Prudential Financial (PRU) 3 May 232023 Q1 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 floor Mr. over I McLaughlin. Bob Please, go ahead.

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

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

a reflect As accordingly. was the duration targeted year of reminder, the the prior adjusted at been that guidance long results our financial have and year results improvement adopted beginning accounting

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

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

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

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

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

quarter, During positioned less market-sensitive to our continued and we the business first better growth. deliver transform to to be sustainable long-term

balanced while value our risk us creating well position stakeholders. maintaining and to to focused management Our current strength, robust liability the macroeconomic asset our financial environment management disciplined capital for navigate on approach deployment

nimble strategy this less higher to the Slide update of I'll market-sensitive company. our on growth, begin to an a with X. Turning and more morning become progress

next world, services around sustainable to generation expanding experiences. long-term of access and M&A industry-leading the solutions growth our customer by the products programmatic and and delivering We through organic creating and are financial opportunities, investing in markets including growth

US private acquisition management. recent more while billion in examples. manager lending Capital credit announced PGIM's leading with a origination Yesterday, assets revenue expand majority alternative stake and that lending than fee-based provide The existing complementing direct Deerpath under acquiring Management, will is Let and capabilities, a direct PGIM's a we capabilities. additional me $X few Prudential providing in

is model, building will example we benefit are addition, both which of Deerpath retirement as business our well insurance self-reinforcing third-party our great a investors In customers. and as

our Our transactions. $X.X business which than Institutional its first Retirement quarter Strategies Transfer strong first sales, Pension new total business, by driven quarter in largely best Risk with had business ever had more billion

million risk experienced In longevity addition, in momentum we transaction. reinsurance continued $XXX a with international

growth where through milestones especially access in to our Brazil's international our Latin and three reached growth our distribution driving We consumers new which third-party channels. expanded in allows year-over-year Brazil in are more also channel, particular, America, products services. through sales business, In achieved double-digit distribution our we Prudential growth of

introduced of new During the strategies protection expanded suite life also In sell through distribution evolving and Mercado product retirement continued accident its our individual into our quarter, our solutions. to and the health FlexGuard to of the expanded the US, we our distribution Mexico expand customers. We Libre next-generation and to meet products. needs enhancements business platform

ago total significant are increase environment. the We rate annuities a Sales interest quarter. of to sales a in in meet one-third higher represented quarter, a diversifying increasing first customer also needs our of fixed annuity mix from individual year sales

engage better drive to and in and our with We experiences more solutions, enhance products the which continue outcomes. digital customers to customer ways

Let you a of me couple examples. give

and time by top impact. several e-signature a reduced carrier three survey our ranked in applications has e-signature, A environmental which of Prudential as majority improved adoption. now submitted industry annuities days are an First, with processing

weeks. to receive By new that using beneficiaries in digital rather than allows customers portal to this increase processing XXX% have feedback. minutes insurance in electronic positive in and file Second, claims overwhelmingly portal claims claims experienced we customer the life quarter, and we launched days a a for payments

four. allowed macroeconomic Turning slide navigate rock balance to now the and risk have us frameworks to environment. solid confidently robust Prudential's current management capital sheet and

is including management. strength, at of liquid high-quality, by $X.X well as financial first assets our supported approach Our AA billion highly to disciplined as and rating portfolio the end asset in a investment well-diversified quarter, the liability a

that of further We've a also proactively taken the contingent advantage hybrid liquidity position. capital our of the and November We year. facility this financial amount next $XXX replace million year of same debt issued pre-fund and the of one optimize maturity opportunities matures to in to issued flexibility to

Moving to five. slide

capital long-term first the to X%, the quarter, effectively disciplined million $XXX us the deployment to approach and our quarterly returned enables by to growth annual businesses of with our shareholders. In shareholders we in also dividend Our capital to consecutive balance increased dividend increase. investing XXth returning

our approach will Looking maintain redeployment. to capital disciplined ahead, we management and

mutually enhancing to the businesses well expanding us We coupled and leader strategy, position, growth financial security are this around robust confident investing, be people that and of for with approach, world. in access mix to positions insurance our a retirement

morning. you overview quarter and an results first will business with time financial on performance. update this Rob our for And that, of Thank your our an now provide

also for the will businesses. I'll specifically holdings, commercial investment our overview results near-term you, provide an our of estate credit Thank potential I our a with of PGIM, risks associated increased given Charlie. our International and an on US provide performance real cycle. and overview financial portfolio focus business and the

of our results slide I'll begin with XXXX. financial on quarter first for the six

underlying including as pre-tax elevated by income rate mortality seasonal variable environment, income, Our investment and was interest offset from results benefits as well growth, per billion experience. higher or a operating lower share after-tax fee an $X.X adjusted the on reflect These $X.XX basis. business

