured all of its net retained liabilities relating to Accumulator variable annuity contracts issued outside the State of New York prior to October 1, 2022 to its affiliate, Equitable America, effective April 1, 2023, on a combined coinsurance funds withheld and modified coinsurance basis
30. 30Equitable Investment Management
31. 31General Account Investment Management
32. 32Holding Company and Shareholder Dividend Regulation
33. 33material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole
34. 34The laws and regulations regarding acquisition of control transactions may discourage potential acquisition proposals and may delay or prevent a change of control involving us, including through unsolicited transactions that some of our shareholders might consider desirable
35. 35The NAIC’s Corporate Governance Annual Disclosure Model Act has also been adopted by our insurance subsidiaries’ domiciliary states. It requires insurers to annually file detailed information regarding their corporate governance policies
36. 36In August 2023, New York adopted legislation codifying the Liquidity Stress Test and the GCC. The first GCC filing was required on June 30, 2024
37. 37We use an affiliated captive reinsurer as part of our capital management strategy. During the last few years, the NAIC and certain state regulators, including the NYDFS, have been focused on insurance companies’ use of affiliated captive reinsurers and offshore entities
38. 38Surplus and Capital; Risk Based Capital
39. 39Regulation of Investments
40. 40In addition, in 2023, the NAIC increased the RBC factor for CLO and other structured security residual tranches from 30% to 45% effective for year-end 2024 RBC filings
41. 41Guaranty Associations and Similar Arrangements
42. 42Adjusting Non-Guaranteed Elements of Life Insurance Products
43. 43Broker-Dealer and Securities Regulation and Commodities Regulation
44. 44Regulators, including the SEC, FINRA, and state securities regulators and attorneys general, continue to focus attention on various practices in or affecting the investment management and/or mutual fund industries, including portfolio management, valuation, fee break points, and the use of fund assets for distribution
45. 45Dodd-Frank Wall Street Reform and Consumer Protection Act
46. 46In October 2022, the SEC adopted final rules requiring the recovery of erroneously awarded compensation as mandated by the Dodd-Frank Act
47. 47Heightened Standards and Safeguards
48. 48Over-The-Counter Derivatives Regulation
49. 49Secretary of the Treasury to exclude physically-settled foreign exchange instruments from regulation as swaps, which the Secretary implemented shortly after adoption of the Dodd-Frank Act
50. 50Investment Adviser Regulation
51. 51Fiduciary Rules / “Best Interest” Standards of Conduct
52. 52In September 2023, the California legislature passed a law that will require firms with annual revenues of over $1 billion that do business in the state to publicly report their greenhouse gas emissions, beginning in 2026 for calendar year 2025
53. 53Diversity and Corporate Governance
54. 54Federal Tax Legislation, Regulation and Administration
55. 55Regulatory and Other Administrative Guidance from the Treasury Department and the IRS
56. 56Privacy and Security of Customer Information and Cybersecurity Regulation
57. 57Innovation and Technology
58. 58Environmental Considerations
59. 59Employee engagement is a measurement of how committed and invested employees are in their work and the organization’s success. Engagement is not simply about showing up — it is about feeling connected, motivated and passionate about the company’s goals
60. 60At Equitable, building a more inclusive workplace is an essential and ongoing endeavor. It helps us better serve our clients and communities, creates a more supportive and productive work environment, and ultimately enables our people to achieve their full potential
61. 61This starts with nurturing strong relationships between employees and leaders, which is further reinforced through peer-to-peer discussions, skill-building initiatives and a focus on professional aspirations
62. 62Rewarding performance is the cornerstone of our “Total Rewards” offering, which includes opportunities to share in company results through incentive programs and equity awards as well as access to a variety of benefits programs
63. 63Advisors, our Benefits team and representatives from our benefits providers. To move people beyond the financial inertia hurdle, the fairs were framed around life stages and events (not products) and taking small, actionable steps
64. 64Our commitment to strengthening our communities is an extension of our promise to be a trusted and valued partner to all we serve. Since its inception in 1986, Equitable Foundation, the charitable giving arm of Equitable, has supported philanthropic causes to underscore our long-term commitment to our communities

