Equitable Holdings (EQH) 2026 年第三季法說會：每股盈餘成長與 Corebridge 併購綜效

重點摘要

• Equitable Holdings 公布 2026 年第三季 Non-GAAP 營業收益為 5.95 億美元，即每股 2.13 美元。扣除顯著項目後，營業 EPS 年增 19% 至 1.98 美元。
• 在淨流入與股市熱絡的支撐下，管理與代管資產規模達到 1.2 兆美元，年增 4%。
• 退休金業務帶來 11 億美元的淨流入，其中包含創紀錄的 RILA 銷售額。個人退休金業務錄得 55 億美元的銷售額，其中 42 億美元來自 RILA 產品。
• 財富管理業務實現創紀錄的 27 億美元諮詢資產淨流入，獲利年增 27% 至 7,500 萬美元。顧問生產力在過去 12 個月基礎上成長 14%。
• 聯博 (AllianceBernstein) 公布總淨流入為 66 億美元。私募市場 AUM 年增 33% 至 1,050 億美元，超越其 900 億至 1,000 億美元的目標區間。
• 管理層預計在獲得剩餘批准後，Corebridge 合併案將於年底前完成。兩家公司已確認超過 1 億美元的年化費用節省金額，預計將於 2027 年上半年實現。

核心財務數據

顯著項目包括年度假設檢討帶來的 2,800 萬美元利益、模型更新帶來的 1,100 萬美元利益，以及 1,500 萬美元的訴訟準備金提存。Equitable 還在個人壽險業務中錄得 3,700 萬美元的跨期再保險會計利益，以及低於預期 2,000 萬美元的另類投資收益。

業務與營運績效

退休金業務

隨著整體銷售額成長 14%，退休金總淨流入達到 11 億美元。個人退休金業務在創紀錄的 55 億美元銷售額（包括來自 RILA 產品的 42 億美元）帶動下，產生 15 億美元的淨流入。Equitable 還錄得 5 億美元的利差借貸淨發行額，該金額未計入呈報的淨流量中。

團體退休金流量出現季節性放緩，主因教師的薪資扣繳提撥通常會在夏季減少。儘管如此，免稅業務的首年保費仍年增 16%。管理層亦指出，在佔該部門帳戶價值不到 15% 的較老舊、低利潤企業 401(k) 業務區塊中，仍面臨持續的淨流出壓力。

在獨立帳戶表現的推動下，退休金費率收入年增 16%，季增 1%。由於現金餘額增加，以及一年期 RILA 合約的宣告利率重置速度快於浮動利率資產收益率，核心利差較上季下降 5 個基點。管理層預期這些時間差效應將趨於正常化。

聯博 (AllianceBernstein)

聯博在本季結束時的資產管理規模 (AUM) 為 9,000 億美元。正向淨流入被固定收益的負回報所抵銷。機構業務的強勁表現帶動了 66 億美元的總淨流入，而零售與私人財富管理業務則出現淨流出。

私募市場 AUM 達到 1,050 億美元。聯博亦接管了 Equitable 120 億美元的商業抵押貸款，預計將於 2026 年第四季開始產生費用。平均基礎費率微幅降至 37.1 個基點，部分原因在於新全權委託帳戶尚未開始產生收益。調整後營業利潤率較上季成長 50 個基點。

財富管理

財富管理業務實現創紀錄的 27 億美元諮詢淨流入，相當於 11% 的有機成長率。諮詢資產年增 22%，顧問生產力提升 14%。管理層指出顧問人數大致持平，但強調有超過 2,000 名潛在顧問可進行進一步培訓與發展。

資本與投資組合定位

Equitable 繼續預計 2026 年將產生 18 億美元的現金，其中不包含將員工福利業務出售給 The Hartford 的所得。扣除 AOCI 並按市值計價聯博持股後，調整後每股帳面價值為 34.25 美元。調整後槓桿率為 25.5%。

另類投資約佔一般帳戶的 3%，並在第三季實現 5% 的年化報酬率。併購投資表現良好，但房地產股權表現為負。房地產股權約佔另類投資組合的 20%。

管理層指引

• 管理層維持對 2026 全年扣除顯著項目之營業 EPS 成長率超過 15% 的預期。前九個月的成長率為 22%。
• 不含出售員工福利業務的所得，全年現金產生量仍預計為 18 億美元。
• Equitable 繼續以全年 60% 至 70% 的資本派息率為目標。
• 管理層預期在第四季時間差效應歸於正常後，退休金業務的利差將回升至約 2026 年上半年的水準。
• 第四季財富管理業務獲利預計基準約為 7,000 萬美元。
• 聯博的全年績效費指引上調至 1.35 億至 1.5 億美元，隱含第四季為 6,200 萬至 7,700 萬美元。
• 扣除顯著項目後的全年企業及其他部門虧損預測仍維持在 3.5 億至 4 億美元。
• 主要由於房地產股權面臨壓力，預計第四季另類投資報酬率將處於個位數低段。
• 合併計劃目標第一年實現 1.5 億美元的年化節省額，並在 2028 年底前達到至少 5 億美元。

風險與關注焦點

管理層表示，高利率改善了年金經濟效益和消費者需求，但也可能增加保單失效、減少固定收益 AUM，並對房地產股權報酬率造成壓力。Equitable 透露，利率每變動 50 個基點，對應約 4,000 萬美元的營業收益敏感度。

較高的失效率假設使 DAC 攤銷較上季增加 1,800 萬美元。管理層將該費用歸類為非現金項目，並表示產品定價反映了預期的客戶行為，但續保率趨勢仍與呈報的 GAAP 收益息息相關。