the improved mortality to to transitioned compared COVID phase. has endemic While ago quarter elevated year as an

to lower and equity assets and primarily operating market co-investment global our had due management from year the businesses manager, from net resulting from the outflows. higher rates, revenues seed interest to Turning related under earnings. fees quarter. the to declines, increased ago results compared investment our asset PGIM, lower management Other

favorable on primarily in US our income spread to of largely income, by income, earnings income less Results due investment higher variable businesses in less favorable impact favorable lower and investment spread fee variable International primarily our The businesses, decrease underwriting. rates income. lower of reflected partially more offset the reflected

their active more investment periods. seven, last to investment has capabilities diversified income, our over PGIM, slide equities, three, under XX% with public or remains of classes five Turning management fixed global and manager, across PGIM's attractive the asset in private and both alternatives. assets XX-year outperforming benchmarks and performance

PGIM inflation, in driven Institutional defined de-risking primarily income interest driven investors strategies. by redemptions from industry. liquidity experienced retail quarter, fixed billion needs, client outflows the including rebalancing of outflows $XX sponsors. of with Retail for third-party rates were the mainly consistent benefit actions institutional and higher and by net were amidst outflows

As the Prudential, mutually engine growth businesses and international the are Retirement success insurance and and of investment of US PGIM self-reinforcing. of and our

expertise, create capabilities, origination enhanced access our and asset other sources value more customers. advantage, or management investment our capital businesses PGIM's and solutions institutional bring private of competitive for and to helping a

XXXX through Our and totaled of in in billion source access to liabilities. insurance net quarter PGIM businesses, insurance first unique retirement the $X turn, well affiliated as as of a growth which flows, provide for

enhanced secondary grow has be Charlie of billion approximately to infrastructure estate our through equity assets addition, real further corporate the and as $XXX Deerpath private, we debt, private across continue of private and equity credit, Capital, and business, stated. previously will In acquisition and credit alternatives which and

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

market. products of and less to market-sensitive the billion shift and and higher its strategies Retirement experiences, sales adviser in and markets, lines our strong across growth addressable towards of first continue expand quarter business. individual achieved and We customer our enhance institutional $X.X further

the market-leading a Our end of jumbo record at quarter first $X.X risk the with values capabilities business pension transaction, including has which first quarter. sales account contributed Retirement Institutional transfer of to billion,

have resulted as In sales strong Individual of like as sales. since $XX fixed more increased one-third well of approximately inception, solutions over product representing simplified continued of FlexGuard sales our FlexGuard that Retirement, and sales billion Income, annuity in comprised pivots

to our reflect products representing with pivot premier the quarter. XX% prior segment strong in driving product life the growth from the of products earlier disability with in continue strategy XX% and health group sales sales year life individual we variable growth diversify supplemental Our for quarter. and And sales about insurance

Turning to slide nine.

international multi-channel high-growth in differentiated Our a aimed businesses businesses model, distribution have include we presence our insurance well life companies, where as other expanding our as Japanese emerging at markets.

In service on Japan, providing and geographic expanding are offerings. product our we high-quality coverage and focused

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

Life Insurance of We tools. J.D. one Prudential satisfaction continue experience categories in survey. in digital Power XXXX support, agent including customer enhance Japan number ranked of the out and the three to two customer through

for proud customers. are value we recognized provide We the to be

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

sales the Brazil Our Consultant of Japan. Gibraltar higher International XX%, in as up sales dollar primarily Planner the well the year by continued by were highest channel, to sales driven driven experienced businesses prior mainly since US Compared up their from in third XXXX. quarter, Life sales were quarter sales. momentum XX%, as the higher Life

portfolio slide Now turning our XX. investment on to

a management robust management. We security underwriting rigorous portfolio to liability selection credit construction framework. a disciplined and and approach practices, to management have our our diversification commitment investment It broad reflects and asset

We experience estate. asset placements also across deep including leverage and and its in long-standing PGIM's private multiple classes, real expertise

securities, investment of are Japanese invested US the points. XX% of are With here our government bonds. of respect grade. investment securities, treasuries of in corporate to XX% XX% is comprised portfolio the a key primarily portfolio, and over which in portfolio invested government is few

XX% and lower almost the securities. public securities below comparable experienced private A than and on BBB of rated in Private BBB resulted and have our covenants cycles, privates consistently placements corporate securities. our financial public half have to loss credits. In have been structural past represent protections that of single These comparable placements these losses over

more XX. an represent on I'll area loans interest; detail of Mortgage slide provide

conservative represent coverage an and of X.X average debt times. Our mortgage and service of reflect loans loan-to-value XX% our portfolio our with of XX% underwriting

