Prudential Financial (PRU) 5 Nov 192019 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Prudential quarterly earnings call. [Operator Instructions] And as a reminder, today’s conference call is being recorded.

I would now like to turn the conference over to Mr. Darin Arita. Please go ahead.

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

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

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

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

hand Charlie. it to over I’ll

and call. quarter us Good joining thank morning, for you, share per earnings we Thank Yesterday of $X.XX. everyone, Darin. you this reported on today third

a We progress strategy. of our begin discussing financial by our executing in ROE also year-to-date XX%. I’ll reported wellness

ways, We distribution our and delivering are set new broader financial scale solutions including management. committed asset to on in people across a wellness multiple our drawing channels more development and of expertise, to leveraging product

of we the acquisition fee-based capabilities IQ, Assurance distribution engine. announced quarter, took the a During capital-light steps to digital expand through our and growth

these and wellness markets. capabilities expand direct-to-consumer financial demographic to platform solutions leading believe including a Assurance for we we Over segment, middle enables a mass that different is internationally. serve time, the can us

and October, in acquisition, benefits which The also potential. provides closed attractive upside Assurance significant financial

at world, of Fortune the has year. purpose challenges for the financial World Change the In I’m second we list named pleased of our are. that a which changing shares to Prudential prestigious note vein, that solving its a core to of who Assurance consecutive is

transforming margin evolving to separation in U.S. the us across efficiency. business to greater program position towards while lines, of the goals the progress October customers way We needs these of expansion intended speed our organization. voluntary quarter and do segments also in a the are Along better our by efforts for our driving made we and launched meet These workforce. we

Finally, efforts we continue to add reduce advance and quarterly impact market to fluctuations financial to the our our of transparency performance.

our a result, will other corporate be our in the affected price. changes in quarter, by and fourth results As own beginning less the equity and stock market

are disciplined rates on to our to will taking ahead, impact have which Looking very of an profitability, on new approach obvious business a sales. pricing we offset effect the help of some

our solutions meaningful We the customers quickly shareholders. are and are and set implement plans encouraged to have with to forward by we and long-term conviction, moving to value progress and our deliver

our Rob over performance quarter. for I’ll to for turn With closer look it Rob? the that, business at a

businesses. Thank I’ll strategy within a on multi-channel executing how and our scale expertise, deliver to you, Charlie. provide Wellness, distribution our our we’re PGIM wider and and Financial to an management product on International opportunity U.S. demographic to asset financial update leverage

produce fee-based U.S. are markets, underwriting it divisions which in the Beginning source X, our Assurance or income. spread these not Financial Slide Wellness on quarter, rates represents and credit. equity also individual and solutions earnings from shown correlated investment a As that currently will fourth workplace from business, interest the include earnings of diversified earnings to

addressable strategy to our continue execute expand We market. to our

assessment the who participation rates have workplace education Our customers, million in driving resonating XX. on Financial venue employer to our of of of digital with Wellness as with and of and with proposition and increased address increased variety employees engagement platform financial number wellness programs This activated platform health. benefit our platform. including to people topics a higher the financial The a has X our is provides needs, those September of financial advice wellness customers digital

online personalized available we provide made the relationships have to interactive people way a expect by is solutions to other is platform roughly achieving path million which on enables growing individual we and also as to customers. to that LINK deploy resource employees Earlier deliver their additional goals. through and this to customers of we We’re financial toward workplace year these create retail LINK people. One X.X solutions as our Prudential, already our began well our highly workplace it

track We people million by are year. the of our X.X to of on goal end meet the

significantly actively of seeking have expanded our Assurance, our insurance acquisition And million of with closing individuals, notably, market XX solutions. the addressable we approximately with October are who

platform direct-to-consumer serve XXXX more over spectrum. people us agents, includes engagement to end-to-end socioeconomic the Assurance’s enables and along model, which

In insurance addition, provided enable range will us this workplace to Medicare of and third-party well and available casualty as our for our adding property customers coverage. solutions platform expand health by as

and efficiencies We’re customer progress agility experience. increase our to enhancing also making streamlining while the driving operations

run of This support have programs $XX $XX of this in the margin of to rate these In the incurred accomplished by track a XXXX. through expect to quarter, end on million end the being million costs programs. that increase we underway. by and current million We’re achieve implementation we $XXX about to is XXXX, to expansion of number

our Financial the I’ll the focusing U.S. of fundamentals Shifting start and of quarter, and third businesses. underlying businesses, quarter this trends with Wellness discussion on retirement flows annuities to in our a

large had large service sales including Our in in of continues activity. business. billion single partially by net quarter by strong client the offset outflows our be as market a retirement business active, full lapse episodic $X.X client was the This to driven

transactions. Institutional is have have deal including of transactions reinsurance as of by as and billion pension of business longevity well transfer $X.X million, Year-to-date funds a de-risking net and ahead strong of closed risk UK competitive innovation longevity we The This pipeline. our we billion driven $XXX elevated $XX by positioning Investments strong Brexit. inflows had activity

of third have quarter recent and these well and the in started pipeline transactions. in not interest have we plans, pending of has rates transactions fourth quarter levels the we the did close PRT a solid While funding any declines funded impacted

account by as the by contracts of period. normal Our lapses experienced outflows surrender of net as certain withdrawals annuities business out move as $X.X well driven billion elevated

expect level lapses an this We XXXX. including was to in offset expanding our channel persist proved year impact into sales This of by launching fixed of annuity the this increase and the through partially IMO last elevated quarter. secure indexed

pressure continue However, environment low we to rate expect the interest current to sales.

