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New York, NY - The Equitable Companies Incorporated (NYSE-EQ) reported today record operating results for
the second quarter and six months ended June 30, 1999.
For the quarter, after-tax operating earnings applicable to common shares rose 22% to a record $271.3
million, or $1.22 per diluted share, compared with $222.3 million, or 98 cents per diluted share, reported
for the 1998 second quarter.
Total assets under management at the end of the second quarter of 1999 rose to a record $390.8 billion,
or 19% above the year-ago level. The overall return on equity (ROE) was at an all-time high of 19.8%.
"These record performances reflect balanced strength throughout our diversified financial services
franchise. Each of our businesses contributed record levels of earnings to these overall results," said
Edward D. Miller, President and CEO. "We are particularly pleased with our record quarterly ROE which
continues to show strong progress. Achieving this level of ROE on a consistent basis, which would place
us near the top among financial services companies, while continuing our significant investments to ensure
sustainable growth remains our primary focus."
"In addition to our financial success achieved during the quarter, we also are making significant
progress in implementing our multi-brand strategy," Mr. Miller continued. "In September, we will be
changing the Equitable Companies name to AXA Financial, Inc. (new ticker symbol "AXF") to more
accurately reflect the global and diversified nature of our financial service offerings. This new name,
coupled with some of the best brand names in the financial services industry - Equitable, DLJ, Alliance
Capital and DLJdirect - will broaden our service and product recognition in the
worldwide marketplace."
"Demographics, the strong growth in financial wealth and the increasing shift of financial
responsibility to the individual all are expected to drive long-term demand for our services
and products, as reflected in our large amount of newly gathered assets during the quarter,"
added Mr. Miller.
Mr. Miller said other highlights for the quarter included:
- Total sales of annuities, investment products and life products for the Equitable Companies were over
$19 billion in the quarter and over $35 billion in the first six months of 1999
- Insurance operations posted operating earnings gains of 24% and a record ROE of 15.6%
- DLJ's contributions to overall operating results grew 18%
- 18% of DLJdirect was sold by DLJ through a successful initial public offering of a new
class of DLJ common stock which tracks the performance of DLJdirect, raising more than $343 million in new
equity capital
- Alliance Capital's contributions rose 36%, while mutual fund assets under management grew 32%
For the six months ended June 30, 1999, after-tax operating earnings applicable to common shares
rose 15% to a record $493.6 million, or $2.22 per diluted share, compared with $428.5 million, or
$1.90 per diluted share, reported in the comparable period last year.
For the second quarter of 1999, net income, which includes net realized gains (losses) and other
non-recurring items, was $381.0 million, or a $1.66 per diluted share, compared with $248.8 million,
or $1.06 per diluted share reported in the 1998 second quarter. Net income for the first six months
of 1999, was $602.1 million, or a $2.62 per diluted share, compared with $515.4 million, or a $2.21
per diluted share. Included in the second quarter of 1999 net income was an after-tax gain of $193.6
million related to our sale of DLJdirect and an after-tax $85.6 million non-recurring adjustment to
deferred acquisition costs.
Insurance Achieves Another Record Quarter
The after-tax operating earnings from the Insurance segment remained strong during the second quarter
of 1999, rising 24% above last year's level and reaching a record $141.3 million. For the first half
of 1999, operating earnings from these operations grew 21% to $269.4 million, compared to the similar
period of 1998.
"The second quarter continues the significant earnings momentum in our Insurance segment," said Michael
Hegarty, President and COO of Equitable Life. "In the quarter, earnings growth was driven by a
17% rise in revenues, led by robust fee income and better margins. In addition, we continued to execute
on our capital redeployment strategy. These results continue to produce better ROE levels from the
insurance operations, achieving another record this quarter at 15.6%."
"Total sales of life insurance, annuity and mutual fund products grew to a record $3.4 billion for the
second quarter, 8.1% above the unusually strong quarter of a year ago," Mr. Hegarty continued.
"Sales growth in the quarter was 8.8% for annuities, 10.5% for mutual funds and 6.4% for life products.
We continue to expand our diverse distribution channels and are in the process of adding to our annuity and
life product capabilities which will improve these growth rates in future periods."
"The implementation of our key strategic growth initiatives continues to pick up pace and is producing
very encouraging results. Started late last year in what has become known as the Texas Project, the market
concept, operational framework of fee-based planning and broader "open architecture" products, has been
tested, refined and continues to validate our strategy," said Mr. Hegarty. "With the knowledge and
experience earned from this Pilot program, we are on target to begin the national rollout in the Fall of
1999 and expect to add meaningfully to the assets we manage."
Another Solid Performance From DLJ
After-tax reported earnings at DLJ rose to a record $165.7 million for the 1999 second quarter, up
16% from the $142.3 million reported for the similar period of 1998, while revenues also rose 16% to
a record $1.8 billion. The average ROE was 22.2% for the second quarter.
DLJ's contribution to Equitable's second quarter results were also a record at $112.2 million,
versus $94.8 million last year or an 18% increase. For the first six months of 1999, the contribution
from DLJ was $190.7 million, versus $184.5 million in the comparable period a year ago.
"Record levels of underwriting income, fees, commissions and trading gains were the primary drivers behind
DLJ's success for the quarter," said Mr. Miller. "In addition to these outstanding results, the firm
also continued to make significant strides in executing on its international expansion plans. For the first
six months of 1999, international revenues increased by 77% versus the first half of 1998, and so far this
year DLJ's international business has generated more revenues than all of 1998. DLJdirect's revenues
for the second quarter of $59.7 million were double those of the comparable period last year."
"DLJ continues to pick up market share in its selected investment banking and financial
services segments. Coupled with the strong backlogs in equities and high yield along with record M&A
assignments as of quarter end, position DLJ well for the second half of 1999," concluded Mr. Miller.
Alliance Capital Assets Under Management Reach Record $321 Billion
After-tax operating earnings - before minority interests and other expenses - at Alliance
Capital Management - reached $97.2 million, or 28% higher than the $75.8 million reported for the
second quarter of 1998. Total assets under management at the end of the period grew to an all-time high
of $321 billion, 22% or $58 billion more than at the end of the second quarter of 1998.
Alliance's contribution to Equitable's second quarter results were also a record at $30.3 million,
versus $22.3 million last year, a 36% increase. For the first six months of 1999, the contribution from
Alliance was $54.6 million, versus $37.8 million in the comparable period a year ago.
"Continued outstanding mutual fund performance was a key ingredient in the company's growth for the
period," said Mr. Miller. "Overall, mutual fund assets under management grew to a record $140.9
billion, a 32% increase from last year. The mix of business at Alliance continues to shift towards higher-margin
mutual funds, which is positive for our earnings. Overall new business in the quarter, both institutional
and mutual funds, was strong at $15.8 billion."
The Equitable Companies Inc. in early September will change its name to AXA Financial, Inc. - to better
reflect the broad based financial services company it has become and to benefit from the global
AXA brand. As with its Equitable Companies predecessor, AXA Financial (NYSE-AXF) is one of the world's
premier financial services organizations through its primary businesses: The Equitable Life Assurance Society,
Alliance Capital Management and Donaldson, Lufkin & Jenrette. AXA Financial is a member of the
global AXA group, which has operations in over 60 countries and more than $650 billion in assets under
management.
Condensed Consolidated Statement of Earnings
After-tax Operating Earnings
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