PRU - Earnings call transcript Q4 2024 | Prudential Financial, Inc.

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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'll 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 McLaughlin. now will call Bob over I Please go ahead.

Robert McLaughlin

Rob thank and and Charlie and our CEO; our Andy Global you Head and call. Officer; Caroline U.S. International morning, Head Lowrey, Vice Accounting of Sullivan, Principal Representing and Investment are joining Financial PGIM, call Businesses; Controller for Good Yanela Rob Businesses; Chief Chairman; Axel, today's Prudential Chairman Officer. Feeney, Manager; Falzon, of on Frias,

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

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

addition, In includes measures. non-GAAP to our presentation references

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

And over to it now Charlie. I'll turn

Charles Lowrey

all Bob, you you, to of thanks and today. for joining Thank us

person will take strategy, Caroline a appointed I'd in CEO Sullivan businesses. the comment like expanded engaged the Also insurance we leadership Board have the executing of an future. we Caroline as at on transition. into to and in I have our highly Prudential exceptional Feeney overseeing and end setting been take First, and smooth Board is the He retirement expect our the role The Andy right quarter. Prudential's Both and so global March, he on announced next is XX. the effective fourth and March changes an to Andy leader, confidence every

time CEO as of And report significant Jacques Jacques business. we an Chappuis Prudential our XXXth Caroline anniversary. time to next to Both be Asset generation and leadership and the Management elevate exciting right directly Andy. will and as for is the of PGIM, This global joining our mark will

company also Admired life Fortune's we health Finally, peers just #X insurance Companies. among our last most as the the on I'd week, and World's XXXX that note list of were recognized for

Now higher excess to capital-efficient In maintained to results. more capital made company. our shareholders. a our our our also returned becoming turn in XXXX, capital significant progress to growth, path disciplined continuing We on while let's to businesses to invest deployment and approach we

progress and strategic our strength. are Our performance by backed financial

Turning to Slide X.

results needs investment, momentum around not distribution power and Our product the than but fourth of further were retirement of suite lower Earnings as the reflect our for diversified for we customers anticipated, insurance continued expanded and and our the quarter our businesses. do the reflect address to full our world. clients year we earnings capabilities the

PGIM. diversified well growing the benefiting income, investment the capabilities broad our and robust of significant third-party an reported level and our and retirement from large fundamentals largely and global the strong, as businesses. driven across for underwriting life due in strong vary fixed year activity experience, Large quarterly create and primarily adverse was of as by for we retirement future our reported elevated strong actions claim and and net XXXX, This alternatives individual by businesses foundation retirement solid businesses year flows taking a across insurance flows but performance equities insurance across will remain our are full and full our the fueled growth a growth. claims. platform our PGIM positive affiliated We private sales on to basis, opportunity

and in annuities. Our as individual pension risk retirement continues the strategies market to of business needs address leader the transfer growing a

had pension sales since for of any single our institutional risk the transfer XXXX. highest carrier level side, the business On annual

ninth consecutive our individual had the side, On of growth. we quarter sales

and products our our life, continue group expand sales which continued networks also momentum. and to in resulted distribution diversify individual in insurance We

retirement Japan, international in businesses, we continue product solutions, our distribution Brazil. our in diversify portfolio to we And expanded and in our including channels

adding In XXXX, successfully our number that quality a and X reinsurance billion And our capital Prismic to on second during addition a flexibility, improved we momentum are further of shifted which our business month, Prismic transactions block platform. we the mix. reduced life Life to XX%. of reinsure businesses, last executed announced this by Japanese our seeing to transactions, Universal to across the $X Guaranteed our our cumulative We of completed product earnings exposure transaction whole just enhanced we policies, the scale

X. Slide to Turning

our in approach businesses disciplined $X nearly in investments shareholders to deployment, continued which by supported capital XXXX. to our are Our billion included returning

In addition, in XXXX repurchases stock and $X year. for of share the billion Board the common the XXth up to increased consecutive has dividend authorized

to X. Turning Slide

Our is and supported robust risk strategic our framework. progress by capital

rating, a than We more assets. including in holding $X liquid maintained capital a position, AA which reflects healthy highly billion

a disciplined from to to approach and of our We We're entered long-term sustainable in liability also capabilities path our with well-diversified, confidence a our high-quality operating for and and have value stakeholders. management. asset investment our maintained continued position strategy, XXXX deliver strength a portfolio all

in it from and And over with turn acknowledge a innumerable I remarkable our these has Prudential career to to want in to contributions call with I over and material continued shared to he the over X made turn Rob. Rob past we have which future the years. Rob, is success XX-year July, that, I'll Before extraordinary firm the partnership retiring culminating growth.

