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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE OF CONTENTS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the consolidated financial condition of Prudential Financial, Inc. (“Prudential,” “Prudential Financial,” “PFI,” or “the Company”) as of March 31, 2026, compared with December 31, 2025, and its consolidated results of operations for the three months ended March 31, 2026 and 2025. You should read the following analysis of our consolidated financial condition and results of operations in conjunction with the MD&A, the “Risk Factors” section, and the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as the statements under “Forward-Looking Statements,” and the Unaudited Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
Introduction
The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations is to provide readers with a foundational understanding of our Company, our consolidated financial statements, and the significant internal and external drivers of our results. The discussion of financial results within is focused on adjusted operating income, which is the Company’s segment-level measure of performance, and provides readers with period-over-period analysis of operating results and significant drivers. In addition to discussing our detailed segment results of operations, we have also provided supplemental information that we believe assists with a greater understanding of our overall financial results.
A brief description of these key informational sections follows:
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“Executive Summary” provides an overview of the Company and its operations, along with any recent significant events that have impacted our organizational structure or financial results.
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“External and Economic Factors” includes a discussion of how the impact of potential changes in foreign currency exchange rates may impact our overall operations and financial position.
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“Accounting Policies & Pronouncements” discusses the equity and interest rate assumptions used in evaluating liabilities for future policy benefits for certain of our products. This section should be read in conjunction with “Accounting Policies & Pronouncements” and Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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“Liquidity and Capital Resources” provides information about our liquidity and capital positions, including any significant actions that have impacted, or are expected to impact, these positions. Information is also provided on our insurance companies’ regulatory capital positions, the sources and uses of our holding company’s cash, and additional information about financing activities of the Company.
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“General Account Investments” provides information about the overall portfolio composition of the general account that supports the liabilities of our insurance companies. Investment results are presented separately for our U.S.-based and Japanese-based operations, our Closed Block division, and our Funds Withheld portfolios, the latter of which supports liabilities relating to reinsurance agreements where the economic benefits and associated investment risk ultimately inure to the reinsurer. This section should be read in conjunction with Note 3 to the Unaudited Interim Consolidated Financial Statements.
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“Valuation of Assets and Liabilities” provides additional breakouts of the fair value of assets and liabilities for Prudential Financial Inc., excluding those held in the Closed Block division and Funds Withheld portfolios, and separately for the Closed Block division and Funds Withheld portfolios. This section should be read in conjunction with Note 6 to the Unaudited Interim Consolidated Financial Statements.
Executive Summary
Company Overview
Prudential Financial, a financial services leader with approximately $1.576 trillion of assets under management as of March 31, 2026, has operations primarily in the United States of America (“U.S.”), Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.
Effective January 1, 2026, the Company made the following segment reporting changes to isolate the impacts of certain discontinued products that were previously commingled with the results of actively sold products that more closely reflect the Company’s strategic focus. These changes are consistent with the Company’s recent organizational changes and strategy and reflect how the Chief Operating Decision Maker (“CODM”) assesses performance and allocates resources:
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“U.S. Legacy Products” segment: (i) traditional variable annuities with guaranteed living benefit riders and certain other annuity products, previously included in the former Individual Retirement Strategies segment, and (ii) guaranteed universal life policies, previously included in the Individual Life segment, have been combined into a new reportable segment named “U.S. Legacy Products.” This segment represents run-off blocks of business consisting of products that are no longer being sold in U.S. markets and will be managed with a focus on reducing risk and optimizing value.
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“Retirement” segment: The blocks of business in the former Individual Retirement Strategies segment that were not moved into the U.S. Legacy Products segment, discussed above, consisting primarily of registered index-linked annuity and fixed annuity products, and the products previously included in the former Institutional Retirement Strategies segment have been combined into a new reportable segment named “Retirement.” This combined segment better represents the Company’s strategic management, growth trajectory, and resource allocation policies.
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“Individual Life” segment: There were no other impacts to this segment other than the transfer of the guaranteed universal life policies, discussed above. The remaining blocks of business contained within this segment primarily consist of term, indexed universal life, and variable universal life products.
These segment reporting changes are being applied retrospectively and do not have an impact on any of the Company’s previously issued Consolidated Financial Statements.
Our principal operations now consist of PGIM (our global investment management business), our U.S. Businesses (consisting of Retirement, Group Insurance, Individual Life and U.S. Legacy Products), our International Businesses, the Closed Block division, and our Corporate and Other operations. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. Divested and Run-off Businesses consist of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind-down status that do not qualify for “discontinued operations” accounting treatment under generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments as well as the Divested and Run-off Businesses described above.
We attribute financing costs to each segment based on the amount of financing used by each segment, excluding financing costs associated with corporate debt, which are reflected in our Corporate and Other operations. The net investment income of each segment includes earnings on the amount of capital that management believes is necessary to support the risks of that segment.
Management expects that results will continue to benefit from our mutually-reinforcing business system, which includes a mix of businesses that complement each other to provide competitive advantages, earnings diversification and capital benefits from a balanced risk profile. We believe we are well-positioned to tap into market opportunities to meet the evolving needs of our clients and society at large. Our mix of high-quality protection, retirement and investment management businesses enables us to offer solutions that cover a broad range of financial needs and to engage with our clients through multiple channels.
As part of our continuous improvement process, we are working to become a leaner and more agile company by simplifying our management structure, empowering our employees with faster decision-making processes and investing in technology and data platforms. We expect these ongoing actions will create operating efficiencies, and provide reinvestment capacity to build capabilities, realize additional efficiencies, strengthen our competitiveness and fuel future growth.
As previously disclosed, in January 2026, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), a Japanese insurance subsidiary of the Company, reported the findings of its internal investigation into incidents of misconduct involving certain employees of Prudential of Japan. In response to these findings, Prudential of Japan is implementing a series of actions which include strengthening oversight of sales practices, governance and risk management, as well as leadership changes. Moreover, in February 2026, following discussions with the Japanese regulator, the Company voluntarily suspended new sales activity at Prudential of Japan for a 90-day period commencing February 9, 2026. In April 2026, the Company announced the voluntary extension of the suspension of new sales for an additional 180 days through November 5, 2026. See Note 21 to the Unaudited Interim Consolidated Financial Statements “—Litigation and Regulatory Matters—Regulatory” for additional information.
The suspension of sales resulted in an estimated reduction of $130 million in International Businesses’ pre-tax adjusted operating income for the first quarter of 2026. We estimate that the suspension of new sales as extended will result in a reduction of pre-tax adjusted operating income in the range of $525 to $575 million for 2026, inclusive of the first quarter impact, and in the range of $400 to $450 million for 2027, reflecting remediation costs associated with sustaining the business, one-time and other operating costs, and lower earnings attributable to the gradual ramp-up of new sales after sales resume. Should the suspension of new sales activities extend beyond November 2026, we estimate that International Businesses’ pre-tax adjusted operating income would be reduced by $50 to $60 million per each additional month. We do not expect a material impact to capital, Economic Solvency Ratios (“ESR”) or cash flows. It is also possible that reputational and other harm resulting from or in connection with this matter will negatively impact our other businesses in Japan beyond Prudential of Japan. We are proactively reviewing the sales practices of Gibraltar Life Insurance Company, which distributes its products through life consultants and independent agencies. Actual results may differ materially from these preliminary expectations, as covered under “Forward-Looking Statements.”
External and Economic Factors
Impact of Changes in the Interest Rate Environment
As a global financial services company, market interest rates are a key driver of our liquidity and capital positions, cash flows, results of operations and financial position. For a discussion of the potential impact of changes in interest rates and our mitigation strategies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—External and Economic Factors—Impact of Changes in the Interest Rate Environment” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Impact of Foreign Currency Exchange Rates
Foreign currency exchange rate movements and related hedging strategies
As a U.S.-based company with significant business operations outside the U.S., particularly in Japan, we are subject to foreign currency exchange rate movements that could impact our USD-equivalent shareholder return on equity. We seek to mitigate this impact through various hedging strategies, including holding USD-denominated assets in certain of our foreign subsidiaries.
In order to reduce equity volatility from foreign currency exchange rate movements, we primarily utilize a yen hedging strategy that calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis. We implement this hedging strategy utilizing a variety of instruments, including USD-denominated assets and dual currency and synthetic dual currency investments held locally in our Japanese insurance subsidiaries. The total hedge level may vary based on our periodic assessment of the relative contribution of our yen-based business to the Company’s overall return on equity.
The table below presents the aggregate amount of instruments that serve to hedge the impact of foreign currency exchange movements on our USD-equivalent shareholder return on equity from our Japanese insurance subsidiaries as of the dates indicated.
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in billions) | |||||||||||
| Foreign currency hedging instruments: | |||||||||||
| USD-denominated assets associated with yen-based entities(1) | $ | 8.3 | $ | 7.5 | |||||||
| Dual currency and synthetic dual currency investments(2) | 0.2 | 0.3 | |||||||||
| Total foreign currency hedges | $ | 8.5 | $ | 7.8 |
(1)Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding. Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $91.6 billion and $90.0 billion as of March 31, 2026 and December 31, 2025, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.
(2)Dual currency and synthetic dual currency investments are held by our yen-based entities in the form of fixed maturities and loans with a yen-denominated principal component and USD-denominated interest income. The amounts shown represent the present value of future USD-denominated cash flows.
The USD-denominated investments that hedge the impact of foreign currency exchange rate movements on USD-equivalent shareholder return on equity from our Japanese insurance operations are reported within yen-based entities and, as a result, foreign currency exchange rate movements will impact their value reported within our yen-based Japanese insurance entities. We seek to mitigate the risk that future unfavorable foreign currency exchange rate movements will decrease the value of these USD-denominated investments reported within our yen-based Japanese insurance entities, and therefore negatively impact their equity and regulatory solvency measures, by having our Japanese insurance operations enter into currency hedging transactions with a subsidiary of Prudential Financial. These hedging strategies have the economic effect of moving the change in value of these USD-denominated investments due to foreign currency exchange rate movements from our Japanese yen-based entities to our USD-based entities.
These USD-denominated investments also pay a coupon which is generally higher than what a similar yen-denominated investment would pay. The incremental impact of this higher yield on our USD-denominated investments, as well as our dual currency and synthetic dual currency investments, will vary over time, and is dependent on the duration of the underlying investments as well as interest rate environments in both the U.S. and Japan at the time of the investments.
Impact of intercompany foreign currency exchange rate arrangements on segment results of operations
The financial results of our International Businesses and PGIM reflect the impact of intercompany arrangements with our Corporate and Other operations pursuant to which these segments’ non-USD-denominated earnings are translated at fixed currency exchange rates that are predetermined during the third quarter of the prior year using forward currency exchange rates. Results of our Corporate and Other operations include differences between the translation adjustments recorded by the segments at the fixed currency exchange rate versus the actual average rate during the period.
In addition, specific to our International Businesses where we hedge certain currencies utilizing forward currency contracts with third parties, the results of our Corporate and Other operations also include the impact of any gains or losses recorded from these contracts that settled during the period, which include the impact of any over or under hedging of actual earnings that differ from projected earnings.
The table below presents, for the periods indicated, the increase (decrease) to revenues and adjusted operating income for our International Businesses, PGIM and Corporate and Other operations, reflecting the impact of these intercompany arrangements.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Segment impacts of intercompany arrangements: | |||||||||||||||||||||||
| International Businesses | $ | (19) | $ | 3 | |||||||||||||||||||
| PGIM | 1 | 0 | |||||||||||||||||||||
| Impact of intercompany arrangements(1) | (18) | 3 | |||||||||||||||||||||
| Corporate and Other: | |||||||||||||||||||||||
| Impact of intercompany arrangements(1) | 18 | (3) | |||||||||||||||||||||
| Settlement gains (losses) on forward currency contracts(2) | (12) | 3 | |||||||||||||||||||||
| Net benefit (detriment) to Corporate and Other | 6 | 0 | |||||||||||||||||||||
| Net impact on consolidated revenues and adjusted operating income | $ | (12) | $ | 3 |
(1)Represents the difference between non-USD-denominated earnings translated on the basis of weighted average monthly currency exchange rates versus fixed currency exchange rates determined in connection with the foreign currency income hedging program.
(2)As of both March 31, 2026 and 2025, the total notional amount of these forward currency contracts within our Corporate and Other operations was $0.8 billion.
Impact of products denominated in non-local currencies on U.S. GAAP earnings
While our international insurance operations offer products denominated in local currency, several also offer products denominated in non-local currencies. This is most notable in our Japanese operations, which currently offer primarily USD-denominated products, but have also historically offered Australian dollar (“AUD”)-denominated products. The non-local currency-denominated insurance liabilities related to these products are supported by investments denominated in corresponding currencies, including a significant portion designated as available-for-sale. While the impact from foreign currency exchange rate movements on these non-local currency-denominated assets and liabilities is economically matched, differences in the accounting for changes in the value of these assets and liabilities due to changes in foreign currency exchange rate movements have historically resulted in volatility in U.S. GAAP earnings.
As a result, we implemented a structure in certain of our Japanese operations that disaggregated the USD- and AUD-denominated businesses into separate divisions, each with its own functional currency that aligns with the underlying products and investments. The result of this alignment was to reduce differences in the accounting for changes in the value of these assets and liabilities that arise due to changes in foreign currency exchange rate movements. For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $0.8 billion and $1.0 billion as of March 31, 2026 and December 31, 2025, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold. Absent the sale of any of these assets prior to their stated maturity, approximately 3% of the $0.8 billion balance as of March 31, 2026 will be recognized throughout the remainder of 2026, approximately 3% will be recognized in 2027, and the remaining balance will be recognized from 2028 through 2051.
Highly inflationary economy
Enterprise Group, our strategic investment in Ghana, has historically utilized the Ghanaian cedi as its functional currency given it is the currency of the primary economic environment in which the entity operates. In the fourth quarter of 2023, Ghana experienced a cumulative inflation rate that exceeded 100% over a 3-year period. As a result, Ghana’s economy was deemed to be highly inflationary, resulting in reporting changes effective January 1, 2024. Under U.S. GAAP, the financial statements of a foreign entity in a highly inflationary economy are to be remeasured as if its functional currency (formerly the Ghanaian cedi) is the reporting currency of its parent reporting entity (the USD) on a prospective basis. While this changed how the results of Enterprise Group were remeasured and/or translated into USD, the impact to our financial statements was not material nor is it expected to have a material impact to our financial statements in future periods given the relative size of the investment.
Results of Operations
Consolidated Results of Operations
The following section provides a comparative discussion of our consolidated results of operations on a U.S. GAAP basis for the periods indicated.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Premiums | $ | 8,362 | $ | 7,000 | |||||||||||||||||||
| Policy charges and fee income | 1,132 | 1,157 | |||||||||||||||||||||
| Net investment income | 5,665 | 5,130 | |||||||||||||||||||||
| Asset management and service fees | 996 | 984 | |||||||||||||||||||||
| Other income (loss) | 30 | 280 | |||||||||||||||||||||
| Realized investment gains (losses), net | (364) | (730) | |||||||||||||||||||||
| Change in value of market risk benefits, net of related hedging gains (losses) | (295) | (351) | |||||||||||||||||||||
| Total revenues | 15,526 | 13,470 | |||||||||||||||||||||
| BENEFITS AND EXPENSES | |||||||||||||||||||||||
| Policyholders’ benefits | 9,533 | 8,140 | |||||||||||||||||||||
| Change in estimates of liability for future policy benefits | 39 | (50) | |||||||||||||||||||||
| Interest credited to policyholders’ account balances | 1,109 | 825 | |||||||||||||||||||||
| Dividends to policyholders | 232 | 145 | |||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 411 | 407 | |||||||||||||||||||||
| General and administrative expenses | 3,469 | 3,083 | |||||||||||||||||||||
| Total benefits and expenses | 14,793 | 12,550 | |||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES | 733 | 920 | |||||||||||||||||||||
| Total income tax expense (benefit) | 129 | 207 | |||||||||||||||||||||
| INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES | 604 | 713 | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities, net of taxes | 2 | 29 | |||||||||||||||||||||
| NET INCOME (LOSS) | 606 | 742 | |||||||||||||||||||||
| Less: Income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests | 9 | 35 | |||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC. | $ | 597 | $ | 707 | |||||||||||||||||||
“Net income (loss) attributable to Prudential Financial, Inc.” for the first three months of 2026 compared to the first three months of 2025 decreased $110 million, inclusive of a $78 million favorable variance from income taxes, primarily driven by the decrease in pre-tax earnings, as described below, and a lower effective tax rate in the current period. See Note 14 to the Unaudited Interim Consolidated Financial Statements for additional information regarding income taxes.
On a pre-tax basis, “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” decreased $187 million, reflecting the following notable items:
“Total revenues” increased $2,056 million, primarily due to the following:
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“Premiums” — $1,362 million favorable variance, primarily reflecting higher pension risk transfer premiums with corresponding offsets in “Policyholders’ benefits,” as discussed below;
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“Net investment income” — $535 million favorable variance, primarily reflecting business growth, higher reinvestment rates and higher prepayment fee income (see “—General Account Investments—Investment Results” for additional information); and
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“Realized investment gains (losses), net” — $366 million favorable variance, primarily reflecting favorable derivative results in the current period, including the change in the fair value of embedded derivatives related to our Funds Withheld portfolios, which are offset by changes in the value of the investments in the Funds Withheld portfolios that are primarily recorded in “Other income (loss)” or through “Other comprehensive income,” partially offset by losses
from the sales of fixed income securities in the current period. See “—General Account Investments—Realized Investment Gains and Losses” for additional information.
Partially offset by:
- “Other income (loss)” — $250 million unfavorable variance, primarily reflecting unfavorable changes in the market value of fixed income securities designated as trading, as well as equity securities.
“Total benefits and expenses” increased $2,243 million, primarily due to the following:
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“Policyholders’ benefits” — $1,393 million unfavorable variance, primarily reflecting higher pension risk transfer premiums, as discussed above;
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“General and administrative expenses” — $386 million unfavorable variance, net of deferrals, primarily reflecting higher operating expenses, including remediation costs associated with the Prudential of Japan matter, as well as expenses supporting business growth; and
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“Interest credited to policyholders’ account balances” — $284 million unfavorable variance, primarily reflecting business growth and a higher weighted-average crediting rate in Japan. See Note 10 to the Unaudited Interim Consolidated Financial Statements for additional information regarding policyholders’ account balances.
Segment Results of Operations
We analyze the performance of our segments and Corporate and Other operations using a measure of segment profitability called adjusted operating income. See “—Segment Measures” below for a discussion of adjusted operating income and its use as a measure of segment operating performance.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Adjusted operating income before income taxes by segment: | |||||||||||||||||||||||
| PGIM | $ | 190 | $ | 156 | |||||||||||||||||||
| U.S. Businesses: | |||||||||||||||||||||||
| Retirement(1) | 572 | 526 | |||||||||||||||||||||
| Group Insurance | 38 | 89 | |||||||||||||||||||||
| Individual Life(1) | 139 | 52 | |||||||||||||||||||||
| U.S. Legacy Products(1) | 207 | 264 | |||||||||||||||||||||
| Total U.S. Businesses | 956 | 931 | |||||||||||||||||||||
| International Businesses | 810 | 848 | |||||||||||||||||||||
| Corporate and Other | (330) | (415) | |||||||||||||||||||||
| Total segment adjusted operating income before income taxes | 1,626 | 1,520 | |||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments(2) | (621) | (246) | |||||||||||||||||||||
| Change in value of market risk benefits, net of related hedging gains (losses) | (295) | (351) | |||||||||||||||||||||
| Market experience updates | 15 | 39 | |||||||||||||||||||||
| Divested and Run-off Businesses(3): | |||||||||||||||||||||||
| Closed Block division | (11) | (22) | |||||||||||||||||||||
| Other Divested and Run-off Businesses | 64 | (51) | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests(4) | (42) | 3 | |||||||||||||||||||||
| Other adjustments(5) | (3) | 28 | |||||||||||||||||||||
| Consolidated income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 733 | $ | 920 |
(1)Prior period amounts have been updated to conform to current period presentation.
(2)See “—General Account Investments” and Note 19 to the Unaudited Interim Consolidated Financial Statements for additional information.
(3)Represents the contribution to income (loss) of Divested and Run-off Businesses that have been or will be sold or exited, including businesses that have been placed in wind-down, but did not qualify for “discontinued operations” accounting treatment under U.S. GAAP. See “—Divested and Run-off Businesses” for additional information.
(4)Equity in earnings of joint ventures and other operating entities is included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as it is reflected on an after-tax U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as they are reflected on a U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests represents the portion of earnings from consolidated entities that relates to the equity interests of minority investors.
