- Net loss attributable to Prudential Financial, Inc. of $2.409
billion or $6.12 per Common share versus net income of $708 million
or $1.71 per share for the year-ago quarter. The current quarter
included a net after-tax charge from our annual reviews and update
of assumptions and other refinements of $84 million or $0.21 per
Common share versus $32 million or $0.08 per share in the year-ago
quarter.
- After-tax adjusted operating income of $742 million or $1.85
per Common share versus $1.262 billion or $3.03 per share for the
year-ago quarter(1). The current quarter included a net after-tax
charge from our annual reviews and update of assumptions and other
refinements of $266 million or $0.66 per Common share versus $36
million or $0.09 per share in the year-ago quarter.
- The current quarter charge from our annual reviews and update
of assumptions and other refinements was primarily driven by the
reduction in our long-term expectation of the 10-year U.S. Treasury
rate by 50 basis points to 3.25%, and the reduction in the expected
10-year Japanese Government Bond yield by 30 basis points to
1.00%.
- Book value per Common share of $165.53 versus $150.04 per share
for the year-ago; adjusted book value per Common share of $92.07
versus $97.15 per share for the year-ago.
- Parent company highly liquid assets of $4.5 billion versus $4.9
billion for the year-ago.
- Assets under management amounted to $1.605 trillion versus
$1.497 trillion for the year-ago.
Charles Lowrey, Chairman and CEO, commented on results:
“During the second quarter, we displayed resiliency amidst the
effects of the pandemic and economic and market shocks while
continuing to execute against our 2020 priorities with urgency,
benefiting from our complementary business mix, our rock-solid
balance sheet, and our carefully constructed risk profile. We
remain on track to achieve our targeted $140 million of cost
savings for the year and are making progress in transitioning our
international earnings base to higher-growth markets.
We also continue to address the impact of the low interest rate
environment through aggressive repricing and by pivoting to less
rate-sensitive products. We are examining ways to further reduce
the sensitivity to interest rates and exploring the potential to
generate cost savings on top of our existing 2022 target of $500
million.
Our hearts go out to all of those directly impacted by the
COVID-19 pandemic and by the deeply troubling recent incidents of
racial injustice and inequality. Guided by our purpose, we remain
committed to addressing these challenges on behalf of our
employees, customers and communities with compassion and
accountability towards achieving meaningful outcomes.”
Prudential Financial, Inc. (NYSE:PRU) today reported second
quarter results. Net loss attributable to Prudential Financial,
Inc. was $2.409 billion ($6.12 per Common share) for the second
quarter of 2020, compared to net income of $708 million ($1.71 per
Common share) for the second quarter of 2019. After-tax adjusted
operating income was $742 million ($1.85 per Common share) for the
second quarter of 2020, compared to $1.262 billion ($3.03 per
Common share) for the second quarter of 2019.
Consolidated adjusted operating income and adjusted book value
are non-GAAP measures. These measures are discussed later in this
press release under “Forward-Looking Statements and Non-GAAP
Measures” and reconciliations to the most comparable GAAP measures
are provided in the tables that accompany this release.
RESULTS OF ONGOING OPERATIONS The Company’s ongoing
operations include PGIM, U.S. Businesses (consisting of U.S.
Workplace Solutions, U.S. Individual Solutions, and Assurance IQ),
International Businesses, and Corporate & Other. In the
following business-level discussion, adjusted operating income
refers to pre-tax results.
PGIM
PGIM, the Company’s global investment management
business, reported record high adjusted operating income of $324
million in the second quarter of 2020, compared to $264 million in
the year-ago quarter. The increase reflects higher Other Related
Revenue, driven by an increase in strategic investment earnings,
lower expenses, and higher asset management fees, driven by an
increase in average account values.
PGIM assets under management of $1.394 trillion, a record high,
were up 9% from the year-ago quarter, reflecting market
appreciation and public fixed income inflows, partially offset by
public equity outflows. Third-party net inflows of $3.7 billion in
the current quarter reflect record retail flows of $9.4 billion,
partially offset by $5.7 billion of institutional outflows, driven
by a single client withdrawal.
