PRU - Earnings call transcript Q2 2020 | 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. At this point, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today's call is being recorded. I'll turn the call now to Mr. Arita. Darin sir. ahead, go Please

Darin Arita

U.S. morning. Rob And Prudential and our Representing Officer. Chief Head for Rob International Head Businesses; Ken Controller thank today’s call and you Tanji, of Sullivan, on Andy Chairman Officer; Vice joining Scott are Sleyster, Falzon, of and call. Financial Chairman; Good Businesses; Axel, Charlie CEO; Accounting Lowrey, Principal

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

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

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

Charlie Lowrey

how you, thank joining of start people healthy over solving our company's and of and new in around important. employees, employees world seamlessly It's evaluate I’ll as world these to transitioning This XX% In times our when the customers, in and our how in today. to to while majority return hope to meeting remain our and purpose to that utmost new employees work of and of serve meantime, while financial our The equity to ways to the believe pandemic. most workplace. needs society. you US continue caution of proud saying serve to times. for the of we is our customers the an on the whom our remote exercise colleagues further continued We’ll months problem of they've of most by and Good events several fashion. exposing I people have allows deep-seated in vast international Darin. our us of focus to around like extraordinary created impact. continue customers these challenges so After the the standing we we communities economic we and related continue us changing you, by evolving pandemic morning, the that our am during work for COVID-XX challenges and we the safe March, past difficulties your Thank families employees everyone, unforeseen during and innovate that and the its our customers, world, face many the the of after

repricing clear aggressively macroeconomic maintained our mix. challenging performance second and the targets, earnings a backdrop. on initiative, our our products and XXXX of progress our rates mitigate to focus rotating cost pivoting quarter, During the impact savings despite By executing against international we on delivering low the on on

on quarter of top our benefited period, a flexibility to I’ll as to the second look sensitivity in savings XXXX We’re focused Throughout and detail changes strength continue us the Rob exploring to turning rock-solid which these on our action, further navigate our of over on economic to for the results. from and existing And it to sheet, reduce the identifying generate at balance to touch additional for our this gives potential environment. we’re we greater each confidence before points Ken particularly the to we also look market. opportunities cost targets.

$XX years, year-to-date, quarter. on our XXXX and slide three. to in second our We track to priorities have savings in $XX the savings the remain achieve million achieved million for target on now $XXX with cost whole Turning million

to track of higher XXXX, Prudential sale. to in our continued half Taiwan, Korea make review remained to sale are second close options and of Prudential on of shifting growth of the our a international may mix also earnings include strategic markets. for advancing progress in on We of We the which

modifying disciplined low we interest while As approach product exercising are in I a this highly pricing our aggressively to rate mix, mentioned earlier, environment.

slide four. Turning to

from While by achieve we order efficiently the making to smarter our to ways we cost are at look encouraged for businesses operations and the progress more and position work future, we’re in continue to to includes top of work to a remote XXXX. $XXX technology This and leveraging target the on savings automation, we where using by how environment of optimize learnings million and operating and work. our in

by product five, In we sensitivity. these highly balance and shift to its our of we're build provided note to second addition, position, and at the upon exceed are ways of initiatives, mitigate embarking the how foundational with of quarter. other the $X.X and further repricing our impact market strength robust we AA including at looking financial billion capital slide On assets on Financial liquid to subsidiaries sheet end the strength rating. continue Prudential

X.X%. a even term update financial quarter basis we Our long had rate as US points effect assumption XX our by to modest reduced our second results, on interest

billion Lastly, by the of Korea, proceeds the year. US$X.X sales end we of from the anticipate receiving business our Korea

