PRUDENTIAL FINANCIAL INC

Current report

During the fourth quarter of 2024, the Company identified an immaterial error in the application of adjusted operating income, which resulted in an overstatement thereof for indexed variable and fixed annuity products within the Retirement Strategies segment in the first three quarters of 2024 and each of the four quarters of 2023. As a result, the Company has voluntarily revised its historical adjusted operating income for the relevant periods, resulting in decreases in pre-tax adjusted operating income of $149 million (unaudited) for the nine months ended September 30, 2024, and $55 million for the year ended December 31, 2023. These revisions had no impact to “Net income (loss)” for any period as determined in accordance with GAAP. See Note 23 for additional information regarding adjusted operating income.

Current report

•PGIM. An aging global population has led to more de-risking across institutional and individual investor portfolios as well as increased demand for higher-yielding investments that deliver income to meet retirement needs. As a result, investors are increasing their allocations to public and private fixed income assets, where PGIM is a global market leader. As employers, particularly in the U.S. and the U.K., continue to transition from defined benefit pensions to defined contribution plans as their primary retirement vehicles, there is a growing need for personalized retirement solutions that can help improve individual retirement security. Asset managers, such as PGIM, will play a critical role in partnering with governments, corporations, and individuals globally to deliver the investment and advice capabilities required to address this challenge.

Current report

•$162 million unfavorable variance from market experience updates.

Current report

“Net income (loss) attributable to Prudential Financial, Inc.” also reflected a $106 million favorable variance from income taxes, primarily reflecting an increase in the non-taxable pre-tax items included above.

Current report

(1)The amount for 2023 reflects the correction of an error related to indexed variable and fixed annuity products within the Retirement Strategies segment. See “—Overview” above for additional information.

Current report

Individual Life. Results for 2024 decreased in comparison to 2023, inclusive of an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased, primarily driven by higher expenses, including costs associated with the recent guaranteed universal life reinsurance transactions as well as from the consolidation of our internal captive reinsurance arrangements, partially offset by the ongoing favorable impacts from these reinsurance transactions.

Current report

There were no new critical accounting estimates resulting from new accounting pronouncements adopted during 2024. See Note 2 to the Consolidated Financial Statements for accounting pronouncements issued but not yet adopted and newly adopted accounting pronouncements.

Current report

•In July 2024, the Company exited PGIM Wadhwani LLP (“PGIMW”), our London-based managed futures investment management firm. The results of PGIMW, beginning in the second quarter of 2024, are reflected in Divested and Run-off Businesses included within our Corporate and Other operations.

Current report

2024 to 2023 Annual Comparison. Revenues increased $454 million. Asset management fees increased, primarily reflecting equity market appreciation and strong investment performance, as well as the impact of the Deerpath acquisition. Other related revenues were favorable, primarily reflecting higher incentive fees due to strong investment performance and the impact of the Deerpath acquisition.

Current report

Expenses increased $292 million, primarily reflecting higher variable expenses related to performance-based incentive fees and an increase in overall segment earnings. The increase also reflects higher compensation expenses due to business growth, including the impact of the Deerpath acquisition, and increases related to certain long-term employee compensation plans tied to investment performance.

Current report

(1)The amount for 2023 reflects the correction of an error related to indexed variable and fixed annuity products within the Retirement Strategies segment. See “—Overview” above for additional information.

Current report

•Higher expenses, primarily driven by higher operating expenses in our Individual Life, Group Insurance, and Institutional Retirement Strategies businesses and higher amortization of acquisition costs in our Individual Retirement Strategies business driven by business growth; and

Current report

Largely offsetting these decreases were:

Current report

•Higher underwriting results, primarily reflecting the impacts of the reinsurance transactions of certain guaranteed universal life policies in our Individual Life business and improved mortality experience in both our Individual Life and Group Insurance businesses;

Current report

•A favorable comparative net impact from our annual reviews and update of assumptions and other refinements, primarily reflecting a net benefit from these updates in the second quarter of 2024 in our Institutional Retirement Strategies business, partially offset by a net charge in our Individual Life business; and

Current report

•Higher net investment spread results, primarily reflecting business growth, higher reinvestment rates, and higher income on non-coupon investments, partially offset by the absence of income on assets included in the recent reinsurance transactions in our Individual Life and Institutional Retirement Strategies businesses.

