Prudential Financial (PRU) 7 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Prudential's Quarterly Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

I will now turn the call over to Mr. Bob McLaughlin. Please go ahead.

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

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

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

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

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

over Now I'll it to turn Charlie.

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

like our Before begin, CFO comment I'd we transition. to on

As President from Business, Executive Prudential's named of has Prudential, been Yanela Group Vice release, you Frias, yesterday's CFO Ken Tanji. Insurance of succeeding saw and President news

period and significant a I'm As of executive as brings March is our Prudential, know deep you'll a sure finance, as industry business getting understanding ensure a effective a will Yanela and who XX, role. well a operations and of to experience. CFO seasoned Yanela veteran XX-year to her become Ken leadership X-month enjoy on as she new starts smooth will her stay transition. for

to the COVID followed. challenges at to that Prudential career friend CFO, been Most had a distinguished has volatility the go articulate Prudential. pandemic financial XX-year through recently, impact. don't has market guided partner as I the and need Ken his of and and Ken great back far a

time, less of same nimble. contributed his our and initiatives meaningfully market-sensitive strategic leadership becoming to the on more During goals

decades many well. and We over X than his more wish are grateful to him contributions Ken for

my for to remarks turn the Now let's quarter.

underlying for The and Our quarter momentum make and continued a strong higher capital-efficient our capped results earnings to more growth, growth. reflect XXXX continued of sales across nimble solid fourth company. transformation year a Prudential insurance financial and businesses retirement more productive

and environment, navigate a position well disciplined to Our approach maintain us strategic deployment macroeconomic long-term and sustainable current to the strength financial capital progress growth. deliver

today to will Turning to our Slide business are unlock a stakeholders. examples future and X. our we growth I of sharing begin how few by for drive all value transforming

annuities, billion executed efficiency. attractive Over traditional of the variable our market course sensitivity. to block XXXX, adding of reducing transactions a reinsured several we our $XX capital We

billion will and transaction and growth by closed our annuities and liability capabilities with We we a $XX leveraging Prismic, brands, of enhance launched. company reinsurance global Prismic and system drive life business distribution. origination structured multichannel differentiated mutually-reinforcing settlement asset future our annuity a

a entered of universal we with capital agreement reserves, which Re life $XX.X reinsurance and addition, for guaranteed release earnings. In Somerset a increase into billion block will

across customers We solutions our and continue market-leading globe M&A, the products of future businesses and channels strategic to capabilities growth. expanded distribution and support meet evolving the needs our strengthen created through to to the new of

the further into our In together closed capabilities brought with PGIM's and one in we a cohesive in Deerpath global stake acquiring offering, PGIM, attractive alternatives Alternatives. area enhanced Private of team December. formation lending Capital, direct we of by private PGIM in credit majority To private a investors capabilities the which with provide

range diversify XXX,XXX meet milestone our quarter. distribution needs. new expand broader through portfolio force a continue in close investment reaching Internationally, of we Japan, expanded inheritance last Libre, products in and to we policies of launched Mercado to Latin and America customer In third-party a to

This biggest life marks second ever our the with the Our international Netherlands. deal one first its transfer risk companies longevity secured Retirement the largest reinsurance Institutional Strategies of Dutch transaction in in business market. insurance

Retirement solution. a income workplace strategies growing retirement address demand to for Fidelity with Investments consumer worked also

product, immediate by now premium administered a Our retirement Prudential new annuity SimplyIncome single is available employer-based Fidelity. to plans

and we settlement solidify annuity market launched In and our our index expand structured settlements, new structured leadership a addressable product. addition, to

more to We efficient to support our the also business continue company level organizational model technology and marketplace. to bring of a create nimble position leveraging meet customers evolving needs our in operating the and the at customers market a and changing faster. better to and to products maintain included competitive structure This

technology launched X product an together every or and enhanced average teams of X in business Our weeks new XXXX.

business experience. cutting-edge We and optimism for reinvest group to Additionally, with and with technology entered experiences increase offerings, product firms customer strategically in and of we enhanced to within expanded growth. partnerships add and as speed momentum have diversified XXXX we leaning businesses the our continued sustainable innovation, capabilities our long-term are into customer client enhance our and