The in office broadly defensive in portfolio sectors and more is multifamily and overweight underweighted property retail. both type, by diversified as and industrial, such

overall of line represent X% loan office the assets, portfolio. coverage are invested service that ratios debt in with values only with and Specifically, properties to

all cyclical a process into potential review be are management capital Any these risk in and management a manageable. We includes framework, scenarios to stress expected tests robust tail portfolio have and which disciplined to least annually credit investments losses factored at and framework are monitoring scenarios. under our

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

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

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

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

in noted, after-tax pre-tax we of in might first the share our how adjusted was get earnings and suggest income As the quarter $X.X adjustments of operating following quarter basis. a second sense resulted To $X.XX for on an per develop, items. billion results

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

to by by a first quarter. for million adjusted of us in $XX for combined we quarter experience. elevated the other income increase million, Next, operating quarter. expenses second $X.XX $XX baseline seasonally we per get the due adjust primarily expect underwriting share to last, to And the items items experience to first These normalize

specific is higher I'll that the note key growth, earnings earnings you of second to interest due has exclude power share items per improved underlying including benefit $X.XX. the business that our takeaway The rates. be if would to quarter,

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

to Slide XX. Turning

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

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

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

investment As replaced of remain billion November. and $X.X shareholder Charlie facility balancing businesses in preservation noted, will financial contingent that flexibility, distributions. our in thoughtful deployment, we We strength the a and in mature capital capital our

our transforming businesses XX Turning sustainable summary, growth. and to for in are Slide we

current balance and maintain sheet, macro capital to of the deployment. the balanced rock-solid a navigate strength approach our to environment continue We financial with and we disciplined

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

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

live. now is line Your

Good morning.

$X.X changes. some portion, be NAIC on just the the has the for Can out a interest $X.X of will think rules know adjustment I changed for I you you Can think through there within the year rates was it on some from and suggests billion maintenance reserve. or -- billion last will I guys at there the question that whether least proposal -- if changed? First based not that the you around negative think that not on that from talk being the there's be impacts recaptured derivatives. mark-to-market if if is Curious potential interest all, whether Thanks. about go you could

Hi, uneconomic issues the that's the in NAIC they've of you as Xth. with They June -- for the proposal, what process until comment IMR. and Tom, is Yes, it's Ken. is a addressing released mentioned, out

the giving issue. to right So, addressing the they're in step collectively industry that think ACOI on the focused direction some for this. regulators they're industry, input it's time big as to We this receive both work the -- a on

to engaged are is hard changes this very needs process it on for in that, the to said a out. but process, sort discussions. some the proposal constructive seems year. Having it's and but areas, It's predict few the others there that We regulatory changes in many path a

And what's now maybe assumption you'll that of back, get is impact kind partial of some potentially clawing case just a of or based there negative base it back be all RBC? out -- on you your Ken, a would part, of would that it on

out input, there it's but very to will intentions I path resolution, taking are it's are predict. again, There think plays want out, the for Tom, time. of are those out. that that things being this sorted are to on give discussed they all and that until indication things get how again, that constructive to Yes, put But I process, an hard a the in play wouldn't

And for a on follow-up, just -- my then leverage. question just I

sorry, $X.X I think redeem think to QX. The -- I sub leverage? or you've you're in million June. And issued $XXX do announced of debt quarter this billion going well stand in where now you as you on --

I debt? some talk about Can perspective, can there's more help changes elusive bit from do been provide upward about an Are think -- do the to Thank an have you accounting right in But you -- it's perspective. at to calculation issue a there? you Because just from you. our some capacity level? of you certainly,

in the debt, line of increase Yes. in which we when and the first quarter, call our at billion with leverage Sure. $X.X in to that Yes, of objectives would our were has then do plans end capacity. our June, we that been always debt

we and look is cost though, a rating free overall stress function criteria cash which we profitability, objectives, believe and Our as of debt fixed capacity, coverage is agency other at important. flow, testing,

prefunded So, was improve But not track debt for for on overall, going that would our just it's And our we're leverage our capacity determine It our of part capacity. again, that will calling the was plans year. debt debt plans. and forward. that

Thanks. Okay.

you. Thank

from Next from Krueger question Ryan is coming today KBW.

