Thank you for joining us for Equitable Holdings, Inc. Fourth Quarter 2020 Earnings Conference Call. Currently, all participant lines are muted, and this conference is being recorded. After the presentations, we will have a question-and-answer session. Now, I would like to introduce Jessica Baehr, Head of Investor Relations. Please proceed.

Thank you and good morning, and welcome to Equitable Holdings full year and fourth quarter 2020 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 materially differ from those expressed in, or indicated by, such forward-looking statements. So I'd like to refer you to the Safe Harbor language on Slide 2 of our presentation for additional information. Joining me on today's call is Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Anders Malmström, our Chief Financial Officer; and Nick Lane, President of Equitable Financial. Also on the line is Ali Dibadj, AllianceBernstein's Chief Financial Officer and Head of Strategy. 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, 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.

Thank you, Jessica, and good morning to all joining our call today. An important part of the CEO’s role in any year is to present the financial results and talk about the momentum of the company. I shall, of course, do that today. But the year 2020, with the global pandemic and the demands for more justice in society was unlike any other year that we have worked or lived in. At Equitable, this caused us to look inwards to really understand the value we add to our clients. And at the same time, have courageous conversations and start our journey to advance racial equity. So I wanted to take this opportunity to thank the people of Equitable and AllianceBernstein who have shown remarkable agility and commitment over the past year. Not one day was lost in serving our 5 million clients, an incredible achievement in the midst of social isolation. I've been fortunate to be a CEO for a number of years now, and I have never felt prouder of our teams. We had a strong finish to the year. Given the turbulence of 2020, protecting shareholder capital and maintaining a strong balance sheet so that we can honor our commitments was paramount. Equitable is managed on a fair value basis. This means we take no bets on interest rates. And as such, our balance sheet remains resilient throughout. I’m very pleased to report that despite the tough macro environment, we have delivered on all of our three-year commitments given at the time of the IPO. All financial targets have been achieved and we have delivered on the strategic priorities we laid out in 2018. Full year non-GAAP operating earnings per share of $4.99 is up 5% from 2019. Assets under management were up 10% year-over-year, so record high of $809 billion supported by robust firm-wide net flows of approximately $8 billion and the recovery in the equity markets. The strength of our balance sheet is evidenced by cash and liquid assets of $2.9 billion at our holding company, and our combined life subsidiary risk-based capital ratio is approximately 410%. This has allowed us to return $1.1 billion to shareholders in the year. And last week, we announced our Board had approved a new share repurchase program of a further $1 billion. Looking forward, the VA reinsurance transaction we announced in the third quarter remains on target for completion and positions us with a significantly derisked balance sheet and improved risk-weighted returns. It has been a remarkable year for Equitable and one which reinforces the purpose of our organization. Every day we hear from our clients heightened demand for advice and protection, and we remain very committed and energized in helping Americans secure their financial well-being so they can live long and fulfilling lives. Turning now to Slide 4, I would like to show what's behind the successful achievement of the goals we set at the time of our IPO. This was largely driven by professional management actions over the last decade and connecting the company to a fair value basis. Firstly, we have built upon our leadership positions in the VA retirement market where we have distinguished ourselves through product innovation and in the K-12 supplementary retirement market, where we proudly serve 800,000 educators. Our broad distribution reach, most importantly to our affiliated equitable advisors, has enabled us to change the mix of business from guaranteed products towards accumulation solutions for our clients, resulting in better risk-weighted returns for our shareholders. We have benefited enormously from our investment in AllianceBernstein, which generates over 30% of our cash flows. AB’s relative performance against its peers has been strong, with positive net flows of 9.2 billion in the year, excluding AXA redemption, buoyed by record gross sales in retail and the highest institutional active equity sales since 2008. These competitive strengths and the approach we take in managing the business has led us to meet or exceed each of our IPO targets. Operating earnings have been growing at 7% CAGR since the IPO at the top end of the range we provided, fueled by the completion of our $160 million general account rebalanced target and net productivity saves of $75 million. We have met our payout target ratio and have returned $3.1 billion to shareholders to date. As a result, our EPS has been growing at 14% CAGR over that period. Balance sheet strength is evident with our RBC ratio at approximately 410% and surplus cash at holdings. Our non-GAAP operating ROE of 17.3% is ahead of target. In light of a strong final quarter, the adjusted operating margin NAV picked up to 30.1% for the year ahead of the guidance we provided. So all-in-all, I'm very proud of what the management team has achieved over this period, and this provides