(5)Includes certain components of consideration for business acquisitions, which are recognized as compensation expense over the requisite service periods.
Segment results for the period presented above reflect the following:
PGIM. Results for the first quarter of 2026 increased in comparison to the prior year period, primarily reflecting higher net asset management fees and higher net other related revenues, partially offset by higher expenses.
Retireme**nt. Results for the first quarter of 2026 increased in comparison to the prior year period, primarily reflecting higher net investment spread results, partially offset by higher expenses and less favorable reserve experience.
Group Insurance. Results for the first quarter of 2026 decreased in comparison to the prior year period, primarily reflecting lower net underwriting results and higher expenses.
Individual Life. Results for the first quarter of 2026 increased in comparison to the prior year period, primarily reflecting higher underwriting results and higher net investment spread results.
U.S. Legacy Products. Results for the first quarter of 2026 decreased in comparison to the prior year period, primarily reflecting lower fee income, lower underwriting results, and lower net investment spread results.
International Businesses. Results for the first quarter of 2026 decreased in comparison to the prior year period, inclusive of an unfavorable comparative net impact from foreign currency exchange rates. Excluding this item, results for the first quarter of 2026 decreased, primarily reflecting higher expenses, including remediation costs associated with the Prudential of Japan matter, partially offset by higher net investment spread results and higher underwriting results.
Corporate and Other. Results for the first quarter of 2026 were less unfavorable in comparison to the prior year period, primarily reflecting lower net charges from other corporate activities.
Closed Block Division. Results for the first quarter 2026 increased in comparison to the prior year period, primarily reflecting higher net investment activity results, partially offset by changes in the policyholder dividend obligation.
Segment Measures
Adjusted Operating Income. In managing our business, we analyze our segments’ operating performance using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss we use to evaluate segment performance and allocate resources and, consistent with authoritative guidance, is our measure of segment performance. The adjustments to derive adjusted operating income are important to an understanding of our overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and our definition of adjusted operating income may differ from that used by other companies; however, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances the understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability of our businesses.
See Note 19 to the Unaudited Interim Consolidated Financial Statements for additional information regarding the presentation of segment results and our definition of adjusted operating income.
Annualized New Business Premiums. In managing our Individual Life, Group Insurance and International Businesses segments, we analyze annualized new business premiums, which do not correspond to revenues under U.S. GAAP. Annualized new business premiums measure the current sales performance of the business, while revenues primarily reflect the renewal persistency of policies written in prior years and net investment income, in addition to current sales. Annualized new business premiums include 10% of first year premiums or deposits from single-payment products in our Individual Life and International Businesses segments. No other adjustments are made for limited-payment contracts.
The amount of annualized new business premiums for any given period can be significantly impacted by several factors, including but not limited to: addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in tax laws, changes in regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.
Assets Under Management. In managing our PGIM segment, we analyze assets under management (which do not correspond directly to U.S. GAAP assets) because the principal source of revenues is fees based on assets under management. Assets under management represent the fair market value or account value of assets that we manage directly for institutional clients, retail clients, and for our general account, as well as assets invested in our products that are managed by third-party managers.
Account Values. In managing our Retirement and U.S. Legacy Products segments, we analyze account values, which do not correspond directly to U.S. GAAP assets. Sales and additions in our Retirement segment do not correspond to revenues under U.S. GAAP but are used as a relevant measure of business activity.
Results of Operations by Segment
PGIM
Business Update
*•*In April 2026, the Company entered into an agreement to sell its PGIM operations in India (“PGIM India”) to TVS Venu Group, a diversified India-based company. The closing of this transaction is subject to regulatory approvals and customary closing conditions. Beginning in the first quarter of 2026, the results of PGIM India are reflected in Divested and Run-off Businesses included within our Corporate and Other operations. PGIM India was not a significant contributor to PGIM’s results.
Operating Results
The following table sets forth PGIM’s operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results(1): | |||||||||||||||||||||||
| Revenues | $ | 1,040 | $ | 985 | |||||||||||||||||||
| Expenses | 850 | 829 | |||||||||||||||||||||
| Adjusted operating income | 190 | 156 | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests | 9 | 10 | |||||||||||||||||||||
| Other adjustments(2) | (3) | 28 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 196 | $ | 194 |
(1)Certain of PGIM’s investment activities are based in currencies other than the USD and are therefore subject to foreign currency exchange rate risk. The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’s USD-equivalent earnings. For additional information regarding this intercompany arrangement, see “—External and Economic Factors—Impact of Foreign Currency Exchange Rates,” above.
(2)Includes certain components of consideration for business acquisitions, which are recognized as compensation expense over the requisite service periods.
Adjusted operating income increased $34 million, primarily reflecting:
-
higher net asset management fees;
-
higher net other related revenues; and
*•*higher net service, distribution and other revenues.
These variances were partially offset by:
- higher compensation and operating expenses, largely supporting business growth.
Revenues and Expenses
The following table sets forth PGIM’s revenues, presented on a basis consistent with the table above under “—Operating Results,” by type:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Revenues by type: | |||||||||||||||||||||||
| Asset management fees by source: | |||||||||||||||||||||||
| Institutional - Third Party | $ | 398 | $ | 387 | |||||||||||||||||||
| Retail - Third Party | 201 | 225 | |||||||||||||||||||||
| Affiliated(1) | 248 | 216 | |||||||||||||||||||||
| Total asset management fees | 847 | 828 | |||||||||||||||||||||
| Other related revenues by source: | |||||||||||||||||||||||
| Incentive fees | 13 | 10 | |||||||||||||||||||||
| Transaction fees | 11 | 7 | |||||||||||||||||||||
| Seed and co-investments | 12 | 6 | |||||||||||||||||||||
| Commercial mortgage(2) | 29 | 15 | |||||||||||||||||||||
| Total other related revenues | 65 | 38 | |||||||||||||||||||||
| Service, distribution and other revenues | 128 | 119 | |||||||||||||||||||||
| Total revenues | $ | 1,040 | $ | 985 |
(1)Includes revenues from the Company’s general account assets, as well as certain separate account assets of the Company’s insurance and retirement businesses managed by PGIM.
(2)Includes mortgage origination revenues from our commercial mortgage origination and servicing business.
Revenues increased $55 million, primarily reflecting:
-
higher other related revenues, primarily reflecting higher commercial mortgage origination revenues from higher loan production, and higher seed and co-investments revenue driven by stronger investment performance, as well as higher transaction and incentive fees;
-
higher asset management fees, driven by higher average assets under management from the impact of equity market appreciation, partially offset by net outflows; and
-
higher service, distribution and other revenues, primarily driven by higher real estate servicing fees from increased transaction volume.
Expenses increased $21 million, primarily reflecting:
- higher compensation and operating expenses, largely supporting business growth.
Assets Under Management
The following table sets forth assets under management by asset class as of the dates indicated:
| March 31, 2026 | December 31, 2025 | March 31, 2025 | |||||||||||||||
| (in billions) | |||||||||||||||||
| Assets Under Management(1) (at fair value): | |||||||||||||||||
| Public equity | $ | 200.8 | $ | 223.1 | $ | 198.0 | |||||||||||
| Public credit | 896.9 | 902.7 | 856.7 | ||||||||||||||
| Private credit(2) | 118.9 | 119.0 | 114.7 | ||||||||||||||
| Real estate | 135.0 | 134.4 | 130.6 | ||||||||||||||
| Multi-asset | 74.0 | 78.5 | 78.2 | ||||||||||||||
| Other alternatives(2) | 7.7 | 8.4 | 7.1 | ||||||||||||||
| Total PGIM assets under management | $ | 1,433.3 | $ | 1,466.1 | $ | 1,385.3 | |||||||||||
| Assets under management within other reporting segments(3) | 142.5 | 143.0 | 136.8 | ||||||||||||||
| Total PFI assets under management | $ | 1,575.8 | $ | 1,609.1 | $ | 1,522.1 |
(1)“Public equity” represents stock ownership interest in a corporation or partnership (excluding hedge funds) or real estate investment trust. “Public credit” represents debt instruments that pay interest and usually have a maturity (excluding mortgages). “Private credit” represents debt financing issued by entities directly to investors outside of public capital markets. “Real estate” includes direct real estate equity and real estate mortgages. “Multi-asset” represents funds or products that invest in more than one asset class, balancing equity, public credit, and target date funds. “Other alternatives” represents private equity, hedge funds, and other alternative strategies.
(2)Prior period amounts have been updated to conform to current period presentation.
(3)Primarily includes assets related to certain insurance and retirement products in our U.S. Businesses and Corporate and Other operations, and certain general account assets in our International Businesses. These assets are not directly managed by PGIM but rather are invested in non-proprietary funds or are managed by either the divisions themselves or by our Chief Investment Officer Organization.
The following table sets forth assets under management by source as of the dates indicated:
| March 31, 2026 | December 31, 2025 | March 31, 2025 | |||||||||||||||
| (in billions) | |||||||||||||||||
| Assets Under Management (at fair value): | |||||||||||||||||
| Institutional - Third Party | $ | 638.8 | $ | 652.0 | $ | 620.2 | |||||||||||
| Retail - Third Party | 259.0 | 267.0 | 240.6 | ||||||||||||||
| Affiliated(1) | 535.5 | 547.1 | 524.5 | ||||||||||||||
| Total PGIM assets under management | $ | 1,433.3 | $ | 1,466.1 | $ | 1,385.3 | |||||||||||
| Assets under management within other reporting segments(2) | 142.5 | 143.0 | 136.8 | ||||||||||||||
| Total PFI assets under management | $ | 1,575.8 | $ | 1,609.1 | $ | 1,522.1 |
(1)Includes the Company’s general account assets, as well as certain separate account assets of the Company’s insurance and retirement businesses managed by PGIM.
(2)Primarily includes assets related to certain insurance and retirement products in our U.S. Businesses and Corporate and Other operations, and certain general account assets in our International Businesses. These assets are not directly managed by PGIM but rather are invested in non-proprietary funds or are managed by either the divisions themselves or by our Chief Investment Officer Organization.
The following table sets forth the component changes in PGIM’s assets under management for the periods indicated:
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | |||||||||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||||||||
| Beginning assets under management | $ | 1,466.1 | $ | 1,375.2 | $ | 1,385.3 | |||||||||||||||||||||||
| Institutional third-party flows(1) | 1.6 | 7.6 | 0.1 | ||||||||||||||||||||||||||
| Retail third-party flows | 0.2 | (0.2) | (3.6) | ||||||||||||||||||||||||||
| Total third-party flows(1) | 1.8 | 7.4 | (3.5) | ||||||||||||||||||||||||||
| Affiliated flows(2) | (1.9) | (0.1) | (3.4) | ||||||||||||||||||||||||||
| Total net flows(1) | (0.1) | 7.3 | (6.9) | ||||||||||||||||||||||||||
| Realizations and distributions(1)(3) | (3.2) | (4.3) | (13.3) | ||||||||||||||||||||||||||
| Market appreciation (depreciation)(4) | (23.3) | 5.0 | 77.8 | ||||||||||||||||||||||||||
| Foreign exchange rate impact | (1.1) | 3.8 | (1.3) | ||||||||||||||||||||||||||
| Net money market activity and other increases (decreases) | (5.1) | (1.7) | (8.3) | ||||||||||||||||||||||||||
| Ending assets under management | $ | 1,433.3 | $ | 1,385.3 | $ | 1,433.3 |
(1)Prior period amounts have been updated to conform to current period presentation.
(2)Represents assets that PGIM manages for the benefit of other reporting segments within the Company. Additions and withdrawals of these assets are attributable to third-party product inflows and outflows in other reporting segments.
(3)Realizations reflect proceeds from the disposition or monetization of assets from closed end funds and from collateralized loan obligations. Distributions reflect income and dividend distributions related to certain closed and open ended private alternative funds and collateralized loan obligations.
(4)Includes income reinvestment, where applicable.
The following table sets forth additional information for “total net flows” as seen above, by asset class for the periods indicated:
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | |||||||||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||||||||
| Net flows by asset class: | |||||||||||||||||||||||||||||
| Public equity | $ | (6.1) | $ | (1.5) | $ | (22.6) | |||||||||||||||||||||||
| Public credit | 7.2 | 8.0 | 21.5 | ||||||||||||||||||||||||||
| Private credit | 1.2 | 2.7 | 3.8 | ||||||||||||||||||||||||||
| Real estate | 1.0 | 1.7 | 3.6 | ||||||||||||||||||||||||||
| Multi-asset | (3.2) | (3.7) | (14.2) | ||||||||||||||||||||||||||
| Other alternatives | (0.2) | 0.1 | 1.0 | ||||||||||||||||||||||||||
| Total net flows | $ | (0.1) | $ | 7.3 | $ | (6.9) |
As of March 31, 2026, PGIM’s assets under management:
-
increased $48 billion over the trailing twelve months, primarily driven by credit and equity market appreciation and strong investment performance, partially offset by realizations and distributions, and net outflows.
-
decreased $33 billion in comparison to the prior year end, primarily driven by equity and credit market depreciation, as well as realizations and distributions.
Private Capital Deployment
Private capital deployment is indicative of the pace and magnitude of capital that is invested and will result in future revenues that may include management fees, transaction fees, incentive fees and servicing revenues, as well as future costs to manage these assets.
Private capital deployment represents the gross value of private capital invested in real estate debt and equity, and private credit and equity asset classes. Assets under management resulting from private capital deployment are primarily included in “Real estate,” “Private credit,” and “Other alternatives” in the “—Assets Under Management— by asset class table” above. As of March 31, 2026, these asset classes decreased $0.2 billion compared to December 31, 2025, primarily reflecting realizations and distributions and market depreciation, partially offset by net inflows across private credit and real estate.
Private capital deployment includes PGIM’s real estate agency debt business, which consists of agency commercial mortgage loans originated and sold to third-party investors. PGIM continues to service these loans; however, they are not included in assets under management.
The following table sets forth PGIM’s private capital deployed by asset class for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||
| Private capital deployed: | |||||||||||||||||||||||
| Real estate debt and equity | $ | 6.7 | $ | 4.6 | |||||||||||||||||||
| Private credit and equity | 6.4 | 6.0 | |||||||||||||||||||||
| Total private capital deployed | $ | 13.1 | $ | 10.6 |
Seed and Co-Investments
As of March 31, 2026 and December 31, 2025, PGIM had approximately $895 million and $1,155 million of seed investments and $525 million and $375 million of co-investments at carrying value, respectively, primarily consisting of public and private credit, public equity, real estate investments, and other alternatives.
Retirement
Business Update
- Effective January 1, 2026, traditional variable annuities with guaranteed living benefit riders and certain other annuity products previously included in the former Individual Retirement Strategies segment were transferred into a new reportable segment named “U.S. Legacy Products.” See “—U.S. Legacy Products” below for the operating results and additional information regarding this new segment.
Subsequent to this transfer, the remaining blocks of business in the former Individual Retirement Strategies segment, consisting primarily of indexed-variable annuity and fixed annuity products, were combined with the products included in the former Institutional Retirement Strategies segment into a new reportable segment named “Retirement.” These changes have been applied retrospectively and did not have an impact on any of the Company’s previously issued Consolidated Financial Statements.
Operating Results
The following table sets forth Retirement’s operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Revenues | $ | 5,457 | $ | 3,665 | |||||||||||||||||||
| Benefits and expenses | 4,885 | 3,139 | |||||||||||||||||||||
| Adjusted operating income | 572 | 526 | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (47) | (328) | |||||||||||||||||||||
| Change in value of market risk benefits, net of related hedging gains (losses) | (48) | (53) | |||||||||||||||||||||
| Market experience updates | (5) | 0 | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests | 1 | 1 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 473 | $ | 146 |
Adjusted operating income increased $46 million, primarily reflecting:
- higher net investment spread results, driven by growth in retail annuities and other products, and higher prepayment fee income.
This variance was partially offset by:
*•*higher amortization costs;
- higher variable and operating expenses, primarily driven by business growth; and
*•*lower underwriting results, primarily reflecting less favorable mortality experience on pension risk transfer transactions.
Revenues increased $1,792 million, primarily reflecting:
*•*higher premiums, driven by an increase in pension risk transfer sales in the current year period, with corresponding offsets in policyholders’ benefits, as discussed below; and
*•*higher net investment income, driven by growth in retail annuities and pension risk transfer transactions, and higher prepayment fee income.
Benefits and expenses increased $1,746 million primarily reflecting:
*•*higher policyholders’ benefits, including changes in reserves, related to the higher pension risk transfer premiums, as discussed above; and
*•*higher interest credited to policyholders’ account balances, driven by business growth.
Account Values
Account values are a significant driver of our operating results and are primarily driven by net flows and the impact of market changes. The investment income and interest we credit to policyholders on our spread-based products varies with the level of general account values. The income we earn on most of our fee-based products varies with the level of fee-based account values as many policy fees are determined by these values.
The following tables set forth account value information for the periods indicated. Account values include both internally- and externally-managed client balances as the total balances drive our revenue. For additional information regarding internally-managed balances, see “—PGIM.”
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Beginning account value, gross(1) | $ | 370,038 | $ | 333,243 | $ | 340,617 | |||||||||||||||||||||||
| Sales and additions | 7,369 | 10,524 | 36,348 | ||||||||||||||||||||||||||
| Withdrawals and benefits | (8,057) | (7,292) | (29,150) | ||||||||||||||||||||||||||
| Net flows | (688) | 3,232 | 7,198 | ||||||||||||||||||||||||||
| Change in market value, interest credited, and policy charges | 1,517 | 1,627 | 17,439 | ||||||||||||||||||||||||||
| Other(2) | (1,786) | 2,515 | 3,827 | ||||||||||||||||||||||||||
| Ending account value, gross | 369,081 | 340,617 | 369,081 | ||||||||||||||||||||||||||
| Reinsurance ceded | (13,336) | (12,096) | (13,336) | ||||||||||||||||||||||||||
| Ending account value, net | $ | 355,745 | $ | 328,521 | $ | 355,745 |
| Amounts included in “Ending account value, net” above: | |||||||||||||||||||||||||||||
| Retail annuities(3) | $ | 58,177 | $ | 43,543 | |||||||||||||||||||||||||
| Longevity reinsurance(4) | 120,015 | 113,480 | |||||||||||||||||||||||||||
| Fee-based stable value | 67,518 | 66,947 | |||||||||||||||||||||||||||
| Pension risk transfer and other products(5) | 110,035 | 104,551 | |||||||||||||||||||||||||||
| Total | $ | 355,745 | $ | 328,521 |
| Amounts included in “Sales and additions” above: | |||||||||||||||||||||||||||||
| Retail annuities(3) | $ | 3,284 | $ | 3,473 | $ | 13,370 | |||||||||||||||||||||||
| Longevity reinsurance(4) | 154 | 4,922 | 7,291 | ||||||||||||||||||||||||||
| Fee-based stable value | 1,113 | 1,081 | 3,798 | ||||||||||||||||||||||||||
| Pension risk transfer and other products(5) | 2,818 | 1,048 | 11,889 | ||||||||||||||||||||||||||
| Total | $ | 7,369 | $ | 10,524 | $ | 36,348 |
(1)Beginning account values, net of reinsurance ceded, were $357,150 million and $321,477 million for the three months ended March 31, 2026 and 2025, respectively, and $328,521 million for the twelve months ended March 31, 2026.
(2)“Other” activity includes the effect of foreign exchange rate changes associated with our United Kingdom international reinsurance business and changes in asset balances for externally-managed accounts. For the three months ended March 31, 2026 and 2025, “Other” activity also includes $1,327 million in receipts offset by $837 million in payments, and $801 million in receipts offset by $956 million in payments, respectively, related to funding agreements backed by commercial paper that typically have maturities of less than 90 days.
(3)Primarily includes FlexGuard suite and fixed annuity products.
(4)Represents notional amounts based on present value of future benefits under longevity reinsurance contracts.
(5)Includes spread-based stable value, structured settlements and funding agreement-backed notes.
Sales and additions for the three months ended March 31, 2026 decreased in comparison to the prior year period, primarily reflecting:
- significant longevity reinsurance sales in the prior year period.
This variance was partially offset by:
*•*higher pension risk transfer and funding agreement-backed notes sales in the current year period.
The decrease in net account values for the three months ended March 31, 2026 primarily reflects:
-
the negative impact of foreign exchange rate changes; and
-
net outflows, primarily driven by longevity reinsurance and fee-based stable value products, partially offset by net sales of retail annuities.
These variances were partially offset by:
- interest credited on customer funds, partially offset by a decrease in the market value of assets.
