Item 1. Financial Statements

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Item 1. Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Financial Position

June 30, 2024 and December 31, 2023 (in millions, except share amounts)


	June 30, 2024		December 31, 2023
ASSETS
Fixed maturities, available-for-sale, at fair value (allowance for credit losses: 2024-$169; 2023-$160) (amortized cost: 2024-$340,984; 2023-$334,598)(1)	$	311,092	$	316,321

Fixed maturities, trading, at fair value (amortized cost: 2024-$11,124; 2023-$10,624)(1)	10,250		9,790
Assets supporting experience-rated contractholder liabilities, at fair value	3,351		3,168
Equity securities, at fair value (cost: 2024-$4,592; 2023-$5,786)(1)	7,098		8,242
Commercial mortgage and other loans (net of $564 and $460 allowance for credit losses; includes $635 and $519 of loans measured at fair value under the fair value option at June 30, 2024 and December 31, 2023, respectively)(1)	60,243		59,305
Policy loans	9,739		10,047
Other invested assets (net of $1 and $1 allowance for credit losses; includes $6,728 and $6,074 of assets measured at fair value at June 30, 2024 and December 31, 2023, respectively)(1)	24,634		22,855
Short-term investments (net of allowance for credit losses: 2024-$0; 2023-$0)	6,241		5,005
Total investments	432,648		434,733
Cash and cash equivalents(1)	17,111		19,419
Accrued investment income(1)	3,434		3,287
Deferred policy acquisition costs	20,564		20,856
Value of business acquired	446		530
Market risk benefit assets	2,233		1,981
Reinsurance recoverables and deposit receivables (net of $11 and $12 allowance for credit losses; includes $555 and $149 of embedded derivatives at fair value at June 30, 2024 and December 31, 2023, respectively)(2)	27,746		27,311
Income tax assets	856		939
Other assets (net of $3 and $3 allowance for credit losses; includes $0 and $11 of assets at fair value at June 30, 2024 and December 31, 2023, respectively)(1)(2)	13,299		13,179
Separate account assets	196,859		198,888
TOTAL ASSETS	$	715,196	$	721,123
LIABILITIES, MEZZANINE EQUITY AND EQUITY
LIABILITIES
Future policy benefits	$	262,330	$	273,281
Policyholders’ account balances	154,991		147,018
Market risk benefit liabilities	4,592		5,467
Policyholders’ dividends	746		1,475
Securities sold under agreements to repurchase	6,929		6,056
Cash collateral for loaned securities	7,050		6,477
Reinsurance and funds withheld payables (includes $22 and $490 of embedded derivatives at fair value at June 30, 2024 and December 31, 2023, respectively)(2)	15,604		15,729

Short-term debt	588		618
Long-term debt	19,353		18,882
Other liabilities (includes $14 and $15 allowance for credit losses and $4,468 and $4,175 of derivatives at fair value at June 30, 2024 and December 31, 2023, respectively)(1)	14,875		16,071
Notes issued by consolidated variable interest entities (includes $422 and $778 measured at fair value under the fair value option at June 30, 2024 and December 31, 2023, respectively)(1)	1,174		1,374
Separate account liabilities	196,859		198,888
Total liabilities	685,091		691,336
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 21)
MEZZANINE EQUITY
Redeemable noncontrolling interests	545		524
Total mezzanine equity	545		524
EQUITY
Preferred Stock $0.01 par value; 10,000,000 shares authorized; none issued)	0		0
Common Stock ($0.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of both June 30, 2024 and December 31, 2023)	6		6
Additional paid-in capital	25,802		25,746
Common Stock held in treasury, at cost (308,646,521 and 307,089,216 shares at June 30, 2024 and December 31, 2023, respectively)	(24,088)		(23,780)
Accumulated other comprehensive income (loss)(2)	(7,444)		(6,504)
Retained earnings	33,737		32,352
Total Prudential Financial, Inc. equity	28,013		27,820
Noncontrolling interests	1,547		1,443
Total equity	29,560		29,263
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY	$	715,196	$	721,123

(1)See Note 4 for details of balances associated with variable interest entities.

(2)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Operations

Three and Six Months Ended June 30, 2024 and 2023 (in millions, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
REVENUES
Premiums (includes $(14), $291, $(9) and $275 of gains (losses) from changes in estimates on deferred profit liability amortization for the three months ended June 30, 2024 and 2023 and the six months ended June 30, 2024 and 2023, respectively)(1)	$	7,820	$	6,909	$	23,357	$	16,272
Policy charges and fee income	1,085		1,073		2,141		2,207
Net investment income	4,849		4,476		9,613		8,796
Asset management and service fees(1)	1,001		918		2,000		1,835
Other income (loss)	591		1,044		1,929		2,063
Realized investment gains (losses), net(1)	(166)		(938)		(474)		(721)
Change in value of market risk benefits, net of related hedging gains (losses)	(297)		16		(174)		91
Total revenues	14,883		13,498		38,392		30,543
BENEFITS AND EXPENSES
Policyholders’ benefits(1)	8,864		7,661		25,458		17,965
Change in estimates of liability for future policy benefits(1)	(176)		255		(193)		280
Interest credited to policyholders’ account balances	1,102		1,149		2,385		2,130
Dividends to policyholders	176		303		466		622
Amortization of deferred policy acquisition costs	375		366		750		731

General and administrative expenses(1)	3,127		3,143		6,721		6,347
Total benefits and expenses	13,468		12,877		35,587		28,075
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES	1,415		621		2,805		2,468
Total income tax expense (benefit)	264		123		553		505
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES	1,151		498		2,252		1,963
Equity in earnings of joint ventures and other operating entities, net of taxes	20		(2)		70		10


NET INCOME (LOSS)	1,171		496		2,322		1,973
Less: Income (loss) attributable to noncontrolling interests	(27)		(15)		(14)		0
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.	$	1,198	$	511	$	2,336	$	1,973
EARNINGS PER SHARE
Basic earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	3.30	$	1.38	$	6.43	$	5.33
Diluted earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	3.28	$	1.38	$	6.40	$	5.31

(1)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Comprehensive Income

Three and Six Months Ended June 30, 2024 and 2023 (in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
NET INCOME (LOSS)	$	1,171	$	496	$	2,322	$	1,973
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments for the period	(353)		(371)		(847)		(358)
Net unrealized investment gains (losses)	(5,343)		(2,814)		(10,117)		5,565
Interest rate remeasurement of future policy benefits(1)	6,138		(196)		10,351		(8,901)
Gain (loss) from changes in non-performance risk on market risk benefits	56		(263)		(196)		(77)
Defined benefit pension and postretirement unrecognized periodic benefit (cost)	12		26		25		45
Total	510		(3,618)		(784)		(3,726)
Less: Income tax expense (benefit) related to other comprehensive income (loss)	293		(793)		156		(883)
Other comprehensive income (loss), net of taxes	217		(2,825)		(940)		(2,843)
Comprehensive income (loss)	1,388		(2,329)		1,382		(870)
Less: Comprehensive income (loss) attributable to noncontrolling interests	(27)		(16)		(14)		0
Comprehensive income (loss) attributable to Prudential Financial, Inc.	$	1,415	$	(2,313)	$	1,396	$	(870)

(1)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Equity

Three and Six Months Ended June 30, 2024 (in millions)


	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2023	$	6	$	25,746	$	32,352	$	(23,780)	$	(6,504)	$	27,820	$	1,443	$	29,263

Common Stock acquired							(250)				(250)				(250)
Contributions from noncontrolling interests													83		83
Distributions to noncontrolling interests													(3)		(3)
Consolidations (deconsolidations) of noncontrolling interests													125		125
Stock-based compensation programs			(5)				139				134				134
Dividends declared on Common Stock					(476)						(476)				(476)
Comprehensive income:
Net income (loss)					1,138						1,138		13		1,151
Other comprehensive income (loss), net of tax									(1,157)		(1,157)		0		(1,157)
Total comprehensive income (loss)					1,138				(1,157)		(19)		13		(6)
Balance, March 31, 2024	6		25,741		33,014		(23,891)		(7,661)		27,209		1,661		28,870
Common Stock acquired							(252)				(252)				(252)
Contributions from noncontrolling interests													6		6
Distributions to noncontrolling interests													(112)		(112)
Consolidations (deconsolidations) of noncontrolling interests													19		19
Stock-based compensation programs			61				55				116				116
Dividends declared on Common Stock					(475)						(475)				(475)
Comprehensive income:
Net income (loss)					1,198						1,198		(27)		1,171
Other comprehensive income (loss), net of tax									217		217		0		217
Total comprehensive income (loss)					1,198				217		1,415		(27)		1,388
Balance, June 30, 2024	$	6	$	25,802	$	33,737	$	(24,088)	$	(7,444)	$	28,013	$	1,547	$	29,560

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Equity—Continued

Three and Six Months Ended June 30, 2023 (in millions)


	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Noncontrolling Interests		Total Equity
December 31, 2022(1)	$	6	$	25,747	$	31,714	$	(23,068)	$	(3,806)	$	30,593	$	955	$	31,548

Common Stock acquired							(250)				(250)				(250)
Contributions from noncontrolling interests													93		93
Distributions to noncontrolling interests													(2)		(2)

Stock-based compensation programs			(104)				171				67				67
Dividends declared on Common Stock					(468)						(468)				(468)
Comprehensive income:
Net income (loss)					1,462						1,462		15		1,477
Other comprehensive income (loss), net of tax									(19)		(19)		1		(18)
Total comprehensive income (loss)					1,462				(19)		1,443		16		1,459
Balance, March 31, 2023	6		25,643		32,708		(23,147)		(3,825)		31,385		1,062		32,447
Common Stock acquired							(252)				(252)				(252)
Contributions from noncontrolling interests													30		30
Distributions to noncontrolling interests													(19)		(19)
Consolidations (deconsolidations) of noncontrolling interests													(36)		(36)
Stock-based compensation programs			33				44				77				77
Dividends declared on Common Stock					(463)						(463)				(463)
Comprehensive income:
Net income (loss)					511						511		(15)		496
Other comprehensive income (loss), net of tax									(2,824)		(2,824)		(1)		(2,825)
Total comprehensive income (loss)					511				(2,824)		(2,313)		(16)		(2,329)
Balance, June 30, 2023	$	6	$	25,676	$	32,756	$	(23,355)	$	(6,649)	$	28,434	$	1,021	$	29,455

(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

See Notes to Unaudited Interim Consolidated Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Cash Flows

Six Months Ended June 30, 2024 and 2023 (in millions)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	2,322	$	1,973
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Realized investment (gains) losses, net(1)	474		721
Change in value of market risk benefits, net of related hedging (gains) losses	174		(91)
Policy charges and fee income	(1,128)		(1,073)
Interest credited to policyholders’ account balances	2,385		2,130
Depreciation and amortization	371		46
(Gains) losses on assets supporting experience-rated contractholder liabilities, net	(494)		(422)
Change in:
Deferred policy acquisition costs	(514)		(385)
Future policy benefits and other insurance liabilities	3,651		2,738
Income taxes	16		(196)
Derivatives, net	574		(333)
Other, net(1)	(2,756)		(2,541)
Cash flows from (used in) operating activities	5,075		2,567
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	24,901		22,234
Fixed maturities, held-to-maturity	0		17
Fixed maturities, trading	1,898		344
Assets supporting experience-rated contractholder liabilities	744		1,256
Equity securities	3,092		1,192
Commercial mortgage and other loans	2,688		1,685
Policy loans	1,030		880
Other invested assets	808		532
Short-term investments	15,943		15,065
Payments for the purchase/origination of:
Fixed maturities, available-for-sale	(36,737)		(25,467)

Fixed maturities, trading	(3,033)		(583)
Assets supporting experience-rated contractholder liabilities	(840)		(1,283)
Equity securities	(1,779)		(1,524)
Commercial mortgage and other loans	(3,888)		(2,457)
Policy loans	(770)		(780)
Other invested assets	(1,902)		(1,044)
Short-term investments	(17,264)		(15,380)


Derivatives, net	(515)		(700)
Other, net	40		(130)
Cash flows from (used in) investing activities	(15,584)		(6,143)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholders’ account deposits	17,531		13,402
Policyholders’ account withdrawals	(9,489)		(8,791)
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities	1,445		(1,384)
Cash dividends paid on Common Stock	(955)		(933)
Net change in financing arrangements (maturities 90 days or less)	(496)		3
Common Stock acquired	(493)		(504)
Common Stock reissued for exercise of stock options	93		63
Proceeds from the issuance of debt (maturities longer than 90 days)	1,158		495
Repayments of debt (maturities longer than 90 days)	(750)		(1,604)
Proceeds from notes issued by consolidated VIEs	182		67
Repayments of notes issued by consolidated VIEs	(1)		(18)

Other, net(1)	320		318
Cash flows from (used in) financing activities	8,545		1,114
Effect of foreign exchange rate changes on cash balances	(368)		(143)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	(2,332)		(2,605)
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR	19,463		17,299
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	17,131	$	14,694

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Cash Flows

Six Months Ended June 30, 2024 and 2023 (in millions)


	Six Months Ended June 30,
	2024		2023

NON-CASH TRANSACTIONS DURING THE PERIOD
Treasury Stock shares issued for stock-based compensation programs	$	212	$	272
Novation of annuity contracts(2)	$	0	$	343

Significant pension risk transfer transactions:
Assets received, excluding Cash and cash equivalents	$	5,802	$	1,506
Liabilities assumed	9,990		2,409
Net cash received	$	4,188	$	903




Somerset Re reinsurance transaction(3):
Reinsurance recoverables under modified coinsurance, net	$	(578)	$	0
Unwind of Deferred policy acquisition costs ceded	284		0
Deferred reinsurance gain	363		0
Net cash received	$	69	$	0

RECONCILIATION TO THE UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Cash and cash equivalents	$	17,111	$	14,652
Restricted cash and restricted cash equivalents (included in “Other assets”)	20		42
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	17,131	$	14,694

(1)See Note 20 for additional information regarding related party transactions.

(2)“Cash flows from (used in) operating activities” and “Cash flows from (used in) investing activities” exclude non-cash activities related to the novation of certain, previously reinsured, annuity products, from Fortitude Group Holdings, LLC to the Company.

(3)See Note 12 for additional information regarding the reinsurance agreement with Somerset Reinsurance Ltd. (“Somerset Re”).

See Notes to Unaudited Interim Consolidated Financial Statements

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements

1. BUSINESS AND BASIS OF PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) and its subsidiaries (collectively, “Prudential” or the “Company”) provide a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the United States and in many other countries. Principal products and services provided include life insurance, annuities, retirement solutions, mutual funds and investment management.

The Company’s principal operations consist of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the Retirement Strategies, Group Insurance and Individual Life businesses), the International Businesses (consisting of the Life Planner and Gibraltar Life and Other businesses), the Closed Block division, and the Company’s 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 within Corporate and Other operations. 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 U.S. GAAP. The Company’s 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.

In September 2023, the Company, through its Corporate and Other operations, invested approximately $200 million, and acquired a 20% equity interest as a limited partner, in Prismic Life Holding Company LP (“Prismic”), a Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company. As this investment is accounted for under the equity method, both Prismic and Prismic Re are considered related parties. 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. For information regarding the Company’s initial reinsurance transaction with Prismic Re, effective September 2023, see Note 12.

As part of its continuous improvement process, the Company is working to become a leaner and more agile company by simplifying its management structure, empowering its employees with faster decision-making processes and investing in technology and data platforms. As part of this, the Company is implementing changes to its organizational structure and recorded a restructuring charge of $200 million to “General and administrative expenses” in the fourth quarter of 2023 within its Corporate and Other operations. The Company expects these actions will create operating efficiencies, and provide reinvestment capacity to build capabilities, realize additional efficiencies, strengthen its competitiveness and fuel future growth.

Basis of Presentation

The Unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). The Unaudited Interim Consolidated Financial Statements include the accounts of Prudential Financial, entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner, and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information regarding the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The most significant estimates include those used in determining future policy benefits; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products; market risk benefits; the measurement of goodwill and any related impairment; the valuation of investments including derivatives, the measurement of allowance for credit losses, and the recognition of other-than-temporary impairments (“OTTI”); pension and other postretirement benefits; any provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

Out of Period Adjustments

In the second quarter of 2024, the Company recorded two unrelated out-of-period adjustments resulting in an aggregate net charge of $136 million to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” for the second quarter of 2024. These adjustments did not have an impact to adjusted operating income, which is the Company’s segment measure of performance.

The adjustments included i) an $86 million valuation-related pre-tax charge from an increase to the policyholder account balances of indexed variable annuity products; and ii) a $50 million pre-tax charge from an increase to the allowance for credit losses related to certain loan balances.

These adjustments impacted the previously issued interim financial statements for the first quarter of 2024 and had no impact to any other previously reported quarterly or annual financial statements. As such, these adjustments do not impact the results for the six months ended June 30, 2024, and will not impact the 2024 annual financial statements.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of ASUs to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year and/or those that have been issued but not yet adopted as of June 30, 2024, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

ASUs issued but not yet adopted as of June 30, 2024


Standard	Description	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures	This ASU requires entities to provide additional information primarily related to the effective tax rate reconciliation and income taxes paid.	Effective for fiscal years beginning after December 15, 2024 with early adoption permitted, and is required to be applied prospectively with the option of retrospective application.	The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	This ASU requires entities to provide more detailed information about significant segment expenses that are regularly provided to the chief operating decision maker.	Effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, using the retrospective method.	The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.

3. INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:


	June 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	25,887	$	657	$	5,005	$	0	$	21,539
Obligations of U.S. states and their political subdivisions	8,143		171		659		0		7,655
Foreign government bonds	63,152		2,037		7,510		0		57,679
U.S. public corporate securities	112,011		1,425		12,576		86		100,774
U.S. private corporate securities(1)	44,373		946		3,243		19		42,057
Foreign public corporate securities	22,612		299		1,584		23		21,304
Foreign private corporate securities	36,885		338		4,290		40		32,893
Asset-backed securities(2)	15,254		219		77		1		15,395
Commercial mortgage-backed securities	9,911		23		682		0		9,252
Residential mortgage-backed securities(3)	2,756		18		230		0		2,544
Total fixed maturities, available-for-sale(1)	$	340,984	$	6,133	$	35,856	$	169	$	311,092

(1)Excludes notes with amortized cost of $13,714 million (fair value, $13,714 million), which have been offset with the associated debt under a netting agreement.

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

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

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	24,874	$	1,091	$	4,169	$	0	$	21,796
Obligations of U.S. states and their political subdivisions	8,650		267		459		0		8,458
Foreign government bonds	71,556		3,895		5,208		53		70,190
U.S. public corporate securities	105,593		2,357		9,711		67		98,172
U.S. private corporate securities(1)	42,801		807		2,574		14		41,020
Foreign public corporate securities	20,473		487		1,298		19		19,643
Foreign private corporate securities	35,128		613		3,446		5		32,290
Asset-backed securities(2)	12,514		202		119		2		12,595
Commercial mortgage-backed securities	10,571		34		713		0		9,892
Residential mortgage-backed securities(3)	2,438		24		197		0		2,265
Total fixed maturities, available-for-sale(1)	$	334,598	$	9,777	$	27,894	$	160	$	316,321

(1)Excludes notes with amortized cost of $12,370 million (fair value, $12,370 million), which have been offset with the associated debt under a netting agreement.

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

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

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


	June 30, 2024
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	4,126	$	114	$	12,469	$	4,891	$	16,595	$	5,005
Obligations of U.S. states and their political subdivisions	1,702		42		4,134		617		5,836		659
Foreign government bonds	6,945		393		20,624		7,117		27,569		7,510
U.S. public corporate securities	21,323		670		58,506		11,882		79,829		12,552
U.S. private corporate securities	5,425		160		27,564		3,082		32,989		3,242
Foreign public corporate securities	4,580		100		10,169		1,469		14,749		1,569
Foreign private corporate securities	5,270		156		21,281		4,133		26,551		4,289
Asset-backed securities	1,842		6		1,785		70		3,627		76
Commercial mortgage-backed securities	970		6		7,228		676		8,198		682
Residential mortgage-backed securities	200		3		1,513		227		1,713		230
Total fixed maturities, available-for-sale	$	52,383	$	1,650	$	165,273	$	34,164	$	217,656	$	35,814

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	2,718	$	95	$	12,642	$	4,074	$	15,360	$	4,169
Obligations of U.S. states and their political subdivisions	862		14		3,816		445		4,678		459
Foreign government bonds	9,098		542		19,589		4,664		28,687		5,206
U.S. public corporate securities	4,881		103		61,204		9,604		66,085		9,707
U.S. private corporate securities	3,026		69		27,062		2,504		30,088		2,573
Foreign public corporate securities	1,766		37		10,812		1,246		12,578		1,283
Foreign private corporate securities	1,578		120		22,145		3,324		23,723		3,444
Asset-backed securities	846		30		5,886		89		6,732		119
Commercial mortgage-backed securities	287		3		8,251		710		8,538		713
Residential mortgage-backed securities	92		2		1,599		195		1,691		197
Total fixed maturities, available-for-sale	$	25,154	$	1,015	$	173,006	$	26,855	$	198,160	$	27,870

As of June 30, 2024 and December 31, 2023, the gross unrealized losses on fixed maturity available-for-sale securities without an allowance of $34,576 million and $26,879 million, respectively, related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $1,238 million and $991 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. As of June 30, 2024, the $34,164 million of gross unrealized losses of twelve months or more were concentrated in the finance, consumer non-cyclical and utility sectors within corporate securities as well as in foreign government bonds. As of December 31, 2023, the $26,855 million of gross unrealized losses of twelve months or more were concentrated in the finance, consumer non-cyclical and utility sectors within corporate securities, as well as in foreign government bonds.

In accordance with its policy described in Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at June 30, 2024. This conclusion was based on detailed analysis of the underlying credit and cash flows for each security. Gross unrealized losses are primarily attributable to increases in interest rates, general credit spread widening and foreign currency exchange rate movements. As of June 30, 2024, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the amortized cost basis.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

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


	June 30, 2024
	Available-for-Sale
	Amortized Cost		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	12,896	$	12,791
Due after one year through five years	56,253		55,179
Due after five years through ten years(1)	59,279		57,655
Due after ten years(1)	184,635		158,276
Asset-backed securities	15,254		15,395
Commercial mortgage-backed securities	9,911		9,252
Residential mortgage-backed securities	2,756		2,544
Total	$	340,984	$	311,092

(1)Excludes notes with amortized cost of $13,714 million (fair value, $13,714 million), which have been offset with the associated debt under a netting agreement.

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

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	8,323	$	6,773	$	14,074	$	14,123
Proceeds from maturities/prepayments	6,147		4,053		11,080		8,041
Gross investment gains from sales and maturities	201		139		595		429
Gross investment losses from sales and maturities	(910)		(397)		(1,270)		(702)
Write-downs recognized in earnings(2)	(4)		(1)		(9)		(10)
(Addition to) release of allowance for credit losses	(22)		(7)		(33)		(138)
Fixed maturities, held-to-maturity:
Proceeds from maturities/prepayments(3)	$	0	$	10	$	0	$	17

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlements of $(253) million and $70 million for the six months ended June 30, 2024 and 2023, respectively.

