Earnings call transcript Q4 2022

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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. 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 and Charlie and our CEO; our Andy Global you Head PGIM call. Officer Caroline US International and Head Lowrey, Vice Accounting of Sullivan, Principal Representing and Investment are joining Financial [ph], call Businesses, Controller for morning, Ken Rob Businesses; Chief Chairman; Axel, today’s Prudential Chairman Officer. Feeney, Manager, Falzon, of on Tanji,

Ken, comments prepared we by with and start and then take Rob, will questions. your We will Charlie,

presentation It Today’s from is that actual make may that today. predictions materially differ possible include forward-looking statements. results the we may

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

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

And it to over Charlie. turn now, I’ll

Charlie Lowrey

to for Thank And thanks everyone you, joining us Bob. today.

As I back on priorities. of proud progress made look executing our strategic am we've against we the XXXX.

year. the During

transform and sustainable to to continue market to long-term business sensitive We less better be growth. our deliver positioned

an to $XXX the exceeded We strength sheet environment. on our evolving our of our of year the macro business each beginning ahead provided with schedule, provide navigate target and I'll financial one update million these cost transformation. savings balance rock areas, economic solid

as pay as annuities. the sales of retirement full sensitivity we the the traditional market completing run our three, well business lock of off business service XXXX slide by the during block reduced to and the variable Turning of overall

a emerging South and invest advice, We Forbes, In of long-term interest markets. provider and management in Africa, in partnerships our in of Africa. business wealth simultaneously in retirement, growth acquired Alex we investment, through leading minority financial programmatic acquisitions, a continue sustainable to the

grow XX% our where channel. to Latin continue about particularly our also in network distribution sales in strong Planner of America, complements third-party We for distribution third-party and accounts Brazil, now Life

we Additionally, access in vision and to be leader global a retirement advanced expanding security. investing our insurance to

For example, Bank, of second history as major transfer billion These including UK and transaction the fund. market our close with longevity IBM as in our risk completed these transaction US the interconnected risk markets, retirement several with pension the quarter in in leadership the we largest Barclays the transactions, model. we strength transactions underscore $X fourth well business completed

provided a in transaction management, than We additional of our strong and billion a businesses. the leverage how synergies under ahead. year PGIM more in Our with $X opportunities in across IBM, these see markets of assets is PRT good pipeline example we

for increasing needs financial continue meet product to to offerings our the customer We solutions. expand

FlexGuard of example, variable on our indexed success an For fourth Life, building introduced we annuity universal product. products, during FlexGuard the the quarter life

and our insurance our we PGIM, is In our provides institutional business opportunities another unique with businesses loan including proprietary expanded clients broad and platform of through origination PGIM self-reinforcing lending capital, direct capabilities. private our investment example our capabilities model. This private

and customer enhanced expedite in technology. experiences we digital sales our example, invested blend human also policy Brazil application In We touch for with same-day advanced expanded delivery automation. with that to greater processing

needs. the our a solutions customers evolving needs we company-wide around to of initiative most pensioners. all our of expedite transaction, XXX,XXX turn, understand the meet experience, better deliver IBM introduced onboarding And as part as continued the in we customer and experience addition, PRT And for to new capabilities for administrator to refine efforts effective technology globe. the implemented products the IBM In their we to

We in which times. our reach customer and and million enhance Moving underwriting, rate We experience. annual technologies cost we the target fund new $XXX of claims systems by employee operate, the exceeding to and reducing and savings, milestone efficiency, digital of wait while one leverage run of million this customer processing improving our while capabilities, improving schedule. $XXX streamlining X, to slide way year we automating achieved ahead

customers, For the many our for underwriting seconds. to XX example, of days Individual from we Life reduce XX time

three three Insurance to and Group from sales processing times weeks. takes Our claims fund to two two annuity is now process three now verification faster, new down to days,

by We customer XX%, million work mindset that going competitiveness annual to improve execute savings. and identify our on finally, savings proactively experiences, employees employee And approximately our $XX helps estate real that model also for hybrid in opportunities equating run adopted continuous a us implemented rate reduced U.S. and cost and forward. our improvement to we enhanced a footprint that continue

Now was solid have sheet balance disciplined XXX deployment to rock approach challenges our to slide exception. And XXXX no macro and navigate financial Prudential for helped and X, years. capital economic nearly

at Our fourth is financial the a highly well the assets investment strength, end as portfolio. by quality, as well our including of AA in diversified $X.X quarter, high liquid supported billion ratings

the continue to capital in our investments We balance shareholders. to of returning with our businesses growth

fourth than share total $X.X billion over a returned of $XXX to of the XXXX. since million more for shareholders quarter, the repurchases, During we beginning and through dividends

first well the beginning Board increase. consecutive XXth up in XXXX, has This as to For in our a our $X increase share authorized X% quarter. as dividend represents billion annual repurchases, dividend

strategic as and access retirement expanding and higher progress, customers a system, investing, to business be globe. financial across leader self-reinforcing to with our well Looking in for our coupled environment insurance, ahead, rate a the interest strength position

our their Together, our better, by on communities. it before I'd our our made to of purpose to for special lives financial making to changing and world. of the a customers fulfilling have significant our Now, challenges and are extend progress we over turning like transformation, Rob, solving dedication our all to you Thank employees

to update and about results, performance. our an the provide talk And now, to business quarter fourth over Rob, to on financial