U.S. Businesses
U.S. Businesses reported adjusted operating income of
$455 million for the second quarter of 2020, compared to $875
million in the year-ago quarter. This decrease includes a net
unfavorable comparative impact from our annual reviews and update
of assumptions and other refinements of $182 million. Excluding
this item, current quarter results primarily reflect lower net
investment spread results and lower net fee income, partially
offset by more favorable underwriting results.
U.S. Workplace Solutions, consisting of Retirement and
Group Insurance, reported adjusted operating income of $286 million
for the second quarter of 2020, compared to $548 million in the
year-ago quarter.
Retirement:
- Reported adjusted operating income of $281 million in the
current quarter, compared to $467 million in the year-ago quarter.
This decrease includes an unfavorable comparative impact from our
annual reviews and update of assumptions and other refinements of
$176 million. Excluding this item, current quarter results
primarily reflect lower net investment spread results, mostly
offset by higher reserve gains due to COVID-19.
- Account values of $498 billion were up 4% from the year-ago
quarter, primarily driven by market appreciation and pension risk
transfer transactions. Net outflows in the current quarter totaled
$600 million with $1.6 billion from Full Service, primarily driven
by elevated participant withdrawals due to COVID-19, partially
offset by $1.0 billion of net inflows from Institutional Investment
Products.
Group Insurance:
- Reported adjusted operating income of $5 million in the current
quarter, compared to $81 million in the year-ago quarter. This
decrease includes a net favorable comparative impact from our
annual reviews and update of assumptions and other refinements of
$2 million. Excluding this item, current quarter results primarily
reflect less favorable underwriting results due to COVID-19 and
lower net investment spread results.
- Reported earned premiums, policy charges, and fees of $1.3
billion in the current quarter were consistent with the year-ago
quarter.
U.S. Individual Solutions, consisting of Individual
Annuities and Individual Life, reported adjusted operating income
of $185 million for the second quarter of 2020, compared to $327
million in the year-ago quarter.
Individual Annuities:
- Reported adjusted operating income of $249 million in the
current quarter, compared to $462 million in the year-ago quarter.
This decrease includes an unfavorable comparative impact from our
annual reviews and update of assumptions and other refinements of
$124 million. Excluding this item, current quarter results
primarily reflect lower fee income, net of distribution expenses
and other associated costs, partially offset by higher net
investment spread results.
- Account values of $159 billion were down 4% from the year-ago
quarter, reflecting net outflows, partially offset by equity market
appreciation. Gross sales of $1.3 billion in the current quarter
reflect our continued product repricing and pivot strategy.
Individual Life:
- Reported a loss on an adjusted operating income basis of $64
million in the current quarter, compared to a loss on an adjusted
operating income basis of $135 million in the year-ago quarter.
This lower loss includes a favorable comparative impact from our
annual reviews and update of assumptions and other refinements of
$116 million. Excluding this item, current quarter results
primarily reflect lower net investment spread results and less
favorable underwriting results due to COVID-19, partially offset by
lower expenses.
- Sales of $184 million in the current quarter were up 2% from
the year-ago quarter, primarily reflecting higher variable life
sales.
Assurance IQ reported a loss, on an adjusted operating
income basis, of $16 million in the current quarter.
International Businesses
International Businesses, consisting of Life Planner and
Gibraltar Life & Other, reported adjusted operating income of
$693 million for the second quarter of 2020, compared to $790
million in the year-ago quarter. This decrease includes a net
unfavorable comparative impact from our annual reviews and update
of assumptions and other refinements of $106 million. Excluding
this item, current quarter results primarily reflect business
growth, higher earnings from joint venture investments due to
market performance, and more favorable underwriting results,
partially offset by lower net investment spread results and higher
expenses.
Life Planner:
- Reported adjusted operating income of $304 million in the
current quarter, compared to $379 million in the year-ago quarter.
This decrease includes a net unfavorable comparative impact from
our annual reviews and update of assumptions and other refinements
of $47 million. Excluding this item, current quarter results
primarily reflect lower net investment spread results and higher
expenses, partially offset by business growth.
