P RUDENTIAL F INANCIAL , I NC . D EBT I NVESTORS U PDATE M AY 2019 May 2019
A GENDA ❑ Enterprise Overview ❑ U.S. and International Businesses ❑ Capital & Liquidity ❑ Investment Portfolio 2 May 2019
E NTERPRISE O VERVIEW May 2019
T RACK R ECORD OF D ELIVERING S UPERIOR V ALUE • Leader in financial wellness • Positioned for organic business growth and acquisition opportunities • Robust record of sustained buybacks and a decade of dividend growth 10% 12.7% 8% 5-yr Adjusted Adjusted 5-yr EPS CAGR, BVPS CAGR (2) Operating ROE (3) excluding notable items (1) 1) From 2013 to 2018; based on after-tax Adjusted Operating Income excluding notable items. See Appendix for more information. 2) From 2013 to 2018; based on Adjusted Book Value. See Appendix for more information. 3) Year-to-date as of 4Q18; based on annualized after-tax Adjusted Operating Income and average Adjusted Book Value. See Appendix for more information. 4 May 2019
L EADING G LOBAL F INANCIAL S ERVICES C OMPANY • Fortune 50 global financial services firm • ~50,000 employees serving customers in more than 40 countries • ~$42 billion market cap (1) Attractive Mix of Businesses Leading Global Asset Manager PGIM 12% General Account Institutional Workplace 30% 36% Solutions International 16% 44% $6.3 billion $1.5 trillion Non-PGIM Individual (3) Managed Retail Solutions 16% 28% 18% Pre-tax Adjusted Operating Income (2) 1Q19 Assets Under Management (Includes $640B of Third-Party AUM) 1) As of May 3, 2019. 2) Based on last twelve months of adjusted operating income through 1Q19. Pie chart excludes Corporate and Other Operations loss of $1,401 million. 3) Includes assets under management in the U.S. Individual Solutions Division, U.S. Workplace Solutions Division, and International Insurance Division. 5 May 2019
L EADERSHIP S UCCESSION John Strangfeld Charles Lowrey Chairman & CEO Chairman & CEO Robert Falzon Mark Grier Vice Chairman Vice Chairman Charles Lowrey Scott Sleyster EVP - International EVP - International Robert Falzon Ken Tanji EVP – Chief Financial Officer EVP – Chief Financial Officer Ken Tanji Nandini Mongia SVP – Treasurer SVP – Treasurer Scott Sleyster Tim Schmidt SVP – Chief Investment Officer SVP – Chief Investment Officer 6 May 2019
W ELL P OSITIONED M IX OF C OMPLEMENTARY B USINESSES D ELIVERING C USTOMER S OLUTIONS AND E NTERPRISE B ENEFITS Connecting societal need and market opportunity with Prudential’s unique mix of capabilities U.S. Financial Wellness International PGIM • ~$1.2 trillion (1) global asset manager • Unique mix of high quality services, • World class Japanese Life Insurance products, and distribution channels operation with distinctive multi-manager model • Integrated solutions: protection, • Businesses in select high growth • Consistently strong investment retirement, and investments markets performance and third-party net flows • Deepening lifetime individual and • Investing in technology and adapting • Provides competitive advantages to institutional relationships products to markets and evolving U.S. Financial Wellness and customer needs International Complementary earnings, cash flows, and capital benefits with long-term growth prospects 1) Assets under management as of March 31, 2019. 7 May 2019
F INANCIAL W ELLNESS – M OMENTUM C ONTINUES T O B UILD W ITH C USTOMERS ✓ Dramatically enhances and scales our ability to bring Resonating value proposition among employers financial security within reach for existing and new customers Nearly 600 employers ✓ Distinctively leverages all parts of our business system have adopted Prudential ▪ Hybrid digital/human capabilities Pathways ▪ Solutions across income, investments, and protection Several marquee wins tied to ▪ Personalized, needs-based engagement powered by financial wellness capabilities investments in digital and data analytics Digital Financial Wellness ✓ Expands access through workplace and digital channels platform deployed to ▪ Over 20 million worksite customers nearly 3,100 employers ▪ Launched digital financial wellness platform in 2017 Prudential Pathways, our cornerstone solution launched in 2015, leverages our customer-centric business model to provide financial wellness education to Prudential’s extensive U.S. customer base 8 May 2019
L AUNCHED A DDITIONAL F INANCIAL W ELLNESS C APABILITIES Manage Student Loan Debt Digital Needs • Evaluate consolidation and repayment options Based Solutions • Employer can make contributions to develop personalized financial roadmap Navigate Job Changes • Launched PruPassages SM • LINK by Prudential in • Proactively engage and support the workplace individuals during a job transition, including maintaining life insurance • Financial coaching coverage service Provide beneficiary services • Making it easier for those who just lost a loved one • Resources to plan a funeral and manage financial accounts Note: Financial coaching service is being piloted with Workplace Solutions clients 9 May 2019
