PRU - Earnings call transcript Q1 2021 | Prudential Financial, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Prudential Quarterly Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given to you at that time. [Operator Instructions] And as a reminder, today’s conference call is being recorded. I would now like to turn the conference over to Mr. Arita. Darin ahead. go Please

Darin Arita

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

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

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

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

Charlie Lowrey

and Darin morning. joining us you you, Thank all thank for this

reported challenges As by safe and robust sales ongoing hope many our have the across families of remained including always, Despite the businesses. the pandemic, operating you I healthy. first for income and and your strong Prudential quarter, adjusted results created record and flows

around the demand complimentary strong the employees risk, reflects helped life underlying the markets, mortality our commitment strategic has for our nature businesses, of of favorable products, on retirement initiatives, mitigate performance us Our which execution world. insurance continued our our and and

a to our transformation performance in review our topics of transformation you I’ll key each balance we and more of begin track returns initiatives, the the with We’re initiatives by and with for of and our strong detail have in highlighted cover February. brief these sheet. strength supported on shareholders increased

Turning to Slide X.

of $XXX which end these initiatives better Cost enhancing XXXX. generating were of by quarter $XXX as savings businesses. in cost We’re cost first targeted a for The million producing deliver XXXX, are on track million. of experiences. our competitiveness savings the the for employee savings the million to $XXX And result, were and customer also

reallocating billion by also acquisitions management $XX in and of of grow process international to capital in are to pursuing the $X billion in programmatic emerging markets. We asset

expand addition, earnings In market to rate our and mix business on business means less focused expense our continue buffered actively other on changing as our and transactions. de-risking capital sensitive running businesses certain our off and we’re profile to pursuing to we’ll in annuity pivoting by efficiency. product, and products, such In other FlexGuard, of remain investing of market and parallel, improve executing to addressable potential actively blocks

more market and As growth, a as Prudential nimble a higher to result, less emerge company. sensitive expect we

As initiatives, can of continue we to execute within our we’ll you capital transformation expect our the demonstrate redeployment and to that shareholders. our against discipline and businesses

we shares. repurchased Turning Slide dividend first of now common the and shareholder X. X% by quarter, increased $XXX to our In million

macro economic improving authorization. In share and environment, equity and rate the XXXX with market outlook to $XXX well increase a interest on repurchase addition, announced progress more initiatives, our as the million our based our as favorable we

repurchase in second shares these the quarter. to expect additional We starting

to expect As a through result, XXXX. shareholders we billion now return $XX.X to

Moving X. to Slide

included supported at is the first the Our $X.X solid assets liquid of in our program end by which return shareholder expanded rock highly billion balance sheet, quarter.

investment have continued financial to hold subsidiaries high And AA ratings. quality operating portfolio. a strength capital to Our support we

X. Slide Turning to

invested the maintain reducing environment, we ever. company the a been changing Of purpose of of And improve to social as behalf of on important and our continually are programs stakeholders executing world actions. as reflected and our equity high financial work We commitment impact we This waste environmental, is level governance our to how environment. our and a made also evaluate continued of solving have social as through long our pay firm. throughout with on and has recent in development paper. note, significant On in have on the issues, emissions, the can progress, our further we we people and training challenges

goals We period. to also persons continuing our racial the senior that and increasing board and XXXX that management tie reflect We our goals last independent of diverse to we diverse. already three-year we that geographies our establishing achieved people with the On serve. of to goal followed over compensation in we’re by and as our we this progress on diverse points prior advance period. did time representation announced management our of who five by governance, equity, created who also among new we XX% in summer. Today, our communities which making we are skilled are directors commitments refresh And continually are highly

our on goals in published that summary details more commitments March. against our progressing we’re You we how and ESG report in can see

challenges Before would thank It’s customers like of and performance. our more purpose of colleagues our these during and business world. their hard we’ve the to on changing over specific that, times, it making around I’ll for continued details the Rob through our to employees advancing while dedication world. all all support transformation challenging closing, lives company’s work I better that to our our by turn been able and of solving With financial

Rob Axel

our our you, businesses. business results U.S., overview of and PGIM Thank I’ll performance provide international and Charlie. for financial an

our X, Slide the results quarter. begin to Turning I’ll financial for with first

businesses. appreciation, on were up the COVID-XX-related underwriting investment net investment ago our our sale income, driven by less basis. or across partially $X.XX on gain income our driven by Italian Our higher asset market record pretax joint variable PGIM, share offset all the and quarter had higher fee results, of by high driven a including of primarily businesses results U.S. a record Results favorable income manager and XX% by adjusted was year experience mortality. $X.X our of equity global operating higher after-tax venture. reflected Earnings exceeded spread of high an billion per

a partner XX% And retained was existing which ago, agreement. investment Our from to by and favorable more joint record $X.X of up Chilean under joint earnings our businesses level. business our management with earnings assets year the in spread, net business rated venture. trillion desire expressed a management results purchase management increased firm higher a interest, acquired to and fees Nonetheless, were pension venture higher international another an was under asset driving from our XX%, reflecting growth, underwriting asset