Robert Falzon

our Slide our a I'll for been privilege. X results. businesses. It's financial international PGIM, Charlie. our and you, of provide results with begin U.S. and performance business overview financial an Thank I'll on

XXXX adjusted X% billion per share full the the for billion pretax for of share $X.XX and from operating year, or quarter fourth $X.X Our up per or $XX.XX was XXXX. $X.X income

of growth businesses businesses. fee increased net was markets, and as This support our grow as higher to reflects well of rates and the sales to to strong spread expenses the continued the and higher strategy of execution our our market-leading income by driven interest benefit equity due and flows of

investment connection million. reinsurance loss in the for $XX as return XXXX. equity portfolio strength recently on XX investment Prismic with quarter. portfolio points be the adjusted our due as actions was benefits net our improved the some This well losses transaction interest XX.X% of and from taken the to Our to of to the was capital-efficient transferred and primarily businesses more products. This quarter our repositioning announced higher-growth we in the realized modest will of basis reflects have rate-driven on to operating XXXX that GAAP from deliberate pivot

net from favorable increasing investment related fees. PGIM, higher by and had other the higher contributions the results Deerpath market performance to quarter. our Turning Capital businesses incentive global quarterly asset flows, investment from appreciation, to driven and by our higher manager, fees, year driven strong ago operating the revenues compared acquisition management

the lower primarily our of fee consolidation growth. offset by partially the underwriting the was impacts net by onetime income. Life to transaction closing offset captive This driven driven U.S. experience financing both investment associated partially true-ups favorable support less higher reinsurance growth. expenses of and results business by by of This mortality our transaction Results businesses reflected and income, with was spread business net Guaranteed expenses to the related arrangements, and higher higher Universal

reflecting and yields by from reinvestment increased primarily partially to portfolio. and the in Our underwriting growth. continued international expenses market higher income results, yen product of These to businesses spread due weakness higher had offset U.S. favorable business surrenders elevated the favorable less performance dollar the support with were

of and Turning classes XX% performance investment public with and respectively. to has and Slide asset outperforming assets XX% benchmarks strong manager, over X. periods, diversified alternatives. last XX-year equities both investment PGIM, X- capabilities fixed and their management our remains global in the income, private across PGIM's under

albeit PGIM's pension flows $XXX of market $X.X flows for offset the mandate, net were billion institutional and net billion, in of by third-party under outflows. billion, the a performance. positioning quarter partially trillion large, by $X.X of large billion management episodic included driven $XX flows activity. both billion competitive in XXXX, of affiliated net assets $XX the business appreciation, strong of annuities year-end and $XX year including X% inflows Total investment from flows These clients. increased million Total net flows wake reflect plan our by to $X.X in from driven XXXX affiliated third-party and PGIM full retirement net by

of other through bring enhanced of capital, insurance. private engine reinsurer, our a competitive our more including retirement, access businesses growth success in customers. management our and sources U.S. are international and our and helping of Prudential, PGIM's to support capabilities asset and origination investment the expertise sponsored value As the create for capabilities, Prismic, asset and PGIM's solutions institutional businesses management advantage, investment and

source Our access in to net businesses, as retirement turn, growth as liabilities. insurance PGIM of and provide unique well affiliated insurance a flows through for

driven credit private under assets $XXX the businesses, private compared This growth business. prior and Deerpath platform, nearly our addition, of In origination of lending asset-backed Capital XXXX in XX% has diversified PGIM billion, build-out direct by alternatives private activity year. our acquisition was organic our management to financing the experienced of in including our which

X. Turning to Slide

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

and on We experience its leveraging sales $XX distribution market-leading across efficiencies. Retirement of annual over $XX of billion businesses in the across any of improve year U.S. transactions by generated and distribution were our delivered XX% billion operating capabilities the XXXX. lines enhancing $XX in while growing XXXX business. the to year. sales our level with market for single continue footprint, addressable since prior individual for we pension sales and strategies broader Prudential new solutions our to focus capabilities a partners carrier the through fourth from the driving expanding institutional in financial those customers the record to of highest strong Institutional retirement contributed for risk set year, transfer up billion, of the $XX quarter funded billion

transfer sales Individual totaled $X.X its in sales quarter, $XX billion decade. $XX billion, longevity over fourth the up Retirement quarter year. from sales sales billion a over best were risk the in posted over this XX% prior XXXX year. in Additionally, of

product year. have from index-linked of Our in innovation sales and registered and prior doubled annuity sales product have strong continued fixed resulted annuities our pivots the

legacy reduce running totaled our off market insurance million prior from $XXX we Additionally, driven continue year, growth the XXXX, supplemental to Group in by sales health. X% annuities. in variable up by sensitivity

and the experience. for $XXX both technology range. quarterly end in million ratio of efficiency the performance year, which a the record profitability of leveraging for We segmentation increase our from and actions of client and quarter full executing fourth sales diversification resulted increased to and reached benefits Life, XX% while of at the In product XX.X% a target to in customer XXXX. our strategy are low high is Individual year improve enhance the These operating

estate of from our strength in product products our more increased These of the expansion planning from the fourth increases concentrated an including capabilities, our sales capital-efficient and quarter. offerings, distribution towards include level benefit the breadth of pivot and the

