PRU - Earnings call transcript Q4 2018 | Prudential Financial, Inc. 5.62

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Prudential Quarterly Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being recorded. And I would now like to turn the conference over to the Head of Investor Relations, Darin Arita. Please go ahead, sir.

Darin Arita

Brad. you, Thank thank and joining call. our Good you morning, for Ken are CEO; Head Rob Rob Representing International Domestic Prudential Vice Axel, Lowrey, call today's Businesses; of Accounting Head Pelletier, on Controller Falzon, and Officer; Officer. Charlie Chairman; Scott Sleyster, Chief Principal Tanji, Financial Businesses; and of Steve

results take from remarks It presentation Today's may predictions forward-looking statements. We prepared Rob today. Ken, questions. by will start materially and your and possible may that we make actual is Charlie, the with then differ we will include

addition, references In to measures. this non-GAAP presentation may include

a the found factors and hand Measures in For With Forward-Looking on reconciliation results those GAAP be over of to cause please appendix investor.prudential.com. that, could I'll the Charlie. forward-looking to such to of titled presentation, comparable see discussion the and materially which slide can from measures our in Statements a Non-GAAP actual it today's at differ measures website that statements, the to

Charles Lowrey

Good thank Darin. everyone, you, and joining you us morning, Thank today. for

While adjusted outlook movements our our by good customers in a building little continue momentum later. our and ability dive subject remained this times. to our feel did fundamentals businesses, into our through items as quarter strong business to earnings, fourth equity We And results, more affected the Ken will across with needs, turbulent today. notable in about helping our especially that the address market financial for for our business our their we're our going detail

grow sustainable for our we important our for to as value to XXXX continued generate another marked the and a meaningful way. business in year, chapter full For customers Prudential

return than and grew operating adjusted and a share, value share via dividends returned $X more As repurchases. and produced equity book a result, on per billion earnings we double-digit

sheet balance large in fourth movements the solid equity a quarter. the even amid market maintained also We

the relationships opportunities more new customers. excited are value forge and to with our existing Looking customers forward, create we about for

highest bringing reach Financial to global customers. PGIM, a and our financial businesses; our complementary management and we're level, others and businesses, allow Our the U.S. market-leading markets We through grow in few business. opportunity us more International business; our Wellness that At way expand capabilities this to accomplish asset more can.

our to competitive businesses same risk supports global transfer, its through new position asset its are from of working world demographic the institutional the with relationships to distributors reach We XX addressing individuals different time, assets in benefits financial enable investment and This groups By which and a and classes. income ages behaviors existing manager. solutions, to capabilities, clients to customers. under the societal that customers. we management, unique asset and security. with a innovate also allows Prudential, for as needs PGIM At us such our financial enables around seek services, as advice, including success and and growth new adopt PGIM affiliate proprietary help evolving continued our services products other top flows private deepen the opportunity segments market brackets, pension across support to for advantage provides which

engaging with an in presence relationships million Our countries, approximately businesses have than established, XX trusted more individuals. XX in

In diversification capital and shareholders. businesses reach, addition wide our create to this for our earnings

and market year-ago period X. financial impacts. a due on from some quarter Slide highlights the year. equity quarter provide to Turning I'll Fourth declined additional fourth full earnings primarily the to

of AA high generated increased on robust $XX.XX. XX.X%, shares earnings intermediate our And XX% by this capital adjusted all For deploy XXXX our full we maintaining the We our to XX% an grew the equity operating paying while near share end to achieved standard. year, capital the in adjusted of our target business, at repurchasing our XX%. book with year per And share by -- book full our and a of We growing per adjusted dividends. of position return value for to consistent X.X%.

repurchase XXXX, authorization billion, businesses, by look milestones. U.S. our year's businesses, our our we Investment achieved strong and to This in we we was pension by is drivers As including account dividend our increased $X risk across performance significant supported share values Institutional capabilities. by Financial products, Within supported the XX%. Wellness record quarterly transfer

Most we reflects the I'm is a to of work. At highly list what sector, in point achieved to feedback clients achieve performance, are body companies we purpose-driven We highly aspirational that management. year growing and this loyalty our the collective a of in marks by reached retaining be global financial Within the Companies recruiting we purpose-driven new to this for recognize of enabled also growth U.S. and a We our Slide with again, and changing retirement such who year for a and as recognized There's close sales. talent, reflects a retirement protection proud to International, meaningful consecutive for Life innovation purpose we is strategy solutions. flows. outperform to that And solving culture of on record this year, it from in and a vision employees but we focus business to all purpose, and Admired in on World's people record high that of our positive the a do that better within. consecutive like ranked We through full-service and talent, of level had our customer and competition our X. starts Within productive driving with of their strategy. we and Financial as areas we Fortune PGIM, note distributors turn on evidence fourth core future, #X which as bold was, effect, once start by top XXXX technology, is our net I'd challenges make continue unveiled Prudential elements statement institutional our to our strengthening of statement, are in which which Maintaining we Wellness executing of businesses. their Magazine's world. our XXth Planners,