confidence for the future. Now turning to Slide 5. In looking to the future, we have distinct capabilities with a number of drivers that give us confidence in our ability to grow. Firstly, our risk management capability. We still face uncertainty with the ongoing pandemic, so maintaining a fortress balance sheet and improving our risk profile are obviously critical. We will continue to manage the business on a fair value basis, recognizing shareholders do not reward us for our ability to forecast future interest rates. We remain on track for the closing of the VA reinsurance transaction in the first half of 2021. This transaction will reduce the CTE98 tail risk from our legacy VA portfolio by approximately 64%, and the positive ceding commission we will receive from Venerable, backed by Apollo, validates the economic soundness of our risk survey and asset liability management. Going forward, this transaction will provide more certainty as to the future cash flows of the business with a limited impact on earnings. Furthermore, in our life business, we will improve the risk profile of our portfolio by moving away from interest-sensitive products and focusing on the VUL accumulation market to our affiliated advisors and third parties. This is a continuation of a 10-year journey. Today, over 85% of our new business is not interest-sensitive, whereas a decade ago, the overwhelming majority of our new business was interest-sensitive with rich guarantees. Moving to productivity. Over the past year, we have been focusing on integrating an enterprise agile framework across our organization. To our knowledge, we are the first financial services company to attempt to do so remotely. Our goal is to create a more efficient and impactful organization to drive innovation and attract the best talent for the future. On technology, we have benefited from the separation from AXA, as it gave us the opportunity to upgrade our capabilities, such as enhanced modeling to drive insights for growth and productivity. As an ongoing result of the pandemic, there will be a structural shift in how companies operate going forward. Of course, this means greater digitization of processes, like electronic applications, and a reduction in certain corporate expenses, like travel. We are also assessing the opportunities of a hybrid workforce and how we can optimize offices in the future. We have a good track record of improving risk profiles and delivering on productivity. This will continue to be a focus of ours going forward. It is upon this foundation of an impervious profile and productivity that we look to the future towards accelerating GA optimization and business growth. Firstly, on optimization of our general account, the combination of Equitable and AB investment teams provides us an attractive opportunity to improve yield. Equitable’s $95 billion general account remains predominantly invested in investment-grade corporates and is conservatively positioned. Our investment teams have created the opportunity to reallocate significant AUM to high-quality liquid assets to further improve risk-adjusted returns. We have a virtuous circle here in managing our general account, the ability to deliver additional yields while at the same time creating high multiple businesses for our shareholders. AB has a good track record here in integrating high-quality teams and building out our alternative investment business. On the business growth side, new business has largely recovered to pre-COVID levels. This is driven by our distribution reach and product innovation, anchored in economic reality. Today, we have built out our individual retirement business, excluding legacy VA, to $73 billion of assets, which is fully aligned and low capital intensive. Our newly launched buffered annuity has helped to fuel record sales in SCS of $1.5 billion in the fourth quarter in what is an increasingly competitive market. We also continue to see growth in the group retirement business, proudly providing 1 million clients with a secure income for retirement, which has grown to over $42 billion in assets. We've continued to grow our alternatives business with AB, approximately 20 billion in assets today. Amplifying the success we have had in developing new alternative businesses, we are encouraged by our ESG efforts designed to meet the growing demand for these products and position us as a responsible company. AB has been a leader in responsible investing with innovative partnerships, such as Columbia University's Earth Institute. Today, AB has built strategies which amount to $16.5 billion in portfolios with purpose, which has grown 60% over the past year. Approximately 80% of AB’s AUM uses ESG factors integrated into their investment process. On the Equitable side, 80% of our general account investment-grade corporates are aligned to the UN Sustainable Development Goals. We see ESG continuing to grow with importance and value for us. With respect to our nascent businesses, employee benefits have now grown to 485,000 enrollees and over the next few years will grow in significance. Our wealth management business managing through our broker-dealer platform has grown to $62 billion in assets under administration. And we continue to evaluate opportunities to expand both businesses organically and inorganically. Our focus on these elements will put the business in a strong position for the future, allowing us to deliver on our long-term financial targets and ensuring that Equitable will be a stable, value generating company for decades to come. Overall, demand for retirement products remains strong and we intend to maintain our reputation for distributing innovative products that are economically sound. I will now pass it to Anders to provide more detail on our financial results for the full year and fourth quarter.