- Constant dollar basis sales of $178 million in the current
quarter decreased 30% from the year-ago quarter, primarily
reflecting lower sales in Japan driven by restrictions in sales
activities due to COVID-19.
Gibraltar Life & Other:
- Reported adjusted operating income of $389 million in the
current quarter, compared to $411 million in the year-ago quarter.
This decrease includes a net unfavorable comparative impact from
our annual reviews and update of assumptions and other refinements
of $59 million. Excluding this item, current quarter results
primarily reflect higher earnings from joint venture investments
due to market performance, higher net investment spread results,
and more favorable underwriting results.
- Constant dollar basis sales of $198 million in the current
quarter decreased 34% from the year-ago quarter, reflecting lower
sales in both the Life Consultant and Bank channels driven by
restrictions in sales activities due to COVID-19.
Corporate & Other
Corporate & Other reported a loss, on an adjusted
operating income basis, of $541 million in the second quarter of
2020, compared to a loss of $335 million in the year-ago quarter.
The higher loss from the year-ago quarter reflects higher expenses,
driven by increases to legal reserves, and lower net investment
income, partially offset by higher income from pension and other
employee benefit plans.
NET INCOME Net loss in the current quarter included $2.7
billion of pre-tax net realized investment losses and related
charges and adjustments, largely driven by the non-cash effect of
non-performance risk related to products that contain embedded
derivatives, due to tightening credit spreads, and includes $139
million from impairment related losses.
Net income for the year-ago quarter included $654 million of
pre-tax net realized investment losses and related charges and
adjustments, primarily driven by products that contain embedded
derivatives and the associated hedging activities, including $14
million from impairment related losses.
FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES(2)
Certain of the statements included in this release, including those
regarding our key initiatives constitute forward-looking statements
within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. Forward-looking statements are made based on
management’s current expectations and beliefs concerning future
developments and their potential effects upon Prudential Financial,
Inc. and its subsidiaries. Prudential Financial, Inc.’s actual
results may differ, possibly materially, from expectations or
estimates reflected in such forward-looking statements. Certain
important factors that could cause actual results to differ,
possibly materially, from expectations or estimates reflected in
such forward-looking statements can be found in the “Risk Factors”
and “Forward-Looking Statements” sections included in Prudential
Financial, Inc.’s Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q. Statements regarding our priorities, cost savings
goals and other business strategies are subject to the risk that we
will be unable to execute our strategy because of market or
competitive conditions or other factors, including the impact of
the COVID-19 pandemic. Prudential Financial, Inc. does not
undertake to update any particular forward-looking statement
included in this document.
Consolidated adjusted operating income and adjusted book value
are non-GAAP measures. Reconciliations to the most directly
comparable GAAP measures are included in this release.
We believe that our use of these non-GAAP measures helps
investors understand and evaluate the Company’s performance and
financial position. The presentation of adjusted operating income
as we measure it for management purposes enhances the understanding
of the results of operations by highlighting the results from
ongoing operations and the underlying profitability of our
businesses. Trends in the underlying profitability of our
businesses can be more clearly identified without the fluctuating
effects of the items described below. Adjusted book value augments
the understanding of our financial position by providing a measure
of net worth that is primarily attributable to our business
operations separate from the portion that is affected by capital
and currency market conditions, and by isolating the accounting
impact associated with insurance liabilities that are generally not
marked to market and the supporting investments that are marked to
market through accumulated other comprehensive income under GAAP.
However, these non-GAAP measures are not substitutes for income and
equity determined in accordance with GAAP, and the adjustments made
to derive these measures are important to an understanding of our
overall results of operations and financial position. The schedules
accompanying this release provide reconciliations of non-GAAP
measures with the corresponding measures calculated using GAAP.
Additional historic information relating to our financial
performance is located on our website at
www.investor.prudential.com.
EARNINGS CONFERENCE CALL
Members of Prudential's senior management will host a conference
call on Wednesday, August 5, 2020, at 11:00 a.m. ET, to discuss
with the investment community the Company's second quarter results.