Your line live. is now

you Do thinking repositioning a PGIM that's think behind Could talk now? the morning. forward? guess about you Good do you going drivers in would then you -- And quarter? of or flows a further Thanks. bit of are little I how you Hey. liquidity-driven more impacts, anticipate the the you outlook about lot

your I'll Good question. morning take it's Ryan, Andy.

always to going quarter-to-quarter. are discuss, flows As vary we

focused stay on record. the we track So, long-term

experienced In you fronts, net retail billion, third-party both driven a income heard very it is QX, say On and by upfront, the $XX of we both much Rob institutional. fixed as story. outflows

funds, CDs retail money funds of short-term is and Our we see the mutual money and in continue US solutions. were market fact outflows The out active $X.X flowing into billion to other quarter.

environment of quarter the That consistent the being the outflow and reverse see We a would expect inflation the moderates retail did industry. with once to said, trend slowing stabilizes. we outflows this rate in

from the as That mentioned, outflows you by On sought will would almost in quarter. were de-risk driven geopolitical and expect market sponsors the remain redemptions business that institutional We and billion flow was income plans. their uncertainty. liquidity, investors for given fixed near-term, public the that institutional as DB entirely net $XX.X institutional side, heightened macroeconomic, the the volatility volatile,

three, marks. assets our our remains XX-year strong That benchmarkable long-term of with and being outperforming said, very performance the XX% investment over very, five

benefit in for from business, the time as between platform, businesses. over going income we rates have insurance and to our particularly the good of our We sustained asset management are higher high confidence fixed and will synergy power be the

the paying we'll a attention net by we to fundamentals, know be So grower.

in there's give in follow-up on that? less some of commercial real estate transaction-related other revenues other current estate can Thanks. or activity, What related expect environment where on of you -- And in to And is real fees? than to the would then, I guess, how that lower that PGIM. bit a normal little sensitive you fees, because remain lack a incentive perspective the words,

Ryan. Yes. Again, Andy. Thanks, it's

lowered real run as As our the to in you expected you're we ORR, to know, revenues. due rate speaking specifically expectations for last quarter, estate-related slowdown

And agency about as you're of variety ways, side, a talking fees. transaction but in fees in the up in incentive that obviously, shows both and also

in we in saw our the came average, because lower expect than estate quarter, real that So we expected as we slowdown it.

a thing QX. the other And would guess, be in only low is, I mention reminder incentive fees to I seasonally tend that just

that definitely So as well. contributor a was

time, the So slowdown expected the the an I still estate ballpark, over have real about will million average impact. definitely, of is think $XX but right

you. great. Okay, Thank

Thank you.

next Erik Your is Research. question from coming from Bass Autonomous

Your live. is line now

Thank you. Hi.

capital testing credit stress mentioned plans. that and including in your your You portfolio management

recession hoping you those what I like look what capital assuming So impacts could moderate just on you're could a more scenario. a in and color or provide severe bit was

to Erik, that about I'll testing. we how turn over capital how you sort stress you talk first and into I'll it's about Rob. the stab take think factor we then, perhaps Ken, And can describing planning. at our of it

we a economic on standpoint, decline base enterprise sort -- management moderate from the a factored stress real of very and series our capital some board full look vary at of an recession estate well. a tests includes more to stress a of whole subject both a our we robust which case results -- have are respect we of with the banks CCARs our we planning as our capability and are portfolio, outlook The So run perform perform between that risk tests particularly that basis, and into those severe to reserving.

disclosure order disclosure But provided We what was the or if we should that that. say on when cycle to of the elaborate haven't, updated the last, to on first want in I articulated a first credit then that from you impact -- back quarter know back Erik, portfolio in of same some any further we magnitude don't I say, the I order would from magnitude of if terms look is XXXX, that. today. roughly is coming Ken, on you of

Yes.

on of plans your our plans variety we your and Rob credit and the which And also, in-rating of those Just part what just question, level stress of that, year. second described, the of plans consider. a our are -- the slowing look is we the of stages on expectation losses though, migration. an for at our And -- set Erik, beyond what testing mild we recession, sort of sort early would include elevated a underpinning of a what is economy that's when have as we that also underpins we

Got US life you. little talk about bit it. of was And individual the forward. I business going then view strategic hoping a you could Thank your

almost breakeven, this your under basis. GAAP implies business LDTI, on a Just I slightly will be profitable are think guidance roughly

this to are improve the could any of there or that you profitability business? considering take that So actions you're

and question. I'll your Caroline, it's Erik, Hi, take

decline earnings state, for Life will year in you deferred. business as obviously, AOI a in this recognition is expected the as result LDTI meaningful be So to

impacts the pattern, business. the While it economics the of this change doesn't earnings

we we've the to are power the to products, remain sensitive do interest encouraged we rate impact So taken as to enhance even diversify the LDTI, proactively by under pivot actions the overall portfolio. of as And however, ways less earnings well product at our to business. looking of

obviously this life on impact AOI attractive recent do based Erik, nicely. rates. at also variable higher FlexGuard And is indexed over our returns. growth, time to compounding up written our reinvestment the the ramping also core new of And business expect product, Life, includes launch of universal grow which We

We business, core we business. like remain And and to distribution the the particularly as our to Prudential's And we mix believe our with a additive overall, Erik, new much this and breadth And profile and as brand continue Life returns. like really our well also Life that balance. potential at committed business strength. favorable in and it's to pivot, certainly purpose the business our is individual the longevity do we're the terms business mortality more business brings, our our overall we very of risk that product writing growth -- new attractive

you. Thank Great.

you. Thank

Thank you.