Thank you, Mark. Turning to Slide 6. On a full year basis, non-GAAP operating earnings were $2.3 billion, or $4.99 per share, up 5% for the year on a per share basis. Excluding notable items of $37 million in the year, non-GAAP operating earnings per share was $4.91, up 14% year-over-year on a normalized basis. Moving to GAAP results, we reported a net loss of $648 million in the year which was primarily driven by non-economic impacts from hedging and non-performance risk, in line with expectations. As Mark mentioned, assets under management increased 10% to $809 billion, supported by total company net flows of $8 billion, unfavorable market changes. We also benefited from solid performance in each of our business segments. In individual retirement, operating earnings were $1.5 billion. We saw strong demand for buffered annuity products, evidenced by record Structured Capital Strategies sales in the fourth quarter, with retail full year sales up 19% year-over-year. Group retirement reported operating earnings of $491 million, up 26% year-over-year. Our ability to shift to a digital engagement model contributed to net flows of $296 million, up 11% year-over-year, marking the eighth consecutive year of positive flows. AllianceBernstein’s operating earnings were $432 million, up 13% year-over-year, with 10% growth in AUM supported by 14.9 billion in active net flows, excluding expected low fee AXA redemptions. Lastly, our protection solutions segment reported 146 million of operating earnings with continued growth in employee benefits and the pivot to less interest-sensitive accumulation products. Overall across these businesses, we continue to drive strong results by leveraging our competitive strengths to realize attractive returns. Turning to Slide 7, I will review our consolidated results for the fourth quarter before providing more details on our segment results and capital management program. Non-GAAP operating earnings were $748 million for the fourth quarter, up from $653 million in the prior year quarter. Non-GAAP operating earnings per share increased by 20% to $1.65 per share, primarily driven by strong net investment income attributable to alternatives, increased fee-type revenue on higher separate account balances, and share repurchases. The outperformance of alternatives reflects strong private equity performance in the third quarter, which we report on a one-quarter lag. Notable items net impact on earnings for the quarter was 110 million favorable adjustments or $0.25 per share. Normalizing for these items, non-GAAP operating earnings were 638 million in the fourth quarter, or $1.40 per share. Moving to GAAP results, we reported a net loss of $1.2 billion in the quarter, which was primarily driven by non-economic impacts on hedging and non-performance risk, in line with expectations. Our economic framework and prudent risk management underpinned these results, and we repriced our products on a regular basis to align with economic reality. As a reminder, we hedged to have a full economic liability linked on the balance sheet to interest rates; our hedging program performed as expected with 96% effectiveness for the quarter. Moving on to the business segments, I will begin with individual retirement on Slide 8. Operating earnings of $442 million were up 13% versus the prior year quarter, primarily driven by higher alternatives income and growth in SCS account values. Results also included $73 million of notable items in the quarter related to positive equity market, reducing debt, and higher net investment income. First year premiums incurred for product offerings and net flows improved 19% and 52%, respectively, versus prior quarter driven by record sales in Structured Capital Strategies reflecting the breadth and depth of our distribution. Net inflows on our recurrent product offerings with lower surrenders were partially offset by expected outflows of our capital-intensive fixed rate block of $863 million in the quarter, or $3.3 billion in the year. Finally, our VA reinsurance transaction with Venerable remains on track for a second quarter close, significantly derisking our balance sheet and validating our reserves. Turning to group retirement on Slide 9, we reported operating earnings of $166 million, up 52% versus the prior year quarter, driven by higher alternatives income and fee revenues on higher account values. These strong results include notable items of $23 million, primarily driven by higher net investment income in the quarter. Net flows improved by $26 million year-on-year with strong renewal and lower surrender rate, largely attributable to our digital engagement initiatives. Account values increased by approximately $4.6 billion in the year due to market appreciation and continued net inflows over the trailing 12 months. Now turning to investment management and research for AB on Slide 10. Overall, AB delivered strong results with operating earnings of $141 million or 8% year-over-year, primarily driven by higher base fees on higher average AUM and lower operating expenses. AB experienced $20 million of lower COVID-related expenses in the quarter, which is accounted for in notable items or $9 million for Equitable Holdings. In the fourth quarter, AB generated $3.9 billion of net inflows, excluding expected low fee AXA redemptions of $700 million attributable to strong performance in the institutional channel. Further, AB reported gross sales of $31 billion, up 4.3 billion or 16% from a year ago, led by the retail channel. Moving to protection solutions on Slide 11. We reported operating earnings of $68 million, down from $129 million in the prior year quarter, primarily due to mortality experience and the PFBL reserve accrual, including $7 million included in notable items in the quarter. While we are encouraged by progress being made on COVID-19 vaccine distribution, we are very mindful that the negative impact on the people and communities we serve remains. In the quarter, we have higher mortality experience relative to expectations driven by COVID-19, but the negative impact was more than offset by our pricing actions. While we expect some volatility to continue, we maintain our guidance of $30 million to $60 million earnings impact for the 100,000 excess U.S. death claims. Turning to Slide 12, I would like to highlight our strong capital and liquidity position demonstrating our financial strength and the resiliency of our balance sheet. We remain committed to our capital management program, returning $1.1 billion to shareholders, including $400 million of share repurchases accelerated into 2019. In the fourth quarter of 2020, we will return $175 million to shareholders with $75 million of cash dividends and $100 million of share repurchases. We have also initiated our 2021 capital management program executing a $170 million accelerated share repurchase earlier this quarter. Our financial strength is evidenced by a combined RBC ratio of approximately 410%. This includes an accelerated $949 million dividend upstream in December of last year, securing our ability to deliver on our commitments in 2021. We remain well positioned at the Holding Company with cash and liquid assets of $2.9 billion, well above our $500 million minimum target and ended the quarter with our debt to capital ratio of 26%, in line with our target. In January of this year, we opportunistically raised another $300 million in preferred stock, taking advantage of record low rates to further optimize our capital structure. As a reminder, we plan to execute an incremental $500 million of share repurchases in 2021, following the close of the legacy VA reinsurance transaction, in addition to our 50% to 60% payout ratio target. With that, I will now turn the call back to Mark for closing remarks.

