PRUDENTIAL FINANCIAL INC

•In July 2023, the Company entered into an agreement with Somerset Reinsurance Ltd. (“Somerset Re”) to reinsure certain guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, both of which are wholly-owned subsidiaries of Prudential Financial. These policies represent approximately 30% of the Company’s reserves on its in-force guaranteed universal life block of business. The transaction was completed in March 2024 with an effective date of January 1, 2024. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.

The following table sets forth Individual Life’s operating results for the periods indicated:

Adjusted operating income decreased $19 million, primarily reflecting higher expenses, including costs associated with the recently closed reinsurance transaction of certain guaranteed universal life policies, as discussed above, and lower net investment spread results reflecting the impacts from this reinsurance transaction, partially offset by higher income on non-coupon investments and higher reinvestment rates. These decreases were partially offset by higher underwriting results driven by less unfavorable mortality experience, net of reinsurance.

Revenues increased $53 million, primarily driven by higher net investment income reflecting higher income on non-coupon investments and higher reinvestment rates. The increase was partially offset by realized investment losses, reflecting the ceding of net investment income, resulting from the recently closed reinsurance transaction, as discussed above.

Benefits and expenses increased $72 million, primarily driven by higher interest expense due to higher reserve financing costs corresponding to higher net investment income, and higher general and administrative expenses reflecting costs associated with the recently closed reinsurance transaction, as discussed above. The increases were partially offset by lower policyholder benefits, reflecting less unfavorable mortality experience, net of reinsurance.

The following table sets forth Individual Life’s annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, by distribution channel and product, for the periods indicated:

Total annualized new business premiums for the first quarter of 2024 increased $18 million, primarily reflecting higher third-party term life sales as well as higher variable life sales across all channels.