PRUDENTIAL FINANCIAL INC

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%:

•In July 2023, the Company entered into an agreement with Somerset Re to reinsure certain guaranteed universal life policies issued by 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 15 to the 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 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.

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

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.

2024 to 2023 Annual Comparison. Revenues decreased $79 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $78 million, primarily driven by lower investment results reflecting the absence of income on assets related to the reinsurance transactions discussed above, 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 $31 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses decreased $40 million. This decrease was primarily driven by lower policyholders’ benefits, including changes in reserves, and lower interest credited on policyholders’ account balances as a result of the reinsurance transactions discussed above, as well as favorable changes in estimates of the liability for future policy benefits. 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 associated with these reinsurance transactions and the consolidation of our internal captive reinsurance arrangements, as well as the absence of a reduction in legal reserves in the prior year.

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:

2024 to 2023 Annual Comparison. Total annualized new business premiums increased $169 million, reflecting higher third-party sales across all products and higher Prudential Advisors variable life sales.