$X.X value asset our Turning management investors with in and global is X, to flows globally. higher combine PGIM PGIM, strategies that private our of investor management. under as ranks affiliated and investor billion assets fixed multi-manager significant the income to investments global largest our the serves largest It Slide alternative platforms. in a fifth business to real XX with added is in investment grow and model distribution top strategy manager estate with in asset third

and from turn, origination $XXX bring Prudential, institutional. record the through financial investment value for symbiotic benefits during our customers, competitive flows and our businesses advantage PGIM solutions more wellness provide and PGIM’s As both growth of the asset its of flows in million third-party retail complement with quarter. AUM third investment our relationship growth, performance of Insurance track capabilities a enhanced and to differentiated source helping generated affiliated and a provide net engine successful U.S. International that of And third-party businesses. it to management expertise a our businesses,

in growing mutual flows fixed and flows, and platforms retail investment fund net third-party were offset $X billion. sales Strong our ETFs income UCITS performance partially equity outflows. delivered Our record solid by

$X.X Institutional withdrawal single world’s And of as fixed outflows by largest driven a our billion large due serve were inflows We and the consolidation. investors from a $X.X outflows income result, institutional many third-party experience institutional idiosyncratic client billion, will to manager mainly and time-to-time. of

and to robust management fixed record income flows. assets Our appreciation asset benefited continued management market fees from under due

a or Strong of allowed investment across classes last us attract outperformed strategies. to of their more over management Approximately under have asset into XX broad to periods. performance assets has and benchmarks XX% three, five expertise the flows higher-return and year continue range

developing products and We in and globalize launching retail our alternative and investments, private and broaden capabilities markets. by and to international continue expanding

us originations the our demonstrated absent private ends Fargo performance, arrangement this Wells strong our time which record year. and model, we will even in as over position investment making generate flows grow multi-manager well and were distribution fee to capabilities, the as Our track earnings investments to of positive

X. to Slide Turning

business unique distribution international with business life Japanese well world-class as our includes operation, Our insurance other in model a differentiated where high-growth operations have Brazil. as we like margins

to Prudential strengths Our grow needs-based look is high global Life focus Planner non-traditional in strategy serve expertise sales. combine a a to with customers markets to distribution Emerging on way. with our we quality

a sales dollar for are Sales ago. Planner This half Consultants by Japan by quarter. sales, which the pay which as fixed half the continued X% account Gibraltar, Protection of to annuity This compared the lower International, about our Life in dollar continue quarter, by in driven Life sales reflects products. represents current on were total Life channel than our other International well as record year of higher growth to and the U.S. operations. year-ago U.S. lower increased pay in recurring was as Brazil Planner focus we single sales primarily XX% in

also rates In crediting lower rates, resulted of U.S. U.S. in in recent affected addition, decline products. which dollar-denominated interest the sales

of focusing products lower lower actions heightened profitability improve to in due our and We’ll continue sales our competitive time. experienced independent target to sales also production conditions. maintaining channel on pricing continued level new and innovate We while channel agency bank over to consider

customers. order solutions, and with to engaging our asset distribution in returns, product growth we’re more management attractive expanding generate leveraging focused Summary, on our our of profitable expertise deeply and

With that, I’ll hand it Ken. to over

insight with earnings $X.X resulted items. adjusted Then to which of X, on income, which $X.XX an Rob. third quarter Thanks, earnings after operating quarter basis. pretax provides tax our third into Slide following we for additional the begin quarter We results. begin and adjust on billion our in I’ll was fourth share our per relative

investment a million. is a First, worth at which we variable adjust normalized $XX income level, to

the quarter Second, expenses and to strategy. include will implementation the seasonal costs acceleration related our of financial wellness fourth

approximately segment of an resulting million expected inclusive our fourth the We will $XXX results $XXX financial in wellness initiatives. of million other $XXX expect corporate by the loss in in to this million the cost of lower quarter and

all be we million separation mentioned. This to million will related the $XXX quarter implementation to discussed financial the There additional accelerate as wellness of in Day. Investor fourth voluntary strategy of to $XXX costs part that program costs on also is our the Charlie

are net there that results result fourth, and income in basis other fourth from $XX quarterly by million a the anticipate portfolio Third, quarter, on reduction increase we in net reinvestment. approximately – investment expect million we will considerations $XX will the a

are quarter. rates reinvestment held flat the Assuming with third

$X.XX XXXX. December, $XXX This quarter ending quarter change assumes the share per this Combined, fourth impacts. fixed a baseline average. period X% us on income yields portfolio share disposition billion share rates, over per with turnover would to and $X.XX purchases, share compound one below points per for $XX.X a in a on Absent for the including gets five annual quarter, the future basis the XX yields before business money market new of of impact growth interest