The increase in net account values for the twelve months ended March 31, 2026 primarily reflects:
-
an increase in the market value of assets and interest credited on customer funds;
-
net inflows, primarily driven by net sales of retail annuities, partially offset by net outflows from fee-based stable value products; and
-
the positive impact of foreign exchange rate changes.
Group Insurance
Operating Results
The following table sets forth Group Insurance’s operating results and benefits and administrative expense ratios for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Revenues | $ | 1,734 | $ | 1,748 | |||||||||||||||||||
| Benefits and expenses | 1,696 | 1,659 | |||||||||||||||||||||
| Adjusted operating income | 38 | 89 | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (2) | (21) | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 36 | $ | 68 | |||||||||||||||||||
| Benefits ratios(1)(2): | |||||||||||||||||||||||
| Group life | 86.0 | % | 87.1 | % | |||||||||||||||||||
| Group disability | 78.4 | % | 65.6 | % | |||||||||||||||||||
| Total Group Insurance | 83.7 | % | 81.3 | % | |||||||||||||||||||
| Administrative expense ratios(2)(3): | |||||||||||||||||||||||
| Group life | 11.5 | % | 10.8 | % | |||||||||||||||||||
| Group disability | 26.2 | % | 25.8 | % | |||||||||||||||||||
| Total Group Insurance | 15.9 | % | 14.8 | % |
(1)Ratio of policyholder benefits to earned premiums plus policy charges and fee income.
(2)The benefits and administrative expense ratios are measures used to evaluate profitability and efficiency.
(3)Ratio of operating and variable expenses (excluding commissions) to net premiums plus policy charges and fee income, excluding third-party administrator pass-through fees and expenses.
Adjusted operating income decreased $51 million, primarily reflecting:
*•*lower underwriting results in our group disability business, driven by less favorable claims experience on long-term disability contracts; and
*•*higher operating and variable expenses, largely supporting business growth.
These variances were partially offset by:
*•*higher underwriting results in our group life business, driven by more favorable mortality experience on non-experience-rated contracts, partially offset by a positive impact in the prior year period from a reserve refinement for certain experience-rated contracts.
Revenues decreased $14 million, primarily reflecting:
-
lower policy charges and fee income, driven by higher policy returns due to more favorable mortality experience on experience-rated contracts; and
-
lower premiums, driven by lower sales and a positive reserve refinement for certain experience-rated contracts in the prior year period in our group life business, partially offset by business growth in our group disability business.
Benefits and expenses increased $37 million, primarily reflecting:
-
higher policyholders’ benefits, including changes in reserves, driven by business growth and less favorable claims experience on long-term disability contracts, partially offset by more favorable mortality experience on non-experience-rated contracts in our group life business; and
-
higher general and administrative expenses, largely supporting business growth.
Sales Results
The following table sets forth Group Insurance’s annualized new business premiums, as defined under “—Segment Measures” above, for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Annualized new business premiums(1): | |||||||||||||||||||||||
| Group life | $ | 211 | $ | 225 | |||||||||||||||||||
| Group disability | 315 | 175 | |||||||||||||||||||||
| Total | $ | 526 | $ | 400 |
(1)Amounts exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.
Total annualized new business premiums increased $126 million, primarily reflecting:
- higher sales in the Premier and National market segments in our group disability business, including significant medical stop loss sales and higher supplemental health product sales.
This variance was partially offset by:
*•*lower sales in the National market segment in our group life business due to outsized sales in the prior year period.
Individual Life
Business Update
- Effective January 1, 2026, guaranteed universal life policies previously included in the Individual Life segment were transferred into a new reportable segment named “U.S. Legacy Products.” See “—U.S. Legacy Products” below for the operating results and additional information regarding this new segment. These changes have been applied retrospectively and did not have an impact on any of the Company’s previously issued Consolidated Financial Statements.
Operating Results
The following table sets forth Individual Life’s operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Revenues | $ | 1,121 | $ | 1,111 | |||||||||||||||||||
| Benefits and expenses | 982 | 1,059 | |||||||||||||||||||||
| Adjusted operating income | 139 | 52 | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (3) | 11 | |||||||||||||||||||||
| Market experience updates | 3 | 0 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 139 | $ | 63 |
Adjusted operating income increased $87 million, primarily reflecting:
-
higher underwriting results, driven by favorable mortality experience; and
-
higher net investment spread results, driven by higher reinvestment rates and higher income from non-coupon investments.
Revenues increased $10 million, primarily reflecting:
- higher net investment income, driven by higher reinvestment rates and higher income from non-coupon investments.
Benefits and expenses decreased $77 million, primarily reflecting:
-
lower policyholders’ benefits, including changes in reserves, driven by favorable mortality experience; and
-
favorable changes in estimates of the liability for future policy benefits, reflecting favorable mortality experience.
Sales Results
The following table sets forth Individual Life’s annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, by distribution channel and product, for the periods indicated:
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||
| Prudential Advisors | Third- Party | Total | Prudential Advisors | Third- Party | Total | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Variable Life | $ | 39 | $ | 157 | $ | 196 | $ | 33 | $ | 121 | $ | 154 | |||||||||||||||||||||||
| Term Life | 4 | 34 | 38 | 4 | 28 | 32 | |||||||||||||||||||||||||||||
| Universal Life | 1 | 16 | 17 | 1 | 17 | 18 | |||||||||||||||||||||||||||||
| Total | $ | 44 | $ | 207 | $ | 251 | $ | 38 | $ | 166 | $ | 204 |
Total annualized new business premiums increased $47 million, primarily reflecting:
-
higher third-party variable life and term life sales; and
-
higher Prudential Advisors variable life sales.
U.S. Legacy Products
Business Update
*•*Effective January 1, 2026, traditional variable annuity products with guaranteed living benefit riders and certain other annuity products previously included in the former Individual Retirement Strategies segment and guaranteed universal life policies previously included in the Individual Life Insurance segment were combined into this new reportable segment. The products contained within are no longer being sold in U.S. markets and will be managed with a specific focus on reducing risk and optimizing value for the Company. These changes have been applied retrospectively and did not have an impact on any of the Company’s previously issued Consolidated Financial Statements. See “—Company Overview” above for additional information regarding these segment changes.
Operating Results
The following table sets forth U.S. Legacy Products’ operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Revenues | $ | 1,138 | $ | 1,182 | |||||||||||||||||||
| Benefits and expenses | 931 | 918 | |||||||||||||||||||||
| Adjusted operating income | 207 | 264 | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (68) | (3) | |||||||||||||||||||||
| Change in value of market risk benefits, net of related hedging gains (losses) | (249) | (304) | |||||||||||||||||||||
| Market experience updates | (2) | 4 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | (112) | $ | (39) |
Our U.S. Legacy Products segment includes variable annuity contracts that offer optional guaranteed living benefit riders (e.g., guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”)), and/or optional death benefit riders (e.g., guaranteed minimum death benefits (“GMDB”)). The results of our variable annuity contracts are generally included in adjusted operating income, subject to certain exceptions related to these guarantees. Under U.S. GAAP, guaranteed living and death benefit riders are accounted for as market risk benefits (“MRBs”) and reported at fair value. For purposes of measuring segment performance, adjusted operating income excludes the changes in fair value of MRBs and instead reflects the performance of these riders in net income, net of related hedges, in “Change in value of market risk benefits, net of related hedging gains (losses),” except for the portion of the change attributable to changes in the Company’s non-performance risk (“NPR”) which is recorded in Other Comprehensive Income (loss) (“OCI”).
Adjusted operating income decreased $57 million, primarily reflecting:
*•*lower fee income, due to lower average separate account values driven by net outflows from the run-off of the variable annuity block, partially offset by favorable equity markets;
*•*lower underwriting results, primarily driven by the ongoing unfavorable impact from assumption updates in the second quarter of 2025 and reserve growth in our guaranteed universal life policies, partially offset by less unfavorable mortality experience relative to expectations; and
*•*lower net investment spread results, driven by the impact of lower short-term interest rates on income on collateral posted to counterparties, partially offset by higher reinvestment rates and lower losses from derivatives.
Revenues decreased $44 million, primarily reflecting:
- lower policy charges and fee income, as well as lower asset management and service fees, due to lower average separate account values driven by net outflows from the run-off of the variable annuity block;
*•*lower other income, driven by the impact of lower short-term interest rates on income on collateral posted to counterparties; and
*•*higher net investment income, driven by higher reinvestment rates and lower losses from derivatives.
Benefits and expenses increased $13 million, primarily reflecting:
- higher policyholders’ benefits, including changes in reserves, primarily driven by higher mortality experience in our guaranteed universal life policies.
This variance was partially offset by:
*•*lower interest credited to policyholders’ account balances, reflecting the run-off of the variable annuity block.
Account Values
The following table sets forth the segment’s annuities account value information for the periods indicated:
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Annuities Account Value(1): | |||||||||||||||||||||||||||||
| Beginning account value, gross(2) | $ | 87,203 | $ | 93,598 | $ | 89,139 | |||||||||||||||||||||||
| Premiums and deposits(3) | 5 | 6 | 23 | ||||||||||||||||||||||||||
| Full surrenders and death benefits | (2,425) | (2,477) | (9,804) | ||||||||||||||||||||||||||
| Premiums and deposits, net of full surrenders and death benefits | (2,420) | (2,471) | (9,781) | ||||||||||||||||||||||||||
| Partial withdrawals and other benefit payments | (1,131) | (1,181) | (4,444) | ||||||||||||||||||||||||||
| Net flows | (3,551) | (3,652) | (14,225) | ||||||||||||||||||||||||||
| Change in market value, interest credited, and other activity | (1,583) | (332) | 8,587 | ||||||||||||||||||||||||||
| Policy charges | (433) | (475) | (1,865) | ||||||||||||||||||||||||||
| Ending account value, gross | 81,636 | 89,139 | 81,636 | ||||||||||||||||||||||||||
| Reinsurance ceded | (7,575) | (8,608) | (7,575) | ||||||||||||||||||||||||||
| Ending account value, net | $ | 74,061 | $ | 80,531 | $ | 74,061 |
(1)Represents discontinued annuities and guaranteed living benefits in the general account and separate accounts. Includes alliance deposits and supplementary contracts.
(2)Beginning account values, net of reinsurance ceded, were $79,249 million and $84,834 million for the three months ended March 31, 2026 and 2025, respectively, and $80,531 million for the twelve months ended March 31, 2026.
(3)Represents renewal premiums or additional deposits on existing policies/contracts.
The decrease in annuities net account values for the three months ended March 31, 2026 primarily reflects:
-
net outflows from the run-off of the variable annuity block; and
-
market value depreciation.
The decrease in annuities net account values for the twelve months ended March 31, 2026 primarily reflects:
- net outflows from the run-off of the variable annuity block.
This variance was partially offset by:
- market value appreciation.
Variable Annuity Risks and Risk Mitigants
The primary risks of our variable annuity contracts arise from differences between actual experience and the assumptions used in the original pricing, including capital markets assumptions and actuarial assumptions. We manage these risks primarily through (i) Product Design Features, (ii) our Asset Liability Management Strategy, and, for certain products, external reinsurance. For additional information regarding our external reinsurance agreements, see Note 12 to the Unaudited Interim Consolidated Financial Statements.
i.Product Design Features:
Certain variable annuity contracts include an automatic rebalancing feature, also referred to as an asset transfer feature, that transfers assets between designated variable investment sub-accounts selected by the annuity contractholder and, depending on the benefit feature, a fixed-rate account in the general account or a bond fund sub-account within the separate accounts. The objective of this feature is to reduce our exposure to equity market risk and market volatility. Additional product design features include, among others, asset allocation restrictions, certain limitations on the amount of purchase payments, and a required minimum allocation to our general account for certain of our products. In addition, there is diversity in our fee arrangements, which help preserve certain revenue streams when market fluctuations cause account values to decline.
ii. Asset Liability Management (“ALM”) Strategy:
We employ an ALM strategy that combines fixed income instruments and derivatives to meet expected liabilities associated with certain annuity guarantees classified as MRBs under U.S. GAAP. The MRB liability that we hedge consists of expected living and death benefit claims under various market conditions. For our Prudential Defined Income (“PDI”) variable annuity, we primarily use fixed income instruments, while other products also utilize exchange-traded and over-the-counter (“OTC”) equity, interest rate and credit derivatives, including, futures, swaps and options. The intent of this strategy is to manage capital and liquidity efficiently and reduce net income volatility from capital markets movements. We periodically review and recalibrate the ALM strategy by optimizing the mix of derivatives and fixed income instruments to achieve expected outcomes.
Differences between changes in the value of the assets supporting MRBs and changes in the MRB liability may impact U.S. GAAP net income, primarily due to differences in accounting treatment and hedge performance factors.
Product Specific Risks and Risk Mitigants
For certain living benefit guarantees, claims will primarily represent the funding of contractholder lifetime withdrawals after the cumulative withdrawals have first exhausted the contractholder account value. Due to the age of the in-force block, claim payments to date have been limited. The timing and amount of future claims will depend on actual investment performance and contractholder behavior relative to our assumptions. Most of our current living benefit guarantees provide for guaranteed lifetime contractholder withdrawal payments inclusive of a “highest daily” contract value guarantee.
The majority of our traditional variable annuity contracts with living benefit guarantees incorporate risk mitigants such as an automatic rebalancing feature and/or inclusion in our ALM strategy. We may also utilize external reinsurance as an additional risk mitigant. For additional information regarding our external reinsurance agreements, see Note 12 to the Unaudited Interim Consolidated Financial Statements.
For our GMDBs, we provide a benefit payable upon death, generally equal to cumulative deposits adjusted for partial withdrawals, with certain products offering enhanced GMDB options. While we retain the risk that death benefit may exceed account values, a substantial portion of GMDB-related account values are subject to automatic rebalancing because the contractholder also selected a living benefit guarantee. All variable annuity contracts with living benefit guarantees include GMDBs, and because the living and death benefits cover the same insured life, we are exposed to both longevity and mortality risk on these contracts.
The following table sets forth the risk management profile of our living benefit guarantees and GMDB features as of the periods indicated:
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||
| Account Value | % of Total | Account Value | % of Total | Account Value | % of Total | |||||||||||||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||||||||||||||
| Living benefit/GMDB features(1)(2): | ||||||||||||||||||||||||||||||||||||||
| Both ALM strategy and automatic rebalancing(3)(4) | $ | 56,529 | 70 | % | $ | 60,491 | 70 | % | $ | 61,645 | 69 | % | ||||||||||||||||||||||||||
| ALM strategy only(4) | 1,540 | 2 | % | 1,650 | 2 | % | 1,690 | 2 | % | |||||||||||||||||||||||||||||
| Automatic rebalancing only | 60 | 0 | % | 63 | 0 | % | 70 | 0 | % | |||||||||||||||||||||||||||||
| External reinsurance(5) | 9,068 | 11 | % | 9,582 | 11 | % | 10,371 | 12 | % | |||||||||||||||||||||||||||||
| PDI | 1,180 | 1 | % | 1,232 | 1 | % | 1,319 | 1 | % | |||||||||||||||||||||||||||||
| Other products | 894 | 1 | % | 1,008 | 1 | % | 947 | 1 | % | |||||||||||||||||||||||||||||
| Total living benefit/GMDB features | 69,271 | 74,026 | 76,042 | |||||||||||||||||||||||||||||||||||
| GMDB features and other(6) | 12,365 | 15 | % | 13,177 | 15 | % | 13,097 | 15 | % | |||||||||||||||||||||||||||||
| Total annuity account value | $ | 81,636 | $ | 87,203 | $ | 89,139 |
(1) Prior period amounts have been updated to conform to current period presentation.
(2) All contracts with living benefit guarantees also contain GMDB features, which cover the same insured contract.
(3) Contracts with living benefits that are included in our ALM strategy and that have an automatic rebalancing feature.
(4) Excludes retained PDI which is presented separately within this table.
(5) Represents contracts subject to reinsurance transactions with external counterparties. Includes approximately $8 billion of account values in relation to the PDI reinsurance transaction, and certain Highest Daily Lifetime Income (“HDI”) v.3.0 business for the period April 1, 2015 through December 31, 2016. The HDI contracts with living benefits also have an automatic rebalancing feature. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information.
(6) Includes contracts that have a GMDB feature and do not have an automatic rebalancing feature.
International Businesses
Business Updates
-
As previously disclosed, in January 2026, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), a Japanese insurance subsidiary of the Company, reported the findings of its internal investigation into incidents of misconduct involving certain employees of Prudential of Japan. In response to these findings, Prudential of Japan is implementing a series of actions which include strengthening oversight of sales practices, governance and risk management, as well as leadership changes. Moreover, in February 2026, following discussions with the Japanese regulator, the Company voluntarily suspended new sales activity at Prudential of Japan for a 90-day period commencing February 9, 2026. In April 2026, the Company announced the voluntary extension of the new sales suspension for an additional 180 days through November 5, 2026. See “—Company Overview” above for additional information.
-
In January 2026, an agreement was entered into to sell the Company’s 24% equity interest (through a private equity limited partnership managed by LeapFrog Investments) in ICEA Lion Insurance Holdings, Ltd., a Kenya-based insurer and asset manager. The closing of this transaction is subject to regulatory approvals and customary closing conditions. This investment was not a significant contributor to the International Businesses segment’s operating results, and beginning in the fourth quarter of 2025, its results are reflected in Divested and Run-off Businesses included within our Corporate and Other operations in “Equity in earnings of joint ventures and other operating entities, net of taxes.”
-
In April 2026, an agreement was signed to sell the Company’s 49% equity interest in a life insurance joint venture in Indonesia to its joint venture partner, CT Corp. The closing of this transaction is subject to regulatory approvals and customary closing conditions. This joint venture was not a significant contributor to the International Businesses segment’s operating results, and beginning in the first quarter of 2026, its results are reflected in Divested and Run-off Businesses included within our Corporate and Other operations in “Equity in earnings of joint ventures and other operating entities, net of taxes.”
Operating Results
The results of our International Businesses’ operations are translated on the basis of weighted average monthly exchange rates, inclusive of the effects of the intercompany arrangement discussed in “—Results of Operations—Impact of Foreign Currency Exchange Rates” above. To provide a better understanding of operating performance within the International Businesses, where indicated below, we have analyzed our results of operations excluding the effect of the year-over-year change in foreign currency exchange rates. Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. For our Japan operations, we used an exchange rate of 147 yen per USD. In addition, for constant dollar information discussed below, activity denominated in USD is generally reported based on the amounts as transacted in USD. Annualized new business premiums presented on a constant exchange rate basis in the “Sales Results” section below reflect translation based on these same uniform exchange rates.
The following table sets forth the International Businesses’ operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Revenues | $ | 4,787 | $ | 4,738 | |||||||||||||||||||
| Benefits and expenses | 3,977 | 3,890 | |||||||||||||||||||||
| Adjusted operating income | 810 | 848 | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (500) | 202 | |||||||||||||||||||||
| Change in value of market risk benefits, net of related hedging gains (losses) | 2 | 6 | |||||||||||||||||||||
| Market experience updates | 22 | 37 | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests | (39) | (29) | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | 295 | $ | 1,064 |
Adjusted operating income decreased $38 million, including an unfavorable comparative net impact of $5 million from foreign currency fluctuations. Excluding this item, adjusted operating income decreased $33 million, primarily reflecting:
- higher operating expenses, primarily driven by remediation costs associated with the Prudential of Japan matter, as discussed above, and to support business growth.
This variance was partially offset by:
-
higher net investment spread results, primarily driven by higher reinvestment rates and business growth, as well as higher prepayment fee income and higher income from non-coupon investments;
-
higher underwriting results, driven by business growth, partially offset by impacts from the Prudential of Japan matter, including the suspension of sales and elevated surrenders; and
-
higher surrender charges, including the elevated impacts from the Prudential of Japan matter.
Revenue increased $49 million, including an unfavorable comparative net impact of $13 million from foreign currency fluctuations. Excluding this item, revenue increased $62 million, primarily reflecting:
-
higher net investment income, driven by higher reinvestment rates, business growth, and higher prepayment fee income, as well as higher income from non-coupon investments; and
-
higher policy charges and fee income, driven by growth in retirement and savings products in Japan and higher surrender charges.
These variances were partially offset by:
- lower premiums attributable to the decline of traditional life insurance business in force in Japan and the impact of the sales suspension related to the Prudential of Japan matter, partially offset by business growth in Brazil.
Benefits and expenses increased $87 million, including a favorable comparative net impact of $8 million from foreign currency fluctuations. Excluding this item, benefits and expenses increased $95 million, primarily reflecting:
-
higher general and administrative expenses, primarily driven by remediation costs associated with the Prudential of Japan matter, and to support business growth;
-
higher interest credited to policyholders’ account balances, reflecting growth in retirement and savings products in Japan; and
-
unfavorable changes in estimates of the liability for future policy benefits, reflecting higher surrenders.