Current report

(1)The amount for 2023 reflects the correction of an error related to indexed variable and fixed annuity products within the Individual Retirement Strategies business. See “—Overview” above for additional information.

Current report

2024 to 2023 Annual Comparison. Adjusted operating income from our Institutional Retirement Strategies business increased $161 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2024 and 2023 included net benefits from this update of $132 million and $6 million, respectively. Excluding this item, adjusted operating income increased $35 million, driven by higher net investment spread results, primarily reflecting business growth and higher income on non-coupon investments, partially offset by the absence of income on assets related to the reinsurance of certain structured settlement annuity contracts in the prior year, as discussed above. This increase was partially offset by higher operating expenses and less favorable reserve experience.

Current report

Under U.S. GAAP, policyholder liabilities associated with our fixed and variable indexed annuity products are recorded in “Policyholders’ account balances,” and include both the contract value that has accrued to the benefit of the policyholder and the fair value of embedded derivative instruments associated with the index-linked features for these products. The change in the liability for these products is measured utilizing a valuation methodology required under U.S GAAP, and includes the fair value of all index credits for the current term and future projected renewals of the policy. For the purpose of measuring segment performance, however, adjusted operating income reflects only the change in the liability associated with the current term elected by the policyholder and excludes the change in the liability associated with all future projected renewals.

Current report

Revenues from our Individual Retirement Strategies business increased $593 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues increased $601 million primarily driven by higher net investment income due to growth in indexed variable annuities and higher reinvestment rates.

Current report

Benefits and expenses of our Individual Retirement Strategies business increased $648 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses increased $664 million primarily driven by higher interest credited to policyholders’ account balances and higher general and administrative expenses, net of capitalization.

Current report

(1)Beginning total account values, net of reinsurance ceded, were $258,417 million, $251,818 million and $245,720 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Current report

(1)Beginning total account values, net of reinsurance ceded, were $117,911 million, $119,205 million, and $181,828 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Current report

(3)The amount for 2023 reflects the correction of an error related to indexed variable and fixed annuity products within the Individual Retirement Strategies business. See “—Overview” above for additional information.

Current report

For 2024, the loss of $1,007 million was primarily driven by realized losses from asset sales and the impact of higher interest rates on derivatives within Institutional Retirement Strategies.

Current report

Benefits and expenses increased $147 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses increased $139 million. The increase primarily reflected higher policyholders’ benefits, driven by less favorable claims experience on long-term disability contracts, as well as higher general and administrative expenses, largely supporting business growth.

Current report

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

Current report

•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 represented 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 a coinsurance basis and contains significant structural protections, including overcollateralization by the counterparty and agreed upon investment guidelines. The transaction was completed in December 2024 with an effective date of October 1, 2024. See Note 15 to the Consolidated Financial Statements for additional information.

Current report

2024 to 2023 Annual Comparison. Adjusted operating income decreased $110 million, including an unfavorable net impact from our annual reviews and update of assumptions and other refinements. Results for 2024 and 2023 included net charges from this update of $98 million and $26 million, respectively. Excluding this item, adjusted operating income decreased $38 million, primarily driven by higher expenses, including costs associated with the reinsurance transactions discussed above as well as from the consolidation of our internal captive reinsurance arrangements. See “Liquidity and Capital Resources—Overview” for additional information regarding this consolidation. This decrease was partially offset by the ongoing favorable impacts from these reinsurance transactions and less unfavorable mortality experience.

