PRU - Earnings call transcript Q2 2021 | Prudential Financial, Inc. 5.62

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Prudential's Quarterly Earnings Conference Call. At this point, all the participant lines are in a listen-only mode. [Operator instructions] As a reminder, today's call is being recorded. I'll turn the call now over to Darin Arita. Please go ahead.

Darin Arita

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

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

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

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

Charlie Lowrey

everyone you and Thank Darin, for thanks joining today. us to

As remain reported safe cost robust in target. always, our performance the for and and your Quarter, investment Second achieving families and financial results We further strong savings healthy. progress hope you we reflecting

progress higher more significant our made also market-sensitive, become nimble a on We to growth, Company. strategy executing and less

As business sell to last we an retirement example, announced our month. full-service an agreement

initiatives thoughtfully provide recent with strategic of Second, and opportunities. I'll both our capital, shareholders third, our on pursuing our an beginning support acquisition the divestiture cost-savings return with we activity. redeploying update each And program capital is plan. of are progressing balance well selectively of and is now our by these original ahead by to rock-solid increasing sheet,

to X. Turning Slide

sale from agreement a expected closed Taiwan business we sell First successfully in the Quarter of and legacy to Korea opportunities traditional in full-service during we variable we an our of to benefits. announced Second announced with living proceeds Taiwan the retirement in businesses, July, net Including transaction our completed last divestitures. our sale of the Empower expect to size and billion to our which continue Korea to sales Retirement, close XXXX. guaranteed of on block sale And the of the Quarter. these $X.X our full-service Meanwhile, of business the approximately Following we business year, reduce the annuities, is pursue of

X. Moving to Slide

retirement of to As I did million exceeded track of mentioned so run-rate of which earlier, end and and savings XX achieved of million savings target savings, XXXX. on generate have by cost are million, well, These To date, remain cost we XXX the a progressing quarter full-service months We've of million include we ahead of savings cost the XXX original to And $XXX our $XXX plan. our total half not XXX also million yet replace in expect had generate result, XXXX. realized the savings. million of in identified for to continue new first a we second cost and those as to of business. $XXX

and billion this quarter, XXX billion full-service including the retirement billion second beginning the X.X returned in this are authorization distributions. to $XXX an complemented targeted total when of the announcing amount our $XX increased XXXX, the This to repurchase agreement Last share share our target year. buybacks $X.X X, approach distributions redeployment, our month, increased business, increase second by initiatives these XX payments. from our up we've capital to shareholder of Turning of since to Slide XXX shareholder of thoughtful sell the initially million, a million Year-to-date, including we million through dividend shareholders, brings we to billion our through earlier XXXX. in end by additional comprised identified in

leverage and outstanding shareholder opportunities Asset in addition, areas, by we on and our M&A our $XXX debt being prudent programmatic of of financial to Emerging Markets. focus philosophy are in we by on Management our executing guided capital, stewards done management to capital enhance being reduce and quarter. higher-growth third flexibility consistent the our with In have including million Meanwhile, we disciplined redeeming approach of past, as disciplined the in intend with a

acquire this, this partner in market in As year respected joint-venture our minority July, announced evidence recently a Africa Tanzania add secondaries closed and of markets, PGIM with Capital LION to in enhance which highly $XXX and expand equity presence financial with These growth More stake our Holdings, will deal operations Uganda. in service or are in our ICEA enhancing further a alternatives and asset consistent a earlier leader on Montana our a manager, to its PGIM deepen Partners, transactions European-based PGIMs billion emerging opportunity. capabilities private strategy capabilities platform. Kenya, in

Our assets and AA financial quarter, deployment $X.X our is highly rock-solid capital business end levels balance sheet, supported of our at subsidiaries. of including by primary the at billion the second liquid capital strength

step established reducing financial which I'd Rob, the our include world. a in governance emissions, These as update links progress month, financing an gas sustainability greenhouse on an well took important our directly to ranks. and of as to Last of to our senior diverse our previously our costs which changing integral like social, targets. environmental, Before integrate meeting and targets are standing of business ESG facility, $X our Quarter, we representation on and I'll strategy focus the commitments. among now frameworks, commitments, turning billion environmental to over challenges improving financial with renewal provide next to our our This purpose it solving our credit

last Global transparency around allocations. projects, in and our We by Environmental also companies inaugural continued green investment issuing providing greater to Commitment, year, our general investing make including other outlined and bond strong account XXXX progress against goals sustainable in our

volume partnership XXXX. reducing also use to shared end paper and customers. we letters are American internally We Forests, both documentation reliance on aspire significantly with our reduce other the and our mailings In paper with in of by our of the

to to runs that equity one we in are we ongoing our through which everything the includes sustainability do that advance at X racial also the performance. ensuring look established this as This updating to week, over specific next year other you diversity, committed are well this progress to for I equity, forward and inclusion on commitments. to Prudential. details We as it on our our turn on business commitments Rob addition quarter I'll ago social fulfilling of more work that, With efforts.

