Prudential Financial (PRU) 2 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Prudential's quarterly earnings conference call. At this time, all participants have been placed in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded. the to turn now will call Mr. over I McLaughlin. Bob Please, go ahead.

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

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

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

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

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

in impact interest lower an quarter underlying rising growth, reflect results third Japan, offset the returns in of from partially COVID-XX market level including benefit rates. fee by elevated business investment the Our including conditions, variability income, financial as as the alternative and of well hospitalization claims

year our schedule. investing achieving deliver meet products businesses of $XXX that our customers long-term and transform to less of includes target cost and savings our evolving positioned continue be in needs and the one million sustainable We ahead market-sensitive better growth. This to to solutions

the environment financial customers, rock-solid strength support the other and to provides our Our stakeholders. current sheet macroeconomic navigate shareholders, employees and balance

in today transfer leadership a leader was our a safeguard that customers $XX access where total update risk pension growth in selected by in to pioneering participation off be to investing, transaction upon needs helped an Turning how we the the investing retirement are long-term transaction global security. meet our vision start our IBM and value this Prudential jumbo since in PRT XX% with market on support September, opportunities in for insurance with and we have ago. the three. evolving market, their workers' US I'll to largest slide of a of builds over expanding role billion. a decade history, second This transaction retirements first employers In

market, $X is positioned grow in upon in transactions to We its product In sales to $XX later which are tremendous to billion we FlexGuard our sales, over Building continue billion volume with plan billion universal well product both of in and have success, expected retirement this scope, from total to XXXX. an to the total life continues $XX PRT growing launch an bringing since FlexGuard industry suite the nearly introduce benefit XXXX. market, individual Life, month. to additional variable the FlexGuard's index in

decade, next businesses on the of for $XXX as decumulation behalf our the customers leader we our a from market. as in our demand annuities expect increased international making products benefit will well. the retirement We investments growth We're strengthen as similar over role billion

approximately Argentina, quarter, Mercado our America's XXX the with e-commerce we largest Latin During platform users. into million third expanded partnership with Libre,

delivers the Mercado Libre to tailored and in Our and year, health expanded earlier insurance partnership mass market follows our life which Brazil accident initial this customer launch with platform's base. products

X. slide to Moving

of of efficient $XXX we achieved assessed completed savings, annual now As customer cost million leverage cost includes schedule. one experiences. $XXX space, operations exceeding target and million earlier, from we deliver run have our realized business savings, office this rate these achieve and all ahead of To quarter. aspects $XXX how our more noted physical our I million third year the we to in carefully technology of to This

space our of the example, about US model, reduced $XX work million. results by footprint savings in we approximately annual hybrid embracing by in a an rate For run office XX%, which

our days of customer opposed the processing six life deliver six individual capability front, accelerated artificial as customers seconds. most intelligence claims experience XX our from underwriting to can digital to our funds use On hours new to now And XX days. in

three of and installed. of to days. now two automated timing systems on faster, data annuity thanks one-third was group reduced processing to two three the is about from claims insurance new also our three have we fund times And new to and verification weeks what sales processing now We to

now X. slide Turning to

sheet has assets with we our $X deployment position, high-quality, rating, Consistent nearly Our financial AA and for years. investment navigate Prudential quarter. macroeconomic have capital rock-solid portfolio liquid at balance strength capital helped a strong approximately XXX a highly billion third disciplined and financial the end well-diversified approach and of in challenges to the

businesses long-term shareholder with our for to distributions. continue investing We growth, in balance

businesses share and XXXX. the in returned to In the we I our total previously million $X of repurchases that investments and also addition dividends a during beginning $XXX through to mentioned, over of quarter shareholders for third the since billion

expect will Looking time. ahead, interest over higher economically rates benefit we business our

environment. We continue current strength have to financial the navigate economic to market the and

early and will we maintain next management we review plan developments, to As our approach disciplined XXXX and capital monitor capital redeployment, year. Board will our our

lead turning to look and take on Rob, US our leadership to week our from will long-term Andy to next approach early his over his thank leads team. Feeney Head the will first of of contributions Retirement Caroline a businesses, on XXXX. Sullivan new forward creating leadership performance. for leads for who thoughtful course PGIM, and company. their Sleyster, Andy over and the upon the of career working current Business year, with currently closely US Rob who Portfolio like & Businesses, our Scott in international as our last will businesses tremendous touch business Insurance role an the Head over join announced the leadership it turn as in transition expanded I'll currently of Caroline our now the Beginning of structure. to Prudential retire part our sustainable to I'd role our XX-year including roles. move PGIM. executive an Before our And US Businesses, in it with international as we will to quarter to Scott We update

you, an an $X businesses. for financial with Thank Pre-tax our of of claims, Japan reflected elevated results including by rates. XXXX. benefit a by X partially the underlying and business level COVID-XX financial international an US results share and business Charlie. third conditions from Slide billion and for on quarter lower our offset income driven I'll per hospitalization our income or begin provide PGIM, after-tax basis $X.XX on overview was performance I'll of operating adjusted interest variable market and growth, rising investment

basis, investment GAAP Our losses, higher by largely reflecting after-tax share realized net an driven interest loss on primarily was $X.XX per rates.