World to the sector was only be Global noted list, named we to our the are Change as last Fortune's recognized. in company we Prudential quarter, where Additionally,

Finally, one for XXXX single XX the year society. on Diversity of the DiversityInc provide executing we key priorities. it businesses shareholder distinctions which on will every who Companies I'll continue a serve are an the a and to how turn cultivate value drive we XXth to over Top that, our cited in contribution These to a build will their row. positive Rob, on endorsement in we for make With culture at update Rob? as by Prudential to for were day and as strong

Robert Falzon

which Thank Charlie selling I'll Charlie. advancing Consistent to we you, financial our solve in our our through aspiration and X. International with begin purpose our through on our of already U.S. Wellness needs-based are business. challenges described, Financial initiative approach our the Slide the in customers,

in are Our was the quality of the market strong equity the hallmarks execution quarter resiliency strategy to that what attractive Prudential: the build and we fluctuations fourth thoughtful fundamentals believe financial outcomes. produce result of and

the Wellness. financial from who through for apply access produce with enduring customers, market to similar these engage We outcomes our is objective employees This employer enhancing with this multiple in and strength. ways also simplified their Financial and, integrated employees. particular, and challenges U.S., by clients channels their through engagement our solutions, In benefit in financial the strengths clients solutions. to the can that our identify do benefits we Our our workplace of individuals of and unique effectiveness and solve

and improved as Our as understanding outcomes stress, reduced increased such programs and financial resonating value generate utilization productivity. proposition we company benefit is of

enable our Workplace our Workplace Individual we financial serves million and this As including channels, million businesses phone-based and people, shown on produces distributors, or through Annuities represents Group Insurance, investment us our and Wellness covers people. and Slide advisers through Individual Individual delivered Financial spread income our directly in of diversified with capabilities clients Life fees, underwriting of The Retirement, our and platforms. and to source XX X, a with a U.S. digital Solutions Individual with net Solutions with continuum X Solutions earnings, tools. have third-party in-person including engage platform over

three Our growth. to is how and I'll individuals' meet for where, our priorities when highlight of want. goal they needs key

address to financial develop First, to customers' continue we needs. solutions

savings launched retirement individuals As long-term while solution goals. for for feature short-term to an toward we our allows access needs plan example, clients. This funds emergency maintaining their recently their contributions

XXXX, continue to Financial and that provide to we new retirement Financial capabilities we Wellness over our case our generated of $X clients, have in Group Insurance these Since attribute sales our billion Wellness as to of workplace this plan existing about we initiative. in also are can to efforts. the launch solutions wins full-service million $XXX Second, client contributing solutions acquisition

Pathways Prudential and Prudential. workplace. individual deepen Wellness to working activate through are Financial relationships we our these We LINK the our relationships in platform digital by Third, program,

adopted new of advisers. been Our nearly Prudential which wide site request has consultation, workplace employees a clients. Prudential clients helped clients financial delivered participate in our by Employees workplace work personal retail by topics our range can XXX Prudential's In a seminars Pathways on advisers. of financial can of also this program program, for has drive

XXXX. a million Our representing in take We This provides wellness by including and LINK Prudential of action. on individuals' over financial digital platform needs adopted venue by financial address digital tools topics, Financial second clients, X of to needs, of half assessment Wellness platform variety individuals. education a over the been X,XXX has to launched

can savings, employees or online a workplace to personalized advisers clients protection goals; of platform. LINK and digital digitally highly our investment, that is make and available helps part customize experience obtain financial Our income Wellness as employees solutions. with connect their phone; This via Financial those

expand market our and to continue believe can addressable and our we solutions As potential. growth significantly we long-term enhance individuals, help employers ultimately our

are This was benchmarks the a serve and large $X of will benefit management billion we our many I withdrawal and management which capabilities. business, via are net of net over PGIM. flows scale assets for under strong third time. that positive including idiosyncratic We a flows consecutive marks time client. not X-year funds a global net PGIM outflows as a investment highlights highlight These the Slide These $X class institutional of from parties other assets asset to institutional performance the single world's client-specific their the with $X flows specifically on have flows and year In to largest decision note in our AUM. to performance. long-term broad over its third-party a positive outperformed trillion Turning XXth billion, XX% that driven third-party of of distinctive, leverage and, of current part experienced institutional based period. investors performance. multi-manager asset by was investment by model to our management under continues the result, PGIM's fixed-income the generally experience would of X, from XXXX quarter, pension PGIM.

retail third-party were investors quarter. more Our consistent Retail sold investments for during the the trends reduced by industry flows and exposure, affected tax credit held with cash purposes.

