Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Q2 2023 Earnings Presentation
45 slides from Prudential Financial's earnings presentation, 2023
Slide 1: 2Q23 Investor Update
2Q23 Investor Update Expanding access to investing, insurance, and retirement security
Slide 2: Prudential Investment Thesis
Prudential Investment Thesis ROCK SOLID DIFFERENTIATED DISCIPLINED Demonstrated financial Thoughtful strategies and Positioned for strength business design produce long-term growth differentiated outcomes TRANSFORMING TO BECOME A HIGHER GROWTH, LESS MARKET SENSITIVE, MORE NIMBLE BUSINESS 145+ years
Slide 3: Complementary Businesses at Scale with Long-Term Growth Potential
Complementary Businesses at Scale with Long-Term Growth Potential Earnings Contribution(1) Key Statistics PGIM 11% Revenues(2): $61B Adjusted Book Value Per Share(3): $97.38 International Businesses $5.1 46% billion U.S. Employees(4): Approx. 40,000 Businesses 43% Adjusted Dividend Yield(5): 5% (1)
Slide 4: Competitive Advantages Support Strategic Execution
Competitive Advantages Support Strategic Execution Leverage our Strengths: Execute on Strategic Priorities: • Leading global asset Invest in growth businesses and manager markets around the world • Best-in-class liability origination Deliver industry-leading customer and • Cross-business synergies c
Slide 5: 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 6: 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 7: 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 8: Continued Commitment to Long-Term Sustainability
Continued Commitment to Long-Term Sustainability ENVIRONMENTAL SOCIAL GOVERNANCE 2050 Net Zero(1) Over $1B Donated(2) 85%(3) emissions across primary global operations by The Prudential Foundation of Independent Directors are diverse to expand and accelerate climate actions to eliminate barriers for
Slide 9: ROCK SOLID
ROCK SOLID Demonstrated financial strength Expanding access to investing, insurance, and retirement security
Slide 10: Robust Approach to Capital & Liquidity Management
Robust Approach to Capital & Liquidity Management Risk Appetite Financial Strength Liquidity Framework “AA” standards Significant resources Capitalized to remain for capital available competitive under stress scenarios Expanding access to investing, insurance, and retirement security 10
Slide 11: Demonstrated Financial Strength
Demonstrated Financial Strength Capital Position Sources of Funding • Parent company liquid assets at the high end of $3 to • Parent company highly liquid assets of $4.5 billion(1), $5 billion liquidity target range which exclude $650 million of proceeds received from traditional variable annuity re
Slide 12: Preserving Balance Sheet Strength, as We Have Done for 145+ Years
Preserving Balance Sheet Strength, as We Have Done for 145+ Years Stress Parameters Our Toolbox Outcomes • Disciplined ALM and hedging • Maintain appropriate and Equity Market Decline competitive regulatory capital • On balance sheet capital levels at insurance companies capacity • Maintain adequate
Slide 13: Broadly Diversified, High Quality Investment Portfolio
Broadly Diversified, High Quality Investment Portfolio Portfolio Composition(1) $368 billion Highlights: Equities/ Other • Broadly diversified, high quality portfolio with strong Alts 5% Asset Liability Management 5% – High allocation to government securities (mostly Government U.S. and Japan) Mortg
Slide 14: Lower than Average Adjusted Asset Leverage
Lower than Average Adjusted Asset Leverage Asset Leverage Adjustments Adjusted Asset Leverage Exclude non-credit risk assets(1): 12.3x • For example: government bonds, assets supporting experience-rated 8.1x contractholder liabilities(2), and equities, etc. 7.4x 6.7x Exclude Closed Block(2): • Risks
Slide 15: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation Shareholder Distributions 1. Maintain Strong Capital Position ($ millions) $4,321 $4,144 2. Organic Growth at Attractive Returns $3,245 $3,322 $3,026 $2,500 $2,550 $2,500 $1,500 3. Sustainable and Growing Dividends $2,269 $2,000 $1,500 $1,250 $500 $1,431 $500