Your Jimmy next question is Bhullar from JPMorgan. from coming today

line live. now is Your

Hey.

commercial on mortgage loan Just a first book. question your

that in you the If in discuss And past any either and how loans trended that over us have portfolio? the that could could restructured been your you several confidence stats that of give months? sort

that. handle I'll Rob. it's Jimmy,

property a a markets sort direct management very They've high-level we well a knowledge track First, and the diversified broadly PGIM's team portfolio that's and by capabilities record the got from really and years estate proven just this And real high-quality origination area. there geography of both in that standpoint, experience portfolio, types. from industry of is a underlying over the a in got in XX deep arena. benefit

actually the the we look When quality well. it's holding up quite portfolio, at of

XX portfolio, that basis under then year basis that see just XX reserve is is can points about that ago. $XXX for from million. about a the That's our points CECL little against a portfolio You up

reserve. that, our data. But that's in there, primarily estimation specific an portfolio outside a really single across property. based a of comprises on with the office have We loan historical reserve a only of the losses reserve general But

your plans. should diversion then buyback Deerpath, be there's we we funds of impact this, Okay. not buyback expect to fund a from any And the that assume of acquisition or sort going on should to of

Jimmy, then take answer level directly. and I'll a up raise just your question and that it So, me let

of disciplined and and our other of and to businesses to of and our capital, We shareholders buybacks have And stakeholders. be said good that the to stewards within we a have balanced when very want and demonstrate we redeployment we think about the continue capital capital. will approach application to

the first dividend. we included consecutive quarter, you shareholders, $XXX increase million in returned to the annual which over And XXth in saw our

about take with So we to your moment, and let -- about optimization, for some you allocation a a if back step which particular how point. observations but I capital me think share fits

domestically businesses, to all we're We our across that internationally, look and capital both optimizing deployment. ensure

So our for we'll balancing to outcomes stakeholders capital investments M&A, all maximize capital growth, optimize continue maintaining by in to financial businesses to ways our returning for and our shareholders business and to while strength. look programmatic

you four We that saw shareholders, share repay all And both of examples invest the hybrid, this we quarter, form in with right? to M&A leverage. to which dividends the repurchases our in of to our continue Deerpath of lowers returned our -- businesses. lowers We which capital programmatic announcement did We and made the Capital. hybrid, an and

So generated the in go flow forward. we going environment. given the were the we'll able our position, evaluate strength as especially these to given an strategy forward, we've example, macroeconomic as this to of cash all quarter, all things we given and current capital of But continue that our do

[Operator next from question Instructions] Thank Fargo. Wells Greenspan Elyse is you. Our coming from

Your now live. line is

Hi. $X.X X.X at Thanks. at -- are things. down, capital on holdco. around right, debt When first is of the we morning. Good you side the guys question after billion pay at My the

that -- run sense just want looking you just can of for to relative So you give I'm to me where target? a

take to any capital Japan? And of PICA this then sense just a well from you that the can as going as dividends out repatriation year answer of question, you're of that give timing the us of to

Ken. it's Elyse, Hey, Yes.

in planning quarter billion built we we higher this before, mentioned a subsidiaries typically some time. been to lower the and and quarter cash be and all of how timing quarters. then flow for first we've $X.X for what As is of terms XQ tends from quarter, and that’s -- I subsequent saw for plans our it That's in the trends

periods PGIM, profitable higher generating cash includes our and our operate cash HLA flows others why All in year of in be that's It will the as them within $X lower we're and PICA $X expect plans. through line expect businesses progress and in the define of to proceeding with flow. from and and we billion That to overall, some range. we billion range. our But we are in very we holdco

the the be real assumes the prepays alternative then baseline, And could lower second income just Thanks. PII, given estate markets. normal EPS, seeing and in volatility quarter XXX but that we're

the the So we for about also just PII, of the think how year? QX, but for balance should not only

it's address I'll Rob. try that. Elyse, to

the the from distinguishing the performance to of is regard returns. continue alternatives returns primarily your on equity our with the First, the that part portfolio. portion to to of prepayments impact portfolio, going component in private market of question, That's

is on any got, of mezzanine is in a that allocation directional. correlation How quarter given note manifests also in quarter it quarter. within kind that That is that conditions PE dependent the we've the allocated of I'd actually And debt about that to distressed and infrastructure.

a And the PE lag. that also is one quarter So not remind on reported markets. correlated with the you entirely

equity you performance quarter, on a indication be at basis. that portfolio some of the would look if the in first So go-forward

basis. regard on we're think higher prepayments, rate we interest on a of it's a see did prepayments reduced go-forward a that a to -- that's I trend With anticipating level And environment.