Slide of we’ll deployment quarter financial and six plans, shows the capital markets continue terms the economy determine to in to In our results. our developments monitor credit strategy. second

risk, had one-sided the risk aim exemplified we balance complementary business mix. underwriting management benefits to quarter, don’t thoughtful In we We net exposure. of longevity and favorable mortality to have experience. the quarter and so approach our This our a

income adjusted in quarter. was million operating Our the $XXX

capital net our a non-cash effect position. by effect recorded loss, the primarily of driven which impacts, we While market on non-economic no GAAP regulatory have

adjusted operating of record US of adjusted from the fee fixed PGIM record impact update assumption of income as appreciation. This reported as income, market well strong and assets reflected year trillion, growth flows $XXX well as spread X% million, income. a increase earlier favorable $X.X unfavorable Our reported management as period. the the under more by and income underwriting, to offset lower due operating million, of $XXX businesses into

and favorable joint ventures earnings spread from underwriting, as growth higher operating update and Our income reported income were assumption International $XXX impact expenses. of business unfavorable by adjusted the businesses and higher offset of million, more lower the

in underway month, Rob, I’d turning like commitments our our and of with what out a responding disturbing racial were society. to billion of racial a to company racism we body has it imperative a within as are aligns shared injustice is our we and recognized make, the well problem racial our We organization, make society. for approach, our our we their to long-standing These drive solve borne Newark. directly communities design and experiences over in hometown purpose spanning long customers, actions the listening place we announced support to of taking company's concrete And I’ll of and Before developed society. address we to of including their our actions products, turn today we work equity, colleagues, calls foster over social courageous have had advance that and and is We employees, as slide and work judged with Last over a multi-stakeholder shareholders the the and communities our stand talent commitments reflects how to and deep-seated moral how candor change the the $X amplify of business. inequity and to commitment that incidence financial are on highlighted the commitments world, of changing substantive equity, investing practices us recent investments promises to doing to set for seven. and as moment and how to that this business already we prepared to it employees, measurable be who Rob. It the an and all to the that do we challenges and Taking equity racial over Prudential. by a within is bottom-up customers programs we already and as that, and to and We expectations, of our Prudential term. in deliver persistent across our been to it where

Rob Falzon

are an Charlie. to to And to issue your supporting fabric you, reemphasize our purpose, racial a as aligned of update strategy is outlook is and our PGIM that for as management an our we update these now want within US, the of on team our the part also culture critical comment an and businesses, I on equity. an as investment to on organization. businesses, well how as I'll our our about success provide it's Thank International This provide and our on portfolio. executing commitment we’ll

eight. Turning to slide

spread US from net and underwriting source of Our fees, investment income. a produced businesses diversified earnings

on We three priorities. key execute continue to

First, to mix, while business simplify we’ve profitability. pricing actions and and derisk protecting our implemented product

well single sensitive received launched product interest guaranteed For universal Life reduce life has And flagship other in solutions. business, sales rate-sensitive the our of the we less aggressive pricing variable buffered result interest supporting product in suspended VA market, annuity significantly been and which our to to Individual with aligned intention example, we life less will in This HDI, mix shift sensitive, products. legacy less July. our continued life of product, shift and actions FlexGuard, sales our took product our by to

rate maintain product diversify in to interest to continue environment. and will We of pricing business, this mix take profitability our to steps actions, including

to a As term. individual individual in annuities expect continue the result, move to life sales we and lower near

enhance we needs evolve, customer response economic technology and to leveraging COVID-XX Second, including are and rapidly in our impact, as the customers to its efficiency. engagement of increasingly

to has expanding our capabilities retirement, to our the electronically platform process policies have application and challenges signatures policy wellness financial process. have And deliver the The our automated use financial financial we of use importance of households pandemic And submission has third, market. example, issuance, self-service US underwriting and addressable face, electronic committed customer of expanded from remain insurance, For that life businesses. we our the and fast-track wellness increased and many our we've solutions. to the and highlighted our planning across amplified expanded

In in to continue P&C also we’ve progressing IQ in the and agent preparation from our enrollment process. period fourth healthcare, We the lines platform with annual our Assurance business. life been the customers well onboarding quarter, in interest of Medicare training see for and increasing

a slide investment the nine. global XX to and business strength top Now turning model. of manager continues resilience to demonstrate multi-manager that PGIM its is

credit a remains from reached $X.X flows, as quarter, under assets assets more have well their X% the performance benchmarks net outperformed impact five- in net single billion quarter, and and strong than the PGIM's third-party the driven passive by ago driven performance, management segments, diversified classes, flows by equity three, downturn asset continued from long-term We investment management has under client outflows of last investment XX-year a regions, strong Our were across redemption. generated Institutional the nearly the by quarter, client billion. $X periods. record XX% has record year investment second of trillion, $X first over rebounded equity from and temporary of retail level the growth. positive markets. capabilities This of and as coupled up to during led with flows driven