Despite into to the significant inflows, in priorities keep our contrast higher-yielding differentiated inflows, under declines in by flows PGIM's our three were total managers. to grow highlight billion stable PGIM's management Our I'll diversify compression, These helped total included advantage. origination industry-wide quarter net key fee management asset other market capabilities to we management overall to quarter. provide competitive the fairly flows stable product positive from pension and affiliate experienced continue basis suite despite assets points significant earnings. a yield remained at risk $X XX as and through transfer, including decline strategies. where other The positive fee assets asset PGIM's asset the

First, our global respect to with footprint. expanding

XXXX, of outside XX% under the sourced management were PGIM's from assets year-end of As U.S.

origination continue private international part driven grow our in by We capabilities. strong organically, to

credit had originations. PGIM private fact, year a In for record non-U.S.

platform PGIM's assets XX grown fund European of with $X in has management to addition, under In billion. mutual funds, excess include

we acquisitions disciplined our capabilities. have strengthen complement Second, presence to and our made also bolt-on global

quantitative the will by announced For London-based alternative manager manager that tapping recently example, expand into our significantly growth global The a investment greater distribution investment we acquisition solutions. will network. potential have PGIM's of

across strategies fixed fund our And last we exchange-traded has by equity to income. year-end, platform products, launched year. the to respect actively first managed, both with grown ETF and X Third,

lending. capabilities a established have in In our addition, to private leading market-leading group franchise focused we on direct alternatives our financing, client mezzanine and and energy continue grow dedicated finance

to turning X. Now Slide

populations includes with high-growth and International life world-class Africa. operation Our India, in large China as Brazil, our as other including as insurance Japanese business markets Indonesia, businesses, such well

and significant business differentiated to growth, to execute ability and our Our have steady led returns generation. strategy models attractive proven capital

including agency higher sales. Bank fourth sales fundamentals reduction quarter. we was X% in than make quarter, bank on half in sales and addition, with prospects. growth long-term channel the channel to higher lower, channel new Life continued mobile X,XXX. out in continue digital, sales, more channel were XX%, total the even summary, Wellness, and in market. remains all to PGIM XX% strong In I highlight record agency focus independent a a sales in businesses: International. about growth Financial sales number to and reflect operating on increased the were U.S. offset X% insurance metrics sales that underwriting Life increased during And by and Planners This distribution. as U.S. a capabilities consistent of and rolled in discipline level product a increasing data than by driven by was in Life to enhance of driven our a our Consultant our increase strategic response lower growth our the our by were sales quarter, will momentum Consultant Life by an which year to few investments the dollar year-ago dollar as Planner the reflect our life year. In ago X% positive sales, year-ago sales count term quarter. earlier Japan pricing were International competitive in continued current by U.S. compared of high-quality of Gibraltar Life a and across Consultant independent

attractive and Ken. customers execution generate continue well. over growth with to serve hand strong those to it We quality fundamentals monetizing fundamentals And we our that, are have as profitable strategies to And I'll thoughtful build that we returns. at

Kenneth Tanji

includes current X of Slide Thanks, the notable were items not the X because the items be of Okay. operating which items. future they primary impact adjusted results quarter. on We notable had highlight in these performance. drivers an indicative There Rob. may

associated market for the and variable million $XXX certain First, and annuities life equity with the resulted recognition costs variable movements in of adjustment policies. benefits a

investment by hedge fund prepayment fees non-coupon income million long-term our were $XXX and In addition, returns. below about driven primarily expectations,

generally expectations, the on was appendix. per in reduced In in presented and underwriting third, our Second, recorded items provision highlights our mortality complementary experience by legal for a total, of $XXX pretax million $X.XX which XX matters. as share. these $XX average notable line million longevity profile, earnings And with Page we or

notable earnings year-ago of seasonal note per the about the a Excluding patterns, we items, the be -- please And would $X.XX, up appendix. we've XX% thinking that earnings in quarterly quarter. share summary included from in items

Slide to deployment, capital I'll and provide liquidity XX. on turning an update leverage. Now

increased As and authorization during noted, an to XX% our announced yesterday, $X more than increase we Charlie and And we returned billion to $X XXXX, by repurchases. share shareholders the share repurchase year quarterly we in dividend. dividends XX% for our billion, through

between evenly repurchases. was businesses were increase the distributions the cash dividends at and million million liquid Shareholder cash distributions. The and amounted $X.X from quarter at in of $XXX end split company assets the of exceeded of the billion shareholder parent Our sequential quarter to roughly driven $XXX quarter. our by flows that share

maintained balance sheet. also strong a We

the equity quarter. in were movements effective Our mitigating the hedging programs in large highly

solutions to regulatory our better be strength of global interest, remains and Our ratio details turning market-leading targeted financial our providing Also, of integrated to and financial we investor target. our portfolio appendix. XXXX financial to our high-quality wellness capabilities continue ratios AA customers. of provided a above credit as than as XX, the complementary Slide capital with remains are leverage our summary In topic businesses in year-end levels, CLO more

billion shareholders and flexibility. our share position a capital shares on to solid we than businesses. year, operating more book in a and also the And and net value along flows significant equity, For adjusted adjusted robust and operating distributed $X with across generated sustained we strong capital per with growth return earnings delivered

Now turn questions. to it for the I'll operator

Operator

[Operator Instructions].