X. Slide to Moving

management strategy which framework, are and the Prudential's navigate confidently us initiatives risk Our robust growth and solid macroeconomic allowed transformation have supported balance by rock environment. capital to and sheet

liquid and AA includes Our a investment and disciplined portfolio liability billion billion the position, well-diversified margins, management. a approximately of capital high-quality, in financial including at $X.X end $XX assets asset highly insurance the of strong unrealized strength rated approach fourth to quarter,

Turning to Slide X.

capital investing in million returning over approach quarter, fourth businesses growth long-term shareholders. our us shareholders. disciplined capital $XXX the effectively to to deployment the Our to capital enables to In returned of of we with balance

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

I over will it now turn Rob. to And

PGIM, International business performance Thank you, our overview of provide Charlie. an results I'll and businesses. financial our U.S. and for

I'll fourth XXXX. results of begin quarter for financial with year Slide the full our and X on

due charge the $XX.XX fourth our operating higher a growth or businesses, pressure including for the rates. interest to pretax primarily benefits by $X.XX million quarter. per income $X.X variable share and partially share expenses, restructuring in the strong This of earnings and income investment increase an the results quarter. underlying billion offset power was fourth higher was XXXX billion Our sales $XXX adjusted on of and in $X.X or per reflect in These

primarily Our GAAP million due net by for after-tax investment was our rates. driven AOI, net than quarter declining gains income the $XXX to higher

quarterly operating results of to lower higher and agency lower had quarter. the of from related and and management benefits manager, the Deerpath expenses. our This Prismic. asset driven year-ago incentive compared other investment fees higher global to partially fees, by income by of businesses revenues our our launching acquisition the Turning including offset Capital was PGIM,

less in reflected the by interest business results, rates lower earnings primarily partially reflected behavior Results primarily was offset fee spread of less income expenses. of traditional international by our variable expenses. The lower annuity lower businesses our underwriting market-sensitive pivot favorable growth income as higher benefit businesses This legacy U.S. unfavorable driven to higher policyholder including by products. and offset we partially and

XX% management PGIM's Turning long-term income, our primarily classes PGIM, of last under assets the alternatives. from equities asset Slide periods. PGIM's and under over private attractive year across over investment their appreciation. X- market quarter, investment to from to assets the resulting active XX-year over manager global has X, benchmarks and performance, driven the management past and has fixed outperforming $X.X X% year-ago with trillion increased public performance capabilities diversified both strong in also

resulting mandate net large were and outflows fixed were $X.X by a by driven and outflows redemptions from primarily Institutional outflows outflows. income client in billion Retail quarter liquidity driven $XX.X and equity, equity of a in of primarily sub-advised income low Third-party needs. totaled public $X.X of the index rebalancing redemption billion. fourth fee mandates billion fixed

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

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

In the secondary placement estate grow $XXX private corporate deployment which assets our of acquisitions, direct organically across of real we originations. across has robust private infrastructure during quarter PGIM's benefited $X Capital through continue billion Private private credit, addition, assets billion and equity approximately business, and from to equity. and both platform private, debt and lending Alternatives PGIM and

Slide X. to Turning

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

across by improve the with across in We $XX.X included we to sales, the market in continue billion drive capabilities sales with Retirement reinsurance quarter customer its expanding sales to since third and sales were recently in business. and since billion reform Institutional the fourth and XXXX. lines to quarter driven transaction institutional time. billion Pension in best settlements our Dutch Retirement continue reinsurance strategies international Individual of billion Netherlands individual structured anticipate fourth level quarter grow $XX.X Prudential. Retirement new transforming quarter the capabilities $X.X addressable and highest market experiences strong the of the posted strong for of our by a $X.X over growth passed this sales will reaching solutions the leveraging of generated legislation, financial our XXXX. International

while from pivots FlexGuard year continued quarter, Our resulted fixed sales in annuity have have increased and about ago which sales product the doubled. Income, XX% strong FlexGuard of

for XX% launched XX% product represented including strategy accumulation protection Our our life Life FlexGuard product. benefit products. ago the Variable our more Individual recently year, sales from year approximately reflecting increased towards Life and capital-efficient quarter, pivot products from a sales the of

In the efficiency our Group diversification and Insurance, to we leveraging execute increase on segment while technology strategy of customer experience. operating client and to continue product enhance

sales supplemental year, full years operating Group's to highest in and year were in year underwriting income experience. favorable full health. by included up XX prior past the the compared the growth was and Our disability XX% driven adjusted

percentage ratio lowering we to target a by XX% As X our to result, are range XX%. benefits points

