➤ Equitable Holdings Inc. aims to be "big" in the US retirement market where it sees ample opportunity for growth.

➤ The insurer's CFO cautioned that it will take some time for investors to differentiate the banking industry from the insurance industry amid market turmoil.

➤ Higher interest rates make many insurance company offerings more attractive.

Equitable Holdings held its first-ever investor day May 10 to deliver new financial guidance, which includes an expected 50% increase in cash generation, to approximately $2 billion per annum by 2027.

S&P Global Market Intelligence caught up with Equitable CFO Robin M. Raju to discuss his outlook for the company in 2023, its growth strategy and his thoughts on the macroeconomic environment.

The following is an edited transcript of that conversation.

S&P Global Market Intelligence: What are the top things on the docket for Equitable this year?

Robin M. Raju: I'm really excited. We have such a unique opportunity here in the US retirement market. It's a fast-growing market, more than 11,000 Americans retire every day. The demographics support the retirement products we have to offer, and the advice that we have to provide. We know in the segment that we operate in … customers want to have and interact with an adviser in person. We know that our business model is differentiated well to capture this need in society.

The US retirement market is the best retirement market in the world, whether you talk about the demographic change compared to other societies or the tax advantage in retirement vehicles.

How is Equitable looking at M&A and its growth strategy?

What we've done since the IPO is grow organically. The base in all of our financial guidance is that we can continue to grow and capture US retirement share or boost our asset management solutions globally organically.

M&A is something that we always look at. We'd love to continue to build out our alternative business at AllianceBernstein, our wealth management franchise at Equitable. The first acquisition that we did since our IPO was CarVal Investors. CarVal is a private credit orientation that enhances the private markets platform to AllianceBernstein. We announced that last year. It's been a great acquisition for us. They fit very well in AllianceBernstein, and now the AllianceBernstein private markets business is almost $56 billion. We plan to grow that business to $90 billion to $100 billion by 2027.

The other piece of the leg is our wealth management business. We completed an acquisition last year of Penn Investment Advisors Inc.; it brought up $600 million of assets under management. And we continue to look to see how that can complement and help our fastest-growing business, which is our wealth management segment.

Our strategy and our ability to grow free cash flows for investors and enhance our financial targets, whether it be our EPS growth of 12% to 15%, or a payout rate of 60% to 70%, are all based on organic growth we see coming through all our business lines.

How are you looking at the turmoil in the banking sector and its potential spillover into other financial markets?

The banking sector provides a very different value proposition than what insurance companies provide — it links to the retirement opportunities — with the tax advantages and benefits. There are different structural protections that you have with the insurance space.

Where I do see the linkage between the industries is in overall volatility in the markets. ... Equitable has been well positioned. We don't have any exposure in our general accounts to any of the names that you've heard are in crisis. And that's a function of how we manage the balance sheet conservatively.

Long-duration targeted improvements (LDTI) is one of the most significant accounting changes life insurers have experienced in several decades. What is the impact of this new standard?

Equitable has been a long proponent of LDTI. We're really excited about it because it moves the accounting closer to how we manage our business on an economic basis, which is fair value. For Equitable, it doesn't impact us on how we generate cash at all, but it does enhance the financial reporting. Also, with long-duration targeted improvements, there are more disclosures available to investors they can look at to understand what risks different companies are taking. I think this will expand transparency and trust for the whole industry. And there is more regulation that's going to come through from the NAIC, whether it's on interest rates or securitized assets that will enhance the transparency and trust for all investors.

Any thoughts on a potential recession and its impact on life insurance companies?

We focus on controlling the controllables. We focus on protecting our balance sheet, driving efficiency, continuing to be innovative with our new products and touching more consumers. We are prepared to respond across many different cycles.

Since we went public, we've seen volatile equity markets, historically low interest rates, rapid rate hikes due to inflation and a global health pandemic. Equitable has always maintained a strong risk-based capital ratio and we have holding company cash, so cash in excess of what is required at $1.8 billion. We've always been able to return capital to shareholders despite any market environment. That's the proof in us focusing on what we can control.

Overall what trends do you think will be impacting life insurers in 2023?

I think in 2023, with interest rates higher, it does create more attractiveness into the offerings that insurance companies have to offer. What differentiates a company in that environment is advice.