in lower The underwriting lower transitions lower year-ago less our outflows, Investment annuities the fee the income the rates, assets US higher business, an legacy variable Manager from interest level COVID-XX less claims to management lower operating results businesses investment spread year equity endemic partially earnings credit markets income reflected in reported to of a to income. income declines variable in fees, reflecting Turning a the income lower more reduction elevated net businesses by asset PGIM, our hospitalization favorable Japan resulting in spread decrease in our and favorable US. COVID-XX by from sale and widening international decline compared resulting portion Global management and businesses spreads in offset were markets. as in from the ago of investment quarter. favorable variable to Results due under quarter, than the reflecting our equity of the driven and

outperforming equities. continue Slide environment, remains global under XX-year in to active more XX% with PGIM's due primarily across experienced alternatives, and periods. diversified fixed outflows, has real PGIM, benchmarks income, income, private rate last X. estate to consistent asset our long-term the Turning performance positive. investment assets than and manager, fixed retail investment over rising industry while management attractive PGM public of classes institutional with be both capabilities to in trends net flows their the five and

our of solutions capital PGIM's or of origination insurance expertise helps value success are enhancing. asset and As of growth advantage. businesses Prudential, international mutually more the and access private and a and management retirement investment the investment This sources engine capabilities, of enhanced for and US customers. other bring to PGIM competitive businesses our and and institutional our create

credit private through a the of its higher source businesses, Our PGIM to for access continued flows of including growth alternatives that annual our insurance fee due fee toward complement insurance and rate and strategies, PGIM's affiliated third-party increased growth. liabilities track unique turn, and record in to shift provide retirement business.

management grow to billion equity private alternatives our assets PGIM's and benefits credit we of market-leading in secondaries $XXX global which private from equity continue and estate across capital credit, this has Across billion private quarter. platform, deployed scale $X.X real We nearly and and of business, private positions. our debt under

more in invest the clients, in also aligned growth needs are that remain opportunities areas business to we margins continue the managing we operating efficiently. to by our finding As with disciplined of protect

Slide to X. Turning

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

for $XX Strategies and and $XX transform closed our by including less We growth of IBM markets, pension higher the a in transfer mix towards cost markets. billion and third business pension billion a being in Retirement further shift Institutional our quarter risk third robust of achieved risk nearly sales lines the institutional across structure and participation continue transfer XX% in addressable expand quarter transaction. products individual to market-sensitive capabilities in Retirement business. selected transactions our its

PRT contributed the US continued superior transfer pension IBM our our risk in experience to the Our team of supported focus execution, market high-quality on and market selecting leadership by us.

PRT retirement, pits third see with of individual increased quarter, FlexGuard the to income FlexGuard as annuity solutions growing in sales. $X sales market. in significant the continue resulted In fixed and have as billion a We well opportunity product

reflect pivot for our to a disability strategy in sales of product reflecting supplemental Our XX% and XX% health. to account variable earlier year higher experienced growth products strategy life the drive increase Group execution representing quarter. ago our the with national product life sales individual compared life Insurance sales and quarter, approximately of sales also

Turning to Slide X.

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

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

product further and focus customers. a consecutive are emerging second markets, there In business can the we quarter. focused a expanded on as carefully In Charlie third in quarter where of sales bank mentioned. the investment record businesses the capabilities creating customer growing, strong and the all add distribution offerings by to third opportunities we example, in launched survivorship performance In selected market-leading and we value. application where Libre regions expanding to joint Brazil the of in feature platform to where across a with the build For evolving continued meet launched successfully We portfolio and product and expanded Mercado on we are driven yen-denominated enterprise our channel Argentina, achieved the Brazil, compelling our for Prudential are sales needs businesses the quarter, digital on platform sales product channels. in needs

provider to completed wealth services South In leading investment our tender XX% Africa. Forbes, addition, our ownership for of integrated and a management we Alex expanding in of offer retirement,

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

to and of range the in invest experiences now And growth customers. create I'll better the and deliver to needs markets, generation serve financial with it to businesses a over hand broad continue diverse that, next industry-leading We of solutions of customer Ken.