just over And we've our XX-ish of the just modest or are Maybe continue that that of got. so real is emphasize, alternatives of our we And to back the team that to from benefit horizon, alternatives long-term. the -- portfolio, we're for diversification with close to from expect we've it's I'll to the going that dedicated alternatives, real question, relatively a around the and selection, percent. your estate we estate the part portfolio including had actually efforts within component component to manager the invested have in the

you. Thank

you. Thank

Scott Goldman from coming is Sachs. question Alex Next from

now live. is line Your

morning. good Hey,

all to the relative place time one annuities. had this I LDTI is First much, where, guess, the was I of quarter. on stronger the came That result out in presentation, put a at much the you recast,

NII securities as versus how there on a you on see to I you provide LDTI changed they me to through wanted and shorter-duration funds of about was are declining? I that what of to if I to and the federal of at had versus some have all the know collateral of the think struck have you one any levels sort model us sensitivity So time that, you today just the what talked just kind things the to could were expecting if at see help NII, perspective wanted think cash. through And of the them recast? And projections sensitivity that we

Yeah.

questions. So Alex, Caroline, your and it's I'll take

this of the would with the that business. Strategies we're first retirement the continues values our in record quarter $XXX institutional growth in I'll reflect out that point strong billion. So all, experiencing which to ended start business, the business earnings with account I ongoing just of Retirement And

values sales, nearly from the first in including account Our best our $X risk ever business. in pension transfer billion quarter benefited

individual sales, and indexed of than leadership see saw strong And if clearly $XX fixed by represented strong suite sales as anchored our I then side, annuities. variable success, the the variable XX% as continued reinforcing offerings complementing annuity over for total growth annuity the retirement we've continue our in top a our five our player position quarter. space. we that sales of over And FlexGuard indexed in well, three here less billion move In to delivered strategy to years,

is Alex, robust Compounding this earnings our perspective, from disciplined growth story pricing. an

as execution. growth clearly is to of go distribution profitable So our to leading market, shareholder as to able to our well maintain when also accretive and pricing this thanks strong capabilities strength We're fair, value. we our brand, also competitive trajectory, the

a seeing are as current as Retirement environment well business provided I in would rate short- term earnings benefit are Strategies in both long-term driving from point tailwinds the which by that interest out income. favorable spread rates, also the

an bottom in remain expense then improvement with eye focused on finally, discipline towards and operating the And we protecting continuous line. efficiency

to factors a earnings to in which really continued for see contribute are strategies it's the these strong well-positioned retirement that business, the we of continue of combination all So growth.

maybe just that, Fed Got rates, if for a to react shorter decline. it. guessed trade portion Maybe the there sensitivity I the interest than mean on like just I follow-up that's run to that have the how us gauge leverage that. would seemed to It the bit term upside begins to there's to a any more may is way

– overlook I estimate? don't So to want

the rates a spread well were from on short-term seeing interest benefit earnings, then that as the see we decline, as And growth to driving to the that in clearly, we as rate that the the spread current the a and So we long-term point the are clearly, reiterate mentioned, income environment, I a made Alex, also if be driver income. of I want earnings that's earn. continues rates to reduction would But well. business I favorable see both as

a so persist. in would to expect even reduction was if And we clearly rates, there that

you. Got it. I Yeah, understand. Thank

Thank you.

coming Next from question Piper from Barnidge John Sandler. is

live. line Your now is

as morning. around disability, is good Thank you jumbo reductions any market? the in both insurance. group larger life question My the Persistency and into you from and group deployment the seeing drivers, opportunity, the talk very can decline much for impact about maybe the

Of your take and I'll question. course, Caroline, John. It's

smart start remain really taking just So is of and growth. let and profit to at disciplined And pursuing back me a that by step pointing means focus just core price our that business out focused. group

year our strong the and the quarter saw attributable business and in ago sales. from strong health. sales comes first we in We that growth premiums discipline X% while And annualized disability and saw in driven is fees, decline quarter it Group primarily to new to year-over-year pricing new growth and earned a in supplemental was Life, when by the premiums

just profitability we in rate level if subtraction. retain well So When as unable which, January John, are to with question that specific and are to choose our achieve to which experience Xst desired appropriate it business, persistency, the through of to action, renewals, is, pursuing highlight to as fact, really as you by weighted towards your comes our I'll renewals, addition heavily we know, effective our on date. not approach

seeing in in And life quarter. first principles the actually the you're in trend strong. here action perspective, So group from group those a remains in disability the ratio business persistency persistency our

about With workforce John, in you the of there. our point really unemployment impacts seeing and on to signs this reductions, time. any we regard aren't at impact from any also impacts asked business

tight large few have a overall be While a unemployment openings. We're with that their of share continue job conditions there been low announcements and current large strong. employment generated labor headlines, of layoff have quite seeing number markets clearly to

and the as results favorable group reflect this in is of business macroeconomic management. as proactive strong tailwinds, employment trend disability claims evident on our our favorable execution well results So

unemployment low And disability historically mention, period risk sustained to short as to the also, increases an we in impacts rates in could would broadly, I claims. increase John, of business view So medium-term. our over over unemployment the a drive

they However, would XX into cycle typically take months to six to our results.