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

(3)Excludes activity from non-cash related proceeds due to the timing of trade settlements of less than $1 million for the six months ended June 30, 2023.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables set forth the activity in the allowance for credit losses for fixed maturity securities, as of the dates indicated:


	Three Months Ended June 30, 2024
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	31	$	139	$	1	$	0	$	0	$	171
Additions to allowance for credit losses not previously recorded	0		0		13		0		0		0		13
Reductions for securities sold during the period	0		(30)		(8)		0		0		0		(38)
Additions (reductions) on securities with previous allowance	0		(1)		24		0		0		0		23
Balance, end of period	$	0	$	0	$	168	$	1	$	0	$	0	$	169


	Three Months Ended June 30, 2023
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	62	$	206	$	1	$	0	$	0	$	269
Additions to allowance for credit losses not previously recorded	0		0		3		0		0		0		3
Reductions for securities sold during the period	0		0		(5)		0		0		0		(5)
Additions (reductions) on securities with previous allowance	0		(6)		15		0		0		0		9
Balance, end of period	$	0	$	56	$	219	$	1	$	0	$	0	$	276

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2024
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	53	$	105	$	2	$	0	$	0	$	160
Additions to allowance for credit losses not previously recorded	0		0		59		0		0		0		59
Reductions for securities sold during the period	0		(30)		(20)		0		0		0		(50)
Additions (reductions) on securities with previous allowance	0		(23)		24		(1)		0		0		0
Balance, end of period	$	0	$	0	$	168	$	1	$	0	$	0	$	169


	Six Months Ended June 30, 2023
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	1	$	136	$	1	$	0	$	0	$	138
Additions to allowance for credit losses not previously recorded	0		62		78		0		0		0		140
Reductions for securities sold during the period	0		0		(45)		0		0		0		(45)
Additions (reductions) on securities with previous allowance	0		(7)		50		0		0		0		43
Balance, end of period	$	0	$	56	$	219	$	1	$	0	$	0	$	276

For both the three and six months ended June 30, 2023, there was no activity in the allowance for credit losses for fixed maturities, held-to-maturity. As of June 30, 2023 the allowance for credit losses was $2 million within foreign corporate fixed maturity securities, held-to-maturity.

For additional information regarding the Company’s methodology for developing its allowance and expected losses, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

For the three months ended June 30, 2024, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to a net release within foreign government bonds, partially offset by net additions in the consumer cyclical and communications sectors within corporate securities due to adverse projected cash flows. For the three months ended June 30, 2023, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the basic industry and technology sectors within corporate securities due to adverse projected cash flows, partially offset by a net release within the consumer non-cyclical sector within corporate securities, as well as in foreign government bonds.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

For the six months ended June 30, 2024, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the consumer cyclical and communications sectors within corporate securities due to adverse projected cash flows, partially offset by a net release within foreign government bonds. For the six months ended June 30, 2023, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the communications and technology sectors within corporate securities, as well as in foreign government bonds due to adverse projected cash flows, partially offset by a net release within the utility and capital goods sectors within corporate securities.

The Company did not have any fixed maturity securities purchased with credit deterioration as of June 30, 2024 or December 31, 2023.

Assets Supporting Experience-Rated Contractholder Liabilities

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


	June 30, 2024				December 31, 2023
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Fixed maturities:
Corporate securities	$	73	$	71	$	81	$	79
Foreign government bonds	554		547		606		604
Obligations of U.S. government authorities and agencies and obligations of U.S. states	197		218		202		206
Total fixed maturities(1)	824		836		889		889
Equity securities	1,506		2,515		1,607		2,279
Total assets supporting experience-rated contractholder liabilities(2)	$	2,330	$	3,351	$	2,496	$	3,168

(1)As a percentage of amortized cost, 99% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings as of both June 30, 2024 and December 31, 2023.

(2)As a percentage of amortized cost, 100% of the portfolio consisted of public securities as of both June 30, 2024 and December 31, 2023.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities still held at period end, recorded within “Other income (loss),” was $74 million and $234 million during the three months ended June 30, 2024 and 2023, respectively, and $373 million and $368 million during the six months ended June 30, 2024 and 2023, respectively.

Fixed Maturities, Trading

The net change in unrealized gains (losses) from fixed maturities, trading still held at period end, recorded within “Other income (loss),” was $(146) million and $(89) million during the three months ended June 30, 2024 and 2023, respectively, and $(327) million and $105 million during the six months ended June 30, 2024 and 2023, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $212 million and $279 million during the three months ended June 30, 2024 and 2023, respectively, and $643 million and $576 million during the six months ended June 30, 2024 and 2023, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Concentrations of Financial Instruments

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

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


	June 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	55,067	$	50,280	$	62,591	$	61,484
Fixed maturities, trading	17		17		19		19
Assets supporting experience-rated contractholder liabilities	477		460		522		514
Total	$	55,561	$	50,757	$	63,132	$	62,017


	June 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Brazil government and government agency securities:
Fixed maturities, available-for-sale	$	2,825	$	2,505	$	3,028	$	2,992
Fixed maturities, trading	43		41		0		0
Short-term investments	28		28		0		0
Cash equivalents	232		232		427		427
Total	$	3,128	$	2,806	$	3,455	$	3,419

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Commercial Mortgage and Other Loans

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


	June 30, 2024				December 31, 2023
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	8,198	13.7	%	$	8,402	14.2	%
Retail	5,307		8.9		5,384		9.1
Apartments/Multi-Family	16,536		27.7		16,555		28.0
Industrial	15,718		26.3		15,263		25.8
Hospitality	2,054		3.4		2,086		3.5
Other	4,313		7.3		4,069		6.9
Total commercial mortgage loans	52,126		87.3		51,759		87.5
Agricultural property loans	7,565		12.7		7,426		12.5
Total commercial mortgage and agricultural property loans	59,691		100.0	%	59,185		100.0	%
Allowance for credit losses	(513)				(459)
Total net commercial mortgage and agricultural property loans	59,178				58,726
Other loans:
Uncollateralized loans	685				425
Residential property loans	22				30
Other collateralized loans	409				125
Total other loans	1,116				580
Allowance for credit losses	(51)				(1)
Total net other loans	1,065				579
Total net commercial mortgage and other loans(1)	$	60,243			$	59,305

(1)Includes loans which are carried at fair value under the fair value option and are collateralized primarily by apartment complexes. As of June 30, 2024 and December 31, 2023, the net carrying value of these loans was $635 million and $519 million, respectively.

As of June 30, 2024, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in California (30%), Texas (7%) and New York (6%), and included loans secured by properties in Europe (7%), Mexico (2%), Asia (1%) and Australia (1%).

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

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


	Three Months Ended June 30, 2024
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	492	$	21	$	0	$	0	$	1	$	514
Addition to (release of) allowance for expected losses	0		3		0		33		17		53
Change in foreign exchange	(3)		0		0		0		0		(3)
Allowance, end of period	$	489	$	24	$	0	$	33	$	18	$	564


	Three Months Ended June 30, 2023
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	205	$	15	$	0	$	0	$	1	$	221
Addition to (release of) allowance for expected losses	18		1		0		0		0		19
Change in foreign exchange	1		0		0		0		0		1
Allowance, end of period	$	224	$	16	$	0	$	0	$	1	$	241


	Six Months Ended June 30, 2024
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	443	$	16	$	0	$	0	$	1	$	460
Addition to (release of) allowance for expected losses	47		8		0		33		17		105
Reduction for loans sold during the period	0		0		0		0		0		0
Change in foreign exchange	(1)		0		0		0		0		(1)
Allowance, end of period	$	489	$	24	$	0	$	33	$	18	$	564


	Six Months Ended June 30, 2023
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	188	$	13	$	0	$	0	$	2	$	203
Addition to (release of) allowance for expected losses	35		3		0		0		0		38
Reduction for loans sold during the period	0		0		0		0		(1)		(1)
Change in foreign exchange	1		0		0		0		0		1
Allowance, end of period	$	224	$	16	$	0	$	0	$	1	$	241

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

For the three months ended June 30, 2024, the net addition to the allowance for credit losses on commercial mortgage and other loans was primarily due to the establishment of general reserves for both the collateralized and uncollateralized consumer loan portfolios. For the three months ended June 30, 2023, the net addition to the allowance for credit losses on commercial mortgage and other loans was due to an increase in loan-specific reserves.

For the six months ended June 30, 2024, the net addition to the allowance for credit losses on commercial mortgage and other loans was primarily due to the establishment of general reserves for both the collateralized and uncollateralized consumer loan portfolios and increases in the loan-specific reserves within the office sector. For the six months ended June 30, 2023, the net addition to the allowance for credit losses on commercial mortgage and other loans was due to an increase in loan-specific reserves and increases to general reserves to reflect declining market conditions.

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


	June 30, 2024
	Amortized Cost by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
	(in millions)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%	$	405	$	1,472	$	828	$	2,216	$	1,220	$	18,159	$	0	$	24,300
60%-69.99%	2,635		2,738		1,473		2,426		1,086		6,203		0		16,561
70%-79.99%	362		911		855		1,255		422		2,522		0		6,327
80% or greater	48		131		486		224		282		3,767		0		4,938
Total	$	3,450	$	5,252	$	3,642	$	6,121	$	3,010	$	30,651	$	0	$	52,126
Debt Service Coverage Ratio:
Greater than 1.2x	$	3,123	$	4,769	$	3,129	$	5,988	$	2,918	$	27,392	$	0	$	47,319
1.0 - 1.2x	299		333		361		52		38		1,845		0		2,928
Less than 1.0x	28		150		152		81		54		1,414		0		1,879
Total	$	3,450	$	5,252	$	3,642	$	6,121	$	3,010	$	30,651	$	0	$	52,126
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%	$	161	$	379	$	899	$	2,016	$	755	$	1,833	$	102	$	6,145
60%-69.99%	58		555		124		15		53		32		0		837
70%-79.99%	0		0		500		0		0		4		50		554
80% or greater	0		0		0		0		2		27		0		29
Total	$	219	$	934	$	1,523	$	2,031	$	810	$	1,896	$	152	$	7,565
Debt Service Coverage Ratio:
Greater than 1.2x	$	215	$	866	$	1,510	$	2,019	$	737	$	1,678	$	152	$	7,177
1.0 - 1.2x	4		63		5		4		57		159		0		292
Less than 1.0x	0		5		8		8		16		59		0		96
Total	$	219	$	934	$	1,523	$	2031	$	810	$	1,896	$	152	$	7,565

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Amortized Cost by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
	(in millions)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%	$	1,822	$	911	$	2,264	$	1,437	$	3,205	$	16,569	$	0	$	26,208
60%-69.99%	2,765		1,440		2,541		1,107		2,146		4,530		0		14,529
70%-79.99%	1,001		1,004		1,278		401		1,013		2,277		0		6,974
80% or greater	145		357		203		330		209		2,804		0		4,048
Total	$	5,733	$	3,712	$	6,286	$	3,275	$	6,573	$	26,180	$	0	$	51,759
Debt Service Coverage Ratio:
Greater than 1.2x	$	5,237	$	3,194	$	6,122	$	3,182	$	5,988	$	23,196	$	0	$	46,919
1.0 - 1.2x	346		366		82		38		265		1,713		0		2,810
Less than 1.0x	150		152		82		55		320		1,271		0		2,030
Total	$	5,733	$	3,712	$	6,286	$	3,275	$	6,573	$	26,180	$	0	$	51,759
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%	$	360	$	880	$	2,027	$	774	$	455	$	1,481	$	74	$	6,051
60%-69.99%	586		668		25		50		20		4		0		1,353
70%-79.99%	7		0		0		0		0		0		0		7
80% or greater	0		0		0		0		15		0		0		15
Total	$	953	$	1,548	$	2,052	$	824	$	490	$	1,485	$	74	$	7,426
Debt Service Coverage Ratio:
Greater than 1.2x	$	948	$	1,535	$	2,040	$	750	$	489	$	1,290	$	74	$	7,126
1.0 - 1.2x	0		5		4		58		0		151		0		218
Less than 1.0x	5		8		8		16		1		44		0		82
Total	$	953	$	1,548	$	2,052	$	824	$	490	$	1,485	$	74	$	7,426

For additional information regarding the Company’s commercial mortgage and other loans credit quality monitoring process, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company may grant loan modifications in its commercial mortgage and other loan portfolios to borrowers experiencing financial difficulties. These loan modifications may be in the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension or some combination thereof.

During the three and six months ended June 30, 2024 commercial mortgage and other loans with an amortized cost of $181 million and $343 million, respectively, were granted a term extension with borrowers experiencing financial difficulties. The modified loans represent less than 1 percent of the portfolio. The modifications added less than one year to the weighted average life of loans in this portfolio.

During both the three and six months ended June 30, 2023, the Company did not modify any loans to borrowers experiencing financial difficulties.

For the six months ended June 30, 2024, all commercial mortgage and other loans that were modified to borrowers experiencing financial difficulties were current.

The Company did not have any commitments to lend additional funds to borrowers experiencing financial difficulties on modified loans as of June 30, 2024 and December 31, 2023.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

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


	June 30, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)(2)		Total Past Due		Total Loans		Non-Accrual Status(3)
	(in millions)
Commercial mortgage loans	$	51,844	$	0	$	4	$	278	$	282	$	52,126	$	298
Agricultural property loans	7,493		0		0		72		72		7,565		85
Residential property loans	22		0		0		0		0		22		0
Other collateralized loans	409		0		0		0		0		409		0
Uncollateralized loans	685		0		0		0		0		685		25
Total	$	60,453	$	0	$	4	$	350	$	354	$	60,807	$	408

(1)As of June 30, 2024, there were no loans in this category accruing interest.

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

(3)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.


	December 31, 2023
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)(2)		Total Past Due		Total Loans		Non-Accrual Status(3)
	(in millions)
Commercial mortgage loans	$	51,665	$	34	$	0	$	60	$	94	$	51,759	$	94
Agricultural property loans	7,392		15		15		4		34		7,426		38
Residential property loans	30		0		0		0		0		30		0
Other collateralized loans	125		0		0		0		0		125		0
Uncollateralized loans	425		0		0		0		0		425		25
Total	$	59,637	$	49	$	15	$	64	$	128	$	59,765	$	157

(1)As of December 31, 2023, there were no loans in this category accruing interest.

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

Loans on non-accrual status recognized interest of less than $1 million for both the three months ended June 30, 2024 and 2023 and less than $1 million for both the six months ended June 30, 2024 and 2023. Loans on non-accrual status that did not have a related allowance for credit losses were $137 million and $126 million as of June 30, 2024 and December 31, 2023, respectively.

The Company did not have any losses on commercial mortgage and other loans purchased with credit deterioration as of June 30, 2024 or December 31, 2023.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Other Invested Assets

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


	June 30, 2024		December 31, 2023
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	9,786	$	8,929
Hedge funds	3,184		3,164
Real estate-related	2,877		2,578
Subtotal equity method	15,847		14,671
Fair value:
Private equity	1,708		1,247
Hedge funds	1,987		2,078
Real estate-related	937		800
Subtotal fair value	4,632		4,125
Total LPs/LLCs	20,479		18,796
Real estate held through direct ownership(1)	1,783		1,794
Derivative instruments	1,175		1,100
Other(2)	1,197		1,165
Total other invested assets	$	24,634	$	22,855

(1)As of June 30, 2024 and December 31, 2023, real estate held through direct ownership had mortgage debt of $145 million and $158 million, respectively.

(2)Primarily includes equity investments accounted for under the measurement alternative, strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding the Company’s holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Accrued Investment Income

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


	June 30, 2024		December 31, 2023
	(in millions)
Fixed maturities	$	2,886	$	2,727
Equity securities	5		6
Commercial mortgage and other loans	223		224
Policy loans	240		259
Other invested assets	29		23
Short-term investments and cash equivalents	51		48
Total accrued investment income	$	3,434	$	3,287

Write-downs on accrued investment income were less than $1 million for both the three months ended June 30, 2024 and 2023 and $1 million and less than $1 million for the six months ended June 30, 2024 and 2023, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Investment Income

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Fixed maturities, available-for-sale(1)	$	3,703	$	3,296	$	7,295	$	6,531
Fixed maturities, held-to-maturity(1)	0		50		0		100
Fixed maturities, trading	130		57		246		112
Assets supporting experience-rated contractholder liabilities	13		12		27		25
Equity securities	61		64		99		104
Commercial mortgage and other loans	642		560		1,253		1,103
Policy loans	119		124		241		248
Other invested assets	246		384		567		694
Short-term investments and cash equivalents	284		222		582		460
Gross investment income	5,198		4,769		10,310		9,377
Less: investment expenses	(349)		(293)		(697)		(581)
Net investment income	$	4,849	$	4,476	$	9,613	$	8,796

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

Realized Investment Gains (Losses), Net

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Fixed maturities(1)	$	(735)	$	(266)	$	(717)	$	(421)
Commercial mortgage and other loans	(44)		(14)		(95)		(26)
Investment real estate	(8)		(5)		(6)		27
LPs/LLCs	4		(1)		23		(17)
Derivatives	745		(663)		597		(305)
Other	(128)		11		(276)		21
Realized investment gains (losses), net	$	(166)	$	(938)	$	(474)	$	(721)

(1)Excludes fixed maturity securities classified as trading.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Unrealized Gains (Losses) on Investments within AOCI

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


	June 30, 2024		December 31, 2023
	(in millions)
Fixed maturity securities, available-for-sale with an allowance	$	(43)	$	(72)
Fixed maturity securities, available-for-sale without an allowance	(29,680)		(18,045)
Derivatives designated as cash flow hedges(1)	1,499		869
Derivatives designated as fair value hedges(1)	(70)		(60)
Other investments(2)	65		57
Net unrealized gains (losses) on investments	$	(28,229)	$	(17,251)

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

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

Repurchase Agreements and Securities Lending

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


	June 30, 2024								December 31, 2023
	Remaining Contractual Maturities of the Agreements								Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total		Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	6,483	$	0	$	0	$	6,483	$	5,693	$	0	$	0	$	5,693
U.S. public corporate securities	0		133		0		133		0		118		0		118
Foreign public corporate securities	0		17		0		17		0		0		0		0
Commercial mortgage-backed securities	296		0		0		296		245		0		0		245
Total securities sold under agreements to repurchase	$	6,779	$	150	$	0	$	6,929	$	5,938	$	118	$	0	$	6,056

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

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2024						December 31, 2023
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1	$	0	$	1	$	1	$	0	$	1
Obligations of U.S. states and their political subdivisions	32		0		32		67		0		67
Foreign government bonds	147		8		155		242		0		242
U.S. public corporate securities	5,225		315		5,540		4,399		420		4,819
Foreign public corporate securities	958		53		1,011		649		76		725
Equity securities	310		1		311		623		0		623
Total cash collateral for loaned securities(1)	$	6,673	$	377	$	7,050	$	5,981	$	496	$	6,477

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

4. VARIABLE INTEREST ENTITIES

In the normal course of its activities, the Company enters into relationships with various special-purpose entities and other entities that are deemed to be variable interest entities (“VIEs”). For additional information, see Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Consolidated Variable Interest Entities

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.


	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs(1)
	June 30, 2024		December 31, 2023		June 30, 2024		December 31, 2023
	(in millions)
Fixed maturities, available-for-sale	$	743	$	539	$	704	$	836

Fixed maturities, trading	568		943		0		0
Equity securities	92		106		0		0
Commercial mortgage and other loans	654		764		595		0
Other invested assets	5,563		4,319		518		485
Cash and cash equivalents	193		302		0		0
Accrued investment income	6		7		4		3
Other assets	650		1,023		604		636
Total assets of consolidated VIEs	$	8,469	$	8,003	$	2,425	$	1,960
Other liabilities	$	189	$	588	$	0	$	0
Notes issued by consolidated VIEs(2)	1,126		1,374		48		0
Total liabilities of consolidated VIEs	$	1,315	$	1,962	$	48	$	0

(1)Total assets of consolidated VIEs reflect $4,211 million and $4,003 million as of June 30, 2024 and December 31, 2023, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of June 30, 2024, the maturities of these obligations were between 0 and 13 years.

Unconsolidated Variable Interest Entities

The Company has determined that it is not the primary beneficiary of certain VIEs for which it may or may not be the investment manager. The Company’s maximum exposure to loss resulting from its relationship with unconsolidated VIEs is limited to its investment in the VIEs, which was $1,195 million and $1,165 million as of June 30, 2024 and December 31, 2023, respectively. These investments are reflected in “Fixed maturities, available-for-sale,” “Fixed maturities, trading,” “Equity securities” and “Other invested assets.” There are no liabilities associated with these unconsolidated VIEs on the Company’s Unaudited Interim Consolidated Statements of Financial Position.

In addition, in the normal course of its activities, the Company will invest in structured investments including VIEs for which it is not the investment manager. These structured investments typically invest in fixed income investments and are managed by third parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment. See Note 3 for details regarding the carrying amounts and classification of these assets. The Company has not provided material financial or other support that was not contractually required to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not control these entities.

Limited Partnerships and Limited Liability Companies

In the normal course of its activities, the Company will invest in limited partnerships and limited liability companies (“LPs/LLCs”), which include hedge funds, private equity funds and real estate-related funds and may or may not be VIEs. The Company classifies these investments as “Other invested assets” and its maximum exposure to loss associated with these VIE and non-VIE entities is limited to the amount of its investment, which was $20,479 million and $18,796 million as of June 30, 2024 and December 31, 2023, respectively.

5. DERIVATIVES AND HEDGING

Types of Derivative and Hedging Instruments

The Company utilizes various derivatives and hedging instruments to manage certain of its risks. Commonly used derivative and non-derivative hedging instruments include, but are not necessarily limited to:

Interest rate contracts: futures, swaps, forwards, options, caps and floors
Equity contracts: futures, options and total return swaps
Foreign exchange contracts: futures, options, forwards, swaps, and foreign currency debt instruments
Credit contracts: single and index reference credit default swaps

Other types of financial contracts that the Company accounts for as derivatives are:

To-be-announced (“TBA”) forward contracts, loan commitments, embedded derivatives and synthetic guaranteed investment contracts (“GICs”).

