Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE OF CONTENTS


			Page
Overview			93

Impact of Changes in the Interest Rate Environment			93
Results of Operations			96
Consolidated Results of Operations			96
Segment Results of Operations			96
Segment Measures			98
Impact of Foreign Currency Exchange Rates			98
Accounting Policies & Pronouncements			101
Results of Operations by Segment			102
PGIM			102
U.S. Businesses			105
Retirement Strategies			106
Group Insurance			112
Individual Life			113
International Businesses			115
Corporate and Other			118
Divested and Run-off Businesses			119
Closed Block Division			119
Income Taxes			120
General Account Investments			121
Valuation of Assets and Liabilities			136
Liquidity and Capital Resources			139
Ratings			149

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the consolidated financial condition of Prudential Financial, Inc. (“Prudential,” “Prudential Financial,” “PFI,” or “the Company”) as of March 31, 2024, compared with December 31, 2023, and its consolidated results of operations for the three months ended March 31, 2024 and 2023. You should read the following analysis of our consolidated financial condition and results of operations in conjunction with the MD&A, the “Risk Factors” section, and the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as the statements under “Forward-Looking Statements,” and the Unaudited Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Prudential Financial, a financial services leader with approximately $1.496 trillion of assets under management as of March 31, 2024, has operations primarily in the United States of America (“U.S.”), Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement solutions, mutual funds and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.

Our principal operations consist of PGIM (our global investment management business), our U.S. Businesses (consisting of our Retirement Strategies, Group Insurance and Individual Life businesses), our International Businesses, the Closed Block division, and our Corporate and Other operations. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. Divested and Run-off Businesses consist of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind-down status that do not qualify for “discontinued operations” accounting treatment under generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments as well as the Divested and Run-off Businesses described above.

We attribute financing costs to each segment based on the amount of financing used by each segment, excluding financing costs associated with corporate debt, which are reflected in our Corporate and Other operations. The net investment income of each segment includes earnings on the amount of capital that management believes is necessary to support the risks of that segment.

Management expects that results will continue to benefit from our mutually-reinforcing business system, which includes a mix of businesses that complement each other to provide competitive advantages, earnings diversification and capital benefits from a balanced risk profile. We believe we are well-positioned to tap into market opportunities to meet the evolving needs of our clients and society at large. Our mix of high-quality protection, retirement and investment management businesses enables us to offer solutions that cover a broad range of financial needs and to engage with our clients through multiple channels.

In September 2023, we, together with Warburg Pincus and a group of institutional investors, announced the launch of Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company. In conjunction with this announcement, we made an initial equity investment through our Corporate and Other operations of approximately $200 million, equivalent to a 20% interest, in Prismic Life Holding Company LP (“Prismic”), the Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re. We expect the increased reinsurance capacity that this partnership provides to support our vision of expanding access to investing, insurance, and retirement security for people around the world. Our initial transaction, effective September 2023, was to reinsure approximately $9 billion, or 70%, of reserves related to our structured settlement annuities business with Prismic Re. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information regarding this transaction.

As part of our continuous improvement process, we are working to become a leaner and more agile company by simplifying our management structure, empowering our employees with faster decision-making processes and investing in technology and data platforms. We expect these actions will create operating efficiencies, and provide reinvestment capacity to build capabilities, realize additional efficiencies, strengthen our competitiveness and fuel future growth.

Impact of Changes in the Interest Rate Environment

As a global financial services company, market interest rates are a key driver of our liquidity and capital positions, cash flows, results of operations and financial position. Changes in interest rates can affect these in several ways, including favorable or adverse impacts to:

investment-related activity, including: investment income returns, net investment spread results, new money rates, mortgage loan prepayments and bond redemptions;
the valuation of fixed income investments and derivative instruments;
collateral posting requirements, hedging costs and other risk mitigation activities;
customer account values and assets under management, including their impacts on fee-related income;
insurance reserve levels, including market risk benefits (“MRBs”), and market experience true-ups;
policyholder behavior, including surrender or withdrawal activity;
product offerings, design features, crediting rates and sales mix; and
the fair value of, and possible impairments on, intangible assets such as goodwill.

For additional information regarding interest rate risks, see “Risk Factors—Market Risk” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

See below for a discussion of the current interest rate environment and its impact to net investment spread in our U.S. and Japanese operations along with the composition of their insurance liabilities and policyholder account balances.

U.S. Operations excluding the Closed Block Division

While interest rates in the U.S. have experienced a sustained period of historically low levels, rates increased throughout 2022 and have continued to sustain higher levels through the first quarter of 2024, and our average reinvestment yield is generally now exceeding our current average portfolio yield.

In order to manage the impacts that changes in interest rates have on our net investment spread, we employ a proactive asset/liability management program, which includes strategic asset allocation and hedging strategies within a disciplined risk management framework. These strategies seek to match the liability characteristics of our products, and to closely approximate the interest rate sensitivity of the assets with the estimated interest rate sensitivity of the product liabilities. Our asset/liability management program also helps manage duration gaps, currency and other risks between assets and liabilities through the use of derivatives. We adjust this dynamic process as products change, as customer behavior changes and as changes in the market environment occur. As a result, our asset/liability management process has permitted us to manage the interest rate risk associated with our products through several market cycles. Our interest rate exposure is also mitigated by our business mix, which includes lines of business for which fee-based and insurance underwriting earnings play a more prominent role in product profitability. We also regularly examine our product offerings and their profitability. As a result, we may reprice certain products and discontinue sales of other products that do not meet our profit expectations.

The portion of the general account supporting our U.S. Businesses and our Corporate and Other operations has approximately $197 billion of fixed maturity securities and commercial mortgage loans (based on net carrying value) as of March 31, 2024, with an average portfolio yield of approximately 4.8%. For this portion of the general account attributable to these operations, we estimate annual principal payments and prepayments that we would be required to reinvest to be approximately 7.4% of the fixed maturity security and commercial mortgage loan portfolios through 2025.

Included in the $197 billion of fixed maturity securities and commercial mortgage loans are approximately $163 billion that are subject to call or redemption features at the issuer’s option and have a weighted average interest rate of approximately 5%. Of this $163 billion, approximately 53% contain provisions for prepayment premiums. Future operating results will be impacted by (i) the reinvestment of scheduled payments or prepayments (not subject to a prepayment fee) at different rates compared to the current portfolio yield, including in some cases at rates below those guaranteed under our insurance contracts, and (ii) our utilization of other asset/liability management strategies, as described above, in order to maintain favorable net investment spread.

The following table sets forth the insurance liabilities and policyholder account balances of our U.S. operations excluding the Closed Block Division, by type, for the date indicated:


	As of March 31, 2024
	(in billions)
Long-duration insurance products with fixed and guaranteed terms	$	177
Contracts with adjustable crediting rates subject to guaranteed minimums	37
Participating contracts where investment income risk ultimately accrues to contractholders	1
Total	$	215

The $177 billion above relates to long-duration products such as group annuities, structured settlements and other insurance products that have fixed and guaranteed terms. We seek to manage the impact of changes in interest rates on these contracts through asset/liability management, as discussed above.

The $37 billion above relates to contracts with crediting rates that may be adjusted over the life of the contract, subject to guaranteed minimums. Although we may have the ability to lower crediting rates for those contracts above guaranteed minimums, our willingness to do so may be limited by competitive pressures. For additional information regarding contracts with adjustable crediting rates subject to guaranteed minimums, see Note 10 to the Unaudited Interim Consolidated Financial Statements.

The remaining $1 billion of insurance liabilities and policyholder account balances in these operations relates to participating contracts for which the investment income risk is expected to ultimately accrue to contractholders. The crediting rates for these contracts are periodically adjusted based on the return earned on the related assets.

Closed Block Division

Substantially all of the $49 billion of general account assets in the Closed Block division support obligations and liabilities relating to the Closed Block policies only. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information regarding the Closed Block.

Japanese Operations

Japan has experienced a low interest rate environment for many years, during which the Bank of Japan’s monetary policy has resulted in even lower and, at times, negative yields for certain tenors of government bonds; however, recent actions by the Bank of Japan have resulted in an increase in interest rates in the first quarter of 2024.

In order to manage, to the extent possible, the impact that the current interest rate environment has on our net investment spread, our Japanese operations employ a proactive asset/liability management program. We continue to purchase long-term bonds with tenors of 10 years or greater. We also regularly examine our product offerings and their profitability. As a result, we may reprice certain products, adjust commissions for certain products and discontinue sales of other products that do not meet our profit expectations. Additionally, our diverse product portfolio in terms of currency mix and premium payment structure allows us to further manage any impacts from changes in the interest rate environment. For additional information regarding sales within these operations, see “—International Businesses—Sales Results,” below.

The portion of the general account supporting our Japanese operations has approximately $148 billion of fixed maturity securities and commercial mortgage loans (based on net carrying value) as of March 31, 2024, with an average portfolio yield of approximately 2.9%. Our Japanese operations have continued to invest in U.S. dollar-denominated assets supporting our U.S. dollar-denominated product portfolio, which has now driven average reinvestment rates to exceed current average portfolio rates. For this portion of the general account attributable to these operations, we estimate annual principal payments and prepayments that we would be required to reinvest to be approximately 6.6% of the fixed maturity security and commercial mortgage loan portfolios through 2025.

Included in the $148 billion of fixed maturity securities and commercial mortgage loans are approximately $14 billion that are subject to call or redemption features at the issuer’s option and have a weighted average interest rate of approximately 4%. Of this $14 billion, approximately 6% contain provisions for prepayment premiums. Future operating results will be impacted by (i) the reinvestment of scheduled payments or prepayments (not subject to a prepayment fee) at different rates compared to the current portfolio yield, including in some cases at rates below those guaranteed under our insurance contracts, and (ii) our utilization of other asset/liability management strategies, as described above, in order to maintain favorable net investment spread.

The following table sets forth the insurance liabilities and policyholder account balances of our Japanese operations, by type, for the date indicated:


	As of March 31, 2024
	(in billions)
Insurance products with fixed and guaranteed terms	$	115
Contracts with a market value adjustment if canceled before maturity	32
Contracts with adjustable crediting rates subject to guaranteed minimums	9
Total	$	156

The $115 billion is primarily comprised of long-duration insurance products that have fixed and guaranteed terms for which underlying assets may have to be reinvested at interest rates that are lower than current portfolio yields. The remaining insurance liabilities and policyholder account balances include $32 billion related to contracts that impose a market value adjustment if the contracts are canceled before maturity and $9 billion related to contracts with crediting rates that may be adjusted over the life of the contract, subject to guaranteed minimums. Most of the current crediting rates on these contracts,

however, are at or near contractual minimums. Although we have the ability in some cases to lower crediting rates for those contracts that are above guaranteed minimum crediting rates, the majority of this business has interest crediting rates that are determined by formula. See Note 10 to the Unaudited Interim Consolidated Financial Statements for additional information regarding crediting rates on policyholder account balances.

Results of Operations

Consolidated Results of Operations

The following table summarizes net income (loss) for the periods presented.


	Three Months Ended March 31,
		2024		2023
		(in millions)
Revenues		$	23,509	$	17,045
Benefits and expenses		22,119		15,198
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		1,390		1,847
Income tax expense (benefit)		289		382
Income (loss) before equity in earnings of joint ventures and other operating entities		1,101		1,465
Equity in earnings of joint ventures and other operating entities, net of taxes		50		12
Net income (loss)		1,151		1,477
Less: Income attributable to noncontrolling interests		13		15
Net income (loss) attributable to Prudential Financial, Inc.		$	1,138	$	1,462

Three Month Comparison. The $324 million decrease in “Net income (loss) attributable to Prudential Financial, Inc.” for the first quarter of 2024 compared to the first quarter of 2023 reflected the following notable items on a pre-tax basis:

$466 million unfavorable variance from realized investment gains (losses), net, and related charges and adjustments;

•$126 million unfavorable variance from our Divested and Run-off Businesses; and

$80 million unfavorable variance from market experience updates.

Partially offsetting these decreases in “Net income (loss) attributable to Prudential Financial, Inc.” were the following items:

$189 million favorable variance from higher adjusted operating income from our business segments (see “Segment Results of Operations for additional information); and
$48 million favorable variance reflecting the change in value of market risk benefits, net of related hedging gains (losses).

“Net income (loss) attributable to Prudential Financial, Inc.” also reflected a $93 million favorable variance from income taxes, primarily driven by the decrease in pre-tax earnings, as described above.

Segment Results of Operations

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.

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.


	Three Months Ended March 31,
		2024		2023
		(in millions)
Adjusted operating income before income taxes by segment:
PGIM		$	169	$	151
U.S. Businesses:
Retirement Strategies		915		837
Group Insurance		45		25
Individual Life		(121)		(102)
Total U.S. Businesses		839		760
International Businesses		896		840
Corporate and Other(1)		(435)		(471)
Total segment adjusted operating income before income taxes		1,469		1,280
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments(1)(2)		(97)		369
Change in value of market risk benefits, net of related hedging gains (losses)		123		75
Market experience updates		(32)		48
Divested and Run-off Businesses(3):
Closed Block division		(3)		(4)
Other Divested and Run-off Businesses(1)		(35)		92
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests(4)		(27)		(5)
Other adjustments(5)		(8)		(8)
Consolidated income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	1,390	$	1,847

(1)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 represent 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 the first quarter of 2024 increased in comparison to the prior year period, primarily reflecting higher net asset management fees and net other related revenues, partially offset by higher compensation expenses.

Retirement Strategies. Results for the first quarter of 2024 increased in comparison to the prior year period, primarily driven by higher net investment spread results, partially offset by lower fee income, net of distribution expenses and other associated costs.

Group Insurance. Results for the first quarter of 2024 increased in comparison to the prior year period, primarily driven by higher underwriting results and higher net investment spread results, partially offset by higher expenses.

Individual Life. Results for the first quarter of 2024 decreased in comparison to the prior year period, driven by higher expenses and lower net investment spread results, partially offset by higher underwriting results.

International Businesses. Results for the first quarter of 2024 increased in comparison to the prior year period, inclusive of an unfavorable net impact from foreign currency exchange rates, primarily driven by higher net investment spread results and higher earnings from joint ventures and other operating entities, partially offset by lower underwriting results.

Corporate and Other. Results for the first quarter of 2024 reflected decreased losses in comparison to the prior year period, primarily driven by lower net charges from other corporate activities.

Closed Block Division. Results for the first quarter of 2024 increased in comparison to the prior year period, reflecting changes in cumulative earnings and other factors, mostly offset by changes in the policyholder dividend obligation.

Segment Measures

Adjusted Operating Income. In managing our business, we analyze our segments’ operating performance using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss we use to evaluate segment performance and allocate resources and, consistent with authoritative guidance, is our measure of segment performance. The adjustments to derive adjusted operating income are important to an understanding of our overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and our definition of adjusted operating income may differ from that used by other companies; however, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances the understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability of our businesses.

See Note 19 to the Unaudited Interim Consolidated Financial Statements for additional information regarding the presentation of segment results and our definition of adjusted operating income.

Annualized New Business Premiums. In managing our Individual Life, Group Insurance and International Businesses segments, we analyze annualized new business premiums, which do not correspond to revenues under U.S. GAAP. Annualized new business premiums measure the current sales performance of the business, while revenues primarily reflect the renewal persistency of policies written in prior years and net investment income, in addition to current sales. Annualized new business premiums include 10% of first year premiums or deposits from single-payment products in our Individual Life and International Businesses segments. No other adjustments are made for limited-payment contracts.

The amount of annualized new business premiums for any given period can be significantly impacted by several factors, including but not limited to: addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in tax laws, changes in regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.

Assets Under Management. In managing our PGIM segment, we analyze assets under management (which do not correspond directly to U.S. GAAP assets) because the principal source of revenues is fees based on assets under management. Assets under management represent the fair market value or account value of assets that we manage directly for institutional clients, retail clients, and for our general account, as well as assets invested in our products that are managed by third-party managers.

Account Values. In managing our Retirement Strategies segment, we analyze account values, which do not correspond directly to U.S. GAAP assets. Net additions (withdrawals) in our Institutional Retirement Strategies business and sales (redemptions) in our Individual Retirement Strategies business do not correspond to revenues under U.S. GAAP but are used as a relevant measure of business activity.

Impact of Foreign Currency Exchange Rates

Foreign currency exchange rate movements and related hedging strategies

As a U.S.-based company with significant business operations outside the U.S., particularly in Japan, we are subject to foreign currency exchange rate movements that could impact our U.S. dollar (“USD”)-equivalent shareholder return on equity. We seek to mitigate this impact through various hedging strategies, including holding USD-denominated assets in certain of our foreign subsidiaries.

In order to reduce equity volatility from foreign currency exchange rate movements, we primarily utilize a yen hedging strategy that calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis. We implement this hedging strategy utilizing a variety of instruments, including USD-denominated assets and dual currency and synthetic dual currency investments held locally in our Japanese insurance subsidiaries. The total hedge level may vary based on our periodic assessment of the relative contribution of our yen-based business to the Company’s overall return on equity.

The table below presents the aggregate amount of instruments that serve to hedge the impact of foreign currency exchange movements on our USD-equivalent shareholder return on equity from our Japanese insurance subsidiaries as of the dates indicated.


	March 31, 2024		December 31, 2023
	(in billions)
Foreign currency hedging instruments:



USD-denominated assets associated with yen-based entities(1)	$	6.4	$	7.2
Dual currency and synthetic dual currency investments(2)	0.3		0.3

Total foreign currency hedges	$	6.7	$	7.5

(1)Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding. Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $80.5 billion and $80.0 billion as of March 31, 2024 and December 31, 2023, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.

(2)Dual currency and synthetic dual currency investments are held by our yen-based entities in the form of fixed maturities and loans with a yen-denominated principal component and USD-denominated interest income. The amounts shown represent the present value of future USD-denominated cash flows.

