Slide 1: 2Q23 Earnings Call
2Q23 Earnings Call August 2, 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 Reducing market • Completed $10B traditional variable annuity reinsurance sensitivity and transaction increasing capital • Announced agreement to reinsure $12.5B of guaranteed universal life policies flexibility • Expanded third-party distribution cha
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 June 30, 2023(1) Increasing capital Highly liquid assets flexibility and of $4.5 billion(2) liquidity Financial strength to support all stakeholders Disciplined High quality, Asset L
Slide 5: Maintaining Balanced and Disciplined Capital Deployment
Maintaining Balanced and Disciplined Capital Deployment Increased capital flexibility from de-risking transactions Investing in businesses for long-term, sustainable growth Returned over $700 million to shareholders in 2Q23(1) Creating sustainable, profitable growth and shareholder returns (1) Capit
Slide 6: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights Financial Highlights Earnings Drivers ($ millions, except per share amounts) ($ millions, pre-tax adjusted operating income) YTD 2023 2Q23 PGIM U.S. Businesses International Businesses – Lower asset management + More favorable + Higher emerging market (1) Pre-Tax Adjus
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: $779 3 Year: 71
Slide 8: U.S. Businesses
U.S. Businesses Diversified Portfolio with Expanding Market Opportunities and Improving Risk Profile Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Create higher value, higher growth, and less market sensitive ($ 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: 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 (1) 2Q23 Reported $1,392 $2.94 Assumption Update • One-time impact from assumption updates and other refinements (16) (0.03) Variable
Slide 11: 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 $4.5 billion(1), which liquidity target range exclude $650 million of proceeds received from traditional variable annuity reins
Slide 12: 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 13: Appendix
Appendix Expanding access to investing, insurance, and retirement security
Slide 14: 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) $377 • Expand access to retirement security, broadening distribution ($30) ($ millions) ($13) through new relationships, platfo
Slide 15: Group Insurance
Group Insurance Leading Group Benefits Provider with Opportunity to Further Diversify Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Execute on diversification strategy while maintaining pricing ($ millions) discipline – Maintain National segment share (>5,000 lives)
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 $1,254 • Optimize Life Cons
Slide 19: Investment Portfolio
Investment Portfolio Portfolio Composition(1) Highlights $368 billion • Broadly diversified, high quality portfolio with strong Asset Liability Management Other Equities/Alts 5% 5% – High allocation to government securities (mostly U.S. and Japan) Government – Significant protections with private cr
Slide 20: Mortgage Loan Portfolio
Mortgage Loan Portfolio • Conservative underwriting with a weighted average loan-to-value (LTV) of 58% and debt service coverage ratio (DSCR) of 2.41x as well as a prudent loan monitoring process with loan evaluations occurring at least annually – 62% rated CM1 and 28% rated CM2 • Office represents
Slide 21: Adjusted Operating Income Rollforward by Business
Adjusted Operating Income Rollforward by Business ($ millions, pre-tax) 2Q23 3Q23 2Q23 3Q23 Reported Assumption Expenses & Expenses & Baseline(4) VII Underwriting Underwriting Update Other(2) Other(3) PGIM $179 - - - 20 - - $199 Institutional $428 (6) 10 5 - - - $437 Retirement Strategies Individual
Slide 22: Seasonality of Key Financial Items
Seasonality of Key Financial Items ($ millions, pre-tax adjusted 3Q23 4Q23 1Q24 2Q24 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 ($25) underwriting gains underwriting gains L
Slide 23: Forward-Looking Statements
Forward-Looking Statements Certain of the statements included in this presentation, including those regarding our plans to transform our business for sustainable growth, our agreement to reinsure a block of guaranteed universal life policies and the expected impact of that planned transaction, our c
Slide 24: Non-GAAP Measures
Non-GAAP Measures This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 25: Non-GAAP Measures (Continued)
Non-GAAP Measures (Continued) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 26: Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure Second Quarter ($ millions) 2023 2022 Net income (loss) attributable to Prudential Financial, Inc. $ 511 $ (1,010) Income (loss) attributable to noncontrolling interests (15) (7) Net income (loss) 496 (1,017) Less: Ear
Slide 27: Reconciliations between Adjusted Operating Income Per Share and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income Per Share and the Comparable GAAP Measure Second Quarter 2023 2022 Net income (loss) per share attributable to Prudential Financial, Inc. $ 1.38 $ (2.71) Less: Reconciling Items: Realized investment losses, net, and related charges and adjustments (2
Slide 28: 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) June 30, 2023 GAAP book value $ 28,434 Less: Accumulated other comprehensive income (AOCI) (6,649) GAAP book value excluding AOCI 35,083 Less: Cumulative effect of foreign exchange rate rem