Current report

•In March 2024, the Company entered into a definitive agreement with Grupo ST S.A. to sell POA. Effective in the first quarter of 2024, the results of POA and the impact of its sale were reflected in the Divested and Run-off Businesses that are included within our Corporate and Other operations. The transaction, which did not have a material impact on the Company’s results, was completed in May 2024.

Current report

•In December 2024, the Company entered into an agreement with Prismic Life Reinsurance International, Ltd., a wholly-owned subsidiary of Prismic, to reinsure approximately $7 billion of reserves for certain USD-denominated Japanese whole life policies originated by the Company’s Japanese affiliates. The transaction is subject to regulatory approvals and customary closing conditions.

Current report

Excluding the impact of currency fluctuations, as well as the impact from our annual reviews and update of assumptions and other refinements as discussed above, adjusted operating income from our Life Planner operations decreased $38 million. This decrease primarily reflects lower underwriting results due to the decline of business in force in Japan, partially offset by the growth of business in force in Brazil. Also contributing to the decrease were higher expenses, including higher variable expenses driven by business growth in Brazil. These decreases were partially offset by higher net investment spread results driven byhigher reinvestment rates.

Current report

2024 to 2023 Annual Comparison. Revenues from our Life Planner operations decreased $244 million, including a net unfavorable impact of $295 million from currency fluctuations and a net benefit of $74 million from our annual reviews and update of assumptions and other refinements. Excluding these items, revenues decreased $23 million, primarily reflecting lower premiums attributable to the decline of business in force in Japan, partially offset by the growth of business in force in Brazil, and lower investment gains from less favorable derivative settlements. These decreases were partially offset by higher net investment income driven by higher reinvestment rates and higher policy charges and fee income reflecting growth in both variable and investment products in Japan.

Current report

Benefits and expenses from our Life Planner operations decreased $114 million, including a net favorable impact of $254 million from currency fluctuations and a net charge of $125 million from our annual reviews and update of assumptions and other refinements. Excluding these items, benefits and expenses increased $15 million, primarily reflecting higher interest credited on policyholders’ account balances, reflecting growth in both variable and investment products in Japan, and higher general and administrative expenses driven by business growth in Brazil. These increases were partially offset by lower policyholders’ benefits, including changes in reserves, due to the decline of business in force in Japan, as discussed above, as well as favorable changes in estimates of the liability for future policy benefits.

Current report

Revenues from our Gibraltar Life and Other operations decreased $513 million, including a net unfavorable impact of $198 million from currency fluctuations and a net charge of $82 million from our annual reviews and update of assumptions and other refinements. Excluding these items, revenues decreased $233 million, primarily reflecting lower premiums attributable to the decline of business in force and the impact of ceded reinsurance, which is mostly offset in policyholders’ benefits below, as well as higher investment losses from unfavorable derivative settlements. These decreases were partially offset by higher net investment income from higher income on non-coupon investments, portfolio growth and higher reinvestment rates, as well as higher earnings from joint ventures and other operating entities.

Current report

Benefits and expenses from our Gibraltar Life and Other operations decreased $566 million, including a net favorable impact of $225 million from currency fluctuations and a net benefit of $65 million from our annual reviews and update of assumptions and other refinements. Excluding these items, benefits and expenses decreased $276 million, primarily reflecting lower policyholders’ benefits, including changes in reserves, due to the decline of business in force and the impact of ceded reinsurance, as discussed above, as well as favorable changes in estimates of the liability for future policy benefits, and lower general and administrative expenses. These decreases were partially offset by higher interest credited on policyholders’ account balances, reflecting growth in investment products.

Current report

•In March 2024, the Company committed to a plan to exit the operations of AIQ; therefore, beginning with the first quarter of 2024, AIQ is classified as a divested business within our Corporate and Other operations. AIQ’s results are excluded from adjusted operating income and historical results have been updated to conform to current period presentation.

Current report

(1)Effective first quarter of 2024, the results of AIQ are excluded from Corporate and Other’s adjusted operating results and are included in Divested and Run-off Businesses. Prior period amounts have been updated to conform to current period presentation.