The USD-denominated investments that hedge the impact of foreign currency exchange rate movements on USD-equivalent shareholder return on equity from our Japanese insurance operations are reported within yen-based entities and, as a result, foreign currency exchange rate movements will impact their value reported within our yen-based Japanese insurance entities. We seek to mitigate the risk that future unfavorable foreign currency exchange rate movements will decrease the value of these USD-denominated investments reported within our yen-based Japanese insurance entities, and therefore negatively impact their equity and regulatory solvency margins, by having our Japanese insurance operations enter into currency hedging transactions with a subsidiary of Prudential Financial. These hedging strategies have the economic effect of moving the change in value of these USD-denominated investments due to foreign currency exchange rate movements from our Japanese yen-based entities to our USD-based entities.

These USD-denominated investments also pay a coupon which is generally higher than what a similar yen-denominated investment would pay. The incremental impact of this higher yield on our USD-denominated investments, as well as our dual currency and synthetic dual currency investments, will vary over time, and is dependent on the duration of the underlying investments as well as interest rate environments in both the U.S. and Japan at the time of the investments.

Impact of intercompany foreign currency exchange rate arrangements on segment results of operations

The financial results of our International Businesses and PGIM reflect the impact of intercompany arrangements with our Corporate and Other operations pursuant to which these segments’ non-USD-denominated earnings are translated at fixed currency exchange rates that are predetermined during the third quarter of the prior year using forward currency exchange rates. Results of our Corporate and Other operations include differences between the translation adjustments recorded by the segments at the fixed currency exchange rate versus the actual average rate during the period.

In addition, specific to our International Businesses where we hedge certain currencies utilizing forward currency contracts with third-parties, the results of our Corporate and Other operations also include the impact of any gains or losses recorded from these contracts that settled during the period, which include the impact of any over or under hedging of actual earnings that differ from projected earnings.

The table below presents, for the periods indicated, the increase (decrease) to revenues and adjusted operating income for our International Businesses, PGIM and Corporate and Other operations, reflecting the impact of these intercompany arrangements.


	Three Months Ended March 31,
		2024		2023
		(in millions)
Segment impacts of intercompany arrangements:
International Businesses		$	3	$	3
PGIM		0		0
Impact of intercompany arrangements(1)		3		3
Corporate and Other:
Impact of intercompany arrangements(1)		(3)		(3)
Settlement gains (losses) on forward currency contracts(2)		(3)		3
Net benefit (detriment) to Corporate and Other		(6)		0
Net impact on consolidated revenues and adjusted operating income		$	(3)	$	3

(1)Represents the difference between non-USD-denominated earnings translated on the basis of weighted average monthly currency exchange rates versus fixed currency exchange rates determined in connection with the foreign currency income hedging program.

(2)As of March 31, 2024 and 2023, the total notional amounts of these forward currency contracts within our Corporate and Other operations were $0.7 billion and $0.3 billion, respectively.

Impact of products denominated in non-local currencies on U.S. GAAP earnings

While our international insurance operations offer products denominated in local currency, several also offer products denominated in non-local currencies. This is most notable in our Japanese operations, which currently offer primarily USD-denominated products, but have also historically offered Australian dollar (“AUD”)-denominated products. The non-local currency-denominated insurance liabilities related to these products are supported by investments denominated in corresponding currencies, including a significant portion designated as available-for-sale. While the impact from foreign currency exchange rate movements on these non-local currency-denominated assets and liabilities is economically matched, differences in the accounting for changes in the value of these assets and liabilities due to changes in foreign currency exchange rate movements have historically resulted in volatility in U.S. GAAP earnings.

As a result, we implemented a structure in Gibraltar Life’s operations that disaggregated the USD- and AUD-denominated businesses into separate divisions, each with its own functional currency that aligns with the underlying products and investments. The result of this alignment was to reduce differences in the accounting for changes in the value of these assets and liabilities that arise due to changes in foreign currency exchange rate movements. For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $1.2 billion and $1.4 billion as of March 31, 2024 and December 31, 2023, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold. Absent the sale of any of these assets prior to their stated maturity, approximately 7% of the $1.2 billion balance as of March 31, 2024 will be recognized throughout the remainder of 2024, approximately 3% will be recognized in 2025, and the remaining balance will be recognized from 2026 through 2051.

Highly inflationary economies

Our insurance operations in Argentina, Prudential of Argentina (“POA”), have historically utilized the Argentine peso as the functional currency given it is the currency of the primary economic environment in which the entity operates. During 2018, Argentina experienced a cumulative inflation rate that exceeded 100% over a 3-year period. As a result, Argentina’s economy was deemed to be highly inflationary, resulting in reporting changes effective July 1, 2018. Under U.S. GAAP, the financial statements of a foreign entity in a highly inflationary economy are to be remeasured as if its functional currency (formerly the Argentine peso) is the reporting currency of its parent reporting entity (the USD) on a prospective basis. While this changed how the results of POA are remeasured and/or translated into USD, the impact to our financial statements was not material given the relative size of our POA operations. As discussed further in “—International Businesses” below, in March 2024, the Company entered into a definitive agreement to sell POA and has transferred these operations into the Divested and Run-off Businesses that are included within our Corporate and Other operations.

Enterprise Group, our strategic investment in Ghana, has historically utilized the Ghanaian cedi as its functional currency given it is the currency of the primary economic environment in which the entity operates. In the fourth quarter of 2023, Ghana

experienced a cumulative inflation rate that exceeded 100% over a 3-year period. As a result, Ghana’s economy was deemed to be highly inflationary, which requires the results of our investment in Enterprise Group to be remeasured in USD, effective January 1, 2024, as per the U.S. GAAP requirements described above. We do not expect this change to have a material impact to our financial statements given the relative size of the investment.

Accounting Policies & Pronouncements

Application of Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews the estimates and assumptions used in the preparation of the Company’s financial statements. If management determines that modifications to assumptions and estimates are appropriate given current facts and circumstances, the Company’s results of operations and financial position as reported in the Unaudited Interim Consolidated Financial Statements could change significantly.

Management believes the accounting policies relating to the following areas are most dependent on the application of estimates and assumptions and require management’s most difficult, subjective, or complex judgments:

Policyholder liabilities;
Goodwill;
Valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”);
Pension and other postretirement benefits;
Taxes on income; and
Reserves for contingencies, including reserves for losses in connection with unresolved legal matters.

Market Performance - Equity and Interest Rate Assumptions

The liability for future policy benefits for certain of our universal life type products includes quarterly adjustments for the impact of changes to our estimate of future rates of returns on investments to reflect actual fund performance and market conditions. A portion of the returns on investments for our variable life contracts are dependent upon the total rate of return on assets held in separate account investment options. This rate of return influences the fees we earn and expected claims to be paid on variable life contracts, as well as other sources of profit. Returns that are higher than our expectations for a given period produce higher than expected account balances, which increase the future fees we expect to earn on variable life contracts and decrease expected claims to be paid on variable life contracts. The opposite occurs when returns are lower than our expectations.

The weighted average rate of return assumptions used in developing estimated market returns consider many factors specific to each product type, including asset durations, asset allocations and other factors. With regard to equity market assumptions, the near-term future rate of return assumption used in evaluating liabilities for future policy benefits for certain of our products, primarily our domestic and international variable life insurance products, is generally updated each quarter and is derived using a reversion to the mean approach, a common industry practice. Under this approach, we consider historical equity returns and adjust projected equity returns over an initial future period of five years (the “near-term”) so that equity returns converge to the long-term expected rate of return. If the near-term projected future rate of return is greater than our near-term maximum future rate of return of 15.0%, we use our maximum future rate of return. If the near-term projected future rate of return is lower than our near-term minimum future rate of return of 0%, we use our minimum future rate of return. As of March 31, 2024, our domestic variable life insurance businesses assume an 8.0% long-term equity expected rate of return and a 3.3% near-term mean reversion equity expected rate of return, and our international variable life insurance business assumes a 5.0% long-term equity expected rate of return and a 0% near-term mean reversion equity expected rate of return.

With regard to interest rate assumptions used in evaluating liabilities for future policy benefits for certain of our products, we update the long-term and near-term future rates used to project fixed income returns annually and quarterly, respectively. As a result of our 2023 annual reviews and update of assumptions and other refinements, we kept our long-term expectation of the U.S. Treasury rate and Japanese Government Bond yield unchanged and continue to grade to rates of 3.25% and 1.00%, respectively, over ten years. As part of our quarterly market experience updates, we update our near-term projections of interest rates to reflect changes in current rates.

For further discussion of impacts that could result from changes in these key estimates and assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Policies and Pronouncements—Application of Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Adoption of New Accounting Pronouncements

See Note 2 to the Unaudited Interim Consolidated Financial Statements for accounting pronouncements issued but not yet adopted and newly adopted accounting pronouncements.

Results of Operations by Segment

PGIM

Business Update

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.

Operating Results

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


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating results(1):
Revenues		$	990	$	898
Expenses		821		747
Adjusted operating income		169		151

Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests		11		13
Other adjustments(2)		(8)		(8)
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	172	$	156

(1)Certain of PGIM’s investment activities are based in currencies other than the U.S. dollar 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 U.S. dollar-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.

Adjusted Operating Income

Adjusted operating income increased $18 million, primarily reflecting higher asset management fees, net of related expenses, and higher other related revenues, net of related expenses, 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:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Revenues by type:
Asset management fees by source:
Institutional customers		$	378	$	362
Retail customers(1)		276		243
General account		120		115
Total asset management fees		774		720
Other related revenues by source:
Incentive fees		41		3
Transaction fees		4		4
Seed and co-investments		41		33
Commercial mortgage(2)		7		12
Total other related revenues		93		52
Service, distribution and other revenues		123		126
Total revenues		$	990	$	898

(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.

Revenues increased $92 million. Asset management fees increased, primarily reflecting equity market appreciation and tightening credit spreads, as well as strong investment performance, and the impact of the Deerpath acquisition. Other related revenues were favorable, primarily reflecting higher incentive fees due to strong investment performance.

Expenses increased $74 million, primarily reflecting 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, as well as higher variable expenses related to performance-based incentive fees.

Assets Under Management

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


	March 31, 2024		December 31, 2023		March 31, 2023
	(in billions)
Assets Under Management(1) (at fair value):
Public equity	$	201.9	$	183.6	$	163.2
Public fixed income	824.5		799.8		797.7
Real estate	127.3		129.2		129.7
Private credit and other alternatives	114.0		112.1		105.3
Multi-asset	73.7		73.4		73.9
Total PGIM assets under management	$	1,341.4	$	1,298.1	$	1,269.8

Assets under management within other reporting segments(2)	154.9		151.5		147.2
Total PFI assets under management	$	1,496.3	$	1,449.6	$	1,417.0

(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:


	March 31, 2024		December 31, 2023		March 31, 2023
	(in billions)
Assets Under Management(1) (at fair value):
Institutional customers	$	616.6	$	582.6	$	561.2
Retail customers	345.4		330.3		314.4
General account	379.4		385.2		394.2
Total PGIM assets under management	$	1,341.4	$	1,298.1	$	1,269.8

Assets under management within other reporting segments(2)	154.9		151.5		147.2
Total PFI assets under management	$	1,496.3	$	1,449.6	$	1,417.0

(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.

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


	Three Months Ended March 31,			Twelve Months Ended March 31,
		2024		2023		2024
		(in billions)
Beginning assets under management		$	1,298.1	$	1,228.4	$	1,269.8
Institutional third-party flows		26.1		(10.2)		13.0
Retail third-party flows		0.5		(3.8)		(10.8)
Total third-party flows		26.6		(14.0)		2.2
Affiliated flows(1)		7.1		2.1		(0.6)
Market appreciation (depreciation)(2)		18.9		50.2		87.0
Foreign exchange rate impact		(5.9)		(0.1)		(10.1)
Net money market activity and other increases (decreases)		(3.4)		3.2		(6.9)
Ending assets under management		$	1,341.4	$	1,269.8	$	1,341.4

(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.

PGIM’s assets under management as of March 31, 2024 increased $72 billion in comparison to the prior year quarter, primarily driven by equity market appreciation and tightening credit spreads, partially offset by the impacts of higher interest rates and unfavorable foreign exchange rates. PGIM’s assets under management as of March 31, 2024 increased $43 billion in comparison to the prior year end, primarily driven by fixed income net inflows and equity market appreciation, partially offset by unfavorable foreign exchange rate impacts.

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 included in “Real estate” and “Private credit and other alternatives” in the “—Assets Under Management— by asset class table” above. As of March 31, 2024, these assets remained unchanged compared to December 31, 2023, as private capital net inflows were offset by market depreciation and unfavorable foreign exchange rate impacts.

Private capital deployment includes PGIM’s real estate agency debt business, which consists of agency commercial loans that are originated and sold to third-party investors. PGIM continues to service these commercial 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:


	Three Months Ended March 31,
		2024		2023
		(in billions)
Private capital deployed:
Real estate debt and equity		$	2.0	$	3.7
Private credit and equity		3.3		2.7
Total private capital deployed		$	5.3	$	6.4

Seed and Co-Investments

As of March 31, 2024 and December 31, 2023, PGIM had approximately $1,176 million and $1,088 million of seed investments and $466 million and $443 million of co-investments at carrying value, respectively, primarily consisting of public fixed income, public equity, private credit and other alternatives, and real estate investments.

U.S. Businesses

Operating Results

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


	Three Months Ended March 31,
		2024		2023
		(in millions)
Adjusted operating income before income taxes:
U.S. Businesses:
Retirement Strategies		$	915	$	837
Group Insurance		45		25
Individual Life		(121)		(102)
Total U.S. Businesses		839		760
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments(1)		(392)		(15)
Change in value of market risk benefits, net of related hedging gains (losses)		120		79
Market experience updates		(55)		98
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests		1		0

Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	513	$	922

(1)Prior period amounts have been updated to conform to current period presentation.

Adjusted operating income for our U.S. Businesses increased by $79 million primarily due to:

Higher net investment spread results, primarily reflecting higher reinvestment and short-term rates, as well as higher income on non-coupon investments; and
Higher underwriting results, primarily reflecting less unfavorable mortality experience in our Individual Life business, and more favorable mortality experience in our Group Insurance business.

*•*Partially offsetting these increases were higher expenses, including costs associated with the recently closed reinsurance transaction for certain guaranteed universal life policies in our Individual Life business; and

Lower fee income, net of distribution expenses and other associated costs, primarily in our Individual Retirement Strategies business due to a reduction in account values resulting from net outflows and the impact of the Prudential Defined Income (“PDI”) reinsurance transaction, partially offset by favorable equity markets.

Retirement Strategies

Business Updates

In May 2023, the Company entered into an agreement with The Ohio National Life Insurance Company, now known as AuguStar Life Insurance Company (“AuguStar”), an affiliate of Constellation Insurance Holdings, Inc., to reinsure approximately $10 billion of account values of PDI traditional variable annuity contracts with guaranteed living benefits issued by Pruco Life Insurance Company, a wholly-owned subsidiary of Prudential Financial. The transaction was completed on June 30, 2023 with an effective date of April 1, 2023. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.
In September 2023, the Company entered into an agreement with Prismic Re to reinsure approximately $9 billion of reserves for certain structured settlement annuity contracts issued by PICA, a wholly-owned subsidiary of Prudential Financial, effective September 2023. These contracts represent approximately 70% of the Company’s in-force structured settlement annuities business. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.

Operating Results

The following table sets forth Retirement Strategies’ operating results for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating results:
Revenues:
Institutional Retirement Strategies		$	11,538	$	4,889
Individual Retirement Strategies		1,214		1,095
Total revenues		12,752		5,984
Benefits and expenses:
Institutional Retirement Strategies		11,097		4,493
Individual Retirement Strategies		740		654
Total benefits and expenses		11,837		5,147
Adjusted operating income:
Institutional Retirement Strategies		441		396
Individual Retirement Strategies		474		441
Total adjusted operating income		915		837
Realized investment gains (losses), net, and related charges and adjustments(1)		(303)		(44)
Change in value of market risk benefits, net of related hedging gains (losses)		120		79
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests		1		1
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	733	$	873

(1)Prior period amounts have been updated to conform to current period presentation.

Adjusted Operating Income

Adjusted operating income from our Institutional Retirement Strategies business increased $45 million, driven by higher net investment spread results, primarily reflecting business growth and higher income on non-coupon investments.

Adjusted operating income from our Individual Retirement Strategies business increased $33 million, primarily driven by higher net investment spread results due to higher reinvestment rates, more favorable short-term interest rates and growth in indexed variable annuities. This increase was partially offset by lower fee income, net of distribution expenses and other associated costs, resulting from lower average separate account values due to net outflows and the impact from the PDI reinsurance transaction, partially offset by favorable equity markets.

Revenues, Benefits and Expenses

Revenues from our Institutional Retirement Strategies business increased $6,649 million, primarily reflecting higher pension risk transfer premiums due to significant sales in the current quarter, with corresponding offsets in policyholders’ benefits, as discussed below.

Benefits and expenses of our Institutional Retirement Strategies business increased $6,604 million. Policyholders’ benefits, including changes in reserves, increased primarily related to the higher pension risk transfer premiums discussed above.

Revenues from our Individual Retirement Strategies business increased $119 million, primarily driven by higher net investment income due to higher reinvestment rates and growth in indexed variable annuities.

Benefits and expenses of our Individual Retirement Strategies business increased $86 million primarily driven by higher interest expense, and higher general and administrative expenses, net of capitalization.

Account Values

Institutional Retire**ment Strategies. Account values are a significant driver of our operating results and are primarily driven by net additions (withdrawals) and the impact of market changes. The investment income and interest we credit to policyholders on our spread-based products varies with the level of general account values. The income we earn on most of our fee-based products varies with the level of fee-based account values as many policy fees are determined by these values.

The following table shows the changes in the account values of Institutional Retirement Strategies’ products for the periods indicated. Account values include both internally- and externally-managed client balances as the total balances drive revenue for the Institutional Retirement Strategies business. For additional information regarding internally-managed balances, see “—PGIM.”


