Good morning. Thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equitable Holdings full year and Q4 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. It is now my pleasure to turn today's call over to Isil Muderrisoglu. Please go ahead.
Thank you. Good morning and welcome to Equitable Holdings full year and Q4 2021 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. I'd like to refer you to the safe harbor language on slide two of our presentation for additional information. Joining me on today's call is Mark Pearson, President and CEO of Equitable Holdings, Robin Raju, our CFO , Nick Lane, President of Equitable Financial, and Ali Dibadj, AllianceBernstein's CFO 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. Reconciliation 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 supplements. I would now like to turn the call over to Mark and Robin for their prepared remarks.
Thank you, Isil. Good morning, everyone, and thank you for joining our call today. We are a business that exists to meet the need for retirement planning, income protection, and Asset Management. Over the past two years of the pandemic, these needs have been amplified. The ability of Equitable Holdings to meet these needs is unique. We provide advice to our affiliated distribution, we have leading retirement franchises, and we have our premier Asset Management subsidiary, AllianceBernstein. Our strategy of managing to economic realities and shifting to low capital-intensive businesses has proven to be well suited to low interest rates and rising equity markets. We are meeting both the amplified needs of our clients and building sustainable shareholder values. 2021 was a record year.
As you can see on slide three, non-GAAP operating earnings were $2.8 billion or $6.58 per share, up 32% year-over-year. For Q4 , non-GAAP operating earnings were $649 million or $1.54 per share. AB had a particularly strong year, contributing $564 million of operating earnings to holdings, up 31% over prior year. Strong organic growth in our core retirement and asset management businesses resulted in net inflows of $25 billion in 2021, and this, combined with the benefit of market tailwinds, resulted in assets under management growing 12% to $908 billion, which is also an all-time record. The balance sheet remains robust.
We have an RBC ratio of approximately 440% and $1.6 billion of cash at the holding company. We successfully executed on our capital return program in 2021, returning $1.9 billion to shareholders, including an incremental $500 million of share repurchases associated with our legacy VA reinsurance transaction and $112 million of 2022 repurchases accelerated into the Q4 . Earlier this week, our board authorized a $1.2 billion share repurchase program for 2022 as we continue to deliver consistent capital return with an expected $1.5 billion in the coming year, of course, subject to no significant deterioration in the market. Looking ahead, we welcome the implementation of LDTI accounting changes in 2023 because it will bring further transparency, comparability across the industry, and it's close to our economic model.
The term economic is often referenced in different contexts across our industry. For us, and I think what is important, economic means two things. Firstly, setting reserves using actual interest rates. That is the forward curve because this is what you can hedge. Secondly, economic means fair value liability reserving assumptions based on actual experience. We know that investors have been eager to understand more about the impacts of LDTI. Our economic approach to interest rates, where we make no bets, and our strong reserves not only align to the upcoming accounting changes, but position us well for the transition. As of year-end, we anticipate the transition impact to be within AOCI. If LDTI were implemented today, it would mean a less than $2 billion adjustment to the GAAP book value, which today stands at $11.5 billion.
We will provide further details for investors in the coming months as we get closer to implementation. Lastly, I am incredibly proud that Equitable achieved another milestone as a public company by releasing our inaugural sustainability report in the Q4 . Conducting ourselves as a force for good has always been a part of our culture and the way we do business for more than 162 years. Of course, the need to show we meet the needs of all stakeholders and help address some of society's inequalities has been significantly amplified in the past few years. As of year-end, $60 billion of Equitable's general account and $524 billion of AB's assets, that is 64% and 67% of their respective totals, now integrate ESG factors into the investment process. In July, EQH pledged to adopt the UN principles for responsible investment.
We also take our role seriously as an industry leader in risk management. This extends beyond our company to supporting advocacy efforts for more economic and robust practices that better protect policyholders and investors. Turning to slide four, an important slide. This shows our unique business model and the results of our shift to capital-light businesses. As a result of the transformation in our retirement business, our legacy VA amounts to only 18% of retirement assets today. We have also improved the certainty of our cash flows through internal restructuring. Today, approximately 50% of our annual $1.5 billion cash flows is generated from non-insurance regulated entities. We continue to leverage synergies between our two operating companies.