The conference call will be broadcast live over the Company’s
Investor Relations website at investor.prudential.com. Please log
on 15 minutes early in the event necessary software needs to be
downloaded. Institutional investors, analysts, and other members of
the professional financial community are invited to listen to the
call and participate in the Q&A by dialing one of the following
numbers: (877) 336-4437 (domestic) or (234) 720-6985
(international) and using access code 2805600. All others may join
the conference call in listen-only mode by dialing one of the above
numbers. A replay will remain on the Investor Relations website
through August 19. To access a replay via phone starting at 4:00
p.m. ET on August 5 through August 12, dial (866) 207-1041
(domestic) or (402) 970-0847 (international) and use replay code
6663193.
(1) Reclassification of results of The Prudential Life
Insurance Company of Korea, Ltd. ("POK"): Adjusted operating
income reflects the reclassification of results of POK from
International Businesses to Divested and Run-off Businesses in
Corporate and Other. POK's results are excluded from adjusted
operating income as a result of the business being held for
sale.
(2) Description of Non-GAAP Measures: Adjusted operating
income is the measure used by the Company to evaluate segment
performance and to allocate resources. Adjusted operating income
excludes “Realized investment gains (losses), net,” as adjusted,
and related charges and adjustments. A significant element of
realized investment gains and losses are impairments and
credit-related and interest rate-related gains and losses.
Impairments and losses from sales of credit-impaired securities,
the timing of which depends largely on market credit cycles, can
vary considerably across periods. The timing of other sales that
would result in gains or losses, such as interest rate-related
gains or losses, is largely subject to our discretion and
influenced by market opportunities as well as our tax and capital
profile.
Realized investment gains (losses) within certain of our
businesses for which such gains (losses) are a principal source of
earnings, and those associated with terminating hedges of foreign
currency earnings and current period yield adjustments are included
in adjusted operating income. Adjusted operating income generally
excludes realized investment gains and losses from products that
contain embedded derivatives, and from associated derivative
portfolios that are part of an asset-liability management program
related to the risk of those products. Adjusted operating income
also excludes gains and losses from changes in value of certain
assets and liabilities relating to foreign currency exchange
movements that have been economically hedged or considered part of
our capital funding strategies for our international subsidiaries,
as well as gains and losses on certain investments that are
designated as trading. Additionally, adjusted operating income
excludes the changes in fair value of equity securities that are
recorded in net income. Additionally, market experience updates,
reflecting the immediate impacts in current period results from
changes in current market conditions on estimates of profitability,
are excluded from adjusted operating income beginning with the
second quarter of 2019, which we believe enhances the understanding
of underlying performance trends.
Adjusted operating income excludes the results of Divested and
Run-off Businesses, which are not relevant to our ongoing
operations. Discontinued operations and earnings attributable to
noncontrolling interests, each of which is presented as a separate
component of net income under GAAP, are also excluded from adjusted
operating income. Adjusted operating income also excludes other
items, such as certain components of the consideration for the
Assurance IQ acquisition, which are recognized as compensation
expense over the requisite service periods, as well as changes in
the fair value of contingent consideration. The tax effect
associated with pre-tax adjusted operating income is based on
applicable IRS and foreign tax regulations inclusive of pertinent
adjustments.
Adjusted book value is calculated as total equity (GAAP book
value) excluding accumulated other comprehensive income (loss) and
the cumulative effect of foreign currency exchange rate
remeasurements and currency translation adjustments corresponding
to realized investment gains and losses. These items are excluded
in order to highlight the book value attributable to our core
business operations separate from the portion attributable to
external and potentially volatile capital and currency market
conditions.
Prudential Financial, Inc. (NYSE: PRU), a financial wellness
leader and premier active global investment manager with more than
$1.5 trillion in assets under management as of June 30, 2020, has
operations in the United States, Asia, Europe, and Latin America.
Prudential’s diverse and talented employees help to make lives
better by creating financial opportunity for more people.
Prudential's iconic Rock symbol has stood for strength, stability,
expertise and innovation for more than a century. For more
information, please visit news.prudential.com.
