PRUDENTIAL FINANCIAL INC

3. INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturities, available-for-sale, as of the dates indicated:

(1)Excludes notes with amortized cost of $16,588 million (fair value, $16,588 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, home equity loans, auto loans, education loans and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(1)Excludes notes with amortized cost of $15,744 million (fair value, $15,744 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, home equity loans, auto loans, education loans and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

The following tables set forth the fair value and gross unrealized losses on fixed maturities, available-for-sale without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the dates indicated:

As of September 30, 2026 and December 31, 2025, the gross unrealized losses on fixed maturities, available-for-sale securities without an allowance of $48,142 million and $32,392 million, respectively, related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $1,141 million and $809 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. As of September 30, 2026, the $42,419 million of gross unrealized losses of twelve months or more were concentrated in the finance, consumer non-cyclical and utility sectors within corporate securities, as well as in foreign government securities. As of December 31, 2025, the $32,225 million of gross unrealized losses of twelve months or more were concentrated in the consumer non-cyclical, finance and utility sectors within corporate securities, as well as in foreign government securities.

In accordance with its policy described in Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at September 30, 2026. This conclusion was based on detailed analysis of the underlying credit and cash flows for each security. Gross unrealized losses are primarily attributable to increases in interest rates, general credit spread widening and foreign currency exchange rate movements. As of September 30, 2026, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the amortized cost basis.

The following table sets forth the amortized cost and fair value of fixed maturities, available-for-sale by contractual maturities, as of the date indicated:

(1)Excludes notes with amortized cost of $16,588 million (fair value, $16,588 million), which have been offset with the associated debt under a netting agreement.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above, as they do not have a single maturity date.

The following table sets forth the sources of fixed maturities, available-for-sale proceeds and related investment gains (losses), as well as losses on write-downs and the allowance for credit losses, for the periods indicated:

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlementsof$20 million and $89 million for the nine months ended September 30, 2026 and 2025, respectively.

(2)Amounts represent write-downs on credit adverse securities and securities actively marketed for sale.

The following tables set forth the balance of and changes in the allowance for credit losses for fixed maturities, available-for-sale, as of and for the periods indicated:

For additional information regarding the Company’s methodology for developing its allowance and expected losses, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

For the three months ended September 30, 2026, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the consumer cyclical, communications and energy sectors within corporate securities, primarily due to adverse projected cash flows, partially offset by write-downs charged against the allowance of distressed securities within the industrial other sector. For the three months ended September 30, 2025, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions within the consumer cyclical, basic industry and communications sectors within corporate securities primarily due to adverse projected cash flows, partially offset by write-downs charged against the allowance of distressed securities within the finance sector.

For the nine months ended September 30, 2026, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the consumer cyclical, energy and communications sectors within corporate securities, due to adverse projected cash flows, partially offset by write-downs charged against the allowance of distressed securities within the industrial other, consumer cyclical and transportation sectors. For the nine months ended September 30, 2025, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to write-downs charged against the allowance due to security restructures and settlements within the communications, capital goods and consumer non-cyclical sectors within corporate securities, partially offset by net additions within the basic industry and consumer cyclical sectors within corporate securities primarily due to adverse projected cash flows.

The Company didnot have any fixed maturity securities purchased with credit deterioration as of both September 30, 2026 and December 31, 2025.

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:

(1)As a percentage of amortized cost,99% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of both September 30, 2026 and December 31, 2025.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities still held at period end, recorded within “Other income (loss),” was $75 million and $337 million during the three months ended September 30, 2026 and 2025, respectively, and $527 million and $391 million during the nine months ended September 30, 2026 and 2025, respectively.

Fixed Maturities, Trading

The net change in unrealized gains (losses) from fixed maturities, trading still held at period end, recorded within “Other income (loss),” was $(795) million and $140 million during the three months ended September 30, 2026 and 2025, respectively, and $(1,011) million and $556 million during the nine months ended September 30, 2026 and 2025, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $(19) million and $438 million during the three months ended September 30, 2026 and 2025, respectively, and $536 million and $583 million during the nine months ended September 30, 2026 and 2025, respectively.

Concentrations of Financial Instruments

The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any single issuer.

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:

(1)Includes loans which are carried at fair value under the fair value option and are collateralized primarily by apartment complexes. As of September 30, 2026 and December 31, 2025, the net carrying value of these loans was $736 million and $1,056 million, respectively.

As of September 30, 2026, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in California (26%), Florida (7%) and Texas (6%) and included loans secured by properties in Europe (6%), Mexico (2%), Japan (1%) and Australia (1%).

As of September 30, 2026, the residential mortgage loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in Florida (16%), California (13%) and New York (9%).

The following tables set forth the balance of and changes in the allowance for credit losses for commercial mortgage and other loans, as of and for the periods indicated:

For additional information regarding the Company’s methodology for developing its allowance and expected losses, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

For the three months ended September 30, 2026, the net reduction to the allowance for credit losses on commercial mortgage and other loans was primarily related to write-downs against loan-specific reserves within commercial mortgage loans in the retail sector, and a decrease in the general reserve, partially offset by increases in loan-specific reserves on agricultural property loans and commercial mortgage loans in the office sector. For the three months ended September 30, 2025, the net decrease to the allowance for credit losses on commercial mortgage and other loans was primarily related to write-downs against loan-specific reserves within commercial mortgage loans in the retail sector.