X. to Turning Slide

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

are protection to continue retirement to approach enterprise resulting expand compelling in and year and our customer Japan to X% sales businesses XX% offerings are are of in benefiting product compared launches, businesses are there international as opportunities retirement Sales which can customers, in customers needs. Our and gaining with a emerging of selective businesses regions needs the Prudential are products where full XXXX. the in selling product prior year. the meet focused where traction market-leading focus a growing, were we evolving important for our build these increase up where provide their savings we value. needs-based on to creating portfolio value compared to In recent from Sales markets, to XXXX in product our and add

Brazil market emerging Life to distribution the the prior continue benefit and Planners. in driven from addition, year, increased by strong sales performance expand In third-party versus we growth our XX% of as

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

experiences to client in generation diverse We over focus markets, And needs serve on the the creating and with I'll broad that, industry-leading customer delivering a to businesses investing it next and continue of of customers. to financial range Yanela. solutions and now growth of hand

Yanela del Frias

I Thank on begin XX. Rob. Slide you, will

support and ability businesses. capital financial strong continue AA expand Our market-leading to to significant ratios regulatory position strength and our our capital our

we liquid have and is above of sheet which assets resources. $X.X and $X target cash billion, liquidity minimum off-balance Our billion, our were substantial

Now turning to Slide XX.

new quarter's on XXXX. outlook call, As financial I business, provide with mentioned in longer-term through targets greater our are nature order introducing insights and to last we financial of align our our into

flows, and capital-efficient well commitment growth, our more position balance a targets. company sales achieve to by significant become strength and Our in supported growth these us sheet the of higher our to

core we the period. due The flows, earnings over period, the and but impact the blocks. to may which over to and core performance buybacks this income efficiencies combined to operating X-year adjusted linear anticipated growth momentum share strain expected to X.X% lead to to this business on our will X-year our for down be introducing will new contribute annual XX% which of businesses expect with the and are of We of global X%, adjusted an trend and of based an from incremental per expect operating operating returns our equity to share expense of in and growth earnings range XXXX off also and for XX%. insurance ratio return retirement is an X% We're per runoff XX.X%, near-term sales not

will our highly profitable $X financial In and by deployment, while maintain addition, liquid capital over company, for growth. our flexibility we holding preserving the businesses in to investing assets billion of at remain long-term in sustainable strength our targeting thoughtful

we to to markets. we with an as organic consideration our share shareholders income, free be ratio significant growth book growth, see increasing XX% to XX% the X% attractive expect towards and XXXX. XXXX. of Board expected in of is in to yields generated and approximately repurchases, billion to XX% repurchases net After healthy flow XX% This payout that dividends. XX% as return deployed chosen deploy a adjusted towards return of to of this XX% XX% $X of a year-end cash We to Further, represents value approximately of of authorized of annual expect organic to capital opportunities

proactively Finally, we while environment. the approach opportunities to deployment growth in invest to explore disciplined in maintaining to capital continue inorganic current a

XX. Slide to Turning

be will segment our targets. metrics enterprise growth Our by business supported

appreciation fee PGIM, operating by asset adjusted XX% and in to expect net of margin strong growth We low and of by double-digit flows backed to market driven earnings X% management growth X%, XX%. an

sales and partially In of mid-single-digit growth billion runoff X%. to value $XX we growth, lastly, premium growth, Individual $XX Insurance, and earnings which offset to our transfer billion. businesses. value Life, In expect the low continue growth. $XX products U.S. sales we growth in businesses, to of flat our Group as X% gross of mix. $X annuities to to to annual expect variable sales earnings to will billion mid-single-digit growth account diversify assumes strategies, longevity net we our by sales to of we of driven retirement in expect be growth X% across legacy risk And $XX we product $XX be billion, expect by X% billion of businesses, account And pension and X% supported our In by to international billion annual

the and We also appendix. key XXXX in other to have included assumptions our considerations economic earnings specific

in to our maintain our We organic growth capital we to approach. as incremental confident while these are businesses deployment objectives our disciplined in financial deliver ability drive on continuing

XX we in to continue growth, company. summary, Slide higher more become to and a capital-efficient turning So

maintain our sheet. be disciplined is deployment, and our take happy your of And will supported strength our growth capital by questions. that, We will to we the balance with approach to

Operator

now be question-and-answer [Operator We'll a conducting Instructions]. session.