商業抵押貸款投資組合被描述為高品質，且具有良好的貸款價值比 (LTV)。管理層表示，先前的壓力測試顯示，在信用壓力情境下，其風險資本適足率 (RBC) 將維持在 430% 以上。

Corebridge 合併案仍需獲得必要的監管批准。管理層預計將在第四季獲得這些批准，並繼續以年底前完成交易為目標。

分析師問答集錦

• 利率與年金需求：管理層表示，儘管保單失效率上升，高利率對退休金業務而言仍屬有利。由於 RILA 產品強調受保護的股票參與度，歷史上看其需求對利率水準較不敏感。
• Corebridge 資產管理契機：合併後的公司預計每年將承作 700 億至 800 億美元的新負債。聯博正在評估擴展私募信用與基礎建設能力，特別是因為 Corebridge 較長存續期間的負債可支援更廣泛的資產組合。
• 退休金流量放緩：淨流入較上季下降反映了團體退休金業務的季節性、機構季交投較為淡靜，以及舊有企業 401(k) 區塊的壓力。個人退休金與 RILA 銷售依然強勁。
• 年金市場競爭：管理層表示近期競爭強度無重大變化，並強調繼續專注於獲利性成長、風險調整後報酬以及嚴格的資產負債配對。
• 合併協同效應：初步節省主要與領導層及員額決策相關。預計在資訊系統、第三方供應商和房地產方面將有更多契機。
• 再保險調整：3,700 萬美元的利益與先前針對 RGA 交易的內部會計處理有關。管理層確認這是會計認列項目，而非新增現金流或再保險合約變更。

法說會完整逐字稿

---

完整財報電話會議逐字稿

管理層陳述

Operator

Hello, everyone. Thank you for joining us, and welcome to Equitable Holdings Inc. Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Erik Bass Chief Strategy Officer and Head of Investor Relations. Erik, please go ahead.

Erik Bass

Thank you. Good morning, and welcome to Equitable Holdings Third Quarter 2026 Earnings Call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would 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 differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on Slide 2 of our presentation for additional information.

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Seth Bernstein, Chief Executive Officer of AllianceBernstein; and Tom Simeone, Chief Financial Officer of AllianceBernstein.

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 and related definitions may be found on the Investor Relations portion of our website and in our earnings release, slide presentation and financial supplement. We will also refer to the pending transaction with Corebridge. Any statements about the transaction made during this call are not an offer of securities registration statement containing a prospectus will be filed with the SEC in connection with the transaction.

I will now turn the call over to Mark.

Mark Pearson

Good morning, and thank you for joining today's call. Equitable's third quarter results highlight the company's strong momentum heading into the merger with Corebridge as we delivered double-digit growth in earnings per share and positive organic growth across all businesses. The current macro environment and population demographics underscore the need for the financial advice and product solutions we provide as our customers face rising costs, higher interest rates and limited options for guaranteed retirement income.

As we build a new Equitable and leverage our scale, distribution breadth and complementary product offerings we see tremendous opportunity to reach more customers, expand our business and deliver value for shareholders. Starting on Slide 4, I will provide a few highlights from the third quarter. We reported non-GAAP operating earnings per share of $2.13 or $1.98, excluding notable items, which is up 19% year-over-year. Through the first 3 quarters of the year, EPS, excluding notable items has increased 22% from 2025, consistent with our guidance for greater than 15% growth in 2026.

We ended the quarter with $1.2 trillion of assets under management and administration, up 4% year-over-year driven by positive net flows and uplift from favorable equity markets. We returned $320 million of capital to shareholders during the quarter which equate to a 59% payout ratio. Year-to-date, we have a payout ratio of 66%, consistent with our 60% to 70% target range.

Organic growth trends remained solid across our businesses. In Retirement, we had total net inflows of $1.1 billion, driven by 14% growth in overall sales. This includes record RILA sales, and we continue to see strong demand for our protected equity and retirement income solutions. We also had $500 million of spread lending net issuance, which is not included in net flows.

Turning to Wealth Management. We continue to see strong new business momentum with record $2.7 billion of advisory net inflows. Adviser productivity increased 14% on a trailing 12-month basis. Finally, AllianceBernstein reported total net inflows of $6.6 billion, with strength in institutional offsetting outflows in retail and private wealth. AB's private markets AUM ended the quarter at $105 billion, up 33% year-over-year and above the $90 billion to $100 billion target level.

During the quarter, AB expanded its private markets platform by enhancing its commercial mortgage loan capabilities and onboarding $12 billion of loans from Equitable. These assets will begin to generate fees in the fourth quarter. And more importantly, AB now has a more robust offering to win mandates from third-party clients. This is another example of the flywheel benefits between Equitable and AB.

We also completed the sale of our employee benefits business to The Hartford effective October 1. While we like the employee benefits market, we lack the scale to effectively compete and grow the business to a meaningful level of earnings. Lastly, we continue to make progress in establishing the operating model for new equitable. During the quarter, we selected the Board of Directors for the new company, and we have named the top 500 leaders for the organization so that we can hit the ground running in January.

Regulators have begun to sign off on the merger, and we expect to receive all required approvals in the fourth quarter so that we can close at year-end. Moving to Slide 5. I want to spend a minute discussing the industry backdrop and why we see tremendous growth opportunity for new equitable. U.S. retirement represents 1 of the most attractive markets for financial services that I have seen anywhere in the world. The total U.S. retirement asset pool has grown 7% annually over the past 10 years and now exceeds $50 trillion representing 65% of global retirement assets. More than half of these assets sit in IRAs or defined contribution plans where individuals control the funds and bear the investment risk.

