Slide 1: 1Q23 Earnings Call
1Q23 Earnings Call May 3, 2023 Expanding access to investing, insurance, and retirement security
Slide 2: Key Messages
Key Messages Transforming our business for sustainable growth WE MAKE LIVES BETTER by Navigating the macro environment SOLVING the FINANCIAL CHALLENGES with our rock solid balance sheet of our CHANGING WORLD Maintaining balanced and disciplined capital deployment Expanding access to investing, insur
Slide 3: Transforming Our Business for Sustainable Growth
Transforming Our Business for Sustainable Growth Expanded Solutions and Invested in Growth Markets and Businesses Enhanced Customer Experience Announced agreement to acquire Expanded FlexGuard distribution and majority interest in Deerpath Capital, introduced product enhancements a private credit as
Slide 4: Navigating the Macro Environment with our Rock Solid Balance Sheet
Navigating the Macro Environment with our Rock Solid Balance Sheet Capital continues to support AA rating level as of March 31, 2023 Proactively increasing capital Highly liquid assets flexibility and of $4.6 billion(1) liquidity Financial strength to support all stakeholders Disciplined High qualit
Slide 5: Maintaining Balanced and Disciplined Capital Deployment
Maintaining Balanced and Disciplined Capital Deployment Increased quarterly Investing in Returned over dividend by 4% in businesses for $700 million to 1Q23, 15th long-term, shareholders consecutive annual sustainable growth in 1Q23(1) increase Creating sustainable, profitable growth and shareholder
Slide 6: First Quarter 2023 Highlights
First Quarter 2023 Highlights Financial Highlights Earnings Drivers ($ millions, except per share amounts) ($ millions, pre-tax adjusted operating income) 1Q23 PGIM U.S. Businesses International Businesses – Lower asset management – Lower fee income – Lower variable investment (1) Pre-Tax Adjusted O
Slide 7: PGIM
PGIM Active Global Investment Manager Across a Broad Range of Private and Public Asset Classes Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Maintain strong investment performance(2) ($ millions) – Percentage of AUM(3) outperforming public benchmarks: $806 3 Year: 85
Slide 8: U.S. Businesses
U.S. Businesses Diversified Portfolio with Expanding Market Opportunities and Improving Risk Profile Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Create higher value, higher growth, and less market sensitive ($ millions) sources of earnings • Transform our capabilit
Slide 9: International Businesses
International Businesses Market Leader in Japan with Expanding Presence in Growth Markets Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Continue to address the insurance and retirement security needs of ($ millions) customers through differentiated distribution and o
Slide 10: Investment Portfolio
Investment Portfolio Portfolio Composition(1) Highlights $373 billion • Broadly diversified, high quality portfolio with strong Asset Liability Management Other Equities/ 4% Alts – High allocation to government securities 5% (mostly U.S. and Japan) – Significant protections with private credit Mortg
Slide 11: Mortgage Loan Portfolio
Mortgage Loan Portfolio • Conservative underwriting with a weighted average loan-to-value (LTV) of 57% and debt service coverage ratio (DSCR) of 2.41x as well as a prudent loan monitoring process with loan evaluations occurring at least annually – 60% rated CM1 and 30% rated CM2 • Office represents
Slide 12: Adjusted Operating Income & EPS Considerations
Adjusted Operating Income & EPS Considerations ($ millions, except per share amounts) Adjusted Adjusted Operating Operating Income Income Per Share Pre-Tax After-Tax 1Q23 Reported(1) $1,266 $2.66 Variable Investment Income • Assumes a normalized level 150 0.31 Underwriting • Normalized for 1Q23 expe
Slide 13: Significant Capital Position
Significant Capital Position Capital Position Sources of Funding • Parent company liquid assets at the high end of $3 to $5 billion • Parent company highly liquid assets of $4.6 billion(1) liquidity target range • Free cash flow(2) ~65% of earnings over time • PICA RBC ratio > 375% • Japan solvency
Slide 14: Key Messages
Key Messages Transforming our business for sustainable growth WE MAKE LIVES BETTER by Navigating the macro environment SOLVING the FINANCIAL CHALLENGES with our rock solid balance sheet of our CHANGING WORLD Maintaining balanced and disciplined capital deployment Expanding access to investing, insur