The $10 billion investment commitment to AB not only improves the risk-adjusted return for our general account, but strengthens AB's efforts to build out higher multiple businesses in the alternative space. Within the Equitable Financial operating subsidiary, we have made tremendous progress to become a more diversified retirement company. We shifted retirement new business away from interest rate dependency and high living benefit guarantees through the launch of our innovative Structured Capital Strategies protected equity product. Q4 saw another record quarter of SCS sales, and as a result, we remain the number one player in this fast-growing RILA market. Overall, gross sales from our retirement businesses amounted to $18 billion, up 30% from last year. In addition to shifting the sales mix and in-force actions, we continue to execute on our productivity and investment income priorities to further drive earnings growth.
Our asset management subsidiary, Alliance Bernstein, generated strong net inflows of $26 billion in the year across all three of its distribution channels, retail, institutional, and private wealth. This has resulted in a five percent organic revenue growth and a one percent fee rate expansion. Importantly, and looking to the future, AB has strong underlying investment performance with 89% of fixed income and 73% of equity assets outperforming this past year. AB was an early mover and now has a strong brand recognition in the Asian markets. We see this as a particular area of differentiation and future growth. Today, our Asia businesses represent 18% of AUM and 25% of annualized fees. AB has a proven track record of attracting and building out investment capabilities, growing an initial seed investment within alternatives 4x to $23 billion today.
We'll be looking to a multiplier effect with the $10 billion investment commitment we announced from Equitable. Equitable Advisors is a cornerstone of our strategy. Firstly, they are the major source of revenue growth within Equitable Financial. Our affiliated sales force contributes 70% of combined gross premiums and broker-dealer inflows. Secondly, they are key to our efforts to transform towards capital-light businesses. Within Equitable Advisors, our broker-dealer continues to be a growth area with an increase in assets under advice of 34% to $83 billion markets. We now have over 500 wealth managers delivering valuable advice and solutions to our clients with full year sales of $13 billion, a 54% improvement over the prior year.
On slide five, I would like to briefly highlight the journey we've been on since the IPO on May 10th 2018, in shifting our business mix towards advice-driven retirement and asset management. In retirement, we've done two important things. We've grown our business and substantially changed the mix. Core retirement business, the capital light business has grown by 47% to $130 billion. At the same time, our legacy VA business has decreased by 40% to now less than $30 billion. We are now no longer dependent or significantly exposed to high guarantee living benefit annuities. At AllianceBernstein, total AUM has grown 40% since the IPO, with a 39% increase in fee-based revenue. AB-managed Equitable AUM has grown to nearly $130 billion and is 17% of total AB assets under management.
Finally, Equitable Advisors are meeting clients' growing needs for wealth accumulation and retirement through a differentiated, holistic financial plan. As a result, we have seen strong organic growth in assets under advice, up 88% since IPO, with strong net inflows and favorable equity markets. Turning to slide six. We were pleased to recently release Equitable's inaugural sustainability report. There was a lot in the report which can be accessed through our website. Underpinning everything, though, in the report is our belief that we can bridge profits with purpose. I've already mentioned inclusion of ESG factors in our investment decisions. Our clients are supporting this momentum and now have $31.5 billion in AB portfolios with purpose, up 91% in the year.
At this time of remote working, we have invested in our people with over 30,000 training hours to adopt an agile design thinking framework to raise the metabolism inside the organization. We are also using this framework to improve our diversity, equity, and inclusion representation. Key to our ESG approach is upholding stakeholder trust, including advocating for more robust industry practices. We see the upcoming implementation of LDTI as a critical building block, which Robin will address on the following page. Robin.