As a result, there was an incredible need for financial advice and solutions to help Americans manage market risks and ensure they have sufficient retirement income. Demographic factors are further crystallized this need with over 4 million Americans turning 65 each year. This baby boomer retirement wave creates significant money in motion with nearly $1 trillion of IRA rollover activity each year. And the life insurance industry is well positioned to capture significant inflows. We see rising demand from customers and advisers for protected equity solutions like wireless and the guaranteed retirement income that our industry is uniquely positioned to provide.

Annuity sales have increased at a 16% CAGR over the past 5 years and are approaching $500 billion annually. Higher interest rates enhance the consumer value proposition of annuities, providing another tailwind for sales moving forward. In addition, the inclusion of guaranteed income allocations within target date funds expands access to a broader pool of customers and creates a sizable new market. Finally, demographics will drive significant wealth transfer activity shifting assets to the next generation and underscoring the need for personalized financial advice.

As a result, we review retirement savings deaccumulation and wealth management as secular growth opportunities and meeting this need is central to Equitable's mission and business model. As highlighted on Slide 6, the new Equitable will be very well positioned to capture the U.S. retirement growth opportunity and deliver attractive returns to shareholders. On a trailing 12-month basis, Equitable and Corebridge have generated over $48 billion of combined annuity sales, which is over $10 billion higher than the next largest competitor and represents approximately 10% market share.

New Equitable will be the only company with a top 5 position in each major product category. And this breadth makes us critical to distribution partners. It also provides flexibility to adapt to changing customer demand trends and pricing conditions. Importantly, our size also shows up in higher earnings with Corebridge and Equitable generating over $4 billion of combined operating income in 2025. Our superior scale will drive multiple competitive advantages. Our differentiated ability to source liabilities coupled with partnerships with leading asset managers, including AB, BlackRock and Blackstone will enable us to access more directly originated assets and achieve higher risk-adjusted yields.

We also expect to have lower average cost of funds, driven by our strong multichannel distribution network, which includes over 5,000 Equitable and Corebridge advisers. As alluded to earlier, the breadth of our retail and institutional product offering will give us flexibility to adjust the market conditions and allocate capital where we see the most attractive returns. In addition, our size should yield superior operational scale and lower expense ratios, allowing more of the spread and fee income we generate to fall to the bottom line.

Finally, our business model means that we capture the full value chain by acting as a manufacturer, distributor and asset manager. This gives us multiple sources of revenue on each transaction, including high multiple distribution and asset management fees. Putting it all together, we expect new equitable to have lower average unit costs than peers allowing us to provide attractive consumer value while also delivering compelling growth and returns for our shareholders. This is a key strategic benefit from the merger and it gives us a clear right to win in the large and growing U.S. retirement market. As this becomes clear to investors, we see meaningful potential upside in our valuation.

I will now turn the call over to Robin to discuss our financial results in more detail.

Robin Raju

Thank you, Mark. On Slide 7, I will provide more detail on our third quarter results. On a consolidated basis, non-GAAP operating earnings were $595 million or $2.13 per share, while net income was $1.1 billion or $4.05 per share. Excluding notable items, non-GAAP operating earnings per share was $1.98, up 19% year-over-year. Notable items in the quarter included our annual assumption review, which had a $28 million favorable impact on operating earnings, a model update benefit of $11 million and a legal reserve accrual of $15 million.

We also called out a $37 million out-of-period reinsurance benefit in our Individual Life business. which, while onetime in nature, effectively offset some of the adverse mortality reported in prior periods. Finally, we reported $20 million of below plan alternative investment returns. Our alternatives portfolio represents about 3% of our total general count and produced an annualized return of 5% in the quarter. This was at the upper end of our 4% to 5% guidance range but below our long-term expectation of 8% to 12% returns.

Higher interest rates pressured real estate returns for the quarter and will likely remain a near-term headwind, we currently forecast a low single-digit return in the fourth quarter. Our consolidated tax rate was 20% for the quarter, consistent with our guidance. Putting it all together, we're pleased with the company's earnings momentum. As Mark mentioned, non-GAAP earnings per share ex notable items, is up 22% year-to-date putting us well on track to achieve our guidance of greater than 15% growth for the full year.

Turning to Slide 8. I'll provide some further details on our segment level earnings drivers. In retirement, third quarter earnings, excluding notable items, were $409 million. Net interest margin or NIM increased 12% year-over-year and 5% sequentially, helped by growth in general account assets and higher returns in our alts portfolio. If you exclude the impact of alternatives, core spreads slightly decreased by 5 basis points sequentially which we attribute primarily to timing factors.

This quarter, spreads declined due to higher cash balances and credit earning rates for our 1-year RILA contracts, which reset more quickly than floating rate asset yields. We expect to see some noise in quarterly spreads, particularly during periods of volatile interest rates and continue to forecast go-forward spreads to be roughly stable with the level from the first half of 2026. Fee-based revenues rose 1% sequentially and 16% year-over-year driven by strong separate account returns.

On the expense side, DAC amortization increased $18 million sequentially, which reflects both growth in the block and in an assumption update capturing higher lapse rates. We view this level as a good baseline for the fourth quarter.