Rob Axel

Thanks Charlie. begin Second for financial overview financial our and our Quarter. performance results I'll International the I'll of Businesses. PGIM, U.S. provide results Slide an and X of for on business

revenues, Global which Manager account adjusted by by co-investment mortality $X.X trillion PGIM impacts benefit fees, values management business that typical record markets, our had Asset business asset driven of in was offset other record Our the from $X.XX reflected related per were income the lower basis, billion, [Indiscernible] growth, and income, exceeded or decrease and net pre-tax COVID-XX. a higher on driven growth. strong lower and than expenses operating expenses, after-tax $X.X by an share of supporting and

partially of growth, U.S. less continued Brazil. COVID-XX net joint in earnings favorable appreciation, This impact driven business net XX%, higher favorable and partially favorable fee spread reflected less driven and primarily in underwriting income, the increased increase by investment assumption was by Chilean lower variable co-investment double and have from update, and offset favorable results, update. a results, quarter spread higher higher underwriting by from higher venture, annual expenses, required claims annual by business reflecting higher Our results were the more a COVID-XX income, And by investment by investment than our earnings business lower market international equity impact offset our assumption -related mortality. more more results, our experience, driven year-ago pension driven primarily in

Turning global flows. both Platform the to us classes and a alternatives, investment estate, Slide capabilities and Manager. in favorably strength continues public equities X, private Active top diversified asset diversified to as Global fixed positioned its XX to PGIMs Investment PGIM across capture demonstrate income, of real Management

more of outperforming In addition, last periods. ten assets remains than management with investment PGIMs over and under three, the year XX% attractive, benchmarks five their performance

mandates more appreciation more helped $X.X fixed strong outflows And growth. continued Our and during with for by of a income investment advantage, bring of solutions $X the performance third-party modest quarter, by provide in customers. asset also our origination net sub-advisory a PGIM's public These affiliated turn, market from our of As billion relationship This neutral to our of across cycle. a of record PGIM's growth PGIM successful a to expertise benefits with reflected PGIM which provide strong offset third-party engine PGIM partially value margin the compared enhanced net equities and asset billion offset management flows Prudential, outflows. complement of retail contribute continued the our investment level, that management result by 's track flows, flows from third-party fees above PGIM year-ago capabilities funds, to to beneficial investment operating mutually businesses XX% 's positive continued businesses. inflows a retail increased than into U.S. capabilities helping institutional to in as driven insurance contributed U.S. diversified record source a outflows and international of to expectation flows to of competitive and businesses our quarter is flows. positive the adjusted XX%, the XX% and

Now, Slide turning to X.

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

products expand our low-growth, shifting transform and capital structure, while strengthen We rate and sensitive businesses, intensive, from and businesses. to continue interest our our cost addressable away markets,

Our the $X.X have annuity by in strong FlexGuard, worked product billion sales sales. quarter, was of debits representing well, our second continued annuity, of total demonstrated individual which buffered XX%

totaled for effective sales combined and benefit discipline offer that and Over brand solutions team. for protection. trusted and demand FlexGuard exercised the $X.X equity continue reflect investment our We've past from sales downside sales actions quarters, the pricing with to have billion. having frequent strong from three through highly customer potential distribution a These markets appreciation

with continue primary Life Assurance, we product proposition, concentrate I Life pivot enhanced respect benefit our in to participation, total revenues, to by would Quarter sales the Group success, quarter, demand agents capabilities Universal note expected plan core are financial Third Life consistent accelerate over similar Variable to up differentiate help the markets. of the in With last Individual targeted strategy. to that period meet of our the Fourth business, policies, prior-year business in In sales Quarter. other our quarter. offset XX% and to with higher lower to our to year, Our compared the be our enrollment grew financial continued in of the particular, higher seasonally wellness as to we sales, scaling increase growth sales and on metric that Medicare also occurs the year-ago value Insurance, annual strong the number

Turning to Slide X.

higher both across we our where Gibraltar other Sales by as differentiated Our life hand up state focused our Life operation amidst distribution helped Ken. operations while with growth over year. were prior capabilities and the have that, than remain multi-channel the in-force than Japanese insurance sales resiliency emergency which Planner were high-growth continue I'll international of well Planner of quarter, businesses XX% our And Life XX% held the sales the Gibraltar We on in have well unique higher as a model encouraged include distribution the of business. operations markets. year-ago Japan. to to it

