All right. Good afternoon, everyone. I'm Ryan Krueger from KBW, and with me on stage is Robin Raju, the CFO of Equitable. Also want to acknowledge Eric Bass, the head of Investor Relations. So I guess, Robin, to start out, you had an Investor Day a little over a year ago. You provided five-year financial targets. Can you start by reviewing what those targets were and also how your results have been tracking so far?
Sure. Thanks, Ryan. Pleasure to be here. Thank you all for joining us today. Three primary targets that we came out at Investor Day, as it was our first Investor Day as a public company. First was cash generation. We want to improve our cash generation from 2023- 2027 and improve that from $1.3 billion- $2 billion. And that's our primary focus in the company, is improve the cash generation of the businesses that we have. Second was our payout ratio. We want to pay out 60%-70% on our payout ratio, and that translates into our third target. The two together is to grow EPS growth by 12%-15%. That's up from 8%-10% that we had at IPO. So how have we done on those targets?
On the free cash flow generation this year, we're guiding to $1.4-$1.5 billion. We're on track. That's about 8%-15% up versus last year, and that puts you along the path to the $2 billion of cash flows. Our payout ratio since our Investor Day was 67%, so on the high end of the range that we provided, and then our EPS growth started slow last year at 3%. We started at lower equity market levels, and as equity markets have increased, we benefited also with mortality and alternatives normalized and improved year over year. Our EPS growth in the first half of the year is 19%, so if the 19% continues, we'll be on track for the 12%-15% EPS target that we provided to the market at Investor Day.
We're six out of 20 quarters through. We're feeling good about where we are and the growth momentum in the business, and we're excited about the opportunities going forward.
Great, thanks. So getting into the businesses, RILA is one of the main products you sell. We've seen significant increase in sales of RILA annuities for both Equitable and the industry. Like, can you give some more perspectives on what's driving the increased demand for the RILA product? And then just also, I think because maybe people have a little less history with RILA, just how sensitive is the demand for the product to macro factors like rates, equity markets, volatility, things like that?
Yeah, so taking a step back, if you look at the overall annuity market, it was sort of stagnant for, like, ten years after the financial crisis. It stayed at about $250 billion. Over the last few years, that market's increased to close to $400 billion last year. So we've seen huge demand in the overall annuity market in itself. I think that's driven probably by three primary factors. First is the demographics. You have 4 million Americans that turn 65 every year. The retirement market or retirees, they're 55 million in the U.S. That's growing to 70 million by 2030. So the first thing is you have a favorable demographic trend of people that have needs for annuity products. Second is higher interest rates.
Higher interest rates benefit the overall and annuity products as they compare well relative to other propositions that retirees may have. And I think you've seen higher interest rates benefit the fixed annuity space quite a bit in the marketplace. And then I think third, it's having simple equity, protected equity solutions like RILA, be a new portion of the variable annuity market has seen and has contributed significantly to that growth. The RILA market today is 50 billion in total sales, so it's a pretty significant part of that, and it continues to grow. It's up year over year, and LIMRA forecasts a continued growth in that marketplace. I think that Equitable created the RILA market 10 years ago, so we were the pioneer in that space.
As peers have moved away from traditional VAs, a lot of people have entered that market. That's expanded the pie in that marketplace. Why do RILAs resonate with consumers? And I think that's the real difference in what that product offers, that a majority of RILAs do not have living benefits, they don't have explicit fees, and so a 60-year-old that's preparing for retirement, they need equity exposure. RILA products provide them that equity exposure with downside protection. So it resonates quite well to the needs of retirees as they're thinking about their retirement and their future, and it's benefited as a result. Equitable is number one in that marketplace, and despite continued competition, it continues to be rational pricing, and we're excited about the market opportunity.
Now, as with sensitivity related to markets, that you mentioned, I think RILAs are less sensitive to interest rates relative to fixed annuities. Across the board, fixed annuities, the rate that you offer is very dependent on the rate in the marketplace. RILA market, since it's structured through an options, that you purchase at every two weeks or at time of issuance, the only thing that changes is the upside potential. So interest rates may decline, volatility may go up. What changes in a, six-year down 20% buffer is how much upside I may offer. Then, so whether I offer 120% upside or 150% upside in equity markets, I think, you know, those don't, move as much as related to a guaranteed rate that you may offer in a fixed index market.
So I think RILA markets will prove out to be sound even in a low interest rate environment. Now, we were in a low interest rate environment. Remember, we were just in 2020, even in the pandemic low interest rate environment, we saw about a 5% decline in RILA sales, so not significant. And I think, again, it goes back to the strong demographic trends and the simplicity of the product.