Turning to Asset Management. AB reported earnings of $152 million, roughly flat year-over-year. Total AUM ended the quarter at $900 billion, down slightly from the second quarter as positive net flows were offset by negative fixed income returns. The average base fee rate of 37.1 basis points declined modestly due to mix shift and timing as the new $12 billion commercial mortgage loan mandate will begin to accrue fees in the fourth quarter.

While some of the recent large institutional wins have a lower base fee rate, they generate an attractive incremental margin on new revenues, and AB's adjusted margin increased 50 basis points sequentially. We also raised our guidance for the full year performance fees to $135 million to $150 million which implies a range of $62 million to $77 million for the fourth quarter.

Moving to Wealth Management. This business reported exceptionally strong third quarter earnings of $75 million, up 27% year-over-year. This reflects robust organic growth momentum with advisory assets up 22% year-over-year and a 14% increase in adviser productivity. Results also benefited from a onetime payment related to the Stifel acquisition which effectively offset some expenses accrued earlier in the year. Looking forward, we view $70 million as a good baseline expectation for fourth quarter earnings.

Finally, Corporate & Other reported a loss of $82 million after adjusting for notable items. Results this quarter benefited from improved mortality experience and lower expenses. In addition, we moved results from the exited employee benefits business, we generated a small loss in the quarter below the line. The year-to-date corporate and other loss adjusting for notable items is $286 million, and we continue to forecast a loss of $350 million to $400 million for the full year.

Turning to Slide 9. We returned $320 million of capital to shareholders during the quarter, including $238 million of share repurchases. Our payout ratio was 59% for the quarter and has been 56% year-to-date, putting us on track for our targeted 60% to 70% payout ratio for the full year. We ended the third quarter with $900 million of cash and liquid assets at the holding company, up from $800 million. We also brought a portion of our proved insurance subsidiary dividend to the holdco in the third quarter.

And we continue to project full year 2026 cash generation of $1.8 billion. Adjusted book value per share ex AOCI with our AB ownership state at market value was $34.25, yielding an adjusted leverage ratio of 25.5%. As a reminder, at the close of the merger with Corebridge, our GAAP shareholders' equity will be reset to reflect the fair value of assets and liabilities. This will result in a more meaningful book value, return on equity and leverage ratio.

Overall, we feel good about the financial momentum across the company and will enter the merger from a position of strength. We are also making good progress on integration planning and expense synergies, and we have good line of sight into revenue synergies and which will be quantified at Investor Day. As a proof point, we have identified over $100 million of run rate expense savings that will be recognized in the first half of 2027. This puts us well on track to achieve the targeted $150 million of run rate savings in the first year post merger.

And we remain confident in achieving at least $500 million of run rate savings by the end of 2028. Since this will likely be Equitable Holdings last earnings call prior to the merger, I want to take this opportunity to thank Mark Pearson for his leadership at Equitable since 2011, and the personal mentorship he's provided to me over the years. I'm equally excited to work with Mark in his executive chair role and Marc Costantini as the CEO of the new Equitable in delivering on the promise of this merger.

I'll now pass the call back over to Mark.

Mark Pearson

Thanks, Robin. With the merger expected to close by year-end, this will be my last earnings call as Equitable CEO. Before handing the reins to Marc Costantini and assuming the role of Executive Chairman. As I reflect on Equitable's journey, I am proud of the actions we have taken to strengthen our balance sheet, shift our business mix and enhance returns while delivering on our mission to help Americans secure their financial well-being and retire with Dignity.

Thank you to all our employees and advisers who have worked so hard to get us to this point. But looking forward, I'm incredibly excited about the opportunity for new Equitable as we complete the merger with Corebridge, and I look forward to working with Marc and the board to deliver on the opportunity in front of us. we will have the platform capabilities and talent needed to win with customers and secure our place as the largest and most profitable U.S. retirement, protection, asset and wealth management company.

We now look forward to taking your questions.

Operator

[Operator Instructions] Your first question comes from the line of Suneet Kamath from Jefferies.

分析師問答

Suneet Kamath

First, congratulations and best of luck to Mark. Thanks for all of your help over the years. I wanted to start with the higher interest rate environment. Obviously, we spiked in the quarter and then things have come back. Are you seeing anything in terms of policyholder behavior whether it relates to lapses or even product design as it relates to annuity competition. We haven't seen rates this high and move this quickly in a while. So I just want to make sure we're not seeing sort of any unintended consequences.

Robin Raju

Sure. Suneet, I can start, and thanks for your question. So look, overall, we think the high interest rate environment is good for our business across the retirement business, sours had positive net flows of $1.1 billion, record sales in Rila but with that also comes some higher lapses that you saw as well. So there is a balance that you see in the specific scenarios, but nothing that we see that would cause concern at this point in time, higher interest rates mean more options for consumers and annuities are a good place to have, whether it be FIAs or RILA products as well.

Some pressure on AV assets on the fixed income side with higher rates as higher rates brought that AUM down. But we think as rates stabilize, that asset class is differentiated with AB's strong performance in that category as well. From -- the only thing I highlighted on the call was on the alternative side, higher rates have a negative impact on the real estate equity exposure. So that's why we guided to a lower single-digit return for the fourth quarter that's the only other thing that we're seeing at this time.

But overall, we think higher interest rates are a good position to be in. And remember, our interest rate sensitivity that we disclosed to the market for every 50 basis points, it's about $40 million of operating earnings as well.

Suneet Kamath

Okay. Got it. That's helpful. And then I guess on the new Equitable as we think about, I guess, liability generation of $70 billion to $80 billion a year. How much of that could AllianceBernstein effectively manage? And are there asset classes or investment strategies that you guys at AB need to build up like you did the CML portfolio in order to take advantage of getting a greater share of that $70 billion to $80 billion.