Our first Lee from Dowling question with today of & comes the Partners. Humphrey line

Humphrey Lee

costs outflow Regarding to it was from PGIM's foreign for the more hedging terms the net And you wondering elaborate you client, if redemption. just outflows, I little related mean, this maybe do for billion in to particular can share being Was was bit exposure client the hoping $X I then color. of reason I have investment single if you can a any client? or the also, still in-house? investors more taking the

Stephen Pelletier

Thank managers, absolute for Steve. was reason much looking due Humphrey, that this basis. will on factor. I was really performance, very client for say question. it. is to you and that I main not driving this relative an the outflow take the was or would your consolidate to our a the It either

So there. that's story the

business gets basis, as inflows also emphasize, we just an with I a We in I do the proud largest I'll of even represents largest with particular, top of that, on mind, In a with blocks. manager. I'd like talk a case. more very front, means institutional the Humphrey, on basis, on business don't highlight large dealings client. our about, too PGIM pension this, think you it funds. a the global business Charlie XX done business may franchise. something large XX over client U.S. with do occasion, world-class granular We single client will no-names companies. of business individual much of don't our quarterly have X that We asset on rare corporate but global to the XX -- XXX about level, truly If that And franchise, occasion, for Fortune top talked pension due XXX do XX the a than that outflows at half have grateful we of on plans. and We're

one to that withdraw, institutional institutional XX billion, I'd point earlier, thought net almost years also, basis, the flows. we that flows However, despite $X to which like on And of an net large we out had outflow have quarter. of in XXXX, positive annual for basis, his in good mentioned Rob quarterly begin as mentioned us gross both as robust And sales and at comments. confidence, gives average we a were fee attract actually as our net, flows, that signifies very that gross ability to the and and strong level, sustainable on

Humphrey Lee

Understood. My investment to understanding reporting then second demand the income, included exposure question your of And And that hedge and so of quarter could fourth weaker, hedge inflows volume I the reflected the fund of is on My related in has note, your million to quarter, Like, of your obviously, agree, $X.X non-coupon was fully in that the but -- in guess much about lag, most is be quarter. expectation? I that the to we the definitely speak how And product. other an net the offset. fund income the no numbers for of first was should underperformance your non-coupon the $XXX related weaker billion quarter the below-plan investment December how underperformance? results. results in will the hedge fund be that private equity think weak

Robert Falzon

Rob. So, take Humphrey, question. I'll it's that

not lagged. So our funds first, are yes, hedge

So funds. was fund S&P that were the hedge alternatives in that, at the put There market market the majority down quarter, performance effect the performance some expectations, World are performance And being around the at it fund would small about in vis-a-vis to full pieces I the and Index. helpful XX%, hedge of look therefore, would X.X%. the context down our that in for related if hedge alternatives vast MSCI overall to I reflected in quarter hedge the say, you attributable of just the funds portfolio quarter. of quarter compare the in Humphrey. components, our so performance. the the performance the both that be XX% around the or performance fund long-term our overall our of again, the if to vast was majority Hedge would to from overall performance portfolio, And the you but look and, fourth other is overall

look of World we you And about the fiscal got. up well-diversified the if performance a also diversification the to has which had it's to class, longer over asset and so you performance strong. performance, speaks We're so. in was in Index, the the look that S&P, think year, performance, mind its contrasting alpha, and sector our If strategy which year, or the the look actually They're period of or about for funds, keep down the XX again, the and at positive portfolio around the of and portfolio. it at different sources time down quite quality little horizons. had year. over and to by over it's It's geography, a diversified hedge XX% that that year, time like MSCI I frame, including full that X.X% alternatives X% a was for time, think things our Bigger funds fund for hedge I helpful that, long been picture, we've actually and

go around that million in actually the So fourth the the of to expectations, period our of the versus or exceeded you total over XXXX, of if back that quarter which $XXX at we long-term it look and time. back performance of inception program, by we've returns XX% was about

So the respect again, it's by equity like are PEs, portfolio. it's you different speaks And some in to about the And that realizations. and management of hedge a that PE With alternatives those the less up PE have funds private equity our there a results correlations are alternatives you they but influenced quarter portfolio. And has fourth funds with of asked, our than would also, as market, come a as direct number the see that the well. mark-to-model number funds also mark-to-market, of or first you were the sort and specifically result overall versus of lagged, in what of XX% XXXX quarter. things private of because as with the and most the positive are of discipline of to around we

off mentioned opposed coming sort just some hit quarter-by-quarter that broadly, of at we've or is caller and you broader If of on we long performance of just a a head from term, sort that as kind can that's think -- looking over the think before, XXXX outlook there's provided. we as of appropriate guidance the we know at the you're first from I follow-on another, for the I alternatives, question, me the from let I the it statistics outlook sort the about more of either issue of look the the this talking if or analysis. kind So to have versus emphasis that I because quarter which of