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2024		2023			2024
	(in millions)
Total Institutional Retirement Strategies:
Beginning total account value, gross(1)	$	267,654	$	251,818		$	252,952
Additions(2)	10,990		3,828			35,660
Withdrawals and benefits	(6,417)		(5,474)			(26,226)
Change in market value, interest credited and interest income	2,655		1,823			8,554
Other(3)	(252)		957			3,690
Ending total account value, gross	274,630		252,952			274,630
Reinsurance ceded	(9,179)		0			(9,179)
Ending total account value, net	$	265,451	$	252,952		$	265,451

(1)Beginning total account values, net, were $258,417 million and $251,818 million for the three months ended March 31, 2024 and 2023, respectively, and $252,952 million for the twelve months ended March 31, 2024.

(2)Additions primarily include: group annuities and funded pension reinsurance calculated based on premiums received; international longevity reinsurance contracts calculated as the present value of future projected benefits; investment-only stable value contracts calculated as the fair value of customers’ funds held in a client-owned trust; and funding agreements issued calculated based on premiums received.

(3)“Other” activity includes the effect of foreign exchange rate changes associated with our British pounds sterling denominated international reinsurance business and changes in asset balances for externally-managed accounts. For the three months ended March 31, 2024 and 2023, “Other” activity also includes $1,072 million in receipts offset by $933 million in payments and $1,268 million in receipts offset by $1,044 million in payments, respectively, related to funding agreements backed by commercial paper that typically have maturities of less than 90 days.

The increase in Institutional Retirement Strategies net account values for the three months ended March 31, 2024 reflects net additions primarily driven by significant pension risk transfer transactions, interest credited on customer funds and an increase in the market value of assets.

The increase in Institutional Retirement Strategies net account values for the twelve months ended March 31, 2024 reflects net additions primarily driven by significant pension risk transfer transactions, including funded pension risk transfer and international reinsurance sales, interest credited on customer funds, the positive impact of foreign exchange rate changes and an increase in the market values of assets. These increases were partially offset by the reinsurance of certain structured settlement annuity contracts.

Individual Retirement Strategies. Account values are a significant driver of our operating results. Since most fees are determined by the level of separate account assets, fee income varies primarily based on the level of account values. Account values are driven by net flows from new business sales, surrenders, withdrawals and benefit payments, policy charges and the impact of positive or negative market value changes. The following table sets forth account value information of Individual Retirement Strategies’ products for the periods indicated:


	Three Months Ended March 31,				Twelve Months Ended March 31,
	2024		2023			2024
	(in millions)
Total Individual Retirement Strategies:
Beginning total account value, gross(1)	$	129,708	$	120,022		$	123,804
Sales	3,314		1,675			9,274
Full surrenders and death benefits	(2,565)		(1,488)			(7,843)
Sales, net of full surrenders and death benefits	749		187			1,431
Partial withdrawals and other benefit payments	(1,290)		(1,120)			(4,701)
Net flows	(541)		(933)			(3,270)
Change in market value, interest credited and other activity	6,081		5,330			16,375
Policy charges	(548)		(615)			(2,209)
Ending total account value, gross	134,700		123,804			134,700
Reinsurance ceded	(11,688)		(1,079)			(11,688)
Ending total account value, net(2)	$	123,012	$	122,725		$	123,012

(1)Beginning total account values, net, were $117,911 million and $119,205 million for the three months ended March 31, 2024 and 2023, respectively, and $122,725 million for the twelve months ended March 31, 2024.

(2)Includes net variable and fixed annuities sold as retail investment products. Variable annuity account values were $115.3 billion and $117.3 billion as of March 31, 2024 and 2023, respectively. Fixed annuity account values were $7.7 billion and $5.4 billion as of March 31, 2024 and 2023, respectively.

Individual Retirement Strategies sales, net of full surrenders and death benefits, for the three months ended March 31, 2024 increased in comparison to the prior year period driven by higher sales of fixed and indexed variable annuities products, partially offset by higher full surrenders.

The increase in Individual Retirement Strategies net account values for the three months ended March 31, 2024 was primarily driven by market value appreciation. The increase in Individual Retirement Strategies net account values for the twelve months ended March 31, 2024 was primarily driven by market value appreciation, partially offset by the reinsurance of PDI traditional variable annuity contracts, net outflows and policy charges on contractholder accounts.

Risks and Risk Mitigants

The following is a summary of certain risks associated with Individual Retirement Strategies’ products, certain strategies in mitigating those risks including any updates to those strategies since the previous year-end, and the related financial results.

Fixed Annuity Risks and Risk Mitigants. The primary risk exposure of our fixed annuity products relates to investment risks we bear for providing customers a minimum guaranteed interest rate or an index-linked interest rate required to be credited to the customer’s account value, which include interest rate fluctuations and/or sustained periods of low interest rates, and credit risk related to the underlying investments. We manage these risk exposures primarily through our investment strategies and product design features, which include credit rate resetting subject to the minimum guaranteed interest rate as well as surrender charges applied during the early years of the contract that help to provide protection for premature withdrawals. In addition, a portion of our fixed products has a market value adjustment provision that affords protection of lapse in the case of rising interest rates. We also manage these risk exposures through external reinsurance for certain of our fixed annuity products. For additional information regarding our external reinsurance agreements, see Note 12 to the Unaudited Interim Consolidated Financial Statements.

Indexed Variable Annuity Risks and Risk Mitigants. The primary risk exposure of our indexed variable annuity products relates to the investment risks we bear in order to credit to the customer’s account balance the required crediting rate based on the performance of the elected indices at the end of each term. We manage this risk primarily through our investment strategies and product design features, which include credit rate resetting subject to contractual minimums as well as surrender charges applied during the early years of the contract that help to provide protection for premature withdrawals. In addition, our indexed variable annuity strategies have an interim value provision that provides some protection from lapse in the case of rising interest rates.

Variable Annuity Risks and Risk Mitigants. The primary risk exposures of our variable annuity contracts relate to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including capital markets assumptions such as equity market returns, interest rates and market volatility, along with actuarial assumptions such as contractholder mortality, the timing and amount of annuitization and withdrawals, and contract lapses. For these risk exposures, achievement of our expected returns is subject to the risk that actual experience will differ from the assumptions used in the original pricing of these products. We manage our exposure to certain risks driven by fluctuations in capital markets primarily through a combination of i) Product Design Features, and ii) our Asset Liability Management Strategy, as discussed below. We also manage these risk exposures through external reinsurance for certain of our variable annuity products. Effective April 2023, the Company entered into an agreement with AuguStar to reinsure approximately $10 billion of account values of PDI traditional variable annuity contracts with guaranteed living benefits. For additional information regarding our external reinsurance agreements, see Note 12 to the Unaudited Interim Consolidated Financial Statements.

i.Product Design Features:

A portion of the variable annuity contracts that we offered include an automatic rebalancing feature, also referred to as an asset transfer feature. This feature is implemented at the contract level, and transfers assets between certain variable investment sub-accounts selected by the annuity contractholder and, depending on the benefit feature, a fixed-rate account in the general account or a bond fund sub-account within the separate accounts. The objective of the automatic rebalancing feature is to reduce our exposure to equity market risk and market volatility. Other product design features we utilize include, among others, asset allocation restrictions, minimum issuance age requirements and certain limitations on the amount of purchase payments, as well as a required minimum allocation to our general account for certain of our products. In addition, there is diversity in our fee arrangements, as certain fees are primarily based on the benefit guarantee amount, the contractholder account value and/or premiums, which helps preserve certain revenue streams when market fluctuations cause account values to decline.

ii.Asset Liability Management (“ALM”) Strategy (including fixed income instruments and derivatives):

We employ an ALM strategy that utilizes a combination of both traditional fixed income instruments and derivatives to meet expected liabilities associated with our annuity guarantees that under U.S. GAAP are considered MRBs. The MRB liability that we hedge consists of expected living and death benefit claims under various market conditions, which are managed using fixed income instruments, derivatives, or a combination thereof. For our PDI variable annuity, we utilize fixed income instruments to meet expected liabilities. For the portion of our ALM strategy executed with derivatives, we enter into a range of exchange-traded and over-the-counter (“OTC”) equity, interest rate and credit derivatives, including, but not limited to: equity and treasury futures; total return, credit default and interest rate swaps; and options including equity options, swaptions, and floors and caps. The intent of this strategy is to more efficiently manage the capital and liquidity associated with these products while continuing to mitigate fluctuations in net income due to movements in capital markets. To achieve this, we periodically review and recalibrate the ALM strategy by optimizing the mix of derivatives and fixed income instruments to achieve expected outcomes. As part of our periodic review of our variable annuities ALM strategy, and in accordance with our Risk Appetite Framework (“RAF”), the Company simplified its hedging approach in the first quarter of 2023 and collapsed the aggregate amount of equity hedging into one program.

Under our ALM strategy, we expect differences in the U.S. GAAP net income impact between the changes in value of the fixed income instruments (either designated as available-for-sale or designated as trading) and derivatives as compared to the changes in the MRB liability these assets support. These differences can be primarily attributed to two distinct areas:

Different accounting treatment between liabilities and assets supporting those liabilities. Under U.S. GAAP, changes in the fair value of the derivative instruments and fixed income instruments designated as trading, and MRBs, excluding the changes in the Company’s non-performance risk (“NPR”) spreads, are immediately reflected in net income, while changes in the fair value of fixed income instruments that are designated as available-for-sale are recorded as unrealized gains (losses) in other comprehensive income.
General hedge results. For the derivative portion of the ALM strategy, the net hedging impact (the extent to which the changes in value of the hedging instruments offset the change in value of the portion of the MRBs we are hedging) may be impacted by a number of factors, including: cash flow timing differences between our hedging instruments and the corresponding portion of the MRBs we are hedging, basis differences attributable to actual underlying contractholder funds to be hedged versus hedgeable indices, rebalancing costs related to dynamic rebalancing of hedging instruments as markets move, certain elements of the MRBs that may not be hedged (including certain actuarial assumptions), and implied and realized market volatility on the hedge positions relative to the portion of the MRBs we seek to hedge.

Product Specific Risks and Risk Mitigants

As noted above, the risks associated with our Individual Retirement Strategies’ products are mitigated through product design features, including automatic rebalancing, as well as through our ALM strategy and external reinsurance. The following table sets forth the risk management profile of our living benefit guarantees and guaranteed minimum death benefit (“GMDB”) features as of the periods indicated:


	March 31, 2024				December 31, 2023				March 31, 2023
	Account Value		% of Total		Account Value		% of Total		Account Value		% of Total
	($ in millions)
Living benefit/GMDB features(1):
Both ALM strategy and automatic rebalancing(2)(3)	$	70,599	56	%	$	70,013	58	%	$	70,618	60	%
ALM strategy only(3)	1,955		2	%	1,933		2	%	1,983		2	%
Automatic rebalancing only	80		0	%	80		0	%	82		0	%
External reinsurance(4)	11,956		10	%	12,418		10	%	2,493		2	%
PDI	1,477		1	%	1,536		1	%	12,200		10	%
Other products	1,631		1	%	1,585		1	%	1,585		1	%
Total living benefit/GMDB features	87,698				87,565				88,961
GMDB features and other(5)	37,267		30	%	33,873		28	%	28,376		25	%
Total variable annuity account value	$	124,965			$	121,438			$	117,337

(1)All contracts with living benefit guarantees also contain GMDB features, which cover the same insured contract.

(2)Contracts with living benefits that are included in our ALM strategy and that have an automatic rebalancing feature.

(3)Excludes PDI which is presented separately within this table.

(4)Represents contracts subject to reinsurance transactions with external counterparties. Includes approximately $10 billion of account values in relation to the PDI reinsurance transaction, as discussed above, and certain Highest Daily Lifetime Income (“HDI”) v.3.0 business for the period April 1, 2015 through December 31, 2016. The HDI contracts with living benefits also have an automatic rebalancing feature. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.

(5)Includes contracts that have a GMDB feature and do not have an automatic rebalancing feature.

Results excluded from adjusted operating income

The following table provides the net impact to the Unaudited Interim Consolidated Statements of Operations from the portion of Retirement Strategies’ results excluded from adjusted operating income:


	Three Months Ended March 31,
		2024		2023
		(in millions)(1)
Results excluded from adjusted operating income:
Change in MRBs, excluding changes in the NPR adjustment(2)		$	1,568	$	52
Change in the value of the non-MRB liabilities, excluding changes in the NPR adjustment(3)		41		278
Change in the NPR adjustment, excluding changes recognized in OCI		(51)		10
Change in the fair value of hedge assets(4)(5)		(1,454)		(196)
Other(6)		(60)		(100)
Total Individual Retirement Strategies results excluded from adjusted operating income		44		44
Total Institutional Retirement Strategies results excluded from adjusted operating income		(226)		(8)
Total results excluded from adjusted operating income		$	(182)	$	36

(1)Positive amounts represent income; negative amounts represent a loss.

(2)Also excludes related hedging gains (losses), which are included within this table in “Change in the fair value of hedge assets.”

(3)Represents the change in the liability for our fixed and variable indexed annuities, which is measured utilizing a valuation methodology required under U.S. GAAP. The total GAAP liability includes the fair value of all index credits for the current term and all future projected renewals of the policy; however, only changes in the fair value of the current term elected by the policyholder are included in adjusted operating income, while changes in the fair value of all future projected renewals of the policy are excluded from adjusted operating income.

(4)Represents the change in fair value of the derivatives utilized to hedge potential claims associated with our variable annuity living and death benefit guarantees.

(5)Includes changes in the fair value of equity derivatives related to the capital hedge program of $0 million and $(225) million for the three months ended March 31, 2024 and 2023, respectively, that were intended to protect a portion of the overall capital position of the variable annuities business against its exposure to the equity markets. The capital hedge program was discontinued in the first quarter of 2023.

(6)Includes the changes in duration swaps, deferred policy acquisition costs (“DAC”) amortization, trading gains or losses, and other activity.

For the three months ended March 31, 2024, the loss of $182 million was primarily driven by the impact of rising interest rates on fixed maturity securities and derivatives, partially offset by favorable equity market performance.

Group Insurance

Operating Results

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


	Three Months Ended March 31,
		2024			2023
		($ in millions)
Operating results:
Revenues		$	1,634		$	1,564
Benefits and expenses		1,589			1,539
Adjusted operating income		45			25
Realized investment gains (losses), net, and related charges and adjustments		(8)			(9)
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	37		$	16
Benefits ratios(1)(3):
Group life		90.1		%	92.9		%
Group disability		71.3		%	65.8		%
Total Group Insurance		84.7		%	85.9		%
Administrative operating expense ratios(2)(3):
Group life		12.1		%	11.8		%
Group disability		25.9		%	25.2		%
Total Group Insurance		16.0		%	15.2		%

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

(2)Ratio of general and administrative expenses (excluding commissions) to gross premiums plus policy charges and fee income.

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

Adjusted Operating Income

Adjusted operating income increased $20 million, primarily reflecting higher underwriting results in our group life business, driven by more favorable mortality experience on non-experience-rated contracts, and higher net investment income driven by higher reinvestment rates and higher non-coupon income. These increases were partially offset by higher operating and variable expenses, largely driven by business growth.

Revenues, Benefits and Expenses

Revenues increased $70 million. The increase primarily reflected higher premiums and policy charges and fee income, driven by business growth in our group disability business, including supplemental health products, and higher net investment income, driven by higher reinvestment rates.

Benefits and expenses increased $50 million. The increase primarily reflected higher general and administrative expenses, largely driven by business growth, as well as higher policyholders’ benefits and changes in reserves, driven by less favorable claims experience on long-term disability contracts and from business growth, as described above in our group disability business. This was partially offset by more favorable mortality experience on non-experience-rated contracts in our group life business.

Sales Results

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


	Three Months Ended March 31,
		2024		2023
		(in millions)
Annualized new business premiums(1):
Group life		$	189	$	162
Group disability		189		157
Total		$	378	$	319

(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 for the three months ended March 31, 2024 increased $59 million compared to the prior year period, primarily driven by higher sales in our group disability business, including an increase in supplemental health product sales, and higher enrollment in our group life business, in the National Market segment. This increase was partially offset by lower sales in the Premier Market segment in both our group disability and group life businesses, reflecting the absence of outsized sales in the prior year period.

Individual Life

Business Update

*•*In July 2023, the Company entered into an agreement with Somerset Reinsurance Ltd. (“Somerset Re”) to reinsure certain guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, both of which are wholly-owned subsidiaries of Prudential Financial. These policies represent approximately 30% of the Company’s reserves on its in-force guaranteed universal life block of business. The transaction was completed in March 2024 with an effective date of January 1, 2024. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.

Operating Results

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


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating results:
Revenues		$	1,580	$	1,527
Benefits and expenses		1,701		1,629
Adjusted operating income		(121)		(102)
Realized investment gains (losses), net, and related charges and adjustments(1)		(81)		38
Market experience updates		(55)		98

Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	(257)	$	34

(1)Prior period amounts have been updated to conform to current period presentation.

Adjusted Operating Income

Adjusted operating income decreased $19 million, primarily reflecting higher expenses, including costs associated with the recently closed reinsurance transaction of certain guaranteed universal life policies, as discussed above, and lower net investment spread results reflecting the impacts from this reinsurance transaction, partially offset by higher income on non-coupon investments and higher reinvestment rates. These decreases were partially offset by higher underwriting results driven by less unfavorable mortality experience, net of reinsurance.

Revenues, Benefits and Expenses

Revenues increased $53 million, primarily driven by higher net investment income reflecting higher income on non-coupon investments and higher reinvestment rates. The increase was partially offset by realized investment losses, reflecting the ceding of net investment income, resulting from the recently closed reinsurance transaction, as discussed above.

Benefits and expenses increased $72 million, primarily driven by higher interest expense due to higher reserve financing costs corresponding to higher net investment income, and higher general and administrative expenses reflecting costs associated with the recently closed reinsurance transaction, as discussed above. The increases were partially offset by lower policyholder benefits, reflecting less unfavorable mortality experience, net of reinsurance.