Turning X. to Slide

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

Planner to to and Sales meet offering. a protection where the product businesses sales we customers XX%, to Life needs value. compelling selective are enterprise our approach we expand build markets, were year customer diversify benefits Prudential to Japan provide regions growing, can as portfolio in were product of businesses ago the their needs. In including add to product in businesses evolving our to on continue needs-based and where of Our in emerging up value our there compared our creating launches important are focused market-leading opportunities focus where quarter. up offerings XX% the recent product international are

were agency channel. primarily leading growth in and driven bank Brazil to by XX%, up sales the a reflecting all up independent growth record. were full-year Gibraltar addition, across sales sales channels In XX%, and higher

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

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

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

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

adjustment last, expectations experience was operating expenses in pretax million results get quarter in unfavorable resulted As variable we the in income expect income the we $XX for share fourth and million; basis. on $XXX quarter, after-tax by adjusted a suggest items. an items: by underwriting investment first quarter; the quarter in following below of first of noted, quarter other we was fourth expectations sense fourth per and included for seasonality in $X.XX First, second, billion To $X.X million million for the the might earnings $XX develop, adjustments and an was our and of $XX how below

profile. per the in the organizational year, increased note the exclude takeaway if includes over the premium. earnings made $X.XX. The restructuring our past us changes first have quarter, items be as a related power first adjustments combined specific and quarter. get share seasonality we adjustments to $XXX to that for is well of strategic we of as progress while the baseline $X.XX risk I'll significantly earnings for our key This related has expenses million structure typical to would improving also These that charge per timing to share underlying our

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

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

XX. Slide to Turning

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

we regulatory RBC to than Our and ratio be targets, expect our ratios XXX%. PICA's are capital greater year-end above

our within businesses We strength billion of billion, of our and cash in the financial investment were and $X $X.X Our shareholder liquid have preservation range assets $X for to and and flexibility, our target remain off-balance in capital we distributions. substantial sheet liquidity long-term thoughtful balancing deployment, billion resources. growth

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

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

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

[Operator coming from Gallagher ISI. Instructions] Our question is Tom Evercore from first

thinking Ken, good looking luck. then can I about that bullet capital and just that's you was few comment Japan capital the solvency conversion, over at just on I that generation slides. want capital you XX% how know sources relatedly, removed sure next The free when to -- make cash from target. implementation, the And impacting uses years? flow economic of and the still the see that,

The didn't the I appreciate Tom, it's that -- luck. for Ken it. and good comment. thanks we remove

our about growth reflective and approach we and cash our Actually, that sources think It's And cash period, but about of and higher our our were understood of actually well it's I XXXX, a for cash has reasons. think to it to sustainable to that's mix going in it's flow. see of than will with that flows XX on -- variety period average. vary reflective that's been free time XX% about ratio diversified balance flow growth. you'll business that been over XX% of be pretty

no So change there.

U.S. be working in well. We Japan, capital In of FSA, capitalized internally, with and and that financially ESR or but to regime And businesses have we could the terms responsible Japan reinsure evident that We the in well standard. our Bermuda. would we adapt again, new could certainly reinsure strong. business strategies advocating for We're standards, reasonable any to in externally. believe reasonable as are also to

we're So the to on. that we have manage new that's strategies a number of in working something regime, and

know And a of comment those the then in you top just Japan in you notable line? competition sort stronger sales? markets kind more 'XX on or Got stronger Because Can in what's if thought, in think was it's going I that's 'XX? the broadly, you. driving at do sales could. inflect and And flattish, but to I you follow-up, Strength that I of quarter. the do into translate to been expect all international

it's Andy. your you and for thank that. noting take So I'll question, Tom,

of relates say areas, Brazil. strong We me Sales clearly heard You've this Japan outstanding before. a in and product those great particularly outcome distribution. as are advantage brand, that feel we and it to have an competitive

Life bank in sales we very our success we designs sales growth were As continue Gibraltar. agents year-over-year, see up off. every supported by are our and Once innovating interest you in paying rate. is again, and heard really independent product from dollar to Japan. work our from Rob, particular, experience, channel Planner on Japan, lift our In U.S. of also But pleased up higher product, we in U.S. XX% saw was XX% that the in and customer digital higher XX% enhancing in in life across clearly, the channel our Brazil planners, that very as and broad-based in

year-over-year in If the every at and results double-digit Brazil channel. saw growth look we there, you

