First Quarter 2024 Earnings Presentation
1Q24 EARNINGS CALL
Expanding access to investing, insurance, and retirement security
KEY MESSAGES
Becoming a higher growth, more capital efficient, and nimble company
Maintaining disciplined capital deployment
Supported by our rock solid balance sheet
WE MAKE LIVES
BETTERBYSOLVING
THEFINANCIAL
CHALLENGESOFOURCHANGINGWORLD
2
BECOMING A HIGHER GROWTH, MORE CAPITAL EFFICIENT, AND NIMBLE COMPANY
Growing our market leading businesses
Divesting lower growth businesses
- PGIM achieved robust third-party and affiliated flows
- Retirement Strategies had the best first quarter of Pension Risk Transfer (PRT) sales and highest Individual sales in over a decade
Group Insurance and Individual Life sales growth reflects product and segment diversification- International sales benefit from recent product launches in
Japan and expanding distribution inBrazil - Completed Guaranteed Universal Life (GUL) reinsurance transaction
- Reached agreement to sell
Argentina business - Decided to exit Assurance business
Strengthening our operating model
- Delivering exceptional sales, service, and claims experiences
- Generating and reinvesting efficiencies to fuel future growth
3
MAINTAINING DISCIPLINED CAPITAL DEPLOYMENT
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Investing in market leading |
Returned over |
Increased quarterly dividend |
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businesses to support |
by 4%, the 16th consecutive |
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to shareholders in 1Q24(1) |
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growth |
annual increase |
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Creating sustainable, profitable growthand shareholder returns
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(1) Capital returned to shareholders in the first quarter of |
4 |
SUPPORTED BY OUR ROCK SOLID BALANCE SHEET
Financial strength
tosupport allstakeholders
Capital supports AA financial strength rating as of March 31, 2024(1), 2023(1)
Highly liquid assets of $4.2 billion(2)
High quality, well diversified investment portfolio
Disciplined Asset Liability Management
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(1) |
Includes approximately |
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(2) |
Parent company highly liquid assets predominantly include cash, short-term investments, |
5 |
FIRST QUARTER 2024 HIGHLIGHTS
Financial Highlights
($ millions, except per share amounts)
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1Q24 |
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Pre-Tax Adjusted Operating Income(1) |
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Adjusted Operating Income Per Share(1) |
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GAAP Net Income Per Share(2) |
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Earnings Drivers |
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($ millions, pre-tax adjusted operating income) |
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PGIM |
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+ Higher asset management |
+ Higher spread income |
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fees |
+ More favorable |
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+ Higher Other Related |
underwriting results |
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Revenues |
- Higher expenses |
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- Higher expenses |
- Lower fee income |
International Businesses
- Higher spread income
- Higher JV earnings
- Less favorable underwriting
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Adjusted Operating ROE(3) |
13.0% |
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Adjusted Book Value Per Share(1) |
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1Q23 |
1Q24 |
1Q23 |
1Q24 |
1Q23 1Q24
Note: See Appendix for segment results.
- See reconciliation in Appendix for non-GAAP measures Adjusted Operating Income, Adjusted Operating Income Per Share, and Adjusted Book Value Per Share.
- Includes impacts of realized investment losses, earnings from divested and run-off businesses, gains related to net change in value of market risk benefits and unfavorable market experience updates.
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(3) Based on 1Q24 after-tax Adjusted Operating Income and average Adjusted Book Value. See Appendix for more information. |
6 |
PGIM
Earnings Contribution to Prudential
Trailing twelve months(1) ($ millions)
PGIM 9%
3rd Party
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($ billions) |
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( |
( |
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( |
( |
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1Q23 |
2Q23 |
3Q23 |
4Q23 |
1Q24 |
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Institutional |
Retail |
Net Flows |
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Key Priorities
- Maintain strong investment performance(2)
-
- Percentage of AUM(3) outperforming public benchmarks:
3 Year: 66%, 5 Year: 80%, 10 Year: 92%
- Percentage of AUM(3) outperforming public benchmarks:
- Leverage leading asset management capabilities to grow our mutually reinforcing business system
- Globalize both product and client footprint and continue to add capabilities
- Grow in alternatives, including private credit, and other high margin areas
- Selectively acquire new capabilities through programmatic M&A
Asset Management Fees
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Trailing twelve months |
Multi-Asset |
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($ millions) |
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Private Credit |
5% |
& Other Alts
12%
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Public |
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Fixed |
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EquityPublic |
Income |
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40% |
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21% |
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Real |
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Estate |
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22% |
- Based on pre-tax adjusted operating income excluding Corporate & Other operations.