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

$XXX our fourth the items: $X.XX was resulted earnings million. To adjusted variable fourth $XXX adjust of claims by income investment a businesses. after-tax for sense pretax following was noted, develop, a the expectations on adjustment in Insurance underwriting experience million our per basis. First, in share $XX million; for $X operating next, quarter a includes income net quarter of placeholder the adjustments suggest International for experience results in for As we below might in quarter This billion, third we by and get an quarter the COVID-XX how third

of adjusted seasonal claims to operating by to expenses lower income get combined supported from expect and and the to We quarter, that of if offset recent takeaway government share eligible the depreciation. These for the $X.XX be expected a at business our items to primarily note quarter. key items earnings more growth, rates items specific I'll market the reduce other fourth fourth benefits revision The baseline seasonally benefit due you us we home to fourth share improved in million, a per quarter. expect level $X.XX. industry of due equity underlying last, is driven policyholders of interest by per in hospitalization that Japan; that higher exclude COVID-XX would earnings than including the elevated the power recovering $XXX

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

XX. Turning slide to

AA supports capital Our financial rating. our strength position

IBM growth, long-term our our the $X target liquid and risk businesses cash Our end transaction. assets to range of were capital liquidity investing in our pension support support at the after transfer to including high billion

sheet off-balance contingent including have facilities. liquidity capital We substantial and resources,

rate In annual regulatory the a the market beneficial. the long-term, assumption the our economically current Over liquidity. is excess higher and update capital reduce and environment near-term, environment interest

will our We in the prudent capital of long-term distributions. remain our financial businesses sustainable shareholder investment for strength, and preservation growth in balancing deployment,

in XX and Turning summary. to slide

current our plans rock to ahead year financial strength we the one businesses, targeted achieved balance our macro the are executing sheet. our of we are plan, of our savings cost with and environment We solid reposition navigating

over Question-and-Answer it I'll to your for Now questions. turn Session operator the

first Thank from [Operator from Instructions] you. coming conducting We’ll today now question-and-answer ISI. Gallagher session. is be Our Evercore Tom question

Your line is live. now

morning. Good

out, sequentially little decline increase balance net any of the on in to bit company comment is million. Ken, billion I despite for by debt assume $X color dividends cash there were dropped $XXX the there? whether taking contributions question first holding but The can you the there on what just were a subs, happened in no

company. Tom, $X main cover including that capital support risk and we did is contribution that. pension US And make that our of business sure. Yeah. growth, insurance a to high the I'll transactions transfer We IBM PICA, a billion of did. to Hey life other volume

of million international highlighted We contributions essentially that's together, profile of We and interest. $XXX quarter, tend this offset And we few joint as by debt quarter. our holdco programmatic have subs that venture a vary we holding our tend company funded dividends of to not still then ended assets, mentioned as the million distributions refinance our in The also $XXX $X.X we our greater with that from target dividends to range. made a increase above shareholder including and into fund net we emerging first had to the was from investments of costs, our did markets. highly all subs to that M&A in the million. liquid we $XXX of part timing debt billion, be quarter fourth and Putting

Life to be that of people declined remind the statutory it some, declined just expect business billion to our we HLA to primary is US -- GAAP more higher, reflected our our fourth going Insurance results updates to be our strengthening impact in in conservative, reserve fully to that's in XQ. the GAPP the comparable recorded our stat and quarter. business, highlight was liquid our growth. in we said helpful on thought call the also be So last The for would $X.X I the will funding assumption needs I -- that is reason stat holdco assets or I including due what be

have available also excess that to capacity As last already on I need. call, meet mentioned Pika our we in

in will that strength AA of business we Pika excess the with remain within this target. and consistent we growth ratios So capacity with contributed to combination the support financial Pika our quarter the RBC capital had

year our economy looking by they'll position, mentioned shareholder next approved as our share invest as fourth of both plan in opportunities with our the the In the we and will uncertainty Board XXXX shareholder always, and distributions And remarks, be distributions, so, repurchases. now complete his our the for and Charlie businesses quarter in in early markets year. dividends terms this And capital volatility consider will ahead. of for capital to increasingly

our and all growth disciplined returning being in strength and and our So capital with financial we'll continue our businesses of balance and philosophy with with factor in. thoughtful shareholders. maintaining capital that long-term we'll But to investment

Hey, Charlie. it's Tom,

our do add just one to can on plan. is we And execute it execute use about part up a Let on plan. your thing I long-term just question we we take just a long-term me that and because think say and levers of I'll additional level can to can pull have we that, resources

Thanks It a so very capital -- plan. three-year total lot I -- think it guys. $XX still comprehensive. you'd return the And was was billion just Charlie,

good feel from? still about that you work that levers to You the have given

do to comment Ken, want you on Yes. that?

