Prudential sees life, annuity growth; shakes up Japan operations

Prudential produced a big third-quarter jump in earnings, with all of its businesses turning profits.

The insurer’s bedrock U.S. businesses reported adjusted operating income before taxes of $1.15 billion, up from $1.04 billion in the year-ago quarter. Strong life insurance and annuity sales, plus a “jumbo” pension risk transfer deal, drove the higher revenues.

PGIM, Prudential’s global investment management division, posted adjusted operating income before taxes of $244 million, reflecting higher asset management fees and other increased revenues.

In the international business segment, adjusted operating income before taxes rose to $881 million from $766 million a year ago, reflecting higher investment returns, among other items.

Prudential executives met with Wall Street analysts Thursday to discuss Q3 results. The venerable U.S. insurer, which celebrated its 150^th anniversary this year, is focused on the opportunities in the Japanese market, CEO Andy Sullivan said.

“Over the past three years in Japan, we've launched seven new products reflecting our commitment to meeting the evolving needs of our customers through a comprehensive suite of protection and retirement solutions,” Sullivan said. “As a result, sales in Japan have increased about 35% over this period, with yen-denominated sales increasing by over 50%.”

But not without a bit of controversy, however. Two weeks ago, Prudential appointed Brad Hearn as president and CEO of Prudential Holdings of Japan. Previously, he served as chief operating officer for Prudential's Japan operations.

Hearn succeeded Motofusa Hamada, who will serve as an advisor through the end of the year. In response to an analyst’s comment about “regulatory issues,” Sullivan added that Hearn was always going to succeed Hamada but “we did accelerate it ... given some operational and compliance considerations.”

In Other News

Variable universal life.  Prudential is a market leader in variable universal life insurance, and one analyst questioned why the insurer likes the market-sensitive product. Sullivan reminded everyone that Prudential pivoted away from guaranteed universal life, a more market-sensitive product, to VUL in recent years.

Prudential’s “relatively new” FlexGuard Life VUL had a record quarter, Sullivan noted. Industry dominant distribution is one reason why Prudential is having so much success with its VUL suite, he added.

“We would expect to see more pressure as more of our competitors are getting into this part of the market,” Sullivan concluded.

Dai-ichi Life partnership. Sullivan updated analysts on the collaboration with Japanese insurer Dai-ichi Life Holdings announced in January.

“Phase one” includes a product distribution agreement in Japan, where Prudential would select Dai-ichi’s wholly owned subsidiary, The Neo First Life Insurance Co., as an exclusive product partner. Prudential is distributing a cancer product through its life planner system, Sullivan said.

“We will manage material assets over time for Dai-ichi, and in part, including private credit,” the CEO explained. “We have begun to manage assets for Dai-ichi and it’s steadily growing and will soon reach $1 billion in assets under management.”

Quarterly Snapshot

• Individual Life sales grew 20% compared to Q3 2024, driven by accumulation-focused products.
• Completed the sale of the PGIM Taiwan business to E. Sun Financial Holding Co.
• Record Life Planner sales and expanded third-party distribution in Brazil.
• Assets under management of $1.61 trillion versus $1.56 trillion for the year-ago quarter.

Management Perspective

“We still believe that the pension risk transfer market will be softer in ‘25 versus ‘24, but we've seen an uptick in the pipeline for the second half of the year and it is proving to be more robust than what we saw earlier.”

– CEO Andy Sullivan

By The Numbers

• Net income: $1.4 billion ($448 million in Q3 2024)
• After-tax adjusted operating income: $1.52 billion ($1.21 billion in Q3 2024)
• Earnings Per Share: $4.26 ($3.33 in Q3 2024)
• Share Repurchases: $250 million in Q3 2025
• Dividend Declared: $481 million in Q3 2025
• Stock Price Movement: Shares up 1.9% at market close Thursday to 103.09

Life Picture

- Adjusted operating income: $93 million ($60 million in Q3 2024)

Annuity Picture

- Adjusted Operating Income: $486 million ($460 million in Q3 2024)

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.