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 Andy Sullivan, CEO, and Janella Frias, CFO. We will start with prepared comments by Andy and Janella, and then we will address your questions. Today's discussion may include forward-looking statements. It is possible that actual results may differ materially from those predictions we made today. In addition, our presentation includes references to non-GAAP measures. For 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-Gap Measures in the appendix to today's presentation, which can be found on our website at investor.prudential.com. And now I'll turn it over to Andy.

Good morning, everyone. I'm incredibly excited to lead Prudential forward at this pivotal moment in our 150-year history. We make promises that last for decades, and we commit every single day to keep those promises to our 50 million customers all over the world. Our work makes a difference, and that is a privilege that I take seriously. Over the past few months, I've been visiting our global offices and meeting with our leadership as I take stock of the state of our business. What is clear to me from this early assessment as CEO is that we need to sharpen our focus on driving growth and on creating greater value for our stakeholders. Beginning on slide two, I see both significant opportunities and challenges in front of us. With our unique combination of global scale, distribution power, brand and talent, we're well positioned to address the growing protection and retirement needs of customers and clients around the world, and to meet increasing investor appetite for a broad range of investment products, including private credit and alternatives. Over the last several years, we've made tangible progress towards de-risking and diversifying the company. Through our divestitures and blocks placed into runoff, we've significantly reduced our exposure to more volatile and market-sensitive products. We've already reduced our overall exposure to traditional variable annuities and guaranteed universal life products by nearly 60%, and we continue to focus on ways to optimize our balance sheet, capital, and cash flows. Our life and annuity products in the US are more diverse than ever. While in Japan, we've increased sales of savings and retirement products by more than 50% over the past three years, complementing our core life insurance offering in that market. We're beginning to see the benefits of this more diversified product mix, specifically stronger sales and flows across our retirement and insurance businesses, While PGM continues to benefit from a broader range of traditional and alternative investment products and expanding distribution platform and strong investment performance. In the first quarter, we reported strong sales across our global retirement and insurance businesses, as well as strong investment performance and robust flows at PGM. And while our earnings were higher than in the first quarter of last year, I want to be clear. Our recent results do not meet our expectations and we will do better. The underlying capabilities, distribution strength, brand, and product quality of Prudential should deliver more value to our stakeholders. We will deliver to a higher performance standard going forward. That is what our customers, our employees, and our shareholders expect. My leadership team and I are committed to executing on a strategy to fundamentally improve our financial performance. At the same time, the path to higher earnings growth will not be linear. There are two reasons for this. First, we expect lower earnings growth in our U.S. businesses over the near term as we continue to run off more volatile blocks of our business comprised of traditional variable annuities and guaranteed universal life products. Second, we face near-term earnings pressure in our Japan business, driven by elevated surrenders of U.S. dollar-denominated products due to a weaker yen. Although we're seeing signs that this is beginning to stabilize. Importantly, we believe these earnings headwinds that contribute to an estimated three to four point drag to EPS growth in 2025 will dissipate over time. We will see the compounding impact of our strong sales and flows drive stronger growth long term. We remain confident in achieving the intermediate term financial targets we provided to you last quarter. While we do not plan to provide quarterly updates to these targets, I want to assure you that as the new CEO, and despite the current macro uncertainty, we continue to expect 5% to 8% core adjusted operating EPS growth on average through 2027, which is inclusive of the transitory headwinds. We have real work ahead of us to create greater value for our stakeholders. But let me reiterate. We are committed to delivering stronger results over time. Turning to slide three, I want to share