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

Suneet Kamath

into wondering Limra a the outlook. just And want see us the out I I saying I industry. about value sense the growth to the want ask reason sales thinking be I account you're just translate sales annuity XX% of to maybe the is, And probably down will year. get Pru's outlook. I think for how is for if was XX% start growth. help could I Caroline, on to expectations you that

Caroline Feeney-Pfundstein

Suneet. certainly Terrific, I take question. your Yes. will

strong another which softening annuities expected terms of fixed $XXX -- year. Limra the sales past with be clearly, in is was it might year what outlook billion in to So traditional think decreases. I total for rate industry sales, over some see with extremely did of last of quarter, their some annuity And their this industry is referencing be

as seeing Suneet, rates were industry But a out across the I So products RILA to XX% shift to is that RILA. would such up are what MYGA, which last is index over sensitive what sales from we're year. more point

our business, see growth. sales $X.X billion delivered in roughly we own of quarter, In quarter was to which positive we the continue So results. consecutive in our fourth sales, ninth

an volume money of due motion. in from of So outlook estimated balances. includes those fund well Suneet, an that's we've previously, perspective, discussed to high compelling that by as And as the plus a we tailwinds see fixed over in continue demographics, $X annuities driven coming trillion market $XX as aging billion in money marketplace

all importance portfolio. diversified So of product our underscores the just this of

know, in us has been in result, you years. over the portfolio a billion this the with individual now for We broadest Suneet, X And product $X focus products actually sales. a history. annual have few our have as As key we past different over

the will to are to strong of our demand, So overall, and support we continue brand. strength sales. certainly, And and thanks positioned this the believe well to capture well-established our distribution tailwinds we

Suneet Kamath

then maybe saw Got to it particularly capital. how helpful. take around time deals, their quickly Prismic Prismic. any to in Is guess the reinsurance internal just consume that integrate the that's think Or of sort just for Obviously, third-party going And pivot pivot to some be Japan? I you we question it. of them do could this deal. is, some to would thoughts to transaction? going time and I to some Presumably, wanted

Robert Falzon

Rob. Suneet, that. I'll it's address

book including opportunity, of the with the A that. broadly, think, about closed the third-party indicated, and as largest the both market is more reinsurance. But it's number Japan, opportunity we reasons doing yes, in world, growth I So a second by Japan-based. the for reinsurers. been relatively it's Japan we we, for life think we and from Japan third-party think had opportunity own underserved transaction important Prismic, as significant third-party our in third

sort there. of has the a So introduction accelerating books the And but there's and lot the industry. -- its is that regime have for have marketplace, it by opportunity demand but a of of of sell that because that and us, virtue the the been treatment ESR just product. noneconomic industry opportunity to the in sold currency-denominated ESR the across an not that's by sold impact on customers of has that of legacy long-duration continues our product. foreign Japan is

addressing to those be those that with, the and to grapple that going something so has think flows, sales do those we -- And well so. are and and books positioned industry to we're

Our in local indicated competitive and a the presence dedicated stood Prismic, we've brand, intelligence a the got we've advantage. team our market that in quarter, last we've Japan. as create up licensed

credibility of, grow by then whole us our as we've establishes and on blocks own more our I virtue the that book, and life third-party given generally, optimistic we're the marketplace. we Suneet. further closing upfront, got, Prismic levers experience multiple to And in the by I through execute that emphasize would But confidence it's indicated can

optimization, in Japan. that includes, new importantly, sales solutions third-party flow, across It includes the particularly sheet So balance and blocks, Japan. so U.S. ongoing businesses both our in and

Operator

Tom question from next coming ISI. Gallagher today is Your Evercore from

Thomas Gallagher

on questions cash flow. free few A

growth businesses growing XX% conversion, XX% that of are most XX% free requiring cash is I capital when of sub-X%? So would think needed the of the why to for flow that capital

Yanela del Frias

Tom, it's Yanela.

take me let that. So

really we're markets, as businesses. by strong opportunities to those and sales leaning see chosen across continue in strong we and evidenced our flows our So opportunities into our

as to example, are do XX% earnings. deferred are and sales a impact full the near-term we a from Life, and an distribution costs sales to not that year XX% of contributing these strategies. specifically retirement due new strong Individual strain for But in runoff. headwinds for basis, in increase sales face we on So had business, increase

have investing strong headwinds in earnings. So we even upward near-term we materializing these growth an new strain growth. X% core in I related would are as emphasize headwinds, a to we But our moderate, but rate that trajectory business runoff. these that with is earnings growth would And X% earnings, in in headwinds core expect to have we and

we dividend, healthy level are and healthy paying a of a have We buybacks.

Thomas Gallagher

cash that a here I and intention the XX% I'm for is dividends would the just follow-up, solving take sure to XX% equate you just will operating use Is used through making returned you. conversion, Got question, X be And the and of over And I'm GAAP to understanding about that the free of years. related income. think Yanela, buybacks a rough what when I earnings flow that the dividends. If buybacks next XX% math?

you're Now into anything there in to the with Is income. change conversion? that using read net

Yanela del Frias

Yes.

if dividends is allocation we mean, our I to that you share to XX% are repurchase So so XX% XX% shared, priorities look XX%. attractive capital at

get So adding you I just think you're to the X when XX%. those

that AOI the proxy the flows. of items closer terms our And statutory primary the income, results. AOI impact to over for change income because cash will term, GAAP is are is in net flows. free do that be do while assessing basis so of are that net a And near for driver operating that from primary is We there excluded which cash capital, think

that losses normal impact hedging and and gains or realized on example, mark-to-market for portfolio stat. course activity management GAAP arise due instruments So both to

some the evens And net Now good out noneconomic with free us. cash calculation, conversely, our GAAP term that that don't overtime in cash over the volatility near anticipate time, there impact components do is income flows, much of of largely for a we net flows but indicator being an ratio cash us Tom. income leaving flow of are