Thank you, Mark. We are very supportive of the upcoming LDTI, which will bring GAAP closer to fair value economics and will improve transparency and comparability for our industry. On slide seven, I would like to provide additional insight into how we view the changes and how we are well positioned for adoption. Before I do that, there are three key points to highlight. First, we expect that the impact to shareholder equity will be lower than our current AOCI balance, which was $2 billion as of year-end. We also expect the impact will flow primarily through AOCI, taking into account year-end market conditions. Second, LDTI aligns well to our economic approach to managing the business due to our conservative interest rate assumptions and fair value approach to setting actuarial assumptions.
Third, the enhanced LDTI disclosure, which we intend to provide in the early summer, will support Equitable's strong economic standing and competitive position in the market. I will now go through some of the drivers to provide additional detail. Primarily attributable to an uneconomic factor, non-performance risk or NPR. Under GAAP accounting today, a company's own credit spreads impact their liabilities. For example, as a company's own credit spread decreases, the company is required to hold more reserves. Vice versa, which can narrow over time and the impact on net income. While LDTI improves this by shifting this non-economic movement to AOCI, there is some potential sensitivity between now and the transition date in 2023. If credit spreads increase before the transition date, the NPR gains would shift from net income to AOCI. Turning to retained earnings.
We anticipated a limited transition impact based on our year-end market conditions. While SOP reserves currently account for two-thirds of our GMIB and GMDBs, the impact of fair value in those reserves is largely mitigated due to two offsetting items. The first is a favorable offset from 8.25% GAAP to the forward curve, which was 2.5% as of year-end. This demonstrates how conservative interest rate assumptions that Equitable's accounting change compared to our peers. The second is a minimal impact from aligning to the proposed LDTI discount rate, as the forward curve and credit spreads, as I mentioned, the movement in NPR may change where it is reflected in the future between retained earnings, but we expect our total AOCI balance regardless. We expect no impact to cash flows given our hedging strategy is aligned for a fair value economics.
Under our current GAAP rules, it creates the majority of the accounting mismatch between net income and non-GAAP operating earnings. Under LDTI, we expect that the asymmetry can be reduced and items such as book value excluding AOCI will be more meaningful for Equitable and our peers. This is a step toward GAAP accounting and the validation of Equitable's economic approach to managing the business. We look forward to sharing further detail at an LDTI including how disclosures will illustrate the strength of our economic assumptions backing our liabilities. We are confident that this will be good for the industry and will help investors better understand the risk they are taking when investing in different companies. Now let me turn to full year results on slide eight. We had a record year with our Retirement and Asset Management businesses performing exceptionally well. We reported non-GAAP operating earnings of two.
Adjusting for non-recurring items in the year, our full year earnings were approximately $2.5 billion. These strong results reflect $908 billion, supported by net inflows of $25 billion and favorable equity markets. In addition to the continued mix shift to our capital-light businesses, Individual Retirement reporting operating earnings less notable items of $1.4 billion, including the impact of the legacy VA transaction, earnings have increased year-over-year. Monetized $1.2 billion for shareholders with the close of the legacy VA transaction and significantly de-risked our in-force. Further supporting this successful mix is the continued strength as we drive record sales and sustain our leadership position in the RILA market. For the full year, first year premiums were $11 billion, up 53% over prior year, which is a level we haven't seen since 2008.
The team finished the year strong, setting another record with $2 billion of SCS sales in the Q4 . We continue to innovate in-demand and economically sound solutions to help ensure our clients achieve their retirement dreams. In Group Retirement, operating earnings less notable items were $596 million, up 26% year-over-year. As we continue to benefit from strong equity markets, we reported gross premiums of $3.6 billion this year, with year-over-year growth supported by both first year premiums and renewal premiums, up 11% and 7% respectively. We continue to see the benefit of our advisors leveraging technology to enhance client engagement. That said, our differentiator continues to be our worksite advice model, with access to over 8,700 school districts and over 800,000 educators.
We began to see the benefit of this hybrid approach in the second half of 2021 as schools reopened in the fall. In Asset Management, AB has continued to be a driver of capital-light growth for Equitable Holdings, with operating earnings of $564 million, up 38% year-over-year. Importantly, AB continues to drive organic revenue growth, supported by active net inflows of $27.6 billion, positive across retail, institutional, and private wealth channels. AB's leadership position in Asia continues to support strong results, with approximately one third of AB's total net inflows in the year attributable to that market. The continued positive momentum is a testament to the performance AB is delivering to our clients, with over 89% of fixed income and 73% of equity assets outperforming their benchmarks over the past year.