Financial Highlights
(in millions, unaudited)
Three Months Ended
Six Months Ended
June 30
June 30
2020
2019
2020
2019
Adjusted operating income (loss) before
income taxes (1):
PGIM
$
324
$
264
$
488
$
478
U.S. Businesses:
U.S. Workplace Solutions division
286
548
575
852
U.S. Individual Solutions division
185
327
538
904
Assurance IQ division
(16
)
—
(39
)
—
Total U.S. Businesses
455
875
1,074
1,756
International Businesses
693
790
1,391
1,649
Corporate and Other
(541
)
(335
)
(883
)
(747
)
Total adjusted operating income before
income taxes
$
931
$
1,594
$
2,070
$
3,136
Reconciling Items:
Realized investment losses, net, and
related charges and adjustments (2)
$
(2,672
)
$
(654
)
$
(3,265
)
$
(1,251
)
Market experience updates
55
(207
)
(886
)
(207
)
Divested and Run-off Businesses:
Closed Block division
(22
)
(21
)
(23
)
(40
)
Other Divested and Run-off Businesses
(602
)
168
(580
)
415
Equity in earnings of operating joint
ventures and earnings attributable to noncontrolling interests
(54
)
(4
)
(63
)
(37
)
Other adjustments (3)
32
—
77
—
Total reconciling items, before income
taxes
(3,263
)
(718
)
(4,740
)
(1,120
)
Income (loss) before income taxes and
equity in earnings of operating joint ventures
$
(2,332
)
$
876
$
(2,670
)
$
2,016
Income Statement Data:
Net income (loss) attributable to
Prudential Financial, Inc.
$
(2,409
)
$
708
$
(2,680
)
$
1,640
Income attributable to noncontrolling
interests
4
30
5
35
Net income (loss)
(2,405
)
738
(2,675
)
1,675
Less: Earnings attributable to
noncontrolling interests
4
30
5
35
Income (loss) attributable to
Prudential Financial, Inc.
(2,409
)
708
(2,680
)
1,640
Less: Equity in earnings of operating
joint ventures, net of taxes and earnings attributable to
noncontrolling interests
38
(6
)
47
18
Income (loss) (after-tax) before equity
in earnings of operating joint ventures
(2,447
)
714
(2,727
)
1,622
Less: Total reconciling items, before
income taxes
(3,263
)
(718
)
(4,740
)
(1,120
)
Less: Income taxes, not applicable to
adjusted operating income
(74
)
(170
)
(372
)
(269
)
Total reconciling items, after income
taxes
(3,189
)
(548
)
(4,368
)
(851
)
After-tax adjusted operating income
(1)
742
1,262
1,641
2,473
Income taxes, applicable to adjusted
operating income
189
332
429
663
Adjusted operating income before income
taxes (1)
$
931
$
1,594
$
2,070
$
3,136
See footnotes on last page.
Financial Highlights
(in millions, except per share data,
unaudited)
Three Months Ended
Six Months Ended
June 30
June 30
2020
2019
2020
2019
Earnings per share of Common Stock
(diluted):
Net income (loss) attributable to
Prudential Financial, Inc.
$
(6.12
)
$
1.71
$
(6.80
)
$
3.93
Less: Reconciling Items:
Realized investment losses, net, and
related charges and adjustments (2)
(6.75
)
(1.58
)
(8.21
)
(3.01
)
Market experience updates
0.14
(0.50
)
(2.23
)
(0.50
)
Divested and Run-off Businesses:
Closed Block division
(0.06
)
(0.05
)
(0.06
)
(0.10
)
Other Divested and Run-off Businesses
(1.52
)
0.41
(1.46
)
1.00
Difference in earnings allocated to
participating unvested share-based payment awards
0.01
0.01
0.02
0.02
Other adjustments (3)
0.08
—
0.19
—
Total reconciling items, before income
taxes
(8.10
)
(1.71
)
(11.75
)
(2.59
)
Less: Income taxes, not applicable to
adjusted operating income
(0.13
)
(0.39
)
(0.88
)
(0.61
)
Total reconciling items, after income
taxes
(7.97
)
(1.32
)
(10.87
)
(1.98
)
After-tax adjusted operating
income
$
1.85
$
3.03
$
4.07
$
5.91
Weighted average number of outstanding
common shares (basic)
394.6
405.3
395.8
407.3
Weighted average number of outstanding
common shares (diluted)
396.1
413.9
397.8
415.8
For earnings per share of Common Stock
calculation:
Net income (loss) attributable to
Prudential Financial, Inc.