X. Slide to Turning

to businesses mortality complimentary U.S. produced underwriting Our income diversified benefit from mix a and fees, net longevity investment and from spread businesses. earnings of

we progress in from products. sensitive away to make shifting interest and capital intensive noted, As continue Charlie rate

worked XX% to Our productivity up buffered well total the have in quarter, billion our representing annuity, with $X.X from FlexGuard, in billion sales, fourth annuity first of the quarter sales XXXX. growing of of $X.X

the equity increasing investment Our appreciation solutions that downside offer combined customer potential from for demand for protection. with markets sales reflect

In has a a reach addition, strong as team Advisors significant with highly third-party as distribution we and advisors. Prudential from benefit having that brand effective and trusted well

We are advisors of engaging with a broad with range FlexGuard.

business account sales ago assets and the distribute re-insurance are XX% offset a quarter total driven variable broad retirement respect longevity we sales financial partners up Individual expanded values grew $X quarter products in pivot of product With We concentrate revenues that life sales also distribution both flows metric our growth our strategy. transaction as multi-dimensional were in With our and to business, with we particularly a to policies, our increase all over year our billion. primary to assurance, up outside sales by $X other of the our quarter on lines, the with market universal by billion, fourth year clients. Medicare, as increased where in the Life, were We relationships scaling respect manage enrollment ago, business particular, were strategic In including XX% the compared quarter. appreciation. X% excess in record of from the of life our annual consistent prior period. Net high, lower higher a sales we business leverage to

its both classes active fixed alternatives, X. us flows. demonstrate to platform manager. diversified equities, and capture turning to a capabilities asset to strength real public investment XX management as across position top of PGIM’s diversified income, investment favorably global continues and Slide estate in global private Now the PGIM

PGIM’s approximately more addition, with and or X-, last the periods. of over investment benchmarks their performance XX% remains X- attractive outperforming assets In under XX-year management

billion Our of the reflecting including the diversified institutional of was the investment $X interest and income Offsetting billion than of a performance fixed our strong capabilities helps to in $X contribute flows. during third-party net rates. the flows value and decrease in market retail of assets, billion flows increase in growth $X more net quarter,

customers. ago of excluding the Italy businesses. X sale insurance joint management point third-party a a successful margin, compared track compared symbiotic to joint in excuse XX% And businesses PGIM, and to the helping of the on to also solutions compliment Prudential, the and turn me, As our the with continued a growth net affiliated year of record and our its cycle. Italy venture the and the operating more market capabilities investment our XX% including an record quarter enhanced benefits advantage, of to value quarter net consistent as expectation asset with appreciation engine our expertise a relationship growth. fees provide increase that increased gain across PGIM’s U.S. sale international differentiated a of from level PGIM asset This third-party to the to for positive flows the result bring year flows. ago investment venture – gain contributed origination through provide competitive management businesses adjusted of PGIM’s source on the of PGIM’s our in

XX. to Turning Slide

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

a last the encouraged as significantly. in-force continue of And While sales areas operations metropolitan from with the reflecting to grow increases Life prior dollar resiliency Japan’s Gibraltar across I’ll following and this quarter, than We hand Ken. lower our helped well by U.S. being capabilities, in business. the unique remain our demand it denominated now as year, of lower products, increased distribution both emergency that, has price state which over were to to profitability our disruption for Planner year,

Ken Tanji

first income second an relative $X.X was the I’ll of billion quarter our provides XX, Thanks, resulted share insight of into the $X.XX quarter results. then the earnings adjusted Rob. on XXXX to for quarter Pre-tax in in first on after-tax earnings basis; items. and operating adjust per Slide we begin for which following

First, the $XXX is income million. outperformed worth variable first which quarter, expectations investment in

additional we in fatalities related Second, the million. COVID-XX of a experience quarter. includes an for $XX during XX,XXX experience U.S. million This claims second COVID-XX adjust upon $XXX placeholder underwriting by based the

us items baseline higher per second benefit portfolio. the you including I’ll in gain of items expenses and other underlying takeaway second primarily PGIM’s earnings power key our Fourth, growth result last expect These the share and including in seasonality. quarter, sale investment quarter, we combined of income yields $X.XX. that to earnings quarter, net from anticipate will the million, in approximately and be is reflecting million rates markets. Italy exclude $X.XX per business we $XXX get be increased lower the that if first to for from new items $XXX investment our specific joint to the Third, quarter, favorable as by to venture reduced share $XX between disposition equity quarter. would money The a items be note a million of of second difference from the

expect quarter provided impact on the on estimated for please the XXXX with On provided sensitivity have the that the that pandemic Consistent quarter. affect $X.X XX, we incremental second $XXX,XXX would these million. is billion. potential year factors earnings of there due fourth to $XX we we share full information consider, also an death call, may be of be that corporate items I the Slide note note U.S. other pandemic. we the and the operating to to loss other in While income to update continue provided per about about our

continued a includes depend on will $XX baseline rates, and to quarter actual and mortality impact of million second such factors, speed impact of our infection variety the The rollout. COVID-XX. of effectiveness fatality acceptance earlier, as the net noted and I a As vaccine geographic due concentration,