Thank you, Anders. As you can see, 2020 was another very strong year for our company despite the headwinds we faced. This is evidenced by the successful achievement of all our IPO targets and strategic priorities. This past year also provided us with the opportunity to demonstrate just how resilient our business model and balance sheet are, resulting in solid earnings and the continued execution of our capital management program. Looking ahead, I can say with confidence that we are continuing to operate from a position of strength, with a clear focus on positioning the business for the future. I look forward to the progress we will continue to make as we ensure the fortitude of Equitable for decades to come. With that, I'd like to open the line for questions.

Thank you. We will now begin the question-and-answer session. To accommodate as many questions as possible, please limit yourself to one question and one related follow-up. Your first question comes from Nigel Dally with Morgan Stanley. Nigel, your line is open.

Great. Thanks and good morning, everyone. So I had a question on buybacks. You have a substantial amount of cash, $2.9 billion at the Holdco, well above your target. So against that, it would seem that you could be more aggressive in buybacks than what you currently offer. So what's the rationale behind what seems to be an excess amount of liquidity at this point with the pandemic and related economic concerns? Despite we see some portion of that used for incremental buybacks, or has that been earmarked for something else?

Good morning, Nigel, and thank you for being on the call. We're very pleased to have navigated this pandemic with a strong capital position, which reflects our fair value approach to capital management. We plan to continue this approach moving forward. Since our IPO, we have returned $3.1 billion and are committed to a payout ratio of 50% to 60%. Additionally, we announced that due to the Venerable transaction, we would increase that by another $500 million. Our current focus is on maintaining financial flexibility and a strong balance sheet, which we believe is critical at this time. The markets remain uncertain, but we reaffirm our commitment to the 50% to 60% payout ratio, plus the additional $500 million related to the Venerable transaction once it closes.

Great. Thanks. And then just on individual retirement. We've seen a lot of new competitors enter the buffered annuity space. In your prepared remarks, you said that's resulting in a more competitive environment. If it gets more competitors entering or some of the new entrants being more aggressive on pricing, just trying to understand whether if the increased competition will result in some erosion of returns going forward?