Rob Falzon

was and $X.XX per International our Businesses. overview per $X.XX $X.X the fourth US, or our income Thank I'll I'll XXXX PGIM, business you, Pre-tax six. Charlie. or for of slide provide and $X.X performance begin billion billion quarter. results on in share an adjusted operating and share financial for

mortality and to an income, rates, offset partially as an investment by in business transitioned improved fee These increase spread and results interest rising has lower underlying reflect to endemic phase, growth. COVID due income variable

strengthening reserves the full include year update annual variable on from our of annuity addition, and results Legacy of the PALAC sale assumption In the block. gain the

fair million, was due goodwill related to of Our GAAP also quarter the and the loss net rising reflecting the of loss investment impacts interest estimated of largely reduction assurance. in for losses rates. included net and and impairment $XXX per realized $X.XX $XXX million charges adjustments This a included value share the

many reflecting is in a profitable peer applied While fourth traded higher conditions, good lower areas publicly lower and applied future progress cashflows expectations, reflects rate had the evaluations. quarter, to and macroeconomic future making discount to impairment assurance growth

to our Turning quarter. reported due to results our declines. compared management, investment higher fees, assets the operating market resulting from primarily PGIM, global year equity rates from the manager under businesses ago lower to and

including primarily investment Results our lower in yen. favorable our higher Japan due partially surrenders income income, impact US and depreciation to of investment The variable income reflected income, the favorable in businesses of offset less variable largely earnings favorable underwriting rates businesses elevated decrease underwriting. through international by reflected primarily less spread and favorable spread and the of more less on the

equities, public private investment across capabilities in estate real alternatives income, and our private seven, PGIM, has slide to diversified asset classes fixed manager both including credit. and global Turning and

management PGIM's XX attractive performance periods. investment benchmarks under last year than three, more of and XX% over remains with assets outperforming the their five,

due more than that experienced were PGIM flows income, institutional the to fixed environment. in primarily offset industry rate net trends positive XXXX, with rising For outflows, retail by consistent

environment third-party were and clients. industry. driven In the quarter, income client by $XX.X net outflows outflows impact fourth by of net retail fixed billion, a the across while interest redemptions, PGIM net few of rising flows public on across Institutional strategies reflected experienced the retail outflows institutional retail the large rate driven

private value a investment and engine capabilities, are the helping our of PGIM's solutions origination of sources bring success capital businesses are advantage, and more for mutually and our of and and As expertise US reinforcing. Insurance Retirement management asset create growth investment other of customers. competitive International institutional PGIM enhanced to businesses access and and our Prudential,

growth retirement as insurance that liabilities. well totaled provide XXXX billion of to access businesses, through unique insurance during PGIM as affiliated in $XX turn, flows Our a source and for

of we addition, $XX continue our billion across equity our In excess gross global credit leading to of XXXX. billion $XXX grow deployed private and and nearly which real estate in scale market has private capital positions. alternatives benefits businesses assets business, from Notably, PGIM’s in and and debt

X. to Turning slide

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

our by costs sensitive market enhance self-service towards further capabilities while tools growth markets. markets, We reducing of amplifying experience continue less shift our higher addressable the to and expand products and customer and use and

institutional robust of Retirement quarter its Strategies sales fourth and achieved across in individual XXXX full lines business. and year

Our Institutional has transfer capabilities $X for selected pension fourth with reinsurance values market XX% of full transaction in account almost end billion a record $XX Retirement of includes largest $XX billion in driving being the sales year. business transaction billion international the of a at year fourth This the leading participation and risk quarter. our

well continued over like Individual solutions have as of sales. sales of $XX and Retirement, representing In annuity strong fixed product billion FlexGuard in sales as income, inception, resulted pivots simplified FlexGuard more increased since

product earlier XX% strategy, through has our sales were Insurance variable from pivot approximately Life ratio representing benefits sales life and during our Group with reflect the COVID the of year lower the Individual Our mortality. for products year. And consistent year improved

X. slide Turning to

multi-channel on emerging International expanding quality have in geographic well and businesses high focused coverage product as Our presence insurance In offerings. and providing we Japan, markets. we where a distribution our differentiated aimed life growth Businesses high include are our service model Japanese at companies, our other expanding as

approach product to we continue needs. as value customers evolving and expand focus provide protection Our their our to needs-based meet to important our product offerings

to where focused emerging portfolio a of creating there and enterprise selected and leading businesses carefully we regions where on market the In Prudential customer's opportunities are are markets, can are needs compelling growing, where value. build add businesses