income franchise generated to one number franchise. ranked the fixed the growth under continues public in billion, leading fund from the based mutual to as PGIM's managers it and asset was And PGIM our were flows and of compared sales. quarter, of across $XX management investments strategies year Our average broad passive the X% assets year-to-date platform of net by on our active US ago suite position management. up asset benefit fees driven

result in reversing primarily spreads quarter. due the to that other occurred earnings investment strong tightening, the and higher as In investment increased the had credit performance a widening revenues of addition, first strategic effect related of

to and continue our cost on leverage. operating growth also to increase We focus discipline further fund

XX. to Turning slide

including high businesses, on focused differentiated Japanese operation, multichannel have growth well markets. model, where we life other as a insurance international as our operations Our distribution

to Life COVID-XX-related $XX the approximately but Gibraltar lower, Chile, year respect year This ago. As were to contributed higher support protect contributed quarter. and as number has consultants expected, life international, to a to market second operating declined we Life sales half quarter. of reflecting the returns due sales last sales of on distribution. million With we of we that the Life care sales continue our for lower year. an Japan planner quality to quarter to to captive expect Similar compared planner, headcount, expenses to focus increased primarily were impact than reversing expenses, on In first to in X% sales quarter, income experienced XX% which activities. the however, ago the million, in planner decreased compared in across as restrictions the in we provided for distribution, trend the $XX appropriate lower to we average noted and benefit XX%

over time, the as in emergency in lifted, was June We sales expect have Japan normalize. we seen sales some state beginning recovery and of to

early In and to virtual that reduced success. adapted to we addition, of of connect focus mitigate value of needs-based our managed interest market customers, we’ve impacts tools of important increased our have usage challenges in seen selling to with to With sales, have the product believe Japan. face-to-face rates, agents other We provide interest customers. continue approach death to and low protection to through respect rates successfully our decades signs and

product adjust needs preferences As customers, achieving you have in the and do the offering also seen our meet to of past, expectations. us while return our we quickly our

We taken continue needed move we have actions as and will already do so to as forward.

turning Now XX. to slide

rate conservative, portfolio asset disciplined a diversification and robust practices, our liability a investment management commitment reflects We to that quality-focused have interest management broad risk framework.

below estate. trended Year-to-date classes, our its asset migration deep also experience PGIM's private losses real placements in expectations. and long-standing and across We have and credit expertise including leveraged multiple

million, second the sectors. consumer and by cyclical credit driven $XXX For energy were losses quarter

be While comfortable to emerges. our are it story, we manageable weather quarter that losses whatever that, feel we multiple exposure with we and expect to well Ken. to I'll is a hand over that And credit capitalized

Ken Tanji

following this, markets. for $XXX the start operating share we will pretax that income earnings last our on an third second you equity resulted in quarter, relative see quarter basis. I to was I’ll XX, our after-tax slide earnings power which reflecting key from To in on $X.XX for is into insight Rob. results. higher quarter of underlying million earnings help which The Then, adjusted increased per Thanks, point the provides second and slightly the quarter, primarily adjust items. begin with

interest resulted First, review other the refinements assumption in XX by annual net long-term and rate $XXX driven the million primarily points quarter, a assumptions by a charge in of of the of basis US. second reduction in our

investment continued while revaluation an Next, conditions. $XXX the level, that included a adjustment estate of for we the have private potential note and not equity quarter, to million. variable the to economic worth which due investments adjusted variable for income third is Please adverse normalized income real we for current exists

are lower above has While time, returns. currently portfolio vary portfolio target over than period-to-period, generated returns of our our income investment alternative our will and target returns, this

for million will we This $XXX quarter, by of $XXX underwriting driven include by $XX retirement. adjusted second million. experience claims in third experience primarily reflects Third, reserve We estimate experience favorable the gains quarter in the million COVID-XX. in

third more combined are quarter, million items to expenses may other $XX there Next, that be primarily related favorable in markets. and the

costs in to is in second due implementation $XXX be lower including expenses, third the expect We the million quarter, primarily this to expenses legal quarter.

the PGIM to benefited In our segment in addition, quarter, other markets by revenues $XX [indiscernible] income in in $XX million. Gibraltar related due by favorable benefited And second in also million.