This our baseline includes puts typical it items below few a earnings level. that

First, expenses quarter. we seasonal fourth in have the

expect at years million expenses be about prior million. those $XXX to similar $XXX We to to

about in – in higher than costs Second, expect the the $XX quarter. level share we elevated quarter three $X.XX about we financial million These higher explained $XX baseline. expense wellness million typical third, and expenses expected in Planner. implementation expenses of And Life of items expect fourth total per fourth typical

note. provided have to quarter earnings share. A be other there consider, While to affect fourth additional factors we few that per may these items items

quarter issued X.X we the million assurance the fourth First, in acquisition. shares for

compensation Second, as stock earnings markets in impact Charlie by the remarks, fluctuation his equity reducing on to movement have quarterly reduce equity of of expenses. taken the Prudential’s action and we deferred – in further long-term in mentioned

have understanding power updated earnings per business. Also on disclosures helpful we information businesses. of continue in our information to by that hope our provided including share seasonal baseline our Slide We find XX, items you new regarding earnings the

We we a years, the past considering over to new with now on have the regular are approach place indicated and basis. disclosures provided how guidance we few alternatives in

on and processes annual call December. provide believe host or insightful our an information more enhanced have to frequent basis. a provide EPS not disclosures We outlook We decided guidance in

returned I’ll share capital on to and We update current through strength good Slide an billion dividends feel We the of $X.X overall provide liquidity quarter X. position. and during leverage. our very about repurchases. shareholders to the Turning deployment, capital

by remainder And year dividend last September XX% XX. authorization repurchase increased of is share million for average. the as five $XXX year the we’ve on share over the our years, of per per Our

$X dividend represents Our current on quarterly a our value. X% adjusted yield of book

maintain We sheet. also rock-solid continued to a balance

target. financial financial regulatory continue Our than and above capital remains target our our levels better be our ratios leverage to AA ratio strength

liquid that cash end Our $X to range. above assets our the $X.X billion and of our liquidity billion and target end the the was was billion at $X top at of parent company quarter

As asset pro a shown reflects balance October in liquid acquisition Assurance the range. on that the provided that early brings highly the balance slide, funded of forma we’ve of within target the the amount our and

continue shareholders. look opportunities to our of businesses, We to to invest the will capabilities in scale or to assess growth capital build return and gain acquisition

liquidity Slide to and and and maintain value we are with margin support end end of and flows consistent $XXX in adjusted high the accelerating XXXX. in long-term position continue other strategy by remain positioning Turning in to we XXXX on generate businesses and shareholders, We’ve run million that per $XX growth book robust and dividends flexibility. X share our track a to to of cash generated achieve capital strong and a deliver financial record summary, to the distributions rate million growth. our expansion by We

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

will Thank Scott Sachs. the of Instructions] with [Operator you. Goldman We line to go Alex

line Your is open.

Hey, good morning.

riders? trendable talked XXX levels sort a previously of about question that. think you we’re ROA, And first this wanted you’re fee seeing already expect Is just if point? coming so, at us, lower for I I impacting the see on the dimension had down? XXX the you should variable or mean, significantly it we spread we’re could come I bps annuities. guess, bps sort I really of to what’s just Is long-term is level it starting making down. So that? And I below to or on it the

Yes. Hey, I’ll this that. Ken, is take

move has diversify ROA we’d and to as continues mix into a both high it’s fee variable mentioned over expect to solutions our tiers and our annuity ROE. still that’s, in as over, a trend profitable product with less that a we strong policies past business to First, sensitivity. to very and the be lower, lower time although, market continue We’ve ROA the bit equity it’s

So that out. play continues to

good basis it significantly is And move down – points benchmark a for by will ROA the interest while a declined have over And rates generally significantly. year-to-date. pretty markets in XXX about – general adjust XXXX when profitability,

account So while of earnings higher the affects decline it the in rates combination by and DAC increases benefit higher value, ratios the amortization.

and we business a So rates, continues the be despite generating very profitability flow, like quarterly ROA. the the cash to in at lower profitable decline again, still albeit

it. Got

next I Okay. more guess on acceleration my broadly And Planner, There’s a then question some is Life expenses. follow-up in quarter. little bit more

you’ve coming the got But there digital also I synergies I which things on You’ve guess got some digital the Assurance some doing of IQ you’re on, expenses capabilities. with going think on. were

of on in have or you’re there Life be provide focusing in is coming Planner you’d online? So was what whatever if once any wondering the you Life thoughts how like Assurance get could so. big And other we And looking if accelerations for segments, detailed like you like past more Planner? spend to much more just next year on offset over there from

– Charlie. Let is me this just

and can Let then others in me in. join start

with we that expense a Assurance amount certain said synergies. of be would So there

and to I next think million $XX million we then after additional said $XX year that.

to can of savings in other that margin making Those in some you the expect separate we’re So or improvements. over and we’re distinct are other some of those come seeing the time. the from expenditures

for some did where quarter in level expenses the area we other And expenses the higher a the of shift see quarter. of then was a International, and

are you that’s corporate? assessing process, so, onetime are other where digital segments that going And the might of kind be really that needs through any in you is initiative or outside for of

is Alex. Hi, This Scott.