These variances were partially offset by:
- lower policyholders’ benefits, including changes in reserves, due to the decline of traditional life insurance business in force in Japan, and impacts from the Prudential of Japan matter, including the suspension of sales and elevated surrenders.
Sales Results
The following table sets forth annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, on an actual and constant exchange rate basis for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026(1) | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Annualized new business premiums: | |||||||||||||||||||||||
| On an actual exchange rate basis | $ | 429 | $ | 576 | |||||||||||||||||||
| On a constant exchange rate basis | $ | 424 | $ | 578 |
(1)2026 results reflect the impact of the sales suspension resulting from the Prudential of Japan matter.
The amount of annualized new business premiums and the sales mix, in terms of types and currency denomination of products, for any given period can be significantly impacted by several factors, including but not limited to: the addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in interest rates or fluctuations in currency markets, changes in tax laws, changes in life insurance regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective and then fluctuate in the other direction following such changes.
Our diverse product portfolio in Japan, in terms of currency mix and premium payment structure, allows us to adapt to changing market and competitive dynamics. We regularly examine our product offerings and their related profitability and reprice or discontinue sales of certain products that do not meet our profit expectations. The impact of these actions, coupled with the introduction of certain new products, has generally resulted in higher sales of products denominated in USD relative to products denominated in other currencies; however, more recently we have experienced an increase in sales of our yen-denominated product offerings as a result of growing demand for these products.
The table below presents annualized new business premiums on a constant exchange rate basis, by product category and distribution channel, for the periods indicated:
| Three Months Ended March 31, 2026(1) | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life | Accident & Health | Retirement (2) | Investment Contracts (3) | Total | Life | Accident & Health | Retirement (2) | Investment Contracts (3) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life Planner | $ | 71 | $ | 17 | $ | 39 | $ | 25 | $ | 152 | $ | 102 | $ | 18 | $ | 73 | $ | 67 | $ | 260 | |||||||||||||||||||||||||||||||||||||||
| Life Consultants | 19 | 4 | 23 | 61 | 107 | 22 | 4 | 23 | 82 | 131 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Banks | 24 | 3 | 0 | 55 | 82 | 25 | 2 | 0 | 68 | 95 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Independent Agency and Other | 26 | 3 | 17 | 37 | 83 | 35 | 6 | 22 | 29 | 92 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 140 | $ | 27 | $ | 79 | $ | 178 | $ | 424 | $ | 184 | $ | 30 | $ | 118 | $ | 246 | $ | 578 |
(1)2026 results reflect the impact of the sales suspension resulting from the Prudential of Japan matter.
(2)Includes retirement income, endowment and savings variable life.
(3)Includes single-payment market value adjusted investment contracts, single-payment whole life products and recurring-payment annuity products.
Annualized new business premiums, on a constant exchange rate basis, decreased $154 million:
-
Life Planner sales decreased $108 million, primarily driven by lower sales in Japan across all products resulting from the sales suspension at Prudential of Japan, as discussed above;
-
Life Consultant and Bank channel sales decreased $24 million and $13 million, respectively, primarily driven by lower investment contract product sales; and
-
Independent Agency and Other sales decreased $9 million, driven by lower life and retirement product sales, partially offset by higher investment contract product sales.
Corporate and Other
Operating Results
Corporate and Other includes corporate operations, after allocations to our business segments, and Divested and Run-off Businesses other than those that qualify for “discontinued operations” accounting treatment under U.S. GAAP. The following table sets forth Corporate and Other’s operating results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Operating results: | |||||||||||||||||||||||
| Investment income | $ | 46 | $ | 55 | |||||||||||||||||||
| Interest expense on debt | (225) | (236) | |||||||||||||||||||||
| Pension and employee benefits | 92 | 102 | |||||||||||||||||||||
| Other corporate activities | (243) | (336) | |||||||||||||||||||||
| Adjusted operating income | (330) | (415) | |||||||||||||||||||||
| Realized investment gains (losses), net, and related charges and adjustments | (1) | (107) | |||||||||||||||||||||
| Market experience updates | (3) | (2) | |||||||||||||||||||||
| Divested and Run-off Businesses | 64 | (51) | |||||||||||||||||||||
| Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests | (13) | 21 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | (283) | $ | (554) |
The loss from Corporate and Other operations, on an adjusted operating income basis, decreased $85 million primarily reflecting:
*•*lower net charges from other corporate activities, primarily driven by lower corporate spending on initiatives, and favorable foreign exchange rate impacts; and
- lower interest expense on debt, largely driven by lower average debt balances.
These variances were partially offset by:
*•*lower investment income results, primarily driven by lower average asset balances and lower interest rates, partially offset by higher income from non-coupon investments; and
- unfavorable pension and employee benefits results, primarily driven by lower earnings from the Company’s pension plans reflecting a decrease in expected returns on plan assets.
Divested and Run-off Businesses
Divested and Run-off Businesses Included in Corporate and Other
Income from our Divested and Run-off Businesses includes results from several businesses that have been or will be sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The results of these Divested and Run-off Businesses are reflected in our Corporate and Other operations but are excluded from adjusted operating income. A summary of the results of the Divested and Run-off Businesses reflected in our Corporate and Other operations is as follows for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Long-Term Care | $ | (17) | $ | (37) | |||||||||||||||||||
| Other(1) | 81 | (14) | |||||||||||||||||||||
| Total Divested and Run-off Businesses income (loss) excluded from adjusted operating income | $ | 64 | $ | (51) |
(1)Effective first quarter of 2026, the results of PGIM India are excluded from PGIM’s adjusted operating results and are included herein.
Long-Term Care. Results increased $20 million, primarily reflecting:
- higher net realized investment gains from sales of fixed income securities and the favorable impact of market value changes on derivatives.
This variance was partially offset by:
*•*more unfavorable impacts from changes in the market value of equity securities; and
- lower underwriting results primarily driven by unfavorable morbidity experience.
Other Divested and Run-off Businesses. Results increased $95 million, primarily reflecting:
*•*favorable results related to the Full Service Retirement business, primarily reflecting accelerated deferred gain amortization resulting from policy novations; and
- higher results related to Assurance IQ driven by favorable Medicare business performance.
Closed Block Division
The Closed Block division includes certain in-force traditional domestic participating life insurance and annuity products and assets that are used for the payment of benefits and policyholder dividends on these policies (collectively, the “Closed Block”), as well as certain related assets and liabilities. We no longer offer these traditional domestic participating policies. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
Each year, the Board of Directors of The Prudential Insurance Company of America (“PICA”) determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains (losses), mortality experience and other factors. Although the Closed Block experience for dividend action decisions is based upon statutory results, at the time the Closed Block was established, we developed, as required by U.S. GAAP, an actuarial calculation of the timing of the maximum future earnings from the policies included in the Closed Block. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. If actual cumulative earnings in any given period are greater than the cumulative earnings we expected, we record this excess as a policyholder dividend obligation. Additionally, any accumulated net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block are reflected as a policyholder dividend obligation, with a corresponding amount reported in AOCI, while any accumulated net unrealized investment losses are reflected as a reduction of the policyholder dividend obligation, to the extent the overall policyholder dividend obligation is otherwise positive.
We will subsequently pay this excess to Closed Block policyholders as an additional dividend unless it is otherwise offset by future Closed Block performance that is less favorable than we originally expected. The policyholder dividends we charge to expense within the Closed Block division will include any change in our policyholder dividend obligation that we recognize for
the excess of actual cumulative earnings in any given period over the cumulative earnings we expected in addition to the actual policyholder dividends declared by the Board of Directors of PICA. If actual cumulative earnings fall below expected cumulative earnings in future periods, earnings volatility in the Closed Block division, which is primarily due to changes in investment results, may not be offset by changes in the cumulative earnings policyholder dividend obligation. For a discussion of the Closed Block division’s realized investment gains (losses), net, see “—General Account Investments.”
As of March 31, 2026, the excess of actual cumulative earnings over the expected cumulative earnings was $1,487 million, which was recorded as a policyholder dividend obligation. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. As of March 31, 2026, net unrealized investment losses have arisen subsequent to the establishment of the Closed Block due to the impacts of higher interest rates on the market value of fixed maturities available-for-sale. The impact of these net unrealized investment losses has been reflected as a decrease to the policyholder dividend obligation of $1,407 million at March 31, 2026, with a corresponding amount reported in AOCI.
Operating Results
The following table sets forth the Closed Block division’s results for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| U.S. GAAP results: | |||||||||||||||||||||||
| Revenues | $ | 879 | $ | 820 | |||||||||||||||||||
| Benefits and expenses | 890 | 842 | |||||||||||||||||||||
| Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities | $ | (11) | $ | (22) |
Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities increased $11 million, primarily reflecting higher net investment activity results, driven by:
-
higher net investment income from non-coupon and fixed income investments;
-
lower realized investment losses, primarily driven by favorable changes in the market value of derivatives, partially offset by higher losses from the sale of fixed income securities; and
-
higher other income, primarily driven by less unfavorable changes in the market value of equity securities.
As a result of these and other factors, a $148 million reduction in the policyholder dividend obligation was recorded in the first three months of 2026, compared to a $245 million reduction in the first three months of 2025.
Revenues increased $59 million, primarily reflecting:
-
higher net investment income;
-
lower realized investment losses; and
-
higher other income, as discussed above.
Benefits and expenses increased $48 million, primarily reflecting:
- higher dividends to policyholders, reflecting a lower reduction in the policyholder dividend obligation due to changes in cumulative earnings and other factors, as discussed above.
Accounting Policies & Pronouncements
Application of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews the estimates and assumptions used in the preparation of the Company’s financial statements. If management determines that modifications to assumptions and estimates are appropriate given current facts and circumstances, the Company’s results of operations and financial position as reported in the Unaudited Interim Consolidated Financial Statements could change significantly.
Management believes the accounting policies relating to the following areas are most dependent on the application of estimates and assumptions and require management’s most difficult, subjective, or complex judgments:
-
Insurance liabilities;
-
Goodwill;
-
Valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”);
-
Pension and other postretirement benefits;
-
Taxes on income;
-
Reserves for contingencies, including reserves for losses in connection with unresolved legal matters; and
-
Reinsurance.
Market Performance - Equity and Interest Rate Assumptions
The liability for future policy benefits for certain of our universal life type products includes quarterly adjustments for the impact of changes to our estimate of future rates of returns on investments to reflect actual fund performance and market conditions. A portion of the returns on investments for our variable life contracts are dependent upon the total rate of return on assets held in separate account investment options. This rate of return influences the fees we earn and expected claims to be paid on variable life contracts, as well as other sources of profit. Returns that are higher than our expectations for a given period produce higher than expected account balances, which increase the future fees we expect to earn on variable life contracts and decrease expected claims to be paid on variable life contracts. The opposite occurs when returns are lower than our expectations.
The weighted average rate of return assumptions used in developing estimated market returns consider many factors specific to each product type, including asset durations, asset allocations, and other factors. With regard to equity market assumptions, the near-term future rate of return assumption used in evaluating liabilities for future policy benefits for certain of our products, primarily our domestic and international variable life insurance products, is generally updated each quarter and is derived using a reversion to the mean approach, a common industry practice. Under this approach, we consider historical equity returns and adjust projected equity returns over an initial future period of five years (the “near-term”) so that equity returns converge to the long-term expected rate of return. If the near-term projected future rate of return is greater than our near-term maximum future rate of return of 15.0%, we use our maximum future rate of return. If the near-term projected future rate of return is lower than our near-term minimum future rate of return of 0%, we use our minimum future rate of return. As of March 31, 2026, our domestic variable life insurance businesses assume an 8.0% long-term equity expected rate of return and a 3.3% near-term mean reversion equity expected rate of return, and our international variable life insurance business assumes a 5.5% long-term equity expected rate of return and a 0% near-term mean reversion equity expected rate of return.
With regard to interest rate assumptions used in evaluating liabilities for future policy benefits for certain of our products, we update the long-term and near-term future rates used to project fixed income returns annually and quarterly, respectively. As a result of our 2025 annual reviews and update of assumptions and other refinements, we kept our long-term expectation of the 10-year U.S. Treasury rate unchanged and continue to grade to a rate of 3.5% over ten years, and increased our long-term expectation of the 10-year Japanese Government Bond yield by 25 basis points and now grade to a rate of 1.5% over ten years. As part of our quarterly market experience updates, we update our near-term projections of interest rates to reflect changes in current rates.
For further discussion of impacts that could result from changes in these key estimates and assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Policies and Pronouncements—Application of Critical Accounting Estimates” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Adoption of New Accounting Pronouncements
See Note 2 to the Unaudited Interim Consolidated Financial Statements for accounting pronouncements issued but not yet adopted and newly adopted accounting pronouncements.
Liquidity and Capital Resources
Overview
Liquidity refers to the ability to generate sufficient cash resources to meet the payment obligations of the Company. Capital refers to the long-term financial resources available to support the operations of our businesses, fund business growth, and provide a cushion to withstand adverse circumstances. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein.
Effective and prudent liquidity and capital management is a priority across the Company. Management monitors the liquidity of Prudential Financial and its subsidiaries on a daily basis and projects borrowing and capital needs over a multi-year time horizon. We use a Risk Appetite Framework (“RAF”) to ensure that all risks taken across the Company align with our capacity and willingness to take those risks. The RAF provides a dynamic assessment of capital and liquidity stress impacts and is intended to ensure that sufficient resources are available to absorb those impacts. We believe that our capital and liquidity resources are sufficient to satisfy the capital and liquidity requirements of Prudential Financial and its subsidiaries.
Our businesses are subject to comprehensive regulation and supervision by domestic and international regulators. These regulations currently include requirements (many of which are the subject of ongoing rule-making) relating to capital and liquidity management. For information regarding these regulatory initiatives and their potential impact on us, see “Business—Regulation” and “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Capital
The primary components of the Company’s capitalization consist of equity and outstanding capital debt, including junior subordinated debt. As shown in the table below, as of March 31, 2026, the Company had $49.6 billion in capital, all of which was available to support the aggregate capital requirements of its businesses and its Corporate and Other operations. Based on our assessment of these businesses and operations, we believe this level of capital is consistent with our ratings targets.
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in millions) | |||||||||||
| Equity(1) | $ | 35,425 | $ | 35,515 | |||||||
| Junior subordinated debt (including hybrid securities) | 7,596 | 7,595 | |||||||||
| Other capital debt | 6,560 | 6,500 | |||||||||
| Total capital | $ | 49,581 | $ | 49,610 |
(1)Amounts attributable to Prudential Financial, excluding AOCI.
We manage PICA, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), The Gibraltar Life Insurance Co., Ltd. (“Gibraltar Life”), and other significant insurance subsidiaries to regulatory capital levels consistent with our “AA” ratings targets. We utilize the risk-based capital (“RBC”) ratio as a primary measure of the capital adequacy of our domestic insurance subsidiaries and the solvency margin ratio as a primary measure of the capital adequacy of our Japanese insurance subsidiaries.
RBC ratio calculations are intended to assist insurance regulators in measuring an insurer’s solvency and ability to pay future claims. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities, but is available to the public.
PICA’s RBC ratio as of December 31, 2025, its most recent statutory fiscal year-end and RBC reporting date, was 415%. PICA’s RBC ratio is calculated on a consolidated basis and included Pruco Life Insurance Company (“Pruco Life”), Pruco Life Insurance Company of New Jersey (“PLNJ”), which is a subsidiary of Pruco Life, and Prudential Legacy Insurance Company of New Jersey (“PLIC”).
Similar to the RBC ratios that are employed by U.S. insurance regulators, regulatory authorities in the international jurisdictions in which we operate generally establish some form of minimum solvency margin requirements for insurance companies based on local statutory accounting practices. These solvency margins are a primary measure of the capital adequacy
of our international insurance operations. Maintenance of our solvency margins at certain levels is also important to our competitive positioning, as in certain jurisdictions, such as Japan, these solvency margins are required to be disclosed to the public and therefore impact the public perception of an insurer’s financial strength.
The table below presents the solvency margin ratios of our most significant international insurance subsidiaries as of December 31, 2025, the most recent date for which this information is available, and represents the final reporting period for which solvency margin ratios are presented as Japan transitions to the Economic Solvency Ratio framework, as described below.
| Ratio | |||||
| Prudential of Japan consolidated(1) | 769 | % | |||
| Gibraltar Life consolidated(2) | 926 | % |
(1)Includes Prudential Trust Co., Ltd., a subsidiary of Prudential of Japan.
(2)Includes Prudential Gibraltar Financial Life Insurance Co., Ltd. (“PGFL”), a subsidiary of Gibraltar Life.
The Japanese Financial Services Agency (“FSA”) has implemented a new market-based replacement to the solvency margin ratio framework entitled the Economic Solvency Ratio (“ESR”) that applies to our Japanese insurance subsidiaries. The ESR became effective in April 2025, for reporting as of March 31, 2026, with disclosure under the new framework required later in 2026.
All of our domestic and significant international insurance subsidiaries have capital levels that substantially exceed the minimum level required by applicable insurance regulations. The statutory capital of our insurance companies and our overall capital flexibility could be impacted by, among other things, market conditions and changes in insurance reserves, including those stemming from updates to our actuarial assumptions. Our regulatory capital levels also may be affected in the future by changes to the applicable regulations, proposals for which are currently under consideration by both domestic and international insurance regulators. For additional information regarding the calculation of RBC and solvency margin ratios, as well as regulatory minimums, see Note 20 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Captive Reinsurance Companies
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital—Captive Reinsurance Companies” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for a discussion of our use of captive reinsurance companies.
Shareholder Distributions
Share Repurchase Program and Shareholder Dividends
In December 2025, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $1.0 billion of its outstanding Common Stock during the period from January 1, 2026 through December 31, 2026. In general, the timing and amount of share repurchases are determined by management based on market conditions and other considerations, including compliance with applicable laws and any increased capital needs of our businesses due to, among other things, credit migration and losses in our investment portfolio, changes in regulatory capital requirements and opportunities for growth and acquisitions. Repurchases may be executed in the open market, through derivative, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended.
The following table sets forth information about declarations of Common Stock dividends, as well as repurchases of shares of Prudential Financial’s Common Stock, for the periods indicated:
| Dividend Amount | Shares Repurchased | ||||||||||||||||||||||
| Three months ended: | Per Share | Aggregate | Shares | Total Cost | |||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| March 31, 2026 | $ | 1.40 | $ | 496 | 2.4 | $ | 250 |
Liquidity
Liquidity management and stress testing are performed on a legal entity basis as the ability to transfer funds between subsidiaries is limited due in part to regulatory restrictions. Liquidity needs are determined through daily and quarterly cash flow forecasting at the holding company and within our operating subsidiaries. We seek to maintain a minimum balance of highly liquid assets to ensure that adequate liquidity is available at Prudential Financial to cover fixed expenses in the event that we experience reduced cash flows from our operating subsidiaries at a time when access to capital markets is also not available.
We seek to mitigate the risk of having limited or no access to financing due to stressed market conditions by generally pre-funding debt in advance of maturity. We mitigate the refinancing risk associated with our debt that is used to fund operating needs by matching the term of debt with the assets financed. To ensure adequate liquidity in stress scenarios, stress testing is performed for our major operating subsidiaries. We seek to further mitigate liquidity risk by maintaining our access to alternative sources of liquidity, as discussed below.
Liquidity of Prudential Financial
The principal sources of funds available to Prudential Financial, the parent holding company, are dividends, returns of capital and loans from subsidiaries, and proceeds from debt issuances and certain stock-based compensation activity. These sources of funds may be supplemented by Prudential Financial’s access to the capital markets as well as the “—Alternative Sources of Liquidity” described below.
The primary uses of funds at Prudential Financial include servicing debt, making capital contributions and loans to subsidiaries, making acquisitions, paying declared shareholder dividends and repurchasing outstanding shares of Common Stock executed under authority from the Board.
As of March 31, 2026, Prudential Financial had highly liquid assets with a carrying value totaling $4,477 million, a decrease of $256 million from December 31, 2025. Highly liquid assets predominantly include cash, short-term investments, U.S. Treasury securities, obligations of other U.S. government authorities and agencies, and/or foreign government bonds. We maintain an intercompany liquidity account that is designed to optimize the use of cash by facilitating the lending and borrowing of funds between Prudential Financial and its subsidiaries on a daily basis. Excluding the net borrowings from this intercompany liquidity account, Prudential Financial had highly liquid assets of $3,712 million as of March 31, 2026, a decrease of $105 million from December 31, 2025.