Current report

(1)Effective first quarter of 2024, the results of AIQ are excluded from Corporate and Other’s adjusted operating results and are included herein. Prior period amounts have been updated to conform to current period presentation. Effective second quarter of 2024, the results of PGIMW are excluded from PGIM’s adjusted operating results and are included herein.

Current report

Long-Term Care. Results increased $196 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2024 included a $111 million net benefit from these updates, while results for 2023 included a $79 million net charge from these updates. Excluding this item, results increased $6 million, primarily reflecting more favorable impacts from changes in the market value of equity securities, largely offset by higher net realized investment losses, primarily from higher losses on sales of fixed income securities.

Previous report

Effective January 1, 2023, we made the following segment reporting changes, which do not impact our consolidated financial statements:

Previous report

•Based on the write-down of Assurance IQ’s (“AIQ”) goodwill asset, and that its financial results and operations are not considered significant, AIQ no longer represents a separately reportable segment and is now included within our Corporate and Other operations.

Previous report

•Since Prudential Advisors, our proprietary nationwide distribution business, is no longer managed through the Individual Life segment and its financial results and operations are not considered significant, it is now included within our Corporate and Other operations.

Previous report

•$726 million favorable variance from a lower goodwill impairment charge related to Assurance IQ recorded in the current year period compared to the prior year period;

Previous report

•$121 million favorable variance from our Divested and Run-off Businesses, reflecting higher results in our Long-Term Care business, partially offset by the absence of a gain from the sale of the Full Service Retirement business in the prior year period and lower results from our Closed Block division.

Previous report

•$892 million unfavorable variance from income taxes reflecting the increase in pre-tax earnings; and

Previous report

•$532 million unfavorable variance driven by market experience updates, primarily within our Individual Life and International businesses.

Previous report

•$2,150 million unfavorable variance from lower adjusted operating income from our business segments, including an unfavorable net impact from our annual reviews and update of assumptions and other refinements, primarily reflecting a net charge from these updates in 2022 within the Individual Life business, and the absence of a gain from the sale of the Company’s 35% ownership stake in Pramerica SGR recorded in 2021, partially offset by a gain from the sale of PALAC in 2022; and

Previous report

•$799 million unfavorable variance reflecting lower results from our Divested and Run-off Businesses, primarily in our Long-Term Care business, partially offset by a gain from the sale of our Full Service Retirement business in 2022.

Previous report

•$2,274 million favorable variance from income taxes reflecting the decrease in pre-tax earnings; and

Previous report

•$622 million favorable variance driven by market experience updates, primarily within our Individual Life and International businesses.

Previous report

Retirement Strategies. Results for 2023 decreased in comparison to 2022, inclusive of a less favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased, primarily reflecting the absence of a gain in the prior year period from the sale of PALAC and lower fee income, net of distribution expenses and other associated costs, partially offset by higher net investment spread results.

Previous report

•In certain instances, the policyholder liability for a particular line of universal life type and participating contract business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. In these situations, accounting standards require that an additional liability (Profits Followed by Losses or “PFL” liability) be recognized by an amount necessary to sufficiently offset the losses that would be recognized in later years. The PFL liability is based on our current estimate of the present value of the amount necessary to offset losses anticipated in future periods. Because the liability is measured on a discounted basis, there will also be accretion into future earnings through an interest charge, and the liability will ultimately be released into earnings as an offset to future losses. At the target accrual date (i.e., date of peak deficiency), the PFL liability transitions to a premium deficiency reserve and, for universal life type products, will continue to be updated each quarter using current in-force and market data and as part of the annual assumption update.

