Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Q4 2023 Earnings Presentation
29 slides from Prudential Financial's earnings presentation, Feb 7, 2024
Slide 1: 4Q23 Earnings Call
4Q23 EARNINGS CALL FEBRUARY 7, 2024 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 SOLVING Navigating the macro environment with our rock solid balance sheet THE FINANCIAL CHALLENGES OF OUR Maintaining balanced and CHANGING WORLD disciplined capital deployment 2
Slide 3: Transforming Our Business for Sustainable Growth
TRANSFORMING OUR BUSINESS FOR SUSTAINABLE GROWTH • Completed $10B traditional variable annuity reinsurance Reducing market transaction sensitivity and • Closed $10B structured settlement annuity reinsurance increasing capital transaction with Prismic efficiency • Announced $12.5B guaranteed universa
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 December 31(1), 2023(1) Highly liquid assets of $4.1 billion(2) Financial strength to support all stakeholders High quality, well diversified investment portfolio Disciplined Asset L
Slide 5: Maintaining Balanced and Disciplined Capital Deployment
MAINTAINING BALANCED AND DISCIPLINED CAPITAL DEPLOYMENT Board authorized share Investing in businesses for Returned over $700 million repurchases of up to $1B in long-term, sustainable to shareholders in 4Q23(1) 2024 and the 16th consecutive growth year of dividend increases Creating sustainable, pr
Slide 6: Full Year & Fourth Quarter 2023 Highlights
FULL YEAR & FOURTH QUARTER 2023 HIGHLIGHTS Financial Highlights Earnings Drivers ($ millions, except per share amounts) ($ millions, pre-tax adjusted operating income) 2023 4Q23 PGIM U.S. Businesses International Businesses – Lower Other Related + Higher spread income – Less favorable Pre-Tax Adjust
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) $713 – Percentage of AUM(3) outperforming public benchmarks: 3 Year: 63
Slide 8: U.S. Businesses
U.S. BUSINESSES Diversified Portfolio with Favorable Growth Opportunities Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Drive higher value and higher growth with a complementary mix of ($ millions) businesses and diversified source of earnings • Transform our capabil
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: Adjusted Operating Income & EPS Considerations
ADJUSTED OPERATING INCOME & EPS CONSIDERATIONS Adjusted Adjusted Operating Operating Income Income Per Share ($ millions, except per share amounts) Pre-Tax After-Tax 4Q23 Reported(1) $1,252 $2.58 Variable Investment Income • Assumes a normalized level 95 0.20 4Q23 experience normalized and 1Q24 Unde
Slide 11: Significant Capital Position
SIGNIFICANT CAPITAL POSITION Objectives Position • Parent company liquid assets of $3 to $5 billion • Parent company highly liquid assets of $4.1 billion(1) • U.S. and Japan regulatory capital ratios consistent with • PICA RBC ratio > 425%(2) AA objectives • Prudential of Japan solvency margin ratio
Slide 12: Key Messages
KEY MESSAGES Transforming our business for sustainable growth WE MAKE LIVES BETTER BY SOLVING Navigating the macro environment with our rock solid balance sheet THE FINANCIAL CHALLENGES OF OUR Maintaining balanced and CHANGING WORLD disciplined capital deployment 12
Slide 13: Appendix
APPENDIX 13
Slide 14: Retirement Strategies
RETIREMENT STRATEGIES Delivering Value by Protecting Customer and Client Outcomes Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Expand access to retirement security by broadening distribution ($ millions) through new relationships, platforms, and advisors $1,695 • De
Slide 15: Group Insurance
GROUP INSURANCE Leading Group Benefits Provider with Opportunity to Further Diversify Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Execute on diversification strategy while maintaining pricing discipline ($ millions) – Maintain National segment market share (>5,000
Slide 16: Individual Life
INDIVIDUAL LIFE Broad Product Portfolio and Multi-Channel Distribution Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Improve profitability through disciplined pricing and expense ($ millions) management • Expand digital capabilities to drive operating efficiencies an
Slide 17: 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 18: 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 $1,183 • Optimize Life Cons
Slide 19: Broadly Diversified, High Quality Investment Portfolio
BROADLY DIVERSIFIED, HIGH QUALITY INVESTMENT PORTFOLIO Portfolio Composition(1) $376 billion Other Highlights: Equities/Alts 5% 5% • Broadly diversified, high quality portfolio with strong Asset Liability Management Government – High allocation to government securities Mortgage Securities (mostly U.
Slide 20: Mortgage Loan Portfolio
MORTGAGE LOAN PORTFOLIO • Conservative underwriting with a weighted average loan-to-value (LTV) of 58% and debt service coverage ratio (DSCR) of 2.46x as well as a prudent loan monitoring process with loan evaluations occurring at least annually – 93% of mortgage loans have LTVs less than 80% – 92%
Slide 21: Adjusted Operating Income Rollforward by Business
ADJUSTED OPERATING INCOME ROLLFORWARD BY BUSINESS 4Q23 1Q24 4Q23 1Q24 Expenses & Expenses & Reported VII Underwriting Underwriting Baseline(4) ($ millions, pre-tax) Other(2) Other(3) PGIM $172 - - 25 - (60) $137 Institutional Retirement $432 45 - (10) - - $467 Strategies Individual Retirement $482 2
Slide 22: Seasonality of Key Financial Items
SEASONALITY OF KEY FINANCIAL ITEMS ($ millions, pre-tax adjusted operating income) 1Q24 2Q24 3Q24 4Q24 Other Related Revenues Higher compensation PGIM ($60) tend to be higher driven by expense(1) Incentive & Agency Fees Individual Life ($30) Lowest underwriting gains $25 Highest underwriting gains L
Slide 23: Other 2024 Earnings Considerations
OTHER 2024 EARNINGS CONSIDERATIONS Corporate & Other estimated annual operating loss of $1.85 billion PGIM quarterly Other Related Revenues, net of related expenses, expected to range from $35 million to $45 million; expect elevated level in 4Q Effective tax rate: 22-23% 23
Slide 24: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain of the statements included in this presentation, including those regarding our plans to transform our business for sustainable growth, our capital and liquidity management strategies, planned dividends and share repurchases, and those under the headings “Key Priori
Slide 25: Non-GAAP Measures
NON-GAAP MEASURES This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 26: Non-GAAP Measures (Continued)
NON-GAAP MEASURES (CONTINUED) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 27: Reconciliations Between Adjusted Operating Income and the Comparable GAAP Measure
RECONCILIATIONS BETWEEN ADJUSTED OPERATING INCOME AND THE COMPARABLE GAAP MEASURE Fourth Quarter Year-to-Date ($ millions) 2023 2022 2023 2022 Net income (loss) attributable to Prudential Financial, Inc. $ 1,317 $ (52) $ 2,488 $ (1,647) Income (loss) attributable to noncontrolling interests 9 8 20 (
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 Fourth Quarter Year-to-Date 2023 2022 2023 2022 Net income (loss) per share attributable to Prudential Financial, Inc. $ 3.61 $ (0.16) $ 6.74 $ (4.49) Less: Reconciling Items: Realized investment gains (losse
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) December 31, 2023 GAAP book value $ 27,820 Less: Accumulated other comprehensive income (AOCI) (6,504) GAAP book value excluding AOCI 34,324 Less: Cumulative change in fair value of funds w