For detailed information regarding these contracts and the related strategies, see Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Primary Risks Managed by Derivatives

The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks they are utilized to manage, excluding embedded derivatives. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral. These netting impacts resulted in total derivative assets of $1,179 million and $1,103 million as of June 30, 2024 and December 31, 2023, respectively, and total derivative liabilities of $4,468 million and $4,181 million as of June 30, 2024 and December 31, 2023, respectively, reflected in the Unaudited Interim Consolidated Statements of Financial Position.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


Primary Underlying Risk /Instrument Type	June 30, 2024									December 31, 2023
			Fair Value									Fair Value
Gross Notional			Assets			Liabilities			Gross Notional			Assets			Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,515		$	23		$	(349)		$	3,582		$	55		$	(252)
Interest Rate Forwards	0			0			0			0			0			0
Foreign Currency
Foreign Currency Forwards	4,661			54			(193)			4,748			43			(195)
Currency/Interest Rate
Foreign Currency Swaps	29,902			2,434			(467)			27,933			1,952			(676)
Total Derivatives Designated as Hedge Accounting Instruments	$	38,078		$	2,511		$	(1,009)		$	36,263		$	2,050		$	(1,123)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	223,053		$	10,441		$	(24,033)		$	224,445		$	8,604		$	(21,599)
Interest Rate Futures	9,699			24			(81)			10,448			7			(26)
Interest Rate Options	34,783			357			(1,325)			32,718			292			(1,095)
Interest Rate Forwards	3,915			63			(81)			3,678			39			(14)
Foreign Currency
Foreign Currency Forwards	27,728			1,729			(1,546)			27,686			965			(954)
Foreign Currency Options	0			0			0			0			0			0
Currency/Interest Rate
Foreign Currency Swaps	7,350			600			(141)			7,771			502			(164)
Credit
Credit Default Swaps	3,957			83			0			3,446			64			0
Equity
Equity Futures	1,259			0			(4)			672			1			(2)
Equity Options	71,236			3,664			(2,312)			51,792			1,688			(1,662)
Total Return Swaps	9,595			29			(259)			9,237			48			(514)
Other
Other(1)	1,250			0			0			1,250			0			0
Synthetic GICs	76,469			2			(1)			78,009			1			(1)
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	470,294		$	16,992		$	(29,783)		$	451,152		$	12,211		$	(26,031)
Total Derivatives(2)(3)	$	508,372		$	19,503		$	(30,792)		$	487,415		$	14,261		$	(27,154)

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $9,684 million (including the Prismic funds withheld related embedded derivative net liability of $34 million) and $8,096 million (including the Prismic funds withheld related embedded derivative net liability of $508 million) as of June 30, 2024 and December 31, 2023, respectively, primarily included in “Policyholders’ account balances” and “Reinsurance and funds withheld payables.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

As of June 30, 2024, the following amounts were recorded on the Unaudited Interim Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges.


	June 30, 2024				December 31, 2023
Balance Sheet Line Item in which Hedged Item is Recorded	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)		Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)

	(in millions)
Fixed maturities, available-for-sale, at fair value	$	216	$	13	$	224	$	19

Policyholders’ account balances	$	(760)	$	292	$	(810)	$	219
Future policy benefits	$	(2,334)	$	376	$	(2,441)	$	298

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

Most of the Company’s derivatives do not qualify for hedge accounting for various reasons. For example: (i) derivatives that economically hedge embedded derivatives do not qualify for hedge accounting because changes in the fair value of the embedded derivatives are already recorded in net income; (ii) derivatives that are utilized as macro hedges of the Company’s exposure to various risks typically do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedge accounting rules; and (iii) synthetic GICs, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

Offsetting Assets and Liabilities

The following tables present recognized derivative instruments (excluding embedded derivatives), and repurchase and reverse repurchase agreements that are offset in the Unaudited Interim Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Unaudited Interim Consolidated Statements of Financial Position.


	June 30, 2024
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	19,369	$	(18,324)	$	1,045	$	(290)	$	755
Securities purchased under agreement to resell	1,088		0		1,088		(763)		325
Total assets	$	20,457	$	(18,324)	$	2,133	$	(1,053)	$	1,080
Offsetting of Financial Liabilities:
Derivatives	$	30,791	$	(26,324)	$	4,467	$	(3,703)	$	764
Securities sold under agreement to repurchase	6,929		0		6,929		(6,633)		296
Total liabilities	$	37,720	$	(26,324)	$	11,396	$	(10,336)	$	1,060

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	14,169	$	(13,158)	$	1,011	$	(240)	$	771
Securities purchased under agreement to resell	388		0		388		(363)		25
Total assets	$	14,557	$	(13,158)	$	1,399	$	(603)	$	796
Offsetting of Financial Liabilities:
Derivatives	$	27,154	$	(22,973)	$	4,181	$	(3,775)	$	406
Securities sold under agreement to repurchase	6,056		0		6,056		(5,811)		245
Total liabilities	$	33,210	$	(22,973)	$	10,237	$	(9,586)	$	651

(1)Amounts exclude the excess of collateral received/pledged from/to the counterparty.

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above, see “—Counterparty Credit Risk” below. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information regarding the Company’s accounting policy for securities repurchase and resale agreements, 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.

Cash Flow, Fair Value and Net Investment Hedges

The primary derivative and non-derivative instruments used by the Company in its fair value, cash flow and net investment hedge accounting relationships are interest rate swaps, currency swaps, currency forwards, and foreign currency denominated debts. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, or equity derivatives in any of its fair value, cash flow or net investment hedge accounting relationships.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables provide the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.


	Three Months Ended June 30, 2024
	Realized Investment Gains (Losses)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	1	$	0	$	0	$	0	$	0	$	(19)	$	(23)	$	0
Currency	0		0		0		0		0		0		1		0
Total gains (losses) on derivatives designated as hedge instruments	1		0		0		0		0		(19)		(22)		0
Gains (losses) on the hedged item:
Interest Rate	(1)		0		3		0		0		11		15		0
Currency	0		0		0		0		0		0		0		0
Total gains (losses) on hedged item	(1)		0		3		0		0		11		15		0
Amortization for gains (losses) excluded from assessment of the effectiveness

Currency	0		0		0		0		0		0		(3)		(19)
Total amortization for gain (loss) excluded from assessment of the effectiveness	0		0		0		0		0		0		(3)		(19)
Total gains (losses) on fair value hedges net of hedged item	0		0		3		0		0		(8)		(10)		(19)
Cash flow hedges
Interest Rate	(13)		0		(4)		0		0		0		0		11
Currency	0		0		0		0		0		0		0		9
Currency/Interest Rate	25		0		82		8		0		0		0		281
Total gains (losses) on cash flow hedges	12		0		78		8		0		0		0		301
Net investment hedges
Currency	0		0		0		0		0		0		0		2
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		2
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(371)		(451)		0		0		0		0		0		0
Currency	(13)		0		0		(3)		0		0		0		0
Currency/Interest Rate	66		0		0		0		0		0		0		0
Credit	4		0		0		0		0		0		0		0
Equity	591		(67)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0
Embedded Derivatives(2)	435		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	712		(518)		0		(3)		0		0		0		0
Total	$	724	$	(518)	$	81	$	5	$	0	$	(8)	$	(10)	$	284

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2024
	Realized Investment Gains (Losses)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	6	$	0	$	0	$	0	$	0	$	(69)	$	(82)	$	0
Currency	0		0		0		0		0		0		(15)		0
Total gains (losses) on derivatives designated as hedge instruments	6		0		0		0		0		(69)		(97)		0
Gains (losses) on the hedged item:
Interest Rate	(6)		0		6		0		0		74		63		0
Currency	0		0		0		0		0		0		14		0
Total gains (losses) on hedged item	(6)		0		6		0		0		74		77		0
Amortization for gains (losses) excluded from assessment of the effectiveness

Currency	0		0		0		0		0		0		(5)		(9)
Total amortization for gain (loss) excluded from assessment of the effectiveness	0		0		0		0		0		0		(5)		(9)
Total gains (losses) on fair value hedges net of hedged item	0		0		6		0		0		5		(25)		(9)
Cash flow hedges
Interest Rate	(13)		0		(7)		0		0		0		0		1
Currency	0		0		0		0		0		0		0		24
Currency/Interest Rate	28		0		158		85		0		0		0		605
Total gains (losses) on cash flow hedges	15		0		151		85		0		0		0		630
Net investment hedges
Currency	0		0		0		0		0		0		0		13
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		13
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,033)		(1,412)		0		0		0		0		0		0
Currency	(39)		0		0		(1)		0		0		0		0
Currency/Interest Rate	172		0		0		1		0		0		0		0
Credit	56		0		0		0		0		0		0		0
Equity	2,040		(560)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0
Embedded Derivatives(2)	(636)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	560		(1,972)		0		0		0		0		0		0
Total	$	575	$	(1,972)	$	157	$	85	$	0	$	5	$	(25)	$	634

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30, 2023
	Realized Investment Gains (Losses)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	5	$	0	$	0	$	0	$	0	$	(53)	$	(58)	$	0
Currency	(1)		0		0		0		0		0		50		0
Total gains (losses) on derivatives designated as hedge instruments	4		0		0		0		0		(53)		(8)		0
Gains (losses) on the hedged item:
Interest Rate	(5)		0		3		0		0		38		44		0
Currency	1		0		1		0		0		0		(50)		0
Total gains (losses) on hedged item	(4)		0		4		0		0		38		(6)		0

Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		0		(2)		(75)
Total amortization for gain (loss) excluded from assessment of the effectiveness	0		0		0		0		0		0		(2)		(75)
Total gains (losses) on fair value hedges net of hedged item	0		0		4		0		0		(15)		(16)		(75)
Cash flow hedges
Interest Rate	0		0		(6)		0		0		0		0		(12)
Currency	3		0		0		0		0		0		0		(1)
Currency/Interest Rate	13		0		80		(66)		0		0		0		(233)
Total gains (losses) on cash flow hedges	16		0		74		(66)		0		0		0		(246)
Net investment hedges
Currency	0		0		0		0		0		0		0		17
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		17
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(322)		(1,022)		0		0		0		0		0		0
Currency	(349)		0		0		4		0		0		0		0
Currency/Interest Rate	(35)		0		0		(1)		0		0		0		0
Credit	38		0		0		0		0		0		0		0
Equity	961		(440)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0
Embedded Derivatives	(970)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(677)		(1,462)		0		3		0		0		0		0
Total	$	(661)	$	(1,462)	$	78	$	(63)	$	0	$	(15)	$	(16)	$	(304)

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2023
	Realized Investment Gains (Losses)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	1	$	0	$	0	$	0	$	0	$	(16)	$	(14)	$	0
Currency	(1)		0		(1)		0		0		0		99		0
Total gains (losses) on derivatives designated as hedge instruments	0		0		(1)		0		0		(16)		85		0
Gains (losses) on the hedged item:
Interest Rate	(1)		0		6		0		0		1		(4)		0
Currency	1		0		1		0		0		0		(97)		0
Total gains (losses) on hedged item	0		0		7		0		0		1		(101)		0

Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		0		(4)		(95)
Total amortization for gain (loss) excluded from assessment of the effectiveness	0		0		0		0		0		0		(4)		(95)
Total gains (losses) on fair value hedges net of hedged item	0		0		6		0		0		(15)		(20)		(95)
Cash flow hedges
Interest Rate	(22)		0		(7)		0		0		0		0		32
Currency	8		0		0		0		0		0		0		(40)
Currency/Interest Rate	48		0		163		(146)		0		0		0		(511)
Total gains (losses) on cash flow hedges	34		0		156		(146)		0		0		0		(519)
Net investment hedges
Currency	0		0		0		0		0		0		0		16
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		16
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	225		(755)		0		0		0		0		0		0
Currency	(510)		0		0		5		0		0		0		0
Currency/Interest Rate	(63)		0		0		(3)		0		0		0		0
Credit	85		0		0		0		0		0		0		0
Equity	1,150		(678)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0
Embedded Derivatives	(1,215)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(328)		(1,433)		0		2		0		0		0		0
Total	$	(294)	$	(1,433)	$	162	$	(144)	$	0	$	(15)	$	(20)	$	(598)

(1)Excludes changes related to net investment hedges using non-derivative instruments of $61 million and $101 million for the three and six months ended June 30, 2024, respectively, and $46 million and $45 million for the three and six months ended June 30, 2023, respectively.

(2)Includes the Prismic funds withheld related embedded derivative realized gain (loss) of $189 million and $472 million for the three and six months ended June 30, 2024, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:


	(in millions)
Balance, December 31, 2023	$	869
Amount recorded in AOCI:
Interest Rate	(19)
Currency	28
Currency/Interest Rate	876
Total amount recorded in AOCI	885
Amount reclassified from AOCI to income:
Interest Rate	20
Currency	(4)
Currency/Interest Rate	(271)
Total amount reclassified from AOCI to income	(255)
Balance, June 30, 2024	$	1,499

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Unaudited Interim Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using June 30, 2024 values, it is estimated that a pre-tax gain of $334 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending June 30, 2025.

The exposures the Company is hedging with these qualifying cash flow hedges include the variability of future cash flows from forecasted transactions denominated in foreign currencies, the purchases of invested assets, and the receipt or payment of variable interest on existing financial instruments. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is 27 years.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. In addition, there were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

For net investment hedges, in addition to derivatives, the Company uses foreign currency denominated debt to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. For effective net investment hedges, the amounts, before applicable taxes, recorded in the cumulative translation adjustment within AOCI were $64 million and $113 million for the three and six months ended June 30, 2024, respectively, and $63 million and $61 million for the three and six months ended June 30, 2023, respectively.

Credit Derivatives

The following tables provide a summary of the notional and fair value of written credit protection, presented as assets (liabilities). The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 10 years for index reference.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2024
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6(2)				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(3)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(3)	0		0		0		0		3,302		41		0		0		0		0		655		42		3,957		83
Total	$	0	$	0	$	0	$	0	$	3,302	$	41	$	0	$	0	$	0	$	0	$	655	$	42	$	3,957	$	83


	December 31, 2023
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6(2)				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(3)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(3)	0		0		0		0		2,723		19		0		0		89		5		634		40		3,446		64
Total	$	0	$	0	$	0	$	0	$	2,723	$	19	$	0	$	0	$	89	$	5	$	634	$	40	$	3,446	$	64

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. (“Moody's”), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.

(2)The NAIC rating designation is due to approximately 5% and 3% as of June 30, 2024 and December 31, 2023, respectively, of the index reference name rated as NAIC 6.

(3)Single name credit default swaps may make reference to the credit of corporate debt, sovereign debt, and structured finance. Index reference NAIC designations are based on the lowest rated single name reference included in the index.

The Company has no purchased credit protection as of June 30, 2024 and December 31, 2023.

Counterparty Credit Risk

The Company is exposed to losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. The Company manages credit risk by: (i) entering into derivative transactions with highly rated major financial institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading through central clearing and over-the-counter (“OTC”) parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

Substantially all of the Company’s derivative agreements have zero thresholds which require daily full collateralization by the party in a liability position. In addition, certain of the Company’s derivative agreements contain credit-risk related contingent features; if the credit rating of one of the parties to the derivative agreement is to fall below a certain level, the party with positive fair value could request termination at the then fair value or demand immediate full collateralization from the party whose credit rating fell and is in a net liability position.

As of June 30, 2024, there were no net liability derivative positions with counterparties with credit risk-related contingent features. All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

6. FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement—Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value.

For a discussion of the Company’s valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, 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.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Assets and Liabilities by Hierarchy Level—The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.


	June 30, 2024
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	21,539	$	0	$		$	21,539
Obligations of U.S. states and their political subdivisions	0		7,649		6				7,655
Foreign government bonds	0		57,672		7				57,679
U.S. corporate public securities	0		100,710		64				100,774
U.S. corporate private securities(2)	0		38,938		3,119				42,057
Foreign corporate public securities	0		21,212		92				21,304
Foreign corporate private securities	0		31,165		1,728				32,893
Asset-backed securities(3)	0		14,259		1,136				15,395
Commercial mortgage-backed securities	0		8,336		916				9,252
Residential mortgage-backed securities	0		2,544		0				2,544
Subtotal	0		304,024		7,068				311,092
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		218		0				218

Foreign government bonds	0		547		0				547
Corporate securities	0		70		1				71



Equity securities	1,208		1,307		0				2,515

Subtotal	1,208		2,142		1				3,351
Market risk benefit assets	0		0		2,233				2,233
Fixed maturities, trading	0		8,730		1,520				10,250
Equity securities	4,705		1,837		556				7,098
Commercial mortgage and other loans	0		635		0				635
Other invested assets(5)	33		19,468		938		(18,324)		2,115
Short-term investments	539		4,653		9				5,201
Cash equivalents	576		6,743		4				7,323
Reinsurance recoverables and deposit receivables	0		192		363				555
Other assets	0		0		0				0
Separate account assets(6)(7)	9,311		161,119		342				170,772
Total assets	$	16,372	$	509,543	$	13,034	$	(18,324)	$	520,625
Market risk benefit liabilities	$	0	$	0	$	4,592	$		$	4,592
Policyholders’ account balances	0		0		10,213				10,213
Reinsurance and funds withheld payables	0		22		0				22
Other liabilities	85		30,706		1		(26,324)		4,468
Notes issued by consolidated VIEs	0		0		422				422
Total liabilities	$	85	$	30,728	$	15,228	$	(26,324)	$	19,717

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	21,796	$	0	$		$	21,796
Obligations of U.S. states and their political subdivisions	0		8,451		7				8,458
Foreign government bonds	0		70,182		8				70,190
U.S. corporate public securities	0		98,097		75				98,172
U.S. corporate private securities(2)	0		38,199		2,821				41,020
Foreign corporate public securities	0		19,576		67				19,643
Foreign corporate private securities	0		30,447		1,843				32,290
Asset-backed securities(3)	0		12,236		359				12,595
Commercial mortgage-backed securities	0		8,954		938				9,892
Residential mortgage-backed securities	0		2,265		0				2,265
Subtotal	0		310,203		6,118				316,321
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		206		0				206

Foreign government bonds	0		604		0				604
Corporate securities	0		79		0				79



Equity securities	1,004		1,275		0				2,279

Subtotal	1,004		2,164		0				3,168
Market risk benefit assets	0		0		1,981				1,981
Fixed maturities, trading	0		9,361		429				9,790
Equity securities(4)	5,953		1,538		512				8,003
Commercial mortgage and other loans	0		519		0				519
Other invested assets(5)	27		14,234		846		(13,158)		1,949
Short-term investments	125		3,746		29				3,900
Cash equivalents	2,240		8,058		4				10,302
Reinsurance recoverables and deposit receivables	0		(75)		224				149
Other assets	0		0		11				11
Separate account assets(6)(7)	8,925		161,793		1,094				171,812
Total assets	$	18,274	$	511,541	$	11,248	$	(13,158)	$	527,905
Market risk benefit liabilities	$	0	$	0	$	5,467	$		$	5,467
Policyholders’ account balances	0		0		7,752				7,752
Reinsurance and funds withheld payables	0		490		0				490
Other liabilities	35		27,112		1		(22,973)		4,175
Notes issued by consolidated VIEs	0		0		778				778
Total liabilities	$	35	$	27,602	$	13,998	$	(22,973)	$	18,662

(1)“Netting” amounts represent cash collateral of $(8,000) million and $(9,815) million as of June 30, 2024 and December 31, 2023, respectively.

(2)Excludes notes with fair value of $13,714 million (carrying amount of $13,714 million) and $12,370 million (carrying amount of $12,370 million) as of June 30, 2024 and December 31, 2023, respectively, which have been offset with the associated debt under a netting agreement.

(3)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(4)Equity securities excluded from the fair value hierarchy include a fund for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of December 31, 2023, the fair value of this investment was $239 million.

(5)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at NAV per share (or its equivalent) as a practical expedient. As of June 30, 2024 and December 31, 2023, the fair value of such investments was $4,613 million and $4,125 million, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(6)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. As of June 30, 2024 and December 31, 2023, the fair value of such investments was $26,087 million and $27,076 million, respectively.

(7)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information regarding significant internally-priced Level 3 assets and liabilities.


	As of June 30, 2024
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	4,157	Discounted cash flow	Discount rate	0.83%	30.00%	11.44%	Decrease
			Market comparables	EBITDA multiples(4)	5.4X	8.8X	6.9X	Increase
			Liquidation	Liquidation value	56.00%	99.02%	94.88%	Increase
Commercial mortgage-backed securities	$	916	Discounted cash flow	Liquidity premium	1.00%	1.00%	1.00%	Decrease
Market risk benefit assets(6)	$	2,233	Discounted cash flow	Lapse rate(8)	1%	20%		Increase
				Spread over SOFR(9)	0.35%	1.88%		Increase
				Utilization rate(10)	37%	94%		Decrease
				Withdrawal rate	See table footnote (11) below.
				Mortality rate(12)	0%	16%		Increase
				Equity volatility curve	15%	25%		Decrease
Equity securities	$	229	Discounted cash flow	Discount rate(5)	0.16%	12%		Decrease
			Market comparables	EBITDA multiples(4)	1.0X	12.2X	1.4X	Increase
			Net Asset Value	Share price	$3	$1,810	$1,726	Increase
Liabilities:
Market risk benefit liabilities(6)	$	4,592	Discounted cash flow	Lapse rate(8)	1%	20%		Decrease
				Spread over SOFR(9)	0.35%	1.88%		Decrease
				Utilization rate(10)	37%	94%		Increase
				Withdrawal rate	See table footnote (11) below.
				Mortality rate(12)	0%	16%		Decrease
				Equity volatility curve	15%	25%		Increase
Policyholders’ account balances(7)	$	10,212	Discounted cash flow	Lapse rate(8)	0%	80%		Decrease
				Spread over SOFR(9)	0.35%	1.90%		Decrease
				Mortality rate(12)	0%	23%		Decrease

				Option Budget(13)	(1)%	7%		Increase

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	As of December 31, 2023
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	1,311	Discounted cash flow	Discount rate	0.57%	20.00%	8.65%	Decrease
			Market comparables	EBITDA multiples(4)	5.5X	8.8X	7.4X	Increase
			Liquidation	Liquidation value	3.55%	68.00%	57.63%	Increase
Commercial mortgage-backed securities	$	938	Discounted cash flow	Liquidity premium	0.60%	0.75%	0.70%	Decrease
Market risk benefit assets(6)	$	1,981	Discounted cash flow	Lapse rate(8)	1%	20%		Increase
				Spread over SOFR(9)	0.41%	1.82%		Increase
				Utilization rate(10)	38%	95%		Decrease
				Withdrawal rate	See table footnote (11) below.
				Mortality rate(12)	0%	15%		Increase
				Equity volatility curve	15%	25%		Decrease
Equity securities	$	246	Discounted cash flow	Discount rate(5)	0.16%	20%		Decrease
			Market comparables	EBITDA multiples(4)	1.0X	10.0X	6.3X	Increase
			Net Asset Value	Share price	$3	$1,714	$733	Increase
Liabilities:
Market risk benefit liabilities(6)	$	5,467	Discounted cash flow	Lapse rate(8)	1%	20%		Decrease
				Spread over SOFR(9)	0.41%	1.82%		Decrease
				Utilization rate(10)	38%	95%		Increase
				Withdrawal rate	See table footnote (11) below.
				Mortality rate(12)	0%	15%		Decrease
				Equity volatility curve	15%	25%		Increase
Policyholders’ account balances(7)	$	7,752	Discounted cash flow	Lapse rate(8)	1%	80%		Decrease
				Spread over SOFR(9)	0.41%	1.85%		Decrease
				Mortality rate(12)	0%	23%		Decrease

				Option Budget(13)	(1)%	7%		Increase

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2)Includes assets classified as fixed maturities available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities, trading.