Ken Tanji

we Thanks Second which begin Quarter Quarter Quarter XX, earnings insight per provides was following the relative develop, our results. Slide to a suggest Second of earnings sense in Rob. the after-tax adjusted To how Pre-tax the on of XXXX, resulted $X.XX operating our get and into income for of I'll basis. on in Third items. an for adjustments Third results billion, Quarter X.X might share

assumption First, net a in and in XX charge our resulted Second the update refinements million other Quarter. annual of

outperformed Second in income the Investment million. expectations Quarter by Variable Next, XXX

adjustment in and XX U.S. on in adjusted net This is businesses. related million. claims our XX for Quarter fatalities a COVID-XX COVID-XX million experienced by for U.S. Third, Third XX,XXX businesses, placeholder million international experience of includes our XX for underwriting a the based the

the that exclude the the have markets, that would in such is fatality we by provided underlying Third takeaway by fee the be on divested of cost COVID-XX lower this in the and which program, of of us will share and costs last sale the specific per geographic reduction a and has $X.XX the rates timing and due Quarter. XX retained the Quarter, make-whole expect million, continued Fourth, our actual concentration, earnings These earnings The underwriting to share as reported note money Last, factors will as income our in million, reduction as quarter, rates, from effectiveness benefits a While increased the of between difference we million of savings baseline Third higher from acceptance debt earnings sale disposition the the if the anticipate net of be key in will XX offset the in items to be expenses Quarter, includes reclassified the the a about related and other. for reduced well from Third our growth, equity This portfolio. for we business, income new impact power earnings to reflecting Second as previously of Third Quarter. items that we full-service associated get corporate placeholder experience with and XXX business. operating be business full-service $X. vaccine. the from more Third than million for infection XXX depend be our investment also a investment per between of and variety Third I'll combined, yields redemption of adjusted the the primarily business, approximately of will announced Quarters. will Quarter And to

While the fee items debt the about that make-whole Service, consider, that I now also cost expect third the retained full-year we please have quarter. other and and note with billion. share note to XXXX would may we per factors provided loss Full affect of X.XX be be there in earnings corporate to that these other

Slide XX. to Turning

capital sources of We robust continue maintain inadequate position to a funding.

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

flow our for And transformation. from our annual cash the in XXXX sources savings and include is were enhancing execute strategic other complete The interest to debt, as will mentioned, generate and on funds which of cash approximately facilities. financial liquid XX redemption X.X future previously financial fixed assets plan as while reduce businesses leverage billion, our free Our charges. capital than our annual we greater of also flexibility million, X of and contingent times other

and Slide summary. to XX in Turning

divestitures. are We executing on

we are capital. We our of rock-solid on schedule redeploying sheet, ahead the support initiatives, balance cost-saving of and with thoughtfully are

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

Operator

Thank do and one go of ahead. to the of you. limit have Ryan KBW, ask Krueger one [ with we yourself we Operator first And instructions]. please you, follow-up. And line please question

Ryan Krueger

billion curious if progress transactions, also the X update market interested your the toward VA had Could and billion Good to provide Hi. you past Variable an in think that morning. tended the you commented on in a I Annuity case? the be transactions, still X inside to also that's

Andy Sullivan

question. Good Hi, morning. It's Andy. take your Ryan. I'll

start top. me what Charlie by in said Let remarks his prepared reiterating at the

we traditional as run-off. earnings talked We significantly And are annuities committed And on successful to reducing benefits. Step the we earnings XX% living a with come what remember, we be to And from of is run-off. reduction about about is expect from variable pivot. process. XX% to the we're X you contribution this executing highly consider a guaranteed two-step will

those legacy quarter, shareholder value run-off FlexGuard in were in in products obviously If in those better you market those pivoted in we we and we experienced products, chassis quarter. sales And X.X where we've number value, of Annuity. to look variable that balanced, Index this Variable at our X we share traditional the product products annuities, XX% and X% billion had are of and saw consumer being provider the there, a First the with much Quarter the

transaction having is for is two and step does a transaction, now and us. a about all one So said priority a conducting that, step runoff, remain

we're have progressing in work work that and We progress, forward.

if tailwinds that the the and As a the look of say continue to would billion that coming capital towards X transactions good X would marketplace at is precedent, you billion I we space. have see in I been say noted, done to the range, you

Andy Sullivan

very we high-quality a have before, As business. of block we've articulated

we be we you sure do we the always, going like progress, only to right do transaction. have make to and are continue As as that disciplined shareholder-friendly saw to things the full-service with are us much economics,

share. something going down to we're more So we tracks to and we moving have when share keep will the

