PRU - Earnings call transcript Q4 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 time, all participants have been placed in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions].

As a reminder, today's call is being recorded. the to turn now will call Mr. over I McLaughlin. Bob Please go ahead.

Bob McLaughlin

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

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

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

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

Charles Lowrey

Thank products company. was financial become we a nimble growth, you, fourth for to customers' Bob, also and performance and us introduced higher for demand favorable the Prudential continued more quarter reflecting full investment results our during our XXXX the the year, to efforts pandemic the market-sensitive delivered Prudential a high and this needs. morning. for joining evolving for to address and pivotal year thanks less and strong everyone

sensitivity. are growth sustainable business reduced First, market long-term repositioning to generate our we mix with

deploying I'll each and third, advance program. provide thoughtful an to areas savings and approach turning of continue over before these And we on it we to Ken. maintained Second, cost update our disciplined capital. Rob to our

to X. Moving Slide

our of repositioning sustainable programmatic market through reduced sensitivity and significant growth for divestitures a are making mix long-term with progress strategic business We acquisitions.

$X.X billion Taiwan Korea traditional of agreements reached our in service successful to produced variable businesses, sales proceeds, full of portion divest insurance of which the Following a our our we annuities. completion and the and business

track We in $X additional to transactions these proceeds first are of of and on half close generate of over billion. XXXX both the

that We are Capital asset Green account PGIM investments equity a and redeploying platform European-based and worth and managed net targeted and in investment year, operations with provides in management highly Last investors. financial secondaries an on Kenya for front, part in customized acquired high asset acquisitions Holdings, emerging highly emerging services LION Uganda. we Tanzania closed ICEA markets. separately in Partners, Harvest, the Meanwhile, leader markets capital a through respected on Montana private a solutions in manager; market

to Slide X. Turning

million program $XXX by cost XXXX. savings continue advance achieved We the date, $XXX to we rate in achieve $XXX To target savings, cost and have run our to exceeding our already million end on track savings XXXX. of million in are for

taken our ways and automation, also and more to and service the have our underwriting, more advice using expedite how the upon the I'll meaningful a intelligence innovation. experiences we're faster, improve provide in processes, options, artificial want customers financial simplify around in convenient for and moment. technology it. deliver steps reduce includes using touch employees to We other through This world customers technology

Slide X. to Turning

XXXX. to of to This and and $XX capital of of currently $X.X approach We by to to end by our of plan disciplined during leverage through returned reducing maintained shareholders, We returns between return XXXX a financial in balanced and dividends. businesses. total investing share includes billion a have and deploying XXXX capital growth the enhancing repurchases shareholders the billion

dividend X% share first increase in and quarterly quarter. represents annual XXth has a Board $X.X of repurchases of authorized our the This dividend consecutive part As the our this in plan, billion beginning increase.

XXXX. also We in reduced $X.X by debt billion

previously example, I made the have customers. businesses acquisitions investments our PGIM, for a evolving to strengthened with the of businesses our insurance drive mentioned experience significantly our for and use One in significant operational process. insurance our experience for generated Variable meet we quickly growth our application environmental, customer mentioned, a risk our efficiencies suite on underwriting customers. to to In as focus and and we funds while We higher businesses, greater potential, needs addition our of we improved to dramatically and products, and and long-term innovative also market-sensitive life life delivering to application sustainability-focused have as growth technology The during in of accurately Meanwhile, In I intelligence. social such bond better investors. global FlexGuard serve AI and and XXXX, of example, use the is to our efficiency. our better artificial assess driving earlier, expedite in businesses governance

emerging continue other and the We will to across of expand technologies AI use firm. the

billion Our a assets in highly strength continues and fourth sheet liquid which capital $X.X financial capital the supported of end at support deployment a position balance that is strategy rating. the to includes quarter AA rock by our solid

Turning to X. Slide

transform sustainability. goal by across reflected our in in interim significant primary these several enhancements in achieve go an commitment carbon-neutral long-standing office hand-in-hand to our becoming by This year. XXXX. We global committed home XXXX to to XXXX net governance with zero Prudential's the last facilities social operations, is efforts ongoing Our framework environmental, with company of emissions commitment and to

reviewing direct XX% coal. We companies account or holdings new their have our from thermal investments revenues general that restricted are also derive in investment of more and

social Foundation follows XXXX in achievement and barriers front, Prudential This around that $X exceeded mobility to the the billion. $X world. the milestone investment on portfolio we eliminating impact our financial reached another billion surpassed focused when in social grants On partners to primarily

advance including inclusion, funding and commitment commitments to equitable employees. committed X to racial our compensation equity our and also We our to in internal investments training continue organizations through diversity, and measures, diversity through for equity to for