Slide 15: Appendix
Appendix Expanding access to investing, insurance, and retirement security
Slide 16: Retirement Strategies
Retirement Strategies Delivering Value by Protecting Customer and Client Outcomes Earnings Contribution to Prudential Key Priorities $16 $408 Trailing twelve months(1) ($4) ($30) $377 • Expand access to retirement security, broadening distribution ($ millions) ($13) through new relationships, platfo
Slide 17: Group Insurance
Group Insurance Leading Group Benefits Provider with Opportunity to Further Diversify Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Execute on diversification strategy while maintaining pricing ($ millions) discipline – Maintain National segment share (>5,000 lives)
Slide 18: Individual Life
Individual Life Broad Product Portfolio and Multi-Channel Distribution Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Continue growth of simplified term protection solutions that ($ millions) expand our addressable market and achieve lower risk financial profiles • Im
Slide 19: Life Planner
Life Planner Highly Productive Proprietary Distribution with Steady Long-Term Growth Potential Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Lead with protection solutions while expanding product and ($ millions) business capabilities to meet customers’ evolving need
Slide 20: Gibraltar Life & Other
Gibraltar Life & Other Meeting Client Needs via Multiple Channels Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Lead with protection solutions while expanding product and ($ millions) business capabilities to meet customers’ evolving needs $1,206 • Optimize Life Cons
Slide 21: Additional Commercial Real Estate Details
Additional Commercial Real Estate Details REIT Debt • 97% investment grade with a BBB+ average portfolio rating $18 billion or 5% of Invested Assets(1) • Well diversified by geography and property type with structural covenants Commercial Mortgage-Backed Securities (CMBS) • High quality portfolio wi
Slide 22: Adjusted Operating Income Rollforward by Business
Adjusted Operating Income Rollforward by Business ($ millions, pre-tax) 1Q23 2Q23 1Q23 2Q23 Reported Expenses & Expenses & Baseline(4) VII Underwriting Other(2) Other(3) PGIM $151 - - 55 - $206 Institutional $396 45 (10) - - $431 Retirement Strategies Individual $441 20 - - - $461 Retirement Strateg
Slide 23: Seasonality of Key Financial Items
Seasonality of Key Financial Items ($ millions, pre-tax adjusted 2Q23 3Q23 4Q23 1Q24 operating income) Other Related Revenues Higher compensation PGIM tend to be higher driven by ($40) expense(2) Incentive & Agency Fees Highest Lowest Individual Life $20 ($25) underwriting gains underwriting gains L
Slide 24: Forward-Looking Statements
Forward-Looking Statements Certain of the statements included in this presentation, including those regarding our plans to reposition our business and become a higher growth, less market sensitive company, our plans relating to share repurchases and dividends, our agreement to acquire a majority int
Slide 25: Non-GAAP Measures
Non-GAAP Measures This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 26: Non-GAAP Measures (Continued)
Non-GAAP Measures (Continued) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 27: Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure First Quarter ($ millions) 2023 2022 Net income (loss) attributable to P rudential Financial, Inc. $ 1,462 $ (493) Income (loss) attributable to noncontrolling interests 15 (13) Net income (loss) 1,477 (506) Less: Earn
Slide 28: Reconciliations between Adjusted Operating Income Per Share and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income Per Share and the Comparable GAAP Measure First Quarter 2023 2022 Net income (loss) per share attributable to Prudential Financial, Inc. $ 3.93 $ (1.33) Less: Reconciling Items: Realized investment gains (losses), net, and related charges and adjustm
Slide 29: Reconciliation between Adjusted Book Value and the Comparable GAAP Measure
Reconciliation between Adjusted Book Value and the Comparable GAAP Measure ($ millions, except per share data) March 31, 2023 GAAP book value $ 31,385 Less: Accumulated other comprehensive income (AOCI) (3,825) GAAP book value excluding AOCI 35,210 Less: Cumulative effect of remeasurement of foreign