PRUDENTIAL FINANCIAL INC

We analyze the performance of our segments and Corporate and Other operations using a measure of segment profitability called adjusted operating income. See “—Segment Measures” below for a discussion of adjusted operating income and its use as a measure of segment operating performance.

Annual Reviews and Update of Assumptions and Other Refinements

During the second quarter of each year, we perform an annual comprehensive review of the assumptions used for estimating future premiums, benefits, and other cash flows, including reviews related to mortality, morbidity, lapse, surrender, and other contractholder behavior assumptions, and economic assumptions, including expected future rates of returns on investments. The Company generally looks to relevant Company experience as the primary basis for these assumptions; however, if relevant Company experience is not available or does not have sufficient credibility, the Company may look to experience of similar blocks of business, either elsewhere within the Company or within the industry. As part of this review, we may update these assumptions and make refinements to our models based upon emerging experience, future expectations and other data, including any observable market data we feel is indicative of a long-term trend. These assumptions are generally reviewed annually unless a material change in our own experience or in industry experience made available to us is observed in an interim period that we feel is also indicative of a long-term trend. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. The impact on our results of operations of changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over time.

Shown below are the impacts on our adjusted operating income from updates of actuarial assumptions and other refinements as discussed above. The information below is presented by each segment and Corporate and Other operations and includes a reconciliation of these impacts to the impacts within income (loss) before income taxes and equity in earnings of joint ventures and other operating entities.

Shown below are the adjusted operating income contributions of each segment and Corporate and Other operations for the periods indicated and a reconciliation of this segment measure of performance to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as presented in the Unaudited Interim Consolidated Statements of Operations.

(1)The amounts for the three and six months ended June 30, 2024 reflect the correction of an error related to indexed variable and fixed annuity products within the Retirement Strategies segment. See “—Retirement Strategies” for additional information. Prior period amounts have been updated to conform to current period presentation.

(2)See “—General Account Investments” and Note 19 to the Unaudited Interim Consolidated Financial Statements for additional information.

(3)Represents the contribution to income (loss) of Divested and Run-off Businesses that have been or will be sold or exited, including businesses that have been placed in wind-down, but did not qualify for “discontinued operations” accounting treatment under U.S. GAAP. See “—Divested and Run-off Businesses” for additional information.

(4)Equity in earnings of joint ventures and other operating entities is included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as it is reflected on an after-tax U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as they are reflected on a U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests represents the portion of earnings from consolidated entities that relates to the equity interests of minority investors.

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

Segment results for the period presented above reflect the following:

PGIM. Results for both thesecond quarter and the firstsix months of 2025 increased in comparison to the prior year periods, primarily reflecting higher net asset management fees, partially offset by higher expenses. Results for the firstsix months of 2025 also reflected lower net other related revenues.

Retirement Strategies. Results for both the second quarter and the first six months of 2025 decreased in comparison to the prior year periods, inclusive of an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased for both periods, primarily driven by lower net fee income and higher expenses, partially offset by higher net investment spread results and more favorable reserve experience.

Group Insurance. Results for both the second quarter and the first six months of 2025 increased in comparison to the prior year periods, inclusive of a less favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results increased for both periods, primarily reflecting higher underwriting results.

Individual Life. Results for both the second quarter and the first six months of 2025 increased in comparison to the prior year periods, inclusive of a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, the results for both periods increased, primarily driven by higher underwriting results, partially offset by lower net investment spread results.

International Businesses. Results for both the second quarter and the first six months of 2025 increased in comparison to the prior year periods, inclusive of an unfavorable comparative net impact from foreign currency exchange rates and a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding these items, results for the second quarter of 2025 increased, primarily driven by higher underwriting results and higher net investment spread results, partially offset by higher expenses. Results for the first six months decreased, primarily driven by lower surrender charges and higher expenses, partially offset by higher underwriting results.

Corporate and Other. Results for both the second quarter and the first six months of 2025 reflected decreased losses in comparison to the prior year periods, primarily driven by lower net charges from other corporate activities.

Closed Block Division. Results for both the second quarter and the first six months of 2025 increased in comparison to the prior year periods. Results for the second quarter of 2025 were driven by higher net investment activity results, partially offset by changes in the policyholder dividend obligation, while results for the first six months of 2025 were driven by lower net investment activity results that were more than offset by changes in the policyholder dividend obligation.