Japan. XXXX, sales Life third Compared up XX%, of quarter Businesses driven higher experienced to up Brazil's sales sales the by life US higher in were as International sales. also mainly sales well highest in as Our by XX% were momentum year Gibraltar dollar continued sales channel their prior channel, distribution third-party the consultant Planner Brazil. record the from in including primarily quarter, driven since

to leader in As insurance security. investing, retirement we across well-positioned global ahead, a to access and our we're look businesses expanding be

a We in next of continue on in creating the better leading generation customer and growth businesses range diverse to of needs customers. of focus financial industry delivering serve the investing broad experiences, to solutions markets,

And over with to that, Ken. I'll it now hand

Ken Tanji

into XX, first on I’ll fourth results. slide begin the provides of our Thanks, XXXX which Rob. to quarter insight earnings relative quarter for

was quarter an fourth billion the in and after income basis. in operating tax $X.X adjusted pre-tax of share per on resulted $X.XX noted, As earnings

To how items. get a the might sense develop, adjustments of quarter results following we our for suggest first

expectations variable the First, by in quarter below fourth $XXX was million. investment income

underwriting adjust as fourth to to items by and expect net $XX quarter seasonally increase we last, we the in $XX due operating by experience first Next, other for fourth we million, million, quarter. adjusted expenses And income quarter. primarily experience seasonality expect in the elevated normalize

share underlying These per the interest you the items $X.XX our quarter, due items benefit earnings to the get is combined that exclude if note The quarter. would growth higher key that, us business share and of power specific improved to per rates. the be first I'll to $X.XX. has baseline first of a earnings takeaway for

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

As in have included we other appendix. the for XXXX we we look as forward, considerations

effect statutory standard contracts now applies insurance the accounting GAAP financial long our update will flows slide financial cash an effect on statements, to new X. I'll which duration adoption our statements for no on new have capacity. direct standard of January provide and Turning dividend went XX. The or into to the on

XX, will comprehensive We estimate AOCI, increase billion, of other by approximately that remeasurement approximately income, to of components. equity increase primarily by as due GAAP $XX XXXX, two Accumulated September of $XX or comprised Japan will our of non-performance reclassification be in in other approximately rates reflecting Retained the reduced discount earnings retained earnings will higher and gains billion, $X from changes with AOCI business. liabilities duration risk long billion reserves. by

exclude to to continue margins will products from subject equity GAAP note, insurance of unrealized certain LDTI. Also

business. XX, products Japan approximately insurance of As unrealized billion, to in $XX September those our related estimated after-tax the are primarily margins XXXX,

expect These significant determining in financial finally, across LDTI profitability. on earnings strength not offset. power, will we assessing and margins as our are an from factor impacts businesses total underlying do important And impacts largely our

Turning XX. to slide

Our financial to capital our position continues AA strength support rating.

range. target billion, $X.X at assets our of were end liquid the and cash high Our liquidity

off-balance balancing have strength, We shareholder and preservation sheet of remain liquidity businesses deployment, investment in distributions. substantial thoughtful including our the and facilities. resources, our financial We in contingent capital capital

to summary. in Turning slide and XX

We one We growth. are of going improvement savings discipline continuous transforming ahead plan sustainable will mindset cost businesses year our maintain our exceeded for and our targeted and forward.

to solid rock macro of We environment balance navigate the with continue our current financial strength the sheet.

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

Operator

Thank Erik you. conducting Bass session. first be from question Instructions] a coming We’ll Research. [Operator is today now question-and-answer from Autonomous Our

is now live. line Your

Erik Bass

you. Hi. Thank

Just talk you about target the is could we SMR Holdco end, adjust and the bit ratio If run range, call level the you on at RBC how at I it's debt XXX% excess talked think if hoping you're within for liquidity call. planned about historically, your a last but the low the looks the the ratio in line pieces look where more capital. provide, we is you viewing below pike that

a pieces or So that should there if are this but we other capital, considering? suggests little sources be excess

Ken Tanji

our it's Hey, capital context for feel We've Overall, in And our the and particularly I well an give consistent it shift parts, while and you strength Ken. about might very management. we've us helpful our overall capital and business maintaining flexibility. Erik, to well-established good Yeah. a little last we also do look year suggest, thought market-sensitive served very financial of we less had as bit picture multiple grow, be as to approach. be overall a to but

terms. released IBM. we annuity also sales the at the attractive capital our the variable that closed year full largest and last with We And to transaction capital service deployed second of business PALAC PRT block

absorbed impact and of We we business mentioned staffed in last call, rates also, discussed update capital. life the the higher our of impact as and assumption on the on insurance capital non-economic our

capital that XXXX and appropriately put capital ended Again, in addressed position. together, we you It's implications. solid we've expected. that was When those manageable, all a

X.XX%. ratios our and were target above objectives above RBC there is Our AA our to be