(3)Excludes notes which have been offset with the associated debt under a netting agreement.

(4)Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)For these investments, a range of discount rates is typically used (10% to 20%) and is therefore a more meaningful representation of the unobservable inputs used in the valuation rather than weighted average.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(6)Market risk benefits primarily represent fair value for all living benefit guarantees including accumulation, withdrawal and income benefits. Since the valuation methodology for these assets and liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(7)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these balances.

(9)The spread over the secured overnight financing rate (“SOFR”) swap curve represents the premium added to the proxy for the risk-free rate (SOFR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees as of June 30, 2024 and December 31, 2023, respectively. This spread includes an estimate of non-performance risk (“NPR”), which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements are insurance liabilities and are therefore senior to debt. Effective April 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. See Note 12 for additional information regarding this transaction. As a result of this transaction, a ceded MRB asset balance was established to fair value the reinsurance reimbursements to the Company. The establishment of the fair value also required an estimate of NPR for AuguStar, which may differ from the Company’s; however, the NPR spreads for AuguStar were developed using a methodology similar to that of the Company.

(10)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(11)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of June 30, 2024 and December 31, 2023, the minimum withdrawal rate assumption is 78% and 81%, respectively. As of June 30, 2024 and December 31, 2023 the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(12)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 50 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

(13)Option budget estimates the expected long-term cost of options used to hedge exposures associated with equity price and interest rate changes. The level of option budget determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.

Interrelationships Between Unobservable Inputs*—*In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

*Corporate Securities—*The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increase, credit spreads widen, which results in a decrease in fair value.

*Commercial Mortgage-backed Securities—*Interrelationships may exist between the prepayment rate, the default rate and/or loss severity, depending on specific market conditions. In stronger economic cycles, prepayment rates are generally driven by underlying property appreciation and subsequent cash-out refinances, while default rates and loss severity may be lower. During weaker economic cycles, prepayment rates may decline, while default rates and loss severity increase. Generally, a change in the assumption used for the probability of default would be accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates. The impact of these factors on average life and economics varies with the deal structure and tranche subordination.

Market Risk Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods (excluding MRBs disclosed in Note 11). When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.


	Three Months Ended June 30, 2024(6)
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3(8)		Transfers out of Level 3(8)		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:

U.S. states	$	6	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	6	$	0
Foreign government	7		0		0		0		0		0		0		0		0		7		0
Corporate securities(3)	4,965		(43)		417		(28)		0		(221)		(141)		54		0		5,003		(51)
Structured securities(4)	2,612		(10)		327		(1)		0		(63)		(492)		(1)		(320)		2,052		(11)






Other assets:
Fixed maturities, trading	1,330		(7)		330		0		0		(70)		0		(2)		(61)		1,520		(6)
Equity securities	506		12		54		(12)		0		(1)		(3)		1		(1)		556		12
Other invested assets	865		(39)		93		0		0		0		19		0		0		938		(40)
Short-term investments	32		3		2		0		0		(6)		(22)		0		0		9		2
Cash equivalents	0		0		4		0		0		0		0		0		0		4		0
Reinsurance recoverables and deposit receivables	303		14		59		0		0		(13)		0		0		0		363		1
Other assets	19		0		0		0		0		0		(19)		0		0		0		0
Separate account assets	338		(8)		80		(61)		0		(2)		0		0		(5)		342		(7)
Liabilities:
Policyholders’ account balances(5)	(9,864)		119		0		0		(469)		0		1		0		0		(10,213)		965
Other liabilities	(1)		0		0		0		0		0		0		0		0		(1)		0
Notes issued by consolidated VIEs	(405)		0		0		0		(17)		0		0		0		0		(422)		0

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30, 2024
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)
	(in millions)
Fixed maturities, available-for-sale	$	(30)	$	0	$	0	$	(33)	$	10	$	(31)	$	0	$	0	$	(30)

Other assets:
Fixed maturities, trading	0		(7)		0		0		0		0		(6)		0		0
Equity securities	0		12		0		0		0		0		12		0		0
Other invested assets	1		(40)		0		0		0		0		(40)		0		0
Short-term investments	3		0		0		0		0		2		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	14		0		0		0		0		1		0		0		0
Other assets	0		0		0		0		0		0		0		0		0
Separate account assets	0		0		(8)		0		0		0		0		(7)		0
Liabilities:
Policyholders’ account balances	119		0		0		0		0		965		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0


	Six Months Ended June 30, 2024(6)
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3(8)		Transfers out of Level 3(8)		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:

U.S. states	$	7	$	(1)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	6	$	(1)
Foreign government	8		0		0		0		0		(1)		0		0		0		7		0
Corporate securities(3)	4,806		(89)		819		(33)		0		(508)		(154)		162		0		5,003		(101)
Structured securities(4)	1,297		(7)		1,592		(1)		0		(75)		(493)		59		(320)		2,052		(11)






Other assets:
Fixed maturities, trading	429		(5)		894		(22)		0		(116)		(1)		402		(61)		1,520		1
Equity securities	512		(7)		75		(16)		0		(5)		6		1		(10)		556		(10)
Other invested assets	846		(47)		122		(2)		0		0		19		0		0		938		(47)
Short-term investments	29		1		7		0		0		(6)		(22)		0		0		9		0
Cash equivalents	4		0		4		0		0		0		(4)		0		0		4		0
Reinsurance recoverables and deposit receivables	224		51		114		0		0		(26)		0		0		0		363		25
Other assets	11		0		8		0		0		0		(19)		0		0		0		0
Separate account assets	1,094		(54)		136		(824)		0		(4)		0		0		(6)		342		(15)
Liabilities:
Policyholders’ account balances(5)	(7,752)		(1,376)		0		0		(1,087)		0		2		0		0		(10,213)		749
Other liabilities	(1)		0		0		0		0		0		0		0		0		(1)		0
Notes issued by consolidated VIEs	(778)		(8)		0		0		(27)		0		391		0		0		(422)		(8)

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2024
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)
	(in millions)
Fixed maturities, available-for-sale	$	(63)	$	0	$	0	$	(49)	$	15	$	(59)	$	0	$	0	$	(54)

Other assets:
Fixed maturities, trading	0		(6)		0		0		1		0		1		0		0
Equity securities	0		(7)		0		0		0		0		(10)		0		0
Other invested assets	0		(47)		0		0		0		0		(47)		0		0
Short-term investments	0		0		0		0		1		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	51		0		0		0		0		25		0		0		0
Other assets	0		0		0		0		0		0		0		0		0
Separate account assets	0		0		(54)		0		0		0		0		(15)		0
Liabilities:
Policyholders’ account balances	(1,376)		0		0		0		0		749		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		(8)		0		0		0		0		(8)		0		0


	Three Months Ended June 30, 2023(6)
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3(8)		Transfers out of Level 3(8)		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:

U.S. states	$	7	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	7	$	0
Foreign government	9		0		0		0		0		(1)		0		0		0		8		0
Corporate securities(3)	3,941		26		737		(47)		0		(177)		(18)		18		(19)		4,461		18
Structured securities(4)	1,438		6		(1)		(4)		0		(13)		0		0		(162)		1,264		(1)






Other assets:
Fixed maturities, trading	339		(2)		33		0		0		(9)		0		0		(59)		302		(3)
Equity securities	801		(23)		2		(8)		0		0		1		0		0		773		(10)
Other invested assets	803		(20)		84		(2)		0		0		0		0		0		865		(20)
Short-term investments	16		1		28		0		0		(20)		0		0		0		25		0
Cash equivalents	0		0		0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	156		26		39		0		0		(4)		0		0		0		217		20
Other assets(7)	11		0		0		0		0		1		0		0		0		12		0
Separate account assets	1,169		49		166		(130)		0		(40)		0		3		(42)		1,175		50
Liabilities:
Policyholders’ account balances(5)	(4,244)		(1,020)		0		0		(438)		0		73		0		0		(5,629)		(153)
Other liabilities	(1)		0		0		0		0		0		0		0		0		(1)		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0		0		0

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30, 2023
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)
	(in millions)
Fixed maturities, available-for-sale	$	(13)	$	0	$	0	$	43	$	2	$	(10)	$	0	$	0	$	26






Other assets:
Fixed maturities, trading	0		(2)		0		0		0		0		(3)		0		0
Equity securities	(1)		(22)		0		0		0		0		(10)		0		0
Other invested assets	(1)		(19)		0		0		0		(1)		(19)		0		0
Short-term investments	0		0		0		0		1		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	26		0		0		0		0		20		0		0		0
Other assets(7)	0		0		0		0		0		0		0		0		0
Separate account assets	0		0		49		0		0		0		0		50		0
Liabilities:
Policyholders’ account balances	(1,020)		0		0		0		0		(153)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0


	Six Months Ended June 30, 2023(6)
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3(8)		Transfers out of Level 3(8)		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:

U.S. states	$	7	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	7	$	0
Foreign government	8		0		0		0		0		0		0		0		0		8		0
Corporate securities(3)	3,858		35		1,264		(175)		0		(500)		(20)		18		(19)		4,461		39
Structured securities(4)	1,289		(29)		239		(5)		0		(25)		0		37		(242)		1,264		(37)






Other assets:
Fixed maturities, trading	304		3		66		0		0		(13)		1		0		(59)		302		1
Equity securities	627		(6)		9		(67)		0		(6)		216		1		(1)		773		(10)
Other invested assets	539		(19)		354		(9)		0		0		0		0		0		865		(18)
Short-term investments	18		3		31		0		0		(27)		0		0		0		25		0
Cash equivalents	0		0		0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	141		8		73		0		0		(5)		0		0		0		217		3
Other assets(7)	11		0		1		0		0		0		0		0		0		12		0
Separate account assets	1,081		88		309		(197)		0		(66)		0		3		(43)		1,175		87
Liabilities:
Policyholders’ account balances(5)	(3,492)		(1,271)		0		0		(839)		0		(27)		0		0		(5,629)		(262)
Other liabilities	(1)		0		0		0		0		0		0		0		0		(1)		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0		0		0

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2023
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)
	(in millions)
Fixed maturities, available-for-sale	$	(16)	$	0	$	0	$	19	$	3	$	(3)	$	0	$	0	$	5






Other assets:
Fixed maturities, trading	0		2		0		0		1		0		1		0		0
Equity securities	(1)		(5)		0		0		0		0		(10)		0		0
Other invested assets	(1)		(18)		0		0		0		(1)		(17)		0		0
Short-term investments	2		0		0		0		1		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Reinsurance recoverables and deposit receivables	8		0		0		0		0		3		0		0		0
Other assets(7)	0		0		0		0		0		0		0		0		0
Separate account assets	0		0		88		0		0		0		0		87		0
Liabilities:
Policyholders’ account balances	(1,271)		0		0		0		0		(262)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0

(1)“Other” includes additional activity not allocated to the specific categories within the rollforward of Level 3 Assets and Liabilities.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(5)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.

(6)Excludes MRB assets of $2,233 million and $1,951 million and MRB liabilities of $4,592 million and $5,462 million for periods ending June 30, 2024 and 2023, respectively. See Note 11 for additional information.

(7)Prior period amounts have been reclassified to conform to current period presentation.

(8)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

Derivative Fair Value Information

The following tables present the balances of certain derivative assets and liabilities measured at fair value on a recurring basis, as of the dates indicated, by the primary underlying risks they are used to manage. These tables include NPR and exclude embedded derivatives. The derivative assets and liabilities shown below are included in “Other invested assets” or “Other liabilities” in the tables contained within the sections “—Assets and Liabilities by Hierarchy Level” and “—Changes in Level 3 Assets and Liabilities,” above.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	As of June 30, 2024
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	24	$	10,884	$	2	$		$	10,910
Currency	0		1,783		0				1,783
Credit	0		83		0				83
Currency/Interest Rate	0		3,034		0				3,034
Equity	9		3,684		0				3,693
Other	0		0		0				0
Netting(1)							(18,324)		(18,324)
Total derivative assets	$	33	$	19,468	$	2	$	(18,324)	$	1,179
Derivative Liabilities:
Interest Rate	$	81	$	25,788	$	1	$		$	25,870
Currency	0		1,739		0				1,739
Credit	0		0		0				0
Currency/Interest Rate	0		608		0				608
Equity	5		2,570		0				2,575
Other	0		0		0				0
Netting(1)							(26,324)		(26,324)
Total derivative liabilities	$	86	$	30,705	$	1	$	(26,324)	$	4,468


	As of December 31, 2023
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	7	$	8,990	$	1	$		$	8,998
Currency	0		1,008		0				1,008
Credit	0		64		0				64
Currency/Interest Rate	0		2,454		0				2,454
Equity	19		1,718		0				1,737
Other	0		0		0				0
Netting(1)							(13,158)		(13,158)
Total derivative assets	$	26	$	14,234	$	1	$	(13,158)	$	1,103
Derivative Liabilities:
Interest Rate	$	26	$	22,960	$	1	$		$	22,987
Currency	0		1,149		0				1,149
Credit	0		0		0				0
Currency/Interest Rate	0		840		0				840
Equity	10		2,168		0				2,178
Other	0		0		0				0
Netting(1)							(22,973)		(22,973)
Total derivative liabilities	$	36	$	27,117	$	1	$	(22,973)	$	4,181

(1)“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreements.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Changes in Level 3 Derivative Assets and Liabilities—The following tables provide a summary of the changes in fair value of Level 3 derivative assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income, attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.


	Three Months Ended June 30, 2024
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	0		1		0		0		0		0		0		0		0		1		1


	Six Months Ended June 30, 2024
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	0		1		0		0		0		0		0		0		0		1		1


	Three Months Ended June 30, 2023
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	0		0		0		0		0		0		0		0		0		0		0


	Six Months Ended June 30, 2023
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	0		0		0		0		0		0		0		0		0		0		0

(1)Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”

(2)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

Nonrecurring Fair Value Measurements—The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3).

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Gains (Losses):
Commercial mortgage loans(1)	$	0	$	0	$	0	$	0

Investment real estate	$	(3)	$	(17)	$	(3)	$	(17)
Investment in JV/LP and Other	$	0	$	(37)	$	(7)	$	(54)


	June 30, 2024		December 31, 2023
	(in millions)
Carrying value after measurement as of period end:
Commercial mortgage loans(1)	$	0	$	34

Investment real estate(2)	$	69	$	113
Investment in JV/LP and Other(2)	$	128	$	186

(1)Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.

(2)Reported carrying values for 2024 include values as of the measurement periods of March 31, 2024 for “Investment in JV/LP and Other” and June 30, 2024 for “Investment real estate.” Reported carrying values for 2023 include values as of the measurement periods of June 30, 2023 for “Investment real estate” and June 30, 2023 and December 31, 2023 for “Investment in JV/LP and Other.”

Fair Value Option

The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made by the Company to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the Company to achieve consistent accounting for certain assets and liabilities. Changes in fair value are reflected in “Realized investment gains (losses), net” for commercial mortgage and other loans and “Other income (loss)” for other assets and notes issued by consolidated VIEs. Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Interest income on commercial mortgage and other loans is included in “Net investment income.” Interest income on these loans is recorded based on the effective interest rate as determined at the closing of the loan.

The following tables present information regarding assets and liabilities where the fair value option has been elected.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Liabilities:
Notes issued by consolidated VIEs:
Changes in fair value	$	0	$	0	$	8	$	0


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Commercial mortgage and other loans:
Interest income	$	1	$	3	$	3	$	4
Notes issued by consolidated VIEs:
Interest expense	$	3	$	0	$	11	$	0

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2024		December 31, 2023
	(in millions)
Commercial mortgage and other loans(1):
Fair value as of period end	$	635	$	519
Aggregate contractual principal as of period end	$	632	$	512
Other invested assets:
Fair value as of period end	$	19	$	0
Other assets:
Fair value as of period end	$	0	$	11
Notes issued by consolidated VIEs:
Fair value as of period end	$	422	$	778
Aggregate contractual principal as of period end	$	422	$	787

(1)As of June 30, 2024, for loans for which the fair value option has been elected, none of the loans were 90 days or more past due.

Fair Value of Financial Instruments

The tables below present the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Unaudited Interim Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.


	June 30, 2024
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:


Commercial mortgage and other loans	$	0	$	33	$	56,007	$	56,040	$	59,608
Policy loans	8		0		9,731		9,739		9,739
Other invested assets	0		95		0		95		95
Short-term investments	1,000		40		0		1,040		1,040
Cash and cash equivalents	8,681		1,107		0		9,788		9,788
Accrued investment income	0		3,434		0		3,434		3,434
Reinsurance recoverables and deposit receivables	0		7		5,478		5,485		5,485
Other assets	19		3,426		2		3,447		3,447
Total assets	$	9,708	$	8,142	$	71,218	$	89,068	$	92,636
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	29,618	$	39,822	$	69,440	$	75,572
Securities sold under agreements to repurchase	0		6,929		0		6,929		6,929
Cash collateral for loaned securities	0		7,050		0		7,050		7,050
Reinsurance and funds withheld payables(2)	0		9,917		(26)		9,891		9,891
Short-term debt(3)	0		503		85		588		588
Long-term debt(4)	558		16,978		742		18,278		19,353
Notes issued by consolidated VIEs	0		0		752		752		752
Other liabilities	0		5,775		32		5,807		5,807
Separate account liabilities—investment contracts	0		22,997		19,120		42,117		42,117
Total liabilities	$	558	$	99,767	$	60,527	$	160,852	$	168,059

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2023
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:


Commercial mortgage and other loans	$	0	$	41	$	55,611	$	55,652	$	58,786
Policy loans	8		0		10,039		10,047		10,047
Other invested assets	0		97		0		97		97
Short-term investments	1,092		13		0		1,105		1,105
Cash and cash equivalents	8,709		408		0		9,117		9,117
Accrued investment income	0		3,287		0		3,287		3,287
Reinsurance recoverables and deposit receivables	0		5		5,171		5,176		5,176
Other assets	43		3,059		0		3,102		3,102
Total assets	$	9,852	$	6,910	$	70,821	$	87,583	$	90,717
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	31,089	$	37,794	$	68,883	$	72,604
Securities sold under agreements to repurchase	0		6,056		0		6,056		6,056
Cash collateral for loaned securities	0		6,477		0		6,477		6,477
Reinsurance and funds withheld payables(2)	0		9,553		(23)		9,530		9,530
Short-term debt(3)	0		535		83		618		618
Long-term debt(4)	564		16,938		766		18,268		18,882
Notes issued by consolidated VIEs	0		0		596		596		596
Other liabilities	0		6,950		32		6,982		6,982
Separate account liabilities—investment contracts	0		24,050		21,315		45,365		45,365
Total liabilities	$	564	$	101,648	$	60,563	$	162,775	$	167,110

(1)Carrying values presented herein differ from those in the Company’s Unaudited Interim Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.

(2)Includes contracts reinsured through coinsurance with funds withheld agreement with Prismic Re with a fair value of $7,945 million (carrying amount of $7,945 million) and $8,036 million (carrying amount of $8,036 million), a portion of which relates to insurance contracts as of June 30, 2024 and December 31, 2023, respectively. See Note 12 for additional information regarding the reinsurance arrangement with Prismic Re.

(3)Excludes debt with fair value of $1,750 million (carrying amount of $1,750 million) and $2,000 million (carrying amount of $2,000 million) as of June 30, 2024 and December 31, 2023, respectively, which have been offset with the associated notes under a netting agreement.

(4)Excludes debt with fair value of $11,964 million (carrying amount of $11,964 million) and $10,370 million (carrying amount of $10,370 million) as of June 30, 2024 and December 31, 2023, respectively, which have been offset with the associated notes under a netting agreement.

7. DEFERRED POLICY ACQUISITION COSTS, DEFERRED SALES INDUCEMENTS AND VALUE OF BUSINESS ACQUIRED

Deferred Policy Acquisition Costs (“DAC”)

The following tables show a rollforward for the lines of business that contain material DAC balances, along with a reconciliation to the Company’s total DAC balance:

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2024
	Retirement Strategies		Individual Life				International Businesses				Total
	Individual Variable		Term Life		Variable/ Universal Life		Life Planner		Gibraltar Life and Other
	(in millions)
Balance, BOP	$	3,676	$	2,237	$	5,364	$	4,909	$	4,442	$	20,628
Capitalization	193		90		338		287		274		1,182
Amortization expense	(190)		(104)		(121)		(170)		(164)		(749)
Other adjustments(1)	0		(2)		(280)		(53)		3		(332)
Foreign currency adjustment	0		0		0		(303)		(159)		(462)
Balance, EOP	$	3,679	$	2,221	$	5,301	$	4,670	$	4,396	20,267
Other businesses											297
Total DAC balance											$	20,564

(1)Includes the impact of the reinsurance transaction with Somerset Reinsurance Ltd. in Individual Life (Universal Life). See Note 12 for additional information.


	Six Months Ended June 30, 2023
	Retirement Strategies		Individual Life				International Businesses				Total
	Individual Variable		Term Life		Variable/ Universal Life		Life Planner		Gibraltar Life and Other
	(in millions)
Balance, BOP	$	4,171	$	2,288	$	5,000	$	4,710	$	4,231	$	20,400
Capitalization	124		72		291		300		294		1,081
Amortization expense	(186)		(107)		(121)		(163)		(156)		(733)
Other adjustments(1)	(393)		0		0		9		0		(384)
Foreign currency adjustment	0		0		0		(124)		(117)		(241)
Balance, EOP	$	3,716	$	2,253	$	5,170	$	4,732	$	4,252	20,123
Other businesses											197
Total DAC balance											$	20,320

(1)Includes the impact of the reinsurance transaction with AuguStar in Individual Retirement Strategies. See Note 12 for additional information.

Deferred Sales Inducements (“DSI”)

The following table shows a rollforward of DSI balances for variable annuity products within Individual Retirement Strategies, which is the only line of business that contains a material DSI balance, along with a reconciliation to the Company’s total DSI balance:


	Six Months Ended June 30,
	2024		2023
	(in millions)
Balance, BOP	$	410	$	446
Capitalization	1		2
Amortization expense	(17)		(20)


Balance, EOP	394		428
Other businesses	31		34
Total DSI balance	$	425	$	462

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Value of Business Acquired (“VOBA”)

The following table shows a rollforward of VOBA balances for Gibraltar Life and Other, which is the only line of business that contains a material VOBA balance, along with a reconciliation to the Company’s total VOBA balance:


	Six Months Ended June 30,
	2024		2023
	(in millions)
Balance, BOP	$	511	$	597

Amortization expense	(21)		(26)

Foreign currency adjustment	(59)		(48)
Balance, EOP	431		523
Other businesses(1)	15		19
Total VOBA balance	$	446	$	542

(1)Represents Aoba Life business.