Ryan Krueger

a than at annuities, And you. are but any already Thank you'd in other there full-service variable point? businesses retirement divesting there sale, the that said is, this you've consider follow-up other

Charlie Lowrey

Hi Ryan, Charlie. it's

significant opening said I we're as my and in said, Andy remarks, As making progress.

business. I Korea, includes executing and this a we've including also Italy, done less higher the on the full-service completed growth, announced sale think things market And nimble Poland the but Taiwan, of some the and sales of before, more sensitive, sale, of becoming businesses. our

we're but So reduce we'll at continue Legacy as past, well. to as in pursue the to opportunities of block, Variable said, the Living Guaranteed insurance our noted as benefits, of blocks Andy size traditional with life Annuities looking of we've business

have we a we're value dual creating still hand, significant very and we and of how on thoughtful we've purpose, other. going work but be on goals do, accomplished to So to the on a the our the more fulfilling lot amount, for execute shareholders one about

Ryan Krueger

Thank you.

Operator

Bass question's Erik with ahead. Autonomous from go next Research. Our Please

Erik Bass

Thank competitor Hi. competitors your this and the was lead. Last jumbo others saw transaction, now potentially a we in historically the industry dominant the volumes PRT night, it's true of been year some you. talking jumbo But market. for being record take seeing another about and we're one

So hoping could about you forward market appetite I just talk and dynamics in for was competitive business the your PRT currently. the going

Andy Sullivan

And the Andy, thank and leader Thanks, have your Erik. a We your pioneer risk is been you space a in This pension of recognition. absolutely for transfer. take I'll question.

we record brand, unique a We very we and have strong a have execution. believe and track distinguished that great of capabilities, have we

we first are second quarter was We opportunity. about The market to seeing that similar in billion, size saw the what quarter. also was strong X.X market in

we our That see we if approach, pipeline transact. being be a back a healthy. market, competitive year our average in XX% desire are going a variation. forward to number consistent more take expect rate disciplined quarter-to-quarter still Very expect the competing but spots, and what see become you're sponsors of we strong the is the going could that the deals. seeing approach, from to winner has to we'll and said, that of of experience us, half larger and comfortable expect our and But The to we're to perspective larger competitors also we're and feel with We funding the high of strength competitors net of pick should very have what in time be it past, this number flows. over the one, be and told that from the going we've good you in seeking both number two, the to combine number you is we you that business, and this

Erik Bass

you. for then you've will question highlighted to a expect two done was year-to-date. be targets, sense deals -- Thank meet next you of is, these give capital this and to Can And M&A programmatic of do capital you your or of reallocation enough how examples that transactions, [Indiscernible] size allocated you

Charlie Lowrey

specific been of transactions, of not M&A size very approach to We've we're but to that M&A, to do are talk of one, on can fair type approach that you it us the to deal and say this with forward. that disciplined balanced some more about is expect going going we a programmatic these and taking of

Erik Bass

you. Thank Okay.

Operator

we'll Next, Humphrey go Please Partners. & Dowling go with Lee to ahead.

Humphrey Lee

Good for taking thank morning my you questions. and

just the costs behind. more you that understand on more full-service [Indiscernible] full-service left the the follow-up Is mature cost solid be M&A. provide of sale thinking about sale? going the impact offset a businesses and that absorb from so the year-to-date, Just is have of can on some transactions focus but something I to done the surrendered and the you earnings being the

Charlie Lowrey

it's Charlie. Humphrey, Yeah.

one. take me that Let

very a when this, disciplined think acquisitions, both them from to about of First perspective. financial but strategic take and a a we're and again, think about going to we approach we balanced all,

continue be distribution and a add increased strategic to can of that a the market acquisitions how to be becoming And product is be a capabilities going country. perspective, number factors or goal very So metrics such or a potential and variety and nimble from we at scale look when we value execute, growth. to a on shareholders. in It's consider. we And our contribution, of for earnings from less to importantly, we're more we standpoint, going market-sensitive, with But about financial a of or it as thoughtful look be disciplined higher-growth, can most focus creating business. assessing that

Ken Tanji

just maybe, And I'll Charlie, add.

the stranded including terms the cost demonstrated gaining efficiencies, excellent transaction, transforming Company, Humphrey, In capabilities. in as our made from operations, what we've or as also you but progress the cost of, described retained we've across

focused We of on cost-saving as have capital, overhead and and an institutionalized our we'll the across redeploy process reallocate well. look and as to reallocate businesses structure XXX it's accelerating our and on our by We're progress XXXX, meeting objectives. cost million we objectives