Operator

Your next KBW. question is coming from Ryan Krueger from

Ryan Krueger

time? over transaction it potential My or was May? announced the in completed million, you transaction two you I use give the but buyback billion may $X that Prismic -- there could are opportunistic for 'XX. you're any for you kept for? holding considerations is just up dollars, question the hundred Or ULSG there million over how them on you the at on several Japan other color that use $XXX of that on you think, freeing Are first capital Can between more

Yanela del Frias

Yanela. it's Ryan,

detailed how with we'll our -- targets terms in that and our So our the be our about we capital consistent potential consistent of be priorities with the priorities capital we allocation deployment. essentially uses capital think with financial will of

growth a our So returning and flexibility, we to financial for businesses strength balance to preserving between and long-term look strike shareholders. investing capital in

part may in As times in repurchases But flow reductions opportunities vary deployment or cash keep sustainable. of in that, stress. philosophy, core with shareholder generally free of our will for mind capital a level of distribution share be that attractive

So economic monitor we constantly developments market and in conditions.

We with capital will follow management be risk management risks playbooks prepared opportunities as our well. discipline and to and for

Ryan Krueger

involved transfer some providers the a And on pension it there lawsuit Do risk was Or recent impact lawsuits do with risk that negative transfer other have a think transaction planned the pension this impact, sponsor other transaction issue? you against you had as against that have pipeline? some seems sponsors view Prudential. activity. will Prudential's been this from one-off on There have plan more any other

Caroline Feeney-Pfundstein

Yes.

And the looking it's this transactions. derisk your It's pension litigation ongoing the say harmful Ryan, retirees industry. the pensions threatens our will like pension impact that and Caroline, health for protected whose won't I peer obligations So to comment who transfer while I on these question. the are I'll on through take risk for clearly of of companies, their particularly sponsors plan are and any

regulatory fundamentally, of governed risks. by of holders are better types the who simply system are like So these Prudential insurance companies

over here promises at ago, retirees Ryan. with was Our transaction XXX Library, Public history industry of actually has since to now this a business an years the which made in we Prudential the pioneered fulfilling extensive Cleveland

just the lawsuit, lawsuit accurately not of me that we're Prudential in party the security does not represent the industry. quality let a this while So reiterate named and or the

perspective, we of market impact still conditions. In forward, the strong from a new see Ryan, favorable we terms statuses, see business and going funded

And continue in to to space. plan be and with to sizes, there types every be So an to different of work with we believe market sponsors ability that all have continue a positioned active to will well our are leader pipeline. reason we

Operator

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

Elyse Greenspan

some by there said the the I to X% target? could you to obviously, variations think you to right, be expected was there EPS year. to And words. is But your the I be 'XX, how expectations think, X% know going growth guys X% outlook, into not linear, 'XX, relative would

Yanela del Frias

Yanela. it's Elyse, Yes.

strong about So those core as we're growth executing off evidenced that we target I our to EPS We sales linear, not would we opportunities due feel and see remarks, strong opening pointed opportunities saying and and runoff. I headwinds, this and start mainly as by X% have confident will sales and to flows. out near-term by you of strain and do said on But our as X% growth of in my tailwinds, earnings. be

over period. as the X% X% to naturally, some in earnings the we or So be our would could year. over of blocks average is expect any given upward higher the And of an X-year hold, investments runoff lower in moderate growth It our core X-year take headwinds that an our period. trajectory and

Elyse Greenspan

a on then And my announce recent second did guys question is just Prismic in Japan. transaction. you

capital Japan, with Prismic upcoming expect deal do additional guys we as with in the -- you there? capital changes to that, the do transactions Beyond

Robert Falzon

own question. sheet take Rob. They Elyse, in well continuing active flow on it's balance on our exclusively include optimization pipeline ongoing I'll We're almost an businesses, the and transactions. at book, work of in U.S. looking And multiple that our Japan. with both reinsurance working to being the blocks again, are third-party U.S. we across Japan. a as We're there and in from Japan. really solutions focus

what So opportunity, have in opportunities but that, is the with see -- the just our book, Prismic we to industry yes, as in we'll continue Japan. across significant own a our address not expectation to market

Operator

Carmichael Wes coming Our from Autonomous from Research. is next question

Wesley Carmichael

the and Japan follow to implementation. on progress ESR on made up wanted being that's I maybe

to insight give Japanese view in think in are had I your could excess ratios your Japan if of you on us current SMR of ESR you today? excess any XXX% But today. capital implement

