PRUDENTIAL FINANCIAL INC

The following table sets forth Group Insurance’s operating results and benefits and administrative expense ratios for the periods indicated:

(1)Ratio of policyholder benefits to earned premiums plus policy charges and fee income.

(2)The benefits and administrative expense ratios are measures used to evaluate profitability and efficiency.

(3)Ratio of operating and variable expenses (excluding commissions) to net premiums plus policy charges and fee income, excluding third-party administrator pass-through fees and expenses.

Adjusted operating income decreased $51 million, primarily reflecting:

•lower underwriting results in our group disability business, driven by less favorable claims experience on long-term disability contracts; and

•higher operating and variable expenses, largely supporting business growth.

•higher underwriting results in our group life business, driven by more favorable mortality experience on non-experience-rated contracts, partially offset by a positive impact in the prior year period from a reserve refinement for certain experience-rated contracts.

Revenues decreased $14 million, primarily reflecting:

•lower policy charges and fee income, driven by higher policy returns due to more favorable mortality experience on experience-rated contracts; and

•lower premiums, driven by lower sales and a positive reserve refinement for certain experience-rated contracts in the prior year period in our group life business, partially offset by business growth in our group disability business.

Benefits and expenses increased $37 million, primarily reflecting:

•higher policyholders’ benefits, including changes in reserves, driven by business growth and less favorable claims experience on long-term disability contracts, partially offset by more favorable mortality experience on non-experience-rated contracts in our group life business; and

•higher general and administrative expenses, largely supporting business growth.

The following table sets forth Group Insurance’s annualized new business premiums, as defined under “—Segment Measures” above, for the periods indicated:

(1)Amounts exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.

Total annualized new business premiums increased $126 million, primarily reflecting:

•higher sales in the Premier and National market segments in our group disability business, including significant medical stop loss sales and higher supplemental health product sales.

•lower sales in the National market segment in our group life business due to outsized sales in the prior year period.