Turning to XX. Slide

sources a of and continued position adequate robust maintain to We funding. capital

have continues we position AA funding. strength substantial to capital Our of and sources support rating, financial

fixed annual liquid sources Our which facilities. continued were cash and charges times flow greater free billion, include $X.X from businesses is assets our cash X and of other and other than funds capital

additional we track Turning benefit to And solid while support initiatives balance we Slide capital continue capital our to from that sheet. returning our rock key management summary, of are to the shareholders, XX. maintain we in on disciplined with and

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

Operator

will [Operator line the Our first Gallagher Instructions] question Evercore. you. of Thank with from come Tom

Your line is open.

Tom Gallagher

if update for M&A morning. things up say deals, an a team Charlie, can and see question transfer also get risk timing we programmatic Good wanted of just freeing to on stand sizing capital, where potential now on targeting. you’re the and

Rob Axel

Rob. Tom, Hey, it’s

Let me you take if at first shot a don’t that, mind.

the thank So for question. you

me respect down is XX% to the total of and/or size the contribution business largely of we the the reduction of reduction our and gap. didn’t portion of organic to – growth side, from have broader side. growth essentially The the closed the that, actively around start let will And reduction of sales block. to so the remarks, double a about targeted opening or businesses. – third targeted indicated on which capital be programmatic transactions we form side our de-risking objectives the on of businesses annuities achieve of growth And on expect XX% in that in his – our those a growth are the large to of on of the Charlie specifically that of our actually, as first executing bringing organically. The business the from We double going legacy comes that a through with acquisitions to including then come runoff with growth are have, XX% that the internal then re-insurance increase remainder redeployment mix actually to achieved objective we reminder,

progress, we making I’d yet what going although, not we’re While a Tom, where said we’re we’re speak more any to in position specifically, to reiterate before. like

quick complex to shareholders value for as And to generally that repricing undertake. billion $XX that creating important undertaking that. range you acquisitions billion to are are secondly, dispositions just the we’re of for respect product remain Andy, update ensure multi-year mind, is the any mention transactions you as and our therefore, indicated change if both we a levers accomplishing period And with That’s they disciplined these in last a pivots and on Probably don’t to $X broad to require we’ve relatively a transaction why we also that want mix. sort give First, transacting and time. maybe I’d been to the could well thing we sort in the that. business of that that of intend

Andy Sullivan

Rob. Sure, Tom, good morning.

specific. make So I’ll this very

So let’s talk about annuity.

the sales. So as of we’ve and talked about step ceasing one in with that de-risking runoff is started

only business. that to to X% So quarter living you in annuities see annuity variable with guaranteed $X expect quarter we very And that saw a we successfully this pivoted where FlexGuard, per we of sales runoff block will traditional from have over billion traditional benefits. variable our of about had came

This quarter, we saw about $X.X billion.

we putting shareholder share market quarter. you pivoted on a sales of new into sales XX.X% value. consumer have billion expand we had really the the and our continued XQ with and putting risk of strength that balances back and off And returns more value is we’re business pleased with We distribution. product. the profile where we’re our $X.X FlexGuard, success a the to very brand very in that And with that better not That that the could market of in as saw, we’re of had happy product we type the As strength book. the to coming our different be this of

about the one So very pivot. how good it’s step of runoff is a example and all

Operator

you. Thank

is Greenspan your we the Fargo go line Elyse to will open. Next, and Wells of with line

Elyse Greenspan

M&A question things. side Hi. of My question, just first on Tom’s on maybe the following-up Thanks.

So where you PGIM as and deals. you to markets mentioned have areas book emerging guys

on plan seeing you’re executing you’re to you’re as looking can there? from out us give of As sense the there you that just a of kind perspective what M&A execute

Charlie Lowrey

this Elyse, Charlie. Sure. is

I’ll context, answer just back take me and Let question. and you then will, doing step into we’re what a put your specific if

and look goals. is And hopefully performance. as seen will, consistent laser team deliver first at you focused we we Well, three if that. a we’re are management journey the on, to strong you’ve As on the

talked second there to and Andy sensitive the sensitive. One and execute is The parts less just pivoting Rob three transformation market that about, are that. our to products capital is on to be and

that And Rob on to The growth our expanded the of the of last ahead reallocation talked capital. as saw our XX% of cost lean second $XX about to is execute efficiency billion we into you is track. the higher goals $X goals. And by to billion and are year third markets

the that’s goal. So second

with inorganically return can be capital think that is to time. stewards we maximize shareholders balance, investing businesses. that the over of of capital, value and And our good achieving both The third shareholder to goal organically by in balancing we

our hopefully look So including, And those and the and take, framework goals, stewards capital. the being we of give programmatic actions of talk that any couldn’t you strong around good a about M&A now at executing on as are consistent performance, talked three will we about. the Andy which transformation which that you can

Andy Sullivan

Yes.