Robin Raju

Yes. So let me start, and I'll pass it over to Seth. Look, across the new Equitable, we're going to write $70 billion to $80 billion of new liabilities every year. And so we're going to need world-class asset managers, and we have that with AllianceBernstein and then also the partnerships with Blackstone and BlackRock as well. As you saw with AB over the years, they built up many asset capability to support equitable in their expansion in private markets, which is over $100 billion now.

And we'd expect that to continue to build with new asset class capabilities and expansion on origination. But let me pass it over to Seth to provide some more information.

Seth Bernstein

Thank you, Robin. I think you put it well. We continue to react to the opportunities that we see. And to the extent the liability needs are different for the new Equitable, we are already focused on what particular areas, notably in private credit and elsewhere to address that. So whether that's infrastructure or other capabilities we're looking actively at it and will pursue it if it makes sense for the broader entity.

Mark Pearson

I think if I could add something, Suneet, it's Mark Pearson here. I mean 1 of the things you will see is that Corebridge's liabilities are longer in duration than Equitables, and that opens up for different type of assets to back those longer liabilities as well. And which, as said, AB are looking and we'll develop the plus for us as well, of course, is that means that AB have an even more robust offer to be successful in the insurance space, which has shown great progress in the last couple of years. So it's a nice opportunity for us both in terms of supporting new equitable, but also in opening up new markets for AB.

Operator

Your next question comes from the line of Joel Hurwitz with Dowling & Partners.

Joel Hurwitz

Robin, first, just on the net interest margin retirement. You provided some good color on the drivers of the lower underlying results in the quarter. And I think you said you expect that to return more towards half 1 levels. Would you expect that for the fourth quarter? Do you think the cash drag and that floating rate reset will normalize in time for Q4 results?

Robin Raju

Sure, Joel. Yes, the short answer to that is yes. It is a function of timing. I think if you take a step back, though, dollar amounts was up 12% year-over-year and don't forget fee-based revenue in the retirement business as well was up 15% year-over-year. So we're getting good growth on the revenue side. There are some timing elements when you look at basis points quarter-to-quarter, we had higher cash. And then with the in rates. We saw some of the liabilities reset faster than the assets, but that all should normalize.

Overall, we're quite pleased with the results and the growth in the retirement business. and we expect to continue to grow NIM, specifically as a general account book value growth and also fee-based revenues as a separate account growth as well on the retirement side.

Joel Hurwitz

Got it. That's helpful. And then just on the assumption review, could you unpack the moving pieces in retirement in the quarter was a benefit in the quarter, but looks like it's having a negative go-forward impact on DAC amortization?

Robin Raju

Sure. So 2 things. I think overall, and you see this, I think, across the industry is, as everybody updates their lapse assumption, which is a good thing. You're moving the current experience, you're going to see some acceleration of DAC amortization, but that's a noncash item. So just keep that in mind. Overall, our assumption update was positive in the quarter. There are always ins and outs and an assumption update, but most importantly, it's around a narrow range that we see those outcomes now, and that's been consistent over the years for Equitable.

Operator

Your next question comes from the line of Tom Gallagher from Evercore ISI.

Thomas Gallagher

Can you unpack a bit what happened to retirement flows this quarter. So they decreased from $1.7 billion in 2Q to $1.1 billion. And then there was some movement between separate account and general account, which was, I think, a little confusing. Anyway, can you talk more at the product level? What are you seeing? Is RILA still holding up well, maybe something happening on the group retirement side? Any color there would be helpful.

Nicholas Lane

Yes, sure. This is Nick. First, as a reminder, our Retirement segment now encompasses both our individual retirement and our retirement business. As you highlighted, it generated healthy flows $1.1 billion, but breaking it down. In Individual Retirement, we generated $1.5 billion of net flows driven by record sales of $5.5 billion and $4.2 billion of RILA sales. So we continue to see strong demand and have the edge to deliver on it.

In Group Retirement, we saw strong top line growth. But as you'll recall and remember, flows are traditionally softer in the third quarter as teachers aren't working in the summer months. They don't get paid and therefore, they don't make payroll contributions. Going a little bit deeper in tax exempt the strong fundamentals are there. We're the #1 player in K-12. We have over 1,000 advisers that serve that space, we saw first year premium grow at 16% year-over-year.

In institutional, which is also in that segment, as we said, it's going to be lumpy. We had a strong second quarter, as you'll remember. Third quarter was a little bit more muted. We only onboarded on BlackRock plan. But I'd note the business has generated over $2.4 billion in assets since we launched it and has a solid pipeline going forward.

Last, we do continue to see some flow pressure in our corporate block. This is our older vintage, lower-margin 401(k) represents less than 15% of our segment account value. And as a reminder, about 20% of the tax-exempt outflows are participant driven. Of the remainder, we're able to capture 50% within Equitable advisors speaking to the benefits of our flywheel. And we see upside in that translating these best practices to Corebridge post-merger. So looking forward, we continue to expect to generate positive flows and believe we've got a competitive edge.

Thomas Gallagher

Got you. That was helpful color, Nick. My follow-up is just on the $37 million prior period adjustment for reinsurance on the life insurance side. Should we view that as an economic adjustment where you got a better reimbursement from some prior periods with your reinsurance partner? Or is this really just an accounting-only adjustment on the EQH side, so no change for your reinsurance partner? Just want to get a sense for what actually happened here?