EEO-X It our independent XXXX, throughout the analysis greater at and by around beginning employees. also to our diversity improve workforce. our disclosures the top taking our Our transparency commitment diverse representation includes the are inclusion, for equity with U.S. steps governance enhanced to Prudential we diverse. and XX% of composition provide to data shared pay publishing results over of of a being the and our we actions U.S. Directors reflected diversity In Board

also our expanded diversity policy of We workforce achievement tying for plans to compensation the executives of senior goals.

investing market-sensitive As our challenges commitments changing fulfill around help and Together, better earlier, more a sustainability customers lives connected. our higher world business for believe I us purpose to and closely by security retirement expanding growth, become of noted clients our transformation they of the we and and globe. are financial nimble to making solving by insurance the less access

we beyond. all momentum it that, meaningful your XXXX over our and employees forward progress built Before XXXX you Thank time turning in the thank stakeholders to even we dedication an it unwavering made of the in the and in to Rob. this am to customers more the lives all and Rob, of light proud of turn over continued making I'll their morning. look particularly I created the serve, with and to communities to for of challenges by we I'd pandemic. difference our in like the for And

Robert Falzon

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

benefit a operating after-tax was year adjusted billion, fourth share while selection. basis, impairment returns the gains value favorable that on strategy of pre-tax a share. million of variable the a includes that updates main $XXX billion income quarter, of $X.X income basis. of resulted Results exceeded target and GAAP about after-tax in a reduction operating or net income share income the drivers For our XXXX, $X.X by market Assurance. In GAAP or the fair experience were performance, $X.XX offset that for This $X.XX per included adjusted net an $X.X in and outperformance a goodwill Of billion X from reflects tax. estimated investment pre-tax net note, reflecting an on a manager charge realized was $XX.XX was income by investment charge market of

revenue we capabilities have to experienced we good First, more to customers, increase access and growth. acquired

into growth assessment traded a significant has a key valuations, input peer is now fair publicly we been have it second, slower this value. longer take And and than of and flow. we to our in decline in which are seen earnings However, assuming monetize expected will cash

to increased by record the last by COVID-XX-related the greater Earnings to our period. equity Relative appreciation, higher reserve favorable had increased the higher reflecting XX% net driven Turning manager, legal of year-ago growth, values higher continued and business account the well management investment asset higher U.S. income, from asset as our expenses of benefit experience spread. investment driven year supporting mortality. expenses reflected Results a fee Businesses offset Businesses operating related global current trillion. reflected variable expenses partially in income, to results revenues X%, net International due businesses. driven other our quarter PGIM, our quarter, as fees record over underwriting earnings and business elevated including primarily lower level $X.X and growth by of spread, market the from investment less in higher a by of year-ago

and continues top diversified across remains manager. classes real investment PGIM estate than with X- performance income, of net periods. their U.S. year, XX Turning both under fixed equities management positive performance both XX-year investment third-party assets more as capabilities across to public demonstrate global to its the flows of has strength the a asset Slide and and non-U.S.-based to private strategies. X. X-, with This alternatives, last PGIM's billion and in attractive clients flows in public benchmarks of XX% private $XX contributed for the outperforming over and

success businesses engine complement through capital strong and businesses, management the to our customers. bring growth. other fundamentals businesses reflect PGIM's assets PGIM's and PGIM source U.S. are institutional and origination of value and insurance to for turn, provide to to third-party innovation As enhanced record record access asset a investment track growth our solutions, And PGIM of management of enhancing. record capabilities, of fees sixth successful of and a and affiliated mutually growth that investment insurance provide in and competitive business consecutive asset by and management. sources flows under liabilities our unique of access helping expertise private its advantage quarter Prudential, International our of more

assets deployed private in scale We global billion benefits capital, year. market-leading billion to of private and franchise businesses equity continue from and last Notably, excess and XX% $XXX which alternatives and and of equity across PGIM's debt business, has up to real $XX our credit from private our positions. nearly estate our credit grow global expand gross

Slide Now to X. turning

benefit fees, mix complementary Our U.S. also Businesses diversified net produced underwriting and mortality of earnings investment income businesses. and spread our from from and longevity

to and mix expand our our and and transform interest higher towards shift capabilities business cost to to growth less products businesses continue structure markets. our addressable We and rate-sensitive

have pivots protection. investment annuity sales product with from continued were reflect demonstrated Our by total customer demand These our for for for $X combined downside sales buffered solutions year, representing of which XX% the annuities, nearly appreciation equity markets strong individual worked well, potential the billion offer that of sales.