Previous report

The annual quantitative goodwill impairment analysis for Assurance IQ utilized both an income and a market approach. The income approach estimated the fair value of Assurance IQ by applying a discount rate, derived from a capital asset pricing model and reflecting a market expected rate of return for the reporting unit, to its projected future cash flows. The market approach derived the fair value of Assurance IQ by applying forward sales market multiples on comparable publicly traded companies to Assurance’s forecasted sales and adding an implied control premium. The estimated fair value of Assurance IQ as of December 31, 2023 was based on weighting the results of each approach. Based on the goodwill impairment test performed as of December 31, 2023, the Company recognized a non-cash goodwill impairment pre-tax charge of $177 million ($140 million after-tax), representing all of the remaining goodwill assigned to Assurance IQ. The impairment was primarily due to a reduction in the forecasted cash flows driven by weaker than expected sales performance in the fourth quarter of 2023.

Previous report

As of the January 1, 2021 transition date, the adoption of the standard resulted in a decrease to “Retained earnings” of $2.6 billion primarily from reclassifying the cumulative effect of changes in non-performance risk on market risk benefits from “Retained earnings” to “Accumulated other comprehensive income” (“AOCI”) as well as from a net increase in additional insurance reserves and other related balances primarily related to the no-lapse guarantee features on certain universal life contracts. AOCI decreased $42.4 billion as of the January 1, 2021 transition date largely from remeasuring in-force contract liabilities using upper-medium grade fixed-income instrument yields as of the transition date. As of the January 1, 2023 adoption date, the impacts amounted to a decrease to “Retained earnings” of $1.7 billion and an increase to AOCI of $16.0 billion. The changes in the impacts from January 1, 2021 to January 1, 2023 primarily reflect the increase in interest rates during 2021 and 2022. See Note 2 to the Consolidated Financial Statements for a more detailed discussion of ASU 2018-12, as well as other accounting pronouncements issued but not yet adopted and newly adopted accounting pronouncements.

Previous report

(2)Revenues for the year ended December 31, 2021 include a $378 million pre-tax gain related to the sale of our 35% ownership stake in Pramerica SGR, an asset management joint venture in Italy.

Previous report

2022 to 2021 Annual Comparison. Adjusted operating income decreased $800 million, reflecting a decrease in service, distribution and other revenues, driven by the absence of a gain in 2021 from the sale of our Pramerica SGR joint venture, and lower other related revenues and asset management fees, net of related expenses.

Previous report

(3)Results for the year ended December 31, 2021 include a $378 million pre-tax gain related to the sale of our 35% ownership stake in Pramerica SGR, an asset management joint venture in Italy.

Previous report

2023 to 2022 Annual Comparison. Revenues increased $16 million, primarily driven by higher service, distribution and other revenues reflecting higher interest income earned on cash as a result of higher short-term rates and higher revenues from certain consolidated funds (which were fully offset by higher expenses related to noncontrolling interests in these funds). Other related revenues were also favorable reflecting higher seed and co-investments results driven by improved investment performance, partially offset by lower commercial mortgage origination revenues and lower performance-based incentive fees. These increases were partially offset by lower asset management fees primarily due to lower average assets under manage ment.

Previous report

Expenses increased $146 million, primarily reflecting higher compensation and operating expenses, driven by certain long-term employee compensation plans tied to investment performance, as well as to support business growth. Variable expenses increased, primarily driven byhigher interest expense from higher interest rates, and higher revenues from certain consolidated funds, as discussed above, partially offset by lower compensation expenses related to performance-based incentive fees.

Previous report

2022 to 2021 Annual Comparison. Revenues decreased $871 million. Service, distribution and other revenues decreased, primarily reflecting the absence of a gain in 2021 from the sale of our Pramerica SGR joint venture, and lower revenues from certain consolidated funds (which were fully offset by lower variable expenses related to noncontrolling interests in these funds). Asset management fees decreased primarily due to a decrease in average assets under management, driven by market depreciation reflecting higher interest rates and widening credit spreads, as well as unfavorable equity markets. Also contributing to the decrease were lower other related revenues primarily driven by lower performance-based incentive fees, reflecting investment underperformance, lower commercial mortgage origination revenues driven by higher interest rates and general economic uncertainty, and lower seed and co-investments results.