by new income quarter. third quarter of baseline to per Please includes reflecting by the We reduced be items yields to EPS our the disposition third to anticipate expect per COVID-XX difference cost get third be $X.XX for will quarter. due portfolio. that last, And that rates million and operating in a net investment $X.XX approximately note investment $XX reduced $XX the of items we between million, the specific These share. baseline us combined share to this money

these impact provided provided [ph] pandemic. items have potential Slide that on per in we to the an other to third earnings the consider, While factors of the we share quarter. affect XX, On the update meet

pandemic. the seen as on previously US population businesses income operating is fatality may rate to earnings of the US have provided to based due included estimate incremental estimated. call, sensitivity our our in lower this million. And we operating we on have than than income this insurance sensitivity by a COVID-XX a lower less last We for $XX XXX,XXX deaths due We the that experiencing

Our to impact and $XX geographic million. of includes mortality medical infection testing net The a factors, actual in variety approximately of a for third baseline quarter will COVID-XX on fatality due impact and treatments. progress considerations depend rates, and as such

is the costs $XX estimated million to primarily and the provided lower health to also travel reduced we costs lower COVID-XX, professionals estimate what and COVID-XX quarter entertainment. than due second quarter. is costs on of as costs Japan, XXXX, employees their productivity due and to The to the have lower $XX and in faster in million have as operating to reduction call, previously our cost incremental third We in million such the fourth of expect other for our with last potential operating operating of estimated. half of estimate these incremental benefit support sales our US $XX incur for in due we costs, In our than improving

half entertainment to in expect lower second of $XX also We expenses million of XXXX. and travel the have

to Turning and to adequate of maintain capital continue Slide sources position funding. we a robust XX,

Our exceeds annual liquid maintain financial our fixed parent assets targets, greater times charges. that at AA strength capital are the X than position we company and

substantial have sources We of funding.

assets liquid the quarter. were at at company the and parent the cash Our $X.X billion end of

receive free of to new available the $X year. net of our brings we billion. the of May, capital expected this in expect combined our In business flow added of facility, second transaction, funding sale funding is close And cash billion of half $X.X a Prudential from which the our the Korea following We contingent contingent resources $X.X source capital with proceeds billion from to facility another of total previous businesses. our is that

remained accelerate initiatives. the on-track Turning to as with execution Slide XX. year, And in for our our of the summary, we objectives we

ways maintain We’re mitigate shift increase upon product capital and – And bound sheet liquidity a cost repricing potential further balance rock-solid to we a with exploring build rock robust our and to to initiative savings at additional the looking our impacts. market position.

questions. your to turn it the I’ll for operator Now, over

Operator

Wells go with Greenspan line First, Please Fargo. ahead. with of the Instructions] [Operator Elyse

Elyse Greenspan

quarter. laid on assumption morning. first My just you for the was the mortality out Hi, third thanks. Good question

your both the So in benefit results QX if year. look disclosures, your the did longevity QX at I this and

trying I’m would to understand continue degree that quarter? some So in just to third least why at the

Ken Tanji

question into Ken. is the the This your COVID third Elyse. take mortality Hi, about I’ll quarter.

So we had Mortality benefited from we the our gain from in business. UK longevity that higher longevity - a second in our bit and than a we UK came the business previously UK. in in quarter, our in reinsurance estimated, little resulted

in fatalities that more now the While given to continue be the UK the rates. we in right was and seems fatality current contained there second, wouldn't expect that to

that from insurance to group life our learned our incorporated So businesses, we in we in second what the we also estimated. and new our is quarter, were also, - in fatality into have estimate, than sensitivity, insurance lower which rates the previously

So we've our that new estimate. into incorporated

Elyse Greenspan

sales Thanks. monitor Okay. to remarks the I guess, under about how getting the have developed? capital of Is the $X.X year? the [ph] towards on return? second, credit you loss capital kind you And then said it prepared your credit time on seeing the dependent we going you you economy how that capital, side, in additional from quarter markets it and guys end as billion Korea your more just dependent belt, know, thinking are determining more this the continue in one Or would strategy. upon is and upon your of

Charlie Lowrey

one. it's Charlie. I’ll take Elyse, that

share better and framework will we the pandemic, until into you the with second mentioned, resiliency. the cycle, Korean the share proceeds we get the share potential we And those said, maintain the So line our our depth and would visibility quarter, the the of of and timing financial from plan clarity that When possible risk by credit also recession as we’ll had in sale you sale just of business. our know, much, duration we the place. that issues in to or get I resume we then the and the buybacks the repurchases and include how paused in flexibility as into

when you maintaining let to focus going our financial we we get know, be transparent will forward, But and we're clarity So we’ll issues going strength. into the it. on about certainly

Elyse Greenspan

the appreciate Thank you. I color.