Yes. $X of And billion again, their through I our complete quarter. -- we're plans complete will year. factor the the year. part Again, we've decisions Board in next that will Yes. our this for all into third early in already We'll returned considerations mentioned

lot Thanks Okay. a guys.

you. Thank

Next from question Tracy Barclays. from is coming Benguigui

live. is now line Your

Thank you.

congratulations Scott, to new to-date capital like First, to do reallocating billion higher $XX role. Andy, Carolina less feel given business. $X about your you market-sensitive retirement, you billion the and to wondering, opportunities, elongate I'm your your in progress to market timetable three-year of need growth thinking of

Sure, Charlie. Tracy, it's

Let me one. that take

remain to on less So executing our strategy start focused totally higher-growth saying become let by transformation me company. on market-sensitive a we and

market we and well made we've a number overall reduced in of seen, divestitures key way. two our you've in PGIM sensitivity acquisitions on the and so that As XX%, by we're programmatic second quarter, emerging completed markets our

market benefit environments from we're path present this times. may of and well-positioned I environment, growth in at as diversification. market to provides to as with different this set we've diverse our Now, seen And themselves our would that businesses note different different not be opportunities grow linear opportunities

and Strategies significant going demonstrate a business including in $XX our believe nearly billion transaction tremendous But market just sales, this instance, in of PRT position Retirement we the potential For there's our leadership did third an in quarter, $X forward. growth that where is with example, the recent billion institutional That business recent to PRT transaction, in IBM also self-reinforcing business. retirement our as in also over the the is system which PGIM. PRT -- IBM brought AUM

saying our looking grow emerging focused by high-growth businesses, other well. markets, mean PGIM we're as our we're naming So not doesn't on and businesses to

One a I'd So, depend and a say to our we're what conditions. growth, arise, higher the is of couple in things. definitely second market-sensitive less upon opportunities company. progress the becoming macroeconomic summary, that But the committed will is is

helpful. very That's

So, sounds organic growth have you it like opportunities.

only You're acquisition. not relying programmatic on

PRT. speaking mentioned pipeline and should deals. So, more you the coinsurance wondering in some we And also these seen could prohibit for of what you to status these done? that organic I'm if expect deals comment on funded just large you've and in if days getting the see future would

Andy. me first, So, And congratulations. Tracy, thanks for it's appreciate I let -- the

our decade You transfer and split in exceptionally probably us made did with bidding history General second we're team capabilities business. the another provider. of breakage XX-XX ground transaction, versus to deal is decision largest of pension split tell could that $XX by the we The sponsor between a clarity, and This we transaction for we a Motors conducted together. plan did the about is to ago our our billion. carriers fact proud second And the in risk for only transaction

pension of record-breaking the on we always the robust. a characteristics. be will forward, market be The don't very industry we type deal and transfer risk remains that will situation As successive atypical to deal's look open depending we in quarter. third experienced think splitting Overall,

last status came which at XX% XXX%. was quarter billion, a levels Funded remains in record at increase near $XX from year. Third

to you remarks in forward. industry, above $XX believe about this we see So, come going that expect the consistently now billion as we'll and in billion we $XX Charlie's year, for heard

despite it's our nice the over be and a expect, picking that will going continue for growth given market, capabilities, Given market, at size we're And us organic spots. industry-leading we a to find of time. that area net-net, success our competitive our this record track to

Thank you.

you. Thank

KBW. Krueger Next question coming is from from Ryan

now live. is line Your

Hey thanks. individual earnings. question I Morning. retirement on had a

Can sequentially. expect of that I through that? they about think And help longer $XX million, you'd key drivers term? up sustainable on us a if to core you think were basis, the be

Yes.

with So, again. Ryan, your that it's We're question we're the the this Andy pleased seeing for Retirement momentum business. morning. Thanks quarter. Good very on Individual

on in talk the our We Let in our material thanks that's about our primarily me and And We earnings just earnings, step-up core as rates FlexGuard of I'll the getting well. the rates collateral portfolio the both and higher continued progress, overall core from to our side FlexGuard. earlier, long-term would in earnings. grow. good end, thing speak our lift Ken about environment. we're on get first said the on short of And core to long the saw you lift the block I go on the at Prudential. short interest That's our success And we're then and interest why a are in a saw change rate for lift seeing back curve. what end kind

we've opportunity see out, of pleased building in date. good the the the the in the have it. we player sales opportunity the kind growth market. billion share we top $XX We've growth in like to quarter achieved in of continued profitability very we progress business. brought capture life right discussion, the retirement the a with a that all the we're at of and much And of very to end block the organic stuff back decumulation country organization. a at remain We into to healthy block Additionally, the as and very very day, Quarter FlexGuard

that at pull had Thanks. And you quick capital can I plan. execute follow-up. then you have your capital long-term just on See on you mentioned had guess, the do could levers might you would you release point you to more to deployment I to business wanted that in capital to one expand if -- you other year what then that At that, think all? time earlier probably contribute Bermuda. to this there capital just Thanks. And related US? see in Charlie,

Sure.

would Ken. that I'll we over sort levers of have examples. give that a of to One the review. and quick just couple and continue balance me be we reinsurance part transactions we Let of off you sheet then that would the turn on other pull. to can And it ongoing be, take first both

So access lots them to want look additional And regularly at order levers we capital. different about of and talk that can Ken, in you Bermuda? use we have resources and to do

Bermuda Yes, launched we Charlie the is the levers that of that Ryan. good earlier in sub Yes, example year referenced. a the

new we've capitalize a It's earlier Lotus with in have reinsured $XXX and did block this of We reinsurer Bermuda. it. a year, called We million Re. it variable life business to

it's it tool will another efficiency, capital of So forward. sort in create and capability toolbox that's our a going reinsurance

you. Thank Great.

you. Thank

Next from Jefferies. from question today is Kamath coming Suneet

is Your line now live.