Libre. throughout Planner and to all our high saw Once And outperformed also the flowing with On quite of Life strong Itau and our retention with pleased really strengthen Bank. from results we last we partnership Life that Our year of again, strong expansion of Mercado distribution. top expand third-party channel continue productivity. we remain that, Planner

about the asked you So outlook.

of our bottom be to As levels while both going about profitability. always, and we strong our healthy business. of line ability value to are our our the grow priority customers to to is deliver top optimistic But achieving

is question KBW. Ryan Krueger next coming from Our from

drivers given in the RBC us more know increased amount it seems improvement ratio the some exact a like during the it on provide but year, the quarter. had I you the can you RBC of quarter? fair in key color First, the

Ken. it's Ryan,

to remind something is is people, RBC that Just annually. reported

end detail than greater will RBC year. again, XX% much will the And of in be we at so where end greater the be filed the believe month. the But is the that of at

free so few in-force that part year. of that's in IMR We have negative surplus, a during it's are our RBC adopted the the improvement benefit combination ratio with regulatory our things. a yes, had XXXX, of And admitting really and in the change One, did businesses generating it. we of an was

had investment which our reduction from reserves, also reaggregation policies efficiency. created We a in of generally and AAT some portfolios,

combination So that. it was a of

our flexibility capital again, And and position the when our so overall, of report XXXX. improved has February. that And in see all we you'll file at end

we understand us rates, can closer interest short-term then get specifically sensitivity to potential your a you And as Fed cycle? help cutting to

much Yes. we Sure, is -- impact that line rates. net Ryan. there's expect The short-term from don't bottom

And balances paying that our portfolio, manage other. derivatives to that offset and short-term generally where generally interest earn fixed by collateral investment receiving have would short-term rate actually offset yields. and from cash we're each duration. two We be The rates

from is from today question Sachs. next Alex Our Goldman coming Scott

ways you talked you about pick touch across on organic well. in So as well. much I at a enhance to has thinking how I as about position for of I businesses stronger going how to you're year some But you've up update into to thinking an times ago. driving I I how wanted just compared look get all more some growth. mean to capital? wanted of begun sort on And finding growth priorities about do that? at a of 'XX the certainly, know your that are growth into capital mean deploying the to business? you're

take the Thanks that. Sure. question. for Charlie. Alex, I'll it's

businesses, aspects wanted focus. are to result, And there we And approach We as and really you good have to a the consistent we and X -- disciplined we have capital. our to we've our that of be a to balanced want on always approach capital to that want as shareholders. which said stewards within redeployment said, of

and balance is which fulfilling customers is strength, our clients. maintaining sheet financial the rock-solid make and foremost to our promises we critical to and First

organically of long-term investing programmatic third shareholders as And and is businesses. Second our the through is both to we sustainable returning past. in support capital the to have acquisitions growth excess

this deployed needs including million and on our returned businesses, for all shareholders. support several capital in closed across over PGIM, done We've X. meet our quarter, Deerpath to acquisition the We products to And evolving strong of customers. sales $XXX we've we to new the

we So and disciplined approach as we'll continue to this forward. have consistent go

more as just could driven hoping begin The I flows. expect PGIM outflows. that headwinds I going these of some had second XXXX you to little question abate into on is on you a provide what was some color have

question. Yes. your with Alex, recent going Thanks the take starts business, satisfied and serve have the to continue and That the we been, it's so historical for performance customers. restore that of that Andy. We're vehicles and our strategies to flows broadly a can appropriate actions we to not we're norms. to really with performance range we of that have ensuring

to invest business continue into the accomplish us You've just seen intentionally to that.

we've the Deerpath. private So expansion Montana with acquisitions Capital alternatives continued into our of and Partners