Sales Results

The following table sets forth Individual Life’s annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, by distribution channel and product, for the periods indicated:










	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Prudential Advisors		Third- Party		Total		Prudential Advisors		Third- Party		Total
	(in millions)
Variable Life	$	30	$	86	$	116	$	27	$	82	$	109
Term Life	4		27		31		5		18		23
Universal Life	1		19		20		1		16		17
Total	$	35	$	132	$	167	$	33	$	116	$	149

Total annualized new business premiums for the first quarter of 2024 increased $18 million, primarily reflecting higher third-party term life sales as well as higher variable life sales across all channels.

International Businesses

Business Update

In March 2024, the Company entered into a definitive agreement with Grupo ST S.A. to sell Prudential of Argentina (“POA”). The results of POA for the first quarter of 2024 and the impact of its anticipated sale are reflected in the Divested and Run-off Businesses that are included within our Corporate and Other operations. The transaction, which is not expected to have a material impact on the Company’s results, is expected to close in the second quarter of 2024, subject to customary closing conditions.

Operating Results

The results of our International Businesses’ operations are translated on the basis of weighted average monthly exchange rates, inclusive of the effects of the intercompany arrangement discussed in “—Results of Operations—Impact of Foreign Currency Exchange Rates” above. To provide a better understanding of operating performance within the International Businesses, where indicated below, we have analyzed our results of operations excluding the effect of the year over year change in foreign currency exchange rates. Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. For our Japan operations, we used an exchange rate of 129 yen per USD. In addition, for constant dollar information discussed below, activity denominated in USD is generally reported based on the amounts as transacted in USD. Annualized new business premiums presented on a constant exchange rate basis in the “Sales Results” section below reflect translation based on these same uniform exchange rates.

The following table sets forth the International Businesses’ operating results for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating results:
Revenues:
Life Planner		$	2,550	$	2,624
Gibraltar Life and Other		2,163		2,391
Total revenues		4,713		5,015
Benefits and expenses:
Life Planner		2,005		2,102
Gibraltar Life and Other		1,812		2,073
Total benefits and expenses		3,817		4,175
Adjusted operating income:
Life Planner		545		522
Gibraltar Life and Other		351		318
Total adjusted operating income		896		840
Realized investment gains (losses), net, and related charges and adjustments(1)		218		435
Change in value of market risk benefits, net of related hedging gains (losses)		3		(4)
Market experience updates		23		(47)
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests		(36)		(16)
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	1,104	$	1,208

(1)Prior period amounts have been updated to conform to current period presentation.

Adjusted Operating Income

Adjusted operating income from our Life Planner operations increased $23 million, including a net unfavorable impact of $15 million from currency fluctuations. Excluding this item, adjusted operating income from our Life Planner operations increased $38 million, primarily reflecting higher net investment spread results driven by higher reinvestment rates and higher income on non-coupon investments. This increase was partially offset by lower underwriting results, primarily due to the decline in business in force in Japan, partially offset by the growth of business in force in Brazil.

Adjusted operating income from our Gibraltar Life and Other operations increased $33 million, including a net favorable impact of $5 million from currency fluctuations. Excluding this item, adjusted operating income from our Gibraltar Life and Other operations increased $28 million, primarily reflecting higher earnings from joint ventures and other operating entities, and higher net investment spread results, driven by higher income on non-coupon investments, partially offset by unfavorable derivative settlements. The increase also reflects lower operating expenses. These increases were partially offset by lower underwriting results, primarily driven by the decline of business in force in Japan.

Revenues, Benefits and Expenses

Revenues from our Life Planner operations decreased $74 million, including a net unfavorable impact of $107 million from currency fluctuations. Excluding this item, revenues increased $33 million, primarily reflecting higher net investment income driven by higher reinvestment rates and higher income on non-coupon investments, and higher policy charges and fee income reflecting the product mix shift to variable and investment products in Japan. This increase was partially offset by lower premiums attributable to the decline of business in force in Japan, partially offset by the growth of business in force in Brazil.

Benefits and expenses of our Life Planner operations decreased $97 million, including a net favorable impact of $92 million from currency fluctuations. Excluding this item, benefits and expenses decreased $5 million, primarily reflecting lower policyholder benefits, including changes in reserves, due to the decline of business in force, as discussed above, partially offset by higher interest credited on policyholders’ account balances, reflecting the product mix shift to investment products in Japan, as described above.

Revenues from our Gibraltar Life and Other operations decreased $228 million, including a net unfavorable impact of $94 million from currency fluctuations. Excluding this item, revenues decreased $134 million, primarily reflecting lower premiums attributable to ceded reinsurance, which is mostly offset in policyholders’ benefits below, and to the decline of business in force, as well as higher realized investment losses from unfavorable derivative settlements. These decreases were partially offset by higher net investment income, driven by higher income on non-coupon investments, higher earnings from joint ventures and other operating entities, and higher policy charges and fee income reflecting the product mix shift to investment products in Japan.

Benefits and expenses of our Gibraltar Life and Other operations decreased $261 million, including a net favorable impact of $99 million from currency fluctuations. Excluding this item, benefits and expenses decreased $162 million, primarily reflecting lower policyholders’ benefits, including changes in reserves, due to ceded reinsurance and the decline of business in force, as discussed above, and lower general and administrative expenses. These decreases were partially offset by higher interest credited on policyholders’ account balances, reflecting the product mix shift to investment products in Japan.

Sales Results

The following table sets forth annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, on an actual and constant exchange rate basis for the periods indicated:


	Three Months Ended March 31,
			2024		2023
		(in millions)
Annualized new business premiums:
On an actual exchange rate basis(1):
Life Planner			$	293	$	277
Gibraltar Life and Other			224		231
Total			$	517	$	508
On a constant exchange rate basis:
Life Planner			$	291	$	265
Gibraltar Life and Other			229		232
Total			$	520	$	497

(1)Prior period amounts have been updated to reflect the correction of errors for both Life Planner and Gibraltar Life and Other.

The amount of annualized new business premiums and the sales mix, in terms of types and currency denomination of products, for any given period can be significantly impacted by several factors, including but not limited to: the addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in interest rates or fluctuations in currency markets, changes in tax laws, changes in life insurance regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.

Our diverse product portfolio in Japan, in terms of currency mix and premium payment structure, allows us to adapt to changing market and competitive dynamics, including the low interest rate environment. We regularly examine our product offerings and their related profitability and reprice or discontinue sales of certain products that do not meet our profit expectations. The impact of these actions, coupled with the introduction of certain new products, has generally resulted in an increase in sales of products denominated in USD relative to products denominated in other currencies.

The table below presents annualized new business premiums on a constant exchange rate basis, by product category and distribution channel, for the periods indicated:


	Three Months Ended March 31, 2024										Three Months Ended March 31, 2023
	Life		Accident & Health		Retirement (1)		Investment Contracts (2)		Total		Life		Accident & Health		Retirement (1)		Investment Contracts (2)		Total
	(in millions)
Life Planner	$	139	$	20	$	81	$	51	$	291	$	127	$	19	$	75	$	44	$	265
Gibraltar Life and Other:
Life Consultants	29		5		9		65		108		35		5		7		81		128
Banks	5		0		0		54		59		11		0		1		43		55
Independent Agency	10		2		17		33		62		16		12		20		1		49
Subtotal	44		7		26		152		229		62		17		28		125		232
Total	$	183	$	27	$	107	$	203	$	520	$	189	$	36	$	103	$	169	$	497

(1)Includes retirement income, endowment and savings variable life.

(2)Includes single-payment market value adjusted investment contracts, single-payment whole life products and annuity products.

Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $26 million, primarily driven by higher life product sales in Brazil, as well as higher investment contract sales, and higher retirement product sales, in Japan.

Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life and Other operations decreased $3 million. Life Consultant sales decreased $20 million, reflecting lower USD-denominated single premium investment contract sales and lower USD-denominated recurring premium life product sales. Independent Agency and Bank channel sales increased $13 million and $4 million, respectively, reflecting higher USD-denominated single premium investment contract sales, partially offset by lower USD-denominated life product sales. Independent Agency also reflects lower accident and health product sales.

Corporate and Other

Business Updates

*•*In March 2024, the Company committed to a plan to exit the operations of AIQ; therefore, beginning with the first quarter of 2024, AIQ is classified as a divested business within our Corporate and Other operations. AIQ’s results are now excluded from adjusted operating income and historical results have been updated to conform to current period presentation.

In September 2023, the Company acquired a 20% interest as a limited partner in Prismic, a Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re. Beginning with the fourth quarter of 2023, the operating results of Corporate and Other reflect the Company’s share of earnings in Prismic on a quarter lag.

Operating Results

Corporate and Other includes corporate operations, after allocations to our business segments, and Divested and Run-off Businesses other than those that qualify for “discontinued operations” accounting treatment under U.S. GAAP. The following table sets forth Corporate and Other’s operating results for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Operating results:
Investment income		$	55	$	61
Interest expense on debt		(205)		(212)
Pension and employee benefits		94		91
Other corporate activities(1)		(379)		(411)
Adjusted operating income(1)		(435)		(471)
Realized investment gains (losses), net, and related charges and adjustments		77		(51)
Market experience updates		0		(3)
Divested and Run-off Businesses(1)		(35)		92
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests		(3)		(3)

Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	(396)	$	(436)

(1)Effective first quarter of 2024, the results of AIQ are excluded from Corporate and Other’s adjusted operating results and are included in Divested and Run-off Businesses. Prior period amounts have been updated to conform to current period presentation.

The loss from Corporate and Other operations, on an adjusted operating income basis, decreased $36 million, primarily driven by lower net charges from other corporate activities of $32 million, reflecting lower expenses, including a decrease in costs related to technology and other corporate initiatives, partially offset by higher costs for long-term compensation plans.

Divested and Run-off Businesses

Divested and Run-off Businesses Included in Corporate and Other

Income from our Divested and Run-off Businesses includes results from several businesses that have been or will be sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The results of these Divested and Run-off Businesses are reflected in our Corporate and Other operations but are excluded from adjusted operating income. A summary of the results of the Divested and Run-off Businesses reflected in our Corporate and Other operations is as follows for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Long-Term Care		$	134	$	95
Other(1)		(169)		(3)
Total Divested and Run-off Businesses income (loss) excluded from adjusted operating income		$	(35)	$	92

(1)Effective first quarter of 2024, the results of AIQ are excluded from Corporate and Other’s adjusted operating results and are included herein. Prior period amounts have been updated to conform to current period presentation.

Long-Term Care

Results increased $39 million compared to the prior year period primarily reflecting favorable impacts from changes in the market value of equity securities and higher underwriting results driven by net favorable policyholder experience, partially offset by more unfavorable impacts from changes in the market value of derivatives used for duration management and lower income on non-coupon investments.

Other Divested and Run-Off Businesses

Results decreased $166 million compared to the prior year period primarily reflecting impairments and charges related to management’s decision to exit Assurance IQ and its subsequent classification as a divested business in the current period.

Closed Block Division

The Closed Block division includes certain in-force traditional domestic participating life insurance and annuity products and assets that are used for the payment of benefits and policyholder dividends on these policies (collectively the “Closed Block”), as well as certain related assets and liabilities. We no longer offer these traditional domestic participating policies. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

Each year, the Board of Directors of The Prudential Insurance Company of America (“PICA”) determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains (losses), mortality experience and other factors. Although the Closed Block experience for dividend action decisions is based upon statutory results, at the time the Closed Block was established, we developed, as required by U.S. GAAP, an actuarial calculation of the timing of the maximum future earnings from the policies included in the Closed Block. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. If actual cumulative earnings in any given period are greater than the cumulative earnings we expected, we record this excess as a policyholder dividend obligation. Additionally, any accumulated net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block are reflected as a policyholder dividend obligation, with a corresponding amount reported in AOCI, while any accumulated net unrealized investment losses are reflected as a reduction of the policyholder dividend obligation, to the extent the overall policyholder dividend obligation is otherwise positive.

We will subsequently pay this excess to Closed Block policyholders as an additional dividend unless it is otherwise offset by future Closed Block performance that is less favorable than we originally expected. The policyholder dividends we charge to expense within the Closed Block division will include any change in our policyholder dividend obligation that we recognize for the excess of actual cumulative earnings in any given period over the cumulative earnings we expected in addition to the actual policyholder dividends declared by the Board of Directors of PICA. If actual cumulative earnings fall below expected

cumulative earnings in future periods, earnings volatility in the Closed Block division, which is primarily due to changes in investment results, may not be offset by changes in the cumulative earnings policyholder dividend obligation. For a discussion of the Closed Block division’s realized investment gains (losses), net, see “—General Account Investments.”

As of March 31, 2024, the excess of actual cumulative earnings over the expected cumulative earnings was $2,807 million, which was recorded as a policyholder dividend obligation. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. As of March 31, 2024, net unrealized investment losses have arisen subsequent to the establishment of the Closed Block due to the impacts of higher interest rates on the market value of fixed maturities available-for-sale. The impact of these net unrealized investment losses has been reflected as a decrease to the policyholder dividend obligation of $2,399 million at March 31, 2024, with a corresponding amount reported in AOCI.

Operating Results

The following table sets forth the Closed Block division’s results for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
U.S. GAAP results:
Revenues		$	962	$	971
Benefits and expenses		965		975
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities		$	(3)	$	(4)

Income (loss) Before Income Taxes and Equity in Earnings of Joint Ventures and Other Operating Entities

Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities increased $1 million. Net investment activity results decreased, primarily reflecting higher realized investment losses driven by unfavorable changes in the market value of derivatives. This decrease was partially offset by higher other income driven by favorable changes in the market value of equity securities, and higher net investment income reflecting higher income on non-coupon investments. Net insurance activity results decreased driven by an unfavorable comparative change in claims experience. As a result of these and other factors, a $66 million reduction in the policyholder dividend obligation was recorded in the first three months of 2024, compared to a $25 million reduction in the first three months of 2023.

Revenues, Benefits and Expenses

Revenues decreased $9 million primarily driven by an increase in realized investment losses, partially offset by increases in other income and net investment income, as discussed above.

Benefits and expenses decreased $10 million primarily driven by a decrease in dividends to policyholders, reflecting a higher reduction in the policyholder dividend obligation due to changes in cumulative earnings and other factors, as discussed above.

Income Taxes

For information regarding income taxes, see Note 14 to the Unaudited Interim Consolidated Financial Statements.

General Account Investments

Portfolio Composition

Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, policy loans and non-coupon investments, which include equity securities and other invested assets such as limited partnerships and limited liability companies (“LPs/LLCs”), real estate held through direct ownership, derivative instruments and seed money investments in separate accounts. The composition of our general account reflects, within the discipline provided by our risk management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our PGIM segment. The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.

A portion of our general account investments support customer liabilities reinsured under coinsurance with funds withheld and modified coinsurance arrangements. With these reinsurance arrangements, we retain legal ownership of the assets (collectively, the “Funds Withheld”) which remain on our Unaudited Interim Consolidated Statements of Financial Position, while the economic benefits and investment risk associated with the Funds Withheld assets ultimately inure to the reinsurer. The composition of the Funds Withheld assets is subject to investment guidelines specific to the reinsurance treaties, which may differ from the investment guidelines we set for our General Account, excluding Funds Withheld. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements.

The following tables set forth the composition of our general account investment portfolio apportioned between PFI excluding the Closed Block division and Funds Withheld, the Closed Block division, and Funds Withheld as of the dates indicated:


	March 31, 2024
	PFI Excluding Closed Block Division and Funds Withheld				Closed Block Division		Funds Withheld		Total
	($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	214,618	58.3	%	$	20,184	$	7,922	$	242,724
Private, available-for-sale, at fair value	62,584		17.0		9,891		2,608		75,083
Fixed maturities, trading, at fair value	4,380		1.2		849		4,577		9,806
Assets supporting experience-rated contractholder liabilities, at fair value	3,359		0.9		0		0		3,359
Equity securities, at fair value	4,838		1.3		1,818		5		6,661
Commercial mortgage and other loans, at book value, net of allowance	50,870		13.8		7,681		73		58,624
Policy loans, at outstanding balance	6,466		1.8		3,441		0		9,907
Other invested assets, net of allowance(1)	16,168		4.3		4,432		1,093		21,693
Short-term investments, net of allowance	5,092		1.4		743		106		5,941
Total general account investments	368,375		100.0	%	49,039		16,384		433,798
Invested assets of other entities and operations(2)	4,451				0		0		4,451
Total investments	$	372,826			$	49,039	$	16,384	$	438,249


	December 31, 2023
	PFI Excluding Closed Block Division and Funds Withheld(3)				Closed Block Division		Funds Withheld(3)		Total
	($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	217,469	58.9	%	$	20,483	$	3,270	$	241,222
Private, available-for-sale, at fair value	61,861		16.7		10,003		2,678		74,542
Fixed maturities, trading, at fair value	4,954		1.3		887		2,944		8,785
Assets supporting experience-rated contractholder liabilities, at fair value	3,168		0.9		0		0		3,168
Equity securities, at fair value	5,664		1.5		1,970		0		7,634
Commercial mortgage and other loans, at book value, net of allowance	50,994		13.8		7,769		23		58,786
Policy loans, at outstanding balance	6,568		1.8		3,479		0		10,047
Other invested assets, net of allowance(1)	13,934		3.8		4,513		1,007		19,454
Short-term investments, net of allowance	4,709		1.3		232		51		4,992
Total general account investments	369,321		100.0	%	49,336		9,973		428,630
Invested assets of other entities and operations(2)	6,103				0		0		6,103
Total investments	$	375,424			$	49,336	$	9,973	$	434,733

(1) Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. For additional information regarding these investments, see “—Other Invested Assets” below.

(2)Includes invested assets of our investment management and derivative operations. Excludes assets of our investment management operations that are managed for third-parties and those assets classified as “Separate account assets” on our balance sheet. For additional information regarding these investments, see “—Invested Assets of Other Entities and Operations” below.

(3)Prior period amounts have been restated to conform to current period presentation.