The following table provides estimated future amortization for the periods indicated:


	2024 (July-December)		2025		2026		2027		2028		Thereafter		Total
	(in millions)
Estimated future VOBA amortization	$	21	$	39	$	35	$	32	$	29	$	290	$	446

8. SEPARATE ACCOUNTS

The Company issues variable annuity and variable life insurance contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. Most variable annuity and variable life insurance contracts are offered with both separate and general account options. See Note 10 for additional information.

The assets supporting the variable portion of variable annuity and variable life insurance contracts are carried at fair value and reported as “Separate account assets” with an equivalent amount reported as “Separate account liabilities.” The liabilities related to the net amount at risk are reflected within future policy benefits or market risk benefits. Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in “Policy charges and fee income” and changes in liabilities for minimum guarantees are generally included in “Policyholders’ benefits” or “Realized investment gains (losses), net.”

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Separate Account Assets

The aggregate fair value of assets, by major investment asset category, supporting separate accounts is as follows:


	June 30, 2024		December 31, 2023
	(in millions)
Asset Type:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	4,361	$	4,411
Obligations of U.S. states and their political subdivisions	2,103		2,116
Foreign government bonds	107		101
U.S. corporate securities	11,588		12,782
Foreign corporate securities	3,024		3,288
Asset-backed securities	1,262		1,211
Mortgage-backed securities	14,394		14,253
Mutual funds:
Equity	92,142		88,397
Fixed Income	34,707		37,065
Other	5,303		5,587
Equity securities	4,767		5,410
Commercial mortgage and other loans	62		67
Other invested assets	18,839		20,739
Short-term investments	1,550		1,202
Cash and cash equivalents	2,650		2,259
Total	$	196,859	$	198,888

For the periods ended June 30, 2024 and December 31, 2023, there were no transfers of assets, other than cash, from the general account to a separate account; therefore, no gains or losses were recorded.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Separate Account Liabilities

The balances of and changes in separate account liabilities as of and for the periods ended are as follows:


	Six Months Ended June 30, 2024
			Retirement Strategies
	PGIM		Institutional		Individual		Group Insurance		Individual Life		Total
	(in millions)
Balance, BOP	$	32,648	$	11,011	$	94,130	$	25,021	$	39,223	$	202,033
Deposits	10,873		105		294		289		1,613		13,174
Investment performance	(972)		(94)		5,249		366		4,334		8,883

Policy charges	(57)		(5)		(1,123)		(120)		(566)		(1,871)
Surrenders and withdrawals	(9,886)		(878)		(6,815)		(339)		(516)		(18,434)
Benefit payments	(1,745)		(270)		(46)		(144)		(208)		(2,413)
Net transfers (to) from general account	13		(45)		(42)		6		(251)		(319)
Other	(458)		84		3		(532)		46		(857)

Balance, EOP	$	30,416	$	9,908	$	91,650	$	24,547	$	43,675	$	200,196
Other businesses(1)											(3,337)
Total separate account liabilities											$	196,859

Cash surrender value(2)	$	30,416	$	9,908	$	90,583	$	24,442	$	40,129	$	195,478

(1)Primarily represents activity from the Company’s Divested and Run-off Businesses as well as the impact of intercompany eliminations. There are no associated cash surrender charges.

(2)“Cash surrender value” represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. There are no cash surrender charges for the PGIM and Institutional Retirement Strategies segments.


	Six Months Ended June 30, 2023
			Retirement Strategies
	PGIM		Institutional		Individual		Group Insurance		Individual Life		Total
	(in millions)
Balance, BOP	$	40,056	$	11,428	$	93,395	$	23,513	$	32,930	$	201,322
Deposits	2,928		175		204		11		1,489		4,807
Investment performance	(99)		523		7,420		896		4,026		12,766

Policy charges	(42)		(6)		(1,181)		(139)		(528)		(1,896)
Surrenders and withdrawals	(2,828)		(226)		(4,667)		(14)		(409)		(8,144)
Benefit payments	(1,728)		(278)		(56)		(138)		(166)		(2,366)
Net transfers (to) from general account	(351)		(35)		(6)		0		(1,130)		(1,522)
Other	(709)		(182)		5		(382)		52		(1,216)

Balance, EOP	$	37,227	$	11,399	$	95,114	$	23,747	$	36,264	203,751
Other businesses(1)											(2,880)
Total separate account liabilities											$	200,871

Cash surrender value(2)	$	37,227	$	11,399	$	93,745	$	23,630	$	33,157	$	199,158

(1)Primarily represents activity from the Company’s Divested and Run-off Businesses as well as the impact of intercompany eliminations. There are no associated cash surrender charges.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

9. LIABILITY FOR FUTURE POLICY BENEFITS

Liability for Future Policy Benefits primarily consists of the following sub-components, which are discussed in greater detail below:

Benefit Reserves;
Deferred Profit Liability (“DPL”); and
Additional Insurance Reserves (“AIR”)

In 2024, the Company recognized a favorable impact to net income attributable to its annual reviews and update of assumptions and other refinements. The impact was favorable for direct and assumed Benefit Reserves and Deferred Profit Liability, net of the impact of flooring these liabilities at zero for each issue year cohort, primarily due to updates to mortality assumptions in Institutional Retirement Strategies and Long-Term Care, partially offset by unfavorable updates to policyholder behavior assumptions on certain life policies in International Businesses. Additionally, there was an unfavorable impact for direct and assumed Additional Insurance Reserves, primarily due to updates to policyholder behavior assumptions on universal life polices with secondary guarantees in Individual Life.

In 2023, the Company recognized an unfavorable impact to net income attributable to its annual reviews and update of assumptions and other refinements. The impact was unfavorable for direct and assumed Benefit Reserves and Deferred Profit Liability, net of the impact of flooring these liabilities at zero for each issue year cohort, primarily due to updates to policyholder behavior and claim assumptions in Long-Term Care. Additionally, there was an unfavorable impact for direct and assumed Additional Insurance Reserves, primarily due to unfavorable model refinements, partially offset by updates to economic assumptions, including expected future rates of returns, on universal life polices with secondary guarantees in Individual Life.

Benefit Reserves

The balances of and changes in Benefit Reserves as of and for the periods indicated consist of the three tables presented below: Present Value of Expected Net Premiums rollforward, Present Value of Expected Future Policy Benefits rollforward, and Net Liability for Future Policy Benefits.


	Six Months Ended June 30, 2024
	Present Value of Expected Net Premiums
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, BOP	$	71,407	$	11,274	$	29,064	$	26,367	$	3,286	$	141,398
Effect of cumulative changes in discount rate assumptions, BOP	11,869		228		596		622		16		13,331
Balance at original discount rate, BOP	83,276		11,502		29,660		26,989		3,302		154,729
Effect of assumption update	41		21		(328)		(535)		(276)		(1,077)
Effect of actual variances from expected experience and other activity	429		(131)		(818)		(529)		95		(954)
Adjusted balance, BOP	83,746		11,392		28,514		25,925		3,121		152,698
Issuances	11,192		418		1,215		573		0		13,398
Net premiums / considerations collected	(12,908)		(692)		(1,944)		(1,678)		(157)		(17,379)
Interest accrual	1,384		264		427		355		76		2,506
Foreign currency adjustment	(898)		0		(1,960)		(1,534)		0		(4,392)
Other adjustments	0		(3)		82		0		0		79
Balance at original discount rate, EOP	82,516		11,379		26,334		23,641		3,040		146,910
Effect of cumulative changes in discount rate assumptions, EOP	(15,077)		(590)		(1,347)		(1,232)		(128)		(18,374)
Balance, EOP	$	67,439	$	10,789	$	24,987	$	22,409	$	2,912	$	128,536
Other businesses, EOP											89
Total balance, EOP											$	128,625

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2024
	Present Value of Expected Future Policy Benefits
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, BOP	$	141,135	$	19,852	$	79,822	$	79,036	$	12,139	$	331,984
Effect of cumulative changes in discount rate assumptions, BOP	14,751		334		563		7,355		603		23,606
Balance at original discount rate, BOP	155,886		20,186		80,385		86,391		12,742		355,590
Effect of assumption update	(481)		21		(106)		(407)		(394)		(1,367)
Effect of actual variances from expected experience and other activity	483		(149)		(854)		(508)		95		(933)
Adjusted balance, BOP	155,888		20,058		79,425		85,476		12,443		353,290
Issuances	11,192		418		1,215		574		0		13,399
Interest accrual	3,003		470		1,282		1,089		303		6,147
Benefit payments	(6,317)		(795)		(2,437)		(2,632)		(155)		(12,336)
Foreign currency adjustment	(908)		0		(5,517)		(5,656)		0		(12,081)
Other adjustments	(63)		(10)		166		(4)		0		89
Balance at original discount rate, EOP	162,795		20,141		74,134		78,847		12,591		348,508
Effect of cumulative changes in discount rate assumptions, EOP	(20,163)		(1,108)		(5,612)		(11,151)		(1,445)		(39,479)
Balance, EOP	$	142,632	$	19,033	$	68,522	$	67,696	$	11,146	$	309,029
Other businesses, EOP											1,656


Total balance, EOP											$	310,685


	Six Months Ended June 30, 2024
	Net Liability for Future Policy Benefits - Benefit Reserves
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, EOP, pre-flooring	$	75,194	$	8,243	$	43,534	$	45,287	$	8,233	$	180,491
Flooring impact, EOP	46		0		28		16		0		90
Balance, EOP, post-flooring	75,240		8,243		43,562		45,303		8,233		180,581
Less: Reinsurance recoverables	5,098		671		88		257		0		6,114
Balance after reinsurance recoverables, EOP, post-flooring	$	70,142	$	7,572	$	43,474	$	45,046	$	8,233	$	174,467
Other businesses, EOP(1)											1,506


Total balance after reinsurance recoverables, EOP											$	175,973

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2023
	Present Value of Expected Net Premiums
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, BOP	$	52,620	$	11,282	$	30,689	$	28,951	$	2,932	$	126,474
Effect of cumulative changes in discount rate assumptions, BOP	14,349		572		1,354		1,326		103		17,704
Balance at original discount rate, BOP	66,969		11,854		32,043		30,277		3,035		144,178
Effect of assumption update	(1,117)		(1)		78		(175)		266		(949)
Effect of actual variances from expected experience and other activity	378		(81)		(417)		(332)		121		(331)
Adjusted balance, BOP	66,230		11,772		31,704		29,770		3,422		142,898
Issuances	5,783		338		1,253		865		0		8,239
Net premiums / considerations collected	(4,944)		(711)		(2,106)		(1,928)		(154)		(9,843)
Interest accrual	1,049		270		458		402		77		2,256
Foreign currency adjustment	3,816		0		(1,080)		(1,214)		0		1,522
Other adjustments	0		0		93		0		0		93
Balance at original discount rate, EOP	71,934		11,669		30,322		27,895		3,345		145,165
Effect of cumulative changes in discount rate assumptions, EOP	(18,002)		(497)		(594)		(614)		(89)		(19,796)
Balance, EOP	$	53,932	$	11,172	$	29,728	$	27,281	$	3,256	$	125,369
Other businesses, EOP											85
Total balance, EOP											$	125,454


	Six Months Ended June 30, 2023
	Present Value of Expected Future Policy Benefits
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, BOP	$	117,754	$	19,288	$	78,639	$	80,331	$	10,685	$	306,697
Effect of cumulative changes in discount rate assumptions, BOP	20,170		1,012		3,719		11,266		1,216		37,383
Balance at original discount rate, BOP	137,924		20,300		82,358		91,597		11,901		344,080
Effect of assumption update	(1,289)		(1)		145		44		357		(744)
Effect of actual variances from expected experience and other activity	351		(96)		(381)		(323)		136		(313)
Adjusted balance, BOP	136,986		20,203		82,122		91,318		12,394		343,023
Issuances	5,783		338		1,253		865		0		8,239
Interest accrual	2,457		472		1,325		1,162		292		5,708
Benefit payments	(5,643)		(779)		(1,777)		(2,270)		(122)		(10,591)
Foreign currency adjustment	3,898		0		(3,243)		(4,355)		0		(3,700)
Other adjustments	4		(13)		179		(11)		0		159
Balance at original discount rate, EOP	143,485		20,221		79,859		86,709		12,564		342,838
Effect of cumulative changes in discount rate assumptions, EOP	(22,882)		(823)		715		(6,148)		(999)		(30,137)
Balance, EOP	$	120,603	$	19,398	$	80,574	$	80,561	$	11,565	$	312,701
Other businesses, EOP											1,707


Total balance, EOP											$	314,408

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2023
	Net Liability for Future Policy Benefits - Benefit Reserves
	Retirement Strategies		Individual Life		International Businesses				Corporate and Other
	Institutional		Term Life		Life Planner		Gibraltar Life and Other		Long-Term Care		Total
	(in millions)
Balance, EOP, pre-flooring	$	66,671	$	8,225	$	50,846	$	53,279	$	8,309	$	187,330
Flooring impact, EOP	1		0		17		2		0		20
Balance, EOP, post-flooring	66,672		8,225		50,863		53,281		8,309		187,350
Less: Reinsurance recoverables	0		707		104		211		0		1,022
Balance after reinsurance recoverables, EOP, post-flooring	$	66,672	$	7,518	$	50,759	$	53,070	$	8,309	$	186,328
Other businesses, EOP(1)											1,553


Total balance after reinsurance recoverables, EOP											$	187,881

(1)Reflects balance after reinsurance recoverables of $63 million and $71 million at June 30, 2024 and 2023, respectively.

The following tables provide supplemental information related to the balances of and changes in Benefit Reserves included in the disaggregated tables above, on a gross (direct and assumed) basis, as of and for the period indicated:


	Six Months Ended June 30, 2024

	Retirement Strategies			Individual Life			International Businesses						Corporate and Other
	Institutional			Term Life			Life Planner			Gibraltar Life and Other			Long-Term Care
	($ in millions)
Undiscounted expected future gross premiums	$	133,585		$	22,965		$	61,195		$	49,376		$	6,823
Discounted expected future gross premiums (at original discount rate)	$	89,770		$	15,208		$	47,373		$	39,649		$	4,521
Discounted expected future gross premiums (at current discount rate)	$	71,759		$	14,451		$	45,365		$	37,697		$	4,339
Undiscounted expected future benefits and expenses	$	255,559		$	31,103		$	126,349		$	127,922		$	29,860
Weighted-average duration of the liability in years (at original discount rate)	9			10			18			18			17
Weighted-average duration of the liability in years (at current discount rate)	8			9			17			15			16
Weighted-average interest rate (at original discount rate)	4.72		%	5.15		%	3.49		%	2.64		%	4.91		%
Weighted-average interest rate (at current discount rate)	5.56		%	5.53		%	3.67		%	3.56		%	5.77		%


	Six Months Ended June 30, 2023

	Retirement Strategies			Individual Life			International Businesses						Corporate and Other
	Institutional			Term Life			Life Planner			Gibraltar Life and Other			Long-Term Care
	($ in millions)
Undiscounted expected future gross premiums	$	114,545		$	23,200		$	70,654		$	57,912		$	6,972
Discounted expected future gross premiums (at original discount rate)	$	79,109		$	15,427		$	54,694		$	46,591		$	4,561
Discounted expected future gross premiums (at current discount rate)	$	59,307		$	14,789		$	54,132		$	45,778		$	4,444
Undiscounted expected future benefits and expenses	$	220,313		$	31,195		$	140,232		$	142,232		$	30,913
Weighted-average duration of the liability in years (at original discount rate)	8			10			20			19			18
Weighted-average duration of the liability in years (at current discount rate)	8			10			20			18			18
Weighted-average interest rate (at original discount rate)	4.39		%	5.18		%	3.45		%	2.57		%	4.91		%
Weighted-average interest rate (at current discount rate)	5.30		%	5.28		%	2.85		%	2.75		%	5.47		%

For additional information regarding observable market information and the techniques used to determine the interest rate assumptions seen above, 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.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

For non-participating traditional and limited-payment products, if a cohort is in a loss position where the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for the present value of expected future policy benefits and non-level claim settlement expenses, then the liability for future policy benefits is adjusted at that time, and thereafter, such that all changes, both favorable and unfavorable, in expected benefits resulting from both actual experience deviations and changes in future assumptions are recognized immediately as a gain or loss respectively.

For both the first six months of 2024 and 2023, there was an immaterial impact to net income for non-participating traditional and limited-payment products, where net premiums exceeded gross premiums for certain issue-year cohorts.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Deferred Profit Liability

The balances of and changes in DPL as of and for the period indicated are as follows:


	Six Months Ended June 30, 2024
	Deferred Profit Liability
	Retirement Strategies		International Businesses
	Institutional		Life Planner		Gibraltar Life and Other		Total
	(in millions)
Balance, BOP, post-flooring	$	5,615	$	3,956	$	5,303	$	14,874
Less: Flooring impact, BOP	0		1		1		2
Balance, BOP, pre-flooring	5,615		3,955		5,302		14,872
Effect of assumption update	370		(150)		(138)		82
Effect of actual variances from expected experience and other activity	(30)		(17)		(29)		(76)
Adjusted balance, BOP	5,955		3,788		5,135		14,878
Profits deferred	89		778		568		1,435
Interest accrual	118		80		77		275
Amortization	(292)		(570)		(492)		(1,354)
Foreign currency adjustment	(2)		(238)		(254)		(494)
Other adjustments	0		17		0		17
Balance, EOP, pre-flooring	5,868		3,855		5,034		14,757
Flooring impact, EOP	0		1		1		2
Balance, EOP, post-flooring	5,868		3,856		5,035		14,759
Less: Reinsurance recoverables	401		9		30		440
Balance after reinsurance recoverables, EOP, post-flooring	$	5,467	$	3,847	$	5,005	14,319
Other businesses							154
Total balance after reinsurance recoverables, EOP							$	14,473


	Six Months Ended June 30, 2023
	Deferred Profit Liability
	Retirement Strategies		International Businesses
	Institutional		Life Planner		Gibraltar Life and Other		Total
	(in millions)
Balance, BOP, post-flooring	$	5,532	$	3,379	$	5,261	$	14,172
Less: Flooring impact, BOP	0		0		1		1
Balance, BOP, pre-flooring	5,532		3,379		5,260		14,171
Effect of assumption update	35		(67)		(228)		(260)
Effect of actual variances from expected experience and other activity	19		(4)		(18)		(3)
Adjusted balance, BOP	5,586		3,308		5,014		13,908
Profits deferred	197		850		665		1,712
Interest accrual	113		71		76		260
Amortization	(282)		(579)		(512)		(1,373)
Foreign currency adjustment	14		(72)		(188)		(246)
Other adjustments	0		20		0		20
Balance, EOP, pre-flooring	5,628		3,598		5,055		14,281
Flooring impact, EOP	0		0		1		1
Balance, EOP, post-flooring	5,628		3,598		5,056		14,282
Less: Reinsurance recoverables	0		8		10		18
Balance after reinsurance recoverables, EOP, post-flooring	$	5,628	$	3,590	$	5,046	14,264
Other businesses							149
Total balance after reinsurance recoverables, EOP							$	14,413

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Additional Insurance Reserves

AIR represents the additional liability for annuitization, death, or other insurance benefits, including guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”) contract features, that are above and beyond the contractholder's account balance for certain long-duration life contracts.

The following table shows a rollforward of AIR balances for variable and universal life products within Individual Life, which is the only line of business that contains a material AIR balance, for the period indicated, along with a reconciliation to the Company’s total AIR balance:


	Six Months Ended June 30,
	2024		2023
	(in millions)
Balance, including amounts in AOCI, BOP, post-flooring	$	14,308	$	12,684
Flooring impact and amounts in AOCI	843		1,285
Balance, excluding amounts in AOCI, BOP, pre-flooring	15,151		13,969
Effect of assumption update	153		23
Effect of actual variances from expected experience and other activity	150		26
Adjusted balance, BOP	15,454		14,018
Assessments collected(1)	591		518
Interest accrual	262		239
Benefits paid	(168)		(153)
Other adjustments	13		0
Balance, excluding amounts in AOCI, EOP, pre-flooring	16,152		14,622
Flooring impact and amounts in AOCI	(1,659)		(1,109)
Balance, including amounts in AOCI, EOP, post-flooring	14,493		13,513
Less: Reinsurance recoverables	7,026		5,484
Balance after reinsurance recoverables, including amounts in AOCI, EOP	7,467		8,029
Other businesses	63		147
Total balance after reinsurance recoverables	$	7,530	$	8,176

(1)Represents the portion of gross assessments required to fund the future policy benefits.