So Charlie. upon it. build And thanks, I’ll Elyse,

to somewhere all that the years spots. on we’ve to first, identified platform. organically And clear I’d organic an remised we last our starts we’re where being of just over and with business. when priorities I clear success will in comes flows and is continue $XX through So M&A, our growth. billion that PGIM, our that growing want Having the we five this due augment neighbourhood very to strength be didn’t in great invest it said area – had that of on the if to we’ve in seen We’ve this say

in in you if we’re are on good focused our industry, of are interested upon very growth as continuing about record capabilities talked our globally. because this on areas the quarter, track well management look as expand of areas at space. we success overall asset Those alternatives faster they we’re expanding As to last already

I we we at our I team obviously way that to talked The model. need and to fit vet for as make that that marketplace, multi-manager in and you it and my know sure the what opportunities, I being the this we the cultural in all everything looking, to As need confident in might mean in by And team that we could the marketplace. sure to flow and in we’re with make would the potential the fits see flow. know. we in talked both and already look very what’s And be tell anything we about what that are but we are a my is

We will confident towards very be PGIM these over add disciplined And very in capital that meaningfully are acquisitions. programmatic it will and we deploying to time.

Elyse Greenspan

there second or businesses And be are focusing businesses, on that downsizing the U.S. you house. those as it workplace capital? assets. you terms an the to out annuities the laid exiting or the retirement monetize solutions more Okay. solutions, kind opportunity Is that and the and to as think of that about in of group still you look some was up we of That’s great. all would consider via focused my you But that transaction something was if free guys question, on and of of plans life the side individual that

Charlie Lowrey

value And the We’ve having execute sensitive, that we’re to less about the a businesses of of fact Charlie, less with context process higher for thoughtful going capital and It’s within review Elyse. the is about really business our taken mix we on be that intensive growth. we’ve a goal and broad the maximizing shareholders. market how spoken diligent strategic on again,

there’s in But report, that. you we’ll process more of doing let when to know. we’re So the

Elyse Greenspan

for Thanks the color. Okay.

Operator

you. Thank

and of open. Andrew Our from is with Kligerman comes next Credit line Suisse question line your the

Andrew Kligerman

everyone. morning, Good

following-up Just question. Elyse’s on

a clarity full retirement core If you give light business, business? capital service more is on a could little that considered the

Charlie Lowrey

we we’ve evaluated as our we’re we businesses, totality. considering is our capital over So not growth, along a to going volatile that your the which Again, other we’re comment go higher at time. this and mix particular is execute, be in all intensive, process, one know, we’ve That’s business be businesses to on any you of is less What back less looked Charlie, within all I’ll and through context. original with that make do Andrew. that all market going premise, to business. And And intensive first colleagues. will as less to decisions go

Andrew Kligerman

let of too a when $XX little quarter moving early to – sense revenues IQ, Maybe before I the me and Assurance yet million. give But to to anyway can little look these still know you loss turn is phenomenally corner liked profitability? you’d this a right, – of all on mean, on robust it say? a kind Or generated a then. you pre-tax Could of you

Andy Sullivan

So Andrew, for you question. thank your it’s Andy,

margin oriented objectives, and more we’re long-term to to revenue addressable one-time expense. I and had our business sure, fee make me our this our for well it as vendor business us, as mix the a non-recurring both for as and as feel in capabilities just on the its couple we shifting ultimate mix. ultimate toward We bought flavor changed. distribution this expanding path contracts you That from that of as to we’re let that, as million that we it has far a market, a the platform First, maturing point for give that. model, out example, And quarter, nothing $XX provides of ended in – strategic drive

and So as in broadening such, to and portfolio. for the the continue we deepening business managing long-term, we’re the invest investing product

the in results and making distribution quarter. capable We system and continue invest to a the more in deepening the

grow this see to we You is scale all what and up, growth the we we as in metric quarter-to-quarter saw, you key and had revenue had point I’ll quarter, platform XX% revenue revenues lines. evidence that. of last back growth as said,

have plan, so we executing against it. we’re a And

the see metrics term, the need scale right such operating will near the we the in way. losses. as and seeing to We go We’re platform

Andrew Kligerman

Thank you.

