PRUDENTIAL FINANCIAL INC

•In March 2024, the Company entered into a definitive agreement with Grupo ST S.A. to sell Prudential of Argentina (“POA”). The results of POA for the first quarter of 2024 and the impact of its anticipated sale are reflected in the Divested and Run-off Businesses that are included within our Corporate and Other operations. The transaction, which is not expected to have a material impact on the Company’s results, is expected to close in the second quarter of 2024, subject to customary closing conditions.

The results of our International Businesses’ operations are translated on the basis of weighted average monthly exchange rates, inclusive of the effects of the intercompany arrangement discussed in “—Results of Operations—Impact of Foreign Currency Exchange Rates” above. To provide a better understanding of operating performance within the International Businesses, where indicated below, we have analyzed our results of operations excluding the effect of the year over year change in foreign currency exchange rates. Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. For our Japan operations, we used an exchange rate of 129 yen per USD. In addition, for constant dollar information discussed below, activity denominated in USD is generally reported based on the amounts as transacted in USD. Annualized new business premiums presented on a constant exchange rate basis in the “Sales Results” section below reflect translation based on these same uniform exchange rates.

The following table sets forth the International Businesses’ operating results for the periods indicated:

Adjusted operating income from our Life Planner operations increased $23 million, including a net unfavorable impact of $15 million from currency fluctuations. Excluding this item, adjusted operating income from our Life Planner operations increased $38 million, primarily reflecting higher net investment spread results driven by higher reinvestment rates and higher income on non-coupon investments. This increase was partially offset by lower underwriting results, primarily due to the decline in business in force in Japan, partially offset by the growth of business in force in Brazil.

Adjusted operating income from our Gibraltar Life and Other operations increased $33 million, including a net favorable impact of $5 million from currency fluctuations. Excluding this item, adjusted operating income from our Gibraltar Life and Other operations increased $28 million, primarily reflecting higher earnings from joint ventures and other operating entities, and higher net investment spread results, driven by higher income on non-coupon investments, partially offset by unfavorable derivative settlements. The increase also reflects lower operating expenses. These increases were partially offset by lower underwriting results, primarily driven by the decline of business in force in Japan.

Revenues from our Life Planner operations decreased $74 million, including a net unfavorable impact of $107 million from currency fluctuations. Excluding this item, revenues increased $33 million, primarily reflecting higher net investment income driven by higher reinvestment rates and higher income on non-coupon investments, and higher policy charges and fee income reflecting the product mix shift to variable and investment products in Japan. This increase was partially offset by lower premiums attributable to the decline of business in force in Japan, partially offset by the growth of business in force in Brazil.

Benefits and expenses of our Life Planner operations decreased $97 million, including a net favorable impact of $92 million from currency fluctuations. Excluding this item, benefits and expenses decreased $5 million, primarily reflecting lower policyholder benefits, including changes in reserves, due to the decline of business in force, as discussed above, partially offset by higher interest credited on policyholders’ account balances, reflecting the product mix shift to investment products in Japan, as described above.

Revenues from our Gibraltar Life and Other operations decreased $228 million, including a net unfavorable impact of $94 million from currency fluctuations. Excluding this item, revenues decreased $134 million, primarily reflecting lower premiums attributable to ceded reinsurance, which is mostly offset in policyholders’ benefits below, and to the decline of business in force, as well as higher realized investment losses from unfavorable derivative settlements. These decreases were partially offset by higher net investment income, driven by higher income on non-coupon investments, higher earnings from joint ventures and other operating entities, and higher policy charges and fee income reflecting the product mix shift to investment products in Japan.

Benefits and expenses of our Gibraltar Life and Other operations decreased $261 million, including a net favorable impact of $99 million from currency fluctuations. Excluding this item, benefits and expenses decreased $162 million, primarily reflecting lower policyholders’ benefits, including changes in reserves, due to ceded reinsurance and the decline of business in force, as discussed above, and lower general and administrative expenses. These decreases were partially offset by higher interest credited on policyholders’ account balances, reflecting the product mix shift to investment products in Japan.

The following table sets forth annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, on an actual and constant exchange rate basis for the periods indicated:

(1)Prior period amounts have been updated to reflect the correction of errors for both Life Planner and Gibraltar Life and Other.

The amount of annualized new business premiums and the sales mix, in terms of types and currency denomination of products, for any given period can be significantly impacted by several factors, including but not limited to: the addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in interest rates or fluctuations in currency markets, changes in tax laws, changes in life insurance regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.

Our diverse product portfolio in Japan, in terms of currency mix and premium payment structure, allows us to adapt to changing market and competitive dynamics, including the low interest rate environment. We regularly examine our product offerings and their related profitability and reprice or discontinue sales of certain products that do not meet our profit expectations. The impact of these actions, coupled with the introduction of certain new products, has generally resulted in an increase in sales of products denominated in USD relative to products denominated in other currencies.

The table below presents annualized new business premiums on a constant exchange rate basis, by product category and distribution channel, for the periods indicated:

(1)Includes retirement income, endowment and savings variable life.

(2)Includes single-payment market value adjusted investment contracts, single-payment whole life products and annuity products.

Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $26 million, primarily driven by higher life product sales in Brazil, as well as higher investment contract sales, and higher retirement product sales, in Japan.

Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life and Other operations decreased $3 million. Life Consultant sales decreased $20 million, reflecting lower USD-denominated single premium investment contract sales and lower USD-denominated recurring premium life product sales. Independent Agency and Bank channel sales increased $13 million and $4 million, respectively, reflecting higher USD-denominated single premium investment contract sales, partially offset by lower USD-denominated life product sales. Independent Agency also reflects lower accident and health product sales.