Prudential Financial, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Prudential's quarterly earnings conference call. At this time, all participants have been placed in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you should require any assistance during the call, please press star zero and an operator will assist you offline. As a reminder, today's call is being recorded. I will now turn the call over to Mr. Bob McLaughlin.

Please go ahead. Good morning and thank you for joining our call. Representing Prudential on today's call are Charlie Lowry, Chairman and CEO, Rob Fausen, Vice Chairman, Andy Sullivan, Head of U.S. Businesses, Scott Slyster, Head of International Businesses, Ken Tangy, Chief Financial Officer, and Rob Achtel, Controller and Principal Accounting Officer. We will start with prepared comments by Charlie, Rob, and Ken, and then we will take your questions. Today's presentation may include forward-looking statements. it is possible that actual results may differ materially from the predictions we make today. In addition, this presentation may include references to non-GAAP measures. For a reconciliation of such measures to the comparable GAAP measures and a discussion of factors that could cause actual results to differ materially from those in the forward-looking statements, please see the slides titled Forward-Looking Statements and Non-GAAP Measures in the appendix to today's presentation and the quarterly financial supplement both of which can be found on our website at investor.prudential.com. And now I'll turn it over to Charlie.

Thank you, Bob, and thanks to everyone for joining us this morning. Prudential delivered strong financial results for the fourth quarter and the full year, reflecting favorable investment performance and continued high demand for the products we introduced during the pandemic to address our customers' evolving needs. 2021 was also a pivotal year for Prudential and our efforts to become a higher growth, less market sensitive, and more nimble company. First, we are repositioning our business mix to generate sustainable long-term growth with reduced market sensitivity. Second, we continue to advance our cost savings program. And third, we maintained our disciplined and thoughtful approach to deploying capital. I'll provide an update on each of these areas before turning it over to Rob and Ken. Moving to slide three. We are making significant progress repositioning our business for sustainable long-term growth with reduced market sensitivity through a mix of divestitures and strategic programmatic acquisitions. Following the successful completion of the sales of our Korea and Taiwan insurance businesses, which produced $1.8 billion in proceeds, we reached agreements to divest our full-service business and a portion of our traditional variable annuities. We are on track to close both of these transactions in the first half of 2022 and generate additional proceeds of over $4 billion. We are redeploying capital in part through highly targeted acquisitions and investments in asset management and emerging markets. Last year, PGM acquired Montana Capital Partners, a European-based private equity secondaries asset manager, and Green Harvest, a separately managed account platform that provides customized solutions for high net worth investors. Meanwhile, on the emerging markets front, we closed on an investment in ICEA Lion Holdings, a highly respected financial services market leader in Kenya with operations in Tanzania and Uganda. Turning to slide four. We continue to advance our cost savings program and are on track to achieve $750 million in savings by the end of 2023. To date, we have already achieved 635 million in run rate cost savings, exceeding our $500 million target for 2021. We have also taken steps to improve experiences around the world for our customers and employees through innovation. This includes using automation, artificial intelligence, and other technology to expedite underwriting, reduce and simplify processes, provide faster, more convenient service options and deliver meaningful financial advice in the ways our customers want it. I'll touch more upon how we're using technology in a moment. Turning to slide five. We have maintained a disciplined and balanced approach to deploying capital by enhancing returns to shareholders, reducing financial leverage, and by investing in the growth of our businesses. We currently plan to return a total of $11 billion of capital to shareholders between 2021 and the end of 2023. This includes 4.3 billion returned during 2021 through share repurchases and dividends. As part of this plan, the board has authorized $1.5 billion of share repurchases and a 4% increase in our quarterly dividend beginning in the first quarter. This represents our 14th consecutive annual dividend increase. We also reduced debt by $1.3 billion in 2021. In addition to the acquisitions I previously mentioned, we have also made investments in our businesses to drive long-term growth and to meet the evolving needs of our customers. In PGM, for example, we have significantly strengthened our suite of environmental, social, and governance bond funds to better serve sustainability-focused investors. Meanwhile, in our insurance businesses, we continue to develop products that are less market-sensitive and have higher growth potential, such as our FlexGuard and Variable Life products. with a focus on improved customer experience and driving greater operational efficiency. One example, as I mentioned earlier, is our use of artificial intelligence. We use AI to quickly and accurately assess risk in our life insurance businesses and to expedite the application and underwriting process. The application of innovative technology generated significant efficiencies for our global businesses during 2021. while delivering a dramatically better experience for our customers. We will continue to expand the use of AI and other emerging technologies across the firm. Our capital deployment strategy is supported by a rock-solid balance sheet, which includes $3.6 billion in highly liquid assets at the end of the fourth quarter and a capital position that continues to support our AA financial strength rating. Turning to slide six. Our ongoing efforts to transform the company in 2021 go hand in hand with Prudential's long standing commitment to sustainability. This commitment is reflected in several significant enhancements to our environmental, social and governance framework last year. We committed to achieve net zero emissions by 2050 across our primary global home office operations with an interim goal of becoming carbon neutral in these facilities by 2040. We are also reviewing our general account investment holdings and have restricted new direct investments in companies that derive 25% or more of their revenues from thermal coal. On the social front, the Prudential Foundation surpassed $1 billion in grants to partners primarily focused on eliminating barriers to financial and social mobility around the world. This achievement follows another milestone that we reached in 2020. when our impact investment portfolio exceeded $1 billion. We also continue to advance our nine commitments to racial equity through investments and funding for organizations committed to diversity, equity, and inclusion, and through internal measures, including diversity training, and our commitment to equitable compensation for our employees. Our governance actions reflected a shared commitment to diversity and inclusion, beginning at the top. with over 80% of our independent board directors being diverse. It also includes the steps we are taking to improve diverse representation throughout credential and to provide greater transparency around the composition of our U.S. workforce. In 2021, we enhanced our diversity disclosures by publishing EE01 data and the results of our pay equity analysis for our U.S. employees. We also expanded our policy of tying compensation plans for senior executives to the achievement of workforce diversity goals. As I noted earlier, we believe our sustainability commitments and transformation to become a higher growth, less market sensitive, and more nimble business are closely connected. Together, they help us fulfill our purpose of making lives better by solving the financial challenges of our changing world by expanding access to investing, insurance, and retirement security for customers and clients around the globe. Before turning it over to Rob, I'd like to thank all of our employees for their unwavering dedication to the customers and communities we serve, particularly in light of the continued challenges created by the pandemic. I am proud of the progress we made and the momentum we built in 2021 and look forward to making an even more meaningful difference in the lives of all our stakeholders in 2022 and beyond. Thank you for your time this morning. And with that, I'll turn it over to Rob.