So you mentioned that Equitable created the RILA market. You're the number one seller of RILA. It's still predominantly companies that used to sell traditional variable annuities that are the leaders in RILA sales, but we have seen some companies that are more focused on fixed annuities trying to enter the RILA market. I'd say they haven't had that much success yet. But I guess, you know, how do you think this plays out competitively? Do you think the market will get more competitive over time, and do you think some of those newer players will be able to penetrate this market?
Sure. So again, I think it's good more people want to come into the market because of the simplicity and the attractiveness that it has for clients, and that'll continue to expand the market across the board. The RILA market, though, the top 10 players own 90% of the market. If you look at fixed annuities, the top 10 players probably own 50% of the market, so it's less, a lot less competition. What differentiates us at Equitable, I believe, is our distribution. Equitable owns through Equitable Advisors. We have 4,400 advisors out there selling the Equitable product. We have privileged relationships with P&C channels that usually have a few carriers in, so that prevents competition coming into those spaces. So I think distribution is what differentiates us, but I wouldn't be surprised. I continue to expect more people to enter the RILA market.
It's an attractive market, the simplicity, its attractive returns, but I think what differentiates us is our distribution.
So Equitable put you know the legacy variable annuity products into run-off, but you do still sell traditional variable annuities, and you actually have seen a decent increase in sales of traditional variable annuities as well. Can you talk a little bit more about what has driven that? And then just maybe just also remind people kind of how the... what the risk profile of the current traditional VA products that you sell is.
So our individual retirement business, which sells RILA products and some traditional VAs, but primarily RILA products, it's up 36% year over year. So within the high interest rate, the growth in annuity demand, the traditional VAs have benefited as well. Those products today are very different than products that were during the global financial crisis. Equitable, specifically, I could speak about our traditional VA is a floating interest rate guarantee. So means interest rates move up, interest rates move down, the guarantee moves in with it. That allows us to hedge it effectively. Secondly, in our traditional VAs, we only offer passive funds. You need to only offer passive funds in order to control how you hedge the product. You can't hedge efficiently active management. That was one of our learnings from the financial crisis.
That's why we moved to more all-passive funds. And third is, we fully hedge the guarantees that we offer. We don't take any open equity or interest rate risk in the products that we write. We want to take that traditional VA with the floating rate exposure, with the passive, and make it look like and feel like an asset management product. But most importantly is you have to set conservative assumptions around these products. We don't want to be wrong when we sell products. We want to gain investor trust. I think that's part of one of the issues with the industry is pre-global financial crisis, everybody was focused on sales and were aggressive with their assumptions. It does not pay off over the long term, and that's not what we want to do.
So we'd rather price more conservatively, given a lot of entrants have left the market, there's less people in the market, and that allows us to price it very conservatively and still generate an attractive IRR on that product. That being said, the RILA product still dominates, you know, the discussion out there with advisors across the board because of the simplicity of it.
Back to RILA. You've talked about the capital requirement on RILA being less than a fixed-indexed annuity or a MYGA, even though the actual earnings profile is similar, which is spread income. Why is that? I guess as a starting point, and then I guess another just related question is, to what extent do you get capital synergies between RILA and the legacy VA risk at this point?
Within the RILA product, the RILA product is sold within a variable annuity chassis, which is different than a fixed annuity chassis. Those chassis have different capital requirements. The variable annuity chassis has lower capital requirements than the fixed annuity chassis, so that's first. Second, it's how you invest. Your C-1 charges under the statutory capital regime depends on the riskiness of your portfolio. Our portfolio is an A quality rating, and so therefore, it's more conservative relative to some others out there, and as a result, it has a lower capital charge. Those two are the primary drivers within what drives a lower capital requirement relative to some of the fixed annuities out there and obviously, how we invest. We do still have aggregation benefits on capital within traditional VA and RILA products, but we don't hedge, and we don't price with aggregation.
We hedge the product and price the product on a standalone basis. We don't want to subsidize products due to aggregation, and we want to make sure we're fully hedged at all time for the risk that we take when we price new business.
Got it, thanks. And then, so in individual retirement, you know, you have been shifting more to spread income because that's the income that RILA generates. Can you talk about your expectations for spreads going forward? I guess both... I'm referring more to kind of spreads as a percentage, but you can also maybe talk about spread income overall.