Operator

you. Thank

with comes KBW. question next the your line Ryan Our Krueger open. line of from And is

Ryan Krueger

losses as you give for if breaking also guess we why also I stopped implementation us that? about we to as we years out implementation this quarter. any expect the costs the corporate that the noticed Good look, decline think did Can decline? billion you morning. segment you I wellness of following And that XXXX, $X.X for should context costs in

Ken Tanji

Okay. it’s Ryan, Ken.

making good they’re year our costs implementation cost making progress. and office on initiative and our $X.X other great progress we driven being that our really transformation We this in estimated saving loss the expect We’re for billion. by that’s and and transformation included corporate of

it’s to it’s So to don’t amount in this we stage, vary there. magnitude XXXX. expect And the that significantly. the in comparable we had At

why and didn’t feel So that’s isolate we the need it to continue separate out. to

as other are, this by costs We our towards over of very $XXX progress good cost would objective and of And have expect our included I we corporate mentioned, continue. making achieving million the XXXX. savings segment in to to period, implementation

Ryan Krueger

And institutional since of products? couple in breakdown to segment? on contribution business, full multiple compared rough is rough kind then your varying reporting there’s you different businesses What’s can Thanks. us investment from give in – the your service terms retirement any of of breakdown

Ken Tanji

full an part But service it’s overall We segment. excellent our have retirement business. of

out. separated we’re the full historically of It segment. to that, specific not is separate just forward haven’t part are We service line those and that going that business

Ryan Krueger

it. Got Thank All right. you.

Operator

Thank you.

from comes is line Citi. open. Kamath question line your with of next Our the And Suneet

Suneet Kamath

were hosting with financial I’m time of lot Great. XXXX how Investor first is, which corporate to the of the that employees you customers. you initiative lot something these meetings spent the on trying a tracking we My your just and a are is, Thanks. at question reconcile wellness of Day,

a strategy review, comments of hearing the are retirement that that we’re those to two including trying today, it that lot with your that U.S. to were because under business, I’m me felt reconcile So things businesses interconnected.

going or there strategy out, that wellness I’m in change So is figure trying a on? financial what’s to

Andy Sullivan

question. a Financial remains of component organic So Suneet, in growth take key absolutely company. the it’s strategy our I’ll your Andy, wellness

American that we’re and through the As to address at people more you workplace, articulated broader to bring as solutions we say, working marketplace. and direct-to-consumer. That more Investor a advisor the both heard swath the channel to often, through is and Day, me of

levers would out Prudential. in value. we’ve seen converting financial really of be customers activate to our predominant of the talked the We’ve are We’ve business, product past workplace and loyal to platform. of seeing second our individual about have about revenue And growth in in value wellness the we that the capability from couple helped conversion from talked institutional we the group built that’s individuals value would from but ones value sales As institutional the delivered been two a to full levers value also those service the activated. both the of net long-term financial wellness And the insurance prop. be growth

sensitive. system you as, as component our of grow push business addressable growth, it piece an the to component it market of expand it’s of important organic think But the So to that, and should of a is less is our strategy capital the be strategy market. to it we higher broader less intensive and

Suneet Kamath

about talking capital last And I growth businesses when think were quarter. then Okay. reallocation, the we on

markets three highlighted emerging and IQ. PGIM You’ve Assurance

IQ more operations? prepared didn’t Charlie, from or to on Should you I of this take insured IQ. mention think, remarks that types planning morning, capital that Assurance your you’re currently allocating in tech Assurance of not sort other we either

Charlie Lowrey

In comment. it as words, strategy. specific about about the M&A, primarily talked in that’s other think other we M&A, Yes, and U.S. in particular programmatic morning, by fair a I we’ve our as investing it’s businesses very international a programmatic in mean we it’s and think what this

and we’re existing targeted highly to and be like scale acquisitions selective or emerging our to add markets. augment PGIM like going businesses going capabilities either We’re do to that

Bob Falzon

equal differentiate the Then you regard we however mentioned that say timetable that not targeted. just assurance XX% Though our is to Rob. to had capital businesses we we comments, Charlie’s what add the which articulated the call to to it’s focused PGIM be emerging would that Suneet, out an objective of was and three deployment. in in – that area earnings at have that Hey, for time markets, that had we the to that of redeployment capital, separately with we did of were on we point as combination said

Suneet Kamath

thanks. Okay,

Operator

Thank you.

Research. the Our Bass come from with line of your Erik line Autonomous will next open. And question is

Erik Bass

some much are that provide do emerging more markets grow stand generating businesses How from you and over today? Hi, of current expect details years? thank on the where in you organically scale and to profitability? next you terms emerging And how earnings they Can you. your markets three

Scott Sleyster

This a earnings all, Eric. of the of Korea question. Well, that of sale ahead perspective, picture Scott. take XX%, our about following come and Japan. from XX% Thanks big is first from go I’ll

a spend we time why that’s So of focused Japan. on lot

combination Within sector said that before from markets, of I’ve comes from earnings the think, the Chile. a emerging of the bulk that from those in Brazil I and

we is like markets news to get emerging where we we’re pretty independent countries is that in actually The we we we’re in partners right And lot is partners So started small hard challenge faced of platform a a that broadened starting from those platform. And that we’ve the right bank markets NLP we’ve or but a where now the model. the tied countries. lot our agency at those worked in in of agency out good rather originally required. assurance, with that feel in

our is, But single-digit seeing markets, rapid in-force our in last and in Brazil grew growth most for in high Mexico So, the of emerging news the example, a to good Charlie for context talks phase year. tend the we like of are at places. in starting in right that to we’re markets we’d of markets, that’s off a we’re We rather about why emerging grow. and it small think double-digit the

strategy markets. Thanks. we bolt-on have and a partners, growing licenses why the those probably and is strategy think for We that’s best