Yes, I'll take that. First, I believe it's a positive to see competitors in the market validating the growing need for buffered annuities. The upside potential with downside protections are right for this current dynamic environment, and I also think speaks to the needs of consumers as they approach life in retirement. While enhanced competition, we think both companies would agree that we expect enhanced competition. With that said, look, we are the pioneers of launching this category. Over the last 10 years, we've built a privileged distribution network and believe we've got a track record of innovation, not just copying that gives us an edge. As both Mark and Anders referenced, we had a record SCS quarter, particularly in equitable advisors. So innovating resilient products anchored in economic realities is still at our core. As a leader in the fastest growing annuity segment, we think we start in a position of strength and remain focused on continuing to build solutions that create consumer and shareholder value.

That's great. Thanks a lot.

Your next question comes from the line of Elyse Greenspan with Wells Fargo. Elyse, your line is open.

Hi. Thanks. Good morning. My first question was on M&A and also using some of your excess capital just in terms of M&A from here. I know in the past you guys have spoken about wealth management and employee benefits as potential uses of capital for M&A. Just interested to know if those are still kind of the target businesses? And then could you give us a sense of how much excess capital you kind of intend to use for M&A and any kind of timeline associated with M&A from here?

Hi, Elyse. It’s Mark. Thank you very much for joining. Yes, you're right. At the time of the IPO, we said for the first three years, we're going to try and build credibility and execute on those financial targets we just talked about. And we did tell you not to expect any large M&A transactions at that time. So that's really what we've been doing. But yes, we are open to some bolt-on M&A as a way to accelerate growth. We'd be very interested and consistent with our strategy on capital-like businesses, so yes, that pushes us towards looking at employee benefits and wealth management. But I can assure you we will always do so if they make economic sense. So we'll maintain that discipline. We don't have to go into M&A. But if the right opportunity is there, we have the ability to actively look at it very, very seriously. Our first priority now remains on closing that legacy VA reinsurance deal. That's very important for us. 64% of the risk was to get that off the balance sheet. So that's our first priority. And that's sort of on track for close in the first half of 2021.

Okay. Thanks. And then my follow-up, within group retirement, can you just give us a little bit of an update on the competitive environment and how are you seeing your ability to grow within school plans just given all the ongoing impacts of the pandemic?

Great. I’ll take that. This is Nick. First, teachers are working harder than ever and we're proud to serve them, especially for myself with three kids at home. I've never had more respect for distance learning and what teachers do every day. That segment we believe continues to be resilient. Teachers are employed. They're working hard. As you've seen, we have record net flows and record renewals, which I think speaks to the trust and the relationships that we've built over the last 30 years as well as our unique model. So we continue to see growth in that segment, and we continue to see the opportunity to serve teachers that do an important part in helping the future of the American public.

Okay. Thanks for the color.

Your next question comes from the line of Jimmy Bhullar with JPMorgan. Jimmy, your line is open.

Hi. Good morning. So first, I just had a question on your stake in AllianceBernstein. And I think in the past, there's been discussion about you've been potentially considering the sale of that stake or maybe buying the whole company. Just wanted to see where that stands currently.

Hi, Jimmy. It’s Mark. AllianceBernstein has been enormously beneficial for Equitable Holdings. If you look at cash flows today, it's 30% of cash flows and total shareholder return in NAV since the IPO is 80%, 24% per annum. We have said in the past that we do the responsible thing and look at all options. But the best option we have at the moment is the Holding that we have continuing to work closely with AllianceBernstein to get those synergies. There's a couple of things which both Anders and I referenced in the presentation. One is this ability to leverage the general account to help AllianceBernstein build out its Alternatives business. It's really a nice virtuous circle, Jimmy. We get additional yield for our policyholders, which is good. It makes us more competitive. And we are able to build high multiple businesses for shareholders in the Alternatives space, and AB has been remarkably successful in that. Nick and Ali are on the line as well. They’re also spearheading for us much more commercial synergies between the two organizations using insurance as an asset class, for example. So we're very happy with the investment in AB. We, of course, always look at options. You would expect them to do so for our shareholders. But the Holding so far has been enormously beneficial to Equitable Holdings.

Okay. Regarding your tax rate, it was quite low in the fourth quarter, and I believe there was a favorable settlement regarding an IRS audit. What are your expectations for the tax rate moving forward? Are you anticipating a lower tax rate in the coming years?