We our and from trusted exercised through sales brand a actions strong have highly a effective pricing and team. frequent benefit and also discipline having distribution

Our for also sales of strategy earlier reflect pivot XX% Variable Individual product our Life with the sales year. products representing

largest business the were total has persistency revenues transfer the And history which Assurance, growth robust revenue market-leading segments. of reinsurance strong to XX% in risk for With fourth XXXX our and platform, drove during Retirement year. year respect market XXXX. across a funded all in $X enabled capabilities, digitally including billion from last sales, the reflected Our distribution up international transaction, pension which was the and

Turning to Slide XX.

other focused Our high-growth emerging focused where markets. International life our multichannel by companies, businesses have distribution the differentiated a Japanese of capabilities, Businesses as insurance model our We distribution unique on encouraged remain as well we include resiliency which product our Japan, sales our the in-force of service, force growing the despite expanding In have are stability high-quality on providing pandemic. our offerings. our world-class coverage sales geographic maintained business and we and and

markets, emerging Our enterprise on customers' as where important growing our meet to are value. compelling their we are offerings a can needs. creating and carefully to our and of provide value build add customers to expand regions mortality are businesses and selected product approach continue partnerships protection Prudential where opportunities where we market-leading evolving focus and needs the Prudential portfolio businesses focused needs-based In there -- to

to hand a And look industry-leading be ahead, it positioned expanding retirement of financial over our will customers. deliver invest global to in we're experiences and markets needs create generation we plan As and with businesses customer serve in and range broad the access insurance better solutions next We of a to of to I leader the to that, well investing, now diverse to Ken. businesses to across security. continue growth

Kenneth Tanji

on I'll first of operating Rob. XXXX for the earnings billion fourth income insight resulted and $X.XX into after-tax earnings fourth an our quarter relative all suggest Slide results quarter basis. variable million. for which $XXX XX, the in items: To the outperformed provides quarter for first adjustments to adjusted following $X.X results. was of income begin our might get by in the share in a develop, Thanks, Pre-tax on sense first, quarter quarter expectations fourth per we investment

we a Next, COVID-XX's XX,XXX first adjust claims U.S. the net the experience in COVID-XX-related quarter a fatalities This for $XXX in of adjustment underwriting million, by million. $XX experience placeholder includes assuming

and infection mix and the the depend actual of provided rates, While impact a will vaccines. of and as factors variety effectiveness geographic we have this claims demographic such fatality on COVID-related for placeholder experience,

market expenses us items money a reduced between our lower the we would underlying of to the of combined share for takeaway first new per investment These to income and continues earnings the will and expect last be we net by per quarter cost capital first expect disposition get baseline by $X.XX items the to normalize. difference $XXX year, investment reflecting program, rates X% appreciation. earnings and if Third, share power exclude business be the tax about of growth, you $XX And Fourth, specific over management is savings in and rate will that be yields improve benefits per share the I'll driven effective we other the quarter. first the million. quarter increased anticipate seasonal million, has quarter, that to portfolio. first key The $X.XX. our by note last, items

earnings first please While there affect the we quarter. may share that in have items be to provided other these factors note consider, per

included As seasonal considerations we other also in XXXX and the look forward, we appendix. have for

Turning to Slide XX.

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

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

billion and Our billion liquidity free $X to other $X were facilities. $X.X cash our flow cash liquid and from contingent assets our of within capital funds billion range and include and sources target businesses

of our summary, are executing to XX reposition cost sheet, we our are our rock Turning and on we And support balance capital. to we Slide our in on the achieve solid thoughtfully track plans and targeted businesses are savings. to with deploying

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

Operator

[Operator Instructions].

KBW. Our is from coming question today Krueger from first Ryan

Ryan Krueger

acquisitions of capital. service recent that available talked deals size consider that they're guess, need would annuity about looking that not were have The sales, bit material opportunities you you're the variable larger from utilized retirement up the if a you've are capital amount for? I of given a amount they in and full freeing and the block you

Charles Lowrey

let Charlie. I'll of is that me question. this couple offer And Ryan, comments. answer a

existing of One in growth. capital. to our businesses of First, X one investment of prudent stewards balancing doing business that by tenets factors. major is the be And our is to strategy we're achieve

we've we merits the that approach, be. last of compelling sizes. acquisitions be variety markets, and observation and to more in programmatic make in done But different your transaction, a But larger by specifically scales. is demonstrated question at us the is asset strategy strategic areas extend did in with emerging said, the as and capabilities we'll we to as right, decades businesses. a where what is both of acquisitions, can in our of And scale growing regards a have the our by third is capital be the each And obvious as at say terms the our transaction with financially will we and point, increase which with the to going programmatic consistent existing we've X actually evaluate we expand year second say the M&A, numerous seen emerging we and various markets will needs to regardless or distribution of of opportunities returning both can for couple to shareholders. also PGIM that looking size, management our and transaction acquisitions can of of financial or you've stated that what they're your we The

Ryan Krueger

And still in Variable be you standpoint, whether looking a Annuity? then or more, U.S. divestiture in do more it Individual from are Life to

Charles Lowrey

again. that. Ryan, Yes. Charlie Sure. it's I'll take

our continuously goal and the be sensitivity to have market-sensitive of for referred that of financial to first focused XXXX. towards opportunities consistency capital -- you that the continue a the results we in we'll additional half an nimble, all, But So the of track and we a first to. as those businesses becoming update, we're reduce both as on that transaction the the transactions goal existing existing shareholders. we've close value we've optimize and in we're progress we within the signed the predictability closing higher-growth But said just of blocks improving market on as less And creating more past, while of see thoughtful the with and and company. to

So execute we'll for to they arise look continue and as opportunities accordingly.

