Really happy to have Equitable with us today. Up here with me is Robin Raju, who is CFO. Robin, I think I'll just kick it over to you if you want to make some opening remarks.
Yeah, sure. Thank you, everyone, for joining us here today. Just for anyone that's new to Equitable, I thought I'd just give a quick overview of Equitable Holdings. We're a retirement asset management and advice business comprised of three main subsidiaries. One, Equitable Financial, which is our retirement business, manages over $200 billion of AUM. AllianceBernstein, which is our leading global asset manager, managing approximately $650 billion AUM. Equitable Advisors, which is our affiliated distribution force, over 4,000 advisors, and they give us privileged distribution in the marketplace. The industry that we operate in is a tremendous industry. It's a force for good for society in many ways. We provide protection when people need it, but we also provide retirement income that enables people to retire with dignity.
Unfortunately, though, the industry has lost some trust from a lot of investors through the global financial crisis due to some of the mispricing in some of the products that were there. We're fortunate because we think some of the advocacy efforts in LDTI, but also the NAIC, are moving to bring enhanced transparency in the industry and in the financials. We hope that brings back more investors to the industry because it's a tremendous industry, and there's a lot that can be done for it. Given the macro environment, though, let me just hit three points on Equitable Holdings. Our fair value hedging and our economic management has differentiated us through market cycles since IPO, and that's led to a stable RBC ratio, capital, and cash position for us at the holding company.
Second, Reg 213 has been a big overhang for our stock over the last year and a half, I'd say. We were pleased to announce our transaction with Global Atlantic, which resolved the remaining redundant reserve we needed for Reg 213. That's important because it enables us to focus with our investors and our community on the business. That's what I come to third, is the business momentum has been tremendous. Our retirement business has record sales, record value generated from that business. Our asset management business has strong organic growth, 11 consecutive quarters of net inflows, and our Equitable Advisors continue to provide net flows and grow their advisory business. We think the opportunity for Equitable with 10,000 Americans retiring every day is tremendous, and we're excited for the growth and the future prospects of the company. Ryan, I'll pass it to you for Q&A.
Thanks, Robin. We'll follow up on probably all those. Let's start with GAAP LDTI accounting changes because I think Equitable, I'd say, is more positive about the changes that are coming than some of your peers. I guess as a starting point, how will it impact Equitable and why are you more positive on the LDTI changes?
Sure. It's strange to say we're excited about accounting change, but we are excited about this accounting change. It's the biggest to the industry in over 40 years. The reason why is because the accounting change moves closer to how Equitable manages its business. We manage on a fair value basis, and the new accounting change moves to fair value for liabilities. Why is that important? Because today you have a 30-year liability that's sensitive to equity markets and interest rates, and it's static, essentially, under the current GAAP accounting. We hedge because we protect against the risk of equity and interest rates, and therefore, our hedges are mark-to-market, obviously, because it's in the market.
There is a mismatch under the current GAAP accounting, which tends to cause some confusion with investors on net income volatility and shows the opaqueness in the accounting due to the asymmetry. FASB, though, has recognized this, and FASB has moved now to a fair value liability, which means those long-dated liabilities will be more sensitive to equity and interest rates. Meaning for us, it moves closer to how we manage, and it'll match closer to our hedging program, which protects against risk of these market movements. We're excited about the change. The second aspect of the change in the fair value is the movement to a forward curve for interest rate assumptions. Today, under GAAP, management teams are allowed to have discretion over what interest rate they pick.
You see a wide range of interest rates used by management teams in the industry from anywhere from 2%-5%. At Equitable, we are not great predictors of interest rates. The only thing we do is we look at the market and we focus on what does the market say and what's the market pricing, and that's the forward curve. We generally hedge and we price all of our products to the forward curve. We like the new GAAP accounting because it moves more to a fair value basis, takes discretion where you shouldn't have discretion away from management, and that, I think, increases transparency for investors, gets rid of some of the opaqueness in the accounting. I think honestly, it's going to be a catalyst to bring back trust in the industry.