Yes, absolutely. As you said, I think it's true. We had a tax audit settlement, which is kind of normal course of business. And it just allows us to take in foreign tax credits into account which lowers the effective tax rate by about 1 percentage going forward. So you can expect the effective tax rate to be between 17% and 18% going forward, always assuming that everything else stays equal.

Okay. Thank you.

Your next question comes from the line of Ryan Krueger with KBW. Ryan, your line is open.

Hi. Good morning. In the 10-K you put out this morning, there's some discussion around Reg 213 in New York and it seems to be cited as I guess a material risk factor if New York doesn't revise it in terms of your dividend capacity going forward. So I guess was hoping to get a little bit more color on I guess how Reg 213 is different from the NAIC VA regime? And what options do you have to mitigate this risk?

Yes. Look, I think, Ryan, we talked about that before, but first of all, we are in a very strong capital position and you saw that. We have $2.9 billion at the Holding Company. So that allows us to maintain our capital management program going forward. The Reg 213 is a move that New York put out that is just not as market sensitive as the VA regulation, which is much more economic. So we pointed that out many times. In a way, it's almost like counterintuitive because Reg 213 becomes, I would say, more prominent in a good market environment and less in a bad market environment. Having said that, it's not binding for year-end 2020. It's not binding right now, but it's something that could become binding. And particularly if you remember, we had a very strong market. So this non-economic impact actually becomes more of an issue. In addition, also this gets amplified with the VA transaction, which makes it even less reasonable. And that's why we strongly believe from the discussions with VA, we're going to find a good solution with them that really makes economic sense. That's why we pulled it out. Now, if it doesn't change, it's going to become a problem at some point. But we strongly believe we're going to find a good solution with DFS because they want prudent risk management and we want prudent risk management. So our interests are aligned.

Got it. I appreciate that. And then just separately, on your commentary around productivity and expense ongoing initiatives, can you give us any sense of the potential magnitude that could have? And when you initially did the IPO, you talked about a $75 million expense save plan that you've now achieved. Is this something that could be as significant as $75 million going forward?

Look, I think at the IPO, we were very specific. I think this is obviously an expense management efficiency program and something that is always top of mind for management, and it continues to be for us. I think what we always said is that you clearly see benefits from the changing environment due to the pandemic, we saw some long-term benefits, but a big piece of that I will say 30% to 50% will remain. As Mike pointed out in his remarks, that I think there's going to be less travel, there's going to be less real estate costs going forward. We will continue to do efficiency programs and make sure that we are most efficient. It's not just about cost. It's also about reinvestment back into the business to become a more efficient company. This is a continuous path.

Got it. Thank you.

Your next question comes from the line of Yaron Kinar with Goldman Sachs. Yaron, your line is open.

Good morning and thanks for taking my questions. My first question goes to the potential to grow the wealth management business. I guess if you go after that strategy, I guess can you at the same time continue to consider a potential decrease in your stake of AllianceBernstein, or does AllianceBernstein then become an even greater portion of the organization?

Let me touch on that. Then I'll pass to Nick about wealth management. Obviously, having an asset manager and a subsidiary is extremely helpful in keeping as much of the margin as you can in a wealth management business. So you would understand the economics of that. And AllianceBernstein is also closely involved with the Equitable team in building out more wealth portfolios as well, which is both good service to our clients, but also a way for us to capture as much of the value chain as we particularly can. So yes, you’re right. Those two are pretty much linked. Let me pass to Nick now on our wealth management book itself and the trajectory we've been seeing there over the last few years.

Thanks, Mark. Look, we're encouraged by the growth that we see in wealth management, positive 3.5 in net flows that you can see from the numbers. I think that speaks to the strength of our affiliated distribution, equitable advisors and their ability to holistically serve clients. So positioning us as the primary relationship helps navigate them through different life stages. We continue to see opportunities in that space.

Got it. Thank you. And then my second question, probably more of a follow-up to Ryan's last question on the expense save. I think in the prepared remarks, you talked about digitalization as well. So can you maybe talk about finding the balance between the expense saves and investment in the platform and what the priorities are as you think about both sides of that equation?