AA solvency objectives. are Our their above ratios margin Japan

We have And of range. we repurchases mentioned, – our cash considers our position billion the opportunities you to profitability an businesses with for led outlook a that's year, Holdco. end that's year That outlook and and next the free high authorize and or the flow, capital as $X HLA and Board at a cash potential share And free flow recession we target for so stress balance at XXXX, that the billion that's reflective also sustained of to have $X.X our healthy our of whether macro XXXX. for another this capital also for as actually, our or businesses our environment, other end deploy events. of

when we consistent that AA we're good objectives. that again, all we our put feel together, So with

our this XXth our they which, where a increased authorized and increases. dividend have billion what that's $X year and considered flexibility, share of We year board level they of issued for repurchases in the is dividend when again, X%, straight

gave context. a helpful I hopefully, hope So but answer broader I that's you much there,

Erik Bass

bit which just hoping seems question retirement my second Yes. it uplift, company's the the rates, you in Thank a And bit sensitivity pattern retirement to the get if and cut lower? of were little you kind a move interest to just then rates Fed of it individual earnings would the were reverse particularly more has short-term was sensitivity could on big been individual Hoping to And see business. interest back then then color you. like wondering provide for to a the there.

Ken Tanji

then to short-term. overall, annuity give short-term I'll Hey, a And But both long-term to it broader business we benefiting sheer start sensitivity to to rates. from yes, Erik, is are rates, our rates, and over and context. turn a variable business short-term generally, sensitive just Caroline from

rise actually a helping us. both is in So

because pickup on collateral, short-term earnings, But in we the higher from a posted earning hedging broadly there's by rates. we're that's on going return of short-term see did that's for a driven our and in rates, positions, dynamics the terms In uptick business. more

So maybe you that. to it I'll turn over Caroline, for

Caroline Feeney

Yes, of course, Ken.

last had of record a delivered So should annuities continues as sales retirement individual in top over point and annuities own leadership we year market I market. our variable by $XX $XXX earnings, strategies player Erik, sales our and our and be over sales now to that the billion clearly strong with a of year where position business suite individual this our in billion first, sales FlexGuard reinforcing out index driven success have five

Erik, more We our of our than third growth came the fourth some and quarter that fixed saw in Actually, of also strong for annuity sales indexed saw, with what solutions fact, results we twice in the quarter. these products. fixed from XX% quarter in

our we to and they a ultimately, FlexGuard this can So progress complement of mix to as in the business our the bring suite we've the strong products like we're made play And overall with these diversification space. role pleased solutions.

Operator

Thank you.

Gallagher today Evercore from Next ISI. coming is question from Tom

Your now line is live.

Tom Gallagher

use Good in morning. the that think of cash should $X.X Holdco about billion a planned Ken, reduction being we of XXXX.

a I think -- $X.X we expect planning your outstanding? we Should of part still that or on expect middle assume the have should to callable calling you you year instrument that, billion. the of in remain

Ken Tanji

factored June. again, -- in call is It year pre-fund debt upcoming on overall the obligated this the our are level do pretty has been and do last practice debt to mentioned But calls issuance debt plans not ability I to have of our year. to Generally us. And last years. that up we call, few and maturities $X.X Yes. so. last into this consistent about of over We're I and that's we've think our to the billion

to our going position discipline market timing to we're factor the funding the continue forward. the going debt call we're overall plan. conditions liquidity And at or Having the is our that said And needs into not. look again, pre-fund decision to also to going to and evaluate to upcoming -- that, in and our

think the ongoing an it. is really should of best you it's way cycle So

Tom Gallagher

And we consider for Thanks. you might any for that big AAT there Thanks. And then you have follow-up, on that or can a can on year-end? you assume other year-end basis provide any talk -- you the adjustments I for ins outs at at been -- occurred -- GUL the reserve how call a releases took about impacts? between statutory charge statutory PICA Okay. that can my and it, we'll of just at other,

Ken Tanji

stat -- as and assumptions same the GAAP, statutory for Sure, for be updated -- quarter. our described, updates Tom. when fourth We those we that would we making occurs purposes for in we assumption

-- It is about Stat So GAAP larger was stat be fourth $X.X our a and more conservative, on to in impact what billion. that the quarter. basis. tends was occurred that's

That to what didn't XXX% achieve fourth led our we was AA going again, contribution RBC capital generally into -- we to make the below still, PICA to again as ratio that of quarter the our it, XXX. but a above And from in above objective expected.

a reminder there. just moving So, parts the of

Operator

you. Thank

Jefferies. question coming Next from today from Kamath is Suneet

is line live. now Your

Suneet Kamath

I for Thanks. Ken. guess

curious, in Lotus the when should Just Re the capital have made? that neighborhood that it, used you somewhere yet we if and originally of freed expect to you use you $XXX resources be and contribution of million sort