but some couple things there’s big gave a guidance be recurring Darin, what will and on. of going think, non-recurring, on I

to specific all be best quarters, in trying and to I we as place before, infrastructure evolving see the of put regulatory oversight mentioned the First at we’re practices. to continue industry to

And actually in but some just out that’s not world. of rolling the Japan, around

litigation technology following worked had of occurred on some we kind finally, of upgrades of upgrades follow the automation. well I other then we’re we’re some and out We Board. As have some things been quarter, reserves. process this also Investor additional And U.S. mentioned Day, those rolling the the digital actually improvement and and we in and at some what doing the across And that

by say I the lag really U.S. big a would playing the significant So, then two would on were those We that of International, about – a improving into falls it best were some I catch-up practices. that year. in And buckets. had bit initiative rollouts regulatory doing say we we

of most way We’re the that. through

the it, in will we rate And we hit you look into that XXXX. run adjustments, disappear quarter million spending at so going additional $XX I the our call fourth think accelerated in have, as if

think say our that’s baseline. I largely new we would

Got you. Thank it. That’s all very helpful.

quarter, have there couple long-term of in related a for mind, just we longer We lower I’ll lower. was was compensation expenses a our our had and mentioned through lower And change expense. keep we’ve price. price expense add forward no long-term pieces the program longer there. as That our occur to of sort little that will then also as in stock need no to the going were modified corporate flowing compensation share bit corporate to And

somewhat corporate offsetting. So you they look at international, if and were

Thanks.

Thank you.

question of Research. with next comes Bass from Our Erik Autonomous line the

line is open. Your

you. thank Hi,

includes talked but a So the EPS outlook it sounds for seasonal in fourth impacts. of the normal about addition number expenses in the like you’ve quarter, one-off that to

growth? I your $X.XX is in for of the us think baseline real adding Therefore, low kind not, a power. And back guess, so earnings help and items, range of earnings something of reasonable the you reflection it’s before about So XXXX? a of more thinking can buybacks really $X it

ways can this this. Erik, and at Ken. number There’s you that think of about it’s look Hi, Yes. a actually

the first gave the the which of third into second I’ll quarter, was start about that quarter baseline at I’ll with going $X. – we end So

So sort middle our where that year power the earnings we of was. thought the was in of

and The we businesses. our above expense a mentioned in and between I as that is a third had because other quarter And that bit the favorable and international. $X.XX little results favorable came of comments, in was investment underwriting expense income last our across at offset corporate variable kind

than to So little a number that you’ve $X. was you got that, better adjusted if a

level. Now, I below do items, number baseline, that remarks quarter of make you little fourth typical like in opening a bit have it said my earnings in a the our

unique the is first nothing quarter. see seasonal what The fourth typical in that expenses we our to year, on going this

Financial Investor again, consistent then expenses very higher have we international And implementation costs, little in the have what Wellness we our with We third, articulated expectation at Day. an of businesses.

If you level earnings put items that, those $X. be over adjusted for a you’d at and little altogether back bit you

think thinking way I So that’s power we’re timeframes. those earnings the our over about

Rob. it’s Erik,

we’ve Let me on of rate just that. going mentioned Ken sort his of given and baseline. do forward that, ahead sort we pick have some off that looking guidance commentary interest in up that on sensitivity

So headwind underlying deployment is have that’s from be very sort a significant capital shares. increase in to obviously, result as And will a we what of contrary the business would updated growth of and have growth. otherwise then

think what piece environment we’ll a with that that’s rate The lower lower or in to we’re interest of at anticipating. come about least other sales as rates well, out that is that have interest

are we being proactive. Recognizing all that, very

and product We’re mix. pricing, design sales managing through

managing We’re costs.

is distribution I was which and that technology the actively the that initiatives capabilities fundamental as clearly we’ve done capabilities in also distribution or financial PGIM growth, then its That not to mentioned, the repurchases. think implementing growth. investment equity rates deploying well. in will markets. for have, things and obviously, share previously Assurance which and to of So we that and wellness IQ the we evidenced very acquisition, all includes other been as and that sensitive that global And the Ken contribute initiatives we’ve But announced capital covered its

going the of us that on of So we outlined. sort terms continue light industry headwinds ability deploying us can can show differentiated confidence that in show believe ability ROE we the a macro capital that forward or the of to to for in and growth with inforce the growth, gives what’s of our happening gives of level differentiated grow in we all level we continued that combination a vis-à-vis international

move a your increased detail. last comment, interest Thank seems helpful it you. basis versus for rates year’s outlook That’s going has interest rate call. like point XXX the on that you impact Maybe $X.XX sensitivity gave on the

a bit little color Just the hoping more case. why you could on that’s give

I’ll ago above assumed rates interest cover a guidance, year benchmark. are we We zone would if Yes, rate a Again, when sure. interest ago a U.S. you that have treasury at rates different issued guidance XX-year our now levels the were were use as and over year X% that. in that’s a we through that of as XXX gave $X.XX that. what basis mentioned financial below kind we we’ve basis points results well. last in that’s per our decline what as sensitivity to would that we’ve gone XXX and year guidance share. And year, the when experienced point we’ve be experienced XXXX And our

rates impact as the what me, lower are the a we’ve in U.S. start XXXX But Japan. provided in a that consistent is we we have here, and ago. with at So sensitivities point also business dollar more year very experienced for again

more We crediting rate business minimums. have that’s

of as a the claims discount So on value have and not there’s greater at it’s an present do rate. we you there to lower well, a have also And is, impact. and impact consider linear

So sensitivity with to all lower the have and the rate those are now, interest reasons rate that has it environment. more do we

it. you. Got Thank

Thank you.

line question the next Our with from Kamath Suneet of comes Citi.

