A.M. Best Affirms Credit Ratings of Prudential Financial, Inc. and Its Subsidiaries
The ratings reflect Prudential’s balance sheet strength, which
Prudential’s balance sheet strength is enhanced by favorable financial flexibility as its parent, PFI, has access to various sources of liquidity and a proven ability to access capital markets. Partially offsetting these strengths is Prudential’s extensive use of captives to finance redundant reserves for its term and universal life products.
Prudential’s operating performance is considered strong, as its return metrics are favorable and generated positive statutory income in each of the past five years. Prudential benefits from meaningful economies of scale, which is reflective of its market leading positions in core business lines.
In addition to its growing domestic and international insurance businesses, Prudential has operated in the pension risk transfer (PRT) marketplace over the long term and now has over
The rating affirmation of PFI reflects its highly diversified earnings sources, considerable financial flexibility, strong liquidity profile and strong debt service capabilities. Cash and short-term holdings at PFI exceed
PFI, however, employs a significant amount of operating leverage, in part, to fund domestic individual life redundant reserve requirements, as well as for securities lending and other spread-based borrowings. However, financial leverage and interest coverage remain within A.M. Best’s guidelines for the company’s current rating level.
PFI’s international segment, which is dominated by its
Partially offsetting these positive rating factors is the increasingly large concentration of annuity reserves, primarily due to the increasing number of PRT transactions, relative to its total statutory general account reserves.
For a complete listing of
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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