Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Q1 2024 Earnings Presentation
28 slides from Prudential Financial's earnings presentation, May 1, 2024
Slide 1: 1Q24 Earnings Call
1Q24 EARNINGS CALL MAY 1, 2024 Expanding access to investing, insurance, and retirement security
Slide 2: Key Messages
KEY MESSAGES Becoming a higher growth, more capital efficient, and nimble company WE MAKE LIVES BETTER BY SOLVING Maintaining disciplined capital deployment THE FINANCIAL CHALLENGES OF OUR Supported by our rock solid balance CHANGING WORLD sheet 2
Slide 3: Becoming a Higher Growth, More Capital Efficient, and Nimble Company
BECOMING A HIGHER GROWTH, MORE CAPITAL EFFICIENT, AND NIMBLE COMPANY • PGIM achieved robust third-party and affiliated flows • Retirement Strategies had the best first quarter of Pension Risk Transfer (PRT) sales and highest Individual sales in over a decade Growing our market • Group Insurance and
Slide 4: Maintaining Disciplined Capital Deployment
MAINTAINING DISCIPLINED CAPITAL DEPLOYMENT Investing in market leading Returned over $700 million Increased quarterly dividend businesses to support to shareholders in 1Q24(1) by 4%, the 16th consecutive growth annual increase Creating sustainable, profitable growth and shareholder returns (1) Capit
Slide 5: Supported by Our Rock Solid Balance Sheet
SUPPORTED BY OUR ROCK SOLID BALANCE SHEET Capital supports AA financial strength rating as of March 31, 2024(1), 2023(1) Highly liquid assets of $4.2 billion(2) Financial strength to support all stakeholders High quality, well diversified investment portfolio Disciplined Asset Liability Management (
Slide 6: First Quarter 2024 Highlights
FIRST QUARTER 2024 HIGHLIGHTS Financial Highlights Earnings Drivers ($ millions, except per share amounts) ($ millions, pre-tax adjusted operating income) 1Q24 PGIM U.S. Businesses International Businesses + Higher asset management + Higher spread income + Higher spread income (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) $731 – Percentage of AUM(3) outperforming public benchmarks: 3 Year: 66
Slide 8: U.S. Businesses
U.S. BUSINESSES Diversified Portfolio with Favorable Growth Opportunities Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Drive higher value and higher growth with a complementary mix of ($ millions) businesses and diversified sources of earnings • Transform 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) • Expand product and business capabilities to meet customers’ ($ millions) evolving insurance and retirement security needs $3,239 •
Slide 10: Adjusted Operating Income & EPS Considerations
ADJUSTED OPERATING INCOME & EPS CONSIDERATIONS Adjusted Adjusted Operating Operating Income Income Per Share ($ millions, except per share amounts) Pre-Tax After-Tax 1Q24 Reported(1) $1,469 $3.12 1Q24 experience normalized and 2Q24 Underwriting • 95 0.20 adjusted for seasonality Primarily reflects s
Slide 11: Significant Capital Position
SIGNIFICANT CAPITAL POSITION Objectives Position Highly Liquid Assets $3 to $5 billion $4.2 billion(1) Consistent with AA objectives Regulatory Capital Ratios remain in excess PICA RBC ratio > 375% Ratios of our objectives(2) Japan solvency margin ratios > 700% Off-Balance Sheet Resources Resource C
Slide 12: Key Messages
KEY MESSAGES Becoming a higher growth, more capital efficient, and nimble company WE MAKE LIVES BETTER BY SOLVING Maintaining disciplined capital deployment THE FINANCIAL CHALLENGES OF OUR Supported by our rock solid balance CHANGING WORLD sheet 12
Slide 13: Appendix
APPENDIX 13
Slide 14: Retirement Strategies
RETIREMENT STRATEGIES Expanding Access to Retirement Security Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Continue market leadership and flawless execution in Institutional ($ millions) retirement while expanding in new products, customer sets, and geographies $1,7
Slide 15: Group Insurance
GROUP INSURANCE Leading Group Benefits Provider with Opportunity to Further Diversify Earnings Contribution to Prudential Key Priorities Trailing twelve months(1) • Execute on diversification strategy while maintaining pricing discipline ($ 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) • Continue to meet customers’ insurance and retirement security ($ millions) needs and expand product and business capabilities $1,216 • Nurture and strength
Slide 19: Broadly Diversified, High Quality Investment Portfolio
BROADLY DIVERSIFIED, HIGH QUALITY INVESTMENT PORTFOLIO Portfolio Composition(1) $365 billion Highlights: Other Equities/Alts 4% 6% • Broadly diversified, high quality portfolio with strong Asset Liability Management Government – High allocation to government securities Mortgage Securities (mostly U.
Slide 20: Mortgage Loan Portfolio
MORTGAGE LOAN PORTFOLIO • Conservative underwriting with a weighted average loan-to-value (LTV) of 58% and debt service coverage ratio (DSCR) of 2.45x as well as a prudent loan monitoring process with loan evaluations occurring at least annually – 93% of mortgage loans have LTVs less than 80% – 92%
Slide 21: Adjusted Operating Income Rollforward by Business
ADJUSTED OPERATING INCOME ROLLFORWARD BY BUSINESS 1Q24 2Q24 1Q24 2Q24 Expenses & Expenses & Reported VII Underwriting Underwriting Baseline(4) ($ millions, pre-tax) Other(2) Other(3) PGIM $169 - - 50 - - $219 Institutional Retirement $441 10 (5) 10 - - $456 Strategies Individual Retirement $474 10 -
Slide 22: Seasonality of Key Financial Items
SEASONALITY OF KEY FINANCIAL ITEMS ($ millions, pre-tax adjusted operating income) 2Q24 3Q24 4Q24 1Q25 Other Related Revenues Higher compensation PGIM tend to be higher driven by ($45) expense(1) Incentive & Agency Fees Group Insurance $10 Higher underwriting gains $10 Higher underwriting gains ($20
Slide 23: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain of the statements included in this presentation, including those regarding our plans to become a higher growth, more capital efficient and nimble company, our capital deployment strategy, including planned dividends and share repurchases, our plans with respect to
Slide 24: Non-GAAP Measures
NON-GAAP MEASURES This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 25: Non-GAAP Measures (Continued)
NON-GAAP MEASURES (CONTINUED) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 26: Reconciliations Between Adjusted Operating Income and the Comparable GAAP Measure
RECONCILIATIONS BETWEEN ADJUSTED OPERATING INCOME AND THE COMPARABLE GAAP MEASURE First Quarter ($ millions) 2024 2023 (3) Net income attributable to Prudential Financial, Inc. $ 1,138 $ 1,462 Income attributable to noncontrolling interests 13 15 Net income 1,151 1,477 Less: Earnings attributable to
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 First Quarter 2024 2023 (2) Net income (loss) per share attributable to Prudential Financial, Inc. $ 3.12 $ 3.93 Less: Reconciling Items: Realized investment gains (losses), net, and related charges and adjus
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) March 31, 2024 GAAP book value $ 27,209 Less: Accumulated other comprehensive income (AOCI) (7,661) GAAP book value excluding AOCI 34,870 Less: Cumulative change in fair value of funds with