For the nine months ended September 30, 2026, the net reduction to the allowance for credit losses on commercial mortgage and other loans was primarily related to write-downs against loan-specific reserves within commercial mortgage loans in the retail sector and a decrease in the general reserve, partially offset by increases in loan-specific reserves on agricultural property loans, commercial mortgage loans in the office sector and an uncollateralized loan. For the nine months ended September 30, 2025, the net decrease to the allowance for credit losses on commercial mortgage and other loans was primarily related to write-downs against loan-specific reserves within agricultural property loans and commercial mortgage loans in the retail sector, partially offset by increases in loan-specific reserves within agricultural property loans and commercial mortgage loans in the retail sector.

The following tables set forth the write-downs of commercial mortgage and agricultural property loans by origination year for the periods indicated:

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the dates indicated:

Residential mortgage loans primarily include fixed-rate, amortizing mortgage loans on rental properties owned by borrowers with FICO scores typically considered prime or above. The primary credit quality indicator is whether a loan is performing or nonperforming. The Company defines nonperforming residential mortgage loans as those that are 90 days or more past due and/or in nonaccrual status.

For additional information regarding the Company’s commercial mortgage and other loans credit quality monitoring process, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company may grant loan modifications in its commercial mortgage and other loan portfolios to borrowers experiencing financial difficulties. These loan modifications may be in the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension or some combination thereof. The amount, timing and extent of modifications granted and subsequent performance are considered in determining any allowance for credit losses.

The following tables set forth the amortized cost basis of loan modifications made to borrowers experiencing financial difficulties for the periods indicated:

For the three and nine months ended September 30, 2026, the modifications added less thanone year to the weighted average life in the commercial mortgage loan portfolio.

The Company didnot have any commitments to lend additional funds to borrowers experiencing financial difficulties on modified loans as of both September 30, 2026 and December 31, 2025.

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:

(1)As of September 30, 2026, there wereno loans in this category accruing interest.

(2)Includes loans for which no credit losses are expected due to U.S. agency guarantees.

(3)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

(1)As of December 31, 2025, there wereno loans in this category accruing interest.

(2)Includes loans for which no credit losses are expected due to U.S. agency guarantees.

(3)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Loans on non-accrual status recognized interest of $0 million and $1 million for the three months ended September 30, 2026 and 2025, respectively, and $0 million and $7 million for the nine months ended September 30, 2026 and 2025, respectively. Loans on non-accrual status that did not have a related allowance for credit losses were $610 million and $442 million as of September 30, 2026 and December 31, 2025, respectively.

For both the three months ended September 30, 2026 and 2025, there wereno commercial mortgage loans acquired, other than those through direct origination. For the nine months ended September 30, 2026 and 2025, there were $31 million and $0 million, respectively, of commercial mortgage loans acquired, other than those through direct origination.

For the three months ended September 30, 2026 and 2025, there were $34 million and $0 million, respectively, of commercial mortgage loans sold. For the nine months ended September 30, 2026 and 2025, there were $34 million and $0 million, respectively, of commercial mortgage loans sold.

For the three months ended September 30, 2026 and 2025, there were $1,478 million and $676 million, respectively, of residential mortgage loans acquired. For the nine months ended September 30, 2026 and 2025, there were $3,035 million and $676 million, respectively, of residential mortgage loans acquired.

For the three months ended September 30, 2026 and 2025, there were $10 million and $0 million, respectively, of residential mortgage loans sold. For the nine months ended September 30, 2026 and 2025, there were $21 million and $0 million, respectively, of residential mortgage loans sold.

The Company didnot have any commercial mortgage and other loans purchased with credit deterioration as of both September 30, 2026 and December 31, 2025.

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:

(1)As of September 30, 2026 and December 31, 2025, real estate held through direct ownership had mortgage debt of $233 million and $217 million, respectively.

(2)Includes structured debt investments in feeder funds that are consolidated, resulting in the Company reporting the consolidated feeder funds’ proportionate share of the net assets of the master fund within “Other invested assets.”

(3)Primarily includes equity investments accounted for under the measurement alternative, tax advantaged investments, strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding the Company’s holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the dates indicated:

Write-downs on accrued investment income were $1 million and $0 million for the three months ended September 30, 2026 and 2025, respectively, and $2 million and $1 million for the nine months ended September 30, 2026 and 2025, respectively.

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:

(1)Includes income on credit-linked notes which are reported on the same financial statement line as related surplus notes, as conditions are met for right to offset.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:

(1)Excludes fixed maturity securities classified as trading.

(2)Includes changes in the value of reinsurance and funds withheld payables, primarily reflecting the impact of net investment income on withheld assets that are ceded to certain reinsurance counterparties under modified coinsurance and funds withheld coinsurance arrangements.

Net Unrealized Gains (Losses) on Investments within AOCI

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:

(1)For additional information regarding cash flow and fair value hedges, see Note 5.

(2)Includes net unrealized gains (losses) on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:

The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:

(1)The Company didnot have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.