Previous report

Expenses decreased $71 million, primarily reflecting lower variable expenses associated with a decrease in overall segment earnings and lower revenues from certain consolidated funds, as discussed above. The decrease was partially offset by higher operating expenses primarily drivenby an increase in travel and entertainment costs, and an increase in compensation expenses.

Previous report

2022 to 2021 Annual Comparison. PGIM’s assets under management decreased $295 billion in 2022, primarily driven by market depreciation resulting from higher interest rates and widening credit spreads, as well as unfavorable equity markets. The decrease also reflects a reduction in assets under management from the sales of the Full Service Retirement business and PALAC in the second quarter of 2022, public fixed income and public equity net outflows, and unfavorable foreign exchange rate impacts.

Previous report

2023 to 2022 Annual Comparison. Adjusted operating income for our U.S. Businesses increased by $1,081 million primarily due to:

Previous report

•A favorable comparative net impact from our annual reviews and update of assumptions and other refinements, primarily reflecting a net charge from these updates in the second quarter of 2022 in our Individual Life business, mainly driven by unfavorable impacts related to assumptions for policyholder behavior and mortality;

Previous report

•Higher net investment spread results, primarily reflecting higher reinvestment and short-term rates, as well as business growth, partially offset by lower income on non-coupon investments; and

Previous report

•Higher underwriting results, primarily reflecting improved mortality experience and more favorable disability results in our Group Insurance business, partially offset by unfavorable mortality experience in our Individual Life business.

Previous report

•Partially offsetting these increases were the absence of a gain in our Individual Retirement Strategies business from the sale of PALAC in the second quarter of 2022; and

Previous report

•An unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements, primarily reflecting a net charge from these updates in the second quarter of 2022 in our Individual Life business, mainly driven by unfavorable impacts related to assumptions for policyholder behavior and mortality;

Previous report

•Lower net investment spread results driven by lower income on non-coupon investments, partially offset by higher reinvestment rates and business growth; and

Previous report

•Lower fee income, net of distribution expenses and other associated costs, primarily in our Individual Retirement Strategies business due to a reduction in account values as a result of the sale of PALAC in the second quarter of 2022 and unfavorable equity markets.

Previous report

•Partially offsetting these decreases werea gain in our Individual Retirement Strategies business from the sale of PALAC; and

Previous report

•Higher underwriting results, including lower COVID-19 related mortality claims, in our Group Insurance and Individual Life businesses, as well as more favorable disability results in our Group Insurance business, partially offset by the unfavorable ongoing impact from our annual reviews and update of assumptions and other refinements in 2022 in our Individual Life business.

Previous report

2023 to 2022 Annual Comparison. Adjusted operating income from our Institutional Retirement Strategies business increased $148 million, including a less favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2023 and 2022 included net benefits from this update of $6 million and $14 million, respectively. Excluding this item, adjusted operating income increased $156 million, driven by higher net investment spread results, primarily reflecting business growth and higher reinvestment rates, partially offset by lower income on non-coupon investments. Also contributing to the increase was a higher gain from reserve experience and higher fee income, net of distribution expenses and other associated costs, primarily driven by business growth.

Previous report

Adjusted operating income from our Individual Retirement Strategies business increased $1,163 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2022 included a $7 million net benefit from our annual reviews and update of assumptions, while results for 2021 had no net impact. Excluding this item, adjusted operating income increased $1,156 million primarily driven by the gain on sale of PALAC. Also contributing to the increase were higher net investment spread results, driven by growth in indexed variable annuities and more favorable interest rates, as well as lower expenses and market value gains on a strategic investment. These increases were partially offset by lower fee income, net of distribution expenses and other associated costs, resulting from lower separate account values due to the impact of the sale of PALAC, net outflows and unfavorable equity markets.