The decrease in general account investments attributable to PFI excluding the Closed Block division and Funds Withheld in the first three months of 2024 was primarily due to the translation impact of the U.S. dollar strengthening against the yen and an increase in U.S interest rates, partially offset by the reinvestment of net investment income and net business inflows. For information regarding the methodology used in determining the fair value of our fixed maturities, see Note 6 to the Unaudited Interim Consolidated Financial Statements.

As of both March 31, 2024 and December 31, 2023, 44% of our general account investments attributable to PFI excluding the Closed Block division and Funds Withheld related to our Japanese insurance operations. The following table sets forth the composition of the investments of our Japanese insurance operations’ general account, as of the dates indicated:


	March 31, 2024		December 31, 2023
	Japanese Insurance Operations
	(in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	108,625	$	113,737
Private, available-for-sale, at fair value	20,959		20,891
Fixed maturities, trading, at fair value	586		669
Assets supporting experience-rated contractholder liabilities, at fair value	3,359		3,168
Equity securities, at fair value	1,618		1,614
Commercial mortgage and other loans, at book value, net of allowance	17,102		17,980
Policy loans, at outstanding balance	2,644		2,670
Other invested assets(1)	5,861		5,617
Short-term investments, net of allowance	286		421
Total Japanese general account investments	$	161,040	$	166,767

(1)Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.

The decrease in general account investments related to our Japanese insurance operations in the first three months of 2024 was primarily due to the translation impact of the U.S. dollar strengthening against the yen and an increase in U.S. interest rates, partially offset by net business inflows and the reinvestment of net investment income.

As of March 31, 2024, our Japanese insurance operations had $85.9 billion, at carrying value, of investments denominated in U.S. dollars, including $1.1 billion that were hedged to yen through third-party derivative contracts and $77.6 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure to U.S. dollar-equivalent equity. As of December 31, 2023, our Japanese insurance operations had $86.5 billion, at carrying value, of investments denominated in U.S. dollars, including $1.3 billion that were hedged to yen through third-party derivative contracts and $77.7 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure of U.S. dollar-equivalent equity. The $0.6 billion decrease in the carrying value of U.S. dollar-denominated investments from December 31, 2023 was primarily attributable to an increase in U.S. interest rates, partially offset by the reinvestment of net investment income.

Our Japanese insurance operations had $3.5 billion and $4.2 billion, at carrying value, of investments denominated in Australian dollars that support liabilities denominated in Australian dollars as of March 31, 2024 and December 31, 2023, respectively. The $0.7 billion decrease in the carrying value of Australian dollar-denominated investments from December 31, 2023 was primarily attributable to run-off of the portfolio. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations and a discussion of our yen hedging strategy, see “Results of Operations by Segment—Impact of Foreign Currency Exchange Rates” above.

Investment Results

The following tables set forth the investment results of our general account apportioned between PFI excluding the Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld, for the periods indicated. The yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in “Realized investment gains (losses), net.”


	Three Months Ended March 31, 2024
	PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations				Japanese Insurance Operations				PFI Excluding Closed Block Division and Funds Withheld				Closed Block Division		Funds Withheld		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	5.13	%	$	2,017	3.01	%	$	1,051	4.12	%	$	3,068	$	370	$	217	$	3,655
Assets supporting experience-rated contractholder liabilities	0.00		0		1.24		10		1.24		10		0		0		10
Equity securities	2.85		25		1.14		5		2.32		30		7		0		37
Commercial mortgage and other loans	4.36		363		3.76		164		4.16		527		81		2		610
Policy loans	4.93		47		3.79		25		4.47		72		50		0		122
Short-term investments and cash equivalents	7.08		224		6.14		25		7.00		249		23		4		276
Gross investment income	5.06		2,676		3.10		1,280		4.20		3,956		531		223		4,710
Investment expenses	(0.19)		(182)		(0.12)		(80)		(0.16)		(262)		(76)		(1)		(339)
Investment income after investment expenses	4.87	%	2,494		2.98	%	1,200		4.04	%	3,694		455		222		4,371
Other invested assets(3)			167				134				301		59		64		424
Investment results of other entities and operations(4)			(31)				0				(31)		0		0		(31)
Total net investment income			$	2,630			$	1,334			$	3,964	$	514	$	286	$	4,764


	Three Months Ended March 31, 2023
	PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations(6)				Japanese Insurance Operations				PFI Excluding Closed Block Division and Funds Withheld(6)				Closed Block Division		Funds Withheld(6)		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	4.92	%	$	2,009	2.79	%	$	983	3.93	%	$	2,992	$	360	$	0	$	3,352
Assets supporting experience-rated contractholder liabilities	0.00		0		1.33		10		1.33		10		0		0		10
Equity securities	2.59		20		1.31		6		2.12		26		14		0		40
Commercial mortgage and other loans	3.95		302		3.60		161		3.82		463		78		0		541
Policy loans	4.95		47		3.86		25		4.50		72		52		0		124
Short-term investments and cash equivalents	6.13		194		3.61		18		5.90		212		15		0		227
Gross investment income	4.81		2,572		2.86		1,203		3.95		3,775		519		0		4,294
Investment expenses	(0.12)		(126)		(0.13)		(83)		(0.13)		(209)		(61)		0		(270)
Investment income after investment expenses	4.69	%	2,446		2.73	%	1,120		3.82	%	3,566		458		0		4,024
Other invested assets(3)			134				55				189		23		9		221
Investment results of other entities and operations(4)			75				0				75		0		0		75
Total net investment income			$	2,655			$	1,175			$	3,830	$	481	$	9	$	4,320

(1)For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to other invested assets.

(2)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading, which are included in other invested assets.

(3)Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.

(4)Includes net investment income of our investment management operations.

(5)The total yield was 4.03% and 3.84% for the three months ended March 31, 2024 and 2023, respectively.

(6)Prior period amounts have been restated to conform to current period presentation.

The increase in investment income after investment expenses yield attributable to our general account investments excluding the Closed Block division, Funds Withheld and the Japanese insurance operations’ portfolio, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily the result of higher fixed income reinvestment rates and higher returns on short-term investments based on an increase in short-term rates.

The increase in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily the result of higher fixed income reinvestment rates and higher returns on short-term investments based on an increase in short-term rates.

Both the U.S. dollar-denominated and Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts provide a yield that is substantially higher than the yield on comparable yen-denominated fixed maturities. The average amortized cost of U.S. dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $66.7 billion and $60.1 billion for the three months ended March 31, 2024 and 2023, respectively. The majority of U.S. dollar-denominated fixed maturities support liabilities that are denominated in U.S. dollars. The average amortized cost of Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $3.7 billion and $4.9 billion for the three months ended March 31, 2024 and 2023, respectively. The majority of Australian dollar-denominated fixed maturities support liabilities that are denominated in Australian dollars. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations, see “—Results of Operations by Segment—Impact of Foreign Currency Exchange Rates” above.

Realized Investment Gains and Losses

The following table sets forth “Realized investment gains (losses), net” of our general account apportioned between PFI excluding Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld, by investment type as well as “Related charges and adjustments” for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
PFI excluding Closed Block Division and Funds Withheld(4):
Realized investment gains (losses), net:
(Addition to) release of allowance for credit losses on fixed maturities		$	2	$	(149)
Write-downs on fixed maturities(1)		(5)		(3)
Net gains (losses) on sales and maturities		182		107
Fixed maturity securities(2)		179		(45)
(Addition to) release of allowance for credit losses on loans		(42)		(16)
Write-offs on mortgage loans		0		0
Net gains (losses) on sales and maturities		0		1
Commercial mortgage and other loans		(42)		(15)
Derivatives		(413)		284
OTTI losses on other invested assets recognized in earnings		(3)		(17)
(Addition to) release of allowance for credit losses on other invested assets		(2)		(1)
Other net gains (losses)		40		41
Other		35		23
Subtotal		(241)		247
Investment results of other entities and operations(3)		(7)		(13)
Total — PFI excluding Closed Block Division and Funds Withheld(4)		(248)		234
Related charges and adjustments		162		135
Realized investment gains (losses), net, and related charges and adjustments(4)		$	(86)	$	369
Closed Block Division:
Realized investment gains (losses), net:
(Addition to) release of allowance for credit losses on fixed maturities		$	(14)	$	18
Write-downs on fixed maturities(1)		0		(6)
Net gains (losses) on sales and maturities		(88)		(122)
Fixed maturity securities(2)		(102)		(110)
(Addition to) release of allowance for credit losses on loans		(11)		(2)
Net gains (losses) on sales and maturities		0		0
Commercial mortgage and other loans		(11)		(2)
Derivatives		(12)		94
(Addition to) release of allowance for credit losses on other invested assets		0		0
Other net gains (losses)		0		1
Other		0		1
Subtotal — Closed Block Division		$	(125)	$	(17)
Funds Withheld(4):
Realized investment gains (losses), net:
(Addition to) release of allowance for credit losses on fixed maturities		$	0	$	0
Write-downs on fixed maturities(1)		0		0
Net gains (losses) on sales and maturities		(58)		0


Fixed maturity securities(2)	(58)		0
(Addition to) release of allowance for credit losses on loans	0		0
Write-offs on mortgage loans	0		0
Net gains (losses) on sales and maturities	0		0
Commercial mortgage and other loans	0		0
Derivatives	203		0
(Addition to) release of allowance for credit losses on other invested assets	0		0
Other net gains (losses)	(80)		0
Other	(80)		0
Subtotal — Funds Withheld	65		0
Related charges and adjustments	(76)		0
Realized investment gains (losses), net, and related charges and adjustments(4)	$	(11)	$	0
Consolidated PFI realized investment gains (losses), net	$	(308)	$	217

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

(2)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading.

(3)Includes “realized investment gains (losses), net” of our investment management operations.

(4)Prior period amounts have been restated to conform to current period presentation.

The following analysis reflects realized gains (losses) attributable to PFI excluding Closed Block Division and Funds Withheld.

Net gains on sales and maturities of fixed maturity securities were $182 million for the first quarter of 2024 primarily driven by the impact of foreign currency exchange rate movements on U.S. dollar-denominated securities that were sold within our International Businesses. Net gains on sales and maturities of fixed maturity securities were $107 million for the first quarter of 2023 primarily driven by the impact of foreign currency exchange rate movements on non-U.S. dollar-denominated securities that matured or were sold within our International Businesses, partially offset by net losses on sales of fixed maturity securities driven by rotation sales of public securities into private securities and mortgage loans.

Net realized losses on derivative instruments of $413 million for the first quarter of 2024 primarily included:

$568 million of losses on interest rate derivatives due to increases in swap and U.S. Treasury rates.

Partially offsetting these losses were:

$78 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the Euro, Australian dollar and British pound; and
$46 million of gains on credit default swaps due to spreads tightening.

Net realized gains on derivative instruments of $284 million, for the first quarter of 2023 primarily included:

$470 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates.

Partially offsetting these gains were:

$135 million of losses on equity derivatives due to increases in equity indices; and
$101 million of losses on foreign currency hedges due to U.S. dollar depreciation versus foreign currencies.

For a discussion of living benefit guarantees and related hedge positions in our Individual Retirement Strategies business, see “—Results of Operations by Segment—U.S. Businesses—Retirement Strategies” above.

Included in the table above are “Related charges and adjustments,” which include the portions of “Realized investment gains (losses), net” that are either (1) included in adjusted operating income or (2) included in other reconciling line items to adjusted operating income, such as “Divested and Run-off Businesses.” Related adjustments also include the portions of “Other income (loss),” “Net investment income,” and “Policyholders’ benefits” that are excluded from adjusted operating income and (3) charges related to “Realized investment gains (losses), net,” which are excluded from adjusted operating income.

These adjustments are made to arrive at “Realized investment gains (losses), net, and related charges and adjustments,” which is excluded from adjusted operating income. See Note 19 to the Unaudited Interim Consolidated Financial Statements for additional information regarding adjusted operating income and its reconciliation to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities.” The results include changes in the fair value of equity securities and fixed income securities that are designated as trading, settlements and changes in the value of derivatives, the impact of foreign currency exchange rate movements on certain non-local currency denominated assets and liabilities, as well as changes in certain policyholder reserves and other costs.

Credit Losses

The level of credit losses generally reflects current and expected economic conditions and is expected to increase when economic conditions worsen and to decrease when economic conditions improve. Historically, the causes of credit losses have been specific to each individual issuer and have not directly resulted in credit losses to other securities within the same industry or geographic region. We may also realize additional credit and interest rate-related losses through sales of investments pursuant to our credit risk and portfolio management objectives.

We maintain separate monitoring processes for public and private fixed maturities and create watch lists to highlight securities that require special scrutiny and management. For private placements, our credit and portfolio management processes help ensure prudent controls over valuation and management. We have separate pricing and authorization processes to establish “checks and balances” for new investments. We apply consistent standards of credit analysis and due diligence for all transactions, whether they originate through our own in-house staff or through agents. Our regional offices closely monitor the portfolios in their regions. We set all valuation standards centrally, and we assess the fair value of all investments quarterly. Our public and private fixed maturity investment managers formally review all public and private fixed maturity holdings on a quarterly basis and more frequently when necessary to identify potential credit deterioration whether due to ratings downgrades, unexpected price variances and/or company or industry-specific concerns.

For LPs/LLCs accounted for using the equity method and for wholly-owned investment real estate, the carrying value of these investments is written down or impaired to fair value when a decline in value is considered to be other-than-temporary. For additional information regarding our OTTI policies, 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, 2023.

General Account Investments of PFI excluding Closed Block Division and Funds Withheld

In the following sections, we provide details about our investment portfolio, excluding investments held in the Closed Block division and the Funds Withheld portfolios. We believe the details of the composition of our investment portfolio excluding the Closed Block division and Funds Withheld are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial, Inc. because (1) substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies where the economics inure to those participating policies and not to shareholders of the Company’s common stock and (2) the Funds Withheld assets support liabilities relating to reinsurance agreements where the economic benefits and associated investment risk of the Funds Withheld ultimately inure to the reinsurer. See Notes 12 and 13 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements and the Closed Block, respectively.

In the following sections, prior period amounts have been restated to conform to the current period presentation to exclude investments related to the Funds Withheld portfolios.

Fixed Maturity Securities

In the following sections, we provide details about our fixed maturity securities portfolio, which excludes fixed maturity securities classified as assets supporting experience-rated contractholder liabilities and classified as trading.

Fixed Maturity Securities by Industry

The following table sets forth the composition of the portion of our fixed maturity, available-for-sale portfolio by industry category and the associated gross unrealized gains and losses, as well as the allowance for credit losses (“ACL”), as of the dates indicated:


	March 31, 2024										December 31, 2023
Industry(1)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		ACL		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		ACL		Fair Value
	(in millions)
Corporate securities:
Finance	$	39,946	$	438	$	3,455	$	9	$	36,920	$	39,542	$	485	$	3,255	$	10	$	36,762
Consumer non-cyclical	32,608		568		3,311		11		29,854		32,392		697		2,998		11		30,080
Utility	27,440		514		2,772		4		25,178		27,548		635		2,610		3		25,570
Capital goods	18,098		323		1,499		1		16,921		17,357		412		1,284		0		16,485
Consumer cyclical	11,079		244		673		17		10,633		10,739		287		574		5		10,447
Foreign agencies	2,409		61		203		0		2,267		2,795		80		210		0		2,665
Energy	11,737		249		816		3		11,167		11,157		270		730		0		10,697
Communications	6,897		232		569		68		6,492		6,648		272		541		60		6,319
Basic industry	6,840		148		567		1		6,420		6,678		174		498		3		6,351
Transportation	10,893		237		913		0		10,217		10,858		326		785		0		10,399
Technology	5,167		79		405		0		4,841		4,935		101		333		0		4,703
Industrial other	4,762		36		759		5		4,034		5,018		49		726		6		4,335
Total corporate securities	177,876		3,129		15,942		119		164,944		175,667		3,788		14,544		98		164,813
Foreign government(2)	66,143		3,222		5,549		30		63,786		71,130		3,878		5,169		54		69,785
Residential mortgage-backed(3)	2,458		17		210		0		2,265		2,305		22		190		0		2,137
Asset-backed	12,415		217		56		0		12,576		9,799		190		79		0		9,910
Commercial mortgage-backed	6,076		22		410		0		5,688		6,159		23		434		0		5,748
U.S. Government	23,905		723		3,986		0		20,642		21,434		1,072		3,402		0		19,104
State & Municipal	7,593		204		496		0		7,301		8,018		244		429		0		7,833
Total fixed maturities, available-for-sale	$	296,466	$	7,534	$	26,649	$	149	$	277,202	$	294,512	$	9,217	$	24,247	$	152	$	279,330

(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.

(2)As of both March 31, 2024 and December 31, 2023, based on amortized cost, 88% represent Japanese government bonds held by our Japanese insurance operations with no other individual country representing more than 4% and 5% of the balance, respectively.

(3)As of both March 31, 2024 and December 31, 2023, based on amortized cost, 100% were rated A or higher.

The increase in net unrealized losses from December 31, 2023 to March 31, 2024 was primarily due to an increase in U.S. interest rates.

Fixed Maturity Securities Credit Quality

The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the investments of insurers for statutory reporting purposes and assigns fixed maturity securities to one of six categories called “NAIC Designations.” In general, NAIC Designations of “1” highest quality, or “2” high quality, include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”) or BBB- or higher by Standard & Poor’s Rating Services (“S&P”). NAIC Designations of “3” through “6” generally include fixed maturities referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by S&P. The NAIC Designations for commercial mortgage-backed securities and non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages, are based on security level expected losses as modeled by an independent third-party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized.

As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the fixed maturity portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date. Pending receipt of SVO designations, the categorization of these securities by NAIC Designation is based on the expected ratings indicated by internal analysis.

Ratings assigned by nationally recognized rating agencies include S&P, Moody’s, Fitch Ratings Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”). Low issue composite rating uses ratings from the major credit rating agencies or, if these are not available, an equivalent internal rating. For securities where the ratings assigned are not equivalent, the second lowest rating is utilized.