	Six Months Ended June 30,
	2024		2023
Weighted-average duration of the liability in years (at original discount rate)	22		22
Weighted-average interest rate (at original discount rate)	3.40	%	3.39	%

Future Policy Benefits Reconciliation

The following table presents the reconciliation of the ending balances from above rollforwards, Benefit Reserves, DPL, and AIR including other liabilities, gross of related reinsurance recoverable, to the total liability for Future Policy Benefits on the Company's Consolidated Statement of Financial Position as of the periods indicated:


	Six Months Ended June 30,
	2024		2023
	(in millions)
Benefit reserves, EOP, post-flooring	$	182,150	$	188,974
Deferred Profit Liability EOP, post-flooring	14,913		14,431
Additional insurance reserves, including amounts in AOCI, EOP, post-flooring	14,556		13,660
Subtotal of amounts disclosed above	211,619		217,065
Other Future Policy Benefits reserves(1)	50,711		51,584
Total Future Policy Benefits	$	262,330	$	268,649

(1)Primarily represents balances for which disaggregated rollforward disclosures are not required, including Closed Block liabilities, unpaid claims and claims expenses, and incurred but not reported and in course of settlement claim liabilities.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Revenue and Interest Expense

The following tables present revenue and interest expense related to Benefit Reserves, DPL, and AIR in the Company's Consolidated Statement of Operations as of the periods indicated:


	Six Months Ended June 30, 2024
	Revenues(1)
	Retirement Strategies		Individual Life				International Businesses
	Institutional		Term Life		Variable/Universal Life		Life Planner		Gibraltar Life and Other		Other Businesses		Total
	(in millions)
Benefit reserves	$	13,223	$	922	$	0	$	2,971	$	2,756	$	273	$	20,145
Deferred profit liability	(254)		0		0		(138)		14		(7)		(385)
Additional insurance reserves	0		0		1,622		0		0		0		1,622
Total	$	12,969	$	922	$	1,622	$	2,833	$	2,770	$	266	$	21,382


	Six Months Ended June 30, 2023
	Revenues(1)
	Retirement Strategies		Individual Life				International Businesses
	Institutional		Term Life		Variable/Universal Life		Life Planner		Gibraltar Life and Other		Other Businesses		Total
	(in millions)
Benefit reserves	$	5,335	$	923	$	0	$	3,340	$	3,174	$	273	$	13,045
Deferred profit liability	(83)		0		0		(291)		18		34		(322)
Additional insurance reserves	0		0		1,547		0		0		0		1,547
Total	$	5,252	$	923	$	1,547	$	3,049	$	3,192	$	307	$	14,270


	Six Months Ended June 30, 2024
	Interest Expense
	Retirement Strategies		Individual Life				International Businesses
	Institutional		Term Life		Variable/Universal Life		Life Planner		Gibraltar Life and Other		Other Businesses		Total
	(in millions)
Benefit reserves	$	1,619	$	206	$	0	$	855	$	734	$	253	$	3,667
Deferred profit liability	118		0		0		80		77		2		277
Additional insurance reserves	0		0		262		1		0		0		263
Total	$	1,737	$	206	$	262	$	936	$	811	$	255	$	4,207


	Six Months Ended June 30, 2023
	Interest Expense
	Retirement Strategies		Individual Life				International Businesses
	Institutional		Term Life		Variable/Universal Life		Life Planner		Gibraltar Life and Other		Other Businesses		Total
	(in millions)
Benefit reserves	$	1,408	$	202	$	0	$	867	$	760	$	242	$	3,479
Deferred profit liability	113		0		0		71		76		2		262
Additional insurance reserves	0		0		239		0		0		1		240
Total	$	1,521	$	202	$	239	$	938	$	836	$	245	$	3,981

(1)Represents gross premiums for benefit reserves, gross premiums, excluding impact of foreign currency adjustments for DPL and gross assessments for AIR.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

10. POLICYHOLDERS’ ACCOUNT BALANCES

The balances of and changes in policyholders' account balances as of and for the periods ended are as follows:


	Six Months Ended June 30, 2024
	Retirement Strategies									Group Insurance			Individual Life			International Businesses						Total
	Institutional			Individual Variable			Individual Fixed			Life/Disability			Variable/Universal Life			Life Planner			Gibraltar Life and Other
	($ in millions)
Balance, BOP	$	17,738		$	23,765		$	7,095		$	5,293		$	27,439		$	12,949		$	38,450		$	132,729
Deposits	3,466			3,755			2,815			491			1,224			1,048			3,207			16,006
Interest credited	356			224			105			75			379			624			444			2,207
Acquisitions and dispositions	0			0			0			0			0			(336)			0			(336)
Policy charges	(6)			(12)			0			(164)			(1,023)			(161)			(144)			(1,510)
Surrenders and withdrawals	(2,514)			(442)			(338)			(849)			(821)			(153)			(883)			(6,000)
Benefit payments	(292)			(38)			(37)			0			(69)			(135)			(1,122)			(1,693)
Net transfers (to) from separate account	0			49			0			(6)			285			0			0			328
Change in market value and other adjustments(1)	1			1,171			125			0			75			(11)			(14)			1,347
Foreign currency adjustment	0			0			0			0			0			(1,155)			(1,146)			(2,301)
Balance, EOP	$	18,749		$	28,472		$	9,765		$	4,840		$	27,489		$	12,670		$	38,792		$	140,777


Closed Block Division																						4,424
Unearned revenue reserve, unearned expense credit, and additional interest reserve																						5,622
Other(2)																						4,168
Total Policyholders' account balance																						$	154,991
Weighted-average crediting rate	3.90		%	1.71		%	2.49		%	2.96		%	2.76		%	9.75		%	2.30		%	3.23		%
Net amount at risk(3)	$	0		$	0		$	0		$	74,276		$	389,142		$	18,168		$	5,887		$	487,473
Cash surrender value(4)	$	18,749		$	26,972		$	8,193		$	3,794		$	23,664		$	11,284		$	34,059		$	126,715

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2023
	Retirement Strategies									Group Insurance			Individual Life			International Businesses						Total
	Institutional			Individual Variable			Individual Fixed			Life/Disability			Variable/Universal Life			Life Planner			Gibraltar Life and Other
	($ in millions)
Balance, BOP	$	17,376		$	17,524		$	4,643		$	5,839		$	26,502		$	11,168		$	35,325		$	118,377
Deposits	2,513			2,230			1,206			523			1,190			1,150			2,818			11,630
Interest credited	335			148			60			84			391			513			354			1,885
Acquisitions and Dispositions	0			0			0			0			0			0			0			0
Policy charges	(11)			(11)			(3)			(161)			(1,024)			(150)			(87)			(1,447)
Surrenders and withdrawals	(2,295)			(332)			(196)			(826)			(859)			(96)			(582)			(5,186)
Benefit payments	(272)			(40)			(40)			0			(81)			(137)			(1,002)			(1,572)
Net transfers (to) from separate account	0			16			0			0			1,155			0			0			1,171
Change in market value and other adjustments(1)	0			1,052			70			0			148			14			(2)			1,282
Foreign currency adjustment	0			0			0			0			0			(798)			(888)			(1,686)
Balance, EOP	$	17,646		$	20,587		$	5,740		$	5,459		$	27,422		$	11,664		$	35,936		$	124,454


Closed Block Division																						4,543
Unearned revenue reserve, unearned expense credit, and additional interest reserve																						4,930
Other(2)																						4,816
Total Policyholders' account balance																						$	138,743
Weighted-average crediting rate	3.83		%	1.55		%	2.32		%	2.99		%	2.90		%	8.98		%	1.99		%	3.11		%
Net amount at risk(3)	$	0		$	0		$	0		$	72,764		$	373,992		$	17,126		$	6,472		$	470,354
Cash surrender value(4)	$	17,646		$	18,638		$	4,541		$	3,992		$	22,936		$	10,046		$	31,477		$	109,276

(1)Primarily relates to changes in the value of embedded derivative instruments associated with the indexed options of certain products.

(2)Includes $5,621 million and $5,832 million of Full Service account balances reinsured to Great-West as of June 30, 2024 and 2023, respectively.

(3)The net amount at risk calculation includes both general account and separate account balances.

(4)Cash surrender value represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. There are no cash surrender charges for the Institutional Retirement Strategies segment.

“Policyholders’ account balances” for Institutional Retirement Strategies and Life Planner includes the Company’s Funding Agreement Notes Issuance Program (“FANIP”), which totaled $5,436 million and $5,502 million at June 30, 2024 and 2023, respectively. Under this program, which has a maximum authorized amount of $15 billion of medium-term notes and $6 billion of commercial paper, Delaware statutory trusts issue short-term commercial paper and/or medium-term notes to investors that are secured by funding agreements issued to the trusts by PICA. The outstanding commercial paper and notes have fixed or floating interest rates that range from 0.0% to 5.6% and original maturities ranging from two months to five years. Included in the amounts at June 30, 2024 and 2023 are funding agreements that secure the medium-term note liability, which are carried at amortized cost, of $3,474 million and $3,470 million, respectively, and short-term note liability of $1,994 million and $2,068 million, respectively.

“Policyholders’ account balances” for Institutional Retirement Strategies also includes collateralized funding agreements issued to the Federal Home Loan Bank of New York (“FHLBNY”) totaling $2,628 million as of both June 30, 2024 and 2023. These obligations, which are carried at amortized cost, have fixed interest rates that range from 1.925% to 4.510% and original maturities of seven years.

The Company issues variable life and universal life insurance contracts which may also include a “no-lapse guarantee” where the Company contractually guarantees to the contractholder a death benefit even when the account value drops to zero, as long as the “no-lapse guarantee” premium is paid.

The net amount at risk is generally defined as the current death benefit in excess of the current account balance at the balance sheet date. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including contractholder mortality, contract lapses, and premium pattern, as well as interest rate and equity market returns.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The Company also issues annuity contracts that provide certain death benefit and/or living benefit guarantees and are accounted for as MRBs. See Note 11 for additional information, including the net amount at risk associated with these guarantees.

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points (“bps”), between rates being credited to policyholders and the respective guaranteed minimums are as follows:


	June 30, 2024
Range of Guaranteed Minimum Crediting Rate (1)	At guaranteed minimum		1 - 50 bps above guaranteed minimum		51 - 150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
	(in millions)
Retirement Strategies - Institutional
Less than 1.00%	$	503	$	0	$	0	$	0	$	503
1.00% - 1.99%	1,519		0		0		0		1,519
2.00% - 2.99%	608		0		0		0		608
3.00% - 4.00%	4,674		0		0		0		4,674
Greater than 4.00%	2,118		0		0		0		2,118
Total	$	9,422	$	0	$	0	$	0	$	9,422
Retirement Strategies - Individual Variable
Less than 1.00%	$	618	$	651	$	254	$	0	$	1,523
1.00% - 1.99%	187		118		2		0		307
2.00% - 2.99%	24		5		4		0		33
3.00% - 4.00%	1,811		7		9		0		1,827
Greater than 4.00%	90		0		0		0		90
Total	$	2,730	$	781	$	269	$	0	$	3,780
Retirement Strategies - Individual Fixed
Less than 1.00%	$	0	$	4	$	10	$	707	$	721
1.00% - 1.99%	482		96		234		79		891
2.00% - 2.99%	548		461		563		16		1,588
3.00% - 4.00%	1,036		76		8		2		1,122
Greater than 4.00%	90		0		0		0		90
Total	$	2,156	$	637	$	815	$	804	$	4,412
Group Insurance - Life / Disability
Less than 1.00%	$	0	$	0	$	0	$	921	$	921
1.00% - 1.99%	0		0		0		0		0
2.00% - 2.99%	27		0		0		0		27
3.00% - 4.00%	1,448		0		0		62		1,510
Greater than 4.00%	72		0		0		0		72
Total	$	1,547	$	0	$	0	$	983	$	2,530
Individual Life - Variable / Universal Life
Less than 1.00%	$	0	$	0	$	0	$	324	$	324
1.00% - 1.99%	247		0		1,678		1,848		3,773
2.00% - 2.99%	31		1,480		2,837		448		4,796
3.00% - 4.00%	4,300		3,897		1,342		28		9,567
Greater than 4.00%	5,433		0		0		0		5,433
Total	$	10,011	$	5,377	$	5,857	$	2,648	$	23,893
International Businesses - Life Planner
Less than 1.00%	$	298	$	40	$	83	$	2,560	$	2,981
1.00% - 1.99%	2,601		25		0		0		2,626
2.00% - 2.99%	1,861		0		0		0		1,861
3.00% - 4.00%	351		0		0		0		351
Greater than 4.00%	375		0		0		0		375
Total	$	5,486	$	65	$	83	$	2,560	$	8,194
International Businesses - Gibraltar Life and Other
Less than 1.00%	$	15,348	$	0	$	0	$	0	$	15,348
1.00% - 1.99%	7,844		57		0		0		7,901
2.00% - 2.99%	2,894		293		32		0		3,219
3.00% - 4.00%	5,501		0		0		0		5,501
Greater than 4.00%	6,728		0		0		0		6,728
Total	$	38,315	$	350	$	32	$	0	$	38,697

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2023
Range of Guaranteed Minimum Crediting Rate (1)	At guaranteed minimum		1 - 50 bps above guaranteed minimum		51 - 150 bps above guaranteed minimum		Greater than 150 bps above guaranteed minimum		Total
	(in millions)
Retirement Strategies - Institutional
Less than 1.00%	$	401	$	0	$	0	$	0	$	401
1.00% - 1.99%	1,565		0		0		0		1,565
2.00% - 2.99%	557		0		0		0		557
3.00% - 4.00%	5,891		0		0		0		5,891
Greater than 4.00%	1,728		0		0		0		1,728
Total	$	10,142	$	0	$	0	$	0	$	10,142
Retirement Strategies - Individual Variable
Less than 1.00%	$	973	$	834	$	18	$	0	$	1,825
1.00% - 1.99%	232		2		1		0		235
2.00% - 2.99%	30		5		0		0		35
3.00% - 4.00%	2,119		8		10		0		2,137
Greater than 4.00%	101		0		0		0		101
Total	$	3,455	$	849	$	29	$	0	$	4,333
Retirement Strategies - Individual Fixed
Less than 1.00%	$	0	$	0	$	0	$	0	$	0
1.00% - 1.99%	559		136		245		84		1,024
2.00% - 2.99%	519		467		48		11		1,045
3.00% - 4.00%	355		8		0		0		363
Greater than 4.00%	100		0		0		0		100
Total	$	1,533	$	611	$	293	$	95	$	2,532
Group Insurance - Life / Disability
Less than 1.00%	$	0	$	0	$	0	$	1,342	$	1,342
1.00% - 1.99%	0		0		0		0		0
2.00% - 2.99%	55		0		0		0		55
3.00% - 4.00%	1,621		0		0		0		1,621
Greater than 4.00%	3		0		0		0		3
Total	$	1,679	$	0	$	0	$	1,342	$	3,021
Individual Life - Variable / Universal Life
Less than 1.00%	$	0	$	0	$	0	$	36	$	36
1.00% - 1.99%	164		0		2,681		363		3,208
2.00% - 2.99%	23		1,724		2,826		287		4,860
3.00% - 4.00%	7,386		2,024		1,308		11		10,729
Greater than 4.00%	5,560		0		0		0		5,560
Total	$	13,133	$	3,748	$	6,815	$	697	$	24,393
International Businesses - Life Planner
Less than 1.00%	$	342	$	26	$	91	$	1,136	$	1,595
1.00% - 1.99%	2,915		24		0		0		2,939
2.00% - 2.99%	2,080		0		0		0		2,080
3.00% - 4.00%	333		0		0		0		333
Greater than 4.00%	388		0		0		0		388
Total	$	6,058	$	50	$	91	$	1,136	$	7,335
International Businesses - Gibraltar Life and Other
Less than 1.00%	$	16,373	$	0	$	0	$	0	$	16,373
1.00% - 1.99%	9,143		68		0		0		9,211
2.00% - 2.99%	3,225		327		39		0		3,591
3.00% - 4.00%	3,943		0		0		0		3,943
Greater than 4.00%	2,612		0		0		0		2,612
Total	$	35,296	$	395	$	39	$	0	$	35,730

(1) Excludes contracts without minimum guaranteed crediting rates, such as funds with indexed-linked crediting options and Japan variable products.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Unearned Revenue Reserve (“URR”)

The balance of and changes in URR as of and for the periods ended are as follows:


	Six Months Ended June 30, 2024
	Individual Life		International Businesses
	Variable/ Universal Life		Life Planner		Gibraltar Life and Other		Total
	(in millions)
Balance, BOP	$	4,613	$	359	$	95	$	5,067
Unearned revenue	436		71		9		516
Amortization expense	(118)		(9)		(2)		(129)
Other adjustments	0		(56)		(1)		(57)
FX adjustment	0		(26)		(8)		(34)
Balance, EOP	4,931		339		93		5,363
Less: Reinsurance recoverables	404		0		0		404
Balance after reinsurance recoverables, EOP	$	4,527	$	339	$	93	$	4,959
Other businesses							53
Total balance after reinsurance recoverables, EOP							$	5,012


	Six Months Ended June 30, 2023
	Individual Life		International Businesses
	Variable/ Universal Life		Life Planner		Gibraltar Life and Other		Total
	(in millions)
Balance, BOP	$	3,983	$	231	$	81	$	4,295
Unearned revenue	412		69		11		492
Amortization expense	(100)		(4)		(3)		(107)
Other adjustments	0		1		0		1
FX adjustment	0		(16)		(4)		(20)
Balance, EOP	4,295		281		85		4,661
Less: Reinsurance recoverables	0		0		0		0
Balance after reinsurance recoverables, EOP	$	4,295	$	281	$	85	$	4,661
Other businesses							47
Total balance after reinsurance recoverables, EOP							$	4,708

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

11. MARKET RISK BENEFITS

The following table shows a rollforward of MRB balances for variable annuity products within Individual Retirement Strategies, which is the only line of business that contains a material MRB balance, along with a reconciliation to the Company’s total net MRB positions as of the following dates:


	Six Months Ended June 30,
	2024		2023
	(in millions)
Balance, BOP	$	4,038	$	4,987
Effect of cumulative changes in NPR	1,137		1,828
Balance, BOP, before effect of changes in NPR	5,175		6,815
Attributed fees collected	569		601
Claims paid	(42)		(59)
Interest accrual	130		173
Actual in force different from expected	(6)		36
Effect of changes in interest rates	(909)		(696)
Effect of changes in equity markets	(1,165)		(1,389)
Effect of assumption update	93		342
Issuances	29		5


Other adjustments	15		(22)
Balance, EOP, before effect of changes in NPR	3,889		5,806
Effect of cumulative changes in NPR	(942)		(1,751)
Balance, EOP	2,947		4,055
Less: Reinsured MRBs	635		637
Balance, EOP, net of reinsurance	2,312		3,418
Other businesses	47		93
Total net MRB balance	$	2,359	$	3,511

In both 2024 and 2023, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update for direct and assumed MRBs, primarily due to updates to policyholder behavior assumptions on certain variable annuities.

The Company issues certain variable annuity insurance contracts where the Company contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract adjusted for any partial withdrawals plus a minimum return, and/or (2) the highest anniversary contract value on a specified date adjusted for any withdrawals. These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods.

The Company also issues indexed variable annuity contracts for which the return is tied to the return of specific indices where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract adjusted for any partial withdrawals upon death. In certain of these indexed variable annuity contracts, the Company also contractually guarantees to the contractholder withdrawal benefits payable during specific periods.

For guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, contract lapses and contractholder mortality.

For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Company’s primary risk exposures for these contracts relates to actual

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, timing of annuitization, contract lapses and contractholder mortality.

For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance.

For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility and contractholder behavior.

The following table presents accompanying information to the rollforward table above.


	June 30, 2024		June 30, 2023
	($ in millions)
Net amount at risk(1)	$	9,358	$	10,885
Weighted-average attained age of contractholders	71		69

(1)For contracts with multiple benefit features, the highest net amount at risk for each contract is included.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The tables below reconcile MRB asset and liability positions as of the following dates:


	June 30, 2024
	Retirement Strategies
	Individual Variable		Other Businesses		Total
	(in millions)
Direct and assumed	$	1,441	$	11	$	1,452
Ceded	780		1		781
Total MRB assets	$	2,221	$	12	$	2,233

Direct and assumed	$	4,388	$	59	$	4,447
Ceded	145		0		145
Total MRB liabilities	$	4,533	$	59	$	4,592

Net liability	$	2,312	$	47	$	2,359


	June 30, 2023
	Retirement Strategies
	Individual Variable		Other Businesses		Total
	(in millions)
Direct and assumed	$	1,185	$	11	$	1,196
Ceded	752		3		755
Total MRB assets	$	1,937	$	14	$	1,951

Direct and assumed	$	5,240	$	106	$	5,346
Ceded	115		1		116
Total MRB liabilities	$	5,355	$	107	$	5,462

Net liability	$	3,418	$	93	$	3,511

12. REINSURANCE

The Company participates in reinsurance with third parties primarily to provide additional capacity for future growth, limit the maximum net loss potential arising from large risks and acquire or dispose of businesses.

Effective January 2024, 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 (“Pruco Life”) and Pruco Life Insurance Company of New Jersey (“PLNJ”), 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 as of December 31, 2023. This transaction is structured on a modified coinsurance basis and follows reinsurance accounting. As a result of the transaction, the Company recognized a $363 million deferred reinsurance gain that will be amortized into income over the estimated remaining life of the reinsured policies. The reinsurance payables, which represent the Company’s obligations under the modified coinsurance arrangement, are netted with the reinsurance recoverables in the Unaudited Interim Consolidated Statements of Financial Position. Separately, effective September 2019, Prudential Annuities Life Assurance Corporation (“PALAC”), a previously wholly-owned subsidiary of Prudential Financial, entered into an agreement with Somerset Re, to coinsure business, on a quota share funds withheld basis, related to fixed index annuities. This agreement was subsequently novated from PALAC to Pruco Life effective October 2021, in connection with the sale of PALAC effective April 2022. Under this reinsurance agreement, which is accounted for under deposit method of accounting, the Company cedes to Somerset Re its quota share of the insurance liabilities with respect to the reinsured contracts. The deposit receivables were

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

$2,152 million and $1,619 million as of June 30, 2024 and December 31, 2023, respectively, and the funds withheld liabilities were $1,974 million and $1,518 million as of June 30, 2024 and December 31, 2023, respectively.

Effective September 2023, the Company entered into an agreement with Prismic Re to reinsure approximately $9 billion of reserves, representing approximately 70% of the in-force structured settlement annuities business previously issued by PICA, 90% of which is on a coinsurance with funds withheld basis and 10% of which is on a coinsurance basis. The reinsurance of the structured settlement annuities that provide periodic payments for the lifetime of the annuitant follows reinsurance accounting. The reinsurance of structured settlement annuities that provide payments for a guaranteed period of time and do not include life contingency risk follows deposit accounting. As a result of the transaction, the Company recognized a $240 million deferred reinsurance loss that will be amortized into income over the estimated remaining life of the reinsured contracts.

Effective April 2023, the Company entered into an agreement with The Ohio National Life Insurance Company, now known as 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, a wholly-owned subsidiary of Prudential Financial. This block represents approximately 10% of the Company’s remaining legacy in-force traditional variable annuity block by account value. The Company ceded 100% of separate account liabilities under modified coinsurance and 100% of general account liabilities under coinsurance of its Pruco Life issued PDI traditional variable annuity contracts. The general account liabilities associated with PDI’s guaranteed living and death benefits and the corresponding reinsurance of those liabilities are accounted for as market risk benefits. As a result of the transaction, the Company recognized a $309 million deferred reinsurance gain that will be amortized into income over the estimated remaining life of the reinsured policies.

Effective April 2022, in connection with the sale of the Full Service Retirement business, the Company entered into separate agreements with external counterparties, Great-West and Great-West Life & Annuity Insurance Company of New York, now known as Empower Annuity Insurance Company of America and Empower Life & Annuity Insurance Company of New York, respectively, to reinsure a portion of its Full Service Retirement business. The Company ceded 100% of separate account liabilities under modified coinsurance and 100% of general account liabilities under coinsurance of its Full Service Retirement business. The Company’s Full Service Retirement business consists of market value and stable value separate accounts as well as general account products, including stable value accumulation funds and a stable value wrap product known as a synthetic guaranteed investment contract. The majority of these products are considered investment contracts as they do not contain significant insurance risk; therefore, the reinsurance of such products are accounted for under deposit accounting. The reinsurance agreement offers the policyholders the opportunity to novate their contracts from the Company to Empower and any such novated contracts shall cease to be reinsured under this agreement.

Effective April 2022, in connection with the sale of the PALAC legal entity, now known as Fortitude Life Insurance and Annuity Company (“FLIAC”), the Company entered into a reinsurance agreement with FLIAC under which the Company assumed all of FLIAC’s indexed variable annuities under modified coinsurance. The reinsurance of the indexed variable annuities transfers all significant risks, including mortality risk, embedded in the reinsured contracts. As a result of the agreement, reinsurance recoverables includes the assumed modified coinsurance receivable, which reflects the value of the invested assets retained by FLIAC and the associated asset returns. The Company also assumed via coinsurance all of FLIAC’s fixed indexed annuities with a guaranteed lifetime withdrawal income feature, which are accounted for under deposit accounting. The reinsurance agreement offers the policyholders the opportunity to novate their contracts from FLIAC to the Company and any such novated contracts shall cease to be reinsured under this agreement.