Erik Bass

infer you. we then down could Brazil. going and but This and businesses, underlying on on Planner about growth provide some I’m you the the Life assuming the business? should you is And with year-over-year. on growth Planner healthy POJ, that Life show in business, to what is the continue decline Planner from trends at counts follow-up total coming Life color Thank the more hoping in what’s international sticking

Scott Sleyster

Yes. do in our we fact That’s follow-up contract that your correct. consistently and declined and a or good and changes in believe, we that we is last needs contract that occur. follow our commented regulatory quarter, like, to the adapt and were go expecting systemically sometimes of a but kind maintain productivity, I year, LT new implement did did that and we I some terms change to models regulatory customer last observation through we terms and Brazil to

really our in in Brazil. that And market. In POJ up were X% quarter-over-quarter Planner so actually growth the change up and that’s back Life year-over-year Japan actually biggest was slightly was we

our a view three sales So, would coming of ago say if were as you Planner all back that kind that change. I our sales look we’ve Life a been the and bank in the from years so contract lot in Life of Further, I making group had outside coming been almost segment. related four segment, our Brazil, XX% of almost Planner would from in or model. And channel have our recently that we’ve of increasingly progress growth

Thanks. things actually in Brazil. we’re pleased going how So, quite are with

Erik Bass

Thank you.

Operator

Thank you.

with line Yaron to go Kinar of would we Next Goldman Sachs.

is line Go Your open. ahead. Please.

Yaron Kinar

be authorization to I conceptually, question $X.X increasing I seeing everybody. targets. Good morning that the want through XXXX, think, thought first My billion but you. flow less goes through I think the Thank you’ll new $XX.X about based think on billion you just, here increase we buyback so that performance basis your of of the come something that the one-off, should this of of a Is a or sense. quarterly this your target? company revisiting on get kind is how the maybe to

Ken Tanji

is way a management. dividend times use have distribute We’ve Ken. earnings prioritized our three approach been about This very to capital dividends. dividends We a to both capital consistent purchases We’ve and as Hi. share and shareholders. to had

flow about Our XX% free been of our dividend. two our cash earnings, about and has times

but seek will and it repurchases, to use grow overtime. them share level use So, while we vary a we’ll dividends of

again, to also, decision just It three-year we just with really point recent to our as well the and consistent adjustments increased increase if time on economy. And that mentioned, Our XXXX, outlook shareholders our our it’s as passes determine time and in we not capital position excess this will as returning with where appropriate. reflects our $X.X reassess the outlook. are but at again, continue are position, to capital billion as for capital you we by

if And excess share we approach the make So capital we’ll had many have the –returning consistent with again, it’s to really we’ve shareholders. that of practice years. for

Yaron Kinar

talking to was deploy fact $XX from in pillar, you which structure. shifting Okay. about into billion, quarter ago the more if shifting also But capital the a were that other businessmen you

or thought need, you mix a you’re if initially additional to seeing So, is opportunity pillar? is think less than that just billion of shifting increasing just this into $X.X business that and I’m to that therefore more, the deploy scaffold identify that’s trying by it other you

Ken Tanji

excess a reflection Yes, really it’s position current of of capital. our

redeploy. be progress we’re release because a range it’s want – mentioned, about towards again, great XX to billion making five we to transactions Rob As we our and of, objective disciplined of capital will And of wide reallocation.

it’s outlook. the of our position capital economic the feel So we and result how about current primarily

Yaron Kinar

which slowdown trends like question Understood. very, maybe of – And tell hearing should retail of trend but institutional we flows is And any very us don’t to pretty very sequentially. are are give the market and so not, a call but you bit what net robust say can with then that kind you’re are that flows, I that’s, second a if want seeing clearly story, what whereas retail. my color seeing don’t I you in a in think consistent flows, I there. strong little PGIM you I think terms institutional both or but I know And, in seeing

Andy Sullivan

Yaron So, the across frame both a we question. any our trends. I would seeing or are I multi it across Yes, way conclusions guess very draw I’d Andy, say versus business and your is quarter-to-quarter would diversified thanks wide we’re public lumpy institutional side. institutional managers and obviously say is, not on be for any side private on The retail more sectors. it’s can the only a We clients. get you’ll to the range serve tend clients of thing we variability very

a confident the across to side, be conclusions, question in, that And to you markets. I we’ll retail. the should continuing coming, of that But have institutional say more And money perspective, across lot of a net have into strength end be tailwind draw and types the and broadly your given at broad product now. could we day, think come a products. we from we’re a suite money seen balance the have and the flows or but would marketplace, the we On that winner of a we very think any retail I trends

Yaron Kinar

you. thank Okay,

Operator

you. Thank

comes from open. your line Lee the question of & with line And is Dowling next Humphrey Partners. Our

Humphrey Lee

thank the to is taking for my questions. related you And My question morning. general. Good time first in

your headwind your you Service XX-K, compression Full business to at in the earnings is in a for key I indicated spread think Retirement.