Operator

Our line with Please Ryan of next go the question is KBW. Krueger from ahead.

Ryan Krueger

assume things that of elaborate interest on, in But your that that would would considering guess, I you're market Could you would guess, change sensitivity? thinking I elaborate could morning. on you guess, sort I in cause I meaningfully reduction require And you're to in-force good a rate the what some transaction. - particular, about? you reinsurance if Hi, in some

Rob Falzon

shot I'll Rob. at that. it's take a Ryan,

of just as we our me it the the bring that we first derisking efficiency about of to remarks, talked order level The opening let some in First, about our in that components we've other then and growth. simplifying strategy about the is, basis, addressable we improving sort them business to a has on which articulated think expansion and expand in the instance, think say, go-forward a and up of through obviously, as initiatives about opportunity elements And market are with that associated near-term think continue we support longer-term earnings our

and sensitivity steps our I rate we've product Specifically with derisking, less the to volatility, businesses. and first that shifts the sort regard to across the lower general characterize would done transitioning of repricing market interest as

For those explicitly discontinued. products that we've either stepped back from or actually

of to as about of variable HDI products. universal actively any actually of reduce looking other aggregate looking potential across off from to optimize product design, of opportunities we're we A annuities and think those products individual that the in options volatility We'll sort of the the or those get selling anywhere at blocks economics just from as our amount So that that blocks. of business range limits reinsuring products, associated well at indoor actively the blocks business. life the life the that – legacy the individual and things are at And couple with simply grouping outside running could products. as guaranteed that in look being

we're at light of that opportunities And term. And risk looking re-optimizing our our at front and of in the in of investment strategic sort and looking credit more really the going the that life rate have trade-offs you portfolio, make allocation, in the individual limits and We're that that element in at resiliency, to we that, volatility that business, capital retain think our within the Charlie an least also us to strategic hit near our order we we financial reduced of by way sure derisking, So saw return significantly flexibility example. so on at place. retention the that's with rate-sensitive our where as less thing our associated interest in the mention our exposures, the are and the on in business, cycle guess business elements business. the we last are asset is the are our I I'd that we and on equity, more emphasis of and like, look growth basis, and capital for instance, a are predictable growing peach of is of go-forward that of management us. asset

be we're color would want things standpoint. the from those know don't a any So primary there's I that that? Charlie, thinking to to derisking about on if you'd further add

Charlie Lowrey

Yes. Thanks, Rob.

less Rob So, future reduced stopped capital as We Rob objectives finally, competitive we’ve and lower buffered or interest currently more. our And Ryan said, selling we which the on cost that increasing out annuity. intensity as [ph]. and Rob a products announced so isn't that then certainly sensitive. acquired market our Because options which almost try business highly just or in and selling Poland, book market a annuities the costs. namely, And We We've achieve We Taiwan. done introduced to significantly market sold have business of just order to connect work accomplish entire Italy, lower right? begin that number IOI are in sensitive, market-sensitive to becoming through growth, some of me business articulated, in let produce customers line. XX serving processes, growth our those to objectives. products potential as We're things about our as dots. processes conviction mix do savings of the over around for and other to repriced so lower with better lower Korea of high assurance and product initiative, on actions let terms And million such months, are the will Rob as we're lower tick options past rate-sensitive of businesses, in with that growth many me taken and said, executing we've sensitivity, said, exploring We $XXX risk. exploring more

So and a change on changes ultimately, mix the to we're lead of believe that will series trajectory we of go our fundamental incremental executing as the business firm forward. we in

So going off a forward. of to going foundation which we grow are that's

Ryan Krueger

Appreciate it. you. Thank

Operator

[Operator Instructions] next Lee Dowling & Partners. And from Please ahead. Humphrey with line the of go