Investments of our international insurance companies are not subject to NAIC guidelines. Investments of our Japanese insurance operations are regulated locally by the Financial Services Agency (“FSA”), an agency of the Japanese government. The FSA has its own investment quality criteria and risk control standards. Our Japanese insurance companies comply with the FSA’s credit quality review and risk monitoring guidelines. The credit quality ratings of the investments of our Japanese insurance companies are based on ratings assigned by nationally recognized credit rating agencies, including Moody’s and S&P, or rating equivalents based on ratings assigned by Japanese credit rating agencies.

The following table sets forth our fixed maturity, available-for-sale portfolio by NAIC Designation or equivalent rating, as of the dates indicated:


	March 31, 2024										December 31, 2023
NAIC Designation(1) (2)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(3)		ACL		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(3)		ACL		Fair Value
	(in millions)
1	$	197,587	$	5,564	$	18,707	$	0	$	184,444	$	199,226	$	6,923	$	17,232	$	1	$	188,916
2	80,972		1,623		6,990		0		75,605		77,919		1,900		6,190		0		73,629
Subtotal High or Highest Quality Securities(4)	278,559		7,187		25,697		0		260,049		277,145		8,823		23,422		1		262,545
3	10,821		215		605		5		10,426		10,346		261		484		5		10,118
4	4,759		77		186		31		4,619		4,877		78		188		55		4,712
5	2,041		38		138		36		1,905		1,762		34		132		10		1,654
6	286		17		23		77		203		382		21		21		81		301
Subtotal Other Securities(5) (6)	17,907		347		952		149		17,153		17,367		394		825		151		16,785
Total fixed maturities, available-for-sale	$	296,466	$	7,534	$	26,649	$	149	$	277,202	$	294,512	$	9,217	$	24,247	$	152	$	279,330

(1)Reflects equivalent ratings for investments of the international insurance operations.

(2)As of March 31, 2024 and December 31, 2023, 781 securities with amortized cost of $7,391 million (fair value, $7,388 million) and 639 securities with amortized cost of $7,242 million (fair value, $7,227 million), respectively, that have been categorized based on expected NAIC Designations pending receipt of SVO ratings.

(3)As of March 31, 2024, includes gross unrealized losses of $480 million on public fixed maturities and $472 million on private fixed maturities considered to be other than high or highest quality and, as of December 31, 2023, includes gross unrealized losses of $416 million on public fixed maturities and $409 million on private fixed maturities considered to be other than high or highest quality.

(4)On an amortized cost basis, as of March 31, 2024, includes $221,678 million of public fixed maturities and $56,881 million of private fixed maturities and, as of December 31, 2023, includes $221,463 million of public fixed maturities and $55,682 million of private fixed maturities.

(5)On an amortized cost basis, as of March 31, 2024, includes $7,926 million of public fixed maturities and $9,981 million of private fixed maturities and, as of December 31, 2023, includes $7,684 million of public fixed maturities and $9,683 million of private fixed maturities.

(6)On an amortized cost basis, as of March 31, 2024, securities considered below investment grade based on low issue composite ratings total $14,753 million, or 5% of the total fixed maturities, and include securities considered high or highest quality by the NAIC based on the rules described above.

Asset-Backed and Commercial Mortgage-Backed Securities

The following table sets forth the amortized cost and fair value of asset-backed and commercial mortgage-backed securities within our fixed maturity, available-for-sale portfolio by credit quality, as of the dates indicated:


	March 31, 2024								December 31, 2023
	Asset-Backed Securities(2)				Commercial Mortgage-Backed Securities(3)				Asset-Backed Securities(2)				Commercial Mortgage-Backed Securities(3)
Low Issue Composite Rating(1)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
AAA	$	6,502	$	6,604	$	4,630	$	4,404	$	5,449	$	5,523	$	4,683	$	4,432
AA	4,502		4,510		1,445		1,283		3,327		3,314		1,475		1,315
A	1,154		1,156		1		1		814		816		1		1
BBB	130		133		0		0		68		70		0		0
BB and below	127		173		0		0		141		187		0		0
Total(4)	$	12,415	$	12,576	$	6,076	$	5,688	$	9,799	$	9,910	$	6,159	$	5,748

(1)The table above provides ratings as assigned by nationally recognized rating agencies as of March 31, 2024 and December 31, 2023, including S&P, Moody’s, Fitch and Morningstar.

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

(3)As of both March 31, 2024 and December 31, 2023, based on amortized cost, 100% were securities with vintages of 2013 or later.

(4)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.”

Included in “Asset-backed securities” above are investments in CLOs. The following table sets forth information pertaining to these investments in CLOs within our fixed maturity, available-for-sale portfolio, as of the dates indicated:


	March 31, 2024				December 31, 2023
	Collateralized Loan Obligations
Low Issue Composite Rating(1)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
AAA	$	5,277	$	5,387	$	4,744	$	4,828
AA	3,790		3,803		2,968		2,967
A	14		13		14		13
BBB	15		15		15		14
BB and below	11		11		11		11
Total(2)(3)	$	9,107	$	9,229	$	7,752	$	7,833

(1)The table above provides ratings as assigned by nationally recognized rating agencies as of March 31, 2024 and December 31, 2023, including S&P, Moody’s, Fitch and Morningstar.

(2)There was no allowance for credit losses as of both March 31, 2024 and December 31, 2023.

(3)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.”

Assets Supporting Experience-Rated Contractholder Liabilities

For information regarding the composition of “Assets supporting experience-rated contractholder liabilities,” see Note 3 to the Unaudited Interim Consolidated Financial Statements.

Commercial Mortgage and Other Loans

Investment Mix

The following table sets forth the composition of our commercial mortgage and other loans portfolio, as of the dates indicated:


	March 31, 2024		December 31, 2023
	(in millions)
Commercial mortgage and agricultural property loans	$	50,739	$	50,786
Uncollateralized loans	394		425
Residential property loans	26		30
Other collateralized loans	125		125
Total recorded investment gross of allowance(1)	51,284		51,366
Allowance for credit losses	(414)		(372)
Total commercial mortgage and other loans, net	$	50,870	$	50,994

(1)As a percentage of recorded investment gross of allowance, 99% of these assets were current as of both March 31, 2024 and December 31, 2023.

We originate commercial mortgage and agricultural property loans using a dedicated sales and underwriting staff through our various regional offices in the U.S. and international offices primarily in London and Tokyo. All loans are underwritten consistently to our standards using a proprietary quality rating system that has been developed from our industry experience in real estate and mortgage lending.

Uncollateralized loans primarily represent corporate loans held by the Company’s international insurance operations.

Residential property loans primarily include Japanese recourse loans. To the extent there is a default on these recourse loans, we can make a claim against the personal assets of the property owner, in addition to the mortgaged property. These loans are also backed by third-party guarantors.

Other collateralized loans include mezzanine real estate debt investments and consumer loans.

Composition of Commercial Mortgage and Agricultural Property Loans

Our commercial mortgage and agricultural property loan portfolio strategy emphasizes diversification by property type and geographic location. The following tables set forth the breakdown of the gross carrying values of commercial mortgage and agricultural property loans by geographic region and property type, as of the dates indicated:


	March 31, 2024				December 31, 2023
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
	($ in millions)
Commercial mortgage and agricultural property loans by region:
U.S. Regions(1):
Pacific	$	18,373	36.3	%	$	18,515	36.5	%
South Atlantic	7,512		14.8		7,340		14.4
Middle Atlantic	5,545		10.9		5,681		11.2
East North Central	2,691		5.3		2,668		5.3
West South Central	5,443		10.8		5,762		11.2
Mountain	2,605		5.1		2,516		5.0
New England	1,240		2.4		1,248		2.5
West North Central	507		1.0		503		1.0
East South Central	1,222		2.4		1,229		2.4
Subtotal-U.S.	45,138		89.0		45,462		89.5
Europe	3,397		6.7		3,498		6.9
Asia	720		1.4		773		1.5
Other	1,484		2.9		1,053		2.1
Total commercial mortgage and agricultural property loans	$	50,739	100.0	%	$	50,786	100.0	%

(1)Regions as defined by the United States Census Bureau.


	March 31, 2024				December 31, 2023
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
	($ in millions)
Commercial mortgage and agricultural property loans by property type:
Industrial	$	13,686	27.0	%	$	13,731	27.1	%
Retail	4,307		8.5		4,323		8.5
Office	6,931		13.7		7,059		13.9
Apartments/Multi-Family	14,151		27.9		14,296		28.1
Agricultural properties	6,153		12.1		6,051		11.9
Hospitality	1,792		3.5		1,805		3.6
Other	3,719		7.3		3,521		6.9
Total commercial mortgage and agricultural property loans	$	50,739	100.0	%	$	50,786	100.0	%

Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and agricultural property loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. The debt service coverage ratio compares a property’s net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt service coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments.

As of March 31, 2024, our commercial mortgage and agricultural property loans had a weighted-average debt service coverage ratio of 2.45 times and a weighted-average loan-to-value ratio of 58%. As of March 31, 2024, 96% of commercial mortgage and agricultural property loans were fixed rate loans. For those commercial mortgage and agricultural property loans that were originated in 2024, the weighted-average debt service coverage ratio was 1.50 times, and the weighted-average loan-to-value ratio was 67%.

The values utilized in calculating these loan-to-value ratios are developed as part of our periodic reviews of the commercial mortgage and agricultural property loan portfolio, which include internal evaluations of the underlying collateral values. Our periodic reviews also include a credit quality re-rating process, whereby we update the internal quality ratings originally assigned at underwriting based on the proprietary quality rating system mentioned above. As discussed below, the internal credit quality rating is a key input in determining our allowance for credit losses.

For loans with collateral under construction, renovation or lease-up, projected stabilized values and net operating income are used in the calculation of the loan-to-value and debt service coverage ratios. Our commercial mortgage and agricultural property loan portfolio included $1.7 billion and $1.5 billion of such loans as of March 31, 2024 and December 31, 2023, respectively. All else being equal, these loans are inherently riskier than those collateralized by properties that have already stabilized. As of both March 31, 2024 and December 31, 2023, there was $1 million of allowance related to these loans. In addition, these unstabilized loans are included in the calculation of our portfolio reserve, as discussed below.

The following table sets forth the gross carrying value of our commercial mortgage and agricultural property loans by loan-to-value and debt service coverage ratios, as of the date indicated:


	March 31, 2024
	Debt Service Coverage Ratio
	> 1.2x		1.0x to < 1.2x		< 1.0x		Total Commercial Mortgage and Agricultural Property Loans
Loan-to-Value Ratio	(in millions)
0%-59.99%	$	25,831	$	559	$	131	$	26,521
60%-69.99%	14,324		442		82		14,848
70%-79.99%	4,654		433		807		5,894
80% or greater	2,020		984		472		3,476
Total commercial mortgage and agricultural property loans	$	46,829	$	2,418	$	1,492	$	50,739

The following table sets forth the breakdown of our commercial mortgage and agricultural property loans by year of origination, as of the date indicated:


	March 31, 2024
	Gross Carrying Value		% of Total
Year of Origination	($ in millions)
2024	$	1,222	2.4	%
2023	5,567		11.1
2022	4,590		9.0
2021	7,280		14.3
2020	3,538		7.0
2019	6,247		12.3
2018	5,740		11.3
2017 & Prior	16,489		32.5
Revolving Loans	66		0.1
Total commercial mortgage and agricultural property loans	$	50,739	100.0	%

Commercial Mortgage and Other Loans Quality

The commercial mortgage and other loans portfolio is monitored on an ongoing basis. If certain criteria are met, loans are assigned to either of the following “watch list” categories:

(1) “Closely Monitored,” which includes a variety of considerations, such as when loan metrics fall below acceptable levels, the borrower is not cooperative or has requested a material modification, or the portfolio manager has directed a change in category; or

(2) “Not in Good Standing,” which includes loans in default or with a high probability of loss of principal, such as when the loan is in the process of foreclosure or the borrower is in bankruptcy.

Our workout and special servicing professionals manage the loans on the watch list.

The current expected credit loss (“CECL”) allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, uncollateralized loans, other collateralized loans and residential property loans.

For commercial mortgage and agricultural property loans, the allowance is calculated using an internally developed CECL model.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans.

The following table sets forth the change in allowance for credit losses for our commercial mortgage and other loans portfolio, as of the dates indicated:


	March 31, 2024		December 31, 2023
	(in millions)
Allowance, beginning of year	$	372	$	172
Addition to (release of) allowance for credit losses	42		227
Write-downs charged against the allowance	0		(29)
Other	0		2
Allowance, end of period	$	414	$	372

The allowance for credit losses as of March 31, 2024 increased compared to December 31, 2023 primarily related to increases in loan-specific reserves within the office sector.

Equity Securities

The equity securities portfolio consists principally of investments in Common and Preferred Stock of publicly-traded companies, as well as mutual fund shares. The following table sets forth the composition of our equity securities portfolio and the associated gross unrealized gains and losses, as of the dates indicated:


	March 31, 2024								December 31, 2023
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Mutual funds	$	998	$	826	$	9	$	1,815	$	932	$	697	$	11	$	1,618
Other Common Stocks	2,002		1,015		63		2,954		3,056		971		43		3,984
Non-redeemable Preferred Stocks	47		42		20		69		39		42		19		62
Total equity securities, at fair value	$	3,047	$	1,883	$	92	$	4,838	$	4,027	$	1,710	$	73	$	5,664

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $295 million and $183 million during the three months ended March 31, 2024 and 2023, respectively.

Other Invested Assets

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


	March 31, 2024		December 31, 2023
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	6,923	$	6,821
Hedge funds	2,453		2,440
Real estate-related	1,764		1,621
Subtotal equity method	11,140		10,882
Fair value:
Private equity	1,200		785
Hedge funds	1,311		1,050
Real estate-related	399		147
Subtotal fair value	2,910		1,982
Total LPs/LLCs	14,050		12,864
Real estate held through direct ownership(1)(2)	1,443		591
Derivative instruments	(83)		(260)
Other(3)	758		739
Total other invested assets	$	16,168	$	13,934

(1)March 31, 2024 balance includes approximately $870 million that was transferred from PGIM into the general account in the first quarter of 2024.

(2)As of March 31, 2024 and December 31, 2023, real estate held through direct ownership had mortgage debt of $153 million and $158 million, respectively.

(3)Primarily includes equity investments accounted for under the measurement alternative, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding our 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, 2023.

Invested Assets of Other Entities and Operations

“Invested Assets of Other Entities and Operations” presented below includes investments held outside the general account and primarily represents investments associated with our investment management operations and derivative operations. Our derivative operations act on behalf of affiliates primarily to manage interest rate, foreign currency, credit and equity exposures. Assets within our investment management operations that are managed for third-parties and those assets classified as “Separate account assets” on our Unaudited Interim Consolidated Statements of Financial Position are not included.


	March 31, 2024		December 31, 2023
	(in millions)
Fixed maturities:
Public, available-for-sale, at fair value(1)	$	527	$	557
Private, available-for-sale, at fair value	176		0
Fixed maturities, trading, at fair value(1)	482		1,005
Equity securities, at fair value	563		608
Commercial mortgage and other loans, at book value(2)	157		519
Other invested assets(3)	2,534		3,401
Short-term investments	12		13
Total investments	$	4,451	$	6,103

(1)As of March 31, 2024 and December 31, 2023, balances include investments in CLOs with fair value of $296 million and $298 million, respectively.

(2)Book value is generally based on unpaid principal balance, net of any allowance for credit losses, or at fair value, when the fair value option has been elected.

(3)December 31, 2023 balance includes approximately $870 million that was transferred from PGIM into the general account in the first quarter of 2024.

Fixed Maturities, Trading

“Fixed maturities, trading, at fair value” are primarily related to assets associated with consolidated VIEs for which the Company is the investment manager. The assets of the consolidated VIEs are generally offset by liabilities for which the fair value option has been elected. For additional information regarding these consolidated VIEs, see Note 4 to the Unaudited Interim Consolidated Financial Statements.

Commercial Mortgage and Other Loans

Our investment management operations include our commercial mortgage operations, which provide mortgage origination, investment management and servicing for our general account, institutional clients, the Federal Housing Administration and government-sponsored entities such as Fannie Mae and Freddie Mac.

The mortgage loans of our commercial mortgage operations are included in “Commercial mortgage and other loans.” Derivatives and other hedging instruments related to our commercial mortgage operations are primarily included in “Other invested assets.”

Other Invested Assets

“Other invested assets” primarily include assets of our derivative operations used to manage interest rate, foreign currency, credit, and equity exposures.

Furthermore, other invested assets include strategic investments made as part of our investment management operations. We make these strategic investments in real estate, as well as fixed income, public equity and real estate securities, including controlling interests. Certain of these investments are made primarily for purposes of co-investment in our managed funds and structured products. Other strategic investments are made with the intention to sell or syndicate to investors, including our general account, or for placement in funds and structured products that we offer and manage (seed investments). As part of our investment management operations, we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds. “Other invested assets” also include certain assets in consolidated investment funds where the Company is deemed to exercise control over the funds.

Valuation of Assets and Liabilities

Fair Value of Assets and Liabilities

The authoritative guidance related to fair value measurement establishes a framework that includes a three-level hierarchy used to classify the inputs used in measuring fair value. The level in the hierarchy within which the fair value falls is determined based on the lowest level input that is significant to the measurement. The fair values of assets and liabilities classified as Level 3 include at least one significant unobservable input in the measurement. See Note 6 to the Unaudited Interim Consolidated

Financial Statements for an additional description of the valuation hierarchy levels as well as for the balances of assets and liabilities measured at fair value on a recurring basis by hierarchy level presented on a consolidated basis.