Yanela del Frias

is this Yanela. Wes,

adopt yes, first date JSSA's the for X, year XXXX, beginning being XX, ESR So March the XXXX. mandatory with is to April reporting plan the fiscal

above that our levels position levels information our target we be summer. that ESR ratings. to financial start strength would to of in implementation will our providing ESR capital intent expect We the about upon as AA support before, continue is And said

volatility. the And and transactions, We and affiliated risks products. best our help we manage to balance we reserving regimes have seek optimize executed like constantly of economics that capital reinsurance and sheet our do, always the some to mitigate our match transactions

in So change in significant we our don't anticipate those position entities. capital a

Andrew Sullivan

Wes, Andy. it's

me Let of meets just on and including portfolio, that continuing our with offerings. the innovate portfolio expand Japan, product ESR-friendly that And offer add that a to we in broad we're customers. needs

capabilities, the profitably liability hedging, line management bottom for to us asset have underwriting, everything strong grow we need our product and these So to we well with our that combined continue is Japan. our in when

Wesley Carmichael

follow-up Andy, you. as it. a for maybe, Got And

think about the at color on direction business? of your taking March, months strategically are As few focused as most Any end Prudential your in you the where CEO? first you're reins of the about you of thinking how

Andrew Sullivan

Yes.

you And thank Wes, it's me this saying privilege, and be a couldn't question. start ahead about is absolute and honor I by of let So more an excited what's the us. for

the going rigorous of over have would years. we executive for that that member opportunities that you in expect, given As see intend to done the marching said we're us. now But the have of that, of company front a raise always to we the performance plan transition X helps well. been is strong having It lot a continue very in that team time we through transition marketplace. of this to a get and obviously over work We I've absolutely

more information is to calls I forward but share say I'd you in. it settles future the be additional would yet with in as team role, so premature now, what sharing the in to So right the look I'm not

Operator

[Operator Instructions].

from Barnidge Piper is Sandler. question John from next coming Our

John Barnidge

Prismic. flow does cash I question second that be in My the know of to prepayments previously opportunistic of Is company conversion the the X% years? X the as Or of international the is high-growth remain M&A? in to interest emerging opportunistic to going the markets, on XX% and expressed that Management ownership M&A. Asset by XX% in free in run prior consumer main

Charles Lowrey

So John, question. Charlie. say excited it's your you. a question. get will I'm I I take thank to

that to a #X, capabilities, some acquisitions growth we've a selective and In job emerging as forward, talent. past, our scale suggest, which organic have as And the opportunities our whole focus growth breadth But markets product significantly that as variety access businesses, both we're terms and focusing third-party forward. or step as acquisitions grown be distribution or remain So our you M&A as our we scale. that's go executed our you management. in capital. back a great. adding us we we're such to M&A many our will we strategic as objectives capabilities always, on which of for And on scale expand accelerates opportunistic selective PGIM going consistent to look distribution, for company. financial focusing on Taking increasing to the through key from distribution open the And of strategy and capabilities reasons, and is expanding for broadening our on of these organic acquisitions programmatic heard moment, Prismic, and pursued meets other our provides or including interest, we existing in

John Barnidge

rounds and That's so helpful. in laid kind that transaction to pipes of friction you the of investors subsequent the second less? with warehouse for with kind liabilities are is getting And Prismic,

Robert Falzon

for We quality and we scale say liabilities don't and specific described in Rob. way in I would our Japan. is you have plan businesses, What the that and insurance brand in the it's that have John, retirement U.S. it. in a both warehousing

books, significant witnessed have our evidenced in the back volume and across quarter both significant growth we last and that we businesses. year of so sales have as with the sales by just a we've And this

to Prismic don't a themselves And opportunities which generating for a amounts of warehouse. But have so business is on a have instead, what we go-forward liabilities, lend system, we basis. bespoke significant is which

Operator

is Jack question from from Matten Next coming BMO.

Francis Matten

Just conversion. the free one flow cash on follow-up

sense You to conversion cash new guess are you to I of the ratio impact the new strain because clarify, rate thought cash just related those have the GAAP makes earnings? blocks referring comments headwinds to but element since runoff. new strain. flow me, business higher mentioned Or not are of conversion incurring strain to flow business running business I the would off would you're had and from a have any that

understanding I'm sure want correctly. So make impacts those I just to

Yanela del Frias

it's Yanela. Jack, Yes,

the I strain. referring runoff yes, in So Core the my specifically was earnings earnings, new the answer and GAAP to to business

Francis Matten

mid-single-digit And as the elevated of outlook off those international levels just uptick kind an normalize call growth I any your low more guess within that rates driving intermediate-term to that for recent operations it. you other markets? would assume on a trajectory drivers question then that guidance the out in does growth earnings surrender product Got in of and your growth. outlook the

Andrew Sullivan

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

as more stronger at to underwriting at So low is the Japan. growth results quarter net lowest from investment look the to are we are -- a our Those that in a forces U.S. is really the discipline. growth as favorable continuing did of the sales see stronger product continued dollar positive income, XXXX. higher things: near-term flow surrenders mid-single-digit momentum expecting results of level earnings that the to expense rate, in surrenders obviously, alternative than we and from yields a counteract continue driven any by and QX, we in few pressure spread going Those

we believe we having So growth, but are these expect to will stabilize. of time, over that overcome we think Net-net, headwinds. and some solid

Operator

from coming Alex Scott is question next Your from Barclays.