Slide 16: Double-Digit Dividend Growth Supported by Strong Earnings and Cash Flow Coverage
Double-Digit Dividend Growth Supported by Strong Earnings and Cash Flow Coverage ($ per share) Annual Dividends $4.80 $4.60 $4.40 $4.00 16% $3.60 CAGR $3.00 $2.17 $2.44 $2.80 47% $1.73 2022 Dividend $1.60 $1.45 Payout Ratio(1) $1.15 $0.58 $0.70 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 17: DIFFERENTIATED
DIFFERENTIATED Thoughtful strategies and business design produce differentiated outcomes Expanding access to investing, insurance, and retirement security
Slide 18: A Leading Global Investment Manager Across a Broad Range of Private and Public Asset Classes
PGIM A Leading Global Investment Manager Across a Broad Range of Private and Public Asset Classes Earnings Contribution(1) Business Highlights: ($ millions) • Diverse product offering with scale $779 – Attractive asset classes, client segments, and worldwide geographic presence • Strong investment p
Slide 19: Market Leader in Japan with Expanding Presence in Growth Markets
International Businesses Market Leader in Japan with Expanding Presence in Growth Markets Earnings Contribution(1) Business Highlights: ($ millions) • Best in class, profitable Japanese franchise consistently maintaining market leadership position • Expand in select, high growth emerging Internation
Slide 20: Attractive Mix of Developed and Emerging Markets Provide Long-term Growth
International Businesses Attractive Mix of Developed and Emerging Markets Provide Long-term Growth Developed: Japan Emerging Markets • Highly productive distribution system; • Expanding economies and rising affluent world class captive agents, and middle class: Latin America, China, complemented by
Slide 21: Broad Business Portfolio with Robust Liability Origination Capabilities
U.S. Businesses Broad Business Portfolio with Robust Liability Origination Capabilities Earnings Contribution(1) Business Highlights: ($ millions) • Diverse customer base with further growth potential across demographics • Complementary solutions across businesses U.S. Businesses • Strong multi-chan
Slide 22: Leading Distribution Model with End-to-End Customer Engagement
U.S. Businesses Leading Distribution Model with End-to-End Customer Engagement Distribution through a Ability to meet customers wide range of channels where and how they want • Financial Professionals In Person Hybrid Digital Individuals • Direct-to-consumer • Pension Plan sponsors Institutions • Re
Slide 23: Complementary Businesses Amplify Growth and Mitigate Risk
Complementary Businesses Amplify Growth and Mitigate Risk Competitive Synergies Risk Mitigation Synergies • PGIM is the “investment engine” • Diversification of earnings, capital, of Prudential – generates higher and risks returning assets that enhance the competitiveness of U.S. and • Natural hedgi
Slide 24: DISCIPLINED
DISCIPLINED Positioned for long-term growth Expanding access to investing, insurance, and retirement security
Slide 25: Execution on Strategy Driving Growth
PGIM Execution on Strategy Driving Growth Growth opportunities from: Alternatives International Retail Expanding access to investing, insurance, and retirement security 25
Slide 26: Broad Geographic Presence in Key Markets
PGIM Broad Geographic Presence in Key Markets With 1,400+ investment professionals located across 46 offices in 18 countries, our experts are present in key financial centers around the world. DUBLIN LETTERKENNEY AMSTERDAM TORONTO LONDON FRANKFURT PARIS MUNICH MINNEAPOLIS CHICAGO BOSTON ZÜRICH MILAN
Slide 27: Growth in Alternatives
PGIM Growth in Alternatives Investments for Market Opportunity(1) PGIM’s Positioning Future Growth ($ trillions) • Acquired Montana Capital Partners, a ~$3B AUM Private 9% Alternatives(2) $265B $23.3 Equity Secondaries manager CAGR • Signed definitive agreement to acquire Deerpath, a ~$5B AUM Top 3
Slide 28: Significant Opportunity Outside the U.S.