Andrew Sullivan

Ryan, it's Andy.

Let over our saw in talked billion we runoff, we've in before, a the legacy. We're about year. We very that's $XX a as all runoff. in runoff seeing much the to quarter. process $X.X great derisking billion in derisk expected runoff are one X-step on Step annuities track. progress And And in and is the business. we on saw about the

to derisking. runoff is a So contributor significant

very As of represents was the that transaction. account doing sale step XX% about values. Charlie with about and X pleased derisking the obviously, we're said, And PALAC legacy our

Re Fortitude deal high-quality we're to continue are explore the closing now how we but legacy, to to said, in focused Charlie very going further the manner. remaining as derisk on So right a

Operator

Wells Greenspan question next is Elyse from Fargo. from coming Your

Elyse Greenspan

just a that the you the the sense write-down lower quarter? well contributions the contributions? with You give you each in give when My valuations. mentioned earnings a us took goodwill up Can first sense and of of Assurance you as guys public within you you on IQ. cash flows the took Can write-down as peer that question is of us came

Kenneth Tanji

-- Elyse, It good Yes. of both. was combination a Ken. is It it's

So we it. that peers. experience conditions at -- each we've updated been We the enrollment value multiples we We've the the incorporated the and the of quarter, assess from annual doing looked Medicare fair recent since we of acquired the business. for values and

in. And so that all went

a both market recent multiples And combination the so peers. for in updating as for of our as recent was it well the experience

Elyse Greenspan

on maybe And follow-up the capital a Okay. then side.

you that are magnitude, would track for materialize consider mentioned guys you guys authorization XXXX transactions raising point, transactions M&A close. a the to higher full-service above a and So repurchase billion? some At the the PALAC don't $X.X retirement or year on don't half materialize if X either for

Charles Lowrey

So Elyse, this is Charlie.

find billion year, what stewards prudent going opportunities again, to to in the we've And will last did capital. our saw continue if segments. returning to what million we $XXX We've we'll by you capital. is, capital be we stewards continue actually share be consider X we on we'll strategy, done opportunities. of in to said past, think our extent the prudent and all $X and execute the to and go forward it we increased say we're we consider of can't that buybacks as And what I

Operator

from from Autonomous Next question is Bass Research. Erik coming

Erik Bass

for you Can heading given And the demand at seeing in you into shift flow in PGIM new interest about fixed talk rates? income are the XXXX? rise business in trends much pipeline

Andrew Sullivan

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

past, overall PGIM in flows quarter-to-quarter. vary obviously, experienced discussed quarter, we've we flows. fourth And in the the flat will As

to in inflows That our positive retail, an our at the out side diversification and business Market were rate and really type plus out on we distribution would As income testament rising our our both income many say a rotate shorter income, outflows counteracted very of had pension was of $X.X of overall, and fixed in to environment. and equities rotation of of environment. this duration particular, by strong in plans retail sub-advised institutional institutional the real it's in flows fixed as you led fixed our if the billion. into strategies. core core is despite saw, client quarter volatility That to facing the you look overall important I and across note, portfolio. our allocations

at term comes important said, always think it's track flows. very we've long As look record to to the when it we

flows We fixed and question to the have seeing our are the and your management XX over driven markets. five income billion side around we've what we we over alpha we that performance billion under billion the did in that done a and have have retail and flows really in seen by from retail see, last in Specific doubled years years XX seen perspective, in XX the we flows the retail last assets positive timeframe, that end XXXX. five

and successful distribution, all an outstanding investment capabilities, different very proven a time, we've and succeed conditions. have So we and winner those to our strongly be we we've feel across of been there. outcome of great all Flows very we'll market are net and having performance exceptional over ability

Erik Bass

Disability? And more provide Life you some group and then color for can quarter, results Group this your on both

Andrew Sullivan

it's and Eric, Group Life I'll this Group I'll on side. split Disability. Sure, out start to the I'm keep Life Group Andy. going and going, between

on As we've a seen XQ. are country. now were Omicron Delta impact big higher than the and deaths U.S. all having

versus in XQ. U.S. So deaths XX,XXX XXX,XXX in we saw XQ

we a business. side X note. have There's effects that X of As a carrier, I Life big book broad on life top would the really

quarter. similar we And employer very and that's of health concentration The large first a care have retail to high third accounts.

of workers that are out If that have you a about employers vaccination exposed And about are many number geographies. and those frontline workers in think basis. of and those daily low on high a also are it,

in side. increase to side, in amount shift I population The in and Disability policies. some that under we to is would rates we Disability age, larger what for the Disability saw what well. And see I'd our while impact XX older still are we the prepared see frame Life But second to impacts shift population. the seeing this, tends to side quarter, we're this business. the the we for, I we in have incidence most it's a the over on the saying effect If did expected start of quarter significant as by in slight on dollar seeing was business

Our benefit effects. was XXX ago. better than XX.X. really That -- year X ratio There's bps ratio was a

assets business, we increased of STD the seeing side the On volumes. are

as If isolation that example the a about impact But that the you and think rules, an in drives fee-based had has STD the Omicron absence. that's business.