Taylor Scott

the drill of in you digits mid-single PGIM more wanted is provided, double like that digits. it into I drivers revenue low the to looks earnings

tangible So I expecting you're like things wanted to looks to understand wanted pretty that that are the are of there? understand base? margin you're some the to And the doing that I improvement substantial. to improve It what just expense just be

Andrew Sullivan

So thanks, Andy. Alex. It's

XXXX, quarter PGIM with let margin. improving through me start So made every that the And progress margins. saying the pleased by about margins a let me the XX.X% our just we with are year talk ending we've

the higher market. talked in on for previous and result rate that progress. has good said, the of as we've impact real in clear. quarters, really That overall, as from I our a both are depressed us environment the estate and path the about But So is the still fixed very being income slowdown margins think

towards XX%, really We expect margins main our expand to led X drivers. by

First, drive and will real fees a fixed it and will an and normalization of environment. fundraising. drive income improving flows estate that

progress, have and traction work. us, Second, our where in finding for third, we And private in credit are our laser growth we been do expenses. investments That's in very particularly we with we're real continued seeing growth. efficiencies a expect reinvesting a balancing continued focus on discipline

going is cycle. from intentional to expand but also an So are actions, improvement from continue the our from here expect to bottom we line our in margins both the do

Taylor Scott

Got it.

that then the was part question insurance that of will calculating do Okay. way similar line results And guide think the ratio the businesses. intermediate that the about for across on we segments? How that, different improvement influence the expense and the bottom understanding

Yanela del Frias

Yanela. this Alex, is

meeting end year So are we that close as would top what of is with the ratio, range. XXXX, full to already I of the start the expense

of terms how we calculating it, calculate the In it. share materials in we

currently variable operating we Now and don't disclose between the G&A. split

We to doing that start on has would variable But also really pressure will revenues on resulting a expenses by there the upward And our operating positive that been but ratio. the have has sales. that calculate I speak fact generally these expense been ratio. you from impact driven variable distribution G&A, to have that would help our corresponding expenses the strong

the ratio which to our that time, time. will improvement will continue So businesses investments we're we the be through over that to approach efficiencies, do positive making evident transform anticipate contribute over continuous in that and the and grow trends our

to do what that's the back expect we runoff ratio. Jack's though. on cash want in to So flow, the and I question go the

runoff, annuities about going those legacy when runoff I But is receive obviously, fees also the was flows variable speaking speaking I So earnings. yes, away. the also about impact because, core cash we on was impact on does the that

Operator

Mike UBS. Ward Next question is from coming from

Unknown Analyst

in on more state up if what Wondering actually it's pretty One question jump in? big that little a volatility quarter. sales, a Life could sales forward? And sales, product we're growth, that going was seeing like lines big if the open for the cut in planning that earnings just bit

Caroline Feeney-Pfundstein

question. Sure. it's Mike, Caroline, your and I'll take

sales finished We quarter, Individual increase strong. quarter. business year XX% record you year as million an say, our fourth Life in prior over the of over is $XXX had the the which So of

For generate the those nearly sales about most where product. sales prior our year. asked the our returns. that. and portfolio were to actually We're And products attractive virtually full year, seeing well-diversified importantly, every we're across and while up Mike, increases XX% continuing versus achieving you

volatility a estate significant some based benefit we the growth the our from will I mentioned I thanks What think on we to of I increased estate continue don't seeing the is positioned some saw that to of of our point quality benefit, would may us. also flight and see and that, to that additional past activity. it's macro to across last sales You any did this I couple we possible quite say The focus the a our that are Life customers is planning activity. to we're quarter to that are and continue Mike, planning increase think new and factors are this driving brings established our Overall, distribution strength. in quality pleased brand we well to that very industry, business. note here continue

Unknown Analyst

helpful. that I'm the or this, But I runoff that in sort capital thought guessing on helpful. Great. any are on least component. on or know release you fees there's strain. Maybe would That's at the -- would clarified more that the but the relief it's be have business. of upon significant of some Yanela, -- capital just just I sort clarity

Yanela del Frias

into growth but Yes. release, are run business When there's of the sales. also the off, reinvesting there's we the capital and capital

cash XX% talk that the that we -- So of organic about that when we're funding, to is freeing growth piece generating. we're up flow the XX% includes and

Operator

from question coming Next from is Burdis James. Raymond Wilma

Wilma Jackson Burdis

Could about more Thanks. that some from reinsured there. you block potential goals and legacy can Japan ESR? talk up Japan the in turbo products And opportunities a along more recent of talk maybe the to margins about the morbidity about lines, when you business are the free talk And just the why same capital? of Prismic