Full Just looking the back think a on on the IB business? several versus least spread of have that past past we about in interest of highlighted, years compression in the how couple rates the that should at the quarters, you portion been Service in terms of

Ken Tanji

roll Hey, Humphrey, that’s do business, in a it’s see Ken. spread provided. a baseline the and in We a our Full we that compression forward of Retirement combination in institutional business Service

You’ll an million see half Retirement of $X million out we of institutional. impact our in But that the split don’t that Service between $XX is or segment. that, Full and

Humphrey Lee

one I which have guess, you directionally, thoughts your of that? say of be kind would will

Ken Tanji

Yes. Again, we to it. get into They want get that. of breakdown down don’t, the to

Humphrey Lee

the valid is to backing Okay. I that you have should guess business stable this general. the business we the How in the capital Full that’s income just a Service? currently portion about just follow-up, fixed of think in stable, of

Ken Tanji

held, earnings not where the it by to part the Service of Full the sub reported in split segment. down but That’s business our of our overall Retirement we’re break capitals with Again, are going as segment.

Humphrey Lee

Okay. Thank All right. you.

Operator

you. Thank

your from Benguigui of open. Tracy is Our comes the next question Barclays. line with line And

Tracy Benguigui

market one the cows, hand, but Thank Charlie, you other comments rate on emphasizing I’m if secret businesses look and that wondering you. previously hand, of some you mentioned mentioned on at are your that you you everything. none made higher sensitive the business, could reconcile

So, a requested in it’d just you to if mind. open-ended have understand, how order you pecking be helpful or

Charlie Lowrey

are the we looking said – is our at have all for businesses. what just Yes, I’ll Tracy before, question. go which we to Thanks back I looked and

overtime. shareholder to and Our objective create value is maximize

We’re mix to business that order if which and the overall to we of about extent. an we’re in the sensitive looking to not time, higher and pecking to rest into businesses businesses carefully our specifically our businesses articulated market at a quarter, a but and talk first smaller fit and this objective our will, they understanding expand all you assured reduce at going was annuities growth that how

this the point before want say all report. to at process you we know So about there’s of in as we’re all to I about more said when that. doing that’s, And will

Tracy Benguigui

Okay, understood.

but ex-COVID a was unusually the experience? to at looks but low. CDC heavy mortality, non-COVID-XX lot experienced looking about I if usually losses go different you talk quarter that data You quarter, mean, is I you of had a mortality first for COVID-XX, quarter. like Did understand better I’m have wondering there’s topic. a the excess full

Bob Falzon

we underwriting the significant to than unusual did any an variance or Hey, stretch Tracy, not experience during certainly time be our generally or But see this seems of to what trend COVID. other is in related pandemic. credible

So really can’t you give other that. any comments other than

Tracy Benguigui

you. Thank Okay.

Operator

you. Thank

your Next, we line John of Piper line the Barnidge is will And go to open. with Sandler.

John Barnidge

it’s transfers. And Thank don’t worry, risk not you very much. a about question

you disability, going than of the that few I with talk elevated well with things short-term Can as quarters that associated natural because with as seemingly So, out. administrative economic was occur disability a claims lapses, curious expenses? to to shock about some long-term expectations your

Andy Sullivan

topic appreciate Andy, cover. the to it’s John new and Sure.

the claims. coming year back of volumes increase So, an given in saw to seen impact more claims disability as We’ve actually pandemic, last the the it’s COVID pandemic, you short would obviously of vaccines term a those like. it’s in expect down, absolutely control getting and we

to to the expect you long-term claim have experience, on an incident. We know, on economy effect impact to due continue disability our the

an and seen put We disability up does you put yet why us saw that mean have plan. not won’t up in quarter. additional we That’s that this necessarily of as last idea long-term six on we not that, generally an up period month our tick a that IBNR quarter there’s the

directly question we’re, expecting administrative increased and So flows to expenses. still your that that about

folks number One right specialists. having managing of that the business professionals, this very of is the things very, and we important consider, to nurses, claims

in that And that up individuals help and long-term beefed our in to ready disability to of ratio. have the seeing be work part properly claims. to you’re go staffing claims return on We admin reflected the elevated business the

Operator

And do for you, will John? that it

John Barnidge

office, return to that was but June corporate I another disability Do Thank to add mute. that on may Sorry, you summer push to say knock it. long-term industry-wide through actually layer the A fall related to dynamic? you. dynamic think to to the follow-up

Andy Sullivan

take to a and diversified and see very that across in to go size, be I’ll have are our question. varied of hard across from of pretty we’re geography. I Andy, segments to think geographies. And return what workplace business it’s your a to one industry a John, size, predict going going really and book So That’s where we perspective the segments different is the patterns thoughts those

on disability have hard really what to incidents. might claims influence that the So tell,

John Barnidge

Thank you very much for your answers.