Yes, it’s Mark again. Let me have a go with that. Obviously, digitalization came particularly to the fore in the last year in our group retirement business when schools shut down. And you've heard a number of firms talk about decades of progress made in weeks, and that was certainly the case at Equitable, where we had to pivot a face-to-face model to a digital model and the teams did an incredible job on that. So, both clients and advisors now are getting much used to working in a digital way and that is accelerating the progress in that particular area. So that's not unique to Equitable, but we've certainly accelerated our progress there. The other point which may be lost on some people, we've gone through a major technology separation from AXA. If you remember at the time of the IPO, we had one-time separation costs of $700 million below the line. That was to cover the brand establishment and the separation of the architecture from AXA. Our IT teams have done a superb job not just in separating from AXA but in using this one-time opportunity to upgrade the technology. So that's giving us opportunities and confidence about our productivity space because we had that big step change as a result of the separation. And then the third arrow to our quiver, if you like, is this agile working. We have brought in a new way of working into Equitable where we're applying design thinking, much more adaptive leadership to up the metabolism of the company, if you like. So those are the three things I would point to that give us confidence that we can continue to see productivity saves, and as Anders said, reinvest back in the business for productivity and for revenue gains going forward.

Thank you.

Your next question comes from the line of Mark Hughes from Truist. Mark, your line is open.

Yes. Thank you. Good morning. The general account optimization effort to build out of the Alternatives portfolio, can you talk about what are the prospects for more movement in that direction, say, over the next 12 months? And then the second question will be also – it sounds like they performed well in the fourth quarter. Was that above the expectations you might have for how those would perform on a run-rate basis? What should we assume kind of on a go-forward basis?

Sorry for that. Can you hear me now?

Yes.

On the general account optimization, this is a journey we started with the IPO. Obviously, we moved from most treasuries to public corporates, and the journey we’re doing now, which is a continuation as we said in the remarks, is really going more into private, into liquid asset classes. And we can expect that to continue. Just to give you some numbers. At the IPO, we talked about the $160 million uplift from the initiatives by the end of '19. Since then, we continued with that. We accelerated that. We did another $80 million during 2020. Obviously, there were opportunities earlier in the year, which helped us, but this is a continuous path that we can go. And I think as Mark said, it's really to improve the risk-adjusted return of the general account. So that's continued. Then the second question is on the Alternatives performance. Generally for the fourth quarter, alternatives always get reported with the quarter last. So in Q4, we really saw strong market performance than Q3. But overall in the year, we’re still behind what we would expect a normal run rate. Q4 was above, but the full year was still behind on the normal run rate. So I would say going forward, alternatives will go back to what we expect. We might see a little bit of an uplift in Q1 just because Q4 wasn’t that strong, but then we expect to go back to normal run rate.

Thank you.

Your next question comes from the line of Tom Gallagher with Evercore. Tom, your line is open.

Thanks. First question is on, would you consider doing further risk transfer deals after this one with Venerable closes? And I ask it for a few different reasons. But just curious if you're more, and if you would consider it, are you more inclined to do the rest of your legacy VA business or would you consider other lines like life insurance? And I guess my final point on that is with this whole Reg 213 sensitivity issue, Anders, I presume if you got rid of all your legacy VA business, that would maybe not eliminate it, but it would certainly lessen that concern.

Thanks for the question, Tom. First of all, I think our focus is primarily on closing the current deal. We're on track to accomplish that. Additionally, as you remember, this deal has multiple implications. It significantly reduced the balance sheet and also validated our reserves, confirming that they are appropriate through third-party validation. Therefore, we don't need to pursue further risk transfers moving forward unless it makes sense. As you mentioned, Reg 213 could become a concern if we don’t find a good solution for DFS, which we strongly believe in as our base case. Nonetheless, we are always looking to optimize capitalization, but the key question remains this initial deal, as it reduced risk by 64%, as Mark noted, while also validating our reserves. So that is our primary focus at this moment.

That makes sense. And just my follow-up, I guess I just want to get a handle on these smaller businesses where you consider inorganic opportunities, employee benefits and wealth management. Are these businesses profitable on a standalone basis currently? And can you share, if so, how much, like what are those two businesses each earn on a standalone basis in Q4?

Yes, we don't disclose the detailed numbers. However, you can see that they are all margin profitable, but to make them significant, we need to grow them. That is our current focus. Right now, they are not significant from a P&L perspective, which is why we need to make them relevant, as Mark mentioned.