Effective April 2015, the Company entered into an agreement with Union Hamilton Reinsurance, Ltd. (“Union Hamilton”) an external counterparty, to reinsure approximately 50% of the Prudential Premier® Retirement Variable Annuity with Highest Daily Lifetime Income (“HDI”) v.3.0 business, a guaranteed benefit feature. This reinsurance agreement covered most new HDI v.3.0 variable annuity business issued between April 1, 2015 and December 31, 2016 on a quota share basis, with Union Hamilton’s cumulative quota share amounting to $2.9 billion of new rider premiums as of December 31, 2016. Reinsurance on business subject to this agreement remains in force for the duration of the underlying annuity contracts. New sales subsequent to December 31, 2016 are not covered by this external reinsurance agreement. This reinsurance agreement is accounted for as market risk benefits.

In January 2013, the Company acquired the Hartford Life Business through reinsurance transactions with three subsidiaries of Hartford Financial Services Group, Inc. (“Hartford Financial”). Under the related agreements, the Company provided reinsurance for approximately 700,000 life insurance policies with net retained face amount in force of approximately $141 billion. The Company acquired the general account business through a coinsurance arrangement and, for certain types of

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

general account policies, a modified coinsurance arrangement. The Company acquired the separate account business through a modified coinsurance arrangement. In May 2018, Hartford Financial sold a group of operating subsidiaries, which included two of the Company’s counterparties to these reinsurance arrangements, to Talcott Resolution Life Insurance Company (“Talcott Resolution”). Talcott Resolution was acquired by Sixth Street in July 2021. There was no impact to the terms, rights or obligations of the Company, or operation of these reinsurance arrangements, as a result of these changes in control of such counterparties.

Since 2011, the Company has entered into a number of reinsurance agreements to assume pension liabilities in the United Kingdom. Under these arrangements, the Company assumes the longevity risk, and in some arrangements, also the investment risk associated with the pension benefits of certain specified beneficiaries.

In 2006, the Company acquired the variable annuity business of The Allstate Corporation (“Allstate”) through a reinsurance transaction. The reinsurance arrangements with Allstate include a coinsurance arrangement associated with the general account liabilities assumed and a modified coinsurance arrangement associated with the separate account liabilities assumed. The reinsurance payables, which represent the Company’s obligations under the modified coinsurance arrangement, are netted with the reinsurance recoverables in the Unaudited Interim Consolidated Statements of Financial Position. During the fourth quarter of 2021, Allstate sold the two counterparties to the aforementioned variable annuity reinsurance transaction to third parties. There was no impact to the terms, rights or obligations of the Company, or operation of these reinsurance arrangements, as a result of this change in control of such counterparties.

For the domestic business, life and disability reinsurance is accomplished through various plans of reinsurance, primarily yearly renewable term, per person excess, excess of loss, and coinsurance. On policies sold since 2000, the Company has reinsured a significant portion of the individual life mortality risk. Placement of reinsurance is accomplished primarily on an automatic basis with some specific risks reinsured on a facultative basis. The Company is authorized and has historically retained up to $30 million per life, but reduced its operating retention limit to $20 million per life in 2013 and then down to $10 million per life for new business starting in 2020. Retention in excess of the operating limit is on an exception basis.

The international business primarily uses reinsurance to obtain experience with respect to certain new product offerings and to a lesser extent, to mitigate mortality risk for certain protection products and for capital management purposes.

Reinsurance amounts included in the Unaudited Interim Consolidated Statements of Operations for “Premiums,” “Policy charges and fee income,” “Change in value of market risk benefits, net of related hedging gains (losses),” “Policyholders’ benefits” and “Change in estimates of liability for future policy benefits,” are as follows:

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Direct premiums	$	6,851	$	6,239	$	21,673	$	14,989
Reinsurance assumed	1,545		1,244		2,996		2,422
Reinsurance ceded	(576)		(574)		(1,312)		(1,139)
Premiums	$	7,820	$	6,909	$	23,357	$	16,272

Direct policy charges and fee income	$	949	$	927	$	1,813	$	1,893
Reinsurance assumed	299		307		599		615
Reinsurance ceded	(163)		(161)		(271)		(301)
Policy charges and fee income	$	1,085	$	1,073	$	2,141	$	2,207

Direct change in value of market risk benefits, net of related hedging gains (losses)	$	(339)	$	8	$	(189)	$	88
Reinsurance assumed	8		83		79		83
Reinsurance ceded	34		(75)		(64)		(80)
Change in value of market risk benefits, net of related hedging gains (losses)	$	(297)	$	16	$	(174)	$	91

Direct policyholders’ benefits	$	7,961	$	6,264	$	23,826	$	15,858
Reinsurance assumed	1,938		2,222		3,781		3,787
Reinsurance ceded	(1,035)		(825)		(2,149)		(1,680)
Policyholders’ benefits	$	8,864	$	7,661	$	25,458	$	17,965

Direct change in estimates of liability for future policy benefits	$	(213)	$	453	$	(67)	$	429
Reinsurance assumed	63		(150)		58		(146)
Reinsurance ceded	(26)		(48)		(184)		(3)
Change in estimates of liability for future policy benefits	$	(176)	$	255	$	(193)	$	280

Reinsurance recoverables are as follows:


	June 30, 2024		December 31, 2023
	(in millions)
Individual and group annuities(1)	$	7,095	$	7,516
Life insurance(2)	9,470		8,806
Other reinsurance	385		415
Total reinsurance recoverables(3)(4)	$	16,950	$	16,737

(1)Primarily represents $5,604 million and $5,981 million of reinsurance recoverables as of June 30, 2024 and December 31, 2023, respectively, established under the reinsurance agreement with Prismic Re under which the Company reinsured a portion of its in-force structured settlement annuities business. The Company has also recorded a funds withheld payable related to the reinsurance agreement with Prismic Re of $7,775 million and $8,543 million as of June 30, 2024 and December 31, 2023, respectively. Also includes reinsurance recoverables representing the modified coinsurance receivable established under the reinsurance agreement with FLIAC in which the Company assumed all of FLIAC’s indexed variable annuities of $1,452 million and $1,485 million as of June 30, 2024 and December 31, 2023, respectively.

(2)Includes reinsurance recoverables established under the reinsurance arrangements associated with the acquisition of the Hartford Life Business of $2,013 million and $2,090 million as of June 30, 2024 and December 31, 2023, respectively. The Company has also recorded reinsurance payables related to the Hartford Life Business acquisition of $1,372 million and $1,396 million as of June 30, 2024 and December 31, 2023, respectively. Also includes net reinsurance recoverables of $716 million as of June 30, 2024 for the modified coinsurance receivable established under the reinsurance agreement with Somerset Re in which the Company reinsured a portion of its in-force guaranteed universal life block of business.

(3)Net of $(11) million and $(12) million of allowance for credit losses as of June 30, 2024 and December 31, 2023, respectively.

(4)Excludes deposit receivables of arrangements that are accounted for under the deposit method of accounting of $10,796 million and $10,574 million as of June 30, 2024 and December 31, 2023, respectively. Deposit receivables related to the reinsurance agreement with Prismic Re were $3,660 million and $3,771 million as of June 30, 2024 and December 31, 2023, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Excluding the reinsurance recoverables associated with the acquisition of the Hartford Life Business, four major reinsurance companies account for approximately 65% of the Company’s reinsurance recoverables as of June 30, 2024. The Company periodically reviews the financial condition of its reinsurers, amounts recoverable therefrom, and unearned reinsurance premium, in order to reduce its exposure to loss from reinsurer insolvencies. Any expected credit losses are reflected in the current expected credit loss (“CECL”) allowance, after considering any collateral the Company obtained in the form of a trust, letter of credit, or funds withheld arrangement. 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 for additional details regarding CECL. Under the Company’s international longevity reinsurance transactions, the Company obtains collateral from its counterparties to mitigate counterparty default risk.

13. CLOSED BLOCK

On December 18, 2001, the date of demutualization, The Prudential Insurance Company of America (“PICA”) established a closed block for certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders’ dividends on these products, (collectively the “Closed Block”), and ceased offering these participating products. The recorded assets and liabilities were allocated to the Closed Block at their historical carrying amounts. The Closed Block forms the principal component of the Closed Block division. For additional information regarding the Closed Block, see Note 16 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

As of June 30, 2024 and December 31, 2023, the Company recognized a policyholder dividend obligation of $2,627 million and $2,873 million, respectively, to Closed Block policyholders for the excess of actual cumulative earnings over expected cumulative earnings. Additionally, accumulated net unrealized investment gains (losses) were reflected as a policyholder dividend obligation of $(2,567) million and $(2,081) million at June 30, 2024 and December 31, 2023, respectively, with a corresponding amount reported in AOCI.

As of June 30, 2024, the Closed Block has sufficient funds to make guaranteed policy benefit payments and there is no expectation that assets outside of the Closed Block will be needed to fund future payments. The excess of Closed Block liabilities over Closed Block assets as of the end of the reporting period shown in the table below is a reasonable measure of the margin in the reported liabilities compared to best estimate liabilities assuming the current dividend scale. Closed Block liabilities and assets designated to the Closed Block, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2024		December 31, 2023
	(in millions)
Closed Block liabilities
Future policy benefits	$	42,965	$	43,587
Policyholders’ dividends payable	641		648
Policyholders’ dividend obligation	60		792
Policyholders’ account balances	4,424		4,500
Other Closed Block liabilities	3,771		3,605
Total Closed Block liabilities	51,861		53,132
Closed Block assets
Fixed maturities, available-for-sale, at fair value	29,317		30,314
Fixed maturities, trading, at fair value	725		887
Equity securities, at fair value	1,861		1,970
Commercial mortgage and other loans	7,679		7,769
Policy loans	3,407		3,479
Other invested assets	4,816		4,513
Short-term investments	583		232
Total investments	48,388		49,164
Cash and cash equivalents	398		993
Accrued investment income	415		421
Other Closed Block assets	276		138
Total Closed Block assets	49,477		50,716
Excess of reported Closed Block liabilities over Closed Block assets	2,384		2,416
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	(2,732)		(2,241)
Allocated to policyholder dividend obligation	2,567		2,081
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,219	$	2,256

Information regarding the policyholder dividend obligation is as follows:


	Six Months Ended June 30, 2024
	(in millions)
Balance, December 31, 2023	$	792

Impact from earnings allocable to policyholder dividend obligation	(246)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	(486)
Balance, June 30, 2024	$	60

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Closed Block revenues and benefits and expenses are as follows for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Revenues
Premiums	$	433	$	430	$	842	$	836
Net investment income	506		498		1,019		977
Realized investment gains (losses), net	(174)		(113)		(299)		(130)
Other income (loss)	43		140		207		240
Total Closed Block revenues	808		955		1,769		1,923
Benefits and Expenses
Policyholders’ benefits	604		610		1,188		1,182
Interest credited to policyholders’ account balances	29		29		59		59
Dividends to policyholders	162		292		437		594
General and administrative expenses	67		71		134		144
Total Closed Block benefits and expenses	862		1,002		1,818		1,979
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	(54)		(47)		(49)		(56)
Income tax expense (benefit)	(73)		(54)		(88)		(86)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$	19	$	7	$	39	$	30

14. INCOME TAXES

The Company uses a full-year projected effective tax rate approach to calculate year-to-date taxes. The projected effective tax rate is the ratio of projected “Total income tax expense” divided by projected “Income before income taxes and equity in earnings of joint ventures and other operating entities.” In addition, certain items impacting total income tax expense are recorded in the periods in which they occur. In determining the year-to-date income tax provision, the Company considers the realizability of deferred tax assets, including those associated with unrealized investment losses, and has determined based upon the weight of available evidence that no valuation allowance is necessary related to unrealized investment losses. Taxes attributable to joint ventures and other operating entities are recorded within “Equity in earnings of joint ventures and other operating entities, net of taxes.” The interim period tax expense (or benefit) is the difference between the year-to-date income tax provision and the amounts reported for the previous interim periods of the fiscal year.

The Company’s income tax provision, on a consolidated basis, amounted to an income tax expense of $553 million, or 19.7% of income (loss) before income taxes and equity in earnings of joint ventures and other operating entities, in the first six months of 2024, compared to an income tax expense of $505 million, or 20.5%, in the first six months of 2023. The Company’s current and prior effective tax rates differ from the U.S. statutory rate of 21% primarily due to non-taxable investment income, tax credits, foreign earnings taxed at higher rates than the U.S. statutory rate, and the items discussed below.

Foreign Tax Credit Regulations. The Treasury Department and the IRS published Final Regulations in the Federal Register (Treasury Decision 9959) on January 4, 2022, which affect the creditability of certain foreign taxes for U.S. federal income tax purposes. The Final Regulations created uncertainty as to whether a U.S. foreign tax credit could be claimed for taxes paid to Brazil. The ability to claim a foreign tax credit for taxes paid to Brazil impacted the benefit of the election made pursuant to Internal Revenue Code Section 952 to subject earnings from the Company’s insurance operations in Brazil to tax in the U.S. in the tax year earned, net of related foreign tax credits.

On July 21, 2023, the IRS issued Notice 2023-55 which provides temporary relief to taxpayers in determining whether a foreign tax is eligible for a U.S. foreign tax credit for tax years 2022 and 2023, specifically delaying until 2024 the provisions of the Final Regulations that impacted the ability to claim a U.S. foreign tax credit for taxes paid to Brazil. As a result of this

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

new guidance, the Company will be able to claim a U.S. foreign tax credit for taxes paid to Brazil for its 2023 and 2024 tax years.

GILTI High Tax Exclusion. On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations (Treasury Decision 9902) pursuant to Internal Revenue Code Section 951A which allows an annual election to exclude from the U.S. tax return certain Global Intangible Low-Taxed Income (“GILTI”) amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the GILTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which the Company operates, including Japan and Brazil, there are differences between local tax rules used to determine the tax base and the U.S. tax principles used to determine GILTI. Also, the Company’s Japan affiliates have a different tax year than the U.S. calendar tax year used to determine GILTI; therefore, while many of the countries, including Japan, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this annual exclusion. The Company anticipates making the high-tax exception election for the 2023 and 2024 tax years and reflected the impact of the election in its full year projected effective tax rate used to calculate year-to-date taxes for the first six months of 2023 and 2024, respectively.

Inflation Reduction Act. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), (House of Representatives, 5376). One of the most significant provisions of the Inflation Reduction Act is a 15% corporate alternative minimum tax (“CAMT”) based on the Company’s GAAP income, with certain adjustments. This provision, which is applicable only to companies with average applicable financial statement income in excess of $1 billion for any three-year period ending in 2022 or later, is effective in taxable years beginning after December 31, 2022. The impact of the book-income alternative minimum tax, if any, will vary from year to year based on the relationship of the Company’s GAAP income to the Company’s taxable income. Any tax paid pursuant to this provision is available as a tax credit in future years when the Company’s tax rate exceeds the 15% minimum tax threshold. The Company is subject to CAMT for 2024 which may or may not result in a CAMT cash tax liability and will have no impact to the full year effective tax rate.

Tax Audit and Unrecognized Tax Benefits. It is possible the Company will make a payment within the next 12 months of approximately $75 million related to unrecognized tax benefits for prior audit cycles, including an amount attributable to the Section 952 election for tax years 2017 and 2018, as the Company pursues resolution of the Section 952 matter. The payment will have no impact on the effective tax rate. The Company cannot predict with reasonable accuracy whether there will be any significant changes within the next twelve months to its total unrecognized tax benefits related to tax years for which the statute of limitations has not expired.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

15. SHORT-TERM AND LONG-TERM DEBT

Short-term Debt

The table below presents the Company’s short-term debt as of the dates indicated:


	June 30, 2024			December 31, 2023
	($ in millions)
Commercial paper:
Prudential Financial	$	25		$	25
Prudential Funding, LLC	478			510
Subtotal commercial paper	503			535

Current portion of long-term debt:

Mortgage debt	85			83
Surplus notes subject to set-off arrangements(1)	1,750			2,000
Subtotal current portion of long-term debt	1,835			2,083

Subtotal	2,338			2,618
Less: assets under set-off arrangements(1)	1,750			2,000
Total short-term debt(2)	$	588		$	618
Supplemental short-term debt information:
Portion of commercial paper borrowings due overnight	$	100		$	110
Daily average commercial paper outstanding for the quarter ended	$	1,474		$	1,334
Weighted average maturity of outstanding commercial paper, in days	53			49
Weighted average interest rate on outstanding commercial paper	5.34		%	5.50		%

(1)The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes included in short-term debt.

(2)Includes Prudential Financial debt of $25 million at both June 30, 2024 and December 31, 2023.

Prudential Financial and certain subsidiaries have access to external sources of liquidity, including membership in the FHLBNY, a funding agreement facility with the Federal Agricultural Mortgage Company (“Farmer Mac”), commercial paper programs and contingent financing facilities in the form of facility agreements. The Company also maintains syndicated, unsecured committed credit facilities as an alternative source of liquidity. At June 30, 2024, no amounts were drawn on these syndicated, unsecured committed credit facilities. For additional information regarding these sources of liquidity, 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.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Long-term Debt

The table below presents the Company’s long-term debt as of the dates indicated:


	June 30, 2024		December 31, 2023
	(in millions)
Fixed-rate obligations:
Surplus notes	$	347	$	346
Surplus notes subject to set-off arrangements(1)(2)	11,384		9,790
Senior notes	10,110		10,112
Mortgage debt(3)	29		0
Floating-rate obligations:
Line of credit	255		255
Surplus notes subject to set-off arrangements(1)	580		580

Mortgage debt(3)	30		75
Junior subordinated notes(4)	8,582		8,094
Subtotal	31,317		29,252
Less: assets under set-off arrangements(1)	11,964		10,370
Total long-term debt(5)	$	19,353	$	18,882

(1)The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes included in long-term debt.

(2)Amount includes $6.4 billion of surplus notes used to finance Guideline AXXX reserves for business reinsured to Somerset Re in March 2024. See Note 12 for additional information.

(3)Includes $59 million and $27 million of debt denominated in foreign currency at June 30, 2024 and December 31, 2023, respectively.

(4)Includes Prudential Financial debt of $8,543 million and $8,050 million at June 30, 2024, and December 31, 2023, respectively. Also includes subsidiary debt of $39 million and $44 million denominated in foreign currency at June 30, 2024, and December 31, 2023, respectively.

(5)Includes Prudential Financial debt of $18,653 million and $18,162 million at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 and December 31, 2023, the Company was in compliance with all debt covenants related to the borrowings in the table above.

Junior Subordinated Notes

In March 2024, the Company issued $1.0 billion in aggregate principal amount of 6.50% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due in March 2054, and also redeemed, in full, $0.5 billion in aggregate principal amount of 5.20% Fixed-to-Floating Rate Junior Subordinated Notes due in 2044.

Credit Facility Extension

In July 2024, the Company amended and restated its $4.0 billion five-year credit facility that has both Prudential Financial and Prudential Funding as borrowers and a syndicate of financial institutions as lenders, extending the term of the facility to July 2029. Borrowings under the credit facility may be used for general corporate purposes, and the Company expects that it may borrow under the facility from time to time to fund its working capital needs and those of its subsidiaries. In addition, amounts under the credit facility may be drawn in the form of standby letters of credit that can be used to meet the operating needs of the Company and its subsidiaries. The credit facility contains customary representations and warranties, covenants and events of default, and borrowings are not contingent on the borrowers’ credit ratings nor subject to material adverse change clauses. Borrowings under the facility are conditioned on the continued satisfaction of customary conditions, including the Company’s maintenance of consolidated net worth of at least $22.1 billion, which is calculated as U.S. GAAP equity, excluding AOCI, equity of noncontrolling interests, equity attributable to the Closed Block, and certain adjustments related to the Company’s adoption of Accounting Standards Update 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

16. EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Plans

The Company has funded and non-funded non-contributory defined benefit pension plans (“Pension Benefits”), which cover substantially all of its employees. For some employees, benefits are based on final average earnings and length of service (the “traditional formula”), while benefits for other employees are based on an account balance that takes into consideration age, length of service and earnings during their career (the “cash balance formula”).

The Company provides certain health care and life insurance benefits for its retired employees, their beneficiaries and covered dependents (“Other Postretirement Benefits”). The health care plan is contributory; the life insurance plan is non-contributory. Substantially all of the Company’s U.S. employees may become eligible to receive certain other postretirement benefits if they retire after age 55 with at least 10 years of service or under certain circumstances after age 50 with at least 20 years of continuous service.

Net periodic (benefit) cost included in “General and administrative expenses” includes the following components:


	Three Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits
	2024		2023		2024		2023
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	51	$	52	$	2	$	3
Interest cost	135		138		13		18
Expected return on plan assets	(239)		(232)		(19)		(22)
Amortization of prior service cost	(1)		0		(17)		(2)
Amortization of actuarial (gain) loss, net	23		17		2		2
Settlements	1		1		0		0

Special termination benefits	1		0		0		0
Net periodic (benefit) cost	$	(29)	$	(24)	$	(19)	$	(1)

	Six Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits
	2024		2023		2024		2023
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	103	$	103	$	4	$	5
Interest cost	270		276		26		36
Expected return on plan assets	(477)		(463)		(38)		(43)
Amortization of prior service cost	(1)		0		(34)		(4)
Amortization of actuarial (gain) loss, net	45		34		4		5
Settlements	1		1		0		0

Special termination benefits	1		0		0		0
Net periodic (benefit) cost	$	(58)	$	(49)	$	(38)	$	(1)

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

17. EQUITY

The changes in the number of shares of Common Stock issued, held in treasury and outstanding, are as follows for the periods indicated:


	Common Stock
	Issued	Held In Treasury	Outstanding
	(in millions)
Balance, December 31, 2023	666.3	307.1	359.2
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	4.5	(4.5)
Stock-based compensation programs(1)	0.0	(3.0)	3.0
Balance, June 30, 2024	666.3	308.6	357.7

(1)Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.

In December 2023, Prudential Financial’s Board of Directors (the “Board”) 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. As of June 30, 2024, 4.5 million shares of the Company’s Common Stock were repurchased under this authorization at a total cost of $500 million.

The timing and amount of share repurchases are determined by management based upon market conditions and other considerations, and repurchases may be executed in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the “Exchange Act”). Numerous factors could affect the timing and amount of any future repurchases under the share repurchase authorization, including, but not limited to: compliance with laws, increased capital needs of the Company due to changes in regulatory capital requirements, opportunities for growth and acquisitions, and the effect of adverse market conditions.