Your line open. is

Thanks.

Ken. Just to follow-up that, on

initiative? compounding expansion of isn’t Just rates think going to much over number. don’t the this about this time, much the associated If is offset pressure, margin some potentially that are as a rate we becoming with targeting up, the Financial you eventually as $X.XX bigger Wellness pretty move

assuming over we exactly eventually change, it impact, fully portfolio the that as does rates does experience And this the rate more interest had. time, build over. is dissipate again, The don’t turns

through from more now back a that If shifted go years recent of was we the rate you then to rate as going what we’re number again. the environment, environment

how It’s is plays it phenomenon new. out. So not that

in as time go its you will over dissipates And waves eventually so over. turns through work out, again, it as portfolio but way think multiples the I

the just turning deck new provided, of over in Rob, rates on money on points. the So we go forward the about gave they out deck be the the in you yield between our and sort basis. of sensitivity on – it’s rates based a quarter call portfolio third That’s a the XX that we delta that’d basis

vis-à-vis where very if something rise So we that’s we rates are of ago, sort little begins the modestly from not today, were while a this phenomena in mid-Xs, just different to where off. to wear

it. Got

then be call, just that the upcoming that decision would AAT year on next reserves. not about thinking to view outlook or And Okay. an for year-end guess, I on an how and sense host Typically, we a return year. capital call get for outlook the a on of it you’re would

that commentary just this on you we’re how not two having So point? if provide about some these call, you’re wondering since thinking could things at

Yes.

would adequacy So have testing do as given gains rate interest first, well a rise offset have with hedges we lower in that. that But asset rates, reserves. I’ll ATT, derivative, would we have derivative start to

we feel about Prudential RBC So very good America. Insurance of still of – our Company level of the

of once the our Board Board that make that its in decision get information In authorization. And terms a decision returns, capital the that and does we’ll December. makes will out that’s

has also our cash capital Our consistent very been and management flow very free approach been consistent. profile has

into now can So for your factor thinking. you that

guys. Thanks, Okay.

Thank you.

question next Evercore Tom comes with ISI. Our line from the of Gallagher

open. is line Your

discusses then million the XQ the $XXX XQ a for that out loss me expenses of and seasonal higher if $XXX slide million. I take corporate to of and corporate $XX of the midpoint I strip onetime through loss, million guide going the expenses, $XXX just sort Ken, the gets restructuring that about the the of morning. million Good

expectation? guys quarterly over I implying have that been be a as the million would corporate you Or I a expect more the – little know, is $XXX loss loss. has normalized a decent a a guidance to is lower of you are there basis? corporate on still to $XXX quarter want loss over million go-forward you think provided just

in I that have the thing bit Tom, half the one I does. off all only think doesn’t little of corporate other, there you think, $XXX a it about and occur seasonal of million is

where you So make corporate you’re think with rate has been. and if line I in our that other more run consideration

for Thanks Okay. clarification. that

The a cash is I return other follow-up capital on the had – on just flow. question

playing I think in been talk some you head and is flow changing out as it, Would similar, based conversion earnings the still you rates pressure on GAAP I based call on – into how here, there’s where understand U.S.? expect XXXX? about both Japan are can ratio? that will you cash visibility XX% a be but Or interest

very Yes. cash our flow much are still intact. engines Tom,

be have in quarterly So, and dividend you consistent dividend first been the been a can And have fourth see filing we’ll for from Japan the and businesses PICA quarterly. very this a providing that quarter quarter. PGIM annuities dividends, the And our paid for quarter business, regular those as and and paid third as well.

modest decrease will consistent. net general, sensitivities. strong our we our quite quite rates investment in with have and cash talked impact and yes, flow picture So, about is income some as But

million I to review onetime around outside experience quarter. reflect to Got actuarial a could. just I net adjustment you. And The can Or color then you just one final just $XXX adjustment the that if negative this factor, think Thanks. Was that? which income provide was market follow-up, macro? of on some related

that onetime a adjustment. No, sure. Yes, wasn’t

income. of other well. that, costs. And net occurs And if estimates said had Having operating as to gains for So update insurance the our it deferred income, actually you discount above related best of liabilities at the charge our rates acquisition lead and that a we a GAAP to looked quarter. didn’t to was adjustment amortization it

was line in pretty our our GAAP operating overall, with profile So profile.

Okay, thanks.

you. Thank

with Nadel from of John line next Our the comes question UBS.

