PRUDENTIAL FINANCIAL INC

We have entered into the following two external reinsurance agreements that we expect will reduce, in aggregate, the Company’s previously established statutory reserves on its in-force guaranteed universal life block of business by approximately 60% upon completion:

•In July 2023, the Company entered into an agreement with Somerset Re to reinsure certain guaranteed universal life policies issued by Pruco Life Insurance Company (“Pruco Life”) and Pruco Life Insurance Company of New Jersey (“PLNJ”), both of which are wholly-owned subsidiaries of Prudential Financial. These policies represented approximately 30% of the Company’s statutory 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.

•In August 2024, the Company entered into an agreement with Wilton Re to reinsure certain guaranteed universal life policies issued by Pruco Life and PLNJ. These policies represent approximately 40% of the Company’s remaining statutory reserves on its in-force guaranteed universal life block of business, following the close of the reinsurance transaction with Somerset Re, as discussed above. The transaction is structured on an indemnity coinsurance basis and contains significant structural protections, including overcollateralization by the counterparty and agreed upon investment guidelines, and is subject to regulatory approvals and customary closing conditions.

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

Three Month Comparison. Adjusted operating income increased $2 million, primarily driven by higher underwriting results due to favorable mortality experience and the impact of the first quarter 2024 reinsurance transaction of certain guaranteed universal life policies, as discussed above. These increases were partially offset by lower net investment spread results reflecting the impact of assets transferred as part of this reinsurance transaction.

Nine Month Comparison. Adjusted operating income decreased $45 million, including an unfavorable net impact from our annual reviews and update of assumptions and other refinements. Results for 2024 included a net charge of $98 million while 2023 included a net charge of $26 million. Excluding this item, adjusted operating income increased $27 million primarily driven by higher underwriting results reflecting favorable mortality experience and the impact from the first quarter 2024 reinsurance transaction, as discussed above. These increases were partially offset by lower net investment spread results reflecting the impact of assets transferred as part of this reinsurance transaction, partially offset by higher reinvestment rates and higher income on non-coupon investments.

Three Month Comparison. Revenues decreased $43 million, primarily driven by lower investment results reflecting the ceding of investment results related to the first quarter 2024 reinsurance transaction, as discussed above, partially offset by higher net investment income reflecting higher reinvestment rates.

Benefits and expenses decreased $45 million, primarily driven by lower policyholders’ benefits, including changes in reserves, and lower interest credited on policyholders’ account balances as a result of the first quarter 2024 reinsurance transaction discussed above. These decreases were partially offset by higher interest expense due to higher reserve financing costs corresponding to higher net investment income, as discussed above, and higher general and administrative expenses reflecting the absence of a reduction in legal reserves in the prior year period.

Nine Month Comparison. Revenues decreased $25 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $24 million, primarily driven by lower investment results reflecting the ceding of investment results related to the first quarter 2024 reinsurance transaction, as discussed above. This decrease was partially offset by higher net investment income reflecting higher reinvestment rates and higher income on non-coupon investments, as well as higher policy charges and fee income due to business growth.

Benefits and expenses increased $20 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses decreased $51 million, primarily driven by lower policyholders’ benefits, including changes in reserves, and lower interest credited on policyholders’ account balances as a result of the first quarter 2024 reinsurance transaction discussed above, as well as favorable changes in estimates of the liability for future policy benefits. These decreases were largely offset by higher interest expense due to higher reserve financing costs corresponding to higher net investment income, as discussed above, and higher general and administrative expenses associated with the first quarter 2024 reinsurance transaction, as discussed above, as well as the absence of a reduction in legal reserves in the prior year period.

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 three and nine months ended September 30, 2024 increased $24 million and $48 million, respectively, reflecting higher third-party sales across all products as well as higher Prudential Advisors variable life sales.