$
(2,409
)
$
708
$
(2,680
)
$
1,640
Earnings related to interest, net of tax,
on exchangeable surplus notes
—
6
—
11
Less: Earnings allocated to participating
unvested share-based payment awards
6
8
11
18
Net income (loss) attributable to
Prudential Financial, Inc. for earnings per share of Common Stock
calculation
$
(2,415
)
$
706
$
(2,691
)
$
1,633
After-tax adjusted operating income
(1)
$
742
$
1,262
$
1,641
$
2,473
Earnings related to interest, net of tax,
on exchangeable surplus notes
—
6
—
11
Less: Earnings allocated to participating
unvested share-based payment awards
9
15
20
28
After-tax adjusted operating income for
earnings per share of Common Stock calculation (1)
$
733
$
1,253
$
1,621
$
2,456
Prudential Financial, Inc. Equity (as
of end of period):
GAAP book value (total PFI equity) at end
of period
$
65,897
$
61,660
Less: Accumulated other comprehensive
income (AOCI)
30,837
23,982
GAAP book value excluding AOCI
35,060
37,678
Less: Cumulative effect of foreign
exchange rate remeasurement and currency
translation adjustments corresponding to
realized gains/losses
(1,593
)
(2,070
)
Adjusted book value
36,653
39,748
End of period number of common shares
(diluted) (4)
398.1
414.3
GAAP book value per common share - diluted
(5)
165.53
150.04
GAAP book value excluding AOCI per share -
diluted (5)
88.07
92.15
Adjusted book value per common share -
diluted (5)
92.07
97.15
See footnotes on last page.
Financial Highlights
(in millions, or as otherwise noted,
unaudited)
Three Months Ended
Six Months Ended
June 30
June 30
2020
2019
2020
2019
PGIM:
PGIM:
Assets Managed by PGIM (in billions, as of
end of period):
Institutional customers
$
571.2
$
534.9
Retail customers (6)
320.2
287.9
General account
503.1
459.8
Total PGIM
$
1,394.5
$
1,282.6
Institutional Customers - Assets Under
Management (in billions):
Gross additions, other than money
market
$
15.0
$
14.5
$
35.6
$
29.6
Net withdrawals, other than money
market
$
(5.7
)
$
(6.0
)
$
(1.5
)
$
(5.0
)
Retail Customers - Assets Under Management
(in billions):
Gross additions, other than money
market
$
24.6
$
13.0
$
48.2
$
27.1
Net additions, other than money market
$
9.4
$
1.1
$
8.1
$
1.5
U.S. Workplace Solutions
Division:
Retirement:
Full Service:
Deposits and sales
$
5,455
$
11,047
$
14,407
$
20,614
Net additions (withdrawals)
$
(1,585
)
$
3,788
$
(1,301
)
$
4,250
Total account value at end of period
$
266,433
$
262,133
Institutional Investment Products:
Gross additions
$
4,545
$
15,044
$
11,438
$
17,291
Net additions
$
1,018
$
10,883
$
2,401
$
9,481
Total account value at end of period
$
231,142
$
215,978
Group Insurance:
Group Insurance Annualized New Business
Premiums (7):
Group life
$
8
$
17
$
181
$
191
Group disability
18
16
126
135
Total
$
26
$
33
$
307
$
326
U.S. Individual Solutions
Division:
Individual Annuities:
Fixed and Variable Annuity Sales and
Account Values:
Gross sales
$
1,346
$
2,675
$
3,273
$
4,982
Sales, net of full surrenders and death
benefits
$
(64
)
$
278
$
(656
)
$
645
Total account value at end of period
$
159,276
$
165,313
Individual Life:
Individual Life Insurance Annualized New
Business Premiums (7):
Term life
$
40
$
53
$
80
$
104
Guaranteed universal life
34
24
63
45
Other universal life
23
48
53
78
Variable life
87
56
175
117
Total
$
184
$
181
$
371
$
344
International Businesses:
International Businesses:
International Businesses Annualized New
Business Premiums (7)(8):
Actual exchange rate basis
$
363
$
549
$
991
$
1,227
Constant exchange rate basis
$
376
$
553
$
1,012
$
1,236
See footnotes on last page.