Ken Tanji

bringing a the reinsurer. for that Re, up. in company is business have We do capability that does did reinsure thanks us give we Yes, XXXX. a Bermuda so entity, to in and which called it to And Lotus

PICA a and XXX. source And all the outcomes we to that we in XXXX, and to capital into again, business for mentioned, we that that capitalized business variable of life reinsured which, was -- a year, above you that was our block entity As factored release. to be continue of initially then it

Suneet Kamath

And can release? that size capital you

Ken Tanji

internal our it. a we number to I it improve transaction, want an does put don't on reinsurance flexibility. think It's but precise

Suneet Kamath

if I comments perhaps I referring it. Charlie. a came Prudential's some quoting overnight, we guess about post IQ. strategy know I'm you Got guess, assuming about for write-downs are to were then that some I follow-up they for made don't that you saw Assurance goodwill And out the -- M&A change headlines my and

talked how on that strategy growth you that about, I that I thinking to about the a you earnings to and years ago? So, you about chance think businesses kind contribution two guess, you're around of wanted comment M&A, just as especially improving give from

Charlie Lowrey

our doing. and remains ability surprised. question what the Yes, we saw the The have too been consistent headlines -- clarify. we we're for slightly Thanks to Suneet. strategy with Sure, our and exactly

is of really fee our So, established said, help what approach and management you portfolio of focusing asset the and that investing programmatic growth said won't proven we businesses. our will with supports markets that where scale increase be businesses focusing less what capabilities we on international records. acquisitions, early-stage we've earnings existing we're profile. our a expand track is more And in can strategy which on What PGIM and high-growth and concentrating growing developing companies and this is markets on emerging

include most our Harvest approach Montana these examples if done will Management, recently, and recent this more recent transactions, acquiring And ICEA companies Alexforbes, what which look have at Custom Capital -- of are four of you most LION, we established we going consistent are and all Partners, with do forward. Asset what and

Suneet Kamath

you. Thank it. Got

Operator

Thank you.

from is question coming Goldman Alex from Sachs. Next Scott

Your line is now live.

Alex Scott

Hi.

we think I one flow of on as First cash of just sort XXXX. is about sources had

dividends You've Japan. debt about some talk Could businesses repurchases, to will cash out funded in in that And interested billion of US about you PICA, particular the be take if $X potentially year? you this specifically, PICA PGIM between plan versus talked flows, I'm in how reduction. share

Ken Tanji

Ken. it's Alex, Yes.

our free -- mix company. our are flow businesses generating support and diverse also do business growth Our PGIM of we the of across the flow business. and to Japan That's distributions, cash And have US provided sources and our but retirement the insurance by cash to shareholder parent businesses. maintain to

PICA given our all business that's all we growth. think expected And we think of expect, our free about right. receive I contribute capital our of to over time, is our ratio to way AOI, again, the mix including And about flow from cash about our and it's been of -- think XX% And after-tax entity. the given would businesses, they're legal to

Alex Scott

Got it.

bit still picked Japan. comps so weaker and premium good. up Second forth. recently question I and is is the a have on pretty had growth I Sales guess, on year-over-year looked

growth what we was I from what top just can that business? you in line interested of from that, kind expect expect So

Andy Sullivan

back it's quite question. But effects the a of sort as those thankfully, bit. mentioned So as some we Alex, I'll some subsided your sit take look here, from a we from that pandemic in Yes, you obviously resulted perspective. Andy. challenges sales COVID pandemic of the headwinds have

businesses. of our We're consistently increased and and new exceptionally over steadily that's last every of our for the amounts market Prudential. share ranked We've top Japanese proud significant cash time, three generated we've face for the business flows earnings year in decade,

Our strategy to grow the business is threefold.

First, we're very on and outstanding both and to capabilities. focused our digital captive delivering solutions going distribution; experience we're to strengthen and particular with remain to that an on we our continuing and our laser-focused importantly, Second, emphasis a deliver continue customer on to innovate third-party the expand customers; our on finally, and expand we

very and that. at proud very, We're good

over and our Power's fact, we one In to to in and market highly intend low-single us, in often claims. remains top attractive the grow by we're ranked issuance, The three J.D. policy consistently digits position number and time. in policy service the

Alex Scott

it. Got you. Thank

Operator

you. Thank

Next coming from question is Ryan from KBW. Krueger

Your live. now line is

Ryan Krueger

Hey, good that Thanks. the I last change seen products? follow-up you weaker Have we've regarding and the in Japan. in may be terms any behavior by seen volatile had year yen policyholder on a morning. over driven the FX that

Andy Sullivan

I'll Yes, Ryan, question. it's Andy take again. the

terms. really customers in their some monetize weakening US of products gains surrenders looking level and business. to the are of there rise we of yen is non-yen an seen yen, dollar the The in the have out So the in effect elevated their given the

of month we continued That this deceleration effect to in saw yen as that appreciate month being has December, and begin of January the the here in it. decelerate said, the

business. in yen stabilize this as will So stabilize, to we expect would starts effect the the

Ryan Krueger

is that Got rates then of that on reverse it. do subtest back in from FC charge, some higher look interest you And XXXX? from chance AAT could a well the there when the

Ken Tanji

it's Ryan, Ken.

you're adequacy not environment. think of the referring our change significant light higher rate testing. asset in any reserves I in our expecting We're to AAT

Ryan Krueger

Okay. Got Thanks. it.

