• Pretax Adjusted Operating Income: $1.6 billion for Q3 2024, $3.48 per share after-tax.
• Year-to-Date Adjusted Operating Return on Equity: 13.7%, up 0.5 percentage points from the prior year.
• PGIM Assets Under Management: Increased by 15% to $1.4 trillion from the year-ago quarter.
• Retirement Strategies Sales: Nearly $15 billion in Q3 2024.
• Institutional Retirement Sales: $11 billion in Q3 2024.
• Individual Retirement Sales: $3.6 billion in Q3 2024, best quarter in over a decade.
• Group Insurance Sales: Increased 3% year-to-date compared to the prior year.
• Individual Life Sales: Increased 13% from the year-ago quarter and 9% year-to-date.
• International Business Sales: Up 25% compared to the year-ago quarter.
• Cash and Liquid Assets: $4.3 billion, above the minimum liquidity target of $3 billion.
• Capital Returned to Shareholders: More than $700 million during Q3 2024.

• Warning! GuruFocus has detected 9 Warning Signs with PRU.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Prudential Financial Inc (NYSE:PRU) reported robust sales across its US and international insurance and retirement businesses, demonstrating strong market demand.
• The company maintained a disciplined approach to capital deployment, returning over $700 million to shareholders during the third quarter.
• PGIM, Prudential's Global Investment Manager, saw a 15% increase in assets under management, reaching $1.4 trillion, driven by market appreciation and investment performance.
• Prudential Financial Inc (NYSE:PRU) successfully executed a significant pension risk transfer transaction with IBM, reinforcing its leadership in the pension risk transfer market.
• The company is well-positioned to capture the growing retail demand for fixed income products, supported by its diversified investment solutions and strong market presence.

Negative Points

• Prudential Financial Inc (NYSE:PRU) experienced elevated US dollar product surrenders in Japan due to the weakening yen, impacting earnings.
• The company faced higher expenses to support business growth, which partially offset the benefits of higher interest rates and equity markets.
• Legacy traditional variable annuity fee income was lower as the company pivoted to less market-sensitive products.
• The transition to the new economic solvency regime (ESR) in Japan presents challenges, potentially requiring adjustments in capital management.
• Prudential Financial Inc (NYSE:PRU) anticipates continued near-term pressure on earnings due to elevated surrender levels in Japan.

Q & A Highlights

Q: Can you provide an update on Prismic and how you plan to use the capital freed up from reinsurance transactions? A: Robert Falzon, Vice Chairman, stated that they are actively working on a pipeline of reinsurance transactions, particularly focusing on Japan. They have established a dedicated team in Tokyo to advance these opportunities. Charles Lowrey, CEO, added that the capital freed up will be used to maintain a strong balance sheet, invest in growth, and return excess capital to shareholders.

Q: How do the margins on new retirement products in Japan compare to the previous debt protection products? A: Andrew Sullivan, Head of International Businesses, mentioned that they are pleased with the profitability of the new retirement products in Japan and do not expect an impact on margins due to the product mix shift. The demand for retirement products is expected to grow due to Japan's aging population and low bank savings yields.

Q: What is driving the record annuity sales, and how sustainable is this growth? A: Caroline Feeney, Head of U.S. Businesses, highlighted that the diversification of their annuity portfolio has allowed them to meet consumer demand for protected savings and income. The aging demographics and increased demand for savings solutions are expected to sustain this growth.

Q: Can you discuss the sales mix between yen and foreign currency products in Japan? A: Andrew Sullivan noted that yen-based sales have nearly doubled over the last three years due to intentional diversification efforts. About 30% of sales in the third quarter were yen-based, reflecting the success of their strategy to offer a balanced product portfolio.

Q: What are the expectations for the pension risk transfer market moving forward? A: Caroline Feeney stated that the U.S. pension risk transfer market remains highly attractive with $3 trillion in outstanding liabilities. Prudential's scale and underwriting experience position them well to capture opportunities, with a strong pipeline expected to continue into 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.