So the we're seeing really up the expense is up effect admin We because to X. our that in make enhanced we're customers for that's staffed job there there showing sure ratio.

On the LTD and side, and severity. But perspective. in much is like third prepared quarter, claims XX% it's we we from continue XX% what in increase to increase again, a a what see it management about incidents a about expected, for we

to customers. to just deliver benefit promises be back range. know to subsides we able an we're So as endemic, the more being or into on our of it pandemic our that into ratios as And will flows come proud our normal the

Operator

Your next Suisse. question from Credit Kligerman is coming from Andrew

Andrew Kligerman

to kind to M&A. of shift back Want

the IQ, the over a talked last done decades, the think programmatic -- And M&A, lot of puts M&As. it. kind of write-down with Assurance Prudential today, shade on has company of being a prudent. about But bit little a the I which X excellent about As Charlie, you've this

Assurance of in think going So how about is you know does terms how forward, dilution? IQ accretion to that I acquisition, particularly does what like the think I'd acquisitions

Charles Lowrey

Charlie. It's Sure.

take me Andrew. let So that,

business our and me a Let function the plays why exactly within mix. we the assurance did step transaction take explain it and back

and it want a our our with access industry, It's our and that's by something absolutely base addressable aligned expand purpose that company is our to increase and and helping with strategy. our market Assurance young us customers, that's we traditionally is completely do which purpose. a underserved customer been aligned to especially more innovative is

underinvested market to digitally-based consistent company. higher-growth and helping it's we And platform, by third, a what with increasing a us our it's is new earnings market-sensitive about fee-based becoming perspective, a of we one were from talked us, space more strategic a nimble, mix entirely to and which that is less but of much reduce sensitivity for which in. we be very Secondly, in frankly, wanted

and be decades will capabilities or the focused as Now forward, -- say which by And for the in this look I emerging And markets or in acquisitions expand going in can be both on that absolutely mentioned making, earlier management. distribution are have period. markets, our we what mature as we'll our extend This scale businesses, in been is and hundreds, be we and to our and focused is over more won't be we've acquisitions of asset they tens made, our again, right? PGIM acquiring on call but that time time. emerging I over wheelhouse, doing they'll successful

very strategic good and So we the it company. feel the about of plays merits Assurance deal our within role the

Andrew Kligerman

comment that? dilution any you accretion on And add to might

Charles Lowrey

Sure.

Let metrics a moment. that me for we talk about the use

capabilities, cetera. as said, product about And from think look we add when earnings So I or perspective. standpoint, And think financial a strategic a and perspective, financial when increasing such as -- we country. distribution from both of metrics acquisitions we assessing as to about potential them we both a strategic market and in such contribution variety acquisitions et or a look or from a scale at growth,

the less the But of disciplined creating we're and transaction, aspects the extremely larger on becoming more the value to the has goal transaction I importantly, going of business, for our our obviously, be continue margin-sensitive to and higher a be. is thoughtful to nimble focus financial stakeholders. Now and compelling growth, think more again, all

Andrew Kligerman

think think completed Do just XXX could 'XX. so it. slides, you're you targeting beyond you I It do savings -- by $XXX up and that far that, saves? you've And in on more quickly that's that's great initial Okay. the expense million And the looks Got XXX. per in expenses. real from an

Kenneth Tanji

progress, done basis company also excellent We've forward. costs. we've really costs, also we payback gaining going And across but both point, just million initial an but gaining And lowering both capabilities, to Ken. both but $XXX a at efficiency certainly targets, on to efficiencies have focused, initiative again, it's our getting our not the institutionalized building on that to drive made growth of capabilities as we capabilities. we're XXXX. and And on terms Andrew, building in much good continuous of improvement. track relative also remain by on this We're very achieve accelerated mindset

budget XXXX, expect $XXX also achieving and for million maintain we going focused a forward. maintain So to main and our we're objective. that Right on this now, discipline by that's that

Operator

today Tom coming question from is next Our Evercore. Gallagher from

Thomas Gallagher

just low I'm the wondering up end getting levels, if at you HoldCo closer the now. on we I need you to to do Just and use you of think use? question that is plus bolster subsidiary to to of to end. that capital. looking deals? clear at ask find the the it you're any the because have of sources free should How capital, strengthen for target or top guess debt about back bolster all, maybe uses much any at you of and want coming there? if much board And billion And of sort capital How from any also $X.X think comments is? proceeds that the levels, to reduction? a across How might think I you you if do any the levels you'd only of you like to