The following table sets forth Prudential Financial’s principal sources and uses of highly liquid assets, excluding net borrowings from our intercompany liquidity account, for the periods indicated:
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Highly Liquid Assets, beginning of period | $ | 3,817 | $ | 4,641 | ||||||||||
| Dividends and/or returns of capital from subsidiaries(1) | 790 | 606 | ||||||||||||
| Affiliated (borrowings)/loans - (capital activities)(2) | 102 | 11 | ||||||||||||
| Capital contributions to subsidiaries(3) | (107) | (16) | ||||||||||||
| Total Business Capital Activity(4) | 785 | 601 | ||||||||||||
| Share repurchases(5) | (246) | (246) | ||||||||||||
| Common Stock dividends(6) | (502) | (491) | ||||||||||||
| Total Share Repurchases, Dividends and Business Disposition Activity | (748) | (737) | ||||||||||||
| Proceeds from the issuance of debt(7) | 58 | 794 | ||||||||||||
| Repayments of debt | (500) | (2) | ||||||||||||
| Total Debt Activity | (442) | 792 | ||||||||||||
| Net interest expense | (374) | (340) | ||||||||||||
| Affiliated (borrowings)/loans - (operating activities)(8) | 188 | (94) | ||||||||||||
| Tax cash flows(4) | 420 | 29 | ||||||||||||
| Other corporate cash flows(4) | (9) | (51) | ||||||||||||
| Share issuances for employee stock purchases and other(4) | 75 | 79 | ||||||||||||
| Total Other Activity | 300 | (377) | ||||||||||||
| Net increase/(decrease) in highly liquid assets | (105) | 279 | ||||||||||||
| Highly Liquid Assets, end of period | $ | 3,712 | $ | 4,920 |
(1)2026 includes $700 million from PICA and $90 million from PGIM subsidiaries. 2025 includes $500 million from Individual Life insurance captives, $53 million from international insurance subsidiaries and $53 million from PGIM subsidiaries.
(2)Represents loans to and from subsidiaries made for capital management purposes. 2026 includes $102 from international insurance subsidiaries. 2025 includes $11 million from captive reinsurance subsidiaries.
(3)2026 includes capital contributions of $107 million to international subsidiaries. 2025 includes capital contributions of $10 million to other subsidiaries and $6 million to PICA.
(4)2026 “Total Business Capital Activity” includes segment inflows of $898 million from U.S. Businesses, $281 million from International Businesses, $111 million from PGIM, and outflows of $505 million to Corporate and Other operations. 2025 “Total Business Capital Activity” includes segment inflows of $508 million from U.S. Businesses, $137 million from PGIM, $117 million from International Businesses, and outflows of $161 million to Corporate and Other operations. In addition, Corporate & Other operations had net inflows of $486 million and $57 million, respectively, from “Tax cash flows,” “Other corporate cash flows” and “Share issuances for employee stock purchases and other,” as shown within this table.
(5)Excludes cash payments made on trades that settled in the subsequent period.
(6)Includes cash payments made on dividends declared in prior periods.
(7)Includes $58 million and $50 million of proceeds from the issuance of retail medium-term notes that were used exclusively to purchase funding agreements from PICA in 2026 and 2025, respectively.
(8)Represents loans to and from subsidiaries to support business operating needs.
Dividends and Returns of Capital from Subsidiaries
Domestic insurance subsidiaries. During the first three months of 2026, Prudential Financial received dividends of $700 million from PICA. In addition to paying Common Stock dividends, our domestic insurance operations may return capital to Prudential Financial by other means, such as affiliated lending, and reinsurance with Bermuda-based affiliates.
International insurance subsidiaries. During the first three months of 2026, Prudential Financial did not receive dividends from its international insurance subsidiaries. In addition to paying Common Stock dividends, our international insurance operations may return capital to Prudential Financial by other means, such as the repayment of preferred stock obligations held by Prudential Financial or other affiliates, affiliated lending, affiliated derivatives and reinsurance with U.S.- and Bermuda-based affiliates.
Other subsidiaries. During the first three months of 2026, Prudential Financial received dividends of $90 million from PGIM subsidiaries.
Restriction on dividends and returns of capital from subsidiaries. Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Prudential Financial and other affiliates under applicable insurance law and regulation. Further, market conditions could negatively impact capital positions of our insurance companies, which could further restrict their ability to pay dividends. More generally, the payment of dividends by any of our subsidiaries is subject to declaration by their Board of Directors and can be affected by market conditions and other factors.
With respect to our domestic insurance subsidiaries, PICA is permitted to pay ordinary dividends based on calculations specified under New Jersey insurance law, subject to prior notification to the New Jersey Department of Banking and Insurance (“NJDOBI”). Any distributions above this amount in any twelve-month period are considered to be “extraordinary” dividends, and the approval of the NJDOBI is required prior to payment. The laws regulating dividends of the states where our other domestic insurance companies are domiciled are similar, but not identical, to those of New Jersey.
Capital redeployment from our international insurance subsidiaries is subject to local regulatory requirements in the international jurisdictions in which they operate. Our most significant international insurance subsidiaries, Prudential of Japan and Gibraltar Life, are permitted to pay Common Stock dividends based on calculations specified by Japanese insurance business law. Dividends in excess of these amounts and other forms of capital distribution may require the prior approval of the FSA. The regulatory fiscal year end for both Prudential of Japan and Gibraltar Life is March 31, after which time the Common Stock dividend amount permitted to be paid without prior approval from the FSA can be determined.
The ability of our PGIM subsidiaries and the majority of our other operating subsidiaries to pay dividends is largely unrestricted from a regulatory standpoint.
See Note 20 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for information regarding specific dividend restrictions.
Liquidity of Insurance Subsidiaries
We manage the liquidity of our insurance operations to ensure stable, reliable and cost-effective sources of cash flows to meet all of our obligations. Liquidity within each of our insurance subsidiaries is provided by a variety of sources, including portfolios of liquid assets. The investment portfolios of our subsidiaries are integral to the overall liquidity of our insurance operations. We segment our investment portfolios and employ an asset/liability management approach specific to the requirements of each of our product lines. This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities.
Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support. We consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures to evaluate our insurance operations’ liquidity under various stress scenarios, including company-specific and market-wide events. We continue to believe that cash generated by ongoing operations and the profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.
The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, investment maturities, sales of investments, and sales associated with our insurance and annuity operations, as well as internal and external borrowings. The principal uses of liquidity include benefits, claims and dividends paid to policyholders, and payments to policyholders and contractholders in connection with surrenders, withdrawals and net policy loan activity. Other uses of liquidity may include commissions, general and administrative expenses, purchases of investments, the payment of dividends to the parent holding company, hedging and reinsurance activity and payments in connection with financing activities.
The following table sets forth the fair value of certain of our domestic insurance operations’ portfolio of liquid assets, as of the dates indicated:
| March 31, 2026 | |||||||||||||||||||||||||||||
| Prudential Insurance(1) | PLIC | Pruco Life | Total | December 31, 2025 | |||||||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||||||||
| Cash and short-term investments | $ | 5.9 | $ | 1.1 | $ | 3.5 | $ | 10.5 | $ | 11.5 | |||||||||||||||||||
| Fixed maturity investments(2): | |||||||||||||||||||||||||||||
| High or highest quality | 127.4 | 26.0 | 51.4 | 204.8 | 203.6 | ||||||||||||||||||||||||
| Other than high or highest quality | 7.7 | 2.1 | 3.0 | 12.8 | 13.0 | ||||||||||||||||||||||||
| Subtotal | 135.1 | 28.1 | 54.4 | 217.6 | 216.6 | ||||||||||||||||||||||||
| Public equity securities, at fair value | 2.6 | 1.5 | 4.0 | 8.1 | 6.3 | ||||||||||||||||||||||||
| Total | $ | 143.6 | $ | 30.7 | $ | 61.9 | $ | 236.2 | $ | 234.4 |
(1)Represents legal entity view and as such includes both domestic and international activity.
(2)Credit quality is based on NAIC or equivalent rating.
The following table sets forth the fair value of our international insurance operations’ portfolio of liquid assets, as of the dates indicated:
| March 31, 2026 | |||||||||||||||||||||||||||||
| Prudential of Japan | Gibraltar Life(1) | All Other(2) | Total | December 31, 2025 | |||||||||||||||||||||||||
| (in billions) | |||||||||||||||||||||||||||||
| Cash and short-term investments | $ | 0.7 | $ | 3.6 | $ | 3.7 | $ | 8.0 | $ | 9.1 | |||||||||||||||||||
| Fixed maturity investments(3): | |||||||||||||||||||||||||||||
| High or highest quality(4) | 22.9 | 43.0 | 30.7 | 96.6 | 97.8 | ||||||||||||||||||||||||
| Other than high or highest quality | 0.4 | 0.4 | 4.0 | 4.8 | 4.6 | ||||||||||||||||||||||||
| Subtotal | 23.3 | 43.4 | 34.7 | 101.4 | 102.4 | ||||||||||||||||||||||||
| Public equity securities | 4.1 | 1.0 | 0.3 | 5.4 | 5.5 | ||||||||||||||||||||||||
| Total | $ | 28.1 | $ | 48.0 | $ | 38.7 | $ | 114.8 | $ | 117.0 |
(1)Includes PGFL.
(2)Represents our international insurance operations, excluding Japan.
(3)Credit quality is based on NAIC or equivalent rating.
(4)As of March 31, 2026, $51.9 billion, or 54%, were invested in government or government agency bonds.
Liquidity associated with other activities
Hedging activities associated with variable annuities
For the portion of our U.S. Legacy Products’ variable annuities ALM strategy executed through hedging, we enter into a range of exchange-traded, cleared and other OTC equity and interest rate derivatives in order to hedge certain capital market risks related to more severe market conditions. This portion of our ALM strategy requires access to liquidity to meet payment obligations relating to these derivatives, such as payments for periodic settlements, purchases, maturities and terminations. These liquidity needs can vary materially due to, among other items, changes in interest rates, equity markets, mortality and policyholder behavior. For a full discussion of our U.S. Legacy Products’ variable annuities risk management strategy, see “—Results of Operations by Segment—U.S. Legacy Products.”
The hedging portion of our U.S. Legacy Products’ ALM strategy may also result in derivative related collateral postings to (when we are in a net post position) or from (when we are in a net receive position) counterparties. The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged. Depending on market conditions, the collateral posting requirements can result in material liquidity needs when we are in a net post position.
Foreign exchange hedging activities
We employ various hedging strategies to manage potential exposure to foreign currency exchange rate movements, particularly those associated with the yen. Our overall yen hedging strategy calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis.
We hold both internal and external hedges primarily to hedge our USD-equivalent equity. These hedges also mitigate volatility in the solvency measures of yen-based subsidiaries resulting from changes in the market value of their USD-denominated investments hedging our USD-equivalent equity attributable to changes in the yen-USD exchange rate.
For additional information regarding our hedging strategy, see “—External and Economic Factors—Impact of Foreign Currency Exchange Rates.”
Cash settlements from these hedging activities result in cash flows between subsidiaries of Prudential Financial and either international-based subsidiaries or external parties. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged. For example, a significant yen depreciation over an extended period of time could result in net cash inflows, while a significant yen appreciation could result in net cash outflows. The following tables set forth information about net cash settlements and the net asset or liability resulting from these hedging activities related to the yen and other currencies for the periods indicated:
| Three Months Ended March 31, | |||||||||||
| Cash Settlements Received (Paid): | 2026 | 2025 | |||||||||
| (in millions) | |||||||||||
| Internal Hedges(1) | $ | 136 | $ | 109 | |||||||
| External Hedges(2) | (156) | 46 | |||||||||
| Total Cash Settlements | $ | (20) | $ | 155 | |||||||
| Assets (Liabilities): | March 31, 2026 | December 31, 2025 | |||||||||
| (in millions) | |||||||||||
| Internal Hedges(1) | $ | 1,018 | $ | 999 | |||||||
| External Hedges(3) | 183 | 97 | |||||||||
| Total Assets (Liabilities)(4) | $ | 1,201 | $ | 1,096 |
__________
(1)Represents internal transactions between international-based and U.S.-based entities. Amounts noted are from the U.S.-based entities’ perspectives.
(2)Includes non-yen related cash settlements received (paid) of ($12) million, primarily denominated in Brazilian real, Chilean peso and Australian Dollar and $3 million, primarily denominated in Brazilian real, Australian dollar and Chilean Peso for the three months ended March 31, 2026 and 2025, respectively.
(3)Includes non-yen related assets (liabilities) of ($80) million, primarily denominated in Brazilian real, Chilean peso and Australian dollar as of March 31, 2026 and ($44) million, primarily denominated in Brazilian real, Chilean peso and Australian dollar, as of December 31, 2025.
(4)As of March 31, 2026, approximately $175 million, $314 million, $313 million and $400 million of the net market values are scheduled to settle in 2026, 2027, 2028, and thereafter, respectively. The net market value of the assets (liabilities) will vary with changing market conditions to the extent there are no corresponding offsetting positions.
PGIM operations
The principal sources of liquidity for our fee-based PGIM businesses include cash flows from asset management, commercial mortgage origination and servicing activities, and internal and external funding facilities. The principal uses of liquidity for our fee-based PGIM businesses include general and administrative expenses, facilitating our commercial mortgage loan business, funding needs of our seed and co-investment portfolio and distributions of dividends and returns of capital to Prudential Financial. The primary liquidity risks for our fee-based PGIM businesses relate to their profitability, which is impacted by market conditions, our investment management performance and client redemptions. We believe the cash flows from our fee-based PGIM businesses are adequate to satisfy the current liquidity requirements of these operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.
The principal sources of liquidity for our seed and co-investments held in our PGIM businesses are cash flows from investments, cash flows from our fee-based businesses, as described above, borrowing lines from internal sources, including Prudential Financial and Prudential Funding, LLC (“Prudential Funding”), a wholly-owned subsidiary of PICA, and external sources, including PGIM’s limited-recourse credit facility. The principal uses of liquidity for our seed and co-investments include making investments to support business growth and paying interest expense from the internal and external borrowings used to fund those investments. The primary liquidity risks include the inability to sell assets in a timely manner, declines in the value of assets and credit defaults.
There have been no material changes to the liquidity position of our PGIM operations since December 31, 2025.
Alternative Sources of Liquidity
In addition to asset-based financing as discussed below, Prudential Financial and certain subsidiaries have access to other sources of liquidity, including syndicated, unsecured committed credit facilities, membership in the FHLBNY, a funding agreement facility with Federal Agricultural Mortgage Corporation (“Farmer Mac”), commercial paper programs and contingent financing facilities in the form of facility agreements. For additional information regarding these sources of liquidity, see Note 15 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Asset-based Financing
We conduct asset-based or secured financing within our insurance and other subsidiaries, including transactions such as securities lending, committed and uncommitted repurchase agreements and mortgage dollar rolls, to earn spread income, to borrow funds, or to facilitate trading activity. These programs are primarily driven by portfolio holdings of securities that are lendable based on counterparty demand for these securities in the marketplace. The collateral received in connection with these programs is primarily used to purchase securities in the short-term spread portfolios of our insurance entities. Investments held in the short-term spread portfolios include cash and cash equivalents, short-term investments (primarily corporate bonds), mortgage loans, private placements, and other fixed and floating rate structured credit assets (CLOs), with a weighted average life at time of purchase by the short-term portfolios of five years or less. These short-term portfolios are subject to specific investment policy statements, which among other things, do not allow for significant asset/liability interest rate duration mismatch, and are managed to a weighted average maturity that cannot exceed 99 days beyond the weighted average maturity of the lending book, which is overnight.
The following table sets forth our liabilities under asset-based or secured financing programs as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| PFI Excluding Closed Block Division | Closed Block Division | Consolidated | PFI Excluding Closed Block Division | Closed Block Division | Consolidated | ||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | $ | 8,223 | $ | 2,752 | $ | 10,975 | $ | 6,802 | $ | 2,796 | $ | 9,598 | |||||||||||||||||||||||
| Cash collateral for loaned securities | 8,705 | 200 | 8,905 | 8,379 | 321 | 8,700 | |||||||||||||||||||||||||||||
| Securities sold but not yet purchased | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Total(1)(2) | $ | 16,928 | $ | 2,952 | $ | 19,880 | $ | 15,181 | $ | 3,117 | $ | 18,298 | |||||||||||||||||||||||
| Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral | $ | 16,308 | $ | 2,950 | $ | 19,258 | $ | 13,527 | $ | 2,357 | $ | 15,884 | |||||||||||||||||||||||
| Weighted average maturity, in days(3) | 13 | 2 | 7 | 2 |
(1)The daily average outstanding balance for the three months ended March 31, 2026 was $11,642 million for PFI excluding the Closed Block division, and $3,090 million for the Closed Block division.
(2)Includes utilization of external funding facilities for PGIM’s commercial mortgage origination business.
(3)Excludes securities that may be returned to the Company overnight.
As of March 31, 2026, our domestic insurance entities had assets eligible for the asset-based or secured financing programs of $93.3 billion, of which $18.2 billion were on loan. Taking into account market conditions and outstanding loan balances as of March 31, 2026, we believe approximately $32.2 billion of the remaining eligible assets are readily lendable, including approximately $27.7 billion relating to PFI excluding the Closed Block division, of which $10.5 billion relates to
certain separate accounts and may only be used for financing activities related to those accounts, and the remaining $4.5 billion relating to the Closed Block division.
Financing Activities
As of March 31, 2026, total short-term and long-term debt of the Company on a consolidated basis was $19.8 billion, a decrease of $0.5 billion from December 31, 2025. The following table sets forth total consolidated borrowings of the Company as of the dates indicated. We may, from time to time, seek to redeem or repurchase our outstanding debt securities through open market purchases, individually negotiated transactions or otherwise. Any such actions will depend on prevailing market conditions, our liquidity position, and other factors.
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Borrowings: | Prudential Financial | Subsidiaries | Consolidated | Prudential Financial | Subsidiaries | Consolidated | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| General obligation short-term debt: | |||||||||||||||||||||||||||||||||||
| Commercial paper | $ | 25 | $ | 849 | $ | 874 | $ | 25 | $ | 849 | $ | 874 | |||||||||||||||||||||||
| Current portion of long-term debt | 36 | 0 | 36 | 536 | 0 | 536 | |||||||||||||||||||||||||||||
| Subtotal | 61 | 849 | 910 | 561 | 849 | 1,410 | |||||||||||||||||||||||||||||
| General obligation long-term debt: | |||||||||||||||||||||||||||||||||||
| Senior debt | 10,884 | 0 | 10,884 | 10,823 | 0 | 10,823 | |||||||||||||||||||||||||||||
| Junior subordinated debt | 7,557 | 39 | 7,596 | 7,555 | 40 | 7,595 | |||||||||||||||||||||||||||||
| Surplus notes(1) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Subtotal | 18,441 | 39 | 18,480 | 18,378 | 40 | 18,418 | |||||||||||||||||||||||||||||
| Total general obligations | 18,502 | 888 | 19,390 | 18,939 | 889 | 19,828 | |||||||||||||||||||||||||||||
| Limited and non-recourse borrowings(2): | |||||||||||||||||||||||||||||||||||
| Short-term debt | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Current portion of long-term debt | 0 | 36 | 36 | 0 | 33 | 33 | |||||||||||||||||||||||||||||
| Long-term debt | 0 | 402 | 402 | 0 | 438 | 438 | |||||||||||||||||||||||||||||
| Total limited and non-recourse borrowings | 0 | 438 | 438 | 0 | 471 | 471 | |||||||||||||||||||||||||||||
| Total borrowings | $ | 18,502 | $ | 1,326 | $ | 19,828 | $ | 18,939 | $ | 1,360 | $ | 20,299 |
(1)Amounts are net of assets under set-off arrangements of $15,844 million and $15,744 million as of March 31, 2026 and December 31, 2025, respectively. Amounts include credit-linked note structures used to finance Guideline AXXX reserves for business reinsured to Somerset Reinsurance Ltd (“Somerset Re”) in March 2024.
(2)Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $218 million and $216 million as of March 31, 2026 and December 31, 2025, respectively, and a draw on a credit facility that has recourse only to collateral pledged by the Company of $220 million and $255 million as of March 31, 2026 and December 31, 2025, respectively.
As of March 31, 2026, and December 31, 2025, the Company was in compliance with all debt covenants related to the borrowings in the table above. For additional information regarding the Company’s short- and long-term debt obligations, see Note 15 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Prudential Financial’s consolidated borrowings decreased $0.5 billion from December 31, 2025. In March 2026, the company paid, at maturity, $500 million in aggregate principal amount of 1.50% medium-term notes.