Financial Highlights
(in billions, as of end of period,
unaudited)
Three Months Ended
June 30
2020
2019
Assets and Assets Under Management
Information:
Total assets
$
915.4
$
873.8
Assets under management (at fair market
value):
PGIM (6)
1,394.5
1,282.6
U.S. Businesses:
U.S. Workplace Solutions division
93.0
90.9
U.S. Individual Solutions division (6)
104.0
110.3
Total U.S. Businesses
197.0
201.2
International Businesses
13.8
13.6
Total assets under management
1,605.3
1,497.4
Client assets under administration
285.8
273.0
Total assets under management and
administration
$
1,891.1
$
1,770.4
See footnotes on last page.
(1)
Adjusted operating income is a non-GAAP
measure of performance. See FORWARD-LOOKING STATEMENTS AND NON-GAAP
MEASURES within the earnings release for additional information.
Adjusted operating income, when presented at the segment level, is
also a segment performance measure. This segment performance
measure, while not a traditional U.S. GAAP measure, is required to
be disclosed by U.S. GAAP in accordance with FASB Accounting
Standard Codification (ASC) 280 – Segment Reporting. When presented
by segment, we have prepared the reconciliation of adjusted
operating income to the corresponding consolidated U.S. GAAP total
in accordance with the disclosure requirements as articulated in
ASC 280.
(2)
Effective fourth quarter of 2019, realized
investment gains (losses), net, and related charges and adjustments
now includes results previously disclosed as investment gains
(losses) on assets supporting experience rated contractholder
liabilities, net and change in experience rated contractholder
liabilities due to asset value changes. Prior period amounts have
been reclassified to conform to current period presentation.
(3)
Represents adjustments not included in the
above reconciling items. “Other adjustments” include certain
components of the consideration for the Assurance IQ acquisition,
which are recognized as compensation expense over the requisite
service periods, as well as changes in the fair value of contingent
consideration.
(4)
Diluted shares as of June 30, 2019 include
6.2 million shares due to the dilutive impact of conversion of
exchangeable surplus notes (“ESNs”) when book value per common
share (i.e., book value per common share, book value excluding AOCI
per common share, and adjusted book value per common share) is
greater than $80.73. The $500 million of ESNs were converted into
6.2 million shares of Common Stock in the third quarter of
2019.
(5)
The exchangeable surplus notes are subject
to customary antidilution adjustments and the exchange rate is
accordingly revalued. In order to calculate book value per common
share as of June 30, 2019, equity is increased by $500 million and
diluted shares include 6.2 million shares reflecting the dilutive
impact of ESNs when book value per common share is greater than
$80.73. The $500 million of ESNs were converted into 6.2 million
shares of Common Stock in the third quarter of 2019.
(6)
Effective first quarter of 2020, certain
assets have been reclassified from U.S. Individual Solutions
division to PGIM. Prior period amounts have been reclassified to
conform to current period presentation.
(7)
Premiums from new sales are expected to be
collected over a one-year period. Group insurance annualized new
business premiums exclude new premiums resulting from rate changes
on existing policies, from additional coverage issued 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. Group insurance annualized new
business premiums include premiums from the takeover of claim
liabilities. Excess (unscheduled) and single premium business for
the Company's domestic individual life and international operations
are included in annualized new business premiums based on a 10%
credit.
(8)
Actual amounts reflect the impact of
currency fluctuations. Constant amounts reflect foreign denominated
activity translated to U.S. dollars at uniform exchange rates for
all periods presented, including Japanese yen 104 per U.S. dollar.
U.S. dollar-denominated activity is included based on the amounts
as transacted in U.S. dollars.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200804005905/en/
MEDIA: Bill Launder (973) 802-8760
bill.launder@prudential.com
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