you As conditions. statements can provide of know, don't we forward-looking context I some make about but current guidance, in observations our the

underlie to the First, the that momentum markets, And December, And guidance head are actually fundamentals, with markets while as guidance provided. deck the that strong heard fourth of quarter went year. in adjusting that end remarks, you performance. our for our results in businesses, fourth across we With assumptions quarter through actually we underlie in provided decline, very our assumptions at we've our December opening strong swooned last the the are guidance quite we our of XXXX. for good the actually current that and that they're as respect the market levels the impact financial the demonstrating reflect consistent pretty the into

I'll leave others from you then context. So I those that thought might conclusions but to helpful own your observations, draw and be additional that,

Operator

Morgan do we question Stanley. Nigel of line a the Dally And from have with

Nigel Dally

light performing you're looking and light on are of also a in the views question that, concern about positioning discuss to Can you in of making? what that you're hedge within as credit the you Broader cycle, they're the In any be cycle where portfolio. the if at investment escalating your looking we turn it that originally just as say to of change would metric now fair your to non-coupon, you allocation forward? so, for performance intended, looking highlighted funds not to the given and

Robert Falzon

Rob it's Nigel, again.

there's yes, of of any consistent your And there. given construction parts year, around our changes make credit in quarter to cycle. the private take that the that. second quarter the depending first, or me the of size asset of points. and our portfolio that in not we point have the individual to with is we consistent, expectations that types positioning X strategic we question component One, that we're in and and and is where are portfolio is to and well let credit to or the which So and performance the But the is, sectors, drawdowns part respect sort variability changes relevant credit regard either estate. things portfolio get, the like real from with portfolio exposures start manage with first in of Obviously, looking weightings ultimate With in it portfolio cycle, significant in for diversified, no for equity ratings. your year I'll limit particularly names, terms to we largely, within discipline really on

discipline So a lot of that around goes sure the portfolio. making the diversification deep into

Second, taking of off of the the or that. actually is a not year over table. this of examples been We A as downturn us. couple portfolio risk last positioning for started two. we've further the into And the for new gotten further we've the cycle,

diversifying our corporate been exposure, longer in we've First, particularly durations.

which fixed noted we've been almost the risk in of of And also credit we're portfolio XX% privates, portfolio. our transportation. And exposure below-investment-grade been We've public noted about utilities for of before, account about portfolio. and we're of our that it where with now underweight as that of we've ahead It's and munis of a general and out corporates. energy, account adding in government finance our as been bonds. noncyclical XX% had half bonds high-yield consumer we've overweight in XX% about and our appetite, think in of the shortening been hold to been the past, selling lieu of maturities. We've I at replacing telecom, times portfolio we we've So migration have multiple the rotating larger-than-typical also duration and of And and we've downgrades. of overall privates

to a benchmarks and, leads our X% which on is only investment marketplace. with and experience portfolio as account. of general excess or that in privates experience, of below-investment-grade the quality well grade credit that higher Combination significantly is recoveries. about equivalent history we of they that substantially find in is public basis our the aggregate, the In in have loss actually, investment defaults lower grade Our below

CLOs, it in are tranches And high-quality by like Our the overweight more Ken industrial, are and you remarks in his our it's as private I'm commercial it's with and a industrial under-weighted office at underweight placements, investments portfolio into structural And opening to mortgages property virtue multi-family origination. structured our to investments. and direct so and the structural exhibit sensitive that highest-quality focused of the retail. enhancement private in deck, very on -- those we've originated, particularly sorry, and directly cyclically our with see significant multi-family with types regard and protections noted we built like

think broader The management point concentration defensively We've around core which sort positioned, just up. And one issues ALM, is portfolio have limits to. to the I highlighted come the in of well. our I very that of different managed as as portfolio key this that is the is It's that discipline asset-liability also we're matching, articulated. I is past strengths. spoke

of recently take spoken it, And call, is that's from just we we I'll the so And to significant that is So In our actually of of and see our the exposure underwritten are research the deck, importantly, our guess, opportunity impairment just tranches, AAA end noted, we not talked provided leverage actually up peers. properly do low an comprised around And our that very more to, comparable you and this then, credit so guidance something benefit haven't more is that. about at credit to even more as levels. but our of subordination leverage peers. range very history. X on I some of actually that leverage seeing asset we're the I on what well thing X we've high-quality during that, NAIC CLOs. included is is range showed entirely adjusted, within NAIC can our exhibit we And asset come the