- PGIM calculations as of
March 31, 2024 for$786 billion of third-party AUM managed against public benchmarks. Past performance is not a guarantee or reliable indicator of future results. All investments involve risk, including the possible loss of capital. Performance is defined as outperformance (gross of fees) relative to each individual strategy's respective benchmark(s). - Represents PGIM's benchmarked AUM (74% of total third-party AUM is benchmarked over 3 years, 67% over 5 years, and 49% over 10 years). This calculation does not include non-benchmarked assets (including general account assets and assets not managed by PGIM). Returns are calculated gross of investment management fees, which would reduce an investor's net return. Excess performance is based on all actively managed Fixed Income, Equity, and Real
|
Estate AUM for |
7 |
Diversified Portfolio with Favorable Growth Opportunities
Earnings Contribution to Prudential
Trailing twelve months(1) ($ millions)
Key Priorities
- Drive higher value and higher growth with a complementary mix of businesses and diversified sources of earnings
- Transform our capabilities to improve customer experiences
- Expand our addressable market with new financial solutions leveraging the capabilities across Prudential
Diversified Sources of Earnings
Trailing twelve months(2)
Underwriting 19%
Net Spread
31%
Quarterly Performance Highlights
- Strong Institutional Retirement Strategies sales of
$11B , including two jumbo PRT deals, reflecting the highest first quarter in market history - Strong Individual Retirement sales of
$3.3B , representing the highest sales quarter since 1Q13, with continued momentum in the FlexGuard Suite and Fixed Annuities Strong Group Insurance sales with 18% increase compared to 1Q23
• Favorable Individual Life sales mix with 12% increase compared to 1Q23, reflecting pivot towards more capital efficient products
Note: See Appendix for segment results.
- Based on pre-tax adjusted operating income excluding Corporate & Other operations.
U.S. Businesses include Retirement Strategies, Group Insurance, and Individual Life. - Based on net spread income, net fee income, and underwriting margin and claims experience gross of expenses. Excludes assumption updates and other refinements.
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(3) Benefits ratio excluding the impact of assumption updates and other refinements. |
8 |
INTERNATIONAL BUSINESSES
Market Leader in
Earnings Contribution to Prudential
Trailing twelve months(1) ($ millions)
International
Businesses
42%
Key Priorities
- Expand product and business capabilities to meet customers' evolving insurance and retirement security needs
- Enhance customer experience and deliver differentiated distribution leveraging digital tools
- Optimize capital and operational efficiency
- Expand in select high growth emerging markets through investments in organic growth and selective M&A
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Sales(2) |
Sales - Currency Mix(2) |
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($ millions) |
Trailing twelve months |
Other 2% |
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BRL |
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14% |
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JPY
23% USD
61%
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1Q23 |
2Q23 |
3Q23 |
4Q23 |
1Q24 |
- Based on pre-tax adjusted operating income excluding Corporate & Other operations.
- Constant exchange rate basis. Foreign denominated activity translated to
U.S. Dollars (USD) at uniform exchange rates for all periods presented, including Japanese Yen (JPY) 129 per USD and Brazilian Real (BRL) 6 per USD. USD-
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denominated activity is included based on the amounts as transacted in USD. Sales represented by annualized new business premiums. |
9 |
ADJUSTED OPERATING INCOME & EPS CONSIDERATIONS
($ millions, except per share amounts)
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Adjusted |
Adjusted Operating |
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Operating Income |
Income Per Share |
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Pre-Tax |
After-Tax |
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1Q24 Reported |
(1) |
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Underwriting
Expenses & Other
•
•
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1Q24 experience normalized and 2Q24 |
95 |
0.20 |
|
adjusted for seasonality |
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Primarily reflects seasonal items as well as |
50 |
0.11 |
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1Q24 GUL reinsurance transaction costs |
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2Q24 Baseline |
(2) |
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2Q24 baseline includes items specific to the second quarter that decrease EPS by $0.07(3)
Note: See Appendix for segment detail.
- See reconciliation in Appendix for non-GAAP measures, Adjusted Operating Income, and Adjusted Operating Income Per Share.
- EPS rollforward list of considerations not intended to be exhaustive and rollforward is not a projection of 2Q24 results. Does not consider future items such as, among other things, share repurchases, business growth, and market impacts.
|
(3) Items specific to the second quarter include expense and seasonality impacts. See Appendix for details. |
1 0 |
Attachments
Disclaimer
Q1 2024 Earnings Call Presentation
Hippo Reports First Quarter 2024 Financial Results
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