Humphrey Lee

you thank for and questions. morning my taking Good

kind Regarding the hello? – of potential

Charlie Lowrey

you. hear can we Humphrey Yes,

Humphrey Lee

it's know planning. you us what line of be still you've kind probably scope just of the Should targeting? any is early impact? to more size just But incremental what to there in an targeting of comparable think been way you've so the to it of to stage about Or far? that been I potential what of incremental help a – and modest

Rob Falzon

Humphrey, it's Rob. I'll take a shot that. at

but a out think question. I cut You your I understood little bit,

enable – the businesses, are positions, to pretty using earnings we're priority which and The it light accelerated those efficiencies of And putting competitive much course a our operating been year the have sort Humphrey year. needed we strategies in that actually as continuous of So ideas actions. generating particular impact the the and new result further Remember, done on that in earlier - earlier in they so, our actually we're environment. capability. transformation low is in of the of experiences. And last customer increases that course in executing of We've that, that's more we've in profits, of levers a the rate institutionalized the us efficiency initiatives doing of enhance we we've the had as in date. articulated light that of is for first of particularly things

further things from articulated on to the We that So pandemic there's implications communications and process We're of we've go of automation, our remote and much and what in increased the improvements, and use some from think the this continuous on in crisis - of process, just technology are as travel than technology sourcing, go-forward of also we of things date. can a and classic. like org that changes use all design, the – contemplating result that a work, experience learnings basis.

expand materially Charlie can on us today. when we'll from guidance our into finished But all – provide not quantify that we indicated, get be we're ready So we leads will we once further that where We'll that. more that of And we as are transparent. to to year. work, optimistic be

Humphrey Lee

Appreciate especially pipeline redemption, mandate the Shifting flows the But just the billion $X.X institutional were also, looking what flows how that [ph] looking in side? quarter? saw equity comment of you as institutional on passive retail very then the you your side, for the even mentioned, side. after I the was on color. So wondering, PGIM, good were still quarter, is gear, in especially you can on connective And - on out at

Andy Sullivan

It's you take I'll you cutting a And were Humphrey. me. Sure, in not your if bit. was I'm sure it question. little Andy. or

flows retail strong very product three management investment and wide we're portfolio And So really of on performance, broad strong and distribution. result those a of performing a well all things, fronts. are

was second performance the investment in Our strong. very quarter

of Genesis income so our performance. strong - equities outperformed PGIM very, outperformed All fixed equity XX% benchmark. fundamental of our strategies benchmark, very

out distribution time. know, As building we've you our global been over

the retail fund a was in to passive low were pleased in were flow related actually quite our with So the mandate. positive number QMA. index quarter. That family and We year-to-date, did We had flows. have billion mutual $X.X billion very the flows we one $X.X

So the of bps. X think neighborhood to X in

organic $X of long look over quarter-to-quarter, But than last less call as will I fees. investment five have expect Difficulty] [Technical was there over last - distribution, of the that fundamental the be also we it several and literally, would forward, in As the the It we you years, next strength flows we So the million variability. what was our performance, our continue strong had run, over years. look forward to our

Charlie Lowrey

repeat well you cut number the for large was to Do don't making point want of funds. one you about? the I know heard out passive it that mandate on sec. were passive you Andy,

Andy Sullivan

about I Sorry was billion in mentioned that. have All was $X.X last passive we portfolio. mandate our the that outflow large the

Humphrey Lee

Got Appreciate it. the color.

Operator

Gallagher line Evercore. go to go we’ll with next ahead. And Please of the Tom

Tom Gallagher

of sounds you back question the follow some anything on Good things Ryan's on morning. like own these businesses are reason transfer. with from maybe hear a of a shareholder limiting the guess, considering more it reinsurance you is what every on growth limited of risk going Charlie, ask result considering year. transformational? some shrinking just the still that insurance. the very have to to new range in sales we'll considered are life up say, limited standpoint that probably I as strategy I you're guys on moderate, approach you that you saying more books, kind is I And Have a -

market-sensitive So you challenge a businesses that? growth And IPO considered a it earnings you something or thinking of annual you of more an an your standpoint. bigger would transaction? like are more kind extreme some of from in Or capital becomes scale? consider reinsurance Have a limited