Operator

is you. Benguigui Instructions] [Operator Our Thank from from next coming Barclays. Tracy question

now line live. is Your

Tracy Benguigui

expectations Has assumption in for statutory Last ultimate you your capital would on that in being all on at quarter within GAAP statutory have Ken, not where does your funding update. understand the for follow-up A up you. and it quarter, changed XQ. than like ended size PICA's in to a charges, also reserve higher the I your once position. reserve be charge excess mentioned reserve absorbed come charge Thank that

share if you you portion of XQ? can a booked before So it

Ken Tanji

the from assumption PICA we was of again, update, consistent with need we – terms practice in to in no, nothing recorded expected, for not did that as in in with is there statutory fund not recorded report to fourth that and the Tracy, came – And – as Hey, did quarter, Holdco established new reporting. as capital also expected.

So, really new there. nothing

Tracy Benguigui

Okay. And meeting not suggest your returns. billion $XX latest years you're three authorization capital your levels of buyback of over objective

else like I broader – you the you is what year something walk you just a PRT? plan I'm singular versus up So if could reserve charge, guess, from experience, multiyear the rethinking with my through idea or just us has it it a this question coming Was are changed since is set objective. of that plan?

Ken Tanji

Ken. Tracy, Yeah. it's

as initially the transactions. as going which Later and as again, had update cash major And in XXXX assumption PRT was all $XX we highlighted strong. I impact we on stat was year, that together, the increased of then insurance a and and we we the a period. our here billion and think healthy kind the call, through three-year for And – a that non-economic in the rates jumping when we put to objective businesses accounting the flow capital was significant position our end standpoint number life flow back of set and the a earlier XXXX up business, a looking sustained with competitive cash a in at outlook end very very for in managed in of from last objective XXXX in XXXX, items, our target three-year forward. we reminder, over that XXXX, Just we

So what with into with got economy uncertainty. factored yeah, along that's the recession the the of decision the outlook

that. billion us but So about the of a to only $XX another achieve billion, will put little shy the take will it quarter $X

Tracy Benguigui

you. Thank Okay.

Operator

Thank you.

is question JPMorgan. coming Bhullar Next from from Jimmy

now Your line live. is

Jimmy Bhullar

Thanks.

your and the institutional First, retail just in how and the sales could talk pipeline in both you that's side looking? PGIM about

Andy Sullivan

Andy. it's Jimmy, Sure,

We have in a high approach degree of confidence PGIM. our in

focused heard work. because is an having track over really outcome broad results resulted in XX things; we It bottom years. As of know and before, -- record we've great distribution. long-term you've The the stayed say great flows in very last three strong those with of and elements investment flows they me a positive product are our portfolio, XX on has line diversified

expand to our continuing we're So range product in vehicles.

in ETF of category. our two Just in ranked its flow bond as an example, net rate terms number ultra-short

Second, our on this institutional advisers. to the new with clients number we're year. and we added of high high continuing approach visibility side. significant retail, in institutional, maintaining in distribution activity, we're invest In And a retail both

And finally, rates itself And impact. that fixed record we've the long-term in for five really XX predominant The been track income seen income then are and three, particular, speaks over our higher we years. obviously, that for business. believe investment impact sustained has a fixed good

be to we that So to what we're net and works, we're grower over going keep time. know a we're confident going doing

Jimmy Bhullar

to say? basis assume that flows Do early at you'll XXXX PGIM positive on for you have enough have visibility or to too an overall

Andy Sullivan

bit flow So very chunky. I've said side, is good on institutional the as the they're in a quarter-to-quarter, past, especially

we that. So forecast on a provide wouldn't

we're Over going the run, know that we grow. long to

Operator

you. Thank

Next coming from from question Sandler. Piper is John Barnidge

line Your is live. now

John Barnidge

is Thank you question around agents. My very much.

recruitment, international. drive taking or tax being the done declined As on with productivity overall the I anything agent generally? more in there assurance improved? greater Is at you force the to agent side lessons Are agent count, look to they've

Andy Sullivan

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

the efforts. count Planner the near-term, you than establish couple recruit life impacted with our it really, our pressure new So years, and on recruiting retention and to a harder consultant affect COVID throughout That more Fact but of culture efforts environment so agents. was kept impact last counts, it did is, our saw Life both.

started over of we've As expect an an and transition seeing to to improvement endemic, see to we time. an more are improvement

areas; strengthening our existing exceptionally We'll of remain talent. performance and proud first, focused we're our two people's on

dollar have really for We single of roundtable every members the million day customers. our highest who number deliver

we lean believe come to will and attract the continuing of be And new are as for pandemic, we easier to second, us. agents, we out develop which COVID in land

time, over this very So us worked model is has seeing expect keep to a steady long of performance. we consistently a that and period for

John Barnidge

for selective Can Disability? Is group about premium annualized you and Thank from Group at and market? large jumbo in job in into exits follow-up decline question. And you cuts or that. this Life talk Thank then the new renewals, you. my Group the the both

Caroline Feeney

Sure. John, it's Caroline.