year, looking Closed basis impairments loss period portfolio are with is If there, actual through went January I after-tax produced subprime. assets comparing that assumed that for by that's the credit we've others to and there Block, that the we calculation so our being Our that think, and XXXX own the out losses, If experience those include to for of of and also experience in of on the from, X September that including the crisis, X.XX%, below out pricing. that our we've roll of total has financial experience sales, the through been XX that statistics includes benchmarks. from that the below average aggregate It's our well been in only with And replicate end XXXX, across or calculation all at impairments it excluding and forward our what points our the basis X points. moves we are period. investment embedding that we

immune positive from about now general would loss and derive this expect, due spoke And size again, ability advantages investment privates, remarks, you investment experience would in before by strong be will opening downturns. spoke it. end That's originate performance environment our the attractive third-party X/X its historical the of think from corporates, investment to track well. of flexibility by publics. we end we record that environment last our with almost operation as mortgages of to to of a end those I've well of that we PGIM our performance acquisition low So to ability as XX standpoint, would it and Charlie standpoint. a at high is XX% -- the and what account evidenced of through, the None and of in the portfolio, are the its more find specifically I coming that's the consecutive cycle, to credit which consistent and attractive the of to to the more we to in peers due of prior of have, institutional very posturing defensive weather I be that's very actually expect strength years cycle, our a imply its opportunistic the in low accompanies gone that financial directly have through typically originate taking sorts that performance the or as advantage flows And the to his to to into from we is but broader cycles, as

fully that, question. I So with hopefully, your answered

Nigel Dally

second Japan. My escalation competition the just channel of the Absolutely. was in bank question the on in

in marketplace. entrants Just is whether the that players existing wondering new or that's

what's color there. Just a going on to as more little

Scott Sleyster

it don't in number No, they I offerings Scott, it's think Nigel. have new would a that. bringing recurring premium particular, of may people market, is but product to be This entrants new that a say about is things market. I been necessarily couple bringing and the In to of that premium single to marketplace.

basis, we bank opportunistic. really in the talk say our about the perhaps, it channels Japan, broader think, channel. that to of is all on Out have -- the more a or should approach I I

come channel, models protection-based most focus very Planner reason that participants and objectives bank the for Our you selling cycle they one competitive. for another much into really Various move are aggressive core traditionally will on When channels. Life pricing the various be needs-based insurance. or achieving. in throughout might with Consultant life Life They that's the

of see Our And that We've insurance. expect model, to quarter-to-quarter channel. would a stick pricing traditionally as still selling highly I We're think, disciplined. is got discipline. that, to we in protection lot we volatility

Operator

with have And line of a UBS. we the Nadel from do John question

John Nadel

pension for a you PRT Just the what Could flows billion mentioned net year. $XX question just I sales. for think specifically gross on risk us tell transfer were? the you

Stephen Pelletier

is this Steve. John,

total, on transfer about annual communicated the $X side. we've $X what PRT with Our is longevity on which billion before, billion runoff risk and side the consistent billion funded on $X is

levels pullback impact. in the out steps across impact. people very, that all, risk pension an some see have mitigate in capital aggregate all the hedge have about that and, would I is funding and flows. in just while their the may taken the that pipeline, And that I'm visible point any first that did to a in volatility terms in you quarter be still looking robust now, in pipeline. the So of we're funding year sure gets what market we I to all some that and at may say that in very thinking fourth the the to that to aggregate true, would the funds all, funded of second markets levels companies virtually fully observation are of

a So we very robust see still pipeline.

are confident within to transact pipeline. very the in We ability still our

billion the by that -- risk billion And the others given strength past $X.X quarter possibly be I say experience, also an think I of longevity that's funded the fourth and less and had borne PRT than we in where opportunity, pipeline would several of the for the transfer. flows backloaded strong other see the very of total, we experience, out to configuration years our this given year's kind have $X.X been.

John Nadel

Rob Okay. Ken. And I a guess, question then for, just or

the compensation-related expenses the us for that much fourth by decline? quantify higher much And up just lower to think market price results, the relative offsetting share quarters? in corporate. the could average then runs was how you specific driven was expenses first to quarter through that form seasonally the Just and of of X your the how I

Kenneth Tanji

about Ken. Yes. and $XXX fourth John, would And in about typically, comp was our of and expenses from range that that of $XX to our other. that expense the and to of impact from end at our of corporate $XXX they million we in million long-term market corporate. and seasonally they high in $XX deferred compensation that, guidance plans other did, indexes, in price range, about We benefit had quarter are given million. either then it's the of of occurred higher quarter, And are million a come linked the had thought half about in that our or terms and and share that

Operator

KBW. question of Ryan have with a do from line we the And Krueger

Ryan Krueger

filed, be, of will get forward I guess the target XXX% statement guess, versus RBC ahead your what wanted the being I tax your ratio I post reform. perspective historical going on to statutory

Kenneth Tanji

Yes.