In December 2025, the Company entered into an agreement with an external counterparty that allows for the issuance by PICA of up to $500 million in principal amount of surplus notes in return for a corresponding amount of credit-linked notes issued by a special-purpose wholly owned subsidiary of the Company. As of March 31, 2026, $381 million in principal amount of these surplus notes and credit-linked notes were outstanding. The PICA surplus notes are subordinated to policyholder obligations, and the payment of principal and interest on the surplus notes can only be made with prior insurance regulatory approval. PICA holds these credit-linked notes as assets supporting statutory requirements and can redeem the principal amount of the outstanding credit-linked notes for cash upon the occurrence of specified liquidity stress events affecting PICA. Under the agreements, the external counterparty has agreed to fund any such payments under these credit-linked notes in return for the
receipt of fees. To date, no such payments under these credit-linked notes have been required. The surplus notes and credit-linked notes eliminate upon consolidation and are not reflected in the Company’s financial statements.
Term and Universal Life Reserve Financing
We use captive reinsurance subsidiaries to finance the portion of the statutory reserves required to be held by our domestic life insurance companies under Regulation XXX and Guideline AXXX that we consider to be non-economic. The financing arrangements involve the reinsurance of term and universal life business to our captive reinsurers and the issuance of surplus notes by those captives that are treated as capital for statutory purposes. These surplus notes are subordinated to policyholder obligations, and the payment of principal and interest on the surplus notes can only be made with prior insurance regulatory approval.
We have entered into agreements with external counterparties providing for the issuance of surplus notes by our captive reinsurers in return for the receipt of credit-linked notes (“Credit-Linked Note Structures”). As of March 31, 2026, we had Credit-Linked Note Structures with an aggregate issuance capacity of $8,000 million to support Regulation XXX reserves, of which $7,760 million was outstanding and matures in 2044, as compared to an aggregate issuance capacity of $8,000 million, of which $7,660 was outstanding, as of December 31, 2025. In addition, we use Credit-Linked Note Structures to finance Guideline AXXX reserves for business reinsured to Somerset Re in March 2024. Under the agreements, the captive receives in exchange for the surplus notes one or more credit-linked notes issued by a special-purpose affiliate of the Company with an aggregate principal amount equal to the surplus notes outstanding. The captive holds the credit-linked notes as assets supporting Regulation XXX or Guideline AXXX non-economic reserves, as applicable. For additional information regarding our Credit-Linked Note Structures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
As of March 31, 2026, for purposes of financing Guideline AXXX non-economic reserves, one captive had $3,982 million of surplus notes outstanding that were issued to affiliates.
The Company introduced updated versions of its individual life products in conjunction with the requirement to adopt principle-based reserving by January 1, 2020. These updated products are currently priced to support the principle-based statutory reserve level without the need for reserve financing.
Off-Balance Sheet Arrangements
See additional information regarding off-balance sheet arrangements in Note 15 and other commitments in Note 21 to the Unaudited Interim Consolidated Financial Statements.
We do not have retained or contingent interests in assets transferred to unconsolidated entities, or variable interests in unconsolidated entities or other similar transactions, arrangements or relationships that serve as credit, liquidity or market risk support, that we believe are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or our access to or requirements for capital resources. In addition, we do not have relationships with any unconsolidated entities that are contractually limited to narrow activities that facilitate our transfer of or access to associated assets.
Ratings
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Ratings” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for a discussion of our financial strength and credit ratings and their impact on our business.
On May 4th, 2026, Fitch announced that they revised the ratings outlook of Prudential Financial Inc. and its subsidiaries from Stable to Ratings Watch Negative.
There have been no other significant changes or actions in ratings or ratings outlooks for the Company that have occurred since the filing of our Form 10-K for the year ended December 31, 2025.
General Account Investments
Portfolio Composition
Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, policy loans and non-coupon investments, which include equity securities and other invested assets such as limited partnerships and limited liability companies (“LPs/LLCs”), real estate held through direct ownership, derivative instruments and seed money investments in separate accounts. The composition of our general account reflects, within the discipline provided by our risk management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our PGIM segment. The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.
A portion of our general account investments supports customer liabilities reinsured under coinsurance with funds withheld and modified coinsurance arrangements. With these reinsurance arrangements, we retain legal ownership of the assets (collectively, the “Funds Withheld”) which remain on our Unaudited Interim Consolidated Statements of Financial Position, while the economic benefits and investment risk associated with the Funds Withheld assets ultimately inure to the reinsurer. The composition of the Funds Withheld assets is subject to investment guidelines specific to the reinsurance treaties, which may differ from the investment guidelines we set for our general account, excluding Funds Withheld. See Note 12 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements.
The following tables set forth the composition of our general account investment portfolio apportioned between PFI excluding the Closed Block division and Funds Withheld, the Closed Block division, and Funds Withheld, as of the dates indicated:
| March 31, 2026 | ||||||||||||||||||||||||||||||||
| PFI Excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | Total | |||||||||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||||||||
| Public, available-for-sale, at fair value | $ | 215,536 | 53.4 | % | $ | 18,588 | $ | 4,528 | $ | 238,652 | ||||||||||||||||||||||
| Private, available-for-sale, at fair value | 79,694 | 19.7 | 9,776 | 2,301 | 91,771 | |||||||||||||||||||||||||||
| Fixed maturities, trading, at fair value | 5,099 | 1.3 | 541 | 9,273 | 14,913 | |||||||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities, at fair value | 4,781 | 1.2 | 0 | 0 | 4,781 | |||||||||||||||||||||||||||
| Equity securities, at fair value | 10,684 | 2.6 | 1,494 | 0 | 12,178 | |||||||||||||||||||||||||||
| Commercial mortgage and other loans, at book value, net of allowance | 56,436 | 14.0 | 7,450 | 301 | 64,187 | |||||||||||||||||||||||||||
| Policy loans, at outstanding balance | 6,803 | 1.7 | 3,185 | 0 | 9,988 | |||||||||||||||||||||||||||
| Other invested assets, net of allowance(1) | 18,051 | 4.5 | 4,706 | 1,995 | 24,752 | |||||||||||||||||||||||||||
| Short-term investments, net of allowance | 6,633 | 1.6 | 264 | 17 | 6,914 | |||||||||||||||||||||||||||
| Total general account investments | 403,717 | 100.0 | % | 46,004 | 18,415 | 468,136 | ||||||||||||||||||||||||||
| Invested assets of other entities and operations(2) | 5,988 | 0 | 0 | 5,988 | ||||||||||||||||||||||||||||
| Total investments | $ | 409,705 | $ | 46,004 | $ | 18,415 | $ | 474,124 |
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| PFI Excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | Total | |||||||||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||||||||
| Public, available-for-sale, at fair value | $ | 214,796 | 53.6 | % | $ | 18,833 | $ | 4,576 | $ | 238,205 | ||||||||||||||||||||||
| Private, available-for-sale, at fair value | 80,634 | 20.2 | 10,049 | 2,217 | 92,900 | |||||||||||||||||||||||||||
| Fixed maturities, trading, at fair value | 4,818 | 1.2 | 581 | 9,049 | 14,448 | |||||||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities, at fair value | 4,842 | 1.2 | 0 | 0 | 4,842 | |||||||||||||||||||||||||||
| Equity securities, at fair value | 8,922 | 2.2 | 1,593 | 0 | 10,515 | |||||||||||||||||||||||||||
| Commercial mortgage and other loans, at book value, net of allowance | 56,195 | 14.0 | 7,463 | 263 | 63,921 | |||||||||||||||||||||||||||
| Policy loans, at outstanding balance | 6,741 | 1.7 | 3,217 | 0 | 9,958 | |||||||||||||||||||||||||||
| Other invested assets, net of allowance(1) | 17,684 | 4.4 | 4,532 | 1,850 | 24,066 | |||||||||||||||||||||||||||
| Short-term investments, net of allowance | 6,078 | 1.5 | 255 | 71 | 6,404 | |||||||||||||||||||||||||||
| Total general account investments | 400,710 | 100.0 | % | 46,523 | 18,026 | 465,259 | ||||||||||||||||||||||||||
| Invested assets of other entities and operations(2) | 5,260 | 0 | 0 | 5,260 | ||||||||||||||||||||||||||||
| Total investments | $ | 405,970 | $ | 46,523 | $ | 18,026 | $ | 470,519 |
(1) Other invested assets consists of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. For additional information regarding these investments, see “—Other Invested Assets” below.
(2)Includes invested assets of our investment management and derivative operations. Excludes assets of our investment management operations that are managed for third parties and those assets classified as “Separate account assets” on our Unaudited Interim Consolidated Statements of Financial Position. For additional information regarding these investments, see “—Invested Assets of Other Entities and Operations” below.
The increase in general account investments attributable to PFI excluding the Closed Block division and Funds Withheld in the first three months of 2026 was primarily due to net business inflows, partially offset by a net increase in U.S. and Japan interest rates and the translation impact of the U.S. dollar strengthening against the yen. For information regarding the methodology used in determining the fair value of our fixed maturities, see Note 6 to the Unaudited Interim Consolidated Financial Statements.
As of both March 31, 2026 and December 31, 2025, 39%, of our general account investments attributable to PFI excluding the Closed Block division and Funds Withheld related to our Japanese insurance operations. The following table sets forth the composition of the investments of our Japanese insurance operations’ general account, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Japanese Insurance Operations | ||||||||||||||
| (in millions) | ||||||||||||||
| Fixed maturities: | ||||||||||||||
| Public, available-for-sale, at fair value | $ | 101,777 | $ | 102,061 | ||||||||||
| Private, available-for-sale, at fair value | 20,607 | 21,284 | ||||||||||||
| Fixed maturities, trading, at fair value | 575 | 551 | ||||||||||||
| Assets supporting experience-rated contractholder liabilities, at fair value | 4,781 | 4,842 | ||||||||||||
| Equity securities, at fair value | 1,636 | 1,652 | ||||||||||||
| Commercial mortgage and other loans, at book value, net of allowance | 14,247 | 14,487 | ||||||||||||
| Policy loans, at outstanding balance | 2,698 | 2,708 | ||||||||||||
| Other invested assets(1) | 6,573 | 6,357 | ||||||||||||
| Short-term investments, net of allowance | 2,698 | 2,166 | ||||||||||||
| Total Japanese general account investments | $ | 155,592 | $ | 156,108 |
(1)Other invested assets consists of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.
The decrease in general account investments related to our Japanese insurance operations in the first three months of 2026 was primarily due to an increase in Japan and U.S. interest rates and the translation impact of the U.S. dollar strengthening against the yen, partially offset by net business inflows.
As of March 31, 2026, our Japanese insurance operations had $98.2 billion, at carrying value, of investments denominated in U.S. dollars, including $2.3 billion that were hedged to yen through third-party derivative contracts and $88.1 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure to U.S. dollar-equivalent equity. As of December 31, 2025, our Japanese insurance operations had $95.7 billion, at carrying value, of investments denominated in U.S. dollars, including $1.7 billion that were hedged to yen through third-party derivative contracts and $86.6 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure of U.S. dollar-equivalent equity. The $2.5 billion increase in the carrying value of U.S. dollar-denominated investments from December 31, 2025 was primarily attributable to portfolio growth as a result of net business inflows, partially offset by a net increase in U.S. interest rates.
Our Japanese insurance operations had $1.8 billion and $1.9 billion, at carrying value, of investments denominated in Australian dollars that support liabilities denominated in Australian dollars as of March 31, 2026 and December 31, 2025, respectively. The $0.1 billion decrease in the carrying value of Australian dollar-denominated investments from December 31, 2025 was primarily attributable to run-off of the portfolio. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations and a discussion of our yen hedging strategy, see “—External and Economic Factors—Impact of Foreign Currency Exchange Rates” above.
Investment Results
The following tables set forth the investment results of our general account apportioned between PFI excluding the Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld, for the periods indicated. The yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in “Realized investment gains (losses), net.”
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations | Japanese Insurance Operations | PFI Excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | Total(5) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Yield(1) | Amount | Yield(1) | Amount | Yield(1) | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed maturities(2) | 5.62 | % | $ | 2,501 | 3.41 | % | $ | 1,201 | 4.63 | % | $ | 3,702 | $ | 357 | $ | 189 | $ | 4,248 | |||||||||||||||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities | 0.00 | 0 | 1.22 | 15 | 1.22 | 15 | 0 | 0 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | 2.31 | 47 | 2.45 | 10 | 2.33 | 57 | 8 | 0 | 65 | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage and other loans | 4.93 | 514 | 3.81 | 136 | 4.64 | 650 | 81 | 4 | 735 | ||||||||||||||||||||||||||||||||||||||||||||
| Policy loans | 4.93 | 50 | 3.78 | 25 | 4.47 | 75 | 48 | (1) | 122 | ||||||||||||||||||||||||||||||||||||||||||||
| Short-term investments and cash equivalents | 4.98 | 154 | 4.17 | 46 | 4.77 | 200 | 12 | 2 | 214 | ||||||||||||||||||||||||||||||||||||||||||||
| Gross investment income | 5.34 | 3,266 | 3.39 | 1,433 | 4.54 | 4,699 | 506 | 194 | 5,399 | ||||||||||||||||||||||||||||||||||||||||||||
| Investment expenses | (0.20) | (218) | (0.12) | (84) | (0.16) | (302) | (53) | 0 | (355) | ||||||||||||||||||||||||||||||||||||||||||||
| Investment income after investment expenses | 5.14 | % | 3,048 | 3.27 | % | 1,349 | 4.38 | % | 4,397 | 453 | 194 | 5,044 | |||||||||||||||||||||||||||||||||||||||||
| Other invested assets(3) | 177 | 146 | 323 | 77 | 187 | 587 | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment results of other entities and operations(4) | 34 | 0 | 34 | 0 | 0 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net investment income | $ | 3,259 | $ | 1,495 | $ | 4,754 | $ | 530 | $ | 381 | $ | 5,665 |
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations | Japanese Insurance Operations | PFI Excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | Total(5) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Yield(1) | Amount | Yield(1) | Amount | Yield(1) | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed maturities(2) | 5.41 | % | $ | 2,219 | 3.18 | % | $ | 1,094 | 4.38 | % | $ | 3,313 | $ | 358 | $ | 191 | $ | 3,862 | |||||||||||||||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities | 0.00 | 0 | 1.30 | 12 | 1.30 | 12 | 0 | 0 | 12 | ||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | 2.09 | 28 | 2.14 | 9 | 2.10 | 37 | 7 | 0 | 44 | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage and other loans | 4.73 | 449 | 3.82 | 151 | 4.46 | 600 | 83 | 5 | 688 | ||||||||||||||||||||||||||||||||||||||||||||
| Policy loans | 4.98 | 48 | 3.83 | 25 | 4.51 | 73 | 53 | (1) | 125 | ||||||||||||||||||||||||||||||||||||||||||||
| Short-term investments and cash equivalents | 5.15 | 193 | 3.96 | 37 | 4.93 | 230 | 12 | 1 | 243 | ||||||||||||||||||||||||||||||||||||||||||||
| Gross investment income | 5.19 | 2,937 | 3.21 | 1,328 | 4.35 | 4,265 | 513 | 196 | 4,974 | ||||||||||||||||||||||||||||||||||||||||||||
| Investment expenses | (0.18) | (201) | (0.13) | (82) | (0.16) | (283) | (60) | (1) | (344) | ||||||||||||||||||||||||||||||||||||||||||||
| Investment income after investment expenses | 5.01 | % | 2,736 | 3.08 | % | 1,246 | 4.19 | % | 3,982 | 453 | 195 | 4,630 | |||||||||||||||||||||||||||||||||||||||||
| Other invested assets(3) | 143 | 142 | 285 | 40 | 155 | 480 | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment results of other entities and operations(4) | 20 | 0 | 20 | 0 | 0 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net investment income | $ | 2,899 | $ | 1,388 | $ | 4,287 | $ | 493 | $ | 350 | $ | 5,130 |
(1)For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance.
(2)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading, which are included in other invested assets.
(3)Other invested assets consists of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.
(4)Includes net investment income of our investment management operations.
(5)The total yield excluding Funds Withheld was 4.39% and 4.21% for the three months ended March 31, 2026 and 2025, respectively.
The increase in investment income after investment expenses yield attributable to our general account investments, excluding the Closed Block division, Funds Withheld and the Japanese insurance operations’ portfolios for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily the result of higher fixed income reinvestment rates.
The increase in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily the result of higher fixed income reinvestment rates.
Realized Investment Gains and Losses
The following table sets forth “Realized investment gains (losses), net” of our general account apportioned between PFI excluding the Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld, by investment type for the periods indicated:
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| PFI excluding Closed Block Division and Funds Withheld: | ||||||||||||||
| Realized investment gains (losses), net: | ||||||||||||||
| (Addition to) release of allowance for credit losses on fixed maturities | $ | (49) | $ | 70 | ||||||||||
| Write-downs on fixed maturities(1) | (157) | (98) | ||||||||||||
| Net gains (losses) on sales and maturities | (411) | 68 | ||||||||||||
| Fixed maturity securities(2) | (617) | 40 | ||||||||||||
| (Addition to) release of allowance for credit losses on loans | (23) | (42) | ||||||||||||
| Write-downs on mortgage and other loans | (3) | (8) | ||||||||||||
| Net gains (losses) on sales and maturities | 1 | 0 | ||||||||||||
| Commercial mortgage and other loans | (25) | (50) | ||||||||||||
| Derivatives | 268 | (279) | ||||||||||||
| OTTI losses on other invested assets recognized in earnings | (8) | (12) | ||||||||||||
| (Addition to) release of allowance for credit losses on other invested assets | (6) | 0 | ||||||||||||
| Other net gains (losses) | 12 | (5) | ||||||||||||
| Other | (2) | (17) | ||||||||||||
| Subtotal | (376) | (306) | ||||||||||||
| Investment results of other entities and operations(3) | 40 | 23 | ||||||||||||
| Subtotal — PFI excluding Closed Block Division and Funds Withheld | $ | (336) | $ | (283) | ||||||||||
| Closed Block Division: | ||||||||||||||
| Realized investment gains (losses), net: | ||||||||||||||
| (Addition to) release of allowance for credit losses on fixed maturities | $ | (6) | $ | 13 | ||||||||||
| Write-downs on fixed maturities(1) | (8) | (16) | ||||||||||||
| Net gains (losses) on sales and maturities | (49) | (33) | ||||||||||||
| Fixed maturity securities(2) | (63) | (36) | ||||||||||||
| (Addition to) release of allowance for credit losses on loans | 6 | (17) | ||||||||||||
| Write-downs on mortgage loans | 0 | 0 | ||||||||||||
| Net gains (losses) on sales and maturities | 0 | 0 | ||||||||||||
| Commercial mortgage and other loans | 6 | (17) | ||||||||||||
| Derivatives | 34 | (20) | ||||||||||||
| (Addition to) release of allowance for credit losses on other invested assets | (5) | 0 | ||||||||||||
| Other net gains (losses) | 0 | 16 | ||||||||||||
| Other | (5) | 16 | ||||||||||||
| Subtotal — Closed Block Division | $ | (28) | $ | (57) | ||||||||||
| Funds Withheld: | ||||||||||||||
| Realized investment gains (losses), net: | ||||||||||||||
| (Addition to) release of allowance for credit losses on fixed maturities | $ | (11) | $ | (3) | ||||||||||
| Write-downs on fixed maturities(1) | 0 | (5) | ||||||||||||
| Net gains (losses) on sales and maturities | (54) | (61) | ||||||||||||
| Fixed maturity securities(2) | (65) | (69) | ||||||||||||
| Commercial mortgage and other loans | 0 | 0 | ||||||||||||
| Derivatives | 234 | (165) | ||||||||||||
| Other net gains (losses) | (169) | (156) | ||||||||||||
| Other | (169) | (156) | ||||||||||||
| Subtotal — Funds Withheld | $ | 0 | $ | (390) | ||||||||||
| PFI realized investment gains (losses), net | $ | (364) | $ | (730) |
(1)Amounts represent write-downs of credit adverse securities, securities where it is more likely than not the Company will be required to sell prior to the recovery of the amortized cost basis and securities actively marketed for sale.
(2)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading.
(3)Includes “realized investment gains (losses), net” of our investment management operations.
The following analysis reflects realized gains (losses) attributable to PFI excluding Closed Block Division and Funds Withheld.