Robin Raju

Yes. Tom, thanks for the question. It's really an accounting change on our side from a reinsurance standpoint with our partners, nothing's changed it's timing of recognition in the accounting. Some of it should have been trued up earlier and we caught it this period, and that's why we're calling it out as an out-of-period benefit.

Operator

Your next question comes from the line of Ryan Krueger from KBW.

Ryan Krueger

My first question was on Wealth Management. You've certainly had strong flow trends, but -- and it seems to be mostly productivity driven. Your adviser count, though, has come down in the last couple of quarters. So -- just hoping to get a little bit more detail on what you're seeing there from kind of the adviser headcount, recruitment and retention standpoint.

Nicholas Lane

Yes. Thanks for the question. As you highlighted, we're very pleased by the momentum in the business as our value proposition is resonating with clients and advisers. $2.7 billion in net new assets with an 11% organic growth rate. We see continued momentum in the underlying growth drivers, as you highlighted, productivity is up 14%. We think we bring a distinct edge in our planning process, given our holistic life planning that serves a broader part of the portfolio and continue to be focused on building wealth managers that get a deeper share of wallet.

There is a robust pipeline to continue to grow that. We -- at year-end last year, we highlighted we have 922 wealth planners, which is up 11%. That continues to grow, and we have a healthy pipeline of over 2,000 advisers that we think we can continue to train and develop. Headcount has been flat, but we think we have an edge given our model out in the space. We're 1 of the few that continues to bring in new people into the industry that allows us to continue to refresh and rejuvenate our pipeline.

I would highlight the average age in the industry is 57. Our average age is 10 years lower. So it's more robust and I think more durable. Finally, the Corebridge acquisition is going to add $20 billion of assets and advisers, and we think there's opportunity to continue to apply our best practices to further drive productivity. So net-net, very bullish on the future, strong momentum and would expect to continue to see that going forward.

Ryan Krueger

And then a quick 1 on AB and the fee rate. Should we expect some uptick in the fourth quarter fee rate as you start earning in fees from the equitable CML portfolio? Or is that going to be offset by just the general trend of somewhat lower fee new inflows?

Mark Pearson

It is going to be mix dependent, but 3Q is abnormally low just because of the $12 billion CML assets that we had that weren't attracting any revenues. So the decline from 2Q to 3Q was largely driven by that. So absent that, we would have been pretty much flat versus 2Q '26. So it's really just going to be is mixed and market dependent from here.

Operator

Your next question comes from the line of Wes Carmichael from Wells Fargo.

Wesley Carmichael

I just wanted to come back to the the interest rate question maybe from a different angle, not so much about unintended consequences, but maybe opportunity. But I guess with higher risk-free rates, do you see industry retail annuity sales continuing to to really accelerate from, call it, $465 billion level in 2025? Or what do you think really gives overall sales to take another leg up from here?

Nicholas Lane

Yes. So look, I would, first and foremost, point to the demographic tailwinds that Mark highlighted, some things you can't predict, but you can't predict demographics. Baby boomers are moving to their next stage, and they are looking for both more secure retirement solutions as well as advice, and we are uniquely positioned to capture both of that. So we would expect the momentum to continue to continue based on the core fundamentals out there.

Wesley Carmichael

Got it. And then just switching gears. On alt turns, I think, Robin, you were talking about higher rates or a headwind for real estate equity. It seems like maybe perhaps we haven't seen as much on the monetization and realization side of private equity portfolio, at least in the news. So just curious if rates are going to remain in the ZIP code, do you kind of expect lower-than-expected returns in 2027? And beyond that, are there any levers that you'd like to pull if those returns are going to remain a little bit more subdued?

Robin Raju

Yes, sure. Just keep in mind, the total portfolio is about less than 3% of the total general account for Equitable, that's below industry average. As we don't have many long-dated liabilities, that's decreased over time, just a function of our liability profile. The alt returns in the quarter were about 5% good and buyout, but negative on rotate equity.

Real estate equity is about 20% of the of the alts portfolio, and so that will remain a headwind. So I won't forecast into 2027 yet. I just guide to what I mentioned for the fourth quarter at this time. And then we'll update again in our first quarter call for the new Equitable.

Operator

Your next question comes from the line of Alex Scott from Barclays.

Taylor Scott

I wanted to see if you could give us some higher level color on the competitive environment that's out there and just seeing that some of the credit rates being offered, it looked like they've gotten a little more aggressive relative to risk free rates and so forth. So I just wanted to understand the supply of capital and just understanding you're making the point about demand, but what is the supply of capital coming from maybe some of the private equity-backed companies doing to the competitive environment?

Nicholas Lane

So I'll start. Look, overall, we had a record quarter in sales and values we highlighted, up 11% and $1.5 billion of net flows translating to a 5% trailing 12-month organic growth rate. From a competitive standpoint, we see no real change in the RILA space. We haven't seen a new entrant since the first quarter of 2025 and the alternative players have been in for a while.

We're very mindful of competitive trends on pricing and our focus on Equitable continues to be unprofitable growth. So looking forward, as you highlighted, we continue to see strong demand. but believe we've got a durable edge. The key to being successful in this market is generating attractive risk-adjusted returns, and we have that through AB and a line of sight there.

I would also highlight we have differentiated distribution with Equitable advisers and shelf space on third-party networks, which attracts lower-cost liabilities. And as Mark highlighted, we have deep relationships and scale, which we expect to further extend given our merger with Corebridge. So we believe we're in a privileged position to capture a disproportionate share of the value that's emerging in that space.

