AXA Equitable Holdings, Inc. (NYSE:EQH) Q4 2018 Earnings Conference Call Transcript

Mar 01, 2019 • 08:00 am ET


AXA Equitable Holdings, Inc. (NYSE:EQH) Q4 2018 Earnings Conference Call Transcript


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Good day. My name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to the AXA Equitable Holdings Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

Kevin Malloy, Head of Investor Relations. You may begin your conference.

Kevin Molloy

Thank you. Good morning, and welcome Equitable Holdings full year and fourth quarter 2018 earnings call. Materials for today's call can be found on our website at

Before we begin, I'd 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 materially differ from those expressed in or indicated by such forward-looking statements. So I'd like to point out the Safe Harbor language on slide 2 of our presentation. You can also find our Safe Harbor language in our 10-K.

Joining me on today's call is Mark Pearson, President and Chief Executive Officer of AXA Equitable Holdings; and Anders Malmstrom, our Chief Financial Officer. Also on the line is John Weisenseel, AllianceBernstein's Chief Financial Officer.

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 in related definitions may be found on the Investor Relations portion of our website, in our earnings release, slide presentation and financial supplement.

I would now like to turn the call over to Mark and Anders for their prepared remarks.

Mark Pearson

Thank you, Kevin, and good morning everyone. Today, we present our 2018 earnings and fourth quarter performance. I will also provide an update on progress against our strategic priorities and key financial targets. Before giving the numbers, I thought it would be helpful to provide a few highlights.

Obviously, the fourth quarter of 2018, we saw a significant correction in equity markets, with the S&P 500 falling 14%. We have a hedge program in place to protect against situations like this. This program offsets movements in the economic viability of our living benefits, due to changes in the market and interest rates, and protects asset levels at CTE98 for VA business.

We have over decades of experience running this hedge program. However, this was the first occasion since our listing in May 2018, that we have seen equity markets fall in the quarter. With the market fall CTE98 requirements increased by $3 billion in the quarter. Our hedging program work as expected and funded this increase. As a result, we end the year with VA capitalization levels in excess of CTE98, and the combined RBC ratio of approximately 670%.

Anders, will go into more detail later in the presentation. But I'm pleased that we were able to demonstrate our financial strength in volatile markets. Having said that, and as I fully expected, our hedge