Your line is open.

question expectations in given your correct Rob like particular I’m And of morning, this sounds rates. macro you Good sustained like can wrong, that it are for but sort It sounds me is everybody. or maybe a low if more Maybe driven. Ken.

are insurance down. less be an simply Some pressured, sales customers. And products attractive would is result environment somewhat expectation in to your that as maybe such a

story? that or could then have else First capital result or ought or at at And free question some maybe that in expect second And short-term, of incremental environment, right is, should that I deployments least related do as a we flow is, is cash the question better. that to capital least there to your something we shareholders? the consider actually to potentially be return

this John, Charlie. is Yes.

then others me start jump and into some will it. Let

Let about philosophically start sales. me just

sales profitability the talked pricing, products is and answer as always interest change much as over less decrease of about for us time. we absolutely, as decrease, So and become a may well profitable – we’ve rates level certain sustained will

what we to making distribution on one two, hand, the have products our And hand. sustaining that is hurdle and the other calibrate our sure on so between rates meet

you we’re And and And will do sense order shareholders. – rates minimum the between both to we’re pricing level internationally. sales go to those already a same level toggling, whatever time, That’s a through. at two have distribution why already of go it see have of and would order as on taken we’re raised But forward. be world-class and that for lower makes crediting that, to to that’s that in is but will profitability in issues. raise multiple domestically maintain calibrating we toggling always and we pricing company the we actions maintain, at system look And what continue what we pricing, what a we takes as will and

past product for rates HDI by making interest reducing a products points changes been we do – in the reduce months XX it, But by on on reducing annuities is the primary by payout I’ll Charlie’s more basis relates John, couple in benefits points Maybe which of This think roll-up in XX get some to rate our something specific in have XX points. as of that in what amplify over product proposition looking Charlie’s that is course business of example and its with in distribution bit is the active partners and with comments to growth. mentioned in profitable sustainable, value order Well, rates, we pricing. the for normal competitive business. customers. to a to relevance a I Steve. that and effectively Recently business, maintain manage certainly increased level a of of the little the decline

frankly, we’ve result trajectory as possible we simply but changes of an and I how that in we’ve actions, as sales would business managed how made business. some see that mention, near decline see than the it’s extended outcome that for the we period take an manage And more we could competitors some time. seen most. term our as And of We’ve a

a market so If product if of not built in-force capital issue you extended is been business, And period over look in at has of where were capital profitability, the supportive were multiyear less annuities more market characteristics, but earlier business period in an we’ve active marketplace robust the significantly conditions periods mentioned in where returns. certainly throughout, been time during of features more been we’ve flow. we’d the Ken conditions over and the relatively cash supportive, in pardon active me, returns strong solid that periods that that that and block active

was short-term there was free appreciate I just wondering Listen, cash a right, or sales impact be need maintaining if maybe that, a can – take sales. it term you’d such Yes. that that down maintenance has expect on of flow. balance, versus near And would profitability to sufficiently But the – if we offline. or I distribution

yes, come improve John, that you we’re don’t Well, associated need capital with – expect cash flow because to not down, business. – naturally, cover quickly. real that I hold new would sales When that’s we would can

is, the direction as described. you is that So

your given be business is And why really than tax it Ken, outlook any rate I’ve cetera, XXXX call, this it quick one is no Thank the housekeeping should next one should in light meaningfully year. mix, – you. reason year different but this be and et of for got any

No.

I tax very, has our very consistent. rate think been

you. Thank

you. Thank

Dowling comes Partners. with of from line the Humphrey Lee & question next Our

is open. line Your

you Good questions. taking my morning thank for and

assets seems that to Looking just especially the the retail can versus rate the PGIM, in was at left a the I have overall your in came of assets. just and this fee kind if pressure be talk and fee about in. general you account and wondering little that especially expectation more fees rate of quarter, those near-term

Humphrey, your it’s Steve, I’ll take question.

up this as income industry other flows a strong negative has institutional income say, the and equity been outflow and picked some the called headwinds out quarter, space. across inflows the flows, general throughout on so pressure again Rob asset a equity experienced the into year. Really fixed in passive I While story classes, to a specific this XXXX fixed active would pretty

mix impact relative classes assets Given fixed from across our that income migration the asset has asset to fee that average noted on rates equities of from that you fee levels.

strategies our Now specific income into solid strategy a mitigate flows able of – that lot by and have fee fixed significantly to drawing a I should emphasize our levels. been we’ve including that flows

from I you cumulative declining recent income assets gradual to in to asset income appreciation fixed from due nonetheless, of you environment. though fixed especially quarters income, But is, the interest as as to mix that out. the equity impact migration rate would of say by fixed fueled this pointed equity

be increasing pressure asset – the scale fees, to margin and scale fixed attractive throughout business. complex. business. those in and flows it’s asset that of Fixed are businesses management expansion be the we supportive have margin source mix While contribution might – our But of economies also supportive where income our on income a of economies of will highly the in most fixed

appreciate Got it. I the color.

for clarification in on Just international. expenses the

coming especially should so then expenses think of response of elevated expenses about that, earlier, we million question kind like I little talked given, But of throughout in in where Alex’s XXXX. expect Should the you lighter of how still the from think in some general? And we high talk you a third international is seems quarter expect quarter’s I then throughout off $XX last to XXXX Gibraltar the Gibraltar, drop the – expenses in kind elevated quarter. terms fourth that think expenses you in to think would off. continue about in you call was bit about and in it