Net losses on sales and maturities of fixed maturity securities were $411 million for the first quarter of 2026 primarily driven by net losses on sales in a higher interest rate environment, partially offset by the impact of foreign currency exchange rate movements on U.S. dollar-denominated securities that matured or were sold within our International Businesses. Net gains on sales and maturities of fixed maturity securities were $68 million for the first quarter of 2025 primarily driven by net gains on assets transferred upon execution of the reinsurance transaction with Prismic Life Reinsurance International, Ltd. (“Prismic Re International”) and the impact of foreign currency exchange rate movements on U.S. dollar-denominated securities that matured or were sold within our International Businesses, partially offset by net losses on sales in a higher interest rate environment.
Net realized gains on derivative instruments of $268 million for the first quarter of 2026 primarily included:
-
$185 million of gains on total return swaps primarily driven by declining equity markets; and
-
$88 million of gains on foreign currency hedges primarily driven by U.S. dollar appreciation versus foreign currencies.
Net realized losses on derivative instruments of $279 million for the first quarter of 2025 primarily included:
-
$237 million of losses on product-related hedge positions and embedded derivatives driven by declining equity markets; and
-
$166 million of losses on foreign currency hedges driven by U.S. dollar depreciation versus foreign currencies.
Partially offsetting these losses were:
- $51 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates.
For a discussion of living benefit guarantees and related hedge positions in our U.S. Legacy business, see “—Results of Operations by Segment—U.S. Legacy Products” above.
Credit Losses
The level of credit losses generally reflects current and expected economic conditions and is expected to increase when economic conditions worsen and to decrease when economic conditions improve. Historically, the causes of credit losses have been specific to each individual issuer and have not directly resulted in credit losses to other securities within the same industry or geographic region. We may also realize additional credit and interest rate-related losses through sales of investments pursuant to our credit risk and portfolio management objectives.
We maintain separate monitoring processes for public and private fixed maturities and create watch lists to highlight securities that require special scrutiny and management. For private placements, our credit and portfolio management processes help ensure prudent controls over valuation and management. We have separate pricing and authorization processes to establish “checks and balances” for new investments. We apply consistent standards of credit analysis and due diligence for all transactions, whether they originate through our own in-house staff or through agents. Our regional offices closely monitor the portfolios in their regions. We set all valuation standards centrally, and we assess the fair value of all investments quarterly. Our public and private fixed maturity investment managers formally review all public and private fixed maturity holdings on a quarterly basis and more frequently when necessary to identify potential credit deterioration whether due to ratings downgrades, unexpected price variances and/or company or industry-specific concerns.
For LPs/LLCs accounted for using the equity method and for wholly-owned investment real estate, the carrying value of these investments is written down or impaired to fair value when a decline in value is considered to be other-than-temporary. For additional information regarding our OTTI policies, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
General Account Investments of PFI excluding Closed Block Division and Funds Withheld
In the following sections, we provide details about our investment portfolio, excluding investments held in the Closed Block division and the Funds Withheld portfolios. We believe the details of the composition of our investment portfolio excluding Closed Block division and Funds Withheld are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial, Inc. because (1) substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies where the economics inure to those participating policies and not to shareholders of the Company’s Common Stock and (2) the Funds Withheld assets support liabilities relating to reinsurance agreements where the economic benefits and associated investment risk of the Funds Withheld ultimately inure to the reinsurer. See Notes 12 and 13 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements and the Closed Block division, respectively.
Fixed Maturity Securities
In the following sections, we provide details about our fixed maturity securities portfolio, which excludes fixed maturity securities classified as assets supporting experience-rated contractholder liabilities and securities classified as trading.
Fixed Maturity Securities by Industry
The following table sets forth the composition of the portion of our fixed maturity, available-for-sale portfolio by industry category and the associated gross unrealized gains and losses, as well as the allowance for credit losses (“ACL”), as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Industry(1) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | ACL | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | ACL | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance | $ | 47,993 | $ | 497 | $ | 3,187 | $ | 1 | $ | 45,302 | $ | 47,215 | $ | 818 | $ | 2,581 | $ | 2 | $ | 45,450 | |||||||||||||||||||||||||||||||||||||||
| Consumer non-cyclical | 34,038 | 494 | 3,128 | 3 | 31,401 | 33,622 | 679 | 2,752 | 4 | 31,545 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Utility | 31,714 | 534 | 2,798 | 22 | 29,428 | 31,576 | 797 | 2,405 | 21 | 29,947 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Capital goods | 20,955 | 346 | 1,240 | 11 | 20,050 | 21,194 | 560 | 1,045 | 2 | 20,707 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer cyclical | 13,361 | 258 | 592 | 41 | 12,986 | 12,645 | 384 | 465 | 30 | 12,534 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign agencies | 1,759 | 19 | 162 | 0 | 1,616 | 1,692 | 25 | 126 | 0 | 1,591 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Energy | 13,915 | 253 | 773 | 19 | 13,376 | 13,336 | 349 | 628 | 8 | 13,049 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Communications | 6,983 | 158 | 556 | 24 | 6,561 | 6,607 | 210 | 487 | 23 | 6,307 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Basic industry | 7,832 | 134 | 525 | 20 | 7,421 | 8,021 | 217 | 467 | 20 | 7,751 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Transportation | 12,646 | 261 | 857 | 28 | 12,022 | 12,704 | 406 | 739 | 19 | 12,352 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Technology | 7,783 | 112 | 405 | 26 | 7,464 | 7,136 | 168 | 344 | 19 | 6,941 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial other | 5,352 | 39 | 878 | 4 | 4,509 | 5,200 | 56 | 795 | 4 | 4,457 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total corporate securities | 204,331 | 3,105 | 15,101 | 199 | 192,136 | 200,948 | 4,669 | 12,834 | 152 | 192,631 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign government(2) | 60,193 | 274 | 13,292 | 0 | 47,175 | 61,928 | 474 | 12,324 | 0 | 50,078 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed(3) | 6,259 | 22 | 174 | 0 | 6,107 | 5,103 | 38 | 149 | 0 | 4,992 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed | 19,325 | 192 | 52 | 2 | 19,463 | 17,098 | 214 | 19 | 1 | 17,292 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | 7,128 | 40 | 212 | 0 | 6,956 | 6,813 | 71 | 192 | 0 | 6,692 | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Government | 22,594 | 472 | 4,261 | 0 | 18,805 | 22,520 | 655 | 4,382 | 0 | 18,793 | |||||||||||||||||||||||||||||||||||||||||||||||||
| State & Municipal | 5,013 | 98 | 523 | 0 | 4,588 | 5,315 | 131 | 494 | 0 | 4,952 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total fixed maturities, available-for-sale | $ | 324,843 | $ | 4,203 | $ | 33,615 | $ | 201 | $ | 295,230 | $ | 319,725 | $ | 6,252 | $ | 30,394 | $ | 153 | $ | 295,430 |
(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.
(2)As of March 31, 2026 and December 31, 2025, based on amortized cost, 88% and 89% represent Japanese government bonds held by our Japanese insurance operations, respectively. As of March 31, 2026, no individual country accounted for more than 7% of the balance, and as of December 31, 2025, no country represented more than 6%.
(3)As of March 31, 2026 and December 31, 2025, based on amortized cost, 97% and 96% were rated A or higher, respectively.
The increase in net unrealized losses from December 31, 2025 to March 31, 2026 was primarily due to the net impact of increases in U.S. and Japan interest rates.
Fixed Maturity Securities Credit Quality
The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the investments of insurers for statutory reporting purposes and assigns fixed maturity securities to one of six categories called “NAIC Designations.” In general, NAIC Designations of “1” highest quality, or “2” high quality, include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”) or BBB- or higher by Standard & Poor’s Rating Services (“S&P”). NAIC Designations of “3” through “6” generally include fixed maturities referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by S&P. The NAIC Designations for commercial mortgage-backed securities and non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages, are based on security level expected losses as modeled by an independent third party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized.
As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the fixed maturity portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date. Pending receipt of SVO designations, the categorization of these securities by NAIC Designation is based on the expected ratings indicated by internal analysis.
Ratings assigned by nationally recognized rating agencies include S&P, Moody’s, Fitch Ratings Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”). Low issue composite rating uses ratings from the major credit rating agencies or, if these are not available, an equivalent internal rating. For securities where the ratings assigned are not equivalent, the second lowest rating is utilized.
Investments of our international insurance companies are not subject to NAIC guidelines. Investments of our Japanese insurance operations are regulated locally by the FSA. The FSA has its own investment quality criteria and risk control standards. Our Japanese insurance companies comply with the FSA’s credit quality review and risk monitoring guidelines. The credit quality ratings of the investments of our Japanese insurance companies are based on ratings assigned by nationally recognized credit rating agencies, including Moody’s and S&P, or rating equivalents based on ratings assigned by Japanese credit rating agencies.
The following table sets forth our fixed maturity, available-for-sale portfolio by NAIC Designation or equivalent rating, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAIC Designation(1) (2) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses(3) | ACL | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses(3) | ACL | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | $ | 207,192 | $ | 2,006 | $ | 26,667 | $ | 0 | $ | 182,531 | $ | 205,414 | $ | 2,921 | $ | 24,708 | $ | 0 | $ | 183,627 | |||||||||||||||||||||||||||||||||||||||
| 2 | 97,456 | 1,763 | 5,986 | 1 | 93,232 | 94,638 | 2,684 | 4,913 | 0 | 92,409 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal High or Highest Quality Securities(4) | 304,648 | 3,769 | 32,653 | 1 | 275,763 | 300,052 | 5,605 | 29,621 | 0 | 276,036 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 13,753 | 314 | 794 | 26 | 13,247 | 13,186 | 476 | 656 | 19 | 12,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | 4,947 | 55 | 121 | 0 | 4,881 | 4,448 | 98 | 61 | 22 | 4,463 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 1,163 | 30 | 38 | 56 | 1,099 | 1,708 | 38 | 45 | 51 | 1,650 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 332 | 35 | 9 | 118 | 240 | 331 | 35 | 11 | 61 | 294 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal Other Securities(5) (6) | 20,195 | 434 | 962 | 200 | 19,467 | 19,673 | 647 | 773 | 153 | 19,394 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total fixed maturities, available-for-sale | $ | 324,843 | $ | 4,203 | $ | 33,615 | $ | 201 | $ | 295,230 | $ | 319,725 | $ | 6,252 | $ | 30,394 | $ | 153 | $ | 295,430 |
(1)Reflects equivalent ratings for investments of the international insurance operations.
(2)As of March 31, 2026 and December 31, 2025, 1,826 securities with amortized cost of $11,119 million (fair value, $10,928 million) and 1,482 securities with amortized cost of $9,683 million (fair value, $9,598 million), respectively, have been categorized based on expected NAIC Designations pending receipt of SVO ratings.
(3)As of March 31, 2026, includes gross unrealized losses of $670 million on public fixed maturities and $292 million on private fixed maturities considered to be other than high or highest quality and, as of December 31, 2025, includes gross unrealized losses of $579 million on public fixed maturities and $194 million on private fixed maturities considered to be other than high or highest quality.
(4)On an amortized cost basis, as of March 31, 2026, includes $234,728 million of public fixed maturities and $69,920 million of private fixed maturities and, as of December 31, 2025, includes $230,712 million of public fixed maturities and $69,340 million of private fixed maturities.
(5)On an amortized cost basis, as of March 31, 2026, includes $7,618 million of public fixed maturities and $12,577 million of private fixed maturities and, as of December 31, 2025, includes $7,277 million of public fixed maturities and $12,396 million of private fixed maturities.
(6)On an amortized cost basis, as of March 31, 2026, securities considered below investment grade based on low issue composite ratings total $17,173 million, or 5% of the total fixed maturities, and include securities considered high or highest quality by the NAIC based on the rules described above.
Asset-Backed and Commercial Mortgage-Backed Securities
The following table sets forth the amortized cost and fair value of asset-backed and commercial mortgage-backed securities within our fixed maturity, available-for-sale portfolio by credit quality, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Asset-Backed Securities(2) | Commercial Mortgage-Backed Securities | Asset-Backed Securities(2) | Commercial Mortgage-Backed Securities | ||||||||||||||||||||||||||||||||||||||||||||
| Low Issue Composite Rating(1) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| AAA | $ | 8,545 | $ | 8,579 | $ | 5,716 | $ | 5,670 | $ | 7,736 | $ | 7,786 | $ | 5,422 | $ | 5,418 | |||||||||||||||||||||||||||||||
| AA | 7,601 | 7,658 | 1,402 | 1,276 | 6,562 | 6,623 | 1,385 | 1,268 | |||||||||||||||||||||||||||||||||||||||
| A | 2,022 | 2,032 | 1 | 1 | 1,981 | 2,004 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||
| BBB | 1,034 | 1,024 | 0 | 0 | 703 | 715 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||
| BB and below | 123 | 170 | 9 | 9 | 116 | 164 | 5 | 5 | |||||||||||||||||||||||||||||||||||||||
| Total(3) | $ | 19,325 | $ | 19,463 | $ | 7,128 | $ | 6,956 | $ | 17,098 | $ | 17,292 | $ | 6,813 | $ | 6,692 |
(1)The table above provides ratings as assigned by nationally recognized rating agencies as of March 31, 2026 and December 31, 2025, including S&P, Moody’s, Fitch and Morningstar.
(2)Includes credit-tranched securities collateralized by loan obligations (“CLOs”), home equity loans, auto loans, education loans and other asset types.
(3)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.”
Included in “Asset-backed securities” above are investments in CLOs. The following table sets forth information pertaining to these investments in CLOs within our fixed maturity, available-for-sale portfolio, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Collateralized Loan Obligations | |||||||||||||||||||||||
| Low Issue Composite Rating(1) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| AAA | $ | 6,375 | $ | 6,400 | $ | 5,727 | $ | 5,757 | |||||||||||||||
| AA | 6,030 | 6,090 | 5,017 | 5,076 | |||||||||||||||||||
| A | 35 | 34 | 35 | 35 | |||||||||||||||||||
| BBB | 25 | 25 | 26 | 26 | |||||||||||||||||||
| BB and below | 17 | 16 | 18 | 18 | |||||||||||||||||||
| Total(2)(3) | $ | 12,482 | $ | 12,565 | $ | 10,823 | $ | 10,912 |
(1)The table above provides ratings as assigned by nationally recognized rating agencies as of March 31, 2026 and December 31, 2025, including S&P, Moody’s, Fitch and Morningstar.
(2)There was no allowance for credit losses as of both March 31, 2026 and December 31, 2025.
(3)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.”
Assets Supporting Experience-Rated Contractholder Liabilities
For information regarding the composition of “Assets supporting experience-rated contractholder liabilities,” see Note 3 to the Unaudited Interim Consolidated Financial Statements.
Commercial Mortgage and Other Loans
Investment Mix
The following table sets forth the composition of our commercial mortgage and other loans portfolio, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Commercial mortgage and agricultural property loans | $ | 53,599 | $ | 54,198 | ||||||||||
| Residential mortgage loans | 2,414 | 1,632 | ||||||||||||
| Uncollateralized loans | 165 | 171 | ||||||||||||
| Other collateralized loans | 679 | 591 | ||||||||||||
| Total recorded investment gross of allowance(1) | 56,857 | 56,592 | ||||||||||||
| Allowance for credit losses | (421) | (397) | ||||||||||||
| Total commercial mortgage and other loans, net | $ | 56,436 | $ | 56,195 |
(1)As a percentage of recorded investment gross of allowance, 99% of these assets were current as of both March 31, 2026 and December 31, 2025.
We originate commercial mortgage and agricultural property loans using a dedicated sales and underwriting staff through our various regional offices in the U.S. and international offices primarily in London and Tokyo. All loans are underwritten consistently to our standards using a proprietary quality rating system that has been developed from our industry experience in real estate and mortgage lending.
Residential mortgage loans primarily include fixed-rate, amortizing mortgage loans on rental properties owned by borrowers with FICO scores typically considered prime or above.
Uncollateralized loans primarily represent corporate loans and unsecured consumer loans.
Other collateralized loans include mezzanine real estate debt investments and consumer loans.
Composition of Commercial Mortgage and Agricultural Property Loans
Our commercial mortgage and agricultural property loan portfolio strategy emphasizes diversification by property type and geographic location. The following tables set forth the breakdown of the gross carrying values of commercial mortgage and agricultural property loans by geographic region and property type, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Gross Carrying Value | % of Total | Gross Carrying Value | % of Total | |||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||
| Commercial mortgage and agricultural property loans by region: | ||||||||||||||||||||||||||
| U.S. Regions(1): | ||||||||||||||||||||||||||
| Pacific | $ | 18,259 | 34.1 | % | $ | 18,633 | 34.5 | % | ||||||||||||||||||
| South Atlantic | 9,116 | 17.0 | 9,241 | 17.1 | ||||||||||||||||||||||
| Middle Atlantic | 6,353 | 11.9 | 6,358 | 11.7 | ||||||||||||||||||||||
| East North Central | 3,475 | 6.5 | 3,433 | 6.3 | ||||||||||||||||||||||
| West South Central | 4,938 | 9.2 | 5,065 | 9.4 | ||||||||||||||||||||||
| Mountain | 3,128 | 5.8 | 2,890 | 5.3 | ||||||||||||||||||||||
| New England | 1,189 | 2.2 | 1,190 | 2.2 | ||||||||||||||||||||||
| West North Central | 512 | 1.0 | 497 | 0.9 | ||||||||||||||||||||||
| East South Central | 1,192 | 2.2 | 1,200 | 2.2 | ||||||||||||||||||||||
| Subtotal-U.S. | 48,162 | 89.9 | 48,507 | 89.6 | ||||||||||||||||||||||
| Europe | 3,436 | 6.4 | 3,701 | 6.8 | ||||||||||||||||||||||
| Mexico | 882 | 1.6 | 882 | 1.6 | ||||||||||||||||||||||
| Asia | 603 | 1.1 | 612 | 1.1 | ||||||||||||||||||||||
| Other | 516 | 1.0 | 496 | 0.9 | ||||||||||||||||||||||
| Total commercial mortgage and agricultural property loans | $ | 53,599 | 100.0 | % | $ | 54,198 | 100.0 | % |
(1)Regions as defined by the United States Census Bureau.
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Gross Carrying Value | % of Total | Gross Carrying Value | % of Total | |||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||
| Commercial mortgage and agricultural property loans by property type: | ||||||||||||||||||||||||||
| Industrial | $ | 15,180 | 28.3 | % | $ | 15,541 | 28.7 | % | ||||||||||||||||||
| Retail | 4,646 | 8.7 | 4,780 | 8.8 | ||||||||||||||||||||||
| Office | 5,471 | 10.2 | 5,523 | 10.2 | ||||||||||||||||||||||
| Apartments/Multi-Family | 15,762 | 29.4 | 15,781 | 29.1 | ||||||||||||||||||||||
| Agricultural properties | 6,810 | 12.7 | 6,959 | 12.8 | ||||||||||||||||||||||
| Hospitality | 1,388 | 2.6 | 1,496 | 2.8 | ||||||||||||||||||||||
| Self-Storage | 1,839 | 3.4 | 1,889 | 3.5 | ||||||||||||||||||||||
| Health Care Senior Living | 1,547 | 2.9 | 1,607 | 3.0 | ||||||||||||||||||||||
| Other | 956 | 1.8 | 622 | 1.1 | ||||||||||||||||||||||
| Total commercial mortgage and agricultural property loans | $ | 53,599 | 100.0 | % | $ | 54,198 | 100.0 | % |
Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and agricultural property loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. The debt service coverage ratio compares a property’s net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt service coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments.
As of March 31, 2026, our commercial mortgage and agricultural property loans had a weighted-average debt service coverage ratio of 2.31 times and a weighted average loan-to-value ratio of 57%. For those commercial mortgage and agricultural property loans that were originated in 2026, the weighted-average debt service coverage ratio was 1.33 times, and the weighted average loan-to-value ratio was 56%.
The values utilized in calculating these loan-to-value ratios are developed as part of our periodic reviews of the commercial mortgage and agricultural property loan portfolio, which include internal evaluations of the underlying collateral values. Our periodic reviews also include a credit quality re-rating process, whereby we update the internal quality ratings originally assigned at underwriting based on the proprietary quality rating system mentioned above. As discussed below, the internal credit quality rating is a key input in determining our allowance for credit losses.
As of March 31, 2026, 93% of our commercial mortgage, agricultural property and residential mortgage loans were fixed rate loans.
For loans with collateral under construction, renovation or lease-up, projected stabilized values and net operating income are used in the calculation of the loan-to-value and debt service coverage ratios. Our commercial mortgage and agricultural property loan portfolio included $3.2 billion and $2.7 billion of such loans as of March 31, 2026 and December 31, 2025, respectively. All else being equal, these loans are inherently riskier than those collateralized by properties that have already stabilized. As of both March 31, 2026 and December 31, 2025, there were less than $1 million of allowances related to these loans. In addition, these unstabilized loans are included in the calculation of our portfolio reserve, as discussed below.