Charlie Lowrey

So Tom, thanks the for appreciate it. question. I

question but both take then me your and particular think businesses, and look - step internationally how make optimizing our optimization. and and deployment. Because just allocation that capital trying about I'll we when to answer capital across is Let directly, comment domestically a ensure what back a about we’re we're we

to continue we're as that our past [ph] looking businesses look at as as operations of IOI LTC. the in and or annuities mentioned some international well at we've So such

et in Taiwan, take Italy, Poland, seen potentially, terms Korea, You've of action cetera. bold us some

in look given or whatever for have we optimize there's through we'll to where do that. right may that businesses optimize to as outcomes share So what take, And the look we going shareholders, date do deploy Be our a get we any going our last we're do to you'll we to potential will to taken assure trading. all for and we're ways We looking, capital in and is how And seen is what acquisition forward that we But shareholders, And we've can what - actions months. deployment order now, see dispositions, commitment what to through the XX repurchases that acknowledged acknowledge major capital that maximize and to over at I acquisitions. continue to that's the is think significant capital doing. that. continue - our is and right? high you've stock flavor hurdle you price us that's to we're through

Tom Gallagher

Or follow-up emerging? you've because I the that the is planning guys recovery on greater expense just, to or see Appreciate subsidy? it. looks visibility sales subsidies lowered Japan. you've pretty Planners Is Life you. been the in a like you on my you of have Got reduced paying level drag guess, it substantially were the you for

Scott Sleyster

Tom? and ahead I This Scott. is don't take that, Why go

on actually were modestly answer Brazil. of maybe to the a the in continued think that pretty We sales even where to And speak I in month question and recovery. the but XXXX we to seen actually to multifaceted, I'll good see starting a July. has and close June, is we first strengthened have both started point to to bounce back sales get the Japan in

sales is to In tempered seeing occur. of that case into we that roll by we're are sort we an what able we Planner, encouraged. plan. of bonusable we that course, So recovery, of that kind pretty were any be subsidy able have, to But actually that to initial and be and resurgence of uncharacteristic that the has could a were Life good was payment to -- has the their was it take an

we a of portion sales amount that deferred POJ the actually their comp. into have So for is being

directly, you're seeing still as it's it So there. not but

Tom Gallagher

Thanks. Okay.

Operator

we'll next Bhullar JPMorgan. Please with go And ahead. to go Jimmy

Jimmy Bhullar

Hi. Good morning.

fairly First, and rate optimistic interest than before. the just it was still assumption. your levels. annual conservative But it's versus assumption review more on market Obviously,

are? into given And to reduce So thoughts just you much on rates like about by? if bigger talk what you assumption make adjustment market where a went did rate not could the your how why

Ken Tanji

it's Ken. Jimmy,

it for perspectives. rate and long-term had that our considers multiple of a process terms followed very established number of we In a assumption, years, we've

this JGB at we So we long-term And long-term we the XX-year in looked meant for managers. look of and banks for U.S. that, X% look at, a all median of interest the And those. of forecast treasury that the in to year, X.XX% be again, at and rate economists, rate when Japan.

do So had as first XX long-term the important grade how a the there. curve. follows path assumption, we It's to two we also that years, followed for a which of of just years over And the but forward the know assumption. process the that and same years. we We long-term get into we've number not result, it's

And X.X%. over rate our the about In average would X.XX%. next years, so years, it's five XX be

this again, We and year. inputs, at median, be pretty the and to look we look for a was third-party process. and that established that so have And was the at result

Jimmy Bhullar

block Okay. And from the held pandemic? on And any has up or any you've care your long-term then benefit seen color whether recently? how on claims reserves your

Ken Tanji

We was was policies call fairly saw elevated I wouldn't a modest, in policies it bit that are already claim, significant. on on little but already claim, are it and our that but mortality

Jimmy Bhullar

Okay, thanks.