When the accounting shows the results and is more transparent, it'll bring more awareness of what the industry does and the value we provide for clients and for investors.
You've talked about how net income will be more aligned now, and you've also given some preliminary disclosure on the day one impact to GAAP equity. I think the one piece that we don't have yet, and I'm hoping you can at least maybe talk through it a little bit, is just how could this impact your ongoing GAAP operating earnings? Is there any directional impacts or way to help us think about that?
Sure. First on the balance sheet, the transition balance. Every company, upon adoption of LDTI, this new accounting framework on January 1st, will have a transition impact to equity. At Equitable, we said that transition impact is positive, and that's because the way we manage interest rates. We assume interest rates under GAAP are at an industry low assumption of 2.25%. Moving to the forward curve creates a gain. We have a positive impact on transition impact. For operating earnings, we're still going through our disclosures and how we're going to structure our new operating earnings come LDTI. Our goal is to make it more economic and closer to cash.
If I think about the main impacts, if you think about an economic reserve or even statutory under VM21, the U.S. framework, it takes all your fees that you have in your contract and says, how much of those fees do you have to set aside for claims? Under current GAAP, it doesn't take all your fees. It only takes a portion of your fees, which are called the rider fees for these contracts, and you set those aside to pay for your claims. You accrue rider fees, the fees you charge to cover your claim costs. In reality, all your rider fees don't cover all your claim costs. Under current GAAP, you can't accrue all the rider fees.
Post-LDTI, what's going to happen, this concept called attributed fees, which means how much of your base fees do you need to cover some more of your rider cost? For Equitable, our core business, we ride it on an economic basis, and we've always done that since IPO. Our rider charges are meant to cover our claim cost on an economic basis. We don't expect any impact on our core business. On our legacy business that was issued prior to the financial crisis, those rider charges don't fully cover the claim cost, so there should be some base fees accrued for that, which would be more economic. There would be some impact on earnings on the legacy fixed rate variable annuity impact. No impact to cash and no impact to economics because, again, GAAP is now moving closer to these economic scenarios.
For Equitable, positions us better and makes the earnings more economic, and we like where that's going because it moves it towards cash, which is where we should value companies. From the major impact for Equitable, though, is going to be net income. Net income is going to be positive on an ongoing basis today because what I mentioned earlier, the way we hedge, you have a positive equity market, we have negative net income. We have a negative equity market, we have positive net income. It's just not intuitive for a lot of folks. Going forward, that changes because the liabilities will be marked to market with the assets. Will generate continued positive net income and generate book value. These are metrics that Equitable we don't look at today and we don't think are appropriate because of the accounting.
Going forward, net income and book value become more appropriate or more relevant for Equitable.
Thanks. All right, that exhausts my LDTI questions, so we can move on from there. On cash flow, you guided to $1.6 billion to the holding company this year. I was hoping you could walk through the components that get you to the $1.6 billion, and then I guess if we remain in a, let's say, a similar market to where we are today, would you view $1.6 billion as a reasonable starting point as we look forward to next year?
We're fortunate for us to be in a strong capital position because of our hedging program. As of half year, our RBC is 440%. The cash we have at its holdco post the dividend that we just recently took out is $2.2 billion relative to our $500 million minimum target of holdco cash. The company's well-capitalized, number one. The cash flow guidance that we gave earlier in the year was $1.6 billion. It's regulated. $750 million of that is regulated. That comes from the insurance company. We took out more than that this year. We took out $930 million. The unregulated parts include AllianceBernstein of $500 million. Our investment management contract with our insurance businesses, which is about $250 million. We expect about $100 million in dividends from Equitable Advisors, our wealth management business as well.
The reason why those cash flows are what they are is because we shifted the business to be more capital light. Those cash flows, as a result, have grown from $1.2 billion at IPO to $1.6 billion now. That's a 30% increase across these different market cycles. That's a function of that business mix change that we have in our business to move more capital light. When you are more capital light, you are more exposed to fees and equity markets. As a result, we would expect some impact on that relative to equity markets. I continue to give our earning sensitivity that we provided as our best metric for cash flow sensitivity. At 10% in equity markets is about $150 million of earnings. I still think that's probably close to the cash flow element of it as well.
Got it. If we take the $1.6 billion and we deduct your holding company costs, I think the net free cash flow would seem to be trending maybe slightly above the longer-term guidance of 50%-60% capital return. Do you see some potential upside to the 50%-60% over time, or do you still think that's the right range?
As a reminder, just for anyone that's new, when we IPO'd, we started with a payout range of 40%-60%. Again, as we improved that mix, we lifted the bottom end of that range, and now we're at 50%-60% of cash flows is our best metric for capital return based on the current operating earnings for GAAP. That capital return, at the same time, as we mentioned earlier, went from $1.2 billion to $1.6 billion. That includes as well the monetization of the Venerable business. Again, the capital generation and the mix remains strong, and that supports the 50%-60% payout. The payout ratio could improve over time, but it takes time because we need to continue to change our business mix.
As we continue to write new business with less capital behind it becomes more eligible and more free cash flow, a higher free cash flow conversion. That could change over time, but that will take time. I'll caution, we're never going to be an 80%-90% or 80%-100% payout company because a big portion of our business is writing retail new business. Retail new business has a cost under statutory, but it is not recognized under GAAP. You're always going to have some delta due to the investments that we make in new business. We think those are good investments. Those have a 15% IRR or minimum threshold of 15% IRR, and those will translate into future cash flows and growth for investors. That's what funds our great products like SCS, for example. We're making good investments.
You'll always have some difference between GAAP and statutory cash flows, but those investments will deliver stronger cash flows for investors.
You mentioned the life RBC 440. It was flat in the first half of the year. I think all things considered, that's a pretty good outcome given it was a tough market backdrop. I guess one of the questions I've heard is that does imply that with at least within the insurance subs, there was no cash flow generated in the first half of the year. In recognizing that you did generate cash flow outside of the insurance subs, can you talk about what were the kind of moving parts?
Sure. Look, the macro environment market's down 20%. We thought it was a proof point that our RBC remained stable. It's a function of our hedging program. We have two hedging programs. One is our first dollar hedging program that protects against equity and interest rate movements on the guarantees fully. It fully immunizes the risk related to markets on the guarantees we provide. Second is our statutory hedge program, and that protects the balance sheet and the fees in the balance sheet, and that's designed to protect our minimum RBC ratio of 400. Both of them operated at a 95% effectiveness ratio. Some people recently asked, effectiveness, does that mean you have breakage? No. Effectiveness means you reduce volatility by 95% versus how it moved. It's more of an R squared measure. It could be positive or negative breakage in any given time period.
Both of them have operated well, which allowed us to maintain a strong RBC capital position and take out $930 million of dividends from the insurance company. That's a proof point. There are always moving parts in any given period in RBC, in capital generation. For us, we had the negatives were mortality in Q1 and obviously the Base C impact. Those were offset by the gains in the hedging program and the normal cash generation. I think those are the two moving parts that I would highlight the ups and downs related to it.
Got it. Hopefully, this may be one of the last times we talk about Regulation 213. You did the transaction with Global Atlantic to reduce or fully offset the remaining redundant reserves that Regulation 213 had caused. Can you talk through the transaction and kind of what the ultimate impacts are to GAAP earnings as well as to cash flow generation?
Sure. We are pleased to get Regulation 213 behind us with this transaction. As we told the market, we had two deals we were working on, external reinsurance and internal. Frankly, we wanted certain deals, we went with the first deal that we thought was the best deal for our investors because we thought it was best to put it behind us. Think of it as a low-cost reserve funding solution. Our term reinsurance that we did last year to Regulation XXX that resolved half of the Regulation 213 redundant reserves was roughly a 90 basis point cost, and this is a little bit more than that. It's another example of us finding efficient solutions to secure investor cash flows, not taking away from long-term shareholder value.
From the transaction itself, we took our pre-2009 group retirement business that had higher crediting rates, and we reinsured about 50% of that to Global Atlantic. Global Atlantic then paid us a positive seed of $1.1 billion on the assets that we provided to them. That $1.1 billion is used to fund the redundant reserves, it's also invested and earns a yield. That's why the net impact on our earnings is quite small. It's about $10 million to $15 million per annum. Cash flows, it's similar because you also have the release of reserves over time. We're quite fortunate to have secured a good deal that doesn't compromise long-term prospects of the business, resolves an opaque accounting issue.
Now that Regulation 213 is resolved, I'm sure you're going to get this question a lot. To what extent would you consider another reinsurance transaction for what remains on the legacy VA book?
Sure. The most important thing about resolving Regulation 213 for me is we can actually focus and talk more about how great business results, because again, the momentum has been tremendous in our business, but Regulation 213 has almost had a shadow or cloud over us because of its risk to potential long-term cash flow. We're really excited to get it behind us so we can focus on the business. We'd certainly look at other legacy transactions over time. Remember, the biggest risk transfer that we did was the Benovo deal. There, we reduced two-thirds of the capital associated with that legacy business for only a third of the policies. That was 100% non-New York business. The remaining parts of the legacy business are commingled between New York and non-New York policies. Now we're going to do work.
We needed to resolve Regulation 213 first, now we'll do work on separating those policies between New York and non-New York. That'll take some time, if there's a transaction that we believe that provides good shareholder value, we'll certainly take a look at it.
Is the separation because if you were to ever do something again, it would most likely be non-New York?
Absolutely. I think it's easier to transact in a non-New York book. A New York would put more restraints on a counterparty, on investing, and so on areas of value creation. We need to separate that book, and that gives us more optionality.
Shifting to AllianceBernstein, can you talk about the synergies between AB and Equitable? Today, and also to what extent you see more potential for synergies over time.
Deep synergies between the two firms. AB manages about 70% of the general account for Equitable and about 30% of the separate account. That's over $100 billion of AUM that Equitable Financial has AB managing for them. It's really an anchor investor that provides scale with AB and helps fuel some of the other growth strategies. On top of that, and the biggest synergy we have is with the $10 billion of capital commitment. That's permanent capital that we've committed to AB to build in a higher multiple alternative business. We've deployed about 50% of that already, so we made progress there. The reason why that's value-created is AB has a track record of raising 4 to 5x third-party money for the seed money that we provide them. Their alternative business started with $5 billion of seed capital. It grew to $20.
Post their CarVal transaction, it's now a $50 billion private markets platform. As they can raise more third-party money from the seed money that we provide, it's huge shareholder value. It's one of the biggest synergies we have. On top of that, it allows them to recruit teams. Think as a portfolio manager, you can join a firm and know you have capital day one, and you have someone that's going to provide that capital for no cost. We're expecting a yield and a return for the general account. Essentially, it's a form of free internal leverage that we provide that enhances returns for AllianceBernstein. That's the core synergy, and that's where we think the most value is. Probably two longer-term prospects that we see synergies between the firm.
I would say not going to be as valuable as a general account, but certainly two things that we're working on. One is with AllianceBernstein on the in-plan guarantee market. We think that's a tremendous opportunity for us. AB's been in that space for 10 years, and now with the SECURE Act, it's opened up more opportunities. AB landed a $10 billion account earlier this year, and from that account, Equitable received $500 million day one of additional assets within the group retirement business to manage. The asset management business makes fees, and then the insurance company collects fees. Good form of synergies on the commercial side. The second aspect will be as AB over the long term creates more insurance management capabilities, they can market themselves to more insurance carriers.
They can take what they've done with Equitable, and they could go market for other insurance carriers to gain more insurance mandates. Those are the two longer-term aspects of the synergies we see. Again, huge amount of synergies in that general account with the $10 billion capital commitment.
Investors often ask about your 65% ownership of AB and how you think about that. Can you just give an update on your thoughts there?
If I had the chance, I would increase to 65%, to be frank. It's the best asset and best-performing asset for Equitable Holdings, but it just doesn't make economic sense to do, to go up from the 65. We're quite pleased. Seth and the team have done a tremendous job in managing that business. Their TSR is almost 3x of their peer group. Organic growth, 11 consecutive quarters of active net inflows, leadership position in Asia, strong fund performance, and now with the acquisition of CarVal, a private markets platform that has $50 billion. That's several different revenue sources that provide huge organic growth opportunities for AllianceBernstein going forward. Quite pleased with the investment. It's been a great performer. Where you do see us and where we would use a stick is what we did with CarVal.
We bought an alternatives asset manager, which if you look at Equitable's currency, you'd say normally it would be dilutive to shareholders. We used a part of AB's currency or AB's ownership, and we invested that and gave that to CarVal in exchange for the ownership position. That enabled us. We went from 65%-62% ownership, no impact on cash flows for shareholders. Over time, that'll provide accretion. We'll use the currency in a smart way. Ideally, it's a core part of our business model, and we'd love to own more, but only if it made financial sense.
Got it. Shifting to wealth management. You've actively been building the wealth management business within Equitable, and I think earlier this year, you disclosed $100 million of cash flows for the first time from that business. Can you talk about where you see the go-forward opportunity to continue growing that?
Yeah. As I mentioned in the opening, affiliated distribution is one of the differentiators for Equitable Holdings. It's a core part of us, we think distribution is here to stay, and people on the ground are here to stay by any poll or any survey we've done from affluent households. Equitable Advisors today provides about 50% of the premiums for Equitable Holdings, it's a huge contributor on flows. At the same time, since IPO, we've been able to build an adjacent wealth management business that's now up 60% in AUA since IPO, it's about $70 billion now. The advisor group is at 4,000 headcount. Productivity's been high, up 9% year-over-year. They continue to benefit from their national footprint and the simplicity of the solutions that we provide from the retirement and asset management company to deliver good client outcomes.
We're quite bullish on the opportunity. We look forward to providing more detail and hopefully breaking it out as its own segment in 2023. That should give investors more clarity on what that brings. It's going to give another $100 million of cash flows this year, we think that's a good contribution.
You've had very strong SCS sales, despite what continues to be increased competition in that market, which has got lots of names for it these days, buffer annuities or RILA products. I guess, how have you been able to maintain such strong sales, and have you seen any change in the returns you can get on new business as competition has increased?
Fortunately, the business has done phenomenally well. I have Steve Scanlon, our Head of Individual Retirement, here with us today. He's joining me for the second half of today, and he's just done a phenomenal job in growing that piece of business. The key to it, though, we provided a simple solution for clients. In a day and age where the 60/40 portfolio no longer works. If you're in 60/40, as all of you know, you lost money in the first half of the year. You lost money on the bonds, you lost money on the equity.
We can come in with a protected equity solution, in SCS or our RILA or buffered annuity product, whatever name people may want to give it, and it's a simple solution that's resonated tremendously well with clients and advisors because it provides them downside protection, but also upside from a wide range of indices to invest in. We stand behind it because simple solutions resonate with clients, resonate with advisors, but also they're easier to manage on the balance sheet. Shareholders aren't taking on risk with these types of client solutions, and we're generating good returns. We're an innovator in the space. We created that market back in 2010. We were first in that market. Everybody's in that market, which we think is great because the pie just gets bigger, and it increases awareness of the product and portfolio.
With our privileged distribution, we can think we can continue to lead. We've come out with two enhancements recently, a dual direction aspect to the portfolio and also an income version, and this ensures we can address a wide range of needs for clients. SCS is our prime solution. We're also excited about a lot of the income products that we have, and we just think the market's there for us now, and Steven and his team are doing a tremendous job in taking advantage of that. Record sales, record value of new business due to higher interest rates, but also because our affiliated distribution can control the margin.
You mentioned income. Curious how big you think the in-plan income solution opportunity could be within your group retirement business, given that this was something that was tougher for the industry to do prior to the SECURE Act.
Yeah, we think it's a seed for the future. If you think about the U.S. retirement income market, it's going to be $32 trillion by the end of the decade. Huge. It is a huge opportunity for all. I think it's a place where insurers, by partnering with asset managers, can provide a differentiated value proposition to clients in 401 plans. We don't operate today in large 401 plans. It's just not economically feasible for us with the margins. This provides us an opportunity to play in that space, and it's a huge profit pool in the U.S. Again, Equitable has been an innovator in this space as well. AB created the first in-plan guarantee solution 10 years ago and this year celebrated their 10th anniversary with that $10 billion plan that I spoke about earlier. A lot of tens there now.
The in-plan guarantee market, with the SECURE Act passed two years ago, it enables us to be a default option in 401 plans. Before, it didn't have a risk of coverage to be a default option. Now that it's the default option, you see everybody's going to want to be in the market, and it's going to become a bigger part of the marketplace. We have AB, but we've also partnered with BlackRock last year, and we created a new solution with BlackRock. We think we're in two leaders in the space with AB and BlackRock in addressing that market. We think there's a tremendous opportunity to grow. It's not going to be a major input for cash flows or for earnings here over the short term. We think the long term, it's a good seed to plant for the future.
Related, but what are your thoughts on the potential SECURE 2.0 Act and any potential impacts that could have?
Yeah, we're in favor of 2.0, 3.0, 4.0, whatever they come out with, because any regulation that enhances and promotes retirement savings is good regulation. We want people to save more for retirement. 2.0, it has interesting features like higher RMD age limits, tax credits to enhance employer contributions to it. Also, some cool student loan repayment features. All this enhances retirement savings, which it helps and aligns to Equitable's mission. If I talk about that $32 trillion market of retirement income and regulation behind it further supporting and propelling that market, along with the demographics in the U.S., again, it's just a tremendous opportunity for Equitable Holdings and for the industry as regulation aligns and brings back more trust from investors. It's just a tremendous opportunity for clients, insurers, asset managers, and investors, frankly, for that matter.
I'm going to pause and see if there's any questions from the audience. If not, I will continue. Okay. You've already achieved $141 million of the $180 million target you had for upside to investment income from repositioning or rebalancing the general account. Just curious if, is that more timing related or do you see absolute upside to the $180 now that we're in a better yield environment?
Yeah. $141 million run rate as of last quarter relative to our $180 million target as of year-end 2023. Certainly, we achieved that faster than planned because of the rate environment with higher spreads, that's benefited our program. If you think about what we're investing in versus what's running off, it's almost 100 basis points different. We're investing in 100 basis points higher yield now than what's running off of our in-force. That is a significant tailwind for the program. Most of the program has gone from Treasuries to credit and illiquid credit with longer duration. In this type of environment, as long as the credit environment stays good, and we believe it will because we're invested more on the senior credit end of things, there's a good yield pickup that we have in the program. We've achieved the $141.
We're going to wait till we get to the $180 before announcing something else, we certainly see upside for that number. We're cognizant that the credit market, the reason spreads are high is because the credit market sees risk. It's important that we're investing in the right names and the right quality of names so that we can navigate through different times.
You mentioned that Equitable has been involved in advocacy efforts on the industry, including on regulatory changes. At the moment, the NAIC is working on an updated economic scenario generator that would be used for variable annuities and I believe some variable life products. There's also various discussions about CLO capital requirements. Would love to get your thoughts on both of those and any other things that you're watching.
As I mentioned earlier, this is a tremendous industry in what we do for clients, whether it's providing protection or providing retirement income. Companies, over time, have lost the trust of investors by taking advantage of these arbitrages and opaqueness in the accounting to hide different risk. We need to change and make the industry healthier because of the good that it provides, and I think that'll bring back more investors. LDTI is a piece of that. Moving to fair value will do that on GAAP accounting. The NAIC changes, the scenario generator, for instance, assumes that interest rates have a reversion to the mean in them. No matter what the interest rate environment is, it always is pegged at 3%. Again, for us, we just think it's intuitive to peg interest rates to where they are in the market.
Again, I don't think insurance management teams are specialized in predicting interest rates, nor most of the market. Otherwise, there wouldn't be all these different arbitrages. We think having an interest rate aligned to what's actually available in the market and can be hedged better protects policyholders over time and is more transparent for investors on what risk you're taking. It's impossible to know what risk insurance companies are taking today because of the opaqueness in the interest rate models. The scenario generator change won't impact Equitable because we voluntarily have more reserves held because we assume the forward curve, essentially in statutory. No impact on Equitable.
If you were taking risk and you weren't hedging low interest rate scenarios in your current model because the scenario doesn't allow you to or doesn't tend to let you do so, you will have impacts upon this new scenario generator because it'll either increase reserves or to require you to hedge more, that's going to impact cash flows for different providers. We think it's good. We think it's good to standardize and to protect against different rates and to protect U.S. consumers because they have trust in us, and not to surprise investors. CLOs, you mentioned, that's another area. If you think about the industry in the pursuit for yield in this low interest rate environment, it's good innovation has come out of it in CLOs. As a result, the industry has amassed over $100 billion in CLO exposure, massive exposure to asset classes.
CLOs, if I just give you a simple example, if you own a single B bond under the U.S. statutory framework, you have a 9% capital charge approximately. If you strip that bond into a CLO, say you strip it from triple A to equities through securitization, and you hold that whole CLO from the equity tranche to the triple A, you go from a 9% RBC charge to a 2.5% RBC charge. The RBC charges are not calibrated to the actual tail risk exposure of the structure. It's calibrated as if it was plain vanilla, senior-oriented debt on the balance sheet. This is an area that has regulator attention. We're supportive of it. Again, we invest in CLOs ourselves through AB, and we invest in senior tranches, we think that there should be appropriate capital held for risk that you take.
If you're just doing capital arbitrage to generate alpha and to price new business to get gains, we think at the end, that leads to a bad surprise for investors and bad outcomes for clients.
Those were the two things I mentioned, are there any other initiatives the NAIC has that you're paying any particular attention to?
Well, those are the two that we're primarily focused on. The other one is AAT reform, as they look at what spreads people assume in AAT, we're monitoring that as well. Again, everything that the NAIC is looking at, and even S&P, where S&P is looking at, it's meant to ensure that appropriate capital is held for risk. That's good because that means it leads to a healthier industry. We're supportive of that.
Thanks. I think this will be good for a last question, which is, your stock has done well since the IPO, but I imagine there's still probably some frustration about the valuation it trades at in the market. What's your take on what's most misunderstood about Equitable by the investment market?
Well, as you said, we've done well since IPO. Our total shareholder return was about 70%. That's almost 2x relative to our peer group. Over the short term, though, there was some underperformance on a relative basis. We think most of that had to do with the cloud on Reg 213. We're happy now to get that behind us and expect performance to improve on a relative basis, but long-term performance has been good. I think some of the valuation issues then when people tend to point is due to the opaqueness in accounting. I think as the accounting fixes itself, the valuation, in general, should improve. We internally, when we think of valuation, if we were going to buy an insurance company, we'd look at cash flows, and we think cash flows are the most important valuation metric to look at.
As I mentioned, we went from $1.2 billion to $1.6 billion of cash flow generation since IPO. That's a 13% free cash flow yield for investors. We think Equitable is a good value proposition for investors. 13% free cash flow yield, stable cash flow generating, and consistent capital return. We think for investors looking at the industry, there's certainly names like ours that provide good value propositions for investors over time. Now, valuation, I'll leave to you, though. I tend to think of cash flows, I leave it to Ryan and the rest of the investors out there to judge on what the right valuation is. At Equitable, we're really focused on controlling the controllables. For us, what does that mean?
That means continue to execute on expense discipline, continue to generate good attracting yield from our general account, growing our core businesses in retirement and asset management, and then building these high multiple wealth management and alternative businesses. If we can control the controllables and continue to deliver good execution, we know over the long-term, we continue to deliver good shareholder return for clients.
All right. That was great, Robin. Thank you very much to you and the Equitable team for being here today.
Thank you. Appreciate it, Ryan. Thank you all.