Risks Relating to Conditions in the Financial Markets and Economy

1. 65Conditions in the global capital markets and the economy
2. 66Equity market declines and volatility
3. 67Some of our retirement and protection products and certain of our investment products, and our investment returns, are
4. 68Adverse capital and credit market conditions
5. 69Market conditions and other factors could materially and adversely affect our goodwill

Risks Relating to Our Operations

1. 70Holdings depends on the ability of its subsidiaries to transfer funds to it to meet its obligations
2. 71Failure to protect the confidentiality, integrity, or availability of customer information or proprietary business information
3. 72Our operational failures or those of service providers on which we rely
4. 73Use or misuse of artificial intelligence technologies
5. 74The occurrence of a catastrophe, including natural or man-made disasters and/or pandemics or other public health issues
6. 75Our ability to recruit, motivate and retain key employees and experienced and productive financial professionals
7. 76Misconduct by our employees or financial professionals
8. 77Potential strategic transactions
9. 78Changes in accounting standards
10. 79Investment advisory agreements with clients and selling and distribution agreements with various financial intermediaries and consultants
11. 80Continued scrutiny and evolving expectations regarding ESG matters

Risks Relating to Credit, Counterparties and Investments

1. 81Our counterparties’ requirements to pledge collateral related to declines in estimated fair value of derivative contracts
2. 82Changes in the actual or perceived soundness or condition of other financial institutions and market participants
3. 83Losses due to defaults by third parties and affiliates, including outsourcing relationships
4. 84Economic downturns, defaults and other events may adversely affect our investments
5. 85Some of our investments are relatively illiquid and may be difficult to sell
6. 86Defaults on our mortgage loans and volatility in performance

Risks Relating to Reinsurance and Hedging

1. 87Our reinsurance and hedging programs
2. 88Our reinsurance arrangement with an affiliated captive

Risks Relating to Our Products, Our Structure and Product Distribution

1. 89GMxB features within certain of our products
2. 90The amount of statutory capital that we have and the amount of statutory capital we must hold to meet our statutory capital requirements and our financial strength and credit ratings can vary significantly
3. 91A downgrade in our financial strength and claims-paying ratings
4. 92State insurance laws limit the ability of our insurance subsidiaries to pay dividends and other distributions to Holdings
5. 93A loss of, or significant change in, key product distribution relationships

Risks Relating to Estimates, Assumptions and Valuations

1. 94Our risk management policies and procedures
2. 95Our reserves could be inadequate and product profitability could decrease due to differences between our actual experience and management’s estimates and assumptions
3. 96Our financial models rely on estimates, assumptions and projections
4. 97Subjectivity of the determination of the amount of allowances and impairments taken on our investments

Risks Relating to Our Asset Management Business

1. 98AB’s revenues and results of operations depend on the market value and composition of AB’s AUM
2. 99AB’s reputation could suffer if it is unable to deliver consistent, competitive investment performance
3. 100Performance-based fee arrangements with AB’s clients cause greater fluctuations in its net revenues
4. 101AB may be unable to develop new products and services, and the development of new products and services may expose AB to reputational harm, additional costs or operational risk
5. 102AB’s seed capital investments are subject to market risk
6. 103AB may not accurately value the securities it holds on behalf of its clients or its company investments
7. 104and sub-committees, comprising senior officers and employees, oversee a consistent framework of pricing controls and valuation processes for the firm and its advisory affiliates. If market quotations for a security are unavailable, the Valuation Committee determines its fair value
8. 105The quantitative and systematic models AB uses in certain of its investment services may contain errors
9. 106AB may not successfully manage actual and potential conflicts of interest that arise in its business
10. 107Changes in the treatment of AB Holding and ABLP as partnerships for tax purposes would have significant tax ramifications

Legal and Regulatory Risks

1. 108We are heavily regulated
2. 109in the business of our insurance subsidiaries. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales
3. 110Changes in U.S. tax laws and regulations or interpretations thereof
4. 111Uncertainty surrounding potential legal, regulatory and policy changes, as well as the potential for general market volatility, because of the change in the presidential administration in the United States
5. 112Legal proceedings and regulatory actions

Risks Relating to Our Common Stock

1. 113Certain provisions in our certificate of incorporation and by-laws
2. 114We have designated a sole and exclusive forum for certain litigation that may be initiated by our stockholders

General Risks

1. 115Competition from other insurance companies, banks, asset managers and other financial institutions
2. 116Protecting our intellectual property