Hi. Thanks. morning. Good

Just wanted on to back circle capital.

signaling used You you of as thinking XXXX level sort just a do level year, would capital is environment made on of you baseline special of the free a that any the specific next times. thinking that flow comments an the I basis, transactions. we're are guys But challenging. a annual or operating ex more conversion be to little XX% that kind about Should as for mean, of set, cash we bit about about couple return to

something a than bit guide that. maybe So lower you'd little to

lower yes, time, that's that reserve businesses and insurance at what been in long-term our years, below than but life some generated average. also for some that. in our That's in Suneet, the average. growth, that Cash from this businesses Hey, years flow than cash statutory you higher through Yes. It's XX%, businesses invest our from we looked work -- our updated in been our year in flow free the we we've both over historical increases continue our businesses this year. is as to if

think our that's and profile, So business rates our it average time, will vary has been. historical growth we over what given our but

back then rough that And was it. Got billion IBM to mean, come related PRT PICA, infusion the $X maybe to I my that I suggest into of deal. could half would Okay. if just math

So you from FlexGuard the sort business. $XXX million, that other I another release have to supported new the of that I'm still withdrawals understand I on Thanks. PICA from into I funding left. million capital would thought it have the $XXX And transaction. individual guess what in growth, would trying piece is outflows. PRT but apart just of is And leaves retirement hear the

I growth rule we it was don't to we in And it lines, the know what but transaction and profitability flows our us, was to FlexGuard Yes. did other deals just for primarily continue using related specific VA the business. business as existing well. as -- on thumb see but well. that not from the of good IBM business And cash you're our

GAAP statutory results? Was from impact the any if there just but that You hedges? interest impact from there's had on rate a wondering any loss,

it's reduced in to and -- our yields a should by improving has Yes. swift. US uneconomic business and will reserves There going is, surplus consider our allow tends And invest interest unique nature with what business a us Suneet, But fixed This reserve in experienced in is rise, rates the when and for addressed. flows. insurance statutory rates an manifest losses cash unrealized that profitability to non-economic is on we rise over of is there's very the method not income been the US us. And near-term, industry the in believe and our time, for we broader discussions itself higher to issue that it's and derivatives. at and regulators lot realized statutory industry our the be and on this. about We in

on statutory is So there we'll and impact AA a financial in our strength rate objectives, we'll consistent short-term the our manage maintain regulatory capital. the with environment, but is capital change

size that all? you at Can

it's move. to going still be It's where subject rates -- the to

And so that's still dynamic.

Okay. Thanks, Ken.

Sandler. [Operator Barnidge from Instructions] Our next question coming from Piper John is

is now line live. Your

typically of this is XQs clearly had given quarter year. any Seasonally mortality much. more This did very in course. endemic, you the year? that now pre-pandemic With return been best Thank seasonality COVID typical talented world, a

we've morning, a dividends about as Andy. mortality. Hey, past, manage about pandemic. That the all to talked many good talk throughout the our it's intentionally, between paid COVID. business have mix We and us times in John, absolutely I'll balance our good longevity

we is XX,XXX XX,XXX deaths, our US which to estimate. fact US. the XQ, the in declining continue impact was During COVID from than more experienced see a the But

Insurance, me mortality. In benefit in above face range, and bit little smaller XX%. the just hit much each we saw was about continue decline. our ratio that at see very COVID our reflect Retirement, show expect a is did given that continuing And transfer, mortality accidental guests seasonalized elevated see its it impact age more. business. again, We're nothing would underwriting Group due Let amount pleased and was death low dismemberment average did natural working we see slightly Institutional just variability, gains of expectations, our end That working In block we to not pre-pandemic but to bands, life It on age In XX.X%. quarter-to-quarter the business. Life, where risk Individual as we to see very claims and surprising we a good the pension particularly typically actual in of particularly our that of performance that up. we to experience saw the as

will the shift of very So this the is, line an endemic very we to that much manageable as balanced expect COVID into mix be businesses have, we bottom given continues state.

or changing you. about retail PGIM, you flows how a my positive, in improve an in either you're question. FX but then is Great. perspective where maybe seeing asset Thank material follow-up Institutional demand, impact geographic deceleration outflow. talk Can And perspective? from

Yeah, John, question flows. it's your on Andy. I'll take

always we've will flows about, As vary talked quarter-to-quarter.