In addition, strong longer-term performance with fixed income and equities outperforming their benchmarks by 70% and 75% respectively over the past five years. Finally, in Protection Solutions, operating earnings less notable items were $277 million, up 39% over the prior year. Our strategic pivot to more capital-light accumulation VUL drove year-over-year first year premium growth, up 99% in that product. Now represents approximately two-thirds of segment first year premiums this year, compared to only 40% in 2020. Turning to the right-hand side of page eight, we have highlighted our success shifting the profile of our business towards more capital-light businesses. Since the IPO, we have improved earnings by 32% while also improving the mix with continued growth in Asset Management and over 80% of retirement AUM in capital-light products today.
Let me now turn to the Q4 consolidated results on slide NINE. Adjusting for notable items in both periods, non-GAAP operating earnings were up from $638 million in the Q4 of 2020 to $691 million this quarter, or $1.54 per share, a 17% increase on a per share basis. We benefited from higher net investment income, performance fees, and base fee revenue on higher AUM this quarter, which partially offset a one-time litigation accrual and adverse mortality in the quarter, which remains in line with our COVID guidance. In the quarter, we reported GAAP net income of $254 million as we continue to see the impact of non-economic accounting treatment for our GAAP liabilities compared to the fair value hedging program, which performed as expected with a hedge effectiveness of 95% in the quarter.
As I discussed a few minutes ago, we look forward to the implementation of LDTI in 2023, which will eliminate much of this accounting asymmetry. AUM was a record $908 billion, supported by strong equity markets and positive Q4 net flows of $7 billion led by our asset management business. We have made good progress against our strategic priorities, delivering $31 million in productivity saves and $90 million in general account yield enhancements this year. We continue to deploy our $10 billion of committed investment capital from the insurance sub-subsidiary to support growth in AB alternative business. This synergy enables us to build a high multiple business at AB while generating favorable risk-adjusted yields for Equitable policyholders. We are excited about the potential for AB's alternative business in the future. Turning to slide 10.
Our strong capital and liquidity position enabled us to successfully deliver on our 2021 capital management program. Throughout the year, we returned $1.9 billion to shareholders, with $540 million occurring in the Q4 . This return was supported by the closing of our legacy VA reinsurance transaction in June of last year, which returned an increment of $500 million and $112 million of 2022 repurchases that we accelerated into the Q4. We closed the year with $1.6 billion of cash at the holding company and a strong RBC ratio of 440%, each well above their respective targets. Our successful shift towards capital life business model and our internal restructuring has increased unregulated cash flows, giving us confidence in our dividends to holding company with approximately 50% coming from non-regulated entities.
In 2022, we expect at least $1.5 billion in subsidiary dividends to support our capital return strategy. Further, our strong financial position allows us to announce a $1.2 billion repurchase authorization from our board as we continue to execute on our stated capital management targets, delivering consistent capital returns of 50%-60% of non-GAAP operating earnings under normal market conditions. I'll now pass it back to Mark.
Thank you, Robin. Before we turn to your questions, I would like to reiterate some highlights from our full year and fourth quarter results. First, we delivered another year of record results supported by the societal need for our products and services and strong equity markets. Second, our unique business model pairing retirement, asset management, and advice drives our strong capital position and enables us to consistently return capital to shareholders. As a result, we are pleased to announce a new authorization to deploy $1.2 billion for repurchases in 2022 and targeted total capital return of $1.5 billion this year. Third, our fair value economic framework positions us well for LDTI implementation. Aided by our economic approach, we expect our LDTI transition impact to be with...
Lastly, Equitable is committed to being a force for good, and we will continue to be a strong advocate for robust industry practices aligned to economic realities. With that, I'd like to open the line for your questions.
At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. Your first question comes from the line of Elyse Greenspan with Wells Fargo.