Taylor Scott

Great. Follow-up question I had was on the $100 million of expense synergies that have been identified. I wonder to see if you could shed a little more light there. And then timing of when that will begin to emerge.

Robin Raju

Sure. So as we mentioned at the merger announcement, we expect to realize $500 million in total synergies as a function of the merger. This is going to come from 4 main areas: duplicate roles within the organization, IT systems, third-party vendors and real estate. What I mentioned on the call today and what we're announcing today, both Equitable and Corebridge through the actions that we've taken, mostly related to head count through the first wave of leadership announcements to over 500 people that Mark highlighted earlier, we've achieved $100 million of run rate saves that will come through in the first half of the year, and that puts us on track to $150 million of year 1 saves.

So we feel very confident, and this should give you confidence in our ability to deliver on the thesis of the merger and the expense synergies that were recognized as this is just the first element we've seen very early on. I think also taking a step back, I think both companies are in a unique position considering the development of technology around us. And being able to reach AI as we integrate in this merger is going to make us -- enable us to have a better customer experience coming out of this and also enable us to be more -- have more productivity and build a bigger scaled organization as a result of leveraging these technologies around us.

So I think that's something unique around this merger that others don't have before. So it's about making us bigger and stronger leveraging technology that we'll do as well as part of the merger.

Operator

Your next question comes from the line of Pablo Singzon from JPMorgan.

Pablo Singzon

I wanted to follow up on the higher DAC amortization you're assuming for in the delivery time and I recognize it's noncash, and it will sort of be written off once the merger is affected. But -- does that reflect a decrease in persistency ultimately, right, and fundamentally -- and if that's the case, does that have any impact on how you price your annuity business?

Robin Raju

Sure, Pablo. Yes. So higher DAC amortization, the result comes from some higher lapses that we reflected in our current assumption update. You should keep in mind from a pricing standpoint, we priced at economic reality of the products. And so we're assuming customer efficiency and our pricing. And so the returns that we price to are stable and ones that we expect and what we have realized over time. But as the experience emerges, we want to reflect that in our GAAP assumptions as well, and that's what you see come through in the DAC amortization.

Pablo Singzon

And the next second question I had was about traditional VAs in retirement. So sales there have been growing faster than RILA, I think that's been true not only for you but for the market at large. So the question is, can you talk about what's driving the trend there? And -- just remind us what type of beds you're selling today versus those you place in the runoff block?

Nicholas Lane

I think I understood your question, what's happening in the traditional VA versus the RILA space. Look, we see continued opportunity there. There is demand for secure income and our Retirement Cornerstone product meets that demand in a very well constructed way. We also see enhanced demand for, I would say, the benefits annuities provide for tax deferral relative to accumulated savings.

So we think about the income benefits. We think about the death benefits and we think about the tax deferral, and we've got a suite of products that meet those needs to respond to different environments and serve customers based on their best interests and their desires.

Operator

Your next question comes from the line of Jack Maton from BMO.

Unknown Analyst

I just have 1 on the retirement business. over the past few years, you see that net interest margin grow faster than operating earnings. I guess is there a point now where you expect the growth rate back in commission expense to slow? Or should we expect to continue seeing that trend as Equitable continues to put up fairly robust sales growth.

Robin Raju

Look, I think part of the robust sales growth as we have more -- attract more customers into our business, and as we continue to grow our retirement business, that does put on more DAC on the balance sheet as it relates to GAAP. So that's something you should see continue. I think where you'll see us focus on is continue delivering strong spread-based earnings and strong fee-based currency.

So are both up 12% and 15% year-over-year overall. And then with the merger with Corebridge, you're going to see lower unit costs come through in that retirement business as well should which should accelerate growth for both retirement businesses on a go-forward basis. But DAC isn't always a negative thing. It means we're attracting more customers, and we're bringing them on to our book and that do that as a good thing.

Operator

Your next question comes from the line of Mark Hughes from Truist.

Maxwell Fritscher

This is Max on for Mark. You had highlighted the institutional pipeline at AB, but what are you seeing in private wealth and the retail channels? And how would you expect flows to trend there?

Robin Raju

In private wealth, we are seeing renewed demand and pretty good flows. Our outflows in September were in part reinvested in October. So we're on a more normalized track, and we're happy about that. Institutional continued to see strong interest in fixed income, third-party fixed income interest from insurance clients as well as other clients. We are seeing more equity search activity, which is promising, but there's nothing to report there.

And in retail, we have a continuation of the general trends we've seen with respect to large cap growth in equities and so forth. But recent performance has improved. And so I don't have anything to report, but I think it's a better trend line. And I guess my final comment to you is our backlog remains quite healthy. And I'm putting aside the $100 billion that we are anticipating receiving from new Equitable following the merger.

Operator

Your next question comes from the line of Tracy Benguigui from Wolfe Research.

Tracy Dolin-Benguigui

And congrats to Mark and best of luck to you. I'm curious how your RILA sales I think -- okay, I'm curious how your RILA sales trended up until September when we saw rates move up and how the sales trends were thereafter, like was pricing more attracted before September but I'm also curious if you saw more demand starting September. So -- and also what rate assumptions support your view that spreads stay roughly stable with the first half of '26 levels?

Nicholas Lane

Sure. I'll start. As a pioneer in launching RILA over a decade ago, we see the core consumer valuation resonating, which is a protected equity story with upside potential and we see that demand continuing to grow. So we didn't -- we haven't seen any month-to-month changes those core fundamentals versus movements from that standpoint, the pricing gets priced every 2 weeks. It's reflective of volatility in interest rates. And so we're able to align delivering that value proposition with very disciplined ALM matching. So it's a great product for the meat. It's a great product that resonates in different environments.