Sure. It's a topic of discussion for the earnings call, I guess, for most insurance companies. So, going into our individual retirement business, our net investment income or net spread on a nominal basis is up 17% year over year, and that's really resulting from the growth in the RILA product, as well as some of the moves that we made in the general account portfolio. It's benefited from rising interest rates with some floating rate asset exposure as well. What I mentioned on our earnings call is that our spreads have likely peaked as we don't see that tailwind of rising interest rates come through, and with some floating rate exposure, which we can manage at the enterprise level, but there's probably less upside potential related to that.
So the way to think about it is, I would take the spread and basis points would likely now continue to stay flat, essentially, but it would grow with the General Account. The nominal spread would grow with the General Account book value over time. So we still expect to see growth, but less growth than we saw to the spread expansion, but more benefiting from the strong new business growth that we have in the General Account.
And then, I guess, how does the interest rate environment play into that? Like, is that comment kind of status quo interest rates, and then there could be some downside if, you know, from short-term rates, if they do get cut? Or can you help walk through that?
Yeah, if short-term rates got cut significantly, like more than that's being spoken about now and very quickly, you could get some noise quarter over quarter. But we have liabilities that are floating as well, like FHLB and so on, so there are offsets within that. So you could get some noise on a quarterly basis, but I don't see any material spread compression from where we are today.
Got it. Okay, so the overall kind of takeaway is you expect spreads to be relatively flat going forward?
Correct.
Got it. So I guess shifting more to the group retirement business, so you received the initial flows from the BlackRock LifePath Paycheck product. You recently entered a new partnership with J.P. Morgan Asset Management, and then you also have the in-plan annuities with AllianceBernstein. So can you just talk about the overall opportunity that you see for in-plan guarantees for Equitable, and how you think that will play out going forward?
Yeah, we're really excited about this opportunity in the marketplace. So the overall 401(k) market is $7 trillion. $3.5 billion roughly is in target date funds. We believe every asset manager with a target date fund will need to link that over time with a lifetime income feature, and we saw first movers. AllianceBernstein was a pioneer in this space ten years ago when they created... Now with the SECURE 2.0 Act, which gave plan fiduciaries safe harbor in offering a lifetime income as a default option within the target date fund, we've seen more asset managers attracted to this. Why? Asset managers can retain assets for longer, and they can offer participants within the plans an offer, a decumulation solution, which no one's done to date. So we're quite bullish on the opportunity. We have the partnership with AllianceBernstein. That was the first one we had.
BlackRock, which you mentioned, we received $500 million of flows from the BlackRock product in the second quarter. BlackRock's announced 14 plans that they have signed up, four of which have funded in the second quarter. Those flows will be lumpy, though, so we don't expect much material flows in the third quarter, but we expect it to pick up as the rest of those plans fund in the fourth quarter and the first half of next year, and then we're excited, you know, J.P. Morgan announced that they have their intention to create their lifetime income product and partner with Equitable and one other insurer. So together with those partnerships, AB, BlackRock, and J.P. Morgan, we think we're well-positioned to capture market share now.
I think it's going to take time, for it to really get, significant adoption within, so I view this as, you know, upside for us post-2027, when we execute on that plan, as this is going to be the next frontier for insurers in the U.S.
Like, do you anticipate more partnerships with Equitable and other asset managers, or are you more focused on just growing the existing ones that you have now?
Yeah, so I think Equitable is viewed in this space as being an innovator in product design, and so that's helped us with the BlackRock partnership, with AllianceBernstein, and now with J.P. Morgan. So we'll continue to talk to more asset managers to see what other solutions make sense, but we'll also focus on continuing to get the growth from the existing partnerships that we have currently.
New topic, I guess, is the alternative investment return. I think on the second quarter call, you said you expected a 5-6% return in the third quarter. Just hoping to get any update on that and just your kind of what's going on underneath the surface with the alternatives performance at this point.
The alternative portfolio is roughly about 2.5% of our general account. For the first half of the year, we had approximately a 5% annualized return. I'd expect this to actually continue with a 5% in the third quarter. We've seen some benefit with equity markets on the buyout growth-oriented funds. That's benefited, but real estate equity obviously has been a drag with higher interest rates, and then I think overall, though, the IPO market, as you all know, is pretty dry, and as a result, with the election coming up, I don't see the IPO market picking up.
So I think it's going to be somewhat of a slow grind here to see material improvement back to our long-term expectation of 8%-12%, because you're going to have to see the IPO market open up for the broader private equity market to benefit. But that being said, we're pretty confident in our long-term returns. You know, we assume 8%-12% over the long term. If you look over a 10-year period since IPO, we've realized a 10% return on our portfolio, and so we expect that to continue over time.