Thanks. On capital return $1 billion authorization for the year, how should we think about just the cadence between the quarters? Will you just be more active, you know, depending upon, you know, your share price?
Morning, Elyse. Thank you for the question. As you recall, we returned $1.9 billion in 2021. That included a hundred or so million of accelerated share repurchase that we're counting towards 2022. The $1.2 billion future authorization that the board approved this year are 50%-60% capital return under normal market conditions. Consistently throughout the year, and the authorization that the board gives us allows us to adjust flexibility to program if we see any share price deviations as well.
When thinking about 2022 relative to that 50%-60%, you would look at the 1.5 plus the 112 that you pulled forward as putting you within that 50%-60% target, correct?
That's right.
In terms of Protection Solutions, you guys had been running with earnings of around $75 million on an adjusted basis. I think last quarter you had said you could either with some, you know, with elevated mortality, you were a bit below this quarter. Just how should we think about the, you know, earnings trajectory for Protection Solutions, just, you know, given that we're in an probably at least for a little bit longer an elevated mortality period?
Sure. We increased the guidance to $75 million last quarter. That's a result of continued productivity in the business and benefiting from the GA rebalancing that we've done throughout the years. With that $75 million, what we said, expect volatility around that $75 million, up or down as mortality evolves. In the quarter, if you look on a normalized basis, excluding the elevated mortality related to COVID and the alternative benefit, we ran about a $92 million normalized earnings for the quarter. The COVID guidance, you know, we're saddened by the continued deaths related to the COVID in the U.S., but we do remain within the guidance that we've given to the market of that $30 million-$60 million per 100,000 U.S. deaths.
Okay, thanks for the color.
Your next question is from the line of Ryan Krueger with KBW. Your line is open.
Hi, good morning. Thanks for the LDTI impact. I guess I'll be greedy and ask for one more thing. How you touched on how it may impact GAAP operating earnings. Can you give any comments on-
Fair value approach to setting assumptions allows us to have a limited impact on the transition balance for LDTI, as it aligns well to our fair value approach in our economic model. The ongoing operating earnings and some of the other details. Our investor day as we go through the technicals of LDTI going forward. Again, we expect the economic earnings of this business to continue to grow based on the strong fundamentals we see across all of our business lines, under EQH.
Got it. Thanks. Then could you give an update on your efforts to mitigate the remaining Reg. 213 impact and if you think you can get that offset in by the end of 2022?
Sure. As you recall, we took significant action during the year. It started by receiving the Permitted Practice from the regulator, restructuring the insurance company cash flows, where 50% of the cash flows going forward of that $1.5 billion will be unregulated. We just completed and closed in December the Triple-X reinsurance transaction, which allowed us to unlock $1 billion of value, decreasing the redundant reserves of Reg. 213 to about $1 billion going forward. That remaining $1 billion will be phased in over the next several years, so it gives us time and flexibility to continue to explore internal and external reinsurance opportunities if they are accretive on an economic basis and drive value to shareholders.
We are targeting, and we continue to be adamant about pursuing all options on the table, and expect us to continue to address it as the year goes by.
Thank you.
Your next question is from Tom Gallagher with Evercore. Your line is open.
Good morning. First question, Robin, if I go back to the second quarter, your estimated RBC was 450, I believe. Now it's 440 at year-end. You haven't taken any dividends out, but I know there's been a lot of movement, things like C-1 and other things going on both for, I guess, non-insurance and insurance over that period of time.
Sure. Organic capital generation, and again, business fundamentals are very strong during the year. There are a few things that change from a statutory basis. As you recall, as I just mentioned, we restructured the cash flows in the insurance entities, where now more cash flows, about $250 million going forward, are coming straight to the holding company. That is no longer an insurance company as a result. From an RBC perspective during the year, as we continue to shift to general account and good risk-adjusted yield, we did see an increase in the C-1 required capital charges. That had about an 18-point impact on RBC as of year-end. If you exclude that and exclude the mortality, we still see strong cash flow generation in the insurance company.
It should translate to about $750 million on an annual basis. AllianceBernstein and our unregulated cash flows to the holding company making up the rest of the 750 to bring the total to $1.5 billion to the holding company.