$X third-party long-term Institutional with we both positive real flows outflows the billion, QX, remained Jennison very into stay net our and In record. track estate debt. net driven on on side. strong positive flows retail focused equity of So we experienced

year-to-date. billion So the pleased would that, We're $X our note very diversified portfolio. with flows. our good experienced in flows benefit also affiliated we showing of I institutional positive

equity. last rest your that billion by both continue retail Much were headwinds improvement the management the impacted To in we capability. from marked about like IBM to was specific the in a very a quarter. of affiliated be reflects the fixed the of our our billion transaction, and our year-to-date. from and important between asset it billion flows liability we well is $XX insurance in as strategy, That as $X our $X.X billion QX income and outflows $X.X transactions, capability part saw synergies active generation So question like growth industry,

far not into short-duration to flows player. where the we're passive, and the As are are tending go strategies, going, passive as in a flows obviously the

settles we environment material portfolio has of have of. day, to start we're to diversified and stabilize well that we far will highly end been. the anything back seen down as flows and impacts, FX net a us as our experience speak in, As always really have the positioned the shift we as haven't winner the product At that and to succeed be confident

before, about years of As of XX positive we've inflows. talked experienced out XX we've

Thank you.

Thank you.

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

live. now is line Your

first Good Thanks. losses. on the is morning. question COVID Japan Hi. My

You of last impact. seeing this million to in underwriting $XXX quarter. came unfavorable maybe quarter about million had that guided $XX And at

fourth you into concerned that are reserves? any quarter? do could leads the And your around movement that be that some So you of think there

This Elyse. Scott. Thanks, is

were later. since mainly experienced During XXX,XXX. the beginning The new a quarter, ages of and peaked good the Japan sort infections in at I the job but in declined did them COVID have largest cases They quite Japan really the hit think, they concentrated much of August, like since significantly. Omicron over hard upfront, younger surge pandemic. of

around running XX,XXX they're today. think I

for irrespective So hospital. they're guidance, From to whether patient down one-sixth about provided consistent into A&H beginning of they claims were. actually and the where related to payments pandemic hospitalizations with regulatory to checked a the policyholder the the of

from very September longer benefits cases, no or for individuals sets are things pregnant be agreement government or hospital you XX determined that in did, exceptions, paid fact, actually over the certain the women see and with insured not in hospitalization a serious people claims, comorbidities. the will A&H few large in in big So if COVID support with the of we spike XX, what were seeing. is which industry with the Starting

the fourth to expect the dramatic here be change we pretty So quarter. in

of are First substantially all, restricted. deal down the been the have infection levels and levels qualification a great then

I think placeholder $XX million that for versus the got a quarter. $XXX Ken we've fourth million for already mentioned the

customers, So remain we'll And focused for our and continue but to situation. closely strength of taking channels. also our on in looking monitor out distribution the employees care as the past, maintaining of our the really we

what should question, are in segment second my rates? potential accelerating? And guys in about how of that base quickly institutional then earnings spreads seeing the we are And terms How from growth think retirement? Thanks. rising those you within the

growth, the invest the business improvement. risk rates more you business But with and the of terms. I'll the on yields rising Ken. more be And the in as see to opportunity earnings the transfer third pension probably it's to just put will importantly, attractive particularly with that Elyse, that the we out played books quarter. at And end have we rise at the start. have seen leading better a

just momentum business. would have institutional our Elyse, it's Andy. I lot And retirement a of add, in we Yeah.

institutional perspective. brand you've $XX.X And to people, sales great transfer have from that's billion none. pension distribution in a and exceptional we and obviously, that really We risk systems, about retirement. great heard capabilities, second But had

just So well risk beyond it pension transfer. goes

$X.X value reinsurance. $X.X billion We billion longevity and also in stable investment-only in had

So very banner we good quarter Institutional us Retirement. and in was have a it for momentum,

Okay. Thank you.

Thank you.

Erik is Bass question from coming Autonomous Next from Research.

live. now is line Your

Hi. Thank you.

to I in which Your seasonal typically of think, highlighted? environment, quarter, $XXX the $XXX should as the cost-saving is that think you actions given you've fourth the this permanent expect. of this the higher $XXX outlook function a less of, a given or million implies being million than just expenses expenses trend we disciplined Is more million on that range

Hey Erik, Ken. it's

We that more but it's as see It's also wouldn't the there's And really lot are into are read timing. but usual. We considerations. coming into of being disciplined, much timing quarter a disciplined, we yes, too fourth that. -- I being

you US change demand this And affecting consumer or the then Does for can products persistency? are in talk you. Thank it. about materially outlook proposition for dollar-denominated yen Japan? how movements the demand and Got the value

several that I'll take from strength go dollar. Scott. There is and US that. of are go the ahead This things Erik. the Thanks, on

for you of have any hand, to one investment terminate bought who of may the have a net and to On versus a positive want gain cohort they kind customers it's they're looking a more amount coverage, for. what permanent dollar surrender ultimately may typically about they yen reducing have certain thinking is life And because will which provide coverage people charge. be products, will take if that a

question on more I focused think side. the sales your

that are US With of good coverage purchase the it covers think that because strong, being US higher And how because their looking we investment -- income, use to down we I think, back to dollar in sizing view will a look our ultimately, attractive. the with dollar be fall, which they to will looking we more swaps yen. are net is overtime, ultimately people That on this the tailwind while products short-term dollar rates, In them the going other do we of general, investment long products be some add this things, will market. in in hedge. said, headwinds again being two for have

Got it. Thank you.

