PRUDENTIAL FINANCIAL INC

Results of Operations by Segment

PGIM

•In December 2023, we completed the acquisition of a majority stake in Deerpath Capital Management, LP (“Deerpath”), a leading U.S.-based private credit and direct lending manager with approximately $5 billion in assets under management.

•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.

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

(1)Certain of PGIM’s investment activities are based in currencies other than the USD and are therefore subject to foreign currency exchange rate risk. The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’s USD-equivalent earnings. For additional information regarding this intercompany arrangement, see “—Results of Operations—Impact of Foreign Currency Exchange Rates,” above.

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

2024 to 2023 Annual Comparison. Adjusted operating income increased $162 million, primarily reflecting higher asset management fees, net of related expenses, and higher other related revenues, net of related expenses. These impacts were partially offset by higher compensation expenses.

Revenues and Expenses

The following table sets forth PGIM’s revenues, presented on a basis consistent with the table above under “—Operating Results,” by type:

(1)Consists of fees from: individual mutual funds and variable annuities and variable life insurance separate account assets; funds invested in proprietary mutual funds through our defined contribution plan products; and third-party sub-advisory relationships. Revenues from fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance are included in the general account.

(2)Includes mortgage origination revenues from our commercial mortgage origination and servicing business.

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.

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.

Assets Under Management

The following table sets forth assets under management by asset class as of the dates indicated:

(1)“Public equity” represents stock ownership interest in a corporation or partnership (excluding hedge funds) or real estate investment trust. “Public fixed income” represents debt instruments that pay interest and usually have a maturity (excluding mortgages). “Real estate” includes direct real estate equity and real estate mortgages. “Private credit and other alternatives” includes private credit, private equity, hedge funds and other alternative strategies. “Multi-asset” includes funds or products that invest in more than one asset class, balancing equity and fixed income funds and target date funds.

(2)Primarily includes assets related to certain annuity, variable life, retirement and group life products in our U.S. Businesses and Corporate and Other operations, and certain general account assets in our International Businesses. These assets are not directly managed by PGIM, but rather are invested in non-proprietary funds or are managed by either the divisions themselves or by our Chief Investment Officer Organization.

The following table sets forth assets under management by source as of the dates indicated:

(1)“Institutional customers” consist of third-party institutional assets and group insurance contracts. “Retail customers” consist of individual mutual funds and variable annuities and variable life insurance separate account assets, funds invested in proprietary mutual funds through our defined contribution plan products, and third-party sub-advisory relationships. “General account” also includes fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance.

(2)Primarily includes assets related to certain annuity, variable life, retirement and group life products in our U.S. Businesses and Corporate and Other operations, and certain general account assets in our International Businesses. These assets are not directly managed by PGIM, but rather are invested in non-proprietary funds or are managed by either the divisions themselves or by our Chief Investment Officer Organization.

The following table sets forth the component changes in PGIM’s assets under management for the periods indicated:

(1)Represents assets that PGIM manages for the benefit of other reporting segments within the Company. Additions and withdrawals of these assets are attributable to third-party product inflows and outflows in other reporting segments.

(2)Includes income reinvestment, where applicable.

(3)Results for the year ended December 31, 2022 include a reduction in assets under management from the sales of the Full Service Retirement business and Prudential Annuities Life Assurance Corporation (“PALAC”).

2024 to 2023 Annual Comparison. PGIM’s assets under management increased $77 billion in 2024, primarily driven by equity market appreciation, fixed income net inflows and strong investment performance.

Private Capital Deployment

Private capital deployment is indicative of the pace and magnitude of capital that is invested and will result in future revenues that may include management fees, transaction fees, incentive fees and servicing revenues, as well as future costs to manage these assets.

Private capital deployment represents the gross value of private capital invested in real estate debt and equity, and private credit and equity asset classes. Assets under management resulting from private capital deployment are primarily included in “Real estate” and “Private credit and other alternatives” in the “—Assets Under Management—by asset class table” above. As of December 31, 2024, these assets increased approximately $3.9 billion compared to December 31, 2023, primarily reflecting private capital net inflows, partially offset by unfavorable foreign exchange rate impacts.

Private capital deployment includes PGIM’s real estate agency debt business, which consists of agency commercial mortgage loans that are originated and sold to third-party investors. PGIM continues to service these loans; however, they are not included in assets under management.

The following table sets forth PGIM’s private capital deployed by asset class for the periods indicated:

Seed and Co-Investments

As of December 31, 2024 and 2023, PGIM had approximately $1,079 million and $1,088 million of seed investments and $415 million and $443 million of co-investments at carrying value, respectively, primarily consisting of public fixed income, public equity, real estate investments, and private credit and other alternatives.

U.S. Businesses

The following table sets forth the operating results for our U.S. Businesses for the periods indicated:

(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.

2024 to 2023 Annual Comparison. Adjusted operating income for our U.S. Businesses decreased by $9 million primarily due to:

•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

•Lower fee income, net of distribution expenses, primarily in our Individual Retirement Strategies business due to a reduction in account values resulting from net outflows, partially offset by favorable equity markets.

Largely offsetting these decreases were:

•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;

•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

•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.