Got it. That's helpful. What is your company in 2022, by the way?
As I mentioned, $1 billion across all of our subsidiaries, and we expect the insurance company to be greater than the $750 million guidance that we provided to the market.
Got it. Based on how year-end stat is expected to play out, do you think the allowable normal dividend will be over $750 million, or is that still not clear?
That's what I expect. It'll be official when we file the 10-K in a few weeks as we'll have that number in there. We do expect it to be above $750 million, bringing the total to $1.5 billion.
Got you. Just one last one if I could. The LDTI book value impact that you mentioned, the less than $2 billion, you mentioned that was year-end 2021, when rates were lower. Would it make much of a difference if you were to mark that to market today? I assume it would go down, but you know, if so, if you could sensitize it at all, would it be meaningful? Then, when you implement the initial 2023, will you be using rate levels from year-end 2021, or what period do you use the initial implementation interest rate from?
Sure. Tom, the good thing about LDTI, again, it's fair value. At point of transition, it moves to the rate at that specific period. Overall, that's the benefit of fair value, and that's where we hedge our balance sheet. The impact as of year-end, we said it's less than the $2 billion AOCI balance, and it's across the industry. It will be sensitive to equities, interest rates, and credit spreads. Those are probably the three biggest sensitivities. Where we sit today, it is lower than the number we had as of year-end, but it is sensitive to those three elements. We'll continue to give updates as the year progresses. Keep in mind, those liability numbers may move. They're always gonna be within the AOCI balance, we believe.
We have derivative gains that offset the potential liability movement. Economically, there's no impact for us because it's close to how we manage the business.
Okay, great. Thanks.
Your next question is from Andrew Kligerman with Credit Suisse. Your line is open.
Hey, good morning. In Individual Retirement, another outstanding quarter in terms of volumes. I think, Buffered SCS product was up 36% year-over-year. Wondering if you could point, you know, just given the incredible competition that's come into that product since you pioneered it's great to see this growth. I'm wondering what's allowing you to keep this going? Is there a particular product feature that the most current SCS stands out for, or is there some new distribution that's driving this growth? Maybe you could give a little color behind this robust sales growth.
Thanks, Andrew, for the question. We have Nick Lane here today, who heads up all of our commercial lines. We'll give Robin a little bit of a rest, and let's talk it to you, Nick.
Great. Thanks, Mark. First, as you mentioned, core results are strong. Positive $2.5 billion for the year, $500 million for the quarter. Sales up 55% in another record SCS. You know, what is sustaining and elevating that, first is our differentiated distribution position, both Equitable Advisors as well as our third-party partnerships. We've been there from the beginning with consistent, strong relationships. As we've highlighted in the past, you know, we believe the pie is going to continue to grow, and we continue to innovate in that space relative to new functionality such as dual direction. You know, we're confident that we will continue to maintain our position going forward and help consumers navigate these volatile markets.
You mentioned, new functionality such as Dual Direction. Could you give a little more color on that?
Sure. An enhancement to the segments that clients can invest relative to their perception of the markets. As you know, we provide upside protection, upside potential with downside protection. All these new segments are perfectly unmatched, and we've been a leader in getting feedback from our clients and advisors on what they're looking to invest in.
You know, as you look for Reg. 213 solutions and, you know, understand that 18% of the Individual Retirement block is only legacy VA, you know, what areas of the business are you looking at for potential solutions? Is it possible to move the remaining legacy VA given that it's housed in New York? Are there very different product areas, as you did with Reg XXX? What areas are you looking at to solve for this 213, and maybe what's the interest level in working with you on it?
Sure, Andrew. Yeah, I think the way to think about it is we're looking at across the in-force all products and where we can drive economic accretion and gains relative to an external or internal transaction. That's why we started with the XXX reinsurance transaction. We don't always have to just address the VA book. If there are opportunities to reduce that 18% legacy AUM further that economically accretive, we'll certainly execute that. If there are opportunities across other lines as well, we'll have a look. Everything's on the table as we continue to address.