PGIM Significant Opportunity Outside the U.S. • Top 3 foreign manager of Japanese Institutional assets Japan ~$198B in Assets • Increased appetite for non-Japan assets • AUM from European clients grew 30% over the past five years Europe • Significantly increased sales and marketing footprint in Euro
Slide 29: Momentum in U.S. Retail
PGIM Momentum in U.S. Retail Investments for Market Opportunity(1) PGIM’s Positioning Future Growth • 13 out of 14 years of • Continue to build on 21% positive mutual fund net strategic partner status flows(2) with key intermediaries $25 51% trillion • Institutional approach to • Scale up suite of 2
Slide 30: Expanding Market Share
International Businesses Expanding Market Share Growth opportunities from: Continuing market leadership in Japan Expanding our presence in select, high growth emerging markets Expanding access to investing, insurance, and retirement security 30
Slide 31: Well Positioned for Continued Outperformance in Japan
International Businesses Well Positioned for Continued Outperformance in Japan Market Adept at Highly Skilled Penetration Product Distribution Beyond Tokyo Evolution Expanding access to investing, insurance, and retirement security 31
Slide 32: Leverage our Partnerships with Market-Leading Companies for Future Growth in Emerging Markets
International Businesses Leverage our Partnerships with Market-Leading Companies for Future Growth in Emerging Markets Latin America Africa Asia Brazil South Africa China Leading provider of integrated Largest private sector bank in Brazil and a independent advice together with Global innovation-dri
Slide 33: Building on a Strong Core
U.S. Businesses Building on a Strong Core Growth opportunities from: Strengthening our foundational businesses Enhancing customer and advisor experiences Expanding in our chosen markets to accelerate growth Expanding access to investing, insurance, and retirement security 33
Slide 34: Strengthening Our Foundational Businesses
U.S. Businesses Strengthening Our Foundational Businesses • Expanding access to retirement security, broadening distribution through new Retirement relationships, platforms, and advisors Strategies • Delivering industry-leading strategies for growth and protection that create stakeholder value acros
Slide 35: Enhancing Capabilities to Simplify Customer and Advisor Experiences
U.S. Businesses Enhancing Capabilities to Simplify Customer and Advisor Experiences Building a culture of continuous improvement… Process Customer Digital Simplification and Onboarding Enablement Automation Optimization …to drive enhancements for customers and advisors while realizing cost savings E
Slide 36: Expanding in our Chosen Markets to Accelerate Growth
U.S. Businesses Expanding in our Chosen Markets to Accelerate Growth As more individuals near retirement… …many are financially unprepared How we solve it and grow: • Simplified and affordable products +20% 89M • Complementary distribution $40T Unprotected nest egg assets channels that meet diverse
Slide 37: Prudential Investment Thesis
Prudential Investment Thesis ROCK SOLID DIFFERENTIATED DISCIPLINED Demonstrated financial Thoughtful strategies and Positioned for strength business design produce long-term growth differentiated outcomes TRANSFORMING TO BECOME A HIGHER GROWTH, LESS MARKET SENSITIVE, MORE NIMBLE BUSINESS 145+ years
Slide 38: APPENDIX
APPENDIX Expanding access to investing, insurance, and retirement security
Slide 39: Sources of Rankings
Sources of Rankings Business Market Position Source Top 3 Real Estate Pensions & Investments Top Real Estate Managers list, published Manager October 3, 2022. AUM as of June 30, 2022. Top 3 Foreign Manager PGIM Japan, based on the total AUM for discretionary managed of Japanese Institutional account
Slide 40: Forward-Looking Statements
Forward-Looking Statements Certain of the statements included in this presentation, including those relating to Prudential Financial, Inc.’s and its subsidiaries’ financial strength, strategy, growth prospects and market opportunities, our plans to reposition our business and become a higher growth,
Slide 41: Non-GAAP Measures
Non-GAAP Measures This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 42: Non-GAAP Measures (Continued)
Non-GAAP Measures (Continued) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 43: Earnings by Business
Earnings by Business Twelve ($ millions) Months Ended 6/30/2023 Adjusted operating income (loss) before income taxes PGIM $ 779 U.S. Businesses: Institutional Retirement Strategies 1,424 Individual Retirement Strategies 1,691 Group Insurance 209 Individual Life (283) Total U.S. Businesses 3,041 Inte
Slide 44: Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure
Reconciliations between Adjusted Operating Income and the Comparable GAAP Measure Twelve Months ($ millions, except per share data) Full Year Ended 2022 6/30/2023 Net income (loss) attributable to Prudential Financial, Inc. $ (1,647) $ 1,829 Income (loss) attributable to noncontrolling interests (28
Slide 45: Reconciliations between Adjusted Book Value and the Comparable GAAP Measure
Reconciliations 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 re