PRUDENTIAL FINANCIAL INC

The following table sets forth Group Insurance’s operating results and benefits and administrative operating expense ratios for the periods indicated:

(1)Ratio of policyholder benefits to earned premiums plus policy charges and fee income.

(2)Benefits ratios reflect the impacts of our annual reviews and update of assumptions and other refinements. Excluding these impacts, the group life, group disability and total Group Insurance benefits ratios were 87.6%, 71.1% and 83.2% for 2023, respectively, 93.4%, 73.3% and 88.4% for 2022, respectively, and 102.5%, 83.8% and 98.2% for 2021, respectively.

(3)Ratio of general and administrative expenses (excluding commissions) to gross premiums plus policy charges and fee income.

(4)The benefits and administrative ratios are measures used to evaluate profitability and efficiency.

2023 to 2022 Annual Comparison. Adjusted operating income increased $335 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2023 included a $36 million net benefit from these updates while results for 2022 included a $3 million net charge from these updates. Excluding this item, adjusted operating income increased $296 million, primarily reflecting higher underwriting results in our group life business, driven by a decline in COVID-19 impacts and favorable mortality experience on non-experience-rated contracts, and higher underwriting results in our group disability business, driven by a favorable impact to reserves from higher interest rates on long-term disability contracts, as well as business growth. These increases were partially offset by higher variable expenses, largely driven by business growth.

2022 to 2021 Annual Comparison. Adjusted operating income increased $437 million, including an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2022 included a $3 million net charge from these updates while results for 2021 included a $1 million net benefit from these updates. Excluding this item, adjusted operating income increased $441 million, primarily reflecting higher underwriting results in our group life business, driven by a decline in COVID-19 impacts on non-experience-rated contracts, and higher underwriting results in our group disability business driven by more favorable claims experience and a favorable impact to reserves from higher interest rates on long-term disability contracts, as well as business growth. These increases were partially offset by lower net investment spread results driven by lower income on non-coupon investments.

2023 to 2022 Annual Comparison. Revenues increased $170 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues increased $167 million. The increase primarily reflected higher premiums and policy charges and fee income driven by business growth in our group disability business, including supplemental health products. In our group life business, growth in non-experience-rated contracts was partially offset by higher premium returns driven by favorable mortality on experience-rated contracts. This increase also reflected higher net investment income driven by higher reinvestment rates.

Benefits and expenses decreased $165 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses decreased $129 million. The decrease primarily reflected lower policyholders’ benefits and changes in reserves in our group life business driven by favorable mortality experience, including a decline in COVID-19 impacts on non-experience-rated contracts. This decrease was partially offset by higher policyholders’ benefits and changes in reserves in our group disability business driven by business growth, as well as higher general and administrative expenses, largely driven by business growth.

2022 to 2021 Annual Comparison. Revenues decreased $104 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $100 million. The decrease primarily reflected lower net investment income driven by lower income on non-coupon investments.

Benefits and expenses decreased $541 million. The decrease primarily reflected lower policyholders’ benefits and changes in reserves in our group life business driven by less unfavorable claim experience from a decline in COVID-19 impacts, as well as in our group disability business driven by a more favorable impact from claims experience and a favorable impact to reserves from higher interest rates on long-term disability contracts.

The following table sets forth Group Insurance’s annualized new business premiums, as defined under “—Segment Measures” above, for the periods indicated:

(1)Amounts exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.

2023 to 2022 Annual Comparison. Total annualized new business premiums increased $52 million, primarily driven by higher sales in our group disability business in the Premier Market segment, including an increase in supplemental health product sales, as well as higher sales in our group life business, primarily in the Association segment, partially offset by lower sales in the National Market segment.

2022 to 2021 Annual Comparison. Total annualized new business premiums decreased $7 million, primarily driven by lower sales in our group disability business in the National Market segment due to the absence of a large sale in 2021, partially offset by an increase in supplemental health product sales, primarily in the Premier Market segment. Higher group life sales, primarily in the National Market segment, served as a partial offset.