Kenneth Tanji

I'll take Tom, that. Ken. Yes. it's

readily as And upon approach or and of we've move had will You to company X our transaction. general, holding of capital $X very think to free coming quickly proceeds that deployable. clear billion close management. a transactions It in should from the more in of consistent the the just and

reduced And free also debt. generating are last we businesses Our year, cash flow.

that reduce thought time it to was we So debt. good a

coming have also And And well. $X billion so in. debt now the have capacity as we certainly of proceeds we

to including So our good period our the to returning feel liquidity and XXXX. we of flexibility our and and X-year over billion to capital positioned being objective XXXX our shareholders $XX position really meet well about

Thomas Gallagher

Got saw that Ken. you. at $X.X then your looking my just holding had And the and was debt billion was follow-up of supplement I that out Thanks, is company. you operating of issued

talk company? entity. I higher-rated about not the thought what operating out Now I've debt holding the exactly, little subs, about of bit operating can of operating is company that's of guess kind But the that always it's out out issued because of you getting holding debt a typically issued the

Kenneth Tanji

Yes.

off of or sort fund that to be operating So structure that a the that asset cash from or flows debt. specific debt pay will we structure where asset consider funding the

support within And operating that with and but of And efficient risk seed from funded to company. that those holding are we some our debt. co find examples PGIM do We the that business. also to do would both be capital the investments, investments

an PGIM loans would fund those debt. where business we agency also that Our has from support time, time operating mortgage where to business, again, loans

So where are it's support structures X again, specific debt. examples. or those will assets that But

Operator

is question John from Piper Sandler. from Next coming Barnidge

John Barnidge

My between and way bifurcate any is first gains? there question, VII to realized marks

Kenneth Tanji

and that of little as investment at as think between from mark-to-market. look do should coming more a it's in the appreciation it is year, both in Usually, move the Last variable distributions given you We as pretty balanced bit than balanced. just income market. cash the Yes. appreciation cash well

John Barnidge

follow-up, Great. the how pricing given have since And my there of COVID seen and focus jumbo contracts increases group, large within emerged? on the much

Andrew Sullivan

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

high-level some my but at don't commentary. I'll fingertips, I make have the exact So percentage

of every years renew So as X is renewing X size block anywhere with every X say, years, large of very I based group business cases years. national insurance business frequently national and the those the think contracts much accounts you're the our of it's from approximately and X smaller accounts. every every renewing very on more XX% to aware, years

endemic, XX more very longer Life that the into spectrum. entering on new from pandemic Disability both will our the . it's last So COVID business done have we to tend pricing put be to the end third and year go the we're we to this at take from probable From our renewal of a it that business of that pandemic and needed now would towards we perspective, cycle, least that and that side. renewal months our the pricing. And to much experience and felt they

that few years. So over next will business reprice the

Operator

Benguigui is question next from Our coming from Barclays. Tracy

Tracy Benguigui

the wanted to a your circle billion back completing comment in PRT $X history. I largest to about deal, market fourth

something space these So X I you that transaction. billion entered and mentioned XX, more over recall, XX Andy, probably of competitors to trying like consistently to in a are do $X meeting, those the or group X have

just these wondering is and due change IRR competition? view getting frothy deals mega I'm your pricing So too to if of have for

Andrew Sullivan

for Thank your question. so Tracy, Yes. Andy. it's you

largest of make up of $XXX writers And strongest funded heels transactions funding guess the which quarter market XX%. we the November years, top the on at a XX levels The I'd in of yes, year end noted, at status they've of fourth the comments. did of million. the successful year. transaction the that the One, very the you was being X size of transaction the ended we at I for was in So for the outlook as are here market strong. the X very been were in and remains one XQ,

pick as that leader we and believe competitors, that to could spots disciplined we'll being we and it despite our stay and market underwriting a we could competitive, and grow given seeing to And the by fair -- continue still the that the be point, are to market, our more is we we becoming pricing, going our your our in to share to capabilities. our of pick large. So And thanks spots. able are there more size win and business, the brand we'll pioneer with space, a

Tracy Benguigui

And I other on that sales. That's on boost a guess, But inflation. question there talent on the like, very I could helpful. wage hand, are shortages. maybe here's bigger these guess, hand, one picture

that impact So could provide expenses, some may I'm how wondering color? you also if