Previous report

Revenues from our Individual Retirement Strategies business decreased $953 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $946 million primarily driven by the absence of a gain in the prior year period from the sale of PALAC and lower policy charges and fee income, resulting from lower average separate account values due to net outflows and the impacts from the sale of PALAC and the PDI reinsurance transaction. These decreases were partially offset by higher net investment income due to higher reinvestment rates and growth in indexed variable annuities, partially offset by lower income on non-coupon investments.

Previous report

Benefits and expenses of our Individual Retirement Strategies business increased $156 million primarily driven by higher interest expense, partially offset by lower general and administrative expenses, net of capitalization.

Previous report

2022 to 2021 Annual Comparison. Revenues from our Institutional Retirement Strategies business increased $3,575 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues increased $3,852 million. This increase primarily reflected higher pension risk transfer premiums due to new sales in 2022, with corresponding offsets in policyholders’ benefits, as discussed below, partially offset by lower net investment income and other income, primarily reflecting lower income on non-coupon investments.

Previous report

Benefits and expenses of our Institutional Retirement Strategies business increased $4,160 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses increased $4,447 million. Policyholders’ benefits, including the change in policy reserves, increased primarily related to the higher pension risk transfer premiums, discussed above.

Previous report

Revenues from our Individual Retirement Strategies business increased $1,010 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues increased $1,003 million. The increase was primarily driven by the gain on sale of PALAC, partially offset by lower policy charges and fee income, reflecting lower average separate account values due to the impact of the sale of PALAC, net outflows and unfavorable equity markets.

Current report — wording carried from elsewhere

See Note 23 to the Consolidated Financial Statements for additional information regarding the presentation of segment results and our definition of adjusted operating income.

Current report — wording carried from elsewhere

Assets Under Management. In managing our PGIM segment, we analyze assets under management (which do not correspond directly to U.S. GAAP assets) because the principal source of revenues is fees based on assets under management.

Current report — wording carried from elsewhere

As of December 31, 2024, our goodwill balance of $1,053 million is primarily reflected in the following reporting units: $946 million for PGIM and $96 million for Gibraltar Life and Other.

Current report — wording carried from elsewhere

(2)Includes certain components of consideration for business acquisitions, which are recognized as compensation expense over the requisite service periods.

Current report — wording carried from elsewhere

(2)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading.

Current report — wording carried from elsewhere

•$94 million of gains on credit default swaps due to credit spreads tightening.

Current report — wording carried from elsewhere

•$544 million of losses on interest rate derivatives due to increases in swap and U.S. Treasury rates; and

Current report — wording carried from elsewhere

Included in the table above are “Related charges and adjustments,” which include the portions of “Realized investment gains (losses), net” that are either (1) included in adjusted operating income or (2) included in other reconciling line items to adjusted operating income, such as “Divested and Run-off Businesses.” “Related adjustments” also includes the portions of “Other income (loss),” “Net investment income,” and “Policyholders’ benefits” that are excluded from adjusted operating income and (3) charges related to “Realized investment gains (losses), net,” which are excluded from adjusted operating income.

Current report — wording carried from elsewhere

The following table sets forth the composition of our commercial mortgage and other loans portfolio, as of the dates indicated:

Current report — wording carried from elsewhere

Guideline AXXX as described below, as well as funding for institutional and insurance company portfolio cash flow timing differences.

Previous report — wording carried elsewhere

•$499 million favorable variance reflecting the change in value of market risk benefits, net of related hedging gains (losses);

Previous report — wording carried elsewhere

2022 to 2021 Annual Comparison. The $10,515 million decrease in “Net income (loss) attributable to Prudential Financial, Inc.” reflected the following notable items on a pre-tax basis:

Previous report — wording carried elsewhere

•$6,586 million unfavorable variance from realized investment gains (losses), net, and related charges and adjustments;

Previous report — wording carried elsewhere

Partially offsetting these decreases in “Net income (loss) attributable to Prudential Financial, Inc.” were the following items:

Previous report — wording carried elsewhere

2023 to 2022 Annual Comparison. The increase in Institutional Retirement Strategies net account values reflects interest credited on customer funds, positive impact of foreign exchange rate changes, net additions primarily driven by significant pension risk transfer transactions, including funded pension risk transfer and international reinsurance sales, and an increase in the market value of the assets, partially offset by the reinsurance of certain structured settlement annuity contracts.