Humphrey Lee

just Got issue doesn't to the using some sale it. Shifting gain the lower gears, proceeds the from trigger rationale you sale? expected the sale leverage, leverage. Can talked you full-service from with the the behind given about really your your especially the about decision of talk since any

Ken Tanji

earnings regular to capital and provide Humphrey, this capacity the have it's flexibility That is time was to redemption for near-term of really also liquidity our it part current position, a future. a review good and of debt going our given but thought redeem we the profile. And benefit, will debt.

it reflects, reduce we to it good way way. our So and just an good was time efficient in a a debt thought really

Humphrey Lee

impact may VA good it that down shouldn't may review your a on have like your fine I road, right term and now. is so or transaction it regular the you an be, value a as just Okay, periodic, leaning towards, book read potential but more

Ken Tanji

It's -- to was we're overall and thought regularly it Exactly. to I we it where a any thing don't directly I do. transaction. specific reviewing -- are connect wouldn't we smart

Humphrey Lee

you. it. Thank Got

Operator

Our next go question Credit ahead. Andrew from Please Suisse. is with Kligerman

Andrew Kligerman

pre-tax loss thinking Could year-over-year. about which morning. about IQ But materially good little the And Hey, revenue. to was a at this when timeframe get you B, you we and rate? in growth think when about up had Assurance then you superb keep growth pace? million, talk of XX about even? XX% that bit I'm a a for you break might A, year-over-year Can

Andy Sullivan

your take I'll Andy, it's Andrew, question. thanks So

intentionally we're hundreds very the saw our platform. we're never have the addressable again million out saw of business at much market. we because shoppers business brought of we so into we're the Prudential, past, reached that part and and We as As customers sold, just building opportunity and doing have customer And this incredible real we've discussed that demand. these in at the to would thousands Quarter, we're looking very Prudential, that policies expanding are in we going of and X

As will is, at these there it as fixed those we're those J-curve become adding they investments, and number are an more you a look I'll investments, expense. more example, of a call agents to whereas productive over And time. investments

So say scale. we metric predominant why that's the is

to scale We -- to sixth use great seeing expense. word And the have I'll up overcome that progress. we're

the very answer front room that know pleased your in -- us grow, XXX believe have a specifically that XX% of we're of growth also and continued You million question. we with to the lot We rate. to we're

a the around guidance. to exact long-term timeframe not As achieving specific economics, going provide more we're to

Andrew Kligerman

buffered that helpful. markets. annuity the And Yeah, was

Do get XX% impede there. lot competition could volumes It like of see segment even growth? that products, on think how Legacy the do total players have you market, doing you the sales that into see is I your were was where a going your seems to you buffered jumping the now and So what a annuity there? been of to point the you of

Andy Sullivan

annuity buffered the and question Thanks for the on on FlexGuard. market

came distribution established and differentiated and strategy that's of well-respected, partners, we brand start a very an has very saying, Let outstanding just we a distribution me to have market our from the do lot success system perspective. with; indexing product the well by with very a driver to we're

have of of has All enabled launches to the one the the industry. of history in that us best probably

growing. itself very market proud it. The very, we're So of is

to seeing chassis. more of designs of that over buffering. accumulation-oriented more products we're think more would a and broad and have variable And this industry-wide the product index area annuity of from upside more So It's shift really volume pretty I traditional-type area. as downside a

third-party and a bit Having of of room we all relationships key our still this see good that, to time we're have we to in rolled all our it geographies. out at run. said So of

So quite we've how pleased done. with

put some high not As levels we to years far going very that. to of to as ability X-XX its have get saw that prediction on ago, I'm the a

Andrew Kligerman

lot. a Thanks

Operator

with is from Tracy Our next Benguigui ahead. question Please Barclays. go

Tracy Benguigui

Thank I been not What IQ which before on a anyway. question. guard, I another understand under direction meeting management of and performance the have have original like looks changing there is It have anticipate? is there should targets potential anymore, earn-out, new you. a the founders that the strategic would Assurance are new left we

Andy Sullivan

Thanks Tracy, Andy. it's

we're me the question to first. Prudential strategy of There the end or and and tail platform, with direction strategic Assurance change with Let zero in hit in change your is trying accomplish. what

As been would business you and expect, we the have as the deepening talent team the adding to matures.

broader over of role Mike experience You Rowell, moved Strategic rightly take the a expertise. identified a that of his has the top a founder, and to use house, Advisor to me, enables to me

