PRUDENTIAL FINANCIAL INC

•Effective January 1, 2023, AIQ and Prudential Advisors are included within Corporate and Other operations. There are no impacts to the Company's consolidated financial statements from these reporting changes and historical results have been updated to conform to the current period presentation.

•In September 2023, the Company acquired a 20% interest as a limited partner in Prismic, a Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re. Beginning with the fourth quarter of 2023, the operating results of Corporate and Other reflect the Company’s share of earnings in Prismic on a quarter lag. In connection with this trans action, effective September 2023, the Company entered into an agreement with Prismic Re to reinsure approximately $9 billion of reserves for certain structured settlement annuities contracts issued by PICA, 90% of which is on a coinsurance with funds withheld basis and 10% of which is on a coinsurance basis. The invested assets supporting the contracts reinsured via coinsurance with funds withheld consist primarily of public fixed maturities available-for-sale, private fixed maturities available-for-sale and fixed maturities designated as trading. As the Company considers its relationship with Prismic to be an enterprise initiative that could span business segments, Corporate and Other will report these segregated assets along with the offsetting funds withheld payable. See Note 15 to the Consolidated Financial Statements for additional information.

Corporate and Other includes corporate operations, after allocations to our business segments, and Divested and Run-off Businesses other than those that qualify for “discontinued operations” accounting treatment under U.S. GAAP. The following table sets forth Corporate and Other’s operating results for the periods indicated:

(1)Includes goodwill impairments of $177 million, $903 million and $1,060 million recorded in the fourth quarters of 2023, 2022 and 2021, respectively, related to AIQ. See Note 2 and Note 10 to the Consolidated Financial Statements for additional information regarding goodwill impairments. Also includes certain components of consideration for a business acquisition, which are recognized as compensation expense over the requisite service periods.

2023 to 2022 Annual Comparison. The loss from Corporate and Other operations, on an adjusted operating income basis, increased $495 million. Net charges from other corporate activities increased by $437 million, primarily driven by corporate initiatives, including a restructuring charge and higher technology costs, unfavorable foreign exchange rate impacts, and the absence of gains from the sales of certain home office properties in the prior year period, partially offset by lower net expenses and other corporate charges. Pension and employee benefits were unfavorable by $42 million, primarily driven by an increase in employee benefit plan costs.

For purposes of calculating pension income from our qualified pension plan for the year ended December 31, 2024, we decreased the discount rate from 5.45% to 5.30% as of December 31, 2023. The expected rate of return on plan assets remained unchanged at 7.50%. The assumed rate of increase in compensation increased from 4.50% in 2023 to 6.25% in 2024. Giving effect to the foregoing changes and other factors, we expect income from our qualified pension plan in 2024 to be approximately $5 million to $10 million lower than 2023 levels. This decrease is primarily driven by higher loss amortizations.

For purposes of calculating postretirement benefit expenses for the year ended December 31, 2024, we decreased the discount rate from 5.55% to 5.20% as of December 31, 2023. The expected rate of return on plan assets decreased from 7.75% in 2023 to 6.75% in 2024. Giving effect to the foregoing changes and other factors, we expect postretirement income in 2024 to be approximately $65 million to $75 million higher than 2023 levels. This increase is primarily driven by a change related to the Company’s Retiree Medical plan, partially offset by a decrease in earnings from a decrease in the expected rate of return.

In 2024, pension and other postretirement benefit service costs related to active employees will continue to be allocated to our business segments. For further information regarding our pension and postretirement plans, including the changes to the Company’s Retiree Medical Savings Account plan, see Note 19 to the Consolidated Financial Statements.

2022 to 2021 Annual Comparison. The loss from Corporate and Other operations, on an adjusted operating income basis, decreased $133 million. Pension and employee benefits were favorable by $103 million, driven by higher earnings from our pension and post-retirement plans resulting from higher returns on plan assets, lower benefit costs for these plans resulting from the sale of the Full Service Retirement business, and a favorable impact from design changes to the Company’s Retiree Medical

Savings Account plan. Net charges from other corporate activities decreased by $29 million, primarily driven by the absence of costs related to the early extinguishment of debt incurred in 2021, gains from the sales of certain home office properties, favorable exchange rate impacts, and lower costs for long-term compensation plans, partially offset by higher expenses, including an increase in costs related to corporate initiatives.