Raymond Your Burdis from coming James. next question Wilma is from

line is now live. Your

in clarify plan you how And bring Bermuda efficiencies? Could works Re morning. Lotus create to a capital is Bermuda? in entity Good to capital there the third-party

of with efforts and of robust And reinsuring sensitive, business Re our that economics Yes. reserves business. with align that capital the internal to to reinsurance a that's certain fit and in risk are and really capital we better use the our very in which an result, And more that as of that a get standards is find it's it by for of the aligned are variable transferring to we businesses products releases regime, reserve of is PICA. the capability that nature The we that with life is And there, that business. Lotus economics and and again, principle-based recognize was standard that that of type reserving in our regime find better based robust a Bermuda. the is initial

Rob. it's Wilma,

of following second your of Just on the question. sort part

that our intent entity, to not third-party So particular no, bring is in in capital.

who's of that, said to, think keenly better into the we've liability alluded of that our this for satisfy the demand appetite Ken institutional customers institutional as of a And of before, intersection Having for the the how out those don't figure side. to coming aware on it's said sorts with there's a a increased appetite positioned are kind captive we into sector. to funding from investments side origination firm As vehicle. we

term particularly there, to talk exploit nothing about that. order able be think we're So, well to positioned in to near we but

Thank Okay. you.

Goldman next Your coming is Sachs. Alex Scott question from from

now is live. line Your

and you XQ, PICA that there through and what's more maybe contribute UL you trying I And when to that to growth. cash PRT be Like to the trying from the maybe -- good growth, help happen balance think with just don't of the really a I is When bit ask it's more this And going part self-funding capital that about impact? there's to of is what around to to balance. I Hi, to think Ex the PRT. the holdco some be need that need a it do has out if if reason fine, XQ. any in fund go review that that's to would holdco the of in would figure to means that growth will understand I'm XQ would heightened the expectation review. and follow-up that's because cash just holdco some had need questions appreciate actually again? of on is into some PICA I'm I from I in contemplation need on more the the that goes occur down maybe the fund

Yes.

that again, and with at maintaining standards. the we at absorb thought non-economic strength in high fourth make we AA rise capital We the at well. then is within for And and consider including we'll, to was quarter, we we the why financial mention, -- surplus that to well-positioned that our So of of PICA, statutory update quarter PICA capital that's pretty assumption very of short-term fourth look this reserving always is the acknowledged a -- quarter business the require flow would size generating what do the deploy that at unique. that We'll given as described, rates. PICA needs, requirement held we -- using as a second and use and we in the capital capital we're by -- opportunities potentially purpose. time as should have that it generated and the the in statutory capital capital capital funding quarter, had But I had also be our -- looking its business our that's -- use of being I businesses. growth being experienced position, Alex, deployed the attractively some and But our sure the evaluating had was cash for and well, profile. attractive we're was capital reserves And again we

Got bit of Could question think how weaker if helpful. yen little about be either a something in negative? that And as on talk we more you a broad or a it, should then And positive that's about cash your flow business? contemplate maybe XXXX, Japan. we impacts

operating We've Scott. in as Japan high is This been high Alex. seen the low here, the I've time. many XXs yen to it is in as today. Thanks as years And for my long in as a

sales, will shift, So, example, happens, for preferences if get high. see yen priced more and customer as products we'll so that dollar too

that On be the the or the type of other hand, to will other related more the products we Gib may dollar deposit attractive in parts channel where bank dollar more see is.

the would would come of we are the down that we've profitability. I'd you've reason over time. So, I to adapt maintained our I channel and ability to in guess, very done say, that we've say bank we we we're the discipline Japan. business fundamentally, is, – Part around is our what disciplined have demonstrated I price we've how seen in back

been haven't deposit the were tight. really margins We when products chasing

in and some So I a going adapt product our we'll about customer keep of have off we're discipline channels feel mix And affinity like the pricing good we Life front less sensitivity price center. very Planners there. we position to of preferred the the but franchise have groups. see based where and demand, We always

I'll add. And Alex, just

that a hedges a $X.X gain the third with and our the dollar And end at earnings of have of also that billion very We quarter. the given net business equity position. the hedging Japanese the has established program both strength

Got it. Thank you.

you. Thank

from Ward from Mike Next coming question Citi. is

Your line live. is now

you, Thank guys.

reinsurance So one you lever as for potentially source capital. of mentioned a

reinsurance an means or life be color it annuities sort Just else? anywhere wondering if that could we or be of deal, there? Any expecting should

Sure.