Robin Raju

We -- historically, we haven't seen RILA sales impacted by a level of interest rates. When interest rates have declined in different periods, we've seen actually increases in RILA sales because as Nick mentioned, it's more of an equity-oriented participation for retirees. So it's less interest rate sensitive from what we offer to the client.

From a return standpoint, as Nick mentioned, we priced in current activity in all markets and what we offer to clients. And you see our differentiator continues to be distribution on a spread basis, we're not assuming any increase in spreads in -- from the first half of the year. We're assuming that we'll come back to that first half of the year level in spreads after we -- after some of the timing gets normalized in the fourth quarter.

Tracy Dolin-Benguigui

Okay. That's very helpful. I'm also curious what quarters your $37 million after-tax reinsurance true-up represented that you're underestimating that reinsurance relief. And was this from RGA or another reinsurance partner?

Robin Raju

It is -- it goes back over a few periods, and it is from the RGA transaction. But it doesn't -- remember, it's not -- it doesn't impact what I mentioned earlier, it's not an impact from RGA. I think what was seated and settled was correct. It's our internal accounting that there was a true-up on for this, which was a catch-up for the prior periods.

Tracy Dolin-Benguigui

Okay. So it won't be an actual cash flow just an accounting recognition?

Robin Raju

Correct. It's an accounting item.

Operator

Your next question comes from the line of Yaron Kinar from Mizuho.

Yaron Kinar

Congratulations to Mark as well on a wonderful run. My first question just goes back to interest rates and maybe a slightly different angle here. if they continue to rise at some point, concerns around CRE starts up building. How -- at what point do you think that becomes a legitimate risk for the balance sheet? And what actions can the company take to mitigate that?

Robin Raju

Sure. Thanks, Yaron. Look, again, I think overall, if you take a step back, high interest rates are good for our business. And what we see is consumers in the U.S. continue to remain strong, and that should help the economy be resilient even in a high interest rate environment. So under that sense as long as we still see good strong trends of the U.S. consumer, I'd expect the overall credit situation and equity markets should be stable from that standpoint.

The CML portfolio that we have is high quality. The LTVs are strong, and we've been able to refi those as planned. So Sure, there's always risk in a high interest rate environment, but I think it goes back to what's happening in the economy to the U.S. consumer as long as that trend is there. I think that's a big protection against any credit or CML actions that may be.

But it's always important that we underwrite the securities properly, both credit and CMLs, and we make sure we do stress test. We've disclosed our stress test earlier this year, you saw us disclose in a credit environment, our RBC will still remain above 430%. So which means the way we've positioned the balance sheet, we can absorb credit stress, still write good new business and still distribute cash flows to shareholders.

Yaron Kinar

And then my second one, just a quick confirmation. I think on the last quarter's call, you had said that you expected to deploy the funds received from the employee benefit sales at Hartford to building up at scale businesses. I just want to confirm that, that was still the case that you had no intent to deploy some of those funds towards buybacks.

Robin Raju

Yes. We remain -- we closed the transaction this quarter. We remain on track to our $1.8 billion of cash flows for this year. I expect us to remain our 50% to 70% payout and use the nominal proceeds that we have to help support growth in this robust environment.

Yaron Kinar

Okay. So again, just to confirm that, that $1.8 billion target would not include the Hartford funds?

Robin Raju

Correct.

Operator

Your next question comes from the line of Wilma Burdis from Raymond James.

Wilma Jackson Burdis

Are you seeing any more rational competition in the annuity space. There's been a little bit more regulatory action there with 2 of the top 20 annuity fixed annuities. Derisking their portfolio, the NAIC is putting in place some rules limiting offshore activity and investments in certain asset classes. Are you seeing any evidence that any of you are working?

Nicholas Lane

Thanks for the question. I would go back and say, look, we view competitive activity as being sort of constant for the last months. As you highlighted, I do think there is a focus on quality of those people that are running in have strong balance sheets are delivering consumer value through the distribution and strong relationships.

But overall, we think that the fundamental drivers continue to focus on demand and competitive activity, we haven't seen a material change recently.

Mark Pearson

I think as well, we'll note market moves to strengthen the governance and the disclosure in the industry. We welcome I think, moves that actually show the value of a trusted brand over a long, long period play to new equitable strength. So these are things that we observe in the marketplace, and we think it's net positive for us.

Wilma Jackson Burdis

Okay. And then could you talk a little bit about the other alternatives? Is that driven by VC? I noticed you've had a couple of good quarters there. I'm just curious if you can have an outlook there. And then if you could give us a little bit more color on your data center and AI investments, which I realize you call out are very small, but a little bit more color would help.

Robin Raju

Yes. I think we shared in the earnings presentation will make returns by the different subsectors that we have on the alts portfolio as well. Again, I think with the high interest rate, I would -- real estate equity is what is the biggest input into our fourth quarter guidance, it's still early with funds reporting. So we'll continue to provide updates as we get more information overall.

And we did disclose the hyperscalers and data center. It's a little bit more than 1% of the general account. So it's very small. A lot of in the big, high-quality names. And then where we have private ABS, it's more short duration, good quality that we're comfortable with. So a small part of the overall general capital.

Operator

This concludes the Q&A session and also concludes today's call. Thank you for attending. You may now disconnect.