Arzeno, to She I'm Allison continued Scientist, in the excited momentum. Chief be has promoted the and who we a is CEO. fantastic the that. that, jumped to very Data addition was by and has In leader

that industry our for the insurance specific I platform, product of mentioned specifically is and attract brand been 's to other Prudential roles. thing and the able top, talent -- top combination pleased The through very we've of unique attractiveness been we've P&L for the

a by and health Medicare and Core eHealth, an in deep As he's name example, XX Health Advantage. [Indiscernible], was recruited we Chris at also both who Health leader expertise our leading a key but gentleman Under the of has

it team the So that take have talent to talent we're forward. we're and pleased and confident right we the right situation the with

Tracy Benguigui

to my when higher main near-term into Is guess thinking review? see at it assumption now not all I year. But the a your part update, for onto your long-term was spot than that grade conducted moving is rate get you I Maybe interest change you in this or your Great. rates did Okay. your assumption are that that assumption, time last at to that ensures and lower we more of still prepare want thinking LDTI. version I

Ken Tanji

It's Tracy. Hi, Ken.

variety rate so, As did it in and forecasts externally. of long-term when talked at little about very very our year, that see our saw studying rates established assumptions. those long-term rate and a didn't a we have for And doing we assumptions. we we've process long-term you in internally know, for change therefore, we this movement both forecasts, to we And look appropriate

So in consistently done the we look past. it way we've the very at it

long improvements, be year-and-a-half is great transition, adoption of on be we'll method think away, ready a making target the date, terms it progress that we're and In and won't to a in that but that's that, still implementing it's we time, adopt an that's appropriate. duration

Tracy Benguigui

Okay. Great. Thank you.

Operator

Please Next, we'll go ISI. Evercore ahead. to with go Tom Gallagher

Tom Gallagher

whether you insurance when the of you color on at then risk risk up way deals, out? and bit we looking unclear at of a had transfer looking you you're likely of that XX you're of at transfer either/or so VA, Hey guys where Is looking timing sort simultaneously billion to relatedly, to end here? And of are deals mentioned now specifically VA you're the freeing that life just do closer on, doing you and dual-track two, a you as provide to the the lines, could of is high more looking two a process process X first? can insurance life billion get as handicapping or capital VA now both have transaction were that maybe between those do you little the or well Charlie, life any laid

Charlie Lowrey

elaborate. me and start then Let Rob can

full-service we're We band. to we'll approach fall but business. makes intentionally Taiwan, an to at we've do but you going won't to we're out prudent we make a we sense said if there, X doing We XX see that's take to wide predictions, now because we've things shareholders, have include will and that and anything, very do said for if where in X.X the this. billion don't Korea, right it So

life annuities In of insurance. versus terms

that add think we're I we we have on life want also but now, focused annuities think forward. said are Rob, right will about we to as you go that? insurance do we to

Rob Axel

done initiative to Charlie standpoint and first. to we valuation initiatives, we valuation as shareholders to the the focused distinct on that overall important the each believe of Just Tom, the Company, those the indicated, get transaction teams impact but on is have from of VA more

And to within as but necessarily been priority, opportunities life resources looking at so of a are the to not the well. that having dedicated the sector it's detriment

Tom Gallagher

guys. That's Okay. helpful, Thanks.

-- you'd color and going to like for estimating individual. virtually given impacts And from seeing impacts on the that about you saw also? what in a COVID life. little all not a this looks it guidance the versus The follow-up. Is individual group come quick COVID provide can out Just for based what group you're you're you on are XQ, quarter of

Andy Sullivan

is group impact see that insurance. going trend to insurance I'll individual from to in mortality XQ. but second-quarter forward in continue Yeah. for similarly, COVID question. take that COVID moderate will would COVID estimate impact insurance Tom, mortality both saw impacts Andy. it's I we in beginning And and that your We we note overall XQ, we in group into life and both life, go as in

seasonal highest COVID underwriting I is offset think what partially you're the is picking ILI results. up Quarter our Third is the that in for the there the being Quarter impact by fact

different So a in the exhibit. little that's why that looks

Scott Sleyster

Scott. Tom, this is

front, to On see we're across in the really the board modest Japan. impacts international continuing

operations, similar impact and our are Brazil are both seeing we of U.S., the more to a seeing across and group We lines. in mix individual our

Tom Gallagher

guys. Thanks, Okay.