You've new that us broad work an exchange adds ESG and also seen funds strategies. portfolio. diversified All vehicles launch traded to and already like

and would flows I XXXX, management flows you And are thing throughout second tell active but The our investment performance is all lag. correlated of with can performance. strengthened

we're the So constructive of the that's looking outlook one forward. reasons on

in over because the our active flows the those -- continued we've X we've off results Third, not breadth, longer and foot term. distribution, lead investment to on distribution things, product gas taken investing

on on that and outperforming like I'm investment are assets ready confident years. we are people sitting others, it. hearing, stabilized XX sideline over XX% rate strength our add given income our and trajectory, also the you're with are into the X will fixed capitalize benchmark of and that that money We're more performance that inflation flow the back once market believe to the record rates in me sure assets Let of

recent noting year. forward. about into satisfied not performance, end continued clearly in a flow we but looking the by and saw XQ, would just this pickup inflows I that So towards optimistic the has of end gross

optimistic. we're So

Greenspan Fargo. question Wells coming from Elyse from is Next

you transactions an be is you there. question the and the I slides, out programmatic first call on PGIM. there? still provide update My might call out sticking just you what just with on, thinking Can In -- you of pipeline guess, about M&A

It's So Andy. Elyse. thanks,

strong So obviously I maybe grow won't We've just PGIM it ability over time. get our period organically but a to level. around pipeline, a specific long of demonstrated bring up

it at we So we to grow. don't need certainly as look M&A

remain in Deerpath Harvest acquisitions. of then mergers do and areas we Montana are PGIM said, growth, in examples capabilities organic industry. closure higher in Custom Capital higher with That interested of obviously, our the us Partners, of our augmenting great and December, growth those fee adding

to So and real higher fee to focus forward, as business, to the areas, going areas private look continue we're like we're on capabilities. globalize to we look and higher asset alternatives going growth, so

and the time of are opportunities, can we're seen to disciplined like in an making periods to on. We've what's on this disruptive lead always, the also going the activity in sure marketplace. Clearly, we're going that uptick we're flow and our But that so in in as in approach. know patient remain

second is on my the one then RBC. And

you greater in this now parent? Or a XXX%, more quarter. it's around the PICA would to look manage down nice to look you saw So maybe bring that that is something time Would capital level? to ratio than and you And over RBC guys right? maintain lift

well an financial Elyse, Ken. AA We're RBC it's basis. objectives Yes, on our within

that for on be, measure, flexibility. matters that we're and the But Now it's thing we to our rating. credit we only not have need where

maintaining again, which financial distribution -- growth strength, our and to So value we obviously also is proposition we'll important shareholders. balance to

of objectives. we're So all X balancing those

from Jefferies. coming from Instructions] Kamath Suneet is Our next [Operator question

that so just update deal with are on in First Obviously, supposed expecting $XXX you My of it. SGUL deal an of million Re. really there. is an proceeds all first the I remember closes? yet, that you that for the If still Ken years. maybe question of And all, quarter. on was Somerset I just thank when over to help haven't seen close to announcement your correctly, appreciate we the fourth

Suneet, it's Rob. Yes, the toward deal proceed continues closing. to

expect but steps a this on quarter. approval. X received X actually has end, final or we closing regulatory Our our its got counterparty in We've

And retrospective respect capital, of recall couple is of costs so close. onetime closing beginning One an with as impacts, financial once well that reminders. annual to the X/X/XX. year, update in the we is, as the announcement we'll earnings it to a Just and

that it. could then X-year we on lower. bit appreciate number, outperforming like guess strong X- it XX% I that numbers, XX-year Is -- And looks is that should the little something Got but and totally the PGIM, a dynamics? an number. off? impact you're maybe the is have to of just get that how color on about kind Or drop -- some Or X-year will that flow on thinking want I something there

Yes, investment focus time we're much the on Suneet, strengthened did here We would period I a how term. our near an performance in -- manager. has have of active

did We a has have in but performance a nicely business, designed We very, many performance strategies that high-conviction our specifically brief through 'XX, we strengthened produce is quite alpha. very in in period 'XX, strong and right now. where fixed dip to went see income

a So us forward. we don't expect that to major looking have impact on

is question from Jimmy from Bhullar next JPMorgan. Our coming

certainly the prioritizing not other your to if in you've instead are where on maybe capital Can just buybacks? sure capital question -- as been talk about M&A your think do generation more and Because and Charlie, you overall. do deployment like about you capacity seems doing, and/or but priorities share you things it buybacks capital than a you're for do given and what first, So well. have how

Sure.

balance for, look strong Ken sure have very mentioned we I have earlier, a again, One to a approach. the and Alex we make As -- X a sheet, that things. which talking result, balanced we do is consistent was about. really And we we as do, to Jimmy, as