Your next question comes from the line of Suneet Kamath with Citi. Suneet, your line is open.

Great. Thank you. So I wanted to start with EPS. I guess on last year's fourth quarter call, you guys had given a target of 8% to 10% EPS growth in 2021. I think 2020 probably came in better than maybe you thought. So is that 8% to 10% range still a good target for you guys? And I'm assuming you’d be putting that against the $4.91 normalized EPS result for 2020?

Look, I think as we said in the past, we don't give short-term targets or short-term guidance, but I think long-term 8% to 10% is the right target. I think clearly that's what we aspire to get to, towards the 10% and you’re absolutely right.

You provided a specific target for 2021 during that call, which is why I was asking. I understand that you don't provide short-term guidance, but is the 8% to 10% range still a reasonable target for you, considering the $4.91 normalized EPS result for 2020?

Yes, but we always say that this is really a long-term view. We want to grow the business sustainably. And I think that's why 8% to 10% I think is the right target long term.

Okay. And my second question is, as we think about the stock in the company, it would seem to us that one of the biggest sources of potential upside is in the value that described to the legacy VA block. It seems to us that the market’s not giving full credit to that piece of the business, especially considering the value that you got for the block that you're reinsuring. So have you thought about maybe additional disclosures that you could provide to help the market understand kind of the quality of the business, maybe how much of the earnings comes from the SCS product? I think that's, in my mind, a real opportunity for the stock. And to the extent that you guys could provide some additional information, I think it would be very constructive. So just curious about your thoughts on that.

Look, I think it's a good question. I usually don't comment on our stock that much. I think that's your job. I think what we strongly believe is I think we have the right business mix now. We continue to grow in the areas we want to grow. I think we validated that the reserving is absolutely appropriate. I think we saw the benefit from the Venerable transaction in the stock price. I'm convinced that if we just continue that path, it will come through. We're in here for the long term and I think that's why we just continue to be on that path and improve the business.

Are you able to tell us what percentage of the earnings come from the SCS product?

We don't disclose that, but we can talk about it in detail.

Your final question comes from the line of Andrew Kligerman with Credit Suisse. Andrew, your line is open.

Hi. Good morning, everyone. To start with the group retirement business, I'm curious about the sustainable long-term earnings growth rate. You grew about 25% in the quarter, so I'm interested in the long-term prospects. Additionally, I noticed that first-year premiums were down 29%, significantly impacted by COVID disruptions in schools. How do you foresee the recovery in that area this year?

I’ll start with the growth rate and then Nick can provide insights on the business. Regarding the growth rate, we have discussed this previously. This business is stable, and we aim to grow our assets under management, having maintained positive net flows for the past eight years. In terms of growth, you can expect it to come from participant wages and market growth, which serves as the foundation for our growth. Additionally, leveraging our balance sheet and managing expenses play a crucial role. Overall, this is a strong business with positive momentum. Now, Nick, you can share the details we observed throughout the year.

Thanks, Anders. Clearly, obviously, access to schools remains dynamic. As Mark alluded to, I think one of the silver linings during this period is that our use of remote digital tools has allowed us to extend and deepen the relationships we have with consumers. So we expect as schools start to reopen and we start to see a reentry in American society, that that will actually amplify our impact going forward.

Got it. And then with regard to the protection solutions, I was just interested in a detail around profits followed by losses on that reserve accrual. Curious as to why and how much of an offset that PFBL item was to unfavorable mortality in the quarter? And then also curious, would results have been materially different if Equitable was already reporting under LDTI?

Good question. And so first of all, what I think first on protection solutions, we saw some headwinds on the mortality side in Q4. And then the PFBL reserve offset some of that, but not all of that. It's kind of a little bit out over time. After LDTI, we won't see that volatility coming from the reserves either increase or decrease anymore because of the way it works; it takes out the back and so it becomes much less volatile. So the mortality will probably then impact more the bottom line results.

I see. And no specific number you can provide on the PFBL.

I don't think we provide a specific number, but we estimate that excess mortality is over 14 million, primarily due to COVID. It may not always be accurate since not all cases are reported, but we largely attribute it to COVID, which aligns with our expectations for Q3. However, the PFBL does offset some of those figures.

Ladies and gentlemen, this concludes today's conference call. On behalf of Equitable Holdings, we thank you for participating. You may now disconnect.