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis, as of the periods indicated, and the portion of such assets and liabilities that are classified in Level 3 of the valuation hierarchy. The table also provides details about these assets and liabilities excluding those held in the Closed Block division and Funds Withheld portfolios. We believe the amounts excluding the Closed Block division and Funds Withheld are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial because (1) substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies only and (2) the Funds Withheld portfolios support obligations and liabilities relating to reinsurance agreements where the economic benefits and associated investment risk of the Funds Withheld assets pass to the reinsurers. See Notes 12 and 13 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements and the Closed Block, respectively.


	As of March 31, 2024
	PFI excluding Closed Block Division and Funds Withheld				Closed Block Division				Funds Withheld
	Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)
	(in millions)
Fixed maturities, available-for-sale	$	277,906	$	6,608	$	30,075	$	953	$	10,529	$	29
Assets supporting experience-rated contractholder liabilities:
Fixed maturities	870		0		0		0		0		0
Equity securities	2,489		0		0		0		0		0
All other(2)	0		0		0		0		0		0
Subtotal	3,359		0		0		0		0		0
Market risk benefit assets	2,225		2,225		0		0		0		0
Fixed maturities, trading	4,862		601		849		18		4,577		711
Equity securities	5,401		440		1,818		61		5		5
Commercial mortgage and other loans	157		0		0		0		0		0
Other invested assets(3)	2,217		865		0		0		28		0
Short-term investments	4,045		22		476		10		106		0
Cash equivalents	7,566		0		785		0		344		0
Reinsurance recoverables and deposit receivables	(79)		0		0		0		303		303
Other assets	19		19		0		0		0		0
Separate account assets	173,511		338		0		0		0		0
Total assets	$	481,189	$	11,118	$	34,003	$	1,042	$	15,892	$	1,048
Market risk benefit liabilities	$	4,624	$	4,624	$	0	$	0	$	0	$	0
Policyholders’ account balances	9,864		9,864		0		0		0		0
Reinsurance and funds withheld payables	(24)		0		0		0		97		0
Other liabilities(3)	4,485		1		0		0		0		0
Notes issued by consolidated variable interest entities (“VIEs”)	405		405		0		0		0		0
Total liabilities	$	19,354	$	14,894	$	0	$	0	$	97	$	0


	As of December 31, 2023
	PFI excluding Closed Block Division and Funds Withheld				Closed Block Division				Funds Withheld
	Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)
	(in millions)
Fixed maturities, available-for-sale	$	279,887	$	5,241	$	30,486	$	868	$	5,948	$	9
Assets supporting experience-rated contractholder liabilities:
Fixed maturities	889		0		0		0		0		0
Equity securities	2,279		0		0		0		0		0
All other(2)	0		0		0		0		0		0
Subtotal	3,168		0		0		0		0		0
Market risk benefit assets	1,981		1,981		0		0		0		0
Fixed maturities, trading	5,959		409		887		20		2,944		0
Equity securities	6,112		451		1,891		61		0		0
Commercial mortgage and other loans	519		0		0		0		0		0
Other invested assets(3)	1,949		846		0		0		0		0
Short-term investments	3,714		19		135		10		51		0
Cash equivalents	8,930		4		966		0		406		0
Reinsurance recoverables and deposit receivables	(75)		0		0		0		224		224
Other assets	11		11		0		0		0		0
Separate account assets	171,812		1,094		0		0		0		0
Total assets	$	483,967	$	10,056	$	34,365	$	959	$	9,573	$	233
Market risk benefit liabilities	$	5,467	$	5,467	$	0	$	0	$	0	$	0
Policyholders’ account balances	7,752		7,752		0		0		0		0
Reinsurance and funds withheld payables	(24)		0		0		0		514		0
Other liabilities(3)	4,174		1		1		0		0		0
Notes issued by consolidated variable interest entities (“VIEs”)	778		778		0		0		0		0
Total liabilities	$	18,147	$	13,998	$	1	$	0	$	514	$	0

(1)Level 3 assets expressed as a percentage of total assets measured at fair value on a recurring basis for PFI excluding the Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld totaled 2.3%, 3.1%, and 6.6%, respectively, as of March 31, 2024, and 2.1%, 2.8%, and 2.4%, respectively, as of December 31, 2023.

(2)“All other” represents cash equivalents and short-term investments.

(3)“Other invested assets” and “Other liabilities” primarily include derivatives. The amounts include the impact of netting subject to master netting agreements.

The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on our results of operations and may require the application of a greater degree of judgment depending on market conditions, as the ability to value assets and liabilities can be significantly impacted by a decrease in market activity or a lack of transactions executed in an orderly manner.

Fixed maturity securities included in Level 3 in our fair value hierarchy are generally priced based on internally-developed valuations or indicative broker quotes. For certain private fixed maturity and equity securities, the internal valuation models use significant unobservable inputs and, accordingly, such securities are included in Level 3 in our fair value hierarchy. Level 3 fixed maturity securities for PFI excluding the Closed Block division and Funds Withheld included approximately $2 billion of public fixed maturities as of March 31, 2024, with values primarily based on indicative broker quotes, and approximately $6 billion of private fixed maturities, with values primarily based on internally-developed models. Significant unobservable inputs used in their valuation included: issue specific spread adjustments, material non-public financial information, management judgment, estimation of future earnings and cash flows, default rate assumptions, liquidity assumptions and indicative quotes from market makers. Separate account assets included in Level 3 in our fair value hierarchy primarily include corporate securities and commercial mortgage loans.

Contracts or contract features reported in “Market risk benefit assets” and “Market risk benefit liabilities” and embedded derivatives reported in “Policyholders’ account balances” that are included in Level 3 of our fair value hierarchy represent general account assets and liabilities pertaining to living benefit features of the Company’s variable annuity contracts and the index-linked interest credited features on certain life and annuity products. “Market risk benefit assets” and “Market risk benefit liabilities” are carried at fair value with changes in fair value included in “Change in value of market risk benefits, net of related hedging gains (losses)” except for the portion of the change attributable to changes in the Company’s NPR that is recorded in OCI. Embedded derivatives included in “Policyholder account balances” are carried at fair value with changes in fair value included in “Realized investment gains (losses), net.” These assets and liabilities are valued using internally-developed models that require significant estimates and assumptions developed by management. Changes in these estimates and assumptions can have a significant impact on the results of our operations. For additional information, see Note 6 to the Unaudited Interim Consolidated Financial Statements.

For additional information regarding the valuation techniques and the key estimates and assumptions used in our determination of fair value, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Liquidity and Capital Resources

Overview

Liquidity refers to the ability to generate sufficient cash resources to meet the payment obligations of the Company. Capital refers to the long-term financial resources available to support the operations of our businesses, fund business growth, and provide a cushion to withstand adverse circumstances. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein.

Effective and prudent liquidity and capital management is a priority across the Company. Management monitors the liquidity of Prudential Financial and its subsidiaries on a daily basis and projects borrowing and capital needs over a multi-year time horizon. We use a Risk Appetite Framework (“RAF”) to ensure that all risks taken across the Company align with our capacity and willingness to take those risks. The RAF provides a dynamic assessment of capital and liquidity stress impacts and is intended to ensure that sufficient resources are available to absorb those impacts. We believe that our capital and liquidity resources are sufficient to satisfy the capital and liquidity requirements of Prudential Financial and its subsidiaries.

Our businesses are subject to comprehensive regulation and supervision by domestic and international regulators. These regulations currently include requirements (many of which are the subject of ongoing rule-making) relating to capital and liquidity management. For information regarding these regulatory initiatives and their potential impact on us, see “Business—Regulation” and “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

From the beginning of 2024 through the date of this report, we took the following significant actions that have impacted, or are expected to impact, our liquidity and capital positions:

In March, we issued $1 billion of junior subordinated notes. We intend to use these proceeds for general corporate purposes, which may include the redemption or repurchase of our $1 billion of junior subordinated notes due in 2045.
In March, we redeemed $500 million of 5.200% junior subordinated notes due in 2044.
In March, we closed our reinsurance transaction with Somerset Re for a portion of the guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, both of which are wholly-owned subsidiaries of Prudential Financial. These reinsured policies represent approximately 30% of the Company’s reserves on its in-force guaranteed universal life block of business. As a result of the transaction, our financing of Guideline AXXX reserves in the form of Credit-Linked Notes Structures has been reduced by $5,040 million from December 31, 2023. See “—Term and Universal Life Reserve Financing” below for additional information.

Capital

The primary components of the Company’s capitalization consist of equity and outstanding capital debt, including junior subordinated debt. As shown in the table below, as of March 31, 2024, the Company had $48.3 billion in capital, all of which was available to support the aggregate capital requirements of its businesses and its Corporate and Other operations. Based on our assessment of these businesses and operations, we believe this level of capital is consistent with our ratings targets.


	March 31, 2024		December 31, 2023
	(in millions)
Equity(1)	$	34,870	$	34,324
Junior subordinated debt (including hybrid securities)	8,582		8,094
Other capital debt	4,867		4,869
Total capital	$	48,319	$	47,287

(1)Amounts attributable to Prudential Financial, excluding AOCI.

We manage PICA, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), Gibraltar Life, and other significant insurance subsidiaries to regulatory capital levels consistent with our “AA” ratings targets. We utilize the risk-based capital (“RBC”) ratio as a primary measure of the capital adequacy of our domestic insurance subsidiaries and the solvency margin ratio as a primary measure of the capital adequacy of our Japanese insurance subsidiaries.

RBC ratio calculations are intended to assist insurance regulators in measuring an insurer’s solvency and ability to pay future claims. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities, but is available to the public.

PICA’s RBC ratio as of December 31, 2023, its most recent statutory fiscal year-end and RBC reporting date, was 435%. PICA’s RBC ratio is calculated on a consolidated basis and included Pruco Life Insurance Company (“Pruco Life”), Pruco Life Insurance Company of New Jersey (“PLNJ”), which is a subsidiary of Pruco Life, and Prudential Legacy Insurance Company of New Jersey (“PLIC”).

Similar to the RBC ratios that are employed by U.S. insurance regulators, regulatory authorities in the international jurisdictions in which we operate generally establish some form of minimum solvency margin requirements for insurance companies based on local statutory accounting practices. These solvency margins are a primary measure of the capital adequacy of our international insurance operations. Maintenance of our solvency margins at certain levels is also important to our competitive positioning, as in certain jurisdictions, such as Japan, these solvency margins are required to be disclosed to the public and therefore impact the public perception of an insurer’s financial strength.

The table below presents the solvency margin ratios of our most significant international insurance subsidiaries as of December 31, 2023, the most recent date for which this information is available.


	Ratio
Prudential of Japan consolidated(1)	787	%
Gibraltar Life consolidated(2)	948	%

(1)Includes Prudential Trust Co., Ltd., a subsidiary of Prudential of Japan.

(2)Includes Prudential Gibraltar Financial Life Insurance Co., Ltd. (“PGFL”), a subsidiary of Gibraltar Life.

All of our domestic and significant international insurance subsidiaries have capital levels that substantially exceed the minimum level required by applicable insurance regulations. The statutory capital of our insurance companies and our overall capital flexibility could be impacted by, among other things, market conditions and changes in insurance reserves, including those stemming from updates to our actuarial assumptions. Our regulatory capital levels also may be affected in the future by changes to the applicable regulations, proposals for which are currently under consideration by both domestic and international insurance regulators. For additional information regarding the calculation of RBC and solvency margin ratios, as well as regulatory minimums, see Note 20 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Captive Reinsurance Companies

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital—Captive Reinsurance Companies” included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our use of captive reinsurance companies.

Shareholder Distributions

Share Repurchase Program and Shareholder Dividends

In December 2023, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $1.0 billion of its outstanding Common Stock during the period from January 1, 2024 through December 31, 2024. In general, the timing and amount of share repurchases are determined by management based on market conditions and other considerations, including compliance with applicable laws and any increased capital needs of our businesses due to, among other things, credit migration and losses in our investment portfolio, changes in regulatory capital requirements and opportunities for growth and acquisitions. Repurchases may be executed in the open market, through derivative, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Securities Exchange Act of 1934.

The following table sets forth information about declarations of Common Stock dividends, as well as repurchases of shares of Prudential Financial’s Common Stock, for the three months ended March 31, 2024.


	Dividend Amount				Shares Repurchased
Three months ended:	Per Share		Aggregate		Shares	Total Cost
	(in millions, except per share data)
March 31, 2024	$	1.30	$	476	2.3	$	250

Liquidity

Liquidity management and stress testing are performed on a legal entity basis as the ability to transfer funds between subsidiaries is limited due in part to regulatory restrictions. Liquidity needs are determined through daily and quarterly cash flow forecasting at the holding company and within our operating subsidiaries. We seek to maintain a minimum balance of highly liquid assets to ensure that adequate liquidity is available at Prudential Financial to cover fixed expenses in the event that we experience reduced cash flows from our operating subsidiaries at a time when access to capital markets is also not available.

We seek to mitigate the risk of having limited or no access to financing due to stressed market conditions by generally pre-funding debt in advance of maturity. We mitigate the refinancing risk associated with our debt that is used to fund operating needs by matching the term of debt with the assets financed. To ensure adequate liquidity in stress scenarios, stress testing is performed for our major operating subsidiaries. We seek to further mitigate liquidity risk by maintaining our access to alternative sources of liquidity, as discussed below.

Liquidity of Prudential Financial

The principal sources of funds available to Prudential Financial, the parent holding company, are dividends, returns of capital and loans from subsidiaries, and proceeds from debt issuances and certain stock-based compensation activity. These sources of funds may be supplemented by Prudential Financial’s access to the capital markets as well as the “—Alternative Sources of Liquidity” described below.

The primary uses of funds at Prudential Financial include servicing debt, making capital contributions and loans to subsidiaries, making acquisitions, paying declared shareholder dividends and repurchasing outstanding shares of Common Stock executed under authority from the Board.

As of March 31, 2024, Prudential Financial had highly liquid assets with a carrying value totaling $4,701 million, an increase of $131 million from December 31, 2023. Highly liquid assets predominantly include cash, short-term investments, U.S. Treasury securities, obligations of other U.S. government authorities and agencies, and/or foreign government bonds. We maintain an intercompany liquidity account that is designed to optimize the use of cash by facilitating the lending and borrowing of funds between Prudential Financial and its subsidiaries on a daily basis. Excluding the net borrowings from this

intercompany liquidity account, Prudential Financial had highly liquid assets of $4,248 million as of March 31, 2024, an increase of $153 million from December 31, 2023.

The following table sets forth Prudential Financial’s principal sources and uses of highly liquid assets, excluding net borrowings from our intercompany liquidity account, for the periods indicated:


	Three Months Ended March 31,
	2024		2023
	(in millions)
Highly Liquid Assets, beginning of period	$	4,095	$	4,535

Dividends and/or returns of capital from subsidiaries(1)	326		21
Affiliated (borrowings)/loans - (capital activities)(2)	702		399
Capital contributions to subsidiaries(3)	(46)		(142)
Total Business Capital Activity	982		278

Share repurchases(4)	(242)		(251)
Common Stock dividends(5)	(483)		(473)
Business dispositions	0		0
Total Share Repurchases, Dividends and Business Disposition Activity	(725)		(724)

Proceeds from the issuance of debt	990		495
Repayments of debt	(504)		(4)




Total Debt Activity	486		491
Net interest expense	(278)		(269)
Affiliated (borrowings)/loans - (operating activities)(6)	(354)		73



Other, net(7)	42		170
Total Other Activity	(590)		(26)

Net increase/(decrease) in highly liquid assets	153		19

Highly Liquid Assets, end of period	$	4,248	$	4,554

(1)2024 includes $250 million from PICA, $60 million from international insurance subsidiaries, and $16 million from PGIM subsidiaries. 2023 includes $15 million from PGIM subsidiaries and $6 million from other subsidiaries.

(2)2024 includes $502 million from international insurance subsidiaries and $200 million from captive reinsurance subsidiaries. 2023 includes $399 million from international insurance subsidiaries.

(3)2024 includes capital contributions of $39 million to international insurance subsidiaries and $7 million to other subsidiaries. 2023 includes capital contributions of $44 million to international insurance subsidiaries and $98 million to other subsidiaries.

(4)Excludes cash payments made on trades that settled in the subsequent period.

(5)Includes cash payments made on dividends declared in prior periods.

(6)Represent loans to and from subsidiaries to support business operating needs.

(7)2024 primarily includes $89 million of proceeds from stock-based compensation and exercise of stock options, $10 million for net income tax receipts and $(57) million from internal affiliated settlements. 2023 primarily includes $45 million of income on investments, $43 million of proceeds from stock-based compensation and exercise of stock options, $25 million from internal affiliated settlements and $16 million for net income tax receipts.

Dividends and Returns of Capital from Subsidiaries

Domestic insurance subsidiaries. During the first three months of 2024, Prudential Financial received dividends of $250 million from PICA. In addition to paying Common Stock dividends, our domestic insurance operations may return capital to Prudential Financial by other means, such as affiliated lending, and reinsurance with Bermuda-based affiliates.

International insurance subsidiaries. During the first three months of 2024, Prudential Financial received dividends of $60 million from its international insurance subsidiaries. In addition to paying Common Stock dividends, our international insurance operations may return capital to Prudential Financial by other means, such as the repayment of preferred stock obligations held by Prudential Financial or other affiliates, affiliated lending, affiliated derivatives and reinsurance with U.S.- and Bermuda-based affiliates.

Other subsidiaries. During the first three months of 2024, Prudential Financial received dividends and returns of capital of $16 million from PGIM subsidiaries.

Restriction on dividends and returns of capital from subsidiaries. Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Prudential Financial and other affiliates under applicable insurance law and regulation. Further, market conditions could negatively impact capital positions of our insurance companies, which could further restrict their ability to pay dividends. More generally, the payment of dividends by any of our subsidiaries is subject to declaration by their Board of Directors and can be affected by market conditions and other factors.

With respect to our domestic insurance subsidiaries, PICA is permitted to pay ordinary dividends based on calculations specified under New Jersey insurance law, subject to prior notification to the New Jersey Department of Banking and Insurance (“NJDOBI”). Any distributions above this amount in any twelve-month period are considered to be “extraordinary” dividends, and the approval of the NJDOBI is required prior to payment. The laws regulating dividends of the states where our other domestic insurance companies are domiciled are similar, but not identical, to those of New Jersey.