-- Thank the you pandemic product there Can to talk you. you categorizing around influenza. like are Japan. is Thank enhance about launches very COVID that I improve or like around believe or related planned anticipated much. infectious restrictions, that? And or any lifting another distribution, question disease they're

question. and Japan it's talk me Andy. take lift bit a So But up John, sales it overall. let I'll your just about

well the growth outstanding pleased We year-over-year. and very distribution, experienced had and where bank That Our X% Life a success over is the sales Consultant and brand. improvement was in the improvement with we channels. a spread out product Japan we advantaged XX% Life as really competitively results a sequential were operation quarter strong material with great year-over-year quarter Planner,

on designs question as wealth innovating ensure health work we on needs. retirement, product, for unmet your needs our drive to the and meet care transfer our To and product we that continues

We and experience around and focus customer on the efforts also enterprises. experience the midsized particular small our the product to a to offering drive to strengthening continue with

while to impacts pandemic and businesses time achieving retention to of about in recruiting still related seeing everything it aggregate, are always strong the challenges as levels restrictions, said, COVID sales As far perspective. profitability. and as that the our related to grow ability But over are our our customers being look effects quite are optimistic seeing if from at you very, very healthy a we we're is, deliver value begin to we these priorities But subside.

you very Thank much.

you. Thank

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

line now is live. Your

to want on I I go previous capital, it just answer Thanks. back an question Jimmy's was think question. to to you gave that Charlie, a

billion felt year, committing was there or wanted wanted I like $X response. So just to just to to to little opportunity are for the you I give maybe you confirm, the a just of your buyback it the clarify. bit of in vagueness

Suneet. no the evaluate of macroeconomic quarter will to buybacks, we thanks, to response. billion Board in But be according conditions. the There and No, authorized that my vagueness $X each has is clear,

that there we is that we can't no statement, can't So going per make. we wavering would be but guarantee -- which to a se, forward-looking are

execute So in on our to no program. But equivocation the forward-looking desire again, we make can't statements.

kind if And loan or what through once that clear. about team, you where hire a I talk know portfolio Thanks you about to approach? then year, the your go I internal or curious least process how at like? go you validate is that. that on your process that and That's Is that? or Ken, mortgage the XX guess, think for when you Rob evaluating it's and process Just firms for you Slide Okay. of confirm an do use about externally don't

the Rob, take it's I’ll Suneet, and Hi, question.

it’s all. So rolling a process, of first

on So throughout point it a in not appraisals. when goes date we year. time It's single the do

outsourced combination appraisals, give properties, using We ultimately, process the is appraisal. that's a appraisals very us and runs rigorous that the of but of sort internal an central have which the into appraisers order we a those of on around is a this have appraisal to team input in all

and outsiders it. valuation even at will use for the constraints and internal appraisal appraisal and data a but process valuations all the a -- standpoint that into from we from data both external that look around standpoint, is put inputs one We we

to external we noted in cap rates resulted appraisals that phenomenon generally as in in property the them are been own our received in internal that about according where XX% in have we've what appraisals the lower floors those our we instance, different use valuations. on past, we've For internal types processes. which the time at a we have make that That's vary than

internal valuations, based much we number it applied our that's a that you doing what external internal see when very quote appraisals, conservatism level of view informed an by on but it. on we're in So with

could if in again. just on sense. sneak Makes Japan And I more one

So higher relatively a phenomenon. rates in is new Japan

having one, of the maybe or products? currency I'm And behavior kind so changing some with then ago, relatedly, products. foreign curious, I issues So a customer quarter is think lapses were you of in just that guys terms in

that's if terms it's just Thanks. if in that there So if an update of or be curious continuing would there's stabilized, helpful.

question. take the It's Sure. Andy. I'll

Let me second with the your of start question. half

on surrenders. So

through So as seen we surrenders the December. way quarter, elevated And in as to that of decelerate subside to we've discussed into one, last level quarter. continue surrenders the quarter the began absolutely continue all our

pretty So we're seeing and back come that subside consistently.

for would when and say obviously, businesses, that, As say, far for yen our I are higher as good good -- are they're interest Prudential, for I US rates, higher higher the our business. rates, would and as good always higher we rates rates, interest Japanese

while earnings yields to and an from flexibility greater that's give to designs also higher delivering our shareholders. but deliver Obviously, additional value in additional our product our perspective, value allows us us to customers

these as So, all-in-all, good things. trends see we good and

Got it.