The following table sets forth the gross carrying value of our commercial mortgage and agricultural property loans by loan-to-value and debt service coverage ratios, as of the date indicated:
| March 31, 2026 | ||||||||||||||||||||||||||
| Debt Service Coverage Ratio | ||||||||||||||||||||||||||
| > 1.2x | 1.0x to < 1.2x | < 1.0x | Total Commercial Mortgage and Agricultural Property Loans | |||||||||||||||||||||||
| Loan-to-Value Ratio | (in millions) | |||||||||||||||||||||||||
| 0%-59.99% | $ | 27,090 | $ | 1,205 | $ | 548 | $ | 28,843 | ||||||||||||||||||
| 60%-69.99% | 13,667 | 763 | 264 | 14,694 | ||||||||||||||||||||||
| 70%-79.99% | 4,908 | 257 | 157 | 5,322 | ||||||||||||||||||||||
| 80% or greater | 2,929 | 399 | 1,412 | 4,740 | ||||||||||||||||||||||
| Total commercial mortgage and agricultural property loans | $ | 48,594 | $ | 2,624 | $ | 2,381 | $ | 53,599 |
The following table sets forth the breakdown of our commercial mortgage and agricultural property loans by year of origination, as of the date indicated:
| March 31, 2026 | ||||||||||||||
| Gross Carrying Value | % of Total | |||||||||||||
| Year of Origination | ($ in millions) | |||||||||||||
| 2026 | $ | 834 | 1.6 | % | ||||||||||
| 2025 | 6,792 | 12.7 | ||||||||||||
| 2024 | 7,302 | 13.6 | ||||||||||||
| 2023 | 5,377 | 10.0 | ||||||||||||
| 2022 | 3,945 | 7.4 | ||||||||||||
| 2021 | 6,294 | 11.7 | ||||||||||||
| 2020 | 2,849 | 5.3 | ||||||||||||
| 2019 & Prior | 20,006 | 37.3 | ||||||||||||
| Revolving Loans | 200 | 0.4 | ||||||||||||
| Total commercial mortgage and agricultural property loans | $ | 53,599 | 100.0 | % |
Residential Mortgage Loans
Residential mortgage loans primarily include fixed-rate, amortizing mortgage loans on rental properties owned by borrowers with FICO scores typically considered prime or above. The primary credit quality indicator is whether a loan is performing or nonperforming. The Company defines nonperforming residential mortgage loans as those that are 90 days or more past due and/or in nonaccrual status.
As of March 31, 2026 more than 99% of the loans are currently performing. As December 31, 2025, all of the loans were performing.
Commercial Mortgage and Other Loans Quality
The commercial mortgage and other loans portfolio is monitored on an ongoing basis. If certain criteria are met, loans are assigned to either of the following “watch list” categories:
(1) “Closely Monitored,” which includes a variety of considerations, such as when loan metrics fall below acceptable levels, the borrower is not cooperative or has requested a material modification, or the portfolio manager has directed a change in category; or
(2) “Not in Good Standing,” which includes loans in default or with a high probability of loss of principal, such as when the loan is in the process of foreclosure or the borrower is in bankruptcy.
Our workout and special servicing professionals manage the loans on the watch list.
The current expected credit loss (“CECL”) allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural property loans, residential mortgage loans, uncollateralized loans and other collateralized loans.
For commercial mortgage and agricultural property loans, the allowance is calculated using an internally developed CECL model.
Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate.
When individual loans no longer have the credit risk characteristics of the commercial mortgage or agricultural property loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.
For residential mortgage loans, the CECL calculation pools together loans that share similar risk characteristics. The estimated lifetime loss of the pool is calculated from the risk profiles of the loans, including borrower credit score, loan-to-value ratio, property type, and several key attributes of the loan and property including: loan type, loan age, loan performance history, and current performing or nonperforming status. Estimated lifetime loss rates are calculated by weighting projected losses in multiple economic scenarios based on the Company’s view of the current stage of the economic cycle and future economic conditions. The scenario losses are calibrated to industry historical experience of defaults, loss severities, and prepayment rates in multiple economic cycles, reflective of similar loan characteristics. When individual loans become nonperforming, the allowance is determined based on annual expected loss rates for nonperforming loans or the fair value of the collateral if the loan is collateral dependent. The Company defines nonperforming residential mortgage loans as those that are 90 days or more past due and/or in nonaccrual status.
The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans.
The following table sets forth the balance of and changes in the allowance for credit losses for our commercial mortgage and other loans, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Allowance, beginning of year | $ | 397 | $ | 468 | ||||||||||
| Addition to (release of) allowance for credit losses | 23 | 133 | ||||||||||||
| Write-downs charged against the allowance | 0 | (205) | ||||||||||||
| Other | 1 | 1 | ||||||||||||
| Allowance, end of period | $ | 421 | $ | 397 |
The allowance for credit losses as of March 31, 2026 increased in comparison to December 31, 2025 primarily related to additions to loan-specific reserves for a commercial mortgage loan within the retail sector, an agricultural property loan and an uncollateralized loan, partially offset by a net decrease in the general reserve.
Equity Securities
The equity securities portfolio consists principally of investments in common and preferred stock of publicly-traded companies, as well as mutual fund shares. The following table sets forth the composition of our equity securities portfolio and the associated gross unrealized gains and losses, as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | $ | 1,809 | $ | 1,185 | $ | 47 | $ | 2,947 | $ | 1,464 | $ | 1,248 | $ | 7 | $ | 2,705 | ||||||||||||||||||||||||||||||||||
| Other common stocks | 7,205 | 665 | 231 | 7,639 | 5,486 | 737 | 92 | 6,131 | ||||||||||||||||||||||||||||||||||||||||||
| Non-redeemable preferred stocks | 79 | 36 | 17 | 98 | 68 | 36 | 18 | 86 | ||||||||||||||||||||||||||||||||||||||||||
| Total equity securities, at fair value | $ | 9,093 | $ | 1,886 | $ | 295 | $ | 10,684 | $ | 7,018 | $ | 2,021 | $ | 117 | $ | 8,922 |
The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $(297) million and $(160) million during the three months ended March 31, 2026 and 2025, respectively.
Other Invested Assets
The following table sets forth the composition of “Other invested assets,” as of the dates indicated:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| LPs/LLCs: | ||||||||||||||
| Equity method: | ||||||||||||||
| Private equity | $ | 7,366 | $ | 7,400 | ||||||||||
| Hedge funds | 2,190 | 2,139 | ||||||||||||
| Real estate-related(1) | 1,731 | 1,591 | ||||||||||||
| Subtotal equity method | 11,287 | 11,130 | ||||||||||||
| Fair value: | ||||||||||||||
| Private equity | 536 | 577 | ||||||||||||
| Hedge funds | 1,164 | 1,197 | ||||||||||||
| Real estate-related | 437 | 434 | ||||||||||||
| Subtotal fair value | 2,137 | 2,208 | ||||||||||||
| Total LPs/LLCs | 13,424 | 13,338 | ||||||||||||
| Real estate held through direct ownership(1) | 1,616 | 1,572 | ||||||||||||
| Total alternative assets | 15,040 | 14,910 | ||||||||||||
| Credit-like instruments(2) | 2,150 | 1,777 | ||||||||||||
| Derivative instruments | (102) | 60 | ||||||||||||
| Other(3) | 963 | 937 | ||||||||||||
| Total other invested assets | $ | 18,051 | $ | 17,684 |
The following table presents a reconciliation of “Total alternative assets” included in the table above to the “Total alternative assets of operating businesses”:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Total alternative assets | $ | 15,040 | $ | 14,910 | ||||||||||
| Less: Divested Businesses(4) | (821) | (824) | ||||||||||||
| Less: Interests held by unaffiliated investors(5) | (1,464) | (1,393) | ||||||||||||
| Total alternative assets of operating businesses | $ | 12,755 | $ | 12,693 |
(1)As of March 31, 2026 and December 31, 2025, investment real estate held through direct ownership had mortgage debt of $218 million and $217 million, respectively.
(2)Includes structured debt investments in feeder funds that are consolidated, resulting in the Company reporting the consolidated feeder funds’ proportionate share of the net assets of the master fund within “Other invested assets.” As of March 31, 2026 and December 31, 2025, interests held by unaffiliated investors that have been consolidated into the Consolidated Statements of Financial Position were $341 million and $283 million, respectively.
(3)Primarily includes equity investments accounted for under the measurement alternative, tax advantaged investments, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding our holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
(4)As of March 31, 2026 and December 31, 2025, interests held by Divested Businesses include private equity of $505 million and $521 million, hedge funds of $145 million and $145 million, real estate-related of $167 million and $154 million and investment real estate held through direct ownership of $4 million and $4 million, respectively.
(5)As of March 31, 2026 and December 31, 2025, interests held by unaffiliated investors that have been consolidated into the Consolidated Statements of Financial Position include, investment real estate held through direct ownership of $967 million and $923 million, hedge funds of $182 million and $160 million and real estate-related of $315 million and $310 million, respectively.
Invested Assets of Other Entities and Operations
“Invested Assets of Other Entities and Operations” presented below includes investments held outside the general account and primarily represents investments associated with our investment management operations and derivative operations. Our derivative operations act on behalf of affiliates primarily to manage interest rate, foreign currency, credit and equity exposures. Assets within our investment management operations that are managed for third parties and those assets classified as “Separate account assets” on our Unaudited Interim Consolidated Statements of Financial Position are not included.
| March 31, 2026 | December 31, 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Fixed maturities: | ||||||||||||||
| Public, available-for-sale, at fair value(1) | $ | 165 | $ | 162 | ||||||||||
| Private, available-for-sale, at fair value | 263 | 188 | ||||||||||||
| Fixed maturities, trading, at fair value(1) | 918 | 421 | ||||||||||||
| Equity securities, at fair value | 374 | 457 | ||||||||||||
| Commercial mortgage and other loans, at fair value | 1,225 | 794 | ||||||||||||
| Other invested assets | 3,040 | 3,228 | ||||||||||||
| Short-term investments | 3 | 10 | ||||||||||||
| Total investments | $ | 5,988 | $ | 5,260 |
(1)As of March 31, 2026 and December 31, 2025, balances include investments in CLOs with fair value of $82 million and $76 million, respectively.
Fixed Maturities, Trading
“Fixed maturities, trading, at fair value” is primarily related to assets associated with consolidated variable interest entities (“VIEs”) for which the Company is the investment manager. The assets of the consolidated VIEs are generally offset by liabilities for which the fair value option has been elected. For additional information regarding these consolidated VIEs, see Note 4 to the Unaudited Interim Consolidated Financial Statements.
Commercial Mortgage and Other Loans
Our investment management operations include our commercial mortgage operations, which provide mortgage origination, investment management and servicing for our general account, institutional clients, the Federal Housing Administration and government-sponsored entities such as Fannie Mae and Freddie Mac.
The mortgage loans of our commercial mortgage operations are included in “Commercial mortgage and other loans.” Derivatives and other hedging instruments related to our commercial mortgage operations are primarily included in “Other invested assets.”
Other Invested Assets
“Other invested assets” primarily includes assets of our derivative operations used to manage interest rate, foreign currency, credit, and equity exposures.
Furthermore, other invested assets include strategic investments made as part of our investment management operations. We make these strategic investments in real estate, as well as fixed income, public equity and real estate securities, including controlling interests. Certain of these investments are made primarily for purposes of co-investment in our managed funds and structured products. Other strategic investments are made with the intention to sell or syndicate to investors, including our general account, or for placement in funds and structured products that we offer and manage (seed investments). As part of our investment management operations, we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds. “Other invested assets” also includes certain assets in consolidated investment funds where the Company is deemed to exercise control over the funds.
Valuation of Assets and Liabilities
Fair Value of Assets and Liabilities
The authoritative guidance related to fair value measurement establishes a framework that includes a three-level hierarchy used to classify the inputs used in measuring fair value. The level in the hierarchy within which the fair value falls is determined based on the lowest level input that is significant to the measurement. The fair values of assets and liabilities classified as Level 3 include at least one significant unobservable input in the measurement. See Note 6 to the Unaudited Interim Consolidated Financial Statements for an additional description of the valuation hierarchy levels as well as for the balances of assets and liabilities measured at fair value on a recurring basis by hierarchy level presented on a consolidated basis.
The table below presents the balances of assets and liabilities measured at fair value on a recurring basis, as of the dates indicated, and the portion of such assets and liabilities that are classified in Level 3 of the valuation hierarchy. The table also provides details about these assets and liabilities excluding those held in the Closed Block division and Funds Withheld portfolios. We believe the amounts excluding the Closed Block division and Funds Withheld are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial, Inc. because (1) substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies where the economics inure to those participating policies and not to shareholders of the Company’s Common Stock and (2) the Funds Withheld assets support liabilities relating to reinsurance agreements where the economic benefits and associated investment risk of the Funds Withheld assets ultimately inure to the reinsurer. See Notes 12 and 13 to the Unaudited Interim Consolidated Financial Statements for additional information regarding our material reinsurance agreements and the Closed Block, respectively.
| As of March 31, 2026 | |||||||||||||||||||||||||||||||||||
| PFI excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | |||||||||||||||||||||||||||||||||
| Total at Fair Value | Total Level 3(1) | Total at Fair Value | Total Level 3(1) | Total at Fair Value | Total Level 3(1) | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Fixed maturities, available-for-sale | $ | 295,658 | $ | 12,020 | $ | 28,364 | $ | 1,152 | $ | 6,829 | $ | 199 | |||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities: | |||||||||||||||||||||||||||||||||||
| Fixed maturities | 915 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Equity securities | 3,866 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Subtotal | 4,781 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Market risk benefit assets | 2,166 | 2,166 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Fixed maturities, trading | 6,017 | 883 | 541 | 24 | 9,273 | 2,008 | |||||||||||||||||||||||||||||
| Equity securities | 11,058 | 532 | 1,494 | 36 | 0 | 0 | |||||||||||||||||||||||||||||
| Commercial mortgage and other loans | 1,225 | 0 | 0 | 0 | 270 | 270 | |||||||||||||||||||||||||||||
| Other invested assets(2) | 2,587 | 1,134 | 0 | 0 | 9 | 0 | |||||||||||||||||||||||||||||
| Short-term investments | 6,105 | 33 | 169 | 11 | 17 | 0 | |||||||||||||||||||||||||||||
| Cash equivalents | 8,139 | 0 | 717 | 0 | 410 | 0 | |||||||||||||||||||||||||||||
| Reinsurance recoverables and deposit receivables | (57) | 0 | 0 | 0 | 802 | 452 | |||||||||||||||||||||||||||||
| Separate account assets | 161,405 | 210 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Total assets | $ | 499,084 | $ | 16,978 | $ | 31,285 | $ | 1,223 | $ | 17,610 | $ | 2,929 | |||||||||||||||||||||||
| Market risk benefit liabilities | $ | 5,000 | $ | 5,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||
| Policyholders’ account balances | 17,590 | 17,590 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Reinsurance and funds withheld payables | (27) | 0 | 0 | 0 | 105 | 0 | |||||||||||||||||||||||||||||
| Other liabilities(2) | 6,401 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Notes issued by consolidated variable interest entities (“VIEs”) | 1,330 | 1,330 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Total liabilities | $ | 30,294 | $ | 23,920 | $ | 0 | $ | 0 | $ | 105 | $ | 0 |
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||
| PFI excluding Closed Block Division and Funds Withheld | Closed Block Division | Funds Withheld | |||||||||||||||||||||||||||||||||
| Total at Fair Value | Total Level 3(1) | Total at Fair Value | Total Level 3(1) | Total at Fair Value | Total Level 3(1) | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Fixed maturities, available-for-sale | $ | 295,781 | $ | 10,802 | $ | 28,882 | $ | 1,073 | $ | 6,792 | $ | 123 | |||||||||||||||||||||||
| Assets supporting experience-rated contractholder liabilities: | |||||||||||||||||||||||||||||||||||
| Fixed maturities | 896 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Equity securities | 3,946 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Subtotal | 4,842 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Market risk benefit assets | 2,330 | 2,330 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Fixed maturities, trading | 5,239 | 480 | 581 | 17 | 9,049 | 1,816 | |||||||||||||||||||||||||||||
| Equity securities | 9,379 | 577 | 1,593 | 49 | 0 | 0 | |||||||||||||||||||||||||||||
| Commercial mortgage and other loans | 793 | 0 | 0 | 0 | 263 | 263 | |||||||||||||||||||||||||||||
| Other invested assets(2) | 2,728 | 1,087 | 1 | 1 | 31 | 0 | |||||||||||||||||||||||||||||
| Short-term investments | 5,551 | 1 | 158 | 0 | 72 | 0 | |||||||||||||||||||||||||||||
| Cash equivalents | 11,685 | 0 | 737 | 0 | 416 | 0 | |||||||||||||||||||||||||||||
| Reinsurance recoverables and deposit receivables | (50) | 0 | 0 | 0 | 623 | 367 | |||||||||||||||||||||||||||||
| Separate account assets | 168,745 | 211 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Total assets | $ | 507,023 | $ | 15,488 | $ | 31,952 | $ | 1,140 | $ | 17,246 | $ | 2,569 | |||||||||||||||||||||||
| Market risk benefit liabilities | $ | 4,623 | $ | 4,623 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||
| Policyholders’ account balances | 18,799 | 18,799 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Reinsurance and funds withheld payables | (20) | 0 | 0 | 0 | 194 | 0 | |||||||||||||||||||||||||||||
| Other liabilities(2) | 6,211 | 0 | 0 | 0 | 4 | 0 | |||||||||||||||||||||||||||||
| Notes issued by consolidated variable interest entities (“VIEs”) | 767 | 767 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
| Total liabilities | $ | 30,380 | $ | 24,189 | $ | 0 | $ | 0 | $ | 198 | $ | 0 |
(1)Level 3 assets expressed as a percentage of total assets measured at fair value on a recurring basis for PFI excluding the Closed Block division and Funds Withheld, the Closed Block division and Funds Withheld totaled 3.4%, 3.9%, and 16.6%, respectively, as of March 31, 2026, and 3.1%, 3.6%, and 14.9%, respectively, as of December 31, 2025.
(2)“Other invested assets” and “Other liabilities” primarily include derivatives. The amounts include the impact of netting subject to master netting agreements.
The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on our results of operations and may require the application of a greater degree of judgment depending on market conditions, as the ability to value assets and liabilities can be significantly impacted by a decrease in market activity or a lack of transactions executed in an orderly manner.
Fixed maturity securities included in Level 3 in our fair value hierarchy are generally priced based on internally-developed valuations or indicative broker quotes. For certain private fixed maturity and equity securities, the internal valuation models use significant unobservable inputs and, accordingly, such securities are included in Level 3 in our fair value hierarchy. Level 3 fixed maturity securities for PFI excluding the Closed Block division and Funds Withheld included approximately 14% of public fixed maturities as of March 31, 2026, with values primarily based on indicative broker quotes, and approximately 86% of private fixed maturities, with values primarily based on internally-developed models. Significant unobservable inputs used in their valuation included: issue specific spread adjustments, material non-public financial information, management judgment, estimation of future earnings and cash flows, default rate assumptions, liquidity assumptions and indicative quotes from market makers. Separate account assets included in Level 3 in our fair value hierarchy primarily include corporate securities and commercial mortgage loans.
Contracts or contract features reported in “Market risk benefit assets” and “Market risk benefit liabilities” and embedded derivatives reported in “Policyholders’ account balances” that are included in Level 3 of our fair value hierarchy represent general account assets and liabilities pertaining to living benefit features of the Company’s variable annuity contracts and the
index-linked interest credited features on certain life and annuity products. “Market risk benefit assets” and “Market risk benefit liabilities” are carried at fair value with changes in fair value included in “Change in value of market risk benefits, net of related hedging gains (losses)” except for the portion of the change attributable to changes in the Company’s NPR that is recorded in OCI. Embedded derivatives included in “Policyholders’ account balances” are carried at fair value with changes in fair value included in “Realized investment gains (losses), net.” These assets and liabilities are valued using internally-developed models that require significant estimates and assumptions developed by management. Changes in these estimates and assumptions can have a significant impact on the results of our operations. For additional information, see Note 6 to the Unaudited Interim Consolidated Financial Statements.
For additional information regarding the valuation techniques and the key estimates and assumptions used in our determination of fair value, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Income Taxes
For information regarding income taxes, see Note 14 to the Unaudited Interim Consolidated Financial Statements.
Previous: Item 1. Financial Statements · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK