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New York, NY - The Equitable Companies Incorporated (NYSE-EQ)
achieved the highest level of quarterly operating earnings, revenues and
assets under management in the company's history during the first quarter
of 1998, Edward D. Miller, President and Chief Executive Officer, announced
today.
For the quarter ended March 31, 1998, after-tax operating
earnings rose 62% to $213.9 million, or 92 cents per diluted share, compared
with $132.1 million, or 61 cents per diluted share, recorded for
the opening period of 1997. After-tax operating earnings for the 1998 quarter
exclude after-tax investment gains of $52.2 million (net of deferred acquisition
cost -- DAC -- amortization and related costs) and a discontinued operations
gain of $0.5 million. When these items are included, after-tax net income
for the 1998 period totaled $266.6 million, or $1.15 per diluted share.
Revenues increased 32% to $2.94 billion, versus $2.23 billion for the year
ago quarter. Total assets under management at The Equitable and its
subsidiaries grew by $65.5 billion, or 27%, to $306.3 billion at the end
of the 1998 first quarter, compared with $240.8 billion at the end of the
initial period of 1997.
"The strong start to 1998 resulted from record performances
from all three of our operating companies," said Mr. Miller. "All of our
operations continue to benefit from the favorable climate in U.S. capital
markets, as well as from strategic initiatives that are enhancing our internal
growth opportunities. We believe that the positive impact from these initiatives
will continue to benefit us in the future of not only improving the company's
already strong competitive position, but further enhancing our long term
profitability. Our ability to continue to generate strong growth validates
our value-added approach to our markets and the strength of our franchise."
Operating Profits From Insurance and Annuity Operations Rise 59%
The after-tax operating earnings contribution from The
Equitable's insurance operations advanced 59% to $122.4 million, compared
with $77.0 million reported for the first quarter of 1997. Excluded
from the 1998 amount are after-tax investment gains of $21.1 million, net
of DAC and related costs. The 1997 amount excludes after-tax investment
gains -- net of DAC and related costs -- of $10.3 million and after-tax
restructuring charges of $3.4 million.
"Key factors in the ongoing growth in profitability of
our insurance and annuity businesses during the quarter included higher
Separate Account fee income, and healthy investment spreads. In addition,
a strong performance by our career sales force and the ongoing development
of new sales channels continues to enhance our revenue prospects and expense
management efforts" said Michael Hegarty, President and Chief Operating
Officer of The Equitable Life Assurance Society. "As a result of
market appreciation and net new money inflows, total Separate Account balances
of those assets that back our variable life and variable annuity businesses
-- totaled $28.5 billion at the end of the 1998 first quarter. This
represents a $10.5 billion, or 58%, increase over the comparative level
last year. In addition, Separate Account based fee income rose 44%
to $71.1 million, versus $49.5 million for the first quarter of 1997."
"Total individual premiums and deposits rose 19.7% for
the quarter, to $2.09 billion from $1.75 billion primarily as a result
of higher annuity sales and renewals," Mr. Hegarty continued. "Total
first year annuity premiums grew by 52% to $981.2 million from $647.3 million.
Mutual fund sales for the quarter rose 50% to $593.6 million, compared
to last year."
"While our overall life and annuity business volume rose
19.7% during the first quarter, operating expenses from these activities
increased by only 2.9%." Mr. Hegarty continued. "Growing our premiums and
deposits at a much higher rate than expenses will remain one of our top
priorities throughout 1998."
Operating Profits From Investment Business Rise 38%
The combined after-tax operating earnings contribution
from The Equitable's two primary investment businesses -- Donaldson, Lufkin
& Jenrette and Alliance Capital Management -- rose to a record $105.7
million, or 38% higher than the level reported for the first quarter of
1997.
"Both of our investment companies continued to turn in
outstanding performances by taking advantage of opportunities here in the
U.S. -- where the environment has been very conducive to growth -- and
by broadening their business base in selective international markets,"
said Mr. Miller.
"After-tax operating earnings at DLJ -- before minority
interest and other expenses -- grew to a record $134.1 million, or 55%
above the level for the first quarter of 1997," Mr. Miller continued. "Reflecting
high market activity and increased market share, the firm's revenues from
securities underwriting -- particularly in the high-yield segment -- increased
84% during the quarter, and fee income -- generated primarily from investment
and merchant banking activities -- rose 75% over year ago levels.
Total revenues at DLJ rose 52% during the period to $1.5 billion."
"At Alliance Capital, after-tax operating earnings before
minority interests and other expenses -- also were at a record level, totaling
$69.0 million, or 29% above the 1997 first quarter," Mr. Miller said.
"This growth reflects the successful strategy that Alliance has executed
in expanding its retail mutual fund business and the ongoing profitability
of its institutional money management business. At the end of the
first quarter, third-party assets under management at Alliance totaled
$221.9 million, or 40% higher than at the end of the similar period a year
ago."
The Equitable Companies Incorporated is one of the nation's
premier financial services organizations through its primary businesses:
The Equitable Life Assurance Society, Alliance Capital Management and Donaldson,
Lufkin & Jenrette. The Equitable is a member of the global AXA
group, one of the world's largest insurer/asset managers with over $530
billion in assets under management.
Condensed Consolidated Statement of Earnings
After-tax Operating Earnings
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