guys. you, Thank Okay.

you. Thank

Your from coming next is question Tracy Barclays. from Benguigui

is now live. line Your

pull I you versus I'm just you quarter Thank an forward you. if in a that curious guess, quarter elevated was early What saw the last first season drove typically what flu or mortality see? not?

consistent excess Sure, certainly, experiences and the mortality industry. what quarter, see Tracy. in across typically that's thanks business elevated It's Caroline. question. first seasonal Life mortality, your with year even we industry, from was the along was and illnesses. with COVID, that The impact the the to And And this for saw no we and exception. other respiratory seasonal also flu And due some

incidence face that term. near higher business. COVID within transitioned contribute believe the over we And to a value therefore, to endemic our to of claims saw forward, of amount Life state still Tracy, mortality medium an and elevated also large has may We going some do

long the to will levels is previous winters, the just we point pre-pandemic out, trend better mortality than however, in return I the that two belief term. reinforcing our overall would that

you And evidence quarter, experience of our flu finally, that flu no our of over last some experience was some year. unfavorable early and last season mix book to horizons. helps in also and mortality mitigate an about even businesses we asked Tracy, diverse see longevity though there season the longer-term mortality in did of year

that. appreciate The your I'd like office next next Very XX question, helpful. you maturities the loan to I about months. in ask

about it Our it's looks $XXX million. review of stat filings, like

the interest floating that? an either the cap more yields extension? equity the purchase like you feel could balance is feasibility debt Can or putting Do to borrowers allow if rate in by loan current reduce with of you speak the loan

in portfolio Tracy. XX% over the -- next little The It's two the actually Rob. Sure, years. -- a about matures of

you as our recall looking The quoted. opposed rate exclusively -- further statistic that that fixed is it, just from almost So portfolio about rate. think a portfolio a at you little floating to the

curve a for of are And the the curve when differences happened at at look short where been dramatic at differentiation, on the obviously the end the basis. of the going rollover so, long been those to floating on the have of rate that curve end portfolio more of versus be end borrowing the looking the you the at short what's

loan the low to values mid-XX% statistic. incidentally, and we relatively we average loans. office portfolio, as much on line roll our on the of portfolio in LTV that, the very is Because that gave have over we And overall it's across portfolio statistics with

be to even about rolling the So sufficiency as we're it are. level and refinance, requires LTV equity not we're of a where concerned loan to over in if particularly we loans, from our of order able higher

helpful. you. Thank Very

from Citi. next is coming from your And you. Thank question Ward Michael

now is live. line Your

how direct squeezing just it the just real REIT risk to -- on commercial about wondering the spectrum they're wondering how and the think and loan? in. you could fits guys we for should that Maybe understand the expand debt. slide a like if similar was was in credit commercial if on us me I about I estate. Thanks help on mortgage

about again. our mortgage think private the Rob It's to more portfolio REIT as portfolio. Mike, the I portfolio would placement than akin

result covenants our property if direct And of investment X% are within XX% that in almost find assets of it's geography REIT is portfolio and PGIM. like of to a result while mortgage than loan, what capabilities private It's origination and single So well-diversified going of origination It's diversified that very assets. primarily, typical package our you're our not about type. that about placements they a loan strong is of larger, benefits within portfolio of mortgages direct the -- asset the grade. as by businesses, and entirely a more underlying a all businesses

of of vis-à-vis the rated in across do private and the down we good like feel the comparatively the performance quite the them securities. rest public about actually we those So cycle strength of loans placement portfolio,

Rob. any Thanks if had bigger I for then or relatedly, perspective believe given that asset one you wondering and risk? class, outlook PGIM’s CLO managers, the of was credit somewhat I just broader And

our within It's to And CLOs, again. on within specifically about the from of to own think AAA first Rob, about PGIM. the take it portfolio, talk all I'll we But jump Andy holder securities I'll to a if defer me in he to we more as CLO, wants – general are account of Mike solely portfolio.

being we that, outside CLO inconsequential. a need AAA manager. manager, AAA so retention We have result below it's being do it's But amount, modest to of portfolio. CLO exposure some We a exclusively PGIM relatively European of a CLOs, of a as miniscule a have there

the obviously AAA we we what we're in views CLO into you subordinated value can once get to a A as good tranches in conservative and and the in look but that. more of even our space, find the the the -- AA and at stress happen BBB environment As and space single

Okay. Thanks much. very

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

of and the you our making evolving Okay. joining for strategy today. we're long-term Thank our in demonstrated hope We're the our you and Prudential company. strength meet customers. I in the of transforming again progress us growth to to we confident sustainable deliver to needs

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

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