Operator

we'll John Piper Please next, go with And Instructions] Sandler. to Barnidge ahead. [Operator go

John Barnidge

Thank that of Great. answered. Thanks. talk quarter, about of have Most well? forbearance But commercial loan been my the you. questions directionality mortgage as can you in

Rob Falzon

been low. declined. that our Recall but interest. John, so it's current the we X% across are of forbearance X% about our remain values date, all deferrals and requests that Yes, a - instances, actually Rob. and other X% and and of that are We a we've portfolio. to requests deferral those in they've review, the or under about forbearance gotten principal. of little we've received are in were provided the of portfolio, loan on instances that, only X% on requests our remaining that quite to bit of excludes that resulted In interest

we're is our concerned know appraisals, that, the so not than average on external that portfolio, will it when XX-ish as so about actually safe. of lower a less that, loan-to-value The our points than principal actually based internal be And that is we we entire XX%. quite particularly principal, appraisals XX defer amount because using result percent, about across

that and of given be loans we the can amortization that's a so and experience there's on on card principal LTV, or low that to principal, performing, date. of if believe our we accommodations repayment to sort doing, remain prudent thing And or interest, keeps been

John Barnidge

the for answer. Thanks Great.

Operator

ahead. go Kamath go And next Please with Suneet to Citi. we'll

Suneet Kamath

Thanks.

variable Just first a annuities. off, question, on

One the AIC reviewing the include about capital that that the they that reversion now VA of mean folks assumption reform. talking to is are things is in

if curious to hedging would just that So changed – VA? program impact capital either big requirements your was for expect you that what a or see your on if

Ken Tanji

backdrop hedging assumptions. framework economic that years. and view on is our a This assumptions, us. VA Ken. We've the with bit long-term terms a dispersion supportive also - of active this I but just for managed for based of around also both the on very those business little many robust economic scenarios, very Hi. a in We're We've is robust statutory of

more NAIC. are by internal business scenarios than those that conservative to we Our being use actually considered manage the the

manage positioned VM-XX we within and well internal that many scenarios So business we continue will for used that due the our the to advocate framework framework years. believe - to it to the for be we've appropriate economic

Suneet Kamath

it. Got

for growth, the for just how flattish you Japan shift I in see of could. earnings, you face-to-face terms businesses those of moving thinking to back then conceptually, as outlook parts you And as sort business? the declines the outlook opposed businesses, about sales, that rates, low think earnings international, when or earnings to Okay. do interest expenses. to if lot just about longer-term of to over Obviously, a again, COVID, But are

Scott Sleyster

ahead we're in Taiwan. market considering a business markets returns we businesses you go LP and we our a And there. question. Japan parent. reason you growth And it saw I'll attractive a in took again, really we difference with cash generates and see in Korea, between that. developed share the flow The little that strong to were cost Scott mixed Japan, low a is have actions seeing and of have that the We about Japan. and capital model lot the capital of those over bit This is Korea generates free Taiwan Suneet. in in out in Hi, rotation take that I’d I guess in those talk that and really high-performing

in country face and demographic to is operation, been overall really in like premium and last we negative That Japan continue years we continues our growth invest the for to it. being Japan several said, challenges. So the

to to has POJ country. a So continue grow the been we've in significant in the able fact that been outperformance

are single-digit say actually what we achieving relative is, of I strong but the going parent. redeployment for in kind would to that, the very low that's those a that's have Japan. look guess then cash higher-growth be system And creating to context In business we're markets, meantime, and the I expect to growth performance. of of And we'll opportunistic. in a in if lot value So

Suneet Kamath

Scott. Thanks, Okay.

Operator

further to no coming I'll seeing And questions it turn Mr. Instructions] over Lowrey, [Operator in, you.

Charlie Lowrey

very much. Thanks Okay.

support to you moment just and employees and Prudential our want continue our like today, community, take the efforts all to and customers society in equity So they to for at at to of as in end our to take for interest we thank I a to collective the the to continued including come Prudential. racial our also for steps call business, address listening I'd our thank large. your

and do appreciate we'll on We the the pandemic health us We frankly, stakeholders. global our continue financial all year, to working to our our executing outcomes for continue value as on and by Backed strength Thanks delivering by for purpose, continues. to our even guided progress make it. initiatives again today. more are to focus meaningful joining and

Operator

Ladies and Thank your conclude that conference today. for gentlemen, you does your for participation.

You may now disconnect.

Prudential Financial, Inc. 5.62 (PRS) 5 Aug 202020 Q2 Earnings call transcript