And to forward. of us could that in organically sales The growth our acquisitions geography second that, and as sense. would make well. do to areas. as invest businesses, for higher the be go to it that all It support we businesses to and growth we distribution, do support you've in be seen will could Those is growth in our continue in to look then be

think for one want business. see right, you are volume also Caroline, opportunities in forward. now the We in good places that's to the in be really as talk we moment. leaders We of one we tremendous in to this that where there's may And like marketplace, going there. go business tremendous right And us PRT, about

we've our final that if in excess have come businesses that that We've in as The But so. want might talk and And we And the thing, relative going to capital, past. think along. is we to particular. we're opportunities in to the capital talked Caroline, done our evaluate excess about we'll about, you do shareholders. investment to returning one

Yes, absolutely.

completed with year XX pension this quarter of has Prudential risk a It's win, first X transactions already our we And Jimmy, strong on pension writer. finishing another finish the deal this year almost largest the And $X risk risk now pension as Shell. worth transactions #X with closed positive transfer So ever. billion transfer PRT in with XX did billion $X We transfer. built top that record. we've U.S. momentum on

well while ability PRT our continue position few service business very will expertise we $X competitive healthy It's that market complex to transactions the pipelines highly due favorable us we a more is episodic although with market. our believe, positions continuing. new We and year. expect exceeding pipeline also funding sales in over XXX%. to transactions And to our do position was of And to have be strong And volume executed roughly market transactions competitors $XX year's leadership leader by the driven billion. and this billion, trend will in entrants, continue remain handle in that and delivery, see to our healthy last see large

case Prudential's share the sort are on would be reasonable in can And of or of Okay. potential the your there? you America, market, in a Latin and views just terms then what what pension worst-case impact Chilean reform in business

Yes.

Andy. you it's So question. Jimmy, for Thank your

about day leaned is interest. what's priority talked our in customers and day for best out. very we've before, delivering We're our always their in into As

very citizens of on for expect, to advocate specifically America the would proactive on improve Latin outcomes pension of We're going advocating Chile. you the because being believe that, As in behalf. to their and that reforms in we continue for

rejected was an Just to December in failed you the referendum on after give X constitutional update, XX, attempts. but Chile,

really has contributions on to is to squarely focused advancing there JV. would increase our X%. President passage now That And to We're that through AFPs So reform. impact and proposal pension eliminate employer as and the a is Boric bill Habitat proposes that's on moved closely monitoring situation Congress.

would of couple things. I just But a say

voluntary is to obviously contributor step diversify very that Our a of actively venture, just take you across high-quality, business. a into And back, component a it's recognize material it's It's Habitat offerings. not countries joint larger PFI to a if while well-run working been markets, JV and our earnings. savings emerging

we'll close have to we let stay we'll when obviously any it, clarity. very know more So and you

from Your Joel coming & next question from Dowling Hurwitz Partners. is

So been lapses you It issue Can in-force what given the just periodically amount international like both terms sizable of saw businesses quarter-over-quarter rates. you looks quarter. I have was there the reduction pretty in Japan in just in the talk in there? lapsation a in an know exchange about

Yes.

So thanks, Andy. Joel, it's

about just decline me So let the in-force. talk in the

a consistent impacting contributors the time. With I been that, exceptionally life for to though, insurance few there stable as First, that long a our in-force always Japanese amounts. start, factors, Prudential businesses. very They've very proud of we're are are and

not investment to our important contracts, do are to note, but really sales earnings. material component, what buy. contributing is of looking and reflects recent a our a sales to are customers First, that Those significant this portion include life are

as particularly Gibraltar. with we've we've yen depreciation, business older Second, yen talked about life modestly seeing legacy then surrenders. of blocks, the the in And in runoff quarters, level natural a elevated seen recent previous we in are in the

Japanese confident retirement continuing are our across them. we to we're and said, in to insurance, security. that grow in diversify and businesses all ability And invest But our investment

And to Okay, Group. gears switching then helpful.