Humphrey, of in Gibraltar in we Hi, quarter. million of expenses expenses. elevated the modest this related be thought a Gibraltar had this as might had that. a We what on you out, we actually is Life Planner pointed we – a Scott. overshot really business, our kind take expect The I’ll $XX level to do still

picked quarter guided I think mid to up where continue in that really sizable last were XXXX. we that would of amounts The year. about you

guidance I those in that relatively very significant would think captured not were de the we’ve say bleed on expenses overnight I’d are on given say Gibraltar. I And really and So in. the minimis, it’s in that

Got it. Thank you.

you. Thank

will the question come next JPMorgan. line from Our of Jimmy Bhullar with

line Your is open.

Hi.

at than faster so that on and next potentially a least XXXX impact, in it growth, Right? you’ve not normal assuming one question change bigger the rate for interest your – compounds or a Ken, three then or first outlined if the XX two what at rate years for for rates much earnings months. bigger do headwind don’t a if you that So becomes versus next the I’m

should it for $X.XX annual – sort as call the five think Yes, $X.XX drag. And for you I of quarters, it said for think of that’s we four.

But considerably the just be Yes. it’s beyond than that next then that, the up. should $X.XX a at base it in Correct? four the quarters, higher building

Yes. math Yes. dissipates. works. it time That’s the way over And the

Right? no in again. portfolio over, a But years out rates that’s few assuming change you the roll Yes. as

That’s right. right. That’s

near-term law that of on are then And and will that trends color least a the term drove and in weak a some what for assume you us this muted Japan in that just or, withdrew change, product. weakness, and quarter what on that market sales give we your at there’s on Should Japan the there’s besides sales drove idea just expectations at you could remain something sales of tax sales? you if the that Prudential sort your –

Jimmy. is This Scott. Hi,

but that Planner us of in ways. touched both take POJ corporate fact impact the change in it industry, the and everybody the a in me couple tax One, Let law did in business. Life

a or you the that. was and going to was more board, authority I across reviewing would were they and high of the strong what the business are five that the period the effect growth of the look case where really was national the net like tax that’s clientele month channel In was there know of POJ, an the coming But the case So because to rules didn’t and of sell Life importantly, implementation period across four more corporate then that after and back. say of There modest some so some we’ll been worth our products. favorable. owners has new continue being products there Planner

versus discipline favored some we’ve products oriented seeing of product. imposed competition say also in the would We’ve bank premium, Gibraltar came as some the case pretty pricing more the continued really competitive. been channel had it’s market. We’ve products of where kind more of corporate more in a recurring down. We income I significant And to mortality-based rates we’ve also challenge. in – the see intense

case transitory I when issues the In and POJ So they’re of are more you Life say, the combine would the in nature. Planner three effects, those challenging. of case in more Gibraltar, generally,

Okay. some with in the And Chilean the any just at all reform political lastly, just on on then point? and potential comments market, for going pension what’s the instability

couple A comments. of Yes.

the with performed we we’ve going say would serious. based underlying with there, relatively touch had wouldn’t actually on I has what’s what’s frequently well Habitat on said, there, actually this Our year-to-date in it’s, on business fairly and downplay and performance [indiscernible] very, favorable I know, very very, very and it’s really you been there That markets quarter. being going

unrest. that the on they people there allow of to or the being because concerned that that materially of impacting one relates have That call from much the when benefit people some – generosity one are may responses there they think of about and the old fees about you. demands out to I don’t nervous the request and them so retirement deposits one not are of the and and if the it may is systems, of insecurity will, increase and the what sometimes actually the there proposals increase then the deposits, said, age you being factors the we

serious a general, that space market, we’re disadvantaged of where being That in down But of in the be I and well feeling positioned our say, actually demands looking in situation those actions a supportive are that we’re sector. would I it’s are think for government there. said, would the quite

and very business and the as we the pension performance best investment therefore of forget, – we’re we have well within in have the And the sector, positioned also lowest don’t some the well. fees

Okay. Thank you.

you. Thank

O’Neill. Our from of John Sandler the Barnidge next question will come line with

open. line Your is

Thanks.

life or equity value, equity different capital size on through on insurer have, quarter in please? venture private largest you the walk you carrying us large Can Another positions investment a write-down private had how many position. and average

companies our it’s our at through invested XXX – to Rob. couple In in extraordinarily There you that things if of a diversified. portfolio, in John, alternatives XXXX look portfolio. excess one it’s is underlying somewhere well around of funds note,

To particular that kinds extent portfolio, primarily, therefore not in investments they strategies are volatility. And not in any we exclusively co-investment about rights. that significantly underlying any in of equity, investments direct the venture concentration. tend by which as come these and not to have do capital, have less companies So relatively do we those in have They private if in small. are of

have performance a in obviously little overall context single investments. underperformance the the have segment we We portfolio, reflection of idiosyncratic result in we a less that’s and out alternatives tend to markets So, of our a of performance. as of

We’re immune not positioned. call out nothing entirely conservatively from but relatively there, and to it, well-diversified particularly

signs been flu them but of seems are here is earlier. follow-up, have answered, early season? any It Great. in activity sick you most everyone My of like seeing