Thanks.
Your next question comes from Tracy Benguigui with Barclays. Your line is open.
Thank you. Good morning. Sorry. Lost my connection. Hold on. Bear with me.
You're coming through clear, Tracy.
Okay. Yeah. One of your competitors talked about policyholder appetite for VA buyout programs, and I'm curious if you can share your thoughts on the economics of offering these lump sum payments to annuity holders of your riskier blocks, perhaps to accelerate your efforts of reducing the proportion of capital-intensive business, or if that could help in any way reduce. But I've heard others in a-
Sure, Tracy. You know, legacy annuity policies were one of the first derisking actions we deployed back in 2011. The majority of that legacy AUM that passed were key derisking levers that we utilized, you know, over 10 years ago, and that led us to the successful derisking for the Venerable transaction. That playbook had been utilized here already, and now we're focused really on external and internal reinsurance as potential opportunities as that can really drive accretion for shareholders.
It's something we're aware of, we've acted on. It's been successful for us. We've moved on a bit now. We're looking at reinsurance and other ways to derisk.
On your COVID losses, particularly what we've seen is there's a little bit more of a bias on the low end. I'm wondering if that had anything to do with you running your losses a little bit higher into the range. I think in the past, it was on the bottom end of the range. If you could also share if you received any benefit from a longevity offset this quarter, maybe in your Individual Retirement.
Sure. You know, again, I just want to emphasize, as I mentioned earlier, we are saddened by the fact that the pandemic still impacts many of the people that we interact with and so many of our clients that we have. It also shows the benefits of the products that Equitable Holdings have to offer in providing protection needs for American consumers. In the quarter, as you can see, some of it come into older age deaths, which we do have exposure to older age policies. If you exclude that for the full year, we are in the middle of our COVID guidance that we provided to the market, and you know, that's where we'd expect to be going forward.
Okay. Maybe on the longevity offset, are you seeing any of that?
We did not in the quarter.
Thank you.
Sachs, your line is open.
Good morning. First question I had is on the flow reinsurance market. I think you made some comments already about your potential, you know, block deals. I'd just be interested in your view on the flow reinsurance market and, you know, there's a potential lever to increase cash conversion.
Sure. Thank you. You know, Nick mentioned it earlier, the products that we write today are all capitalized, very efficient, and generate good economic value for shareholders. When we think about leverage, flow reinsurance isn't one of them that we consider as an opportunity to benefit our shareholders because we would essentially be passing some of the value that we have for shareholders to someone else. The products that we write today are economically sound, still unmatched. As a result, we don't need to pass on the value to others, and we fully believe in the products that we write today and the value that they generate, and we want to retain those for our shareholders.
I guess just on inflation, I know from a capital standpoint and if rates were to move higher, that's you know, an obvious benefit, I think, for variable annuity companies generally. Just thinking more specifically about expenses, can you help us think through wage inflation and some of the
Pressure there, and if we should expect to see anything in 2022?
Thanks, Alex. It's Mark. Yes, we obviously two things. Firstly, to offset any inflation. It hasn't really hit us up to the end of 2021, but we're alert and watching it closely. I think the other thing to say, though, Alex, is the types of products that we offer. You know, we like to talk about it internally as all-weather products. If you look at some of the things that AB offers in alternatives and real assets, this can be attractive to consumers. As Nick has just explained, on some of the products we've got, like SCS and Dual Direction, that can help consumers. We look at it three ways, as you say, balance sheet first, making sure we're immunized there.
Secondly, productivity to offset pressure on inflation, if it comes. Thirdly, what other products we can help our clients with that are helping them.
Thanks.
Your next question is from the line of Jimmy Bhullar with J.P. Morgan. Your line is open.
Business. I guess with the SEC settlement, you're gonna pay a fine and then increase disclosure. Do you see any sort of ongoing impacts of this either on your business or on competitors that, you know, greater disclosure leads to maybe fee pressure or something else, but any comments on whether you expect any ongoing impact from this?