Can what's ratio benefit for outlook you for full It the just the drivers roughly then overall that top was line And reduction flat. there. there? the the to like reduced you growth looks talk So business? target year about

Just any color there. on growth expectations

Yes, you so absolutely, Thank your much Joel. question. Caroline. It's for

pleased results all, very very we've given made we by manner. the earnings the to executing we made Group reflect and we've of will year in first grow And in So our position and profitable our a insurance for efforts off believe future strong in Group I'll quarter with of strong disciplined strategy. progress power we're this had on another saying And we're start the that full in business.

our fees We is disability. and continuing effort, the X,XXX segments. rate double-digit We're before. diversifying supplemental growth products in the made adding And increasing our and with at market higher in expanding strong core than premiums focus on progress we this our margins. our continue diversification grew supplemental at like to and by under that earnings driving in disability association And business health live stronger rates. new diversification annual health premiums a growth also higher And

the of points. our year and of half So year very third as was It first quarters in over XX just for our full includes and ratio results performance block the our second record last the year. benefits percentage performance, in Life in strong disability

record While performance we don't expect that factors there are other to indefinitely, to certainly continue consider.

believe continue ratio our power underwriting our our see capabilities Group state, you guidance diversification endemic having performance investments I'd is earnings as improve. So doing attractive XX% that combined with I and in well to in be our made through It's strategy year. our partnerships, COVID with to growing. an walked overall, with the claims are and why say is transitioned so management to decision strategic we'll we've that improving as lowering benefits XX% to Joel, just business for And we we at that confident margins

Insurance to just strong Group strategy. well, will terms on We and continue you continue the future some future earnings in power Joel. be as our And well, to there color execute as earnings of I grow of we as believe gave power

next is Raymond from Burdis James. question coming from Our Wilma today

been this if been and of wondering with fixed large the also PRT annuity guys on Seeing activity there's focused that have with just deal. any sales Prismic. you I'm

an if So update please. give there, us could

Wilma, it's Rob.

believe to recently basis. So execute for create be the not transaction it will as to between retirement growth, be play avenues that in our announced, We marketplace the against our the of coming insurance more we're asset PRT can Prismic the out we've quite us growth on articulated role that before, businesses opportunity. specifically across that source enthusiastic other a specifically we about opportunity a in of of we to for both see are broadly sales opportunities go-forward management about Prismic the helping and the but and that and intersection businesses, financing what and

share from extremely aspirations, standpoint our both directional large institutional quantum from Our investors global a investors, and standpoint. which a are

structured go securities expectation billion our or $XX well to is initial structured the completed. So beyond that we settlements transaction

It's include, the to include across growth some It's going financing businesses. to level I of balance going ongoing noted, sheet our as optimization.

and unique well for of we're the increasing Prismic, PGIM business. look appetite the management our under ] about going liabilities. complex way which the will enable its duration for to assets of by in it and And third-party in is do also what's [ as all Prismic blocks investors longer to a benefit more think I

bit And buyback. could about the you talk little a

that little $X to XXXX -- certainly, would more said bit? returns. guys guys billion with and It's capital -- good for you earnings see the blocks authorization a you run think sell I off

So talk about are guys thinking can just you how through you that.

return consistent both we've to Yes, as very Yes, a way and it's had share to approach dividends Ken. using a capital. shareholder repurchases distributions

Our this and for robust they particular, flow share repurchases but into considered outlook board, opportunities as was discussed, capital had our organic for Charlie in capital the by that free deploy very the PRT year our to market. cash position, growth, also approved

again. things -- those all that increased it. years increased XX factored We a So our now dividend row. we've into in That's

our again, is consistent we So into a as approach, it well. all all very factors think objectives what balancing

color helps. that hope I So

coming is from question Piper from Sandler. Next Barnidge John

story -- Group but that an Best first of Ken. in moving expense business, is administrative in I up the Insurance ramping question, with savings the could I recent in appreciate notice to should the side? COVID And My expenses, coming I of the there ratio But if appreciate guidance. we expenses help luck, benefit can't to fall up? improvement endemic, quarters. disability go

Yes.

So John, you it's much question. so Thank Caroline. your for

to the then of of the And ensure quarter. would you by to improvement seen management, saw is have continue we ratio overall expense we XXX will driven adjust going both discipline. appropriate service admin regularly may basis business in and forward. continued operating expense year ago our growth In That levels focus point from obviously our on our expense models efficiencies terms and

by In as were on overall, results disability, and effective driven short- would in absence our disability of well leave. focus those group claims management, I say disability terms as family including across long-term

from benefited outstanding We of continued interest environment, and the high also rate a year. business employment had strong tailwinds and an our disability

we're that in strategic want provider just We've out leading actually improving also recoveries. grow something provides a invested, strategically, EvolutionIQ. disability real-time management with through to process would our side John, a technology This AI-driven claims to I continue doing the else partnership area. of monitoring as increased we on point is that to