So our and XXXX. Ryan, it's target, did provided RBC with adjust our for that guidance Ken. We we

a in a and deferred and Just profits strengthens future value lower that our in our that the rate, our bit we reside reserves. reminder improves and with of tax the reform, that a little tax of have earnings today

overall, So lead higher regulatory positive It tax does for impact capital the is requirements. to reform of us.

so strength was our did regulatory that sense, adjustment -- along with we we And ratio RBC put to all ratio higher be objective. lot when PICA capital our together, to for financials the we've expect of that. month, and a And an we of think we'll end made improved financial XXX% and to to statutory at -- would done above our file and RBC our we our requirements, would expect the

Ryan Krueger

PGIM, don't can then any a quarter. fourth know on relative flows, you've perspective us And on if seen the to January rebound if I give you

Stephen Pelletier

our and and ability across we on results in range fixed is given flows, mortgages a Steve. entered sources estate that with strong of about to alternatives. to Without a upon. We as income, operate say public touched just continue the a asset and month, this sense of other Ryan, commenting year equity, generate classes: I private real would Rob confidence of

also, strong feel -- performance, investment -- based we confident our our feel and we in So this to very ability generate through our on flows year.

Operator

from question line with of Scott a Alex have do we And Goldman the Sachs.

Taylor Scott

you'd make mean, holding had was The It sense. so first comments on quite made you're the is opportunities. mean, earlier is and for things distribution call your or be kind about geographically growth? on maybe cash is in. positioned potential expanding what sounds building I out any probably target, would company of with on Would I RBC on like I that'll I your would well one have mean, just above the strong. the focus M&A you'd it synergies? volume that cost increasing I'd something be opportunities M&A being color where be interested -- be? target around interested just further it it

Charles Lowrey

Charlie. is This Sure.

talk of and Let the the course having kind I'd we'll over sold along businesses me financial examining stages others. XX this as for I first elimination is back, of decades we businesses. our out several the underbrush, of may, discontinued And And take billion, process, supermarket. put And if XX a years just perspective, of you And a stages. it that and the your But development critically answer couple development X our if will are the we during past and we the $XX we about And way. spent of company. characterize question of the step the the about about into will. still clearing

Poland. So most estate, business business, in real in we've sold years, commodities and, recently, our past insurance retail the of number wealth global services the management

and which asset down what to specific each we're lines businesses over to stage, to those of $XX performance wanted on So the areas, billion us business X in build right, time, our of is and we those honed business. we've businesses, world-class of of ROE That's we increased, made retirement. Which the So brings businesses, individual each We to about focused protection, of right? on. that's focused management to second or we each during significantly the as augment were internationally both terms three lines businesses go go we talent of and Recession, lift-outs continue also And opportunistic as we acquisitions that of teams, look domestically both acquisitions domestically. of in businesses, Great we forward forward. during internationally. the and individuals whether in do we'll to especially and augment for to had, continue period, these acquiring We this

It can experience we our which better us business we PRT businesses diversification, balance and have stage considered once about, had -- between there's customer which savings. business. we we We're businesses. businesses third also And longevity, This be were at efficiencies allows an have the as then longevity do diversification the So developed that a talked services businesses Steve mortality glad of then they pipeline benefits the different of great operation focus insurance And to to we shared efficiencies very the capital scale, because deal. the those can is cost be balance. do. a or such create of on and as good between longevity operational can that the very,

they reaching significantly integrating of we channels. workplace our through And wellness, our So our use seen those that more stems the and our and we're that in from more fully customers terms the increased that's increase focusing consider fully the to the one of that market to in completely integrated capital And and capital fourth ideas by increases. our on and now, to financial belief stage. business operations our businesses and addressable system work, about expand entire where focus to leads us to we're the through our with Hence, this combining we're which customer on our And which different far our retirement. complementary the and terms deployment positioned dividend businesses are, buybacks the provide of needs make you've is digital the stakeholders. by clients' its that discussion really of of requires in gets efficient which relevant in in of to culture. communities work by also businesses and which changing important selfless clients needs company, culture provide solutions who it's across insurance, is financial that our teamwork, And the as in and to to sets we to part But such elements our is to which timely we and and core enables so pressing what businesses we of from the services uniquely us needs solve call real consider other of -- of words, of an savings most the back. which I'd success integrate giving

And capabilities our consider additional you Latin the America, that areas increase Asia, So would of it's our in presence would U.S. in in Northern the that stage Internationally, higher-growth you time. Africa, in program. distribution businesses in would the and U.S., stage, to of communicate business, or us -- Wellness be would augment to or about. bringing either those balance to -- capabilities in you've acquisitions continue this transactions to Financial distribution at additional increase fourth grow X that again, the certain these look Southeast related markets seen off in us we And see over by Asia. either, lines that ones to beginning kind this we're to we're this given is fourth in

Operator

the with Sandler of John O'Neill. And from Barnidge have question a line we do

John Barnidge

but have quarter? the Solutions of over been has volatility Most X how of your and Workplace the market my call nature a conversations the weeks for shutdown maybe last, questions business the changed to it, answered, government