Thanks. In your protection business, you had some unfavorable mortality, but then in the last few quarters, it seems to have settled down. What are you seeing in that business, and, you know, do you feel like you're on track for the $200 million-$300 million annual earnings guidance that you had given?
Yes, so we're happy to have a few quarters of mortality in line with our expectations. That allowed us to, you know, think more broadly about any type of solutions or actions we may take across the board. For Equitable, since we write variable universal life policies, they're sold mainly to mass affluent folks that are looking for tax savings and estate planning. And as a result, we have high face amounts. Historically, we've retained that exposure in high face amounts, and coming out of COVID, we've seen an acceleration or a pull forward in deaths in older age clients. These are policies that were in force for, you know, 20-25 years, so we've had good returns, but someone passes away, you have a claim that you have to pay, and we had little reinsurance within those policies.
We've seen mortality now come back in line with our expectation the last few quarters. In the first half of the year, we had about $120 million of earnings, and that's in line, if you annualize that, with $200-$300 million guidance that we've provided to the marketplace. Protection's about 10% of our overall book, and, you know, until we consistently get to the $200-$300 million earnings mark, we probably won't be giving any updated guidance beyond that.
Got it. Well, I'll try my next question, but you may not be able to answer it. But, you have talked about exploring, you know, potential actions to improve the results of the protection business. You know, I think seems like it could be... You know, there's a variety of things being considered, whether it be, reducing volatility, improving capital efficiency, improving earnings. Like, can you flesh out some of the, you know, potential options, and is there any one of those outcomes that you're trying to achieve more than the others, or is it you had a more, a holistic look at trying to improve the business?
I think earlier in the year when we were coming off, you know, lots of volatility on the mortality side from last year, we were looking first at excess reinsurance to take away some of the volatility and pass that on to reinsurer, but pricing was expensive. So, you know, if you're giving someone else volatility, they're gonna make you pay for it. And so we didn't wanna go down that route, and as mortality has somewhat stabilized and come back in line with our expectations, it's given us the chance to be more proactive rather than reactive on how we wanna look at the block overall. So overall, what do we wanna do? We wanna improve the returns on capital on that block.
It's a block that has poor margins for us today, so we're exploring a whole list of solutions, whether that be just old-fashioned, getting after your expenses and making sure you're more efficient within that segment. It could come in the form of looking at different sidecars, Bermuda, capital optimization, reinsurance initiatives. So we're looking at, like, the full playbook, I would say, Ryan, to make sure whatever we do, it's the best outcome for shareholders. So I mentioned on the call, we probably won't be able to give a meaningful update until 2025, because now that we're taking a broader lens at it, it's gonna take more time than just doing straight excess reinsurance.
Got it, so shifting to AllianceBernstein, and as a reminder for those listening, Equitable owns over 60% of AllianceBernstein, so one thing you did was you committed $20 billion of assets to AB to invest in private markets to help grow their private markets business, but also increase your yields. Can you talk about or I guess give an update on kind of where you are in the process of that $20 billion, and what have been the benefits to both you and AllianceBernstein so far?
Yeah, thanks. It's one of the synergies within our business model between AllianceBernstein and Equitable, is being able to invest and seed new strategies at AllianceBernstein and generate a good, risk-adjusted yield for the general account, so that we can offer attractive, products to policyholders. So, as Ryan mentioned, we had came out with a $20 billion commitment to build AB's private markets business. We funded about $10 billion through half of the year, really benefiting from strategies like private credit or resi loans through CarVal. We invested over $1 billion in CarVal since we bought them two years ago, so that's worked out really well. But also investing in private placements, commercial mortgage loans, European CML, so different types of structures that ABs have built up over time, including NAV loans, most recently, was the most recent one we announced.
So, AB's built out that full spectrum, and we benefited on the yield side of it. To date, we gave out part of our hitting our Investor Day targets. One of them was having an incremental $110 million of income yield from the commitment that we made to AllianceBernstein. We realized about $60 million to date, so well on track to achieving that, benefiting from the private credit capabilities at AB. Now, it also benefits AllianceBernstein, so AB's now grown their private markets business to $65 billion. That's up considerably since when we IPO-ed the business, and AB has a proven track record of raising $3-$4 of third-party capital for every $1 that Equitable seeds them, so it helps them build a higher margin business at AllianceBernstein.