Capital redeployment from our international insurance subsidiaries is subject to local regulatory requirements in the international jurisdictions in which they operate. Our most significant international insurance subsidiaries, Prudential of Japan and Gibraltar Life, are permitted to pay Common Stock dividends based on calculations specified by Japanese insurance business law. Dividends in excess of these amounts and other forms of capital distribution may require the prior approval of the FSA. The regulatory fiscal year end for both Prudential of Japan and Gibraltar Life is March 31, after which time the Common Stock dividend amount permitted to be paid without prior approval from the FSA can be determined.

The ability of our PGIM subsidiaries and the majority of our other operating subsidiaries to pay dividends is largely unrestricted from a regulatory standpoint.

See Note 20 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for information regarding specific dividend restrictions.

Liquidity of Insurance Subsidiaries

We manage the liquidity of our insurance operations to ensure stable, reliable and cost-effective sources of cash flows to meet all of our obligations. Liquidity within each of our insurance subsidiaries is provided by a variety of sources, including portfolios of liquid assets. The investment portfolios of our subsidiaries are integral to the overall liquidity of our insurance operations. We segment our investment portfolios and employ an asset/liability management approach specific to the requirements of each of our product lines. This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities.

Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support. We consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures to evaluate our insurance operations’ liquidity under various stress scenarios, including company-specific and market-wide events. We continue to believe that cash generated by ongoing operations and the profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.

The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, investment maturities, sales of investments, and sales associated with our insurance and annuity operations, as well as internal and external borrowings. The principal uses of liquidity include benefits, claims and dividends paid to policyholders, and payments to policyholders and contractholders in connection with surrenders, withdrawals and net policy loan activity. Other uses of liquidity may include commissions, general and administrative expenses, purchases of investments, the payment of dividends to the parent holding company, hedging and reinsurance activity and payments in connection with financing activities.

The following table sets forth the fair value of certain of our domestic insurance operations’ portfolio of liquid assets, as of the dates indicated:


	March 31, 2024
	Prudential Insurance(1)		PLIC		Pruco Life		Total		December 31, 2023
	(in billions)
Cash and short-term investments	$	5.9	$	1.7	$	3.0	$	10.6	$	10.8
Fixed maturity investments(2):
High or highest quality	116.0		27.3		28.6		171.9		163.6
Other than high or highest quality	7.7		2.6		2.6		12.9		12.6
Subtotal	123.7		29.9		31.2		184.8		176.2
Public equity securities, at fair value	0.7		1.8		0.6		3.1		4.1
Total	$	130.3	$	33.4	$	34.8	$	198.5	$	191.1

(1)Represents legal entity view and as such includes both domestic and international activity.

(2)Credit quality is based on NAIC or equivalent rating.

The following table sets forth the fair value of our international insurance operations’ portfolio of liquid assets, as of the dates indicated:


	March 31, 2024
	Prudential of Japan		Gibraltar Life(1)		All Other(2)		Total		December 31, 2023
	(in billions)
Cash and short-term investments	$	0.7	$	3.5	$	2.1	$	6.3	$	6.7
Fixed maturity investments(3):
High or highest quality(4)	29.3		55.6		22.0		106.9		111.8
Other than high or highest quality	0.3		0.6		3.3		4.2		4.2
Subtotal	29.6		56.2		25.3		111.1		116.0
Public equity securities	2.9		1.2		0.1		4.2		3.9
Total	$	33.2	$	60.9	$	27.5	$	121.6	$	126.6

(1)Includes PGFL.

(2)Represents our international insurance operations, excluding Japan.

(3)Credit quality is based on NAIC or equivalent rating.

(4)As of March 31, 2024, $70.2 billion, or 66%, were invested in government or government agency bonds.

Liquidity associated with other activities

Hedging activities associated with Individual Retirement Strategies

For the portion of our Individual Retirement Strategies’ ALM strategy executed through hedging, we enter into a range of exchange-traded, cleared and other OTC equity and interest rate derivatives in order to hedge certain capital market risks related to more severe market conditions. For a full discussion of our Individual Retirement Strategies’ risk management strategy, see “—Results of Operations by Segment—U.S. Businesses—Retirement Strategies.” This portion of our Individual Retirement Strategies’ ALM strategy requires access to liquidity to meet payment obligations relating to these derivatives, such as payments for periodic settlements, purchases, maturities and terminations. These liquidity needs can vary materially due to, among other items, changes in interest rates, equity markets, mortality and policyholder behavior.

The hedging portion of our Individual Retirement Strategies’ ALM strategy may also result in derivative related collateral postings to (when we are in a net post position) or from (when we are in a net receive position) counterparties. The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged. Depending on market conditions, the collateral posting requirements can result in material liquidity needs when we are in a net post position. As of March 31, 2024, the derivatives comprising the hedging portion of our Individual Retirement Strategies’ ALM strategy were in a net post position of $13.3 billion compared to a net post position of $13.0 billion as of December 31, 2023. The change in collateral position was primarily driven by the impact of equity market appreciation, and increasing interest rates.

Foreign exchange hedging activities

We employ various hedging strategies to manage potential exposure to foreign currency exchange rate movements, particularly those associated with the yen. Our overall yen hedging strategy calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis.

We hold both internal and external hedges primarily to hedge our USD-equivalent equity. These hedges also mitigate volatility in the solvency margins of yen-based subsidiaries resulting from changes in the market value of their USD-denominated investments hedging our USD-equivalent equity attributable to changes in the yen-USD exchange rate.

For additional information regarding our hedging strategy, see “—Results of Operations—Impact of Foreign Currency Exchange Rates.”

Cash settlements from these hedging activities result in cash flows between subsidiaries of Prudential Financial and either international-based subsidiaries or external parties. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged. For example, a significant yen depreciation over an extended period of time could result in net cash inflows, while a significant yen appreciation could result in net cash outflows. The following tables set forth information about net cash settlements and the net asset or liability resulting from these hedging activities related to the yen and other currencies for the periods indicated:


	Three Months Ended March 31,
Cash Settlements Received (Paid):	2024		2023
	(in millions)
Internal Hedges(1)	$	137	$	193
External Hedges(2)(5)	(86)		(108)
Total Cash Settlements	$	51	$	85

Assets (Liabilities):	March 31, 2024		December 31, 2023
	(in millions)
Internal Hedges(1)	$	1,221	$	875
External Hedges(3)	160		134
Total Assets (Liabilities)(4)	$	1,381	$	1,009

__________

(1)Represents internal transactions between international-based and U.S.-based entities. Amounts noted are from the U.S.-based entities’ perspectives.

(2)Includes non-yen related cash settlements received (paid) of $(4) million, primarily denominated in Brazilian real, Chilean peso and Australian dollar, and $(4) million, primarily denominated in Brazilian real, Australian dollar and Chilean peso for the three months ended March 31, 2024 and 2023, respectively.

(3)Includes non-yen related assets (liabilities) of $(48) million, primarily denominated in Brazilian real, Chilean peso and Australian dollar, as of March 31, 2024 and $(74) million, primarily denominated in Brazilian real, Australian dollar and Chilean peso, as of December 31, 2023.

(4)As of March 31, 2024, approximately $449 million, $473 million, $212 million and $247 million of the net market values are scheduled to settle in 2024, 2025, 2026, and thereafter, respectively. The net market value of the assets (liabilities) will vary with changing market conditions to the extent there are no corresponding offsetting positions.

(5)Prior period amounts have been updated to conform to current period presentation.

PGIM operations

The principal sources of liquidity for our fee-based PGIM businesses include cash flows from asset management, commercial mortgage origination and servicing activities, and internal and external funding facilities. The principal uses of liquidity for our fee-based PGIM businesses include general and administrative expenses, facilitating our commercial mortgage loan business, funding needs of our seed and co-investment portfolio and distributions of dividends and returns of capital to Prudential Financial. The primary liquidity risks for our fee-based PGIM businesses relate to their profitability, which is impacted by market conditions, our investment management performance and client redemptions. We believe the cash flows from our fee-based PGIM businesses are adequate to satisfy the current liquidity requirements of these operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.

The principal sources of liquidity for our seed and co-investments held in our PGIM businesses are cash flows from investments, cash flows from our fee-based businesses, as described above, borrowing lines from internal sources, including Prudential Financial and Prudential Funding, LLC (“Prudential Funding”), a wholly-owned subsidiary of PICA, and external sources, including PGIM’s limited-recourse credit facility. The principal uses of liquidity for our seed and co-investments include making investments to support business growth and paying interest expense from the internal and external borrowings used to fund those investments. The primary liquidity risks include the inability to sell assets in a timely manner, declines in the value of assets and credit defaults.

There have been no material changes to the liquidity position of our PGIM operations since December 31, 2023.

Alternative Sources of Liquidity

In addition to asset-based financing as discussed below, Prudential Financial and certain subsidiaries have access to other sources of liquidity, including syndicated, unsecured committed credit facilities, membership in the Federal Home Loan Bank of New York, a funding agreement facility with Farmer Mac, commercial paper programs and contingent financing facilities in the form of facility agreements. For additional information regarding these sources of liquidity, see Note 15 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Asset-based Financing

We conduct asset-based or secured financing within our insurance and other subsidiaries, including transactions such as securities lending, committed and uncommitted repurchase agreements and mortgage dollar rolls, to earn spread income, to borrow funds, or to facilitate trading activity. These programs are primarily driven by portfolio holdings of securities that are lendable based on counterparty demand for these securities in the marketplace. The collateral received in connection with these programs is primarily used to purchase securities in the short-term spread portfolios of our insurance entities. Investments held in the short-term spread portfolios include cash and cash equivalents, short-term investments (primarily corporate bonds), mortgage loans and fixed maturities (primarily collateralized loan obligations and other structured securities), with a weighted average life at time of purchase by the short-term portfolios of four years or less. Floating rate assets comprise the majority of our short-term spread portfolio. These short-term portfolios are subject to specific investment policy statements, which among other things, do not allow for significant asset/liability interest rate duration mismatch.

The following table sets forth our liabilities under asset-based or secured financing programs as of the dates indicated:


	March 31, 2024						December 31, 2023
	PFI Excluding Closed Block Division		Closed Block Division		Consolidated		PFI Excluding Closed Block Division		Closed Block Division		Consolidated
	($ in millions)
Securities sold under agreements to repurchase	$	4,596	$	1,967	$	6,563	$	3,803	$	2,253	$	6,056
Cash collateral for loaned securities	5,211		1,767		6,978		5,173		1,304		6,477
Securities sold but not yet purchased	0		0		0		0		0		0
Total(1)(2)	$	9,807	$	3,734	$	13,541	$	8,976	$	3,557	$	12,533
Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral	$	9,276	$	3,682	$	12,958	$	8,217	$	3,457	$	11,674
Weighted average maturity, in days(3)	5		2				8		4

(1)The daily average outstanding balance for the three months ended March 31, 2024 was $9,352 million for PFI excluding the Closed Block division, and $3,815 million for the Closed Block division.

(2)Includes utilization of external funding facilities for PGIM’s commercial mortgage origination business.

(3)Excludes securities that may be returned to the Company overnight.

As of March 31, 2024, our domestic insurance entities had assets eligible for the asset-based or secured financing programs of $96.5 billion, of which $13.4 billion were on loan. Taking into account market conditions and outstanding loan balances as of March 31, 2024, we believe approximately $11.7 billion of the remaining eligible assets are readily lendable, including approximately $9.9 billion relating to PFI excluding the Closed Block division, of which $4 billion relates to certain

separate accounts and may only be used for financing activities related to those accounts, and the remaining $1.8 billion relating to the Closed Block division.

Financing Activities

As of March 31, 2024, total short-term and long-term debt of the Company on a consolidated basis was $20 billion, an increase of $0.5 billion from December 31, 2023. The following table sets forth total consolidated borrowings of the Company as of the dates indicated. We may, from time to time, seek to redeem or repurchase our outstanding debt securities through open market purchases, individually negotiated transactions or otherwise. Any such actions will depend on prevailing market conditions, our liquidity position, and other factors.


	March 31, 2024						December 31, 2023
Borrowings:	Prudential Financial		Subsidiaries		Consolidated		Prudential Financial		Subsidiaries		Consolidated
	(in millions)
General obligation short-term debt:
Commercial paper	$	25	$	480	$	505	$	25	$	510	$	535
Current portion of long-term debt	0		0		0		0		0		0
Other short-term debt	0		0		0		0		0		0
Subtotal	25		480		505		25		510		535
General obligation long-term debt:
Senior debt	10,111		0		10,111		10,112		0		10,112
Junior subordinated debt	8,541		41		8,582		8,050		44		8,094
Surplus notes(1)	0		347		347		0		346		346
Subtotal	18,652		388		19,040		18,162		390		18,552
Total general obligations	18,677		868		19,545		18,187		900		19,087
Limited and non-recourse borrowings(2):
Short-term debt	0		0		0		0		0		0
Current portion of long-term debt	0		80		80		0		83		83
Long-term debt	0		328		328		0		330		330
Total limited and non-recourse borrowings	0		408		408		0		413		413
Total borrowings	$	18,677	$	1,276	$	19,953	$	18,187	$	1,313	$	19,500

(1)Amounts are net of assets under set-off arrangements of $7,330 million and $12,370 million as of March 31, 2024 and December 31, 2023, respectively. Amounts exclude credit-linked note structures used to finance Guideline AXXX reserves for business reinsured to Somerset Re in March 2024.

(2)Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $153 million and $157 million as of March 31, 2024 and December 31, 2023, respectively, and a draw on a credit facility that has recourse only to collateral pledged by the Company of $255 million as of both March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, and December 31, 2023, the Company was in compliance with all debt covenants related to the borrowings in the table above. For additional information regarding the Company’s short- and long-term debt obligations, see Note 15 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Prudential Financial’s consolidated borrowings increased $0.5 billion from December 31, 2023. In March 2024, the Company issued $1.0 billion in aggregate principal amount of 6.50% junior subordinated notes due in March 2054. In March 2024, the Company redeemed, in full, $500 million in aggregate principal amount of 5.20% junior subordinated notes due in 2044.

Term and Universal Life Reserve Financing

We use captive reinsurance subsidiaries to finance the portion of the statutory reserves required to be held by our domestic life insurance companies under Regulation XXX and Guideline AXXX that we consider to be non-economic. The financing arrangements involve the reinsurance of term and universal life business to our captive reinsurers and the issuance of surplus notes by those captives that are treated as capital for statutory purposes. These surplus notes are subordinated to policyholder

obligations, and the payment of principal and interest on the surplus notes can only be made with prior insurance regulatory approval.

We have entered into agreements with external counterparties providing for the issuance of surplus notes by our captive reinsurers in return for the receipt of credit-linked notes (“Credit-Linked Note Structures”). As of March 31, 2024, we had Credit-Linked Note Structures with an aggregate issuance capacity of $11,250 million, of which $8,780 million was outstanding, compared to December 31, 2023, where we had an aggregate issuance capacity of $15,700 million, of which $13,820 million was outstanding. Under the agreements, the captive receives in exchange for the surplus notes one or more credit-linked notes issued by a special-purpose affiliate of the Company with an aggregate principal amount equal to the surplus notes outstanding. The captive holds the credit-linked notes as assets supporting Regulation XXX or Guideline AXXX non-economic reserves, as applicable. For additional information regarding our Credit-Linked Note Structures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities” in our Annual Report on Form 10-K for the year ended December 31, 2023.

The following table summarizes our Credit-Linked Note Structures, which are reported on a net basis, as of March 31, 2024:


	Surplus Notes		Outstanding as of March 31, 2024
Credit-Linked Note Structures(1):	Original Issue Dates	Maturity Dates			Facility Size
	($ in millions)
XXX	2014-2021	2024-2036	$	1,600	(2)	$	1,750
XXX	2014-2016	2025-2034	1,750		(3)	1,750
XXX	2014-2017	2024-2037	2,330			2,400
XXX	2018	2038	1,000			1,600
AXXX	2020	2049	2,100			3,750
Total Credit-Linked Note Structures			$	8,780		$	11,250

(1)Excludes credit-linked note structures used to finance Guideline AXXX reserves for business reinsured to Somerset Re in March 2024. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.

(2)Prudential Financial has agreed to reimburse amounts paid under the credit-linked notes issued in this structure up to $250 million.

(3)The $1,750 million of surplus notes represents an intercompany transaction that eliminates upon consolidation. Prudential Financial has agreed to reimburse amounts paid under credit-linked notes issued in this structure up to $1,000 million.

As of March 31, 2024, we also had outstanding an aggregate of $2,600 million of debt issued for the purpose of financing $700 million of Regulation XXX and $1,900 million of Guideline AXXX non-economic reserves. In addition, as of March 31, 2024, for purposes of financing Guideline AXXX non-economic reserves, one captive had $3,982 million of surplus notes outstanding that were issued to affiliates.

The Company introduced updated versions of its individual life products in conjunction with the requirement to adopt principle-based reserving by January 1, 2020. These updated products are currently priced to support the principle-based statutory reserve level without the need for reserve financing.

Off-Balance Sheet Arrangements

See additional information regarding off-balance sheet arrangements in Note 15 and other commitments in Note 21 to the Unaudited Interim Consolidated Financial Statements.

We do not have retained or contingent interests in assets transferred to unconsolidated entities, or variable interests in unconsolidated entities or other similar transactions, arrangements or relationships that serve as credit, liquidity or market risk support, that we believe are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or our access to or requirements for capital resources. In addition, we do not have relationships with any unconsolidated entities that are contractually limited to narrow activities that facilitate our transfer of or access to associated assets.

Ratings

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Ratings” in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our financial strength and credit ratings and their impact on our business.

There have been no significant changes or actions in ratings or ratings outlooks for the Company that have occurred since the filing of our Form 10-K for the year ended December 31, 2023.

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