Stephen Pelletier

you do business. We volatility John, not it's as market group impact Steve. benefits I'll answer your in of the significant government and question. the see mentioned, shutdown, a

and, strength Our very front the proposition. clients the on our continues Wellness of engagement that around to with value proposition in Financial value particular, much be corporate

on there's that that Solutions, for been are as positioned -- be well -- there's the the that risk particular Workplace except from well risk time to the Retirement I group Rob last of previously, relates front the markets billion number of further directly to Insurance in I on funded that our capital either, say markets off and full-service Financial strength an other numbers, has of frankly, companies and to premium side, part On and proposition. would would the some been Group Wellness terms now are front Financial engagement billion. a were we the a million and stems impact $XXX and the hedging $X was may real not the proposition those the table you it though, around of the of those from Wellness any movements, capital overall, ALM to year standpoint movements. a $X -- take the that here our transact their annualized say citing that are mentioned reminder say movements Retirement

attributed billion is the we of Now that $X directly very strength proposition. to full-service sales This much as anticipated. of

results in their this with it we anticipated of at our provision of would the that work retirement companies impact if level the benefit of Wellness at employer the As funnel, plans of will, we our strategy, Financial top would in terms at first and the visible you be developed -- packages.

proposition. very funnel, develop with value engagement seeing we interesting. levels of As the to strong engagement we customer are continue very, that It's

entered are is start-ups engage to we're of a a client of costs example, seeking to space, have business those of retirement frankly, They're some And into. are by run a experience, plan with our lot already issue for plan customer those already part is levels that people administered that that you the client lot start-ups, acquisition they're the our Prudential. our doing and start-ups that group If benefits of costs a fraction and of a reason Prudential. acquisition engagement that or the compare know the the

from the individuals will So financial and that their seeing lead our the we're with to engagement them solutions engagement levels that our we're confident that greater revenues address providing needs.

ahead the we we're thought of we're we'd somewhat process, of already just flow where beginning retail seeing be that already point. but of this at some revenues. In fact, It's

the very, So to and about we're the to Financial Wellness market all ability very advance differentiate ourselves proposition. in that strong in proposition on feeling all, the based

Operator

the a Erik question Bass of Autonomous have do from with Research. we And line

Erik Bass

and, performance particular, this Can some hedging detail in more December? provide quarter you variable annuity your in on

Kenneth Tanji

it's our hedging performed They Ken. We Erik, very in with Yes. programs, overall. quite were particularly well. happy

that's Our And net $XXX value net liabilities a And gained that also overall in of program and also increase nonoperating in to billion in variable XX%. in during in over reported quarter, value most effectiveness of hedge due at to a living equity than more liabilities overall in we December, offset GAAP our the due the benefit gained that earnings, our that increase the have offsetting program very annuity equity with capital GAAP $X hedge million effective hedge and markets. our markets. was

markets. profile financial our and we think our thought amidst our did a and programs demonstrates the balance of difficult at So hedge position, job resilience we sheet solid capital protecting it

Erik Bass

you've cash flows for think, earnings. And from XX% the operating I annuity highlighted the consistent your of which, above year, were business,

of picks growth will impact policies that come block cash runoff ratio down? that you're seeing? older sales there, the your As up the flow bigger of the is Or

Kenneth Tanji

Yes.

framework program and in We've our is We that position our hold I capital very our excess continue. enables mentioned, the standard And performed program standards, annuities well. own quite as to and our designed flow of solid. regulatory So in hedging capital market withstand to and cash capital moves. hedging

on we able that capital profitable, well target, we that attractive. we business returns we and -- would a would the more think think I be deploy That and that would and XX%, that it good basis, That's find we and business basis. think, for If billion earn in and XX%. profitable year. is the and that use fee of be are cited on like would, was towards that. be and more more that of You pick well of that an solid stream both pretax that from more after-tax We it coming capitalized we reflective have it capital, $X.X would a to hedged up sales the we've

Operator

And closing ahead. to go I'll remarks, it Lowrey. over now Please back for turn Charlie

Charles Lowrey

Thank you.

We customers By meaning market, deliver me deploying and in variety of achieve positive Let about to technology can across more a a how expand grow customers' and long-term and capabilities there to continue reach do to peace which security our difference continuing our final are we few financial really thoughts. businesses, of and ways make our innovate, lives feel just we we a add leveraging financial meaningful can can in more that and them help value. mind.

by to to invest a in sustainable our the in scale we our and stability customers, a and value for communities with the talented knowledge cycles. call long and strategies With execution confidence for the stakeholders. your thoughtful today. employees, joining sheet which provide operate Prudential day. for we Have throughout term and deliver you for Thank customers for have We interest in high-quality and balance our of comfort and rock-solid good for the our our the market

Operator

conference And TeleConference and participation does your for the using conclude for for gentlemen, AT&T you that ladies Executive and your Thank Service. today.

now may disconnect. You

Prudential Financial, Inc. 5.62 (PRS) 7 Feb 192018 Q4 Earnings call transcript