So I'll your question. take

sales say, So you're Group quarter, me to that fourth as in the majority a being pleased largest, very of with we're our be And momentum tend the aware, first the we've terms of seen first inception Insurance as quarter X with our just all, do in business. little have our quarter of lighter does let dates. the January cases

a sales that year due just volumes. sales last large is can do in in year-over-year lower and you're particularly largely up drove sales the basis noticing And on variability these to quarters. those that periodically So volumes, certainly lighter buyout case a produce occur sales some

sales on saw we And side. year's last is you X%. So buyout normalize disability that were one-time John, to up are about actually the this obviously, if for

by in On do in a enrollment side, when the it some of driven life of customers the year. changes matter timing premiums just was

strong So I we feel would good existing very our continue momentum. say, with our we just overall, pipeline as about well sales as

John Barnidge

you the answers. Thank for

Operator

Thank you.

today question from Fargo. is Wells Elyse Greenspan coming Next from

Your line is now live.

Elyse Greenspan

you've morning. issue the RBC permitted practice you getting question, forward impact ratio your Good seen from solvable Thanks. on think is that a do from by via first you either Hi. Jersey? talk IMR And zero. can or NAIC the at getting that, My that changes New about

Ken Tanji

XX the our to that Book occurred ratio more. with about our XQ. through able Blue see points, And Book the on And basis Yes. was RBC and you'll in be XQ combined. that bit rise little Hey, rates Green maybe in from a Elyse, impact PICA

So we'll the be reporting of that at the end month.

We -- rest across to more have with have active come. given be of a been know working and to a issue. been careful see as industry to seems others we're I issue others it, with But regulators well. on have being are There very assured, to address many this consideration address how as good regulators, with so discussions the understanding and to well how best of best lot what the many our and

Elyse Greenspan

cycle Board's at for into credit credit deployment had the that I in impairments is then, downgrades was context and into And potential. think the factored looking And Board you a and XXXX you mentioned what recession budget the severe talk decision Thanks. of capital enter on kind buyback a outlook what of we Rob, the your Can plan? about if recession?

Rob Axel

and considerations, Thanks, possibility cycle, could in the that of the decision that articulated factored credit recession accompanied obviously, buybacks affect regard number a might a including the portfolio. earlier, to the recession Elyse. We -- in be which Ken as by of with a

thoughts A couple on of that.

which both management. have negative strength scenarios, incredibly any we the event the credit do think that losses, credit cycle. lead we're we might in positioned in take comfort, and also as a anticipate we of our that migration from portfolio We Board to the in would well the while did some potential deterioration First, for economy

of I'll that, We're not Elyse. yet seeing note any

full and If you XXXX, migration credit year for in net at actually look positive. the our quarter the was fourth it

level could might thing migration both to absorb happen a and within So, would to any able want from anticipate But distress lead sort we negative such strength that overly we the that we the anything that. amount to portfolio about that able seen buyback have of we established that that anticipate percolating to was be did of signs the that a to authorized, as haven't and of be buyback concerned default us standpoint. be or imminent occur would

Ken Tanji

our contingent is I'll particular, Maybe remind have which of PCAPs, $X just guaranteed funding. people, add billion we source of is to funding, do sources in a just

event of of in of including important an variety reasons, stress. source the that's a So, funding

Elyse Greenspan

you. Thank

Operator

you. Thank

from is Andrew from Suisse. question coming Kligerman Credit Next

now Your live. line is

Andrew Kligerman

capital number I XXXX. this due bit IMR Hey losses XQ good we've interest coming been of rising derivative now morning. was rates, a a questions to there's given impacted the and off quarter know got rates in

wondering about could impact a on sensitivity how us with particularly we little regard capital, that to derivatives? and you on give think can rates if these I'm So,

Ken Tanji

and good complicated economically. But pretty in level. also generally item a rates depending thing rates upon one for this and rising is Again, a help. Yes. complex item vary decline the But called will it's activity would a IMR,

as to make sure factored in So, I the we a position can order result. capital sensitivity we into a our volatility. But you precise deal can't give overall with

Andrew Kligerman

Okay.

help maybe us And Okay. the on expenses.