Robert Falzon

to specific the respect and come on a help increases higher costs, operating if significant good level, Tracy, most I we you for stab in, it's I would that's up bringing that would to be guess, that. inflation of initiatives that your Tracy, that free a that on is so. at thing impact start would to inflation by any ongoing jump of leads included I'll our will take feel -- Rob. through. it And for efficiency a And industry impact do to Andy, a rates, want one, have question, rates. would first note part which that. please as if With actually I'd mitigate the us to be

the into in macro that if looking there have happening more quite is know add that factor that extent that how we'll Andy, add businesses, believe that I'd if be most will a are products we get we -- for year, we're macro inflation the Secondly, to while our at to want able and inflation. things comfortable pricing. sufficient impact, COVID. that improving to a outlook like -- an we for number And a material a it you the pricing there there's anything rates a from business that our And residual very influences things incorporate I power that upcoming much will markets of in higher and are basis. don't specific to standpoint other beyond on be actually tailwinds level created most drivers

Andrew Sullivan

the environment for is business. Retirement one Maybe both we're very world, helpful in mentioned, real in the obviously, I could plenty estate we're X well is, and spots broad, management. our good. would are big, our add there under of environment that And an PGIM investors diversified. And we this our of where largest Tracy, and by inflationary thing Insurance we're the businesses only very just # be assets business, I are business U.S. system And

Operator

coming Our next from Dowling Partners. from Humphrey question Lee and is

Humphrey Lee

to talked Group about deck, about you to do portfolio market pressure? related some you same results In How product. to growing looking your do seeing with insurance planning pricing? just especially you expand that, slide talk group time question you Disability. and a share Can how achieving the adequate into some voluntary you of to recently and the disability are group diversify at looking the industry have balance just I disability

Andrew Sullivan

Sure, Humphrey. Andy. It's

let strategically. up first we talk do bring So how me a about it think this about to level

workplace grow to We've expanding and it of the the gives because solutions lot particular, the over in space and and that capabilities in because bringing cases, that been disability to business executing of bundle. that certain spots, smaller we reach us. diversify So middle sense more grow talked market believe And on continue about place is and a the so we in grow years consistently lot in business of clients to our market, our X to further. to strategy to very block in group that grow grow more last our as the we've voluntary block to makes grow group so a in to addressable access people, a a great our

As majority Insurance and national said is earlier, Group large at business the life. is account our the majority of I

strengthening but core also our the of capabilities financial we to capabilities room And So grow. course stay a value We've quite fundamental overall our in our prop, going Disability. to have value prop. on both in we both in invested feel lot and Life our essence, wellness we're significantly

disability environment and all you that do about in in? severity. pricing seeing properly about how an about It's that making Disability It's the an question business right? you underwriting on in expertise in it the and especially side, we're maintain Your -- discipline, you you claims do we're sure staffing, could that and environment strong manage increased disciplined and so like being incidence where

Humphrey Lee

interest be that work the other in of markets? given insurance talked to emerging kind about Or is area strategic M&A? and still in your now emerging review, benefits of site, management you area follow-up of to would markets. potential you now But be is kind my management voluntary your So group in M&A are asset and asset in in expanding disability sticking

Charles Lowrey

this is Humphrey, So Charlie.

from be business. asset going which where think concentration areas and are on Those to we scale markets. are in For increase now, we and already our X markets emerging in doing is management the capabilities we in we significantly can have benefit the

be -- the And so that's medium going term. to to focus certainly near in the our in

Operator

today Kamath Our coming next question Jefferies. is from from Suneet

Suneet Kamath

there it wondering, the without that from your thoughts about was to on businesses is math on whether be that Charlie, a we get was still over get to XX% the the organically. earnings I'm from, wanting wanting contribution might year XX%. M&A, And to but growth can that, table I think would seem because just ago, talked difficult just increase you I

Charles Lowrey

X a -- things, Sure. through it That things. in we'll One be One our point But to X years. out, of doing combination is couple or goal X a of remains growth. really. is organic you as

with seen you've we And on being capital really be shareholders. begin the growth M&A lower is is to in our again, us to of businesses. going and So either transactions investing of this And to year. that third stewards we're X there. prudent programmatic of the capital, all businesses. or in market-sensitive returning continuing to One to having that will that's the the close And of dispositions invest business, within, our context execute get

is, of through answer a our your short and question the we'll remains do it yes, of factors. goal, that So still combination

Suneet Kamath

the is X? X? the the think sort of Or piece might it to evenly the M&A that distributed of do fair need across be And biggest you say to it's

Charles Lowrey

-- whether opportunities that we the inorganically, say make. to what organically the we the hard It It's and will dispositions be. on see, both and percentages will depend

and multivariable equation, to So we're that equation thoughtfully prudently. of if but a you looking will, and do sort it balance it's

Suneet Kamath

sense. international ask then Makes And it. Japan Gibraltar. looks been we sales I kind It Got about like just and if to wanted of have flattish. focus sales, on

guys of or reason in lack to is some of if product impacts do of work both face-to-face set are the Life Gibraltar terms and -- the that wondering offering, have the COVID and you you Just Planner the or in sort model. more do