Let Charlie. me This that. take is

in-force with both on continue the valuation life. guaranteed and the blocks by possible as gain we pleased VA to explore variable annuities about with we First, that then de-risk of opportunities the We're traditional living benefits sale business. block bit really we'll for to little sold traditional deal I'll of annuities additional talk with a And evidenced reported.

having time to reach over to this, just the explore as said of another the do to position in do But sensitivity we'll expect pallet stakeholders. not as we through and in of transaction we've if a market interest additional possible opportunities, annuities but it's continue goal we're before, natural reducing runoff said and through having completed business traditional only variable something, We the transaction. we'll best of our of

So that's on side. the annuity

looking we've but the On becoming less to block past, we've that the to higher consider a for of resources the growth sense with at various it a with noted Life side, opportunities our a make has certainly company. way, and caveat result, opportunities they came we'd if dedicated shareholders. in And as aligned as strategy market-sensitive life for our sub-block

our our approach disciplined business the to in be going we're to as individual purpose. So to core be continues life

helpful. given about just Great. peers larger PRT, PRT, then that think $X could wondering you million, there's maybe business $X that accurate? very like $X something billion of ballpark your of around in per how Thank kind has PRT sounds of the in that. I $X think or this of if past, guess wondering a maybe on of you. I million per it's of one billion earnings That's benchmark give you if And terms earnings

– I is is don't Yeah. Hey, a different. the deals Mike, putting are Ken. be little benchmark a would appropriate. this out think All

Thanks. Okay.

Thank you.

next Benguigui from Our Barclays. a from is today question follow-up Tracy

line Your now live. is

revisit to taking quarter. be charge I you'll fourth just in the reserve the Thank wanted statutory you.

compatibility. would comparable Because some are elaborate GAAP on if reserves me conservative. help in cushion I imagine the mentioned, on be understand mean, side? could more you as Just there, statutory I there'd it size why the better be you would

that and conservative to we Yes. Tracy, and that, hold because it's just it's But view. generally But it we stat capacity have will more because again the -- different. again, absorb is -- still also be and higher.

little or a will Okay. on higher, say higher, When contribution mean be absolute terms you the you bit confused.

we believe we as capital result. have excess we capacity charge, had we we believe to that and a position No, within PICA's the I'm sorry. When continue absorb took to that

was Okay. But it like pretax. billion I quarter, I something think $X.X last think

same So, for dollar stat? are the we talking amount

It finalizing results. quarter would our to with AA the continue be fourth That be RBC higher have and again. PICA, to absorb again, maintain finalized in capacity consistent we standards. within will We're we'll still But our that those. ratios

you. Thank Okay.

Thank you.

next Krueger. Ryan Our question follow-up a is from

Your now from line KBW. is live

last it lapse reserve able you just quarter. what to quarter. asked to Would wasn't stat ultimate to rate be I when your and did the I is ULSG last you asked moved review the figured say assumption Thanks. you what this total since

we need follow that's pretty to both on up if of all right. think They're I specific, those.

no a shot. give just I it Yes, I'd you. figured problem. Thank

Thank you.

ISI. Evercore Next follow-up a Tom question is Gallagher from from

line now is live. Your

Thanks.

And question one to cash, $X.X -- to believe, debt that's billion net on Just I in the think a includes we cash basis? prefunding holding middle again, back for the on company company the $X.X part Thanks. should that about the the of XXXX. I come just to wanted holding confirm billion as think that, about the maturity we billion, really intention. should a $X.X

debt selective will to consistently In what year. that with at looked debt debt hasn't it relative We've And that we've in advance. depending market upon risk it the and company, is cash -- as refinancing made But call matures good. happy months a it. does We're we Tom, good to our of callable debt funding XX $X.X The it It three vary to we to depending debt be our the we a it's years, issuance. of over of you the of vary XX timing in debt this enables earmarked this prefund or in when Yes, issued August, issue And or us much. last will fairly our consistent timing overall, and timing level. and on good to and reduces at changed level been continue conditions. particular debt maturities position practice billion if holding a maturing timing though, we're And was debt practice. prefund going that's for of to overall, callable outcome. next the

we have, to as sources highlight of continue debt. also contingent We

our as that's very the level well. with of consistent rating our how of we debt overall, manage about So well strength we very feel AA debt and good financial refinancings our

I'd and to what other execute Charlie. I reiterate we by it's Tom, Hey, in have plan. as levers said well. believe resources beginning the which We on our just

are and it to other well. hand, the there by did. the -- have we've Ken look you as So as But Q&A in other at means reiterated can you we the plan throughout which End our on call, way execute said, one of on as

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

thank for today. us Thank you, and operator, joining you Okay.

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

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