Our goal at Investor Day was we wanted to build that business to be $90-100 billion in private market assets by 2027, and that would represent about 20% of AllianceBernstein's revenues coming from high-fee private markets. It's a win-win. Equitable gets to benefit from higher yields on the general account, higher income, that's the $60 million I mentioned, and AB gets to benefit as they can attract more teams with permanent capital coming from Equitable, and now they've built that business to $65 billion on its way to $90-100 billion by 2027. It's exciting on both fronts for both franchises.
AB's margin has increased to 31% in the second quarter. There are some timing dynamics, I think, near term with the relocation to Nashville and the savings from the prior lease. Can you review that? Then just how to think about the overall impact of the relocation to Nashville, kind of as an addition to the 31% margin?
Sure. So at Investor Day, we said AB's initiatives will improve the margins of the business by 350-500 basis points of overall margin. There are three drivers of that margin improvement program that we put in place. One was the Bernstein deconsolidation with the JV that we set up with SocGen. That created roughly 250 basis points of margin improvement, and that's been executed already earlier this year. Second is the move to Nashville for AllianceBernstein. That moves their real estate cost out of New York City into Nashville, where we built a presence. That lease runs off later this year, and so that's worth about 100-150 basis points of improved margin improvement.
We're actually accelerating that one, so we're gonna move it up even a quarter. So we're gonna have $13 million of additional real estate expense in the third quarter at AB, 'cause we're gonna get the full benefit starting the fourth quarter now, going forward. And then third is the build-out of that private markets business. We believe as we build out that private markets business and reach that $90-$100 billion, that's a higher margin business for us, higher multiple business. That's worth probably 50-100 basis points. So we remain on track for that, through to build that as well. But the Bernstein research and the national move will be completed by the end of this year, and then the growth in the private markets business will be realized over the next few years.
Great. Your wealth management business, you had one of your targets was growing the earnings of that business to $200 million or more by 2027. Over the last year, I think you're at, like, $172 million, so it seems like you're ahead of pace. Curious, you know, how much of that is maybe due to higher short-term rates than you had assumed at the time, compared to just better overall momentum in the business?
I think we're benefiting from both. We have strong momentum, and we're benefiting from the higher short-term rates. On the momentum side, our wealth management business has a 6% organic growth rate. We saw $1.5 billion of positive net flows in the quarter, so we continue to have strong momentum, and the underlying characteristics of our advisors have improved. Productivity is up 10% year over year, and our advisor headcount is up. So overall, I think we have good organic momentum, coming from the training that we provide to our advisors and the attractiveness of our platform. In addition, we have benefited from short-term short-term rates being higher than what we assumed in our plan. Our wealth management business, about 20% of the earnings come from the cash sweep account.
The Cash Sweep Account now is about 2.7 billion of our 94 billion of AUA, and so probably the sensitivity you want out of that is for the first 100 basis points of Fed funds rate decline, it's about 70 basis points off the 2.7 billion that would impact the Wealth Management earnings. So, still pretty good earnings momentum, yet, we benefited certainly, and you'll see some of that, go away as we see short-term rates decline in line with what the Fed's saying. But I think the organic momentum will keep us on pace to just continue the momentum towards the 200 million target.
In, I guess, a bit of a separate question, but Equitable has been an advocate for strengthening of certain regulations for the life insurance industry. I guess one thing would just be kind of curious, you know, the driver of that advocacy, since it does probably differ from most companies. And then just there are certain things going on, like proposals for offshore asset adequacy testing with reinsurers. I think there's a new economic scenario generator for variable products. There's some initiatives on structured asset capital requirements, just perspectives that you have. What are the key things on your radar?
Yes, so, Equitable has chosen to manage its liabilities on an economic in an economic way. As we've come out of our European insurer, we were managing on Solvency II, so we took that Solvency II approach and applied U.S. credit risk to manage on an economic way. And as a result, we were huge promoters of fair value management in the industry. Why? Because this is an industry that offers a great thing for society. You heard me talk about the retirement opportunity, what we offer from a wealth management side and helping people plan, have protection, secure retirement. But it's an industry that's made a lot of mistakes in pricing over the past, and regulators have been slow to keep pace with the industry innovation.