Scott Sleyster

Suneet, this Scott. is

doing. give a can are me I about down, and what the why then talk little Let we're on context sales more

banks our of the the both regional easier investment First competitive dollar to higher higher subject there sell to when are COVID-related is but interest also a channel have level market. shifts shifted products. given in headwinds, given bank all, And rates, and to variability U.S. of

we process second on a making be efforts was of some adjustments strong in death by end quarter. in U.S. always the first new we of the we're quarter, our and deposit the know, during Life a of As we've premium and concentrated protection products place we're in maintain the expect annuity that shelf fourth offerings and channel. the on recurring selling you our channel, factor products, the product dollar in to where discipline pricing products our Consultant updating majority There

we're the bank intend we look, are channel, time, actions in that especially explains relaxed. restrictions that think discipline, taking, down. I the we will we COVID maintain but our So think why market to over do as were evolve The

and coupled more center counteract going continue we retirement, those in products. able and increases, increasingly, given wealth forward we've And Japan, line death be with products. there. distribution transfer we to pretty Life Additionally, adding this. Planners We're Consultants, front high-quality But product product to about with line with Life believe, actually optimistic in there protection we'll go really been to our our and health

Operator

Scott Next Alex Goldman from is from coming question Sachs.

Alexander Scott

if earnings Yes. International. a think When be not for over least guess I first it And for probe years, there to of few something has when to I international? I defend my bit allowed earnings you I in to help follow-up to kind expenses a at near I growth look last think the have at continue I or guys the do you through had. sales for you've term, a is on just earnings same in the seems had just continue persistency, little to it seems And one, and can pretty like premium take wanted And way. lower that G&A will a to than been expenses strong doing you what declining and out? little understand

Scott Sleyster

a of comments there. couple give I'll There's Yes. different

automation Japan other International First of in of be costs. ways to all, use transformation, and have others our Also been and Business, emerging experiencing to more just to U.S. and efficient control some for the looking activities growth. the we're faster like markets,

said, being that the earnings product and opportunities I in done And force that center of internationally the I actions the taking a place much we've revenue LC. distribution to both grow actions alluded LP starting actions the That in some corporate to are and our driven are job more by we're finally, So benefits. then see good scale control at to cost level. think

disciplined more important the emerging think So the growth I expense we're going areas will to product more that be of market it's forward. and but be we always going front, on the think

ease recruit it as Life And pandemic would made or has I into an course, say, eases to that of we the turns Lastly, Life endemic. COVID more expect challenging to do Consultants. and Planners

Alexander Scott

a care pretty the insurance find impacts then wanted And charge inflation. policies from And had there and out a with of maybe to a sizable follow-up, gross reimbursement it. long-term that associated Got was to stat just underwriter for what to any is your consider? all, on we impact that? exposure do have reserves? that any and And material required your is cash you impact should flow the filings you And like there feel will I

Kenneth Tanji

positioned in No. elevated in we a experience assumptions do with we're favorable. into our is to assumptions, an inflation of And well no. level continue more for actually term. The claims short our near factor inflation the little answer consistent and We bit and see

Operator

Wolfe Mike question Zaremski Michael from - Research. Wolfe next Research, Our from Zaremski LLC great. is Okay, coming

on the comments. and question marketplace one a Just follow-up pension

great funding XXX financial levels that at their levels the highest mentioned not looks yet. like but You crisis, above since

there like -- we it, costs XXX. magic curious, given good Just market there that cause market associated a XXX, sales macro 'XX, number is an kind a a of say, number, levels, with if kind to of like magic in would pension to there's is Or had funding they uplift? got let's in

Andrew Sullivan

answer very Mike, we the believe and in it's so. lean Andy. transact. is, I'll take to your question. And sponsors don't plan At to XX%, are willing

their in think the the when drives to it they're range really marketplace, and sponsors, volatility the derisk pension I plan this plans. in desire transact and see they to

at we're So no these markets. Having see magic think that, continue going robust number. we to to levels, said there's

Operator

turn comments. I'd floor Thank Lowrey question-and-answer the to to back Mr. over of We’ve further session. end any you. like closing for reached our or

Charles Lowrey

towards a level of a for high a and for a real in more transformation was you becoming back higher-growth Thank of operating we market-sensitive joining progress which after-tax amount today. us record nimble, you, reached shareholders made year and earnings, distributed thank less record company. to XXXX and Prudential

global and ahead expanding creating and security. retirement in and focused beyond, growth becoming look access investing on to driving we we leader to As are and XXXX a insurance

about We with value our progress. to along joining and thank create all upon and again the you look strategy excited are and to both today. for our further more ability We way, by sharing stakeholders us forward for our our building even in you confident

Operator

conclude you. Thank today's teleconference and webcast. does That

thank a your disconnect We this at today. line may you day. You wonderful time, for participation have and your

Prudential Financial, Inc. 5.62 (PRS) 4 Feb 222021 Q4 Earnings call transcript