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'll 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 International Businesses and PGM, our Global Investment Manager, Caroline Feeney, Head of U.S. Businesses, Ken Tangy, Chief Financial Officer, and Rob Axel, 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 measure 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 today. Our second quarter results reflect continued momentum across our businesses, including the fourth consecutive quarter of underlying earnings growth and record operating earnings for group insurance. We continue to execute on our strategy by reducing market sensitivity and and increasing our capital flexibility, enhancing our capabilities, and optimizing operating efficiency to support long-term growth. Our strategic progress and financial strength position us well to navigate the current macroeconomic environment and maintain our disciplined approach to capital deployment. Turning to slide three, I'll start this morning by noting two significant milestones demonstrating how we are reducing market sensitivity and increasing our capital flexibility. During the second quarter, we completed a reinsurance transaction for a $10 billion block of traditional variable annuities and received proceeds of $650 million. With this transaction, I'm pleased that we have achieved our objective of lowering the proportion of traditional variable annuities while continuing our progress in pivoting to less market sensitive and higher growth products. Additionally, last week we announced another transaction to reinsure a $12.5 billion block of guaranteed universal life policies, which will be accretive to earnings. We expect to receive approximately $450 million of proceeds when the transaction closes, which is expected to be in the fourth quarter of this year. We also continue to deliver on our vision to increase access to investing, insurance, and retirement security by enhancing our capabilities and customer experiences, and by expanding our distribution channels and products to more people around the world. In Latin America, we continue to expand our distribution through the MercadoLibre platform and added 150,000 new customers last quarter. Also, Prudential of Brazil achieved a record sales quarter, driven by strong performance by life planners and continued expansion of the third-party distribution channel. Prudential of Brazil is now the third largest life insurance company in the country, growing at twice the market average and reaching more than 3.5 million customers. In addition, we see continued opportunity and feel we are well positioned in the international longevity risk transfer market as we completed more than $3.5 billion of transactions in the second quarter. In the U.S., Our individual retirement strategies business achieved annuity sales of $1.9 billion in the second quarter, a 20% increase year-over-year, and the highest since the fourth quarter of 2020. Our FlexGuard suite has reached $15 billion of sales over the past three years, and our fixed annuity sales in the quarter represented over one-third of new business as we innovate our portfolio of annuity solutions to meet customer needs. As we look ahead, we are well positioned as a global leader at the intersection of asset management and insurance. We are confident that our strategy and mutually reinforcing business mix, which leverages the combined strength of our brand, global asset and liability origination capabilities, and multi-channel distribution will enable us to drive future growth and continue to expand access to investing insurance and retirement security. At the same time, We continue to enhance the ways we leverage technology to improve customer experiences and optimize operating efficiency. One recent example is Model My Retirement, a new digital tool designed to help institutional pension customers gain a better understanding of their retirement benefits and adjust their financial planning accordingly. Customers can now quickly and seamlessly get an estimate of their available annuity benefits through our self-service website. We also announced a strategic partnership with NIA, a leading benefits experience platform. The new partnership will allow group insurance clients to harness AI and data science capabilities to make more informed workplace benefit decisions. And we are also using chatbot technology and robotic process automation to reduce transaction processing time across our U.S. businesses. As part of our continuous improvement framework, we are focusing on creating a leaner, faster, and more agile company so that we can better meet the needs of our customers while driving growth and efficiency. We've made good progress in this area, having exceeded the target we established two years ago, but we think there's more work we can do. We are evaluating additional opportunities including further evolving our operating model, simplifying our organizational structure, and streamlining decision making. Turning now to slide four. Prudential's rock-solid balance sheet and robust risk and capital management frameworks have allowed us to confidently navigate the current macro environment. Our AA financial strength is supported by our strong capital position, including approximately $50 billion of unrealized insurance margins, $4.5 billion in highly liquid assets at the end of the second quarter, which does not include the $650 million of proceeds from the traditional variable annuities reinsurance transaction that was completed this quarter, and a high-quality, well-diversified investment portfolio and disciplined approach to asset liability management. Moving to slide five, our disciplined approach to capital deployment coupled with the added capital flexibility achieved through our de-risking transactions, enables us to effectively balance investing in the long-term growth of our businesses with returning capital to shareholders. In the second quarter, we returned approximately $700 million in capital to shareholders. And with that, Rob will now provide an overview of our second quarter financial results and an update on our business performance.