Operator

you. Thank

open. of next with and line will of is line Our Shanker the America, Bank Josh question your come from

Josh Shanker

entertain the – be rising in didn’t there quarter, argument I set reform end. first in from tuned think does it a Yes. Thank the embrace? of the arrived, me first was in here interesting first negative of inflows might that industry and have quarter way. and if look industry slipping right strategy PGIM at obviously an the I’m ones, is very one in it the economy move a quick industries Two is strategies you I that to affected guess mark-to-market results, PGIM sort will for perspective that probably PGIM an customers but not

Andy Sullivan

question. Thanks it’s Josh, for Andy. your So

flows both broad environment, XX is, that which with couldn’t a a a So we to we’re yes, were be space has a consistently and very environment and of as an winner those sector. asset and something likely manager rising perspective. see we’ll feel that well-diversified go from set and in rate to, very fixed in impact back that on a general I’d growth earlier, you’re the businesses income said in we to portfolio net impact But if economic for referring public top across private flows I any across net

– feel rise remiss, positioned. I And well a we a if then net be overall is for I’d add, remember rate very obviously didn’t environment positive rising yes, So Prudential.

Josh Shanker

sales are legacy contributing more But side Obviously Prudential, business. it? annuity policies? the of customers break advisor, to the new living older who down, And that. understand new sales on into sales the I annuity just just been I buffered the their much money has benefits And annuity Yes. a strong. keep can of how to are with I with living putting the variable have to very if understand I want benefits financial into

Andy Sullivan

Yes.

it’s Andy; again, the for question. So thanks

could the rules money depending are what pays, the dropped the depending there policies. various territory, on much we into how call So be additional sub regulatory on product, on those

reflective when have off that the living of products. We and is a to actually well. only it we those is report to the the we’re sub guaranteed that benefit That’s is annuities able X% closed that why large degree pace jury, sub going variable into traditional pace in as

to are stop it So we’re in, new a products runoff, is hard those on. sales additional only about truly when monies really customers, not really but talking being dropped

Josh Shanker

Thank Okay, you.

Operator

you. Thank

We will line is go Gallagher your to open. Evercore a with from Tom ISI. follow-up And

Tom Gallagher

Thanks. this on legacy sales, you risk maybe about Andy, product. of why compare a there? looking on that the business profile feel volume the if a with obviously big that’s just capital product clarity lot of this very obviously into a intensity majority risk annuity confidence a now about you business, profile to your bit the sales, of are that just pivot follow-up to VA? of Can talk the you annuity the buffer sales, to you’re exit of compared and and VA But contrast have and why confidence legacy which your

Andy Sullivan

the perspective, different take From it’s So product and return. like sort our highest I’ll risk income. Tom, to vastly the Andy, maybe two and daily sides traditional of Yes question, risk that annuities, variable from the is

at were with risk interest is bit upside, the think consumer, the interest about HDI, sharing day, detailed risk, taking obviously the the downside be have the the we’re and for but rate risk little them end buffer of in a on downside with it, not options. a product hedged like nearly of design of the we’re Kat, giving they upside because so rate we perfectly risks the could we’re you of simple If

a very profile the very, risk from comfortable – go-forward with So perspective. we’re

a about pricing. returns, adjust work and in more of I what rapidly talked to lot be price Your our I did to we products question quarters, around able previous think our product

very why obviously one that hit the the results advisor we Prudential with to led return. with returns that risk you we’re very, people so sales We’re through that, space one, and that and advantage inclusive the might seeing best the channels. the have for to profile brands big of very successful? the of we’re relationships, of, well, two, Number me let us. So great which question begging we business that of in liked on And the selling. be we Advisors, top we the the in liked a have number lot been are distribution has quite positive third-party history and results. But pleased strategic is very a And

Rob Axel

The his onto make about it’s interest Andy clear. able you well, Rob, hedge – we’re just is also structure it comments thing of the quite rate talked to Hey profile with Tom, equity add low, able to to said, it’s the the risk to to buffer the risk in we’re as something profile, just just implied sure that actively marketplace. is in options one

on equity So Thanks. we’re risk not ourselves. market taking that

Tom Gallagher

Okay. Thanks guys.

Operator

to Mr. you with you. back And Thank any for turn I’d closing comments. over that, it Lowrey, like to

Charlie Lowrey

you much. Thank very

you look to I We nimbler forward continues our evolving We sharing for initiatives. And growth the we’re and joining with So remain our momentum on steady transformation for your our increased taking and again on our customers. strategy around we’ve the you interest sense the steps thank of coming progress in which of and business, us confident time the progress conveyed you to one quarters. today. build the and details hope to thank in a additional today. higher and focus more needs

Operator

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

disconnect. now may You

Prudential Financial (PRU) 5 May 212021 Q1 Earnings call transcript