Operator

And Elyse go next ahead. Wells go with Please Greenspan we'll Fargo. to

Elyse Greenspan

morning. first XXX you for Good up you the when your thanks. Hi, year. buyback announced full-service My sale, did guys million by question, this

repurchases, about about the M&A potentially should insurance, life additional CDA transactions portion some think for So and think we well perhaps we with as capital going to the of as bucket? as incremental

Charlie Lowrey

all We've want We've date, continue will significant to so balanced to share your to we of take and And a our to good capital overriding already returned amount question. capital over and authorization. capital. both Charlie. I'll increased approach and stewards disciplined Elyse, And our that's shareholders, of to it's and have billion the of redeployment to we've a concept. demonstrate along said the within shareholders. the we and returned dividend businesses the have repurchase be $X

billion and $XX stated, and So with we or the the for across of us we're optimization our to find capital that businesses, both back, through stepping return end shareholders to strategic in seen plan to optimize the cannot capital. over do then that let and you of capital continue about in of Because internationally, to to think But the we've ensure and deployment, outcomes financial domestically next we maximize all to allocation, as particular look years we ways how we'll extent capital And excess return deployment meet optimizing criteria, we'll that for our opportunities to capital capital. you've share as X shareholders. me capital look we XXXX, to attractive past.

Elyse Greenspan

in I XXXX. a XXXX costs, sorry, beyond of think how come -- and trending know see I think the then, into [Indiscernible] we we give corporate And about as Full corporate implementation I'm and how guide. both more Retirement helpful. XXXX, also about the you of from Can and then sense when in costs we guess could the XXXX thinking Service the costs Business? and That's should outyears, us those

in corporate how the up years? costs but we So this there's about billion of over couple life year, should next X.X think

Ken Tanji

Elyse, it's Ken.

great I transformation improvement continuous and institutionalized effort, is a As mentioned process and making at our and progress we're with earlier, including it efficiencies, this gaining ongoing point.

we progress make of we our and Again, capital, to cost XXXX, that by well. we'll reallocate to as that. savings continue expect with we're we continue to can to expect costs, as well and think So track and million some capital reallocate objective redeploy our towards XXX overhead you on continue

So Overall, our good progress to with we continue make objectives. cost

have us I in to the make to should progress think past. you we expect continue like

Elyse Greenspan

you. Thank Okay.

Operator

with from go John Barnidge Piper question's And next Sandler. ahead. Please the

John Barnidge

Thank you.

few X those thinking elevated handle to With ratio disability for the that's be about increased coming a how down cases? for we loss relationship quarters the the been expense as straight with ratio, quarters, group administrative should

Andy Sullivan

It's John. So thanks, Andy.

you business. rightly in staffing enhanced have group As we insurance noted, levels our had

previous on this about talked quarters. we think I

and effects, pandemic [Indiscernible] Given claims, the the service. level nature higher provide of the seen level enhanced the make of we've an we to and right absence we have and that levels sure of morbidity been staffing maintaining

our We sure levels. also long-term we higher staff at been claims making maintain disability that have

seeing administrative as So ratio. a elevated contributor the to that you're definitely

as I bring part we we Accenture we've are have doing as with operations down nature of mention and would thing into entered conversations, to we're is, of a that, strategic other The the us. do talked the about that for And implementing this some relationship that's over on we and costs, of time, a effect, one-time there's doubling efforts. will transition our But that expect everything basically, transformation in and our some the ratio speak, admin we're group up. business previous

John Barnidge

a have developed maybe And Okay. insured life population? question; then of rates second sense general versus that you blocks of the of vaccination

Charlie Lowrey

reflects of higher higher the general vaccination that geography, feel rate. between and and we the variety John, insured yes, factors believe population of a rate of age, than that that population, is the vaccination has number insured But Generally, generally a things. the a we population

John Barnidge

for answers. Thanks the

Operator

Bhullar Jimmy to with go ahead. go we'll Morgan. Please JP Next,

Jimmy Bhullar

Good morning.

extent Japan, the Japan I in because in Tokyo, a easier your strong were for obviously was operating what challenges but trends the up, the are seeing your given question of in environment First To sales an pretty versus ongoing -- on count had comps. outlook country? mostly in your it in opening increase you as businesses in market are the improvement case the

Scott Sleyster

is Jimmy. Thanks, Scott. This

the that are below because sales typical really incentive the that's Quarter Quarter as cycle. know, ahead of ramping current strong, Quarter, when and prior annual but year, First but out, was time, our this were at closing slightly impacted by well Quarter out you First only COVID pointed was our quite sales you that As measurement up significantly we're

elevated COVID want The remain the strong this we I'd pleased it, on meet accident, the are quarter, our continue on of considering other selling for products add even evolving to because of with protection, products pretty and that's strong, global we needs. we ongoing call recurring threatening related challenges then to and retirement pandemic. focus impacts situation customer remains supplemental say underlying our premium demand approach, and our health, And fluid, Japan the it's life somewhat like anchored to issues. by Although needs-based in you our awareness death business particularly and dynamic, performance of whatever with to that