$XXX I at terrific million rate run those to So, bottom-line. look results, of you've as I'm got benefits find savings. unable kind this But falling the to

bottom-line? So, going is that little how the forward? maybe we color $XXX geographically, little all could it color million about a of as to a Like just think like hitting

Ken Tanji

company-wide has Yes. a It been objective.

across and our corporate And the hit centers our contribution is that. businesses the all So, the impact of that it does towards make bottom-line.

add we Having just business so International they investing there are lines, well. in as and certain to want said that, that and grow dynamic to particularly PGIM

Andrew Kligerman

real planning it. will into quick little you can just going a technical capital now deploy generating IQ forward, profit, it Got Are to a And or that -- be Assurance it self-funding? question. its

Ken Tanji

well-capitalized maintained improve incurred. and we've and keep as to going Profitability to continues they've Yes, its Assurance losses well-capitalized been continue we'll funded it forward.

Andrew Kligerman

Thanks a lot.

Operator

you. Thank

is coming Ward Citi. question Next from Michael from

Your is now live. line

Michael Ward

morning. Thanks Good guys.

if maybe has or all. reserve certain the solid it taken going Just far, you months at or mix pressures, I these changed a lines you've seems the high so And level last how XX capital in I'm specifically pressure some derisking few help business forward. wondering charge, wondering know some that pressures steps could of earnings divestment a your if about like I so. but was incremental think question, over reduce

about that wondering prospect? how just I'm So think you

Charlie Lowrey

Mike. Sure, I'll It's that. Charlie. take

to on the and focus know, still thoughtfully you performance. deploy we to We're to we experience, a capital. we're look progress in advancing to And on we sensitive as ahead, our also and focus company. focus higher employee do far, so would on our significant continuing our have more to transformation, made note, financial we're we've transformation growth become going work going and less So including customer going market as but to

businesses, our of industry of All well-positioned as long-term experiencing, create growth And financial all sustainable security. markets we'll diversified businesses next investment continue of that go investing access the a forward, of for diverse ways. to continue in expanding think We'll to leading we needs and we're scope deliver leveraging we'll And and of which our broad as serve and goal a our capabilities that, to be we we'll three of businesses creating global stakeholders. and insurance range broad to in our in to -- better and customers. we'll retirement with value a across invest do the well, generation solutions invest customer leader

and summary is to that. on our and arise we're we'll progress market what a company. to but we're committed definitely face, And growth, upon in we sensitive opportunities obviously macroeconomic focused what that So becoming that dependent conditions higher be do, need less will say laser the we accomplish I'd

Michael Ward

I earn-out Okay, the you. great. sure not nail my were you're making And questions of Thank asked, was most the curious, in just IQ? of liable but coffin, with Assurance sort for

Ken Tanji

that and Actually, that. that the disclosing the one for GAAP of as disclosed things cover zero. of we've fair I'll value been Yeah, that earn-out, we is

think I good you a So give would that indication.

Michael Ward

Thank you. great. Okay,

Operator

Thank you.

Next from Kamath follow-up Jefferies. a from question is Suneet

live. now is line Your

Suneet Kamath

Maybe just follow-up. the quick for Thanks Great. two ones.

you rates. case? to Just would change be talk up why for Ken, that the in reserves about about AAT with I even Can was your comment just no curious the move about

Ken Tanji

also at at because scenarios the of number but the of looks AAT, not we also just rates higher surplus on that ending periods a of Yeah, some and I impact periods. ultimate mean have with derivatives, looks interim And period. interim it offset level it the

So it's changes a little overall, But little technical question. there.

Suneet Kamath

impacts And businesses know sense businesses saw curious just benefits, I which But it. you businesses. of that said maybe, then pressure? which some LDTI. give Got AO on us offset the can and across just you a

Ken Tanji

Yeah. Sure.

And businesses some an would the to expect, or again, as the we earnings. little overall PGIM, of which Insurance. impact, Group rate run would no be, of expect yeah, don't Assurance level overall, will actually, have change So and you the

and really the expected Retirement that's increase on margins, recognition businesses, unrealized from due run of earlier are our quite which and to to Institutional are International basis, sizable. insurance earnings The rate a the

segment level be individual the On of lower, those that's hand, retirement slower and from of the the revenue primarily information. recognition minuses of are insurance pluses expected but US that's for in businesses. due earnings life that offset to sort Again, the kind some and other and to

like information our restate lot first others, new be when to will a prior the earnings under We, more providing quarter we standard.

a to expect can you lot So, get more.

Suneet Kamath

you. Thank Okay.

Operator

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

Charlie Lowrey

And to are the progress you growth deliver we you. and hope making we long-term needs meet Prudential thank joining the to today. thank us sustainable, transform Okay, our of everyone customers. for demonstrated I evolving

we remain and our strategy of company. our strength in ahead, confident Looking the

creating time as on for and focused is and global Prudential expanding Thank our access we to insurance to security. you strive years, value we serve XXX today. customers continue who to your again nearly in stakeholders for investing, will the For other retirement be leader

Operator

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

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

Prudential Financial, Inc. 5.62 (PRS) 8 Feb 232022 Q4 Earnings call transcript