Robert Falzon

to on under was, Wilma, treatment Rob. what want it and then product. second to a we would the jump respect that the that ESR, for note someone jump that block question dollar-denominated first, again, might the duration in it's With I part and longer part. in Prismic I'll of first is on selected

we have under And so but of is, margins. from well -- product significant type an the fact, under necessarily that the in reflected those ESR, in economic margins ESR. standpoint aren't where

players credibility jump in across opportunity is be ESR sort our the some actually that process view respect test to the pipe third -- product, set marketplace for that on and and where part a that up, learn the us margins, of feeling parties longer the get that block under is question. the meaning create mortality given demonstrate wants on us from duration that as where type With the industry, maybe it need first to question for for it well. will And the do area people a as in we Andy case dollar-denominated other itself so good strain therefore, your could of and good we presented to of

Andrew Sullivan

yen really been and last enhanced that's offerings, work very to broaden out a years. But the at headwinds We've what pressure is I of in question. expected Yes. perspective. in And earlier, the portfolios. follow upfront. of what successful our said, really didn't experience surrender you experiencing being our is underwriting said has be what fully that product strength we've shown tell a Japan line couple But the by would from sales morbidity I And within been done meant you we've Wilma, enhancing our your and ranges. as I our in the I'll been over lot

Wilma Jackson Burdis

EPS then Okay. that little bit to And EPS point finer X% Can growth towards the XX% a on 'XX. half we trying put be at weighted of range? expect Or back of a X% end the of the to just more to lower range? the

Yanela del Frias

Yanela. it's Wilma, Yes.

not So we mentioned, have headwinds. near-term as the And linear. also I it's

near-term if So than headwinds, 'XX to the take have then higher the account term into yes, years. say, headwinds you I would out close would being

Operator

is Research. Wes from Carmichael follow-up Next from question a Autonomous

Wesley Carmichael

move in XXX. assuming yen. That's the And of you're second. activity touch think, the on wanted for a I yen by that just surrender in Japan. in your strengthening a dollars you assumptions, mentioned Andy, impacted, just I meaningful at the on been pretty to

play can talk a you guess, how don't about if that we guidance significant the in strengthening see see yen? you out might I pretty or you to So what expect of

Andrew Sullivan

Yes. Wes. Sure,

that in couple Let of take me a parts.

So first, the the to going the assumption let guidance JPY XXX. me around of yen take

in on yen and as based sit around here our that curve. sits XXX. -- look that and really we that, the So And is today assumption forward at

total matter Japan these would But portfolio, So you, the economic the the increases market been in I believes yen go, year-over-year the in up yen Japan. sales way yen rates to will in XX%. I appreciate both said. on interest which intentionally and percent remind the the rate growth XX% no as our just are of as And a Japan diversifying we've based

of products and So have economic the demand way as is no look we we do know dollar, appreciate set for expect a forward which these surrender offerings lessen given the and that go, we to yen yen headwinds to But those environment. our broad and going matter to we across strong. U.S. stay

Wesley Carmichael

And But as if on life out bit underwriting, That's in pretty my follow-up was in little slides. I individual worse you really back it's meaningful a your the I been it of called years, the couple last a quarter. headwind, guess helpful. look over past

a couple there's done get help and to realize kind that headline of have how to guys give you're I any on expecting transactions. you But some us can of So profitability? back seasonality you

Caroline Feeney-Pfundstein

Yes.

So Wes, It's Caroline. I'll question. your take

large had claims quarter, legacy So comments, Charlie past several policies permanent for this mentioned as Hartford his opening block. we from our case from in

more with encouraging season. negative underwriting the fluctuations to mortality, COVID-XX would that say, as the that in What And saw, broadly, you typically an we overall more mortality, endemic continue we can happen flu see I underwriting so to see signs what state in that transitioned such seasonal adverse in which this during episodically. though, resulted of do terms has predictable

that on and strategy and roughly with XX%. would capital size market thing our reduce the of to sensitivity reducing derisking I is to execute you GUL now flexibility increase add, our successfully us actually clearly, continue have Wes, other in-force by The seen

are pleased with very we've completed. transactions we the So

We managing our proactive will in in-force continue to of business. block terms be very of

major for so And a priority is that us.

have gone transactions a out And smoothing so our expectations. derisking towards way long

Operator

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

Charles Lowrey

the around clients, I'm our continue thoughts. I'll we've employees and each other to world for care proud under close X every well confident been my forward and past you communities Prudential leadership, for positioned has to And look Executive the today sustainable you, our that what Chairman. my Thank leadership you time. as call thank company I long-term a It next Thank privilege for that as offer for day. more I and CEO growth role our us your for joining team is final supporting the thanks of lead become few capital-efficient will the of today. a in who accomplished this and and for higher a and to profound joining our to customers, with for generation years. I'm growth. our Andy

Operator

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

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

Prudential Financial (PRU) 5 Feb 252024 Q4 Earnings call transcript