Previous report — wording carried elsewhere

2022 to 2021 Annual Comparison. The table below presents annualized new business premiums on a constant exchange rate basis, by product category and distribution channel, for the periods indicated:

Previous report — wording carried elsewhere

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

Previous report — wording carried elsewhere

(2)Includes single-payment market value adjusted investment contracts and single-payment whole life products. 2021 also includes annuity products.

Previous report — wording carried elsewhere

As of December 31, 2023, the excess of actual cumulative earnings over the expected cumulative earnings was $2,873 million, which was recorded as a policyholder dividend obligation. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. As of December 31, 2023, net unrealized investment losses have arisen subsequent to the establishment of the Closed Block due to the impacts of higher interest rates on the market value of fixed maturities available-for-sale. The impact of these net unrealized investment losses has been reflected as a decrease to the policyholder dividend obligation of $2,081 million at December 31, 2023, with a corresponding amount reported in AOCI.

Previous report — wording carried elsewhere

Benefits and expenses increased $790 million primarily driven by an increase in dividends to policyholders, reflecting less of a reduction in the policyholder dividend obligation due to changes in cumulative earnings and other factors, as discussed above.

Previous report — wording carried elsewhere

(2)Excludes fixed maturity securities classified as trading.

Previous report — wording carried elsewhere

2022 to 2021 Annual Comparison. Net losses on sales and maturities of fixed maturity securities were $1,027 million for the year ended December 31, 2022 primarily driven by rotation sales of public securities into private securities and mortgage loans coupled with relative value trading in a higher interest rate environment, partially offset by the impact of foreign currency exchange rate movements on U.S. and Australian dollar-denominated securities that matured or were sold within our International Businesses segment. Net gains on sales and maturities of fixed maturity securities were $1,445 million for the year ended December 31, 2021 primarily driven by sales of U.S. treasuries acquired in a higher interest-rate environment within our domestic segments and the impact of foreign currency exchange rate movements on U.S. and Australian dollar-denominated securities that matured or were sold within our International Businesses segment.

Previous report — wording carried elsewhere

For a discussion of living benefit guarantees and related hedge positions in our Individual Retirement Strategies business, see “—Results of Operations by Segment—U.S. Businesses—Retirement Strategies” above.

Previous report — wording carried elsewhere

We maintain separate monitoring processes for public and private fixed maturities and create watch lists to highlight securities that require special scrutiny and management. For private placements, our credit and portfolio management processes help ensure prudent controls over valuation and management. We have separate pricing and authorization processes to establish

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The following table sets forth the composition of the portion of our fixed maturity, held-to-maturity portfolio by industry category attributable to PFI excluding the Closed Block division and the associated gross unrealized gains and losses, as well as the allowance for credit losses, as of the dates indicated:

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(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.

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(2)As of December 31, 2022, based on amortized cost, 97% represent Japanese government bonds held by our Japanese insurance operations.

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(3)As of December 31, 2022, based on amortized cost, 94% were rated A or higher.

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(1)Reflects equivalent ratings for investments of the international insurance operations.

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•In February 2024, we announced that the Company will redeem, in full, $500 million in aggregate principal amount of 5.20% junior subordinated notes due in 2044.

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willingness to extend repurchase and/or securities lending arrangements, commitments to invest and market volatility. We closely manage these risks through our credit risk management process and regular monitoring of our liquidity position.

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•Senior Management and the Board: Senior management plays a critical role in reviewing the risk profile of the Company, including identifying impacts to the business strategy and risks in any new strategies under consideration.