Equitable Holdings says it will come up with a plan for improving the performance of its life insurance business by about July 31.
Executives at the New York-based company discussed their concerns about the business last week, during a conference call with securities analysts.
Robin Raju, the chief financial officer, said the unit lacks the growth momentum that the company sees at its asset management, wealth management and retirement businesses.
"We have a business that has a low return on capital," Raju said. "We have to improve returns on it."
Equitable could improve returns by taking steps such as cutting expenses, using outside reinsurance and using reinsurance from an Equitable affiliate based in Bermuda, Raju said.
What it means: At some U.S. life and annuity issuers, life insurance may be in the doghouse.
The backdrop: Equitable's life insurance helped create the modern U.S. life insurance market.
The company's policyholders have included the inventor Thomas Edison, the songwriter George Gershwin and President Franklin D. Roosevelt.
But low interest rates hurt portfolio returns in the 2010s, the COVID-19 pandemic led to U.S. life insurers paying more than $25 billion in death claims, and new investment and benefits value accounting rules make the net earnings of publicly traded life insurers like Equitable look much more volatile than they used to.
When Equitable started to try to reduce mortality-related life insurance claim fluctuations, "we looked at excess-loss reinsurance to help mitigate that volatility, but the pricing wasn't attractive relative to the economic value that we would give up," Raju said.
Equitable's life insurance business is part of its protection solutions unit, which also sells employee benefits products.
The earnings: Equitable as a whole is reporting $1 billion in net income for the fourth quarter of 2025 on $3.6 billion in revenue, compared with a $589 million net loss on $2.2 billion in revenue for the fourth quarter of 2023.
Operating earnings, which exclude the effects of changes in the value of investments and benefits, increased to $522 million, from $476 million.
The protection solutions unit, which sells disability insurance and employee benefits products along with life insurance, recorded $32 million in operating earnings on $831 million in revenue, up from $28 million in operating earnings on $807 million in revenue for the year-earlier quarter.
"Gross mortality claims were close to our expectation, but we experienced elevated net mortality because of two large claims where we had minimal reinsurance coverage," Raju said.
Reinsurance covered just 12% of the company's life insurance claims. Normally, Equitable expects reinsurance to pay 15% of its life insurance claims.
Equitable is expecting that protection solutions operating earnings could amount to about $200 million this year, if mortality experience is stable and alternative investment earnings come in at the lower end of the projected range.
Documents from Equitable's archives related to customers such as George Gershwin, Franklin D. Roosevelt and Thomas Edison. Credit: Allison Bell/ALM
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