So we believe in fair value management as a healthier industry means it's more sustainable and will be more attractive to shareholders over time. So it's something that we're passionate about and something we strongly believe in. Now, three reforms that you mentioned, the scenario generator is one. I think we started talking about that, Ryan, in like 2018 or 2019, to my point, and regulators moving a bit slow on this, when interest rates were at historic lows. We think that's good for the industry as it makes people hedge more interest rates. If people choose not to hedge their interest rate exposure, they'll have higher reserves that they need to hold. We think that's a good thing. Now, over time, there are some things being still worked on, for instance, the equity and interest rate linkage.
Some of it is uneconomic now in the current proposal, and I'm sure that'll be sorted out. But for Equitable, since we fully hedged the equity and interest rate for our guarantees, we don't see much of an impact on us, but it will impact the industry and how you manage risk. The second area is structured assets. That's having a lot of discussion across the industry. We're big proponents of CLOs. We invest in CLOs. AB has a CLO business, but we don't believe below investment-grade CLOs in size are good holdings in insurance companies. The capital charges are not adequate in below investment grade structures on that, and so the regulator is looking at that.
They have the 45% equity charge for CLOs that'll be in place for this year, and they'll continue to look at the modeling of that, over time. It's a place that saw lots of growth with new entrants coming in, but again, the regulators haven't kept up to date, as we wanna make sure that for whatever risk you take in an insurance company, you should hold capital for that risk in case you're wrong, and so that's what we wanna make sure on the structured, assets reform, and then third, on the offshore reinsurance AAT, I just think it's important to have transparency at the end of the day.
Regulators should know what's being held in terms of reserves and assets when you move something offshore, and I think that transparency, as long as it's done, in a consistent way and is visible to regulators, I think that'll be good as well for the industry.
So sticking on that topic, I mean, we've seen a number of U.S. life insurers either establish offshore entities for internal reinsurance or similarly, establish sidecars, many-most of which are also, domiciled offshore. Like, do you think either of those structures could make sense for Equitable over time?
Yeah, we're always looking at ways to optimize our capital, and both of those structures would be interesting and something that we look at as part of our toolkit. If you think, take a step back, Equitable has a strong origination platform. You see that in the strong organic growth that we have coming in through low-cost liabilities. And then we have a premier asset manager in AllianceBernstein to manage assets. Those are all capabilities that third-party investors are attracted to and would be capabilities that would fit well within a sidecar. So, as we continue to grow, sidecars become interesting because we believe we can attract third-party capital to support the growth in this space across the board. Bermuda as well. Bermuda allows you, if you choose to, to manage fully economically at the end of the day.
Now, with their updated reforms, I think they've taken out, you know, some of the ways people can arbitrage there as well. So, I think Bermuda provides an economic way to manage, and that's where the NAIC needs to catch up and make sure that it has a more economic framework, and then people don't have to move stuff offshore in order to get that economic management across the board. So, we continue to explore multiple opportunities to optimize our capital position and support growth in the markets and manage economically.
Just gonna pause for a second. Are there any questions from the audience?
The sidecar business-
Can you hold on one sec for a mic? I think he'll come to you after. Sorry.
Yeah, a little while back, Robin. Good to see you, by the way. Thanks for this. You mentioned NAV loans as something you were investing. Is that a... Are you making a sizable investment there, or is that just that was just an example of something that on the private side?
Yeah, that's an example of a private capability that we've helped seed at AllianceBernstein, that AB can go leverage their strong middle-market lending business and take that capability and move to an adjacent market in NAV loans, to attract third-party capital.
So it's small, relatively.
It's small for us, but it's-
Yeah
... hoping to get that three to four X leverage in AllianceBernstein.
There's a question up front. Mic's coming.
Yes, I was just wondering, for the sidecar, would that be business that would come from the new Arizona entity, or would you be able to do New York directly to offshore?
Likely, if we created a sidecar and use our capabilities to attract growth, most of our new business is written now out of the Arizona company, so it would likely come for the Arizona company.
Any other questions in the audience? Just one more. We didn't... You talked a little bit about the expense savings at AB from Nashville. Well, I guess, can you just... You also had a general, I think, an overall expense savings target as part of your 2027 plan. Can you give an update there?
We, as part of our Investor Day plan, we have a $150 million overall expense target. That includes AllianceBernstein and Equitable. So AllianceBernstein's portions is on track. I think we reported through the first half of the year, we're, again, about $34 million of the Equitable side of it. So and across the next few years, we'll continue to have expense efficiency gains. So we remain on track towards the overall $150 million, the majority of which coming when AllianceBernstein closes, at the end of this year for the Nashville move.
Great. I think we're gonna wrap it up there. Thank you very much, Robin, and the Equitable team for attending.
Thank you. Thanks, Ryan.