John, answer question. I’ll your this Steve. is

in quarter’s have we this unfavorable some indicative the the think random in a And really generally of to result, as have in trends. quarter. didn’t We this believe of any counter see out did that quarter over the a more in I is play saw don’t positive that we I that a favorably to rather It fluctuation the normally in blocks what – result know Normally, think I way mortality. issues this see the immediately present experience mortality quarter the trended state than time. seasonal individual as quite quarter our life underlying life flu or this experience was experience we is that about a business of tends the season, life a but third that trends. be

in outsized would able as gains, third I we’ve A also this the And as to similar speaks to being relation life, to play in retirement quarter normally from we and has in out again, the say in third experience seasonal from the our patterns because experience I business pushing in reserve think business. trends the and business normal quarter of a normal realize of the favorable we’ve business mortality intended quarter that exact patterns. it out this different seasonal to working saw similar the was phenomenon mortality kind mix designed away reserve to. less complimentary

you Great. Thank very much.

Thank you.

Our come next Elyse Fargo. Wells question Greenspan will with line from of the

is Your open. line

that we you I of a thanks. you expenses recognize band question, in a out us your corporate as, the give higher any as baseline recur guys sense slides Hi, called growth items the the morning. do so of in Good hosting I outlook way XXXX maybe or some guess you there where get within fourth well can is My right, EPS you about so some just every I kind that of first of more, aren’t an in guess, call forward but ROE quarter? thinking the kind just, beyond come days

a EPS the adjusted of number you fourth described for for gets earlier. an Yes, out quarter third little I the sure. level of about provided better can some a the adjusted for we our the bit I’ll echo of quarter Rob kind sort of coming bit $X. mentioned we think results second were just things whether elevated of And that sort favorable baseline that quarter baseline the than you described that of how things or expenses. or the the to All that’s

as the we Investor thoughts the accretive into have that measures given on And XXXX. we which which sensitivities articulated to. environment Day. a We for rate top some interest acquisition, little then, Assurance then we our eats that businesses improvement impact as a be of given as in of we growth bit But have lower articulated do that and we’ve are again, that, we underway, And now so IQ at expect have described and to our growing. margin well of

as to the all think think we to are encourage those would that yourself. you components think XXXX look I and So we about about for

Elyse, it’s Rob.

jump ROE just of in of question. on sort the your portion me Let

the quarter in third of of note I’d ROE excess XX%. that an had – in First, we

associated had better than had an have impacts with if did – think we while with impacts positive equity headwinds that baseline that that little would So, interest equity movement we the you triangulated positive headwinds would rates. We the in be quarterly And associated $X XX%. Ken about number represent markets. ROE around, markets, about with still

those is an when interest rates, opposed obviously in expectation absent the so, be XX% range. was XX% was the the of ROE, XX% would we interest XX% a of where high-end provided was But to in of the between midpoint of were baseline And sort that, much rates to expectation and outlook more higher. as XX% our that environment our it midpoint we

put the could occurred not bit have think but recalibration to by the of With that gave point for interest the range regard on headwind little anything interest that statements that, the changed pressure absent that in made we it we’ve where XX% a in rates, rates. materially with of time XX% out I to virtue guidance, of that’s since

weighted to our models? now in the that you Okay, closed. I thanks. towards said was want terms is And modeling of Is believe that of then in quarter. the seasonality as that into you of there put previously anything fourth point guys out terms Assurance, more we in had terms it deal

quarterly that as anything about basis? getting out stands on that we XXXX Just think a into

good the driven quarter. take I’ll Medicare the Andy. XX is There enrollment product, for products this and by the your fourth be individual by the of variability you period. right the question now open the advantage in will revenue portion Elyse, age thank are driven that sure. quarter-to-quarter and seasonal Yes, a is It’s question. really and

So fourth we business Assurance with adding will revenue our heaviest products of executing both likely quarter when additional the us perspective. that platform, pattern earnings to to prior the you be the mix about current and the earnings on have with think from and

and company expect in for the XXXX. XXXX fourth again, progress it But young didn’t is to about and and company and a we material we the mind, this to keep But good Yes. a making outlook we’re growing the quarter. be feel

this be the went going experience and the results that the core books. we’ll transaction quarter are in on – Also assets obviously, add-ons, two the to just maybe are financing and costs. net amortization And transaction the of of fourth intangible that

Thank you very much. Okay.

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

Thank you.

many your to we’re moment updated So to is take on not committed providing more and months like XX-year Steve, career. our telephone, his room And to see the ear, last people you, the from you ahead. a but to But I as to month the progress in grin, before his delivering you the heard, Prudential your contributions Thank look of purpose financial opportunity in wish is ear an Pelletier, you following our career earnings are as in extraordinary those retiring participates to here, he who at forward I’d for on could keeping up, to you Steve wrapping next we on company. throughout recognize of who for which call.

again to like and I’d for today to more conversations in you. that, you Thank us thank joining we with forward the future. And look

Thank this conference and for you. gentlemen, attending. ladies today’s does you Thank conclude And call.

You may now disconnect.