H IGHLIGHTS OF C APITAL S TRENGTH ▪ Significant adverse experience absorption capacity in statutory and GAAP reserves Conservative ▪ High quality investment portfolio and strong regulatory capital Balance Sheet ratios ▪ Deployable cash flow expected to be ~65% of after-tax adjusted operating income (1) over time Solid Capital ▪ Japan equity hedge protects value of our largest international Generation operation and contribution to overall returns and capital generation ▪ Share repurchase authorization increased by 33% for 2019 to $2 billion; increased quarterly dividend by 11% to $1.00 per Effective Capital share of common stock in 1Q19 Deployment ▪ Strong recent track record of deploying capital to support outsized organic growth, M&A, dividends and share buybacks ▪ Comprehensive analysis of market and business risks at an enterprise level Capital Protection ▪ Framework Ability to sustain more severe scenarios with substantial resources on and off balance sheet 1) Excludes notable items. 10 May 2019
R OBUST C APITAL P OSITION S UPPORTS S TRONG D ISTRIBUTIONS TO S HAREHOLDERS Capital Position • Share repurchases of $500 million Capital Deployment • Quarterly Common Stock Dividend per Share increase of 11% • Capital Level Continue to hold capital above our AA financial strength levels • Leverage (1) Financial leverage ratio less than 25% Liquidity Position Shareholder Distributions ($ in millions) ($ in billions) (2) Parent Company Highly Liquid Assets Share Repurchase Common Stock Dividends $5.5 $5.5 $915 $5.2 $5.1 $4.7 $762 $757 $755 $752 500 375 375 375 375 415 387 382 380 377 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 1) Financial leverage ratio represents capital debt divided by sum of capital debt and equity. Junior subordinated debt treated as 25% equity, 75% capital debt for purposes of calculation. Equity excludes non- controlling interest, AOCI (except for pension and postretirement unrecognized costs), and the impact of foreign currency exchange rate remeasurement. 2) Highly liquid assets predominantly include cash, short-term investments, U.S. Treasury securities, obligations of other U.S. government authorities and agencies, and/or foreign government bonds. 11 May 2019
K EY T AKEAWAYS • Financial strength a key value proposition • Attractive and balanced portfolio of businesses that produce strong returns • Steady growth prospects with continued initiative spending to capture longer term opportunities • Diversified sources of earnings • Balance sheet strength, capital position and cash generation support disciplined shareholder return and financial flexibility • Continue to navigate the evolving regulatory environment • Focus on talent and leadership enables execution, fosters innovation and builds long-term success 12 May 2019
U.S. AND I NTERNATIONAL B USINESSES May 2019
U.S. F INANCIAL W ELLNESS – E NGAGING M ILLIONS OF I NDIVIDUALS W ITH A M ULTI -C HANNEL O FFERING Earnings Contribution to Prudential Key Priorities to Grow Earnings Trailing twelve months (1) • Continue to help employers understand our ($ in millions) differentiated value proposition to increase workplace clients • Engage and educate workers about their Workplace U.S. Solutions workplace solutions to increase utilization of Financial $1,210 existing benefits Wellness 44% • Address holistic financial needs of individuals with our broad set of capabilities and solutions Individual Solutions • Continue to execute initiatives specific to $2,170 underlying businesses Diversified Sources of Earnings Prudential and the Wellness Effect Trailing twelve months (2) Nearly 600 employers have adopted Net Spread Digital Financial Wellness platform has been deployed to 27% nearly 3,100 employers reaching nearly 8 million Underwriting individuals Net Fees 17% 56% LINK by Prudential was deployed to ~190,000 participants in Workplace Solutions Note: See Appendix for segment results. 1) Trailing twelve months ended 1Q19. Based on pre-tax adjusted operating income excluding Corporate and Other Operations. 2) Trailing twelve months ended 1Q19. Based on net fee income, net spread income, and underwriting margin and claims experience gross of expenses; excludes notable items. 14 May 2019
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