Thanks, Jimmy. It's Mark. Yes, we've been cooperating with SEC on that industry-wide investigation. As you know, that's been on for a little while here. I think you're also aware of settlements entered by some of our peer companies as well on this one. We have, as you say, reached a settlement in principle on it, as we go. It is around our quarterly account disclosure statement. Obviously, we disclose our fees and charges in our prospectus. The SEC would like us to be clearer, if you like, on the statements, and we fully agree we should be as clear and as transparent as we possibly can.
Look, we're very proud of the service we offer to our teachers. You know, if you look at the fee income, what does it cover? It really covers the advice we give, of course. We know that teachers who receive advice end up with 49% more in their retirement accounts than those teachers who don't get advice. There's getting teachers into the right investment solution, access inside their funds to safe harbor funds or guarantee funds if the market gets too rocky. I think the way we look at this, Jimmy, is do we justify our fees? We are very confident that we do. We can see the benefit of teachers.
Okay. On the SCS product and just the buffer annuity market in general, there's a lot of other companies that have come out with similar products and more crowded than it was. Are you seeing the other companies be rational in terms of terms, conditions, and the benefits that they're offering? Are some of them being aggressive on features as well?
Great. This is Nick. Currently, we're seeing rational pricing out there. We continue to see growth in the space, both driven by the demographics and volatile markets. As we've said, we think competitors entering helps validate these solutions for advisors and consumers out there.
Jimmy, remember, anybody can copy our product, but they can't copy our differentiator, and that's what makes us win in the market.
Thank you.
Your final question comes from the line of Suneet Kamath with Jefferies.
Just to make sure I'm reading this right. Are you basically saying that the legacy VA block is about 15% of total company earnings, maybe a third of individual retirement earnings? Is that kind of in the ballpark?
Yeah, what we said in the slide and what you see is the legacy VA, and that's a function of the historic de-risking, but also the good core flows that we receive, $2.5 billion in the year, up 20%, year-over-year. From an earnings perspective, we haven't disclosed earnings by specific product, and we won't enhance disclosures until post-LDTI, and we'll look to provide greater clarity. But if you wanted to take a look at something right now, the best we can give you is AUM as a ballpark. So that's probably the right way to look at it right now.
Okay, got it. I guess, Robin, I haven't heard anyone else use the words excited and LDTI in the same sentence. It sounds like you're gonna provide a lot more disclosure, I guess, in the early summer. Is that your view that this is just gonna shed a new light on how people think about your Individual Retirement business? Because when I think about, like, the valuation of the company, to me, that's always been the biggest source of upside, if people just get a better handle on the risk profile of this of this block. Is that kind of what you're leading us towards?
Yes, I think that's right. I think there's two issues, Suneet. Excitement and accounting change is not normally two words you put into one sentence. Look, why we say that is not. Number one, go back to Jimmy's question earlier. Is there rational pricing? We would argue very strongly that the current accounting basis, particularly where you can use and hide irrational pricing. We think that's wrong. We think if people are pricing irrationally, it should be disclosed as such. It's up to every insurance company where they want to price, but it shouldn't be hidden by the accounting system. Secondly, companies that have hedged their VAs should have less capital needs than those who don't.
Of course, management teams have to decide the risks they wanna take, but it should be disclosed properly. We're not saying ours is the only way or the best way, but we are saying you should disclose it properly so that investors can make an informed choice. That's why we're excited about it. The disclosure leads to better comparability, and a recognition of economically what's happened.
Okay, got it. Maybe just sneak one more in real quick. Just on the Wealth Management segment, we can see the account value growth or the AUA growth, but we can't really see the organic growth. Can you maybe just give us a sense of what the organic growth looks like in that business and maybe how it's tracked over the past few years?
Great. Thanks for the question. We're very pleased with the progress we've seen in the Wealth Management segment. As you highlighted, it's grown to 34%. We're now at $83 billion. In 2021, we had $3 billion of gross sales. We've originally expressed that we'd enhance our disclosures when the AUA ranges got to about $125 billion to be a meaningful segment. These targets and aspirations still hold true.
All right, I'll follow up. Thanks.
Okay.
There are no further questions at this time. Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.