Our and restrictions. the to tools and activities and to enhancing sales social adapting the operations support are also virtual use increasing amid digital distancing of

that we've levels to acknowledge right -- at. But than maybe the difficult adapted still that's LPs is that have how recruit to say performing that's now, business past we in We So wanted. is actually the we at I good, good longer Japan. feel to about you LCs I a in good feel technology. the pretty would we're answer COVID it quite environment. level pretty and the that both feel amid about

Jimmy Bhullar

for Can was business a the had the Assurance, have payments. earn-outs. when had up I hit on think Thanks. billion versus you [Indiscernible] our to had potential metrics there the of you the for announced the that results And discuss deal, you earnout of X.X would to mentioned that

Ken Tanji

provide it Ken. may original you Jimmy, if they for we what was it's of Hey When that that compensation earnout, recall set a were was our we performance as the the set expectations. baseline business. above It to to exceed

earn-out positioned. about So continues did be we it that's that we the way and that the way when thought the is deal, to

Jimmy Bhullar

I'm assuming you is the likelihood high; is that don't having out you right? to anything that But be not of that think you're --

Ken Tanji

provide designed. upside it's still way to there they was it Again, if expectations that's the outperformed our and

Jimmy Bhullar

whether -- to And not clarity have so have you when to the can on you going Okay. or would anything? be when you're

Ken Tanji

end midway it the of we're at this point. next to through extends It so year,

Jimmy Bhullar

or far, -- sort or on so yes any And how the no based results on Okay. as color of

Ken Tanji

I so think for transparent Jimmy, the been think with far. we've them I can been you so disclosed, evaluate yourself. They're -- we've pretty results separately

Jimmy Bhullar

it. Got

Thank Okay. you.

Operator

next, we'll ahead. Please And UBS. with Mike go to Ward go

Mike Ward

retirement morning. in in mostly I through that seasonality in Hi, question. second part for driven there the flows, half. some wondering it's Thanks being just some flows PRT coming good my My the taking understanding segment on was by net pressure. was is

phenomenon forward becoming thinking should we So just I guess I'm that be about with divested? more is going being what Full Service prevalent wondering

Andy Sullivan

Andy, your it's I'll take Mike, question.

be of the you're sale past and we on side, the pretty PRT As are blocks on aware, businesses given But and to I obviously large to that's which episodic. steady and inflow more consistent, means be the going by our LRT think definition, business, success. going they outflow transaction-oriented have side, it's

It in in pioneer we to over but a in be front long do think and I we'll a competitive, term that, and I said good are So been the we flows think and a given see would but call, it's this. what and produce think of our disciplined, leader given quarter-to-quarter has will that I opportunities of right quite the earlier us, winner. to the strength we plan platform, of variation, be net we'll the repeat

Mike Ward

just what we organic any specifically Do helpful. what have I organically. And VA, annuities annuities. the be our should you off, the thinking use dollar from the in wondering within in placeholder the mentioned to transformations, annuities wondering earnings for about a was earnings deals? That's then just expect about ex amount value from running from you the change you but organic you've natural know thanks. just the mix of Thanks. earnings Great, think trend that trend I

Andy Sullivan

-- So

Charlie Lowrey

go Sorry. Andy, ahead.

Andy Sullivan

do and variable Okay. obviously, going XX% Mike, said, say to remainder and traditional the be what is very earnings expect I would overall to of XX% the is, transactions the we we to of from run-off to effect annuities as we're would that get the look -- that committed result, to reduce impact. will the we produce

Rob Axel

Mike, it's Rob.

and you I use runs billion think Legacy a [Indiscernible] the off X quarter, at given and runoff the the profile. that and sort as market a our of products, for thinking about sensitive can sales a about that that are doing book that we're against we've so on metric very which that attractive out, number newer is less

those off the with to you've runoff. would seen, net earnings look happening two to that absent profile get for between despite how markets. at sense run what can the anything You is offset a Obviously,

of [Indiscernible] result Our a the as market. are up appreciation in continued

Mike Ward

Thanks very much.

Operator

Lowrey for further call over no I will with turn Charlie remarks. to questions, And closing the

Charlie Lowrey

to savings consideration we're today. on much. portfolio, Prudential our and track. us right. joining strategy you program performance deployment year, confirms hope to on very I All our cost the making this thoughtful our transform Thank that advancing for repositioning the capital remains you progress our Thank

evolve look to your and with progress, speed again time deliver and to Company financial for today. our greater act to conviction, our our We thanks on with will continue you We stakeholders. to updated and forward all of opportunity keeping

Operator

that your for concludes today. gentlemen, and call COMPALadies conference

now disconnect. may You

Prudential Financial, Inc. 5.62 (PRS) 4 Aug 212021 Q2 Earnings call transcript