Dividends declared per share of Common Stock are as follows for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Dividends declared per share of Common Stock	$	1.30	$	1.25	$	2.60	$	2.50

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Accumulated Other Comprehensive Income (Loss)

AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Unaudited Interim Consolidated Statements of Comprehensive Income. The balance of and changes in each component of AOCI as of and for the six months ended June 30, 2024 and 2023, are as follows:


	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Interest rate remeasurement of Liability for Future Policy Benefits		Gains (Losses) from Changes in Non-performance Risk on Market Risk Benefits		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2023	$	(2,686)	$	(11,213)	$	8,547	$	900	$	(2,052)	$	(6,504)
Change in OCI before reclassifications	(827)		(10,584)		10,351		(196)		11		(1,245)
Amounts reclassified from AOCI	(20)		467		0		0		14		461
Income tax benefit (expense)	(81)		2,526		(2,606)		42		(37)		(156)
Balance, June 30, 2024	$	(3,614)	$	(18,804)	$	16,292	$	746	$	(2,064)	$	(7,444)


	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Interest rate remeasurement of Liability for Future Policy Benefits		Gains (Losses) from Changes in Non-performance Risk on Market Risk Benefits		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2022	$	(2,274)	$	(16,194)	$	15,242	$	1,448	$	(2,028)	$	(3,806)
Change in OCI before reclassifications	(359)		5,184		(8,901)		(77)		10		(4,143)
Amounts reclassified from AOCI	1		381		0		0		35		417
Income tax benefit (expense)	(87)		(1,358)		2,324		16		(12)		883
Balance, June 30, 2023	$	(2,719)	$	(11,987)	$	8,665	$	1,387	$	(1,995)	$	(6,649)

(1)Includes cash flow hedges of $1,499 million and $869 million as of June 30, 2024 and December 31, 2023, respectively, and $2,097 million and $2,616 million as of June 30, 2023 and December 31, 2022, respectively, and fair value hedges of $(70) million and $(60) million as of June 30, 2024 and December 31, 2023, respectively, and $(149) million and $(54) million as of June 30, 2023 and December 31, 2022, respectively.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Reclassifications out of Accumulated Other Comprehensive Income (Loss)


	Three Months Ended June 30,				Six Months Ended June 30,				Affected line item in Unaudited Interim Consolidated Statements of Operations
	2024		2023		2024		2023
	(in millions)
Amounts reclassified from AOCI(1)(2):
Foreign currency translation adjustment:
Foreign currency translation adjustments	$	7	$	(1)	$	20	$	(1)	Realized investment gains (losses), net


Net unrealized investment gains (losses):
Cash flow hedges—Interest rate	(17)		(6)		(20)		(29)		(3)
Cash flow hedges—Currency	2		3		4		8		(3)
Cash flow hedges—Currency/Interest rate	114		26		271		65		(3)
Fair value hedges—Currency	(3)		(2)		(5)		(4)		(3)
Net unrealized investment gains (losses) on available-for-sale securities	(735)		(266)		(717)		(421)		Realized investment gains (losses), net
Total net unrealized investment gains (losses)	(639)		(245)		(467)		(381)		(4)
Amortization of defined benefit items:
Prior service cost	18		2		35		4		(5)
Actuarial gain (loss)	(25)		(19)		(49)		(39)		(5)
Total amortization of defined benefit items	(7)		(17)		(14)		(35)
Total reclassifications for the period	$	(639)	$	(263)	$	(461)	$	(417)

(1)All amounts are shown before tax.

(2)Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.

(3)See Note 5 for additional information regarding cash flow and fair value hedges.

(4)See table below for additional information regarding unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.

(5)See Note 16 for additional information regarding employee benefit plans.

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains (losses) on available-for-sale fixed maturity securities and certain other invested assets and other assets are included in the Company’s Unaudited Interim Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from “Other comprehensive income (loss)” those items that are included as part of “Net income (loss)” for a period that had been part of “Other comprehensive income (loss)” in earlier periods. The amounts for the periods indicated below, split between amounts related to available-for-sale fixed maturity securities on which an allowance for credit losses has been recorded, and all other net unrealized investment gains (losses), are as follows:

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Net Unrealized Investment Gains (Losses) on Available-for-Sale Fixed Maturity Securities on Which an Allowance for Credit Losses has been Recorded		Net Unrealized Gains (Losses) on All Other Investments(1)		Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Income Tax Benefit (Expense)		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
Balance, December 31, 2023	$	(72)	$	(17,179)	$	(484)	$	1,306	$	2,081	$	3,135	$	(11,213)
Net investment gains (losses) on investments arising during the period	(25)		(11,420)								2,822		(8,623)
Reclassification adjustment for (gains) losses included in net income	53		414								(115)		352
Reclassification due to allowance for credit losses recorded during the period	1		(1)								0		0
Impact of net unrealized investment (gains) losses					(652)		1,027		486		(181)		680
Balance, June 30, 2024	$	(43)	$	(28,186)	$	(1,136)	$	2,333	$	2,567	$	5,661	$	(18,804)

(1)Includes cash flow and fair value hedges. See Note 5 for additional information.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

18. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the periods indicated is as follows:


	Three Months Ended June 30,
	2024					2023
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	1,171				$	496
Less: Income (loss) attributable to noncontrolling interests	(27)					(15)
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	14					6
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,184	358.8	$	3.30	$	505	364.8	$	1.38
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	14				$	6
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	14					6
Stock options			0.2					0.2
Deferred and long-term compensation programs			1.5					1.1
Diluted earnings per share
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,184	360.5	$	3.28	$	505	366.1	$	1.38


	Six Months Ended June 30,
	2024					2023
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	2,322				$	1,973
Less: Income (loss) attributable to noncontrolling interests	(14)					0
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	29					24
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	2,307	358.9	$	6.43	$	1,949	365.7	$	5.33
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	29				$	24
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	29					24
Stock options			0.3					0.2
Deferred and long-term compensation programs			1.3					1.0
Diluted earnings per share
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	2,307	360.5	$	6.40	$	1,949	366.9	$	5.31

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to Prudential Financial are allocated between Common Stock and the participating awards, as if the awards were a second class of stock. During periods of net income available to holders of Common Stock, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss available to holders of Common Stock, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. Undistributed earnings allocated to participating unvested share-based payment awards for the three months ended June 30, 2024 and 2023, as applicable, were based on 4.0 million and 4.1 million of such awards, respectively, and for both the six months ended June 30, 2024 and 2023, as applicable, were based on 4.1 million of such awards, weighted for the period they were outstanding.

Stock options and shares related to deferred and long-term compensation programs that are considered antidilutive are excluded from the computation of diluted earnings per share. Stock options are considered antidilutive based on application of the treasury stock method or in the event of a net loss available to holders of Common Stock. Shares related to deferred and long-term compensation programs are considered antidilutive in the event of a net loss available to holders of Common Stock. For the periods indicated, the number of stock options and shares related to deferred and long-term compensation programs that were considered antidilutive and were excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, are as follows:


	Three Months Ended June 30,
	2024			2023
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	0.0	$	0.00	1.7	$	99.74
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.0
Antidilutive shares based on application of the treasury stock method	0.0			0.3
Antidilutive shares due to net loss available to holders of Common Stock	0.0			0.0
Total antidilutive stock options and shares	0.0			2.0


	Six Months Ended June 30,
	2024			2023
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	0.1	$	110.42	1.4	$	101.12
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.0
Antidilutive shares based on application of the treasury stock method	0.0			0.2
Antidilutive shares due to net loss available to holders of Common Stock	0.0			0.0
Total antidilutive stock options and shares	0.1			1.6

19. SEGMENT INFORMATION

Segments

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

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 U.S. GAAP.

Adjusted Operating Income

The Company analyzes the operating performance of each segment 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 used by the Company’s chief operating decision maker to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Adjusted operating income is calculated by adjusting each segment’s “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” for the following items:

Realized investment gains (losses), net, and related charges and adjustments;
Change in value of market risk benefits, net of related hedging gains (losses);
Market experience updates;
Divested and Run-off Businesses;
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests; and
Other adjustments.

These items are important to an understanding of overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies. The Company, however, believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses. For additional information regarding these reconciling items, see Note 23 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Reconciliation of adjusted operating income to net income (loss)

The table below reconciles “Adjusted operating income before income taxes” to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities”:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Adjusted operating income before income taxes by segment:
PGIM	$	206	$	179	$	375	$	330
U.S. Businesses:
Institutional Retirement Strategies	550		428		991		824
Individual Retirement Strategies	486		448		960		889
Retirement Strategies(1)	1,036		876		1,951		1,713
Group Insurance	121		139		166		164
Individual Life(1)	(87)		(59)		(208)		(161)
Total U.S. Businesses	1,070		956		1,909		1,716
International Businesses:
Life Planner	400		487		945		1,009
Gibraltar Life and Other	302		297		653		615
Total International Businesses	702		784		1,598		1,624
Corporate and Other(2)	(371)		(472)		(806)		(943)
Total segment adjusted operating income before income taxes	1,607		1,447		3,076		2,727
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments(2)	128		(757)		31		(388)
Change in value of market risk benefits, net of related hedging gains (losses)	(297)		16		(174)		91
Market experience updates	47		(3)		15		45
Divested and Run-off Businesses:
Closed Block division	(60)		(48)		(63)		(52)
Other Divested and Run-off Businesses(2)	38		(1)		3		91
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests	(43)		(26)		(70)		(31)
Other adjustments(3)	(5)		(7)		(13)		(15)
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities per Unaudited Interim Consolidated Financial Statements	$	1,415	$	621	$	2,805	$	2,468

(1)The Retirement Strategies and Individual Life segments’ results reflect DAC as if the business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

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

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

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Reconciliation of select financial information

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Unaudited Interim Consolidated Financial Statements.



	June 30, 2024		December 31, 2023
	(in millions)
Assets by segment:
PGIM	$	38,270	$	42,064
U.S. Businesses:
Institutional Retirement Strategies	119,582		111,308
Individual Retirement Strategies	145,609		139,934
Retirement Strategies	265,191		251,242
Group Insurance	38,294		39,214
Individual Life	115,137		116,449
Total U.S. Businesses	418,622		406,905
International Businesses:
Life Planner	75,399		81,164
Gibraltar Life and Other	100,816		110,060
Total International Businesses	176,215		191,224
Corporate and Other	32,265		29,842
Closed Block division	49,824		51,088
Total assets per Unaudited Interim Consolidated Financial Statements	$	715,196	$	721,123

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Revenues by segment:
PGIM	$	963	$	849	$	1,953	$	1,747
U.S. Businesses:
Institutional Retirement Strategies	4,041		2,737		15,579		7,626
Individual Retirement Strategies	1,246		1,119		2,460		2,214
Retirement Strategies	5,287		3,856		18,039		9,840
Group Insurance	1,586		1,598		3,220		3,162
Individual Life	1,529		1,564		3,109		3,091
Total U.S. Businesses	8,402		7,018		24,368		16,093
International Businesses:
Life Planner	2,367		2,381		4,917		5,005
Gibraltar Life and Other	2,145		2,342		4,308		4,733
Total International Businesses:	4,512		4,723		9,225		9,738
Corporate and Other(1)	(36)		(7)		(6)		(13)
Total revenues on an adjusted operating income basis	13,841		12,583		35,540		27,565
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments(1)	234		(495)		542		17
Change in value of market risk benefits, net of related hedging gains (losses)	(297)		16		(174)		91
Market experience updates	0		(5)		(58)		19
Divested and Run-off Businesses:
Closed Block division	811		955		1,773		1,926
Other Divested and Run-off Businesses(1)	311		454		825		954
Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests	(17)		(10)		(56)		(29)

Total revenues per Unaudited Interim Consolidated Financial Statements	$	14,883	$	13,498	$	38,392	$	30,543

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

Intersegment revenues

Management has determined the intersegment revenues with reference to market rates. Intersegment revenues are eliminated in consolidation in Corporate and Other operations. The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
PGIM segment intersegment revenues	$	204	$	198	$	411	$	403

Segments may also enter into internal derivative contracts with other segments. For adjusted operating income, each segment accounts for the internal derivative results consistent with the manner in which that segment accounts for other similar external derivatives.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Asset management and service fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in millions)
Asset-based management fees	$	853	$	789	$	1,685	$	1,577
Performance-based incentive fees	19		4		61		7
Other fees	129		125		254		251
Total asset management and service fees	$	1,001	$	918	$	2,000	$	1,835

20. RELATED PARTY TRANSACTIONS

In September 2023, the Company invested approximately $200 million, and acquired a 20% equity interest as a limited partner, in Prismic, a Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re, a licensed Bermuda-based life and annuity reinsurance company. As this investment is accounted for under the equity method, both Prismic and Prismic Re are considered related parties.

Also 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 the Company. These contracts represent approximately 70% of the Company’s in-force structured settlement annuities business. Separately, the Company, through PGIM, entered into an investment management agreement with Prismic to manage a large portion of Prismic Re's assets. The following tables summarize the impacts to the Company’s financial statements related to the agreements that the Company entered with Prismic and Prismic Re.

The related party balances with Prismic and Prismic Re impacted the Company’s balance sheet as of the periods indicated as follows:


	June 30, 2024		December 31, 2023
	(in millions)
Reinsurance recoverables and deposit receivables	$	9,264	$	9,752
Other assets	$	131	$	132
Reinsurance and funds withheld payables (includes $34 and $508 of embedded derivatives at fair value at June 30, 2024 and December 31, 2023, respectively)	$	7,979	$	8,544
Accumulated other comprehensive income (loss)	$	(92)	$	335

The Company has agreed to guarantee Prismic Re's reimbursement obligations on letters of credit that may be obtained by Prismic Re from third-party financial institutions to support Prismic Re’s obligations under the reinsurance agreement with the Company for a total amount up to $2.0 billion as of both June 30, 2024 and December 31, 2023. See Note 21 for additional information on the Company’s guarantees and commitments.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The related party activity with Prismic and Prismic Re impacted the Company’s results of operations and cash flows for the period indicated as follows:


	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
	(in millions)
Premiums	$	19	$	15

Asset management and service fees	9		18
Other income	35		74
Realized investment gains(losses), net	114		318
Policyholders’ benefits	(70)		(141)
Change in estimates of liability for future policy benefits	20		16
General and administrative expenses	8		19
Income (loss) from related parties, before income taxes	219		531
Other comprehensive income (loss), before tax	(224)		(92)
Total comprehensive income (loss), before tax	$	(5)	$	439


	Six Months Ended June 30, 2024
	(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Realized investment (gains) losses, net	$	(318)
Change in:
Other, net	$	(364)
CASH FLOWS FROM FINANCING ACTIVITIES
Other, net	$	180

21. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments and Guarantees

Commercial Mortgage Loan Commitments


	June 30, 2024		December 31, 2023
	(in millions)
Total outstanding mortgage loan commitments	$	1,821	$	1,798
Portion of commitment where prearrangement to sell to investor exists	$	381	$	366

The Company originates commercial mortgage loans as part of its commercial mortgage operations. Commitments for loans that will be held for sale are recognized as derivatives and recorded at fair value. In certain of these transactions, the Company prearranges that it will sell the loan to an investor, including to government sponsored entities as discussed below, after the Company funds the loan. The above amount includes unfunded commitments that are not unconditionally cancellable. For related credit exposure, there was an allowance for credit losses of $1 million as of both June 30, 2024 and December 31, 2023. The change in allowance is $0 million for both the three months and six months ended June 30, 2024 and 2023.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Commitments to Purchase Investments (excluding Commercial Mortgage Loans)


	June 30, 2024		December 31, 2023
	(in millions)
Expected to be funded from the general account and other operations outside the separate accounts	$	11,042	$	10,675
Expected to be funded from separate accounts	$	13	$	39

The Company has other commitments to purchase or fund investments, some of which are contingent upon events or circumstances not under the Company’s control, including those at the discretion of the Company’s counterparties. The Company anticipates a portion of these commitments will ultimately be funded from its separate accounts. The above amount includes unfunded commitments that are not unconditionally cancellable. There were no related charges for credit losses for either the three months or six months ended June 30, 2024 or 2023.

Indemnification of Securities Lending and Securities Repurchase Transactions


	June 30, 2024		December 31, 2023
	(in millions)
Indemnification provided to certain clients for securities lending and securities repurchase transactions(1)	$	5,893	$	5,409
Fair value of related collateral associated with above indemnifications(1)	$	6,020	$	5,528
Accrued liability associated with guarantee	$	0	$	0

(1)Includes $252 million and $0 million related to securities repurchase transactions as of June 30, 2024 and December 31, 2023, respectively.

In the normal course of business, the Company may facilitate securities lending or securities repurchase transactions on behalf of certain client accounts (collectively, “the accounts”). In certain of these arrangements, the Company has provided an indemnification to the accounts to hold them harmless against losses caused by counterparty (i.e., borrower) defaults associated with such transactions facilitated by the Company. In securities lending transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 102% of the fair value of the loaned securities and the collateral is maintained daily to equal at least 102% of the fair value of the loaned securities. In securities repurchase transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 95% of the fair value of the securities subject to repurchase and the collateral is maintained daily to equal at least 95% of the fair value of the securities subject to repurchase. The Company is only at risk if the counterparty to the transaction defaults and the value of the collateral held is less than the value of the securities loaned to, or subject to repurchase from, such counterparty. The Company believes the possibility of any payments under these indemnities is remote.

Credit Derivatives Written

As discussed further in Note 5, the Company writes credit derivatives under which the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the defaulted security or similar security.

Guarantees of Asset Values


	June 30, 2024		December 31, 2023
	(in millions)
Guaranteed value of third-parties’ assets	$	76,469	$	78,009
Fair value of collateral supporting these assets	$	70,557	$	73,186
Asset (liability) associated with guarantee, carried at fair value	$	0	$	(2)

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Certain contracts underwritten by the Retirement Strategies segment include guarantees related to financial assets owned by the guaranteed party. These contracts are accounted for as derivatives and carried at fair value. The collateral supporting these guarantees is not reflected on the Unaudited Interim Consolidated Statements of Financial Position.

Indemnification of Serviced Mortgage Loans


	June 30, 2024		December 31, 2023
	(in millions)
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company	$	3,145	$	3,102
First-loss exposure portion of above	$	909	$	898
Accrued liability associated with guarantees(1)	$	25	$	28

(1)The accrued liability associated with guarantees includes an allowance for credit losses of $13 million and $14 million as of June 30, 2024 and December 31, 2023, respectively. The change in allowance is a reduction of $1 million for both the three months ended June 30, 2024 and 2023, and a reduction of $1 million and $2 million for the six months ended June 30, 2024 and 2023, respectively.

As part of the commercial mortgage activities of the Company’s PGIM segment, the Company provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities, such as Fannie Mae and Freddie Mac. The Company has agreed to indemnify the government sponsored entities for a portion of the credit risk associated with certain of the mortgages it services through a delegated authority arrangement. Under these arrangements, the Company originates multi-family mortgages for sale to the government sponsored entities based on underwriting standards they specify, and makes payments to them for a specified percentage share of losses they incur on certain loans serviced by the Company. The Company’s percentage share of losses incurred generally varies from 4% to 20% of the loan balance, and is typically based on a first-loss exposure for a stated percentage of the loan balance, plus a shared exposure with the government sponsored entity for any losses in excess of the stated first-loss percentage, subject to a contractually specified maximum percentage. The Company determines the liability related to this exposure using historical loss experience, and the size and remaining life of the asset. The Company serviced $25,056 million and $24,875 million of mortgages subject to these loss-sharing arrangements as of June 30, 2024 and December 31, 2023, respectively, all of which are collateralized by first priority liens on the underlying multi-family residential properties. As of June 30, 2024, these mortgages had a weighted-average debt service coverage ratio of 1.98 times and a weighted-average loan-to-value ratio of 61%. As of December 31, 2023, these mortgages had a weighted-average debt service coverage ratio of 1.97 times and a weighted-average loan-to-value ratio of 60%. The Company had no losses related to indemnifications that were settled for either the six months ended June 30, 2024 or 2023.

Other Guarantees


	June 30, 2024		December 31, 2023
	(in millions)
Other guarantees where amount can be determined	$	41	$	36
Accrued liability for other guarantees and indemnifications	$	32	$	32

The Company is also subject to other financial guarantees and indemnity arrangements. The Company has provided indemnities and guarantees related to acquisitions, dispositions, investments and other transactions that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. This includes guarantees issued on $1.5 billion of standby committed letters of credit and $0.5 billion of standby uncommitted letters of credit that may be obtained by Prismic Re from third-party financial institutions, for the benefit of PICA as beneficiary, to support U.S. statutory reserve credit related to a reinsurance agreement with PICA. As of June 30, 2024, no letters of credit have been issued to PICA under the facility, and the likelihood of PICA drawing upon them is remote. The guarantees are renewable on an annual basis. The current value of the guarantees is estimated to be immaterial. See Note 20 for additional information on the related party relationship between the Company and Prismic Re and Note 12 for additional information on the Company’s reinsurance transactions.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Since certain of these obligations are not subject to limitations, it is not possible to determine the maximum potential amount due under these guarantees. The accrued liability identified above relates to the sale of The Prudential Life Insurance Company of Taiwan Inc. (“POT”) and represents a financial guarantee of certain insurance obligations of POT.

Contingent Liabilities

On an ongoing basis, the Company and its regulators review its operations including, but not limited to, sales and other customer interface procedures and practices, and procedures for meeting obligations to its customers and other parties. These reviews may result in the modification or enhancement of processes or the imposition of other action plans, including concerning management oversight, sales and other customer interface procedures and practices, and the timing or computation of payments to customers and other parties. In certain cases, if appropriate, the Company may offer customers or other parties remediation and may incur charges, including the cost of such remediation, administrative costs and regulatory fines.

The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements.

It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company’s financial position.

Litigation and Regulatory Matters

The Company is subject to legal and regulatory actions in the ordinary course of its businesses. Pending legal and regulatory actions include proceedings relating to aspects of the Company’s businesses and operations that are specific to it and proceedings that are typical of the businesses in which it operates, including in both cases businesses that have been either divested or placed in wind-down status. Some of these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain.

The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed, including matters discussed below. The Company estimates that as of June 30, 2024, the aggregate range of reasonably possible losses in excess of accruals established for those litigation and regulatory matters for which such an estimate currently can be made is less than $250 million. Any estimate is not an indication of expected loss, if any, or the Company’s maximum possible loss exposure on such matters. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews.

The following discussion of litigation and regulatory matters provides an update of those matters discussed in Note 25 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Individual Annuities, Individual Life and Group Insurance

California Advocates for Nursing Home Reform v. The Prudential Insurance Company of America and Pruco Life Insurance Company, et al.

In February 2024, defendants removed the action from California state court to the United States District Court for the Northern District of California.

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Securities Litigation

City of Warren v. PFI, et al.

In March 2024, the court issued an order granting the motion for preliminary approval of the Settlement. In June 2024, the Court granted final approval of the Settlement and issued a final judgment dismissing the action with prejudice. This matter is now closed.

Assurance IQ, LLC

William James Griffin, et al. v. Benefytt Technologies, Inc., et al. and Assurance IQ, LLC

In May 2024, the Court granted final approval of the Settlement and issued a final judgment dismissing the action with prejudice. This matter is now closed.

Summary

The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company’s results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company’s litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company’s financial statements. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company’s financial statements.

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