PRUDENTIAL FINANCIAL INC

Group Insurance provides and distributes a full range of group life, long-term and short-term group disability, and group corporate-, bank-, and trust-owned life insurance. Additionally, we offer supplemental health solutions including accident, critical illness, and hospital indemnity.

We primarily distribute our products through a proprietary sales force organized around market segments in conjunction with employee benefit brokers and consultants across the U.S. to institutional employers, professional associations, and affinity groups to enhance employee membership benefit plans.

Our revenues primarily come in the form of premiums and policy charges for our group life, group disability, and supplemental health products as well as investment income from assets supporting customer liabilities and required capital.

Our profitability is substantially impacted by our ability to appropriately price our products, many of which include multi-year premium rate guarantees. Profitability also depends on the voluntary coverage attachment ratio, which is influenced by future employment and compensation rates. We price our products based on underwriting practices and rating systems that consider company, industry and/or other experience, along with the expected benefit payouts and other costs calculated using assumptions for mortality and morbidity rates, interest rates, and expenses based on specific product features.

While the majority of our premiums are derived from the National Market segment (over 5,000 benefit-eligible employees), we continue to diversify our book through growth of the Premier Market (between 100–5,000 benefit-eligible employees) and Association segments (affinity groups, regardless of size).

We compete with many large, well-established life and health insurance providers in mature markets. Our primary competitive advantages include brand recognition, financial strength and a diverse range of product offerings that help employers create comprehensive benefits programs that support the well-being of their employees. Additionally, we emphasize customer relationships and overall experience. Employee-paid coverage is important as we implement strategies to control costs and shift benefit decisions and funding to employees who continue to value workplace benefits.

We use ceded reinsurance on most products to (1) limit losses from large claims, (2) in response to client requests, and (3) for capital management purposes.