Slide 1: 4Q22 Earnings Call
4Q22 Earnings Call February 8, 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 Exceeded $750 million of cost SOLVING the FINANCIAL CHALLENGES savings one year ahead of target of our CHANGING WORLD Navigating the macro environment with our rock solid balance sheet Expanding access to investing
Slide 3: Transforming Our Business for Sustainable Growth
Transforming Our Business for Sustainable Growth Reduced Market Sensitivity and Invested Expanded Solutions and Enhanced in Emerging Market Growth Customer Experience Sales of Full Service Retirement business and Completed 2nd largest PRT transaction in U.S. PALAC traditional Variable Annuity block
Slide 4: Exceeded $750 Million of Cost Savings One Year Ahead of Target
Exceeded $750 Million of Cost Savings One Year Ahead of Target ($ in millions) Achieved $820 million of run-rate savings, above 2023 target $50 $400 $635 Run-Rate Savings 2019 2020Run-Rate Savings 2021 1Q22 2Q22 $750 2019 2020 2021 Implementing continuous improvements to enhance employee and custome
Slide 5: 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, 2022 Financial strength to • Highly liquid assets of $4.5 billion(1) support all stakeholders • Well-diversified investment portfolio • Investing in businesses for lon
Slide 6: Full Year & Fourth Quarter 2022 Highlights
Full Year & Fourth Quarter 2022 Highlights Financial Highlights Earnings Drivers ($ millions, except per share amounts) ($ millions, pre-tax adjusted operating income) 2022 4Q22 PGIM U.S. Businesses International Businesses (1) $4,650 $1,186 – Lower asset management – Lower variable – Lower variable
Slide 7: PGIM
PGIM Active Global Investment Manager Across a Broad Range of Private and Public Asset Classes Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Maintain strong investment performance(2) ($ millions) − Percentage of AUM(3) outperforming public benchmarks: $843 3 Year: 79
Slide 8: U.S. Businesses
U.S. Businesses Diversified Portfolio with Expanding Market Opportunities and Improving Risk Profile Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Create higher value, higher growth, and less market sensitive ($ millions) sources of earnings • Transforming our capabi
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 4Q22 Reported(1) $1,186 $2.42 Variable Investment • Assumes a normalized level 125 0.26 Income Underwriting • 4Q22 normalized and 1Q23
Slide 11: Adoption of Long-Duration Targeted Improvements (LDTI)
Adoption of Long-Duration Targeted Improvements(1) (LDTI) No direct effect on statutory results, cash flows, or dividend capacity Book Value ▌ + GAAP equity increase of ~$15 billion ▌ + AOCI increase of ~$17 billion driven by higher single-A discount rates ▌ – Retained earnings decrease of ~$2 billi
Slide 12: 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) liquidity target range • Free cash flow(2) ~65% of earnings over time • PICA RBC ratio > 375% • Japan solvency
Slide 13: Key Messages
Key Messages Transforming our business for sustainable growth WE MAKE LIVES BETTER by Exceeded $750 million of cost SOLVING the FINANCIAL CHALLENGES savings one year ahead of target of our CHANGING WORLD Navigating the macro environment with our rock solid balance sheet Expanding access to investing
Slide 14: Appendix
Appendix Expanding access to investing, insurance, and retirement security
Slide 15: Institutional Retirement Strategies
Institutional Retirement Strategies Differentiated Capabilities Drive Growth in PRT and International Reinsurance Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Leverage world class talent and market leading capabilities to ($ millions) deliver differentiated product
Slide 16: Individual Retirement Strategies
Individual Retirement Strategies Creating Shareholder Value by Protecting Customer Outcomes Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Deliver investment strategies and income solutions for growth and ($ millions) protection that create stakeholder value across al
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) • Improve profitability through operating model transformation, ($ millions) expense management, and pricing discipline • Continue growth of simplified
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 and Other
Gibraltar Life and 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 $966 • Optimize Life Cons
Slide 21: Adjusted Operating Income Rollforward by Business
Adjusted Operating Income Rollforward by Business ($ millions, pre-tax) 4Q22 1Q23 4Q22 1Q23 (4) Reported Expenses & Expenses & Baseline VII Underwriting (2) Underwriting (3) Other Other PGIM $230 - - (10) - (40) $180 Institutional $342 55 (20) - 40 - $417 Retirement Strategies Individual $460 15 - (
Slide 22: Seasonality of Key Financial Items
Seasonality of Key Financial Items ($ millions, pre-tax adjusted operating income) 1Q23 2Q23 3Q23 4Q23 Other Related Revenues Higher compensation PGIM ($40) tend to be higher driven by expense(1) Incentive & Agency Fees Institutional Retirement $40 Higher reserve gains $20 Higher reserve gains ($30)
Slide 23: Other 2023 Earnings Considerations
Other 2023 Earnings Considerations • Corporate & Other estimated annual operating loss of $1.65 billion • PGIM quarterly Other Related Revenues, net of related expenses, expected to range from $45 million to $55 million; expect elevated level in 4Q • Effective tax rate: 22-23% Expanding access to in
Slide 24: Diverse Businesses Create Complementary Exposures to Mortality and Longevity
Diverse Businesses Create Complementary Exposures to Mortality and Longevity (1.2%) Cumulative Net Mortality(1) as % of AOI (2013 – YTD 2022) • Net mortality was a positive contributor to AOI in six out of last ten years (1) Mortality experience compared to expectations includes Individual Life, Gro
Slide 25: Forward-Looking Statements
Forward-Looking Statements Certain of the statements included in this presentation, including those regarding our plans to reposition our business and become a higher growth, less market sensitive company, expected run-rate cost savings, our plans relating to share repurchases and dividends, and tho
Slide 26: Non-GAAP Measures
Non-GAAP Measures This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 27: Non-GAAP Measures (Continued)
Non-GAAP Measures (Continued) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments are included in adjusted operati
Slide 28: Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure Fourth Quarter Year-to-Date ($ millions) 2022 2021 2022 2021 Net income (loss) attributable to Prudential Financial, Inc. $ (558) $ 1,208 $ (1,438) $ 7,724 Income (loss) attributable to noncontrolling interests 2 34 (2
Slide 29: 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 2022 2021 2022 2021 Net income (loss) per share attributable to Prudential Financial, Inc. $ (1.53) $ 3.13 $ (3.93) $19.51 Less: Reconciling Items: Realized investment gains (losse
Slide 30: Reconciliation between Adjusted Book Value and the Comparable GAAP Measure
Reconciliation between Adjusted Book Value and the Comparable GAAP Measure ($ millions, except per share data) December 31, 2022 GAAP book value $ 16,250 Less: Accumulated other comprehensive income (AOCI) (19,827) GAAP book value excluding AOCI 36,077 Less: Cumulative effect of remeasurement of for