there fact discipline. remain terms terms of I'd maintaining doesn't continue we growth and in pricing of also management, walk focused to say in highly our obviously, any also, our book, evidence our away all to in just pricing this not grow accomplish case. to ability expense So overall, much competitiveness. very The the disciplined our if on price sense make as we that we're But the afraid particular is

management feel benefit confident in to very and our pricing lower comfortable remain we decision and ratio our guidance with overall, expense So discipline. our

to large in? you're you opportunity for does when within question, growth business, not PGIM size that that internationally? sit get markets globalizing the PGIM My you are bigger Prismic want about follow-up in Where talk there

So tail start jump to want and if you John, you Rob, then, can I'll in. in, out

management it's a United our that are States. assets we majority today of recognize when globalizing So important to the about talk business, in under the I think

years and So Europe business. distribution institutional invested both we've have heavily and on quite to Asia many working for actively, across and now, retail the in side been of expand the

our That in that continue we geographies asset both and said, broaden key would mix as we're but interested to to of geographies, growing. we look look and as diversify Europe Asia classes, to most

Rob. it's John,

think Within and own huge of optimizing to as to to, on also call, respect I both with Ken Just but sort we as is in following with see with Andy. a Prismic, marketplace book, parties we the third I'd the note Japan, earlier that what alluded to well. see opportunities regard respect in up opportunity in Asia our with

is next Citi. Michael coming question from Ward Our from

Sorry to to one be the ask.

on It update bit. little looked any estate for there's commercial deteriorated a real if guys. the curious like side Just you LTV

about feel wondering of last kind resolutions list you year, watch too. how any kind you've of that Just or made

Rob. is This

I'll take Mike. your question, So

So things start invest seen on One, a real to couple about I'll basis. From unlevered correction, the trough, lend we peak and that is market from XX% the what to against. And in that's that an standpoint, what market, of institutional call, let a a relates of there. thoughts. across me estate, or we've an quality sort overall number we

probably types this Our to cycle peak XX%. real going estimate in is be over the to estate trough that little across a is

correction So we've way got experience. yet the X% or in price X% of left probably to

some well. And our that finding this XX% and quite it's and portfolio much severely, geography that, to with is go. Because construction date, of obviously, the of experience, originated XX team directly actually portfolio within importantly, the and another because to and that's to across property that's and holding deep Now XX% has probably a portfolio, office, the because quality is corrected more portfolio office by of we're averages diversification up it closer a of XX%, types. has years PGIM overall significantly underweight, yet our of the industry

office debt the saw of the XXXX course portfolio. that. portfolio around or a offset the rest ratios that our coverage of performance XX% has about double-digit about X% our our So and of were right discount But we our despite is decline the increased overall our actual mortgages, service again, component office in the of our loan XX% because of XX% -- of component that only the X.X%. Within assets our about to values portfolio, valuations across the -- portfolio X% fact remain during

extensions the at provided quite to Mike, what X% experience or we're the we're upcoming short-term portfolio during -- sort or all maturities X extensions. The asked we've In that's that that, favorably maturities. last resolved of than on. scheduled of That's list, billion got would regard way guess seeing are leading of maturities $X billion we is that million had our that good. The look So $X I with we was about those remainder worth thing to describe providing payoffs first was through coming XXXX, led maturing. in refinancing actually I year for with -- then payoffs. the billion subsequent of feeling cetera. $X you of of modifications that of about longer-term performance, about maturities et those with the we those, $XXX portfolio XXXX, less Of if watch about modifications

million expect around quite be to to don't and we as in again, the we resilient. on that points, while provisioned what And expect basis, real of the end the about given basis represents of do we've the from be experienced any quality portfolio We $XXX increased we of underlying in portfolio. that by that's portfolio, estate year our think relative that well this we'll that against cycle the a reserves means, and immune XX

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

So thank evolution quarter us joining for again today. fourth The growth you and capped continued for year a of Prudential.

growth system to business well our long-term us strategy, coupled to with Our positions reinforcing sustainable stakeholders. mutually our deliver all

and are our we confident about into fundamentals are Our strong, going XXXX. momentum

to We current insurance the lead to and as across retirement the we will generations security a future financial future. build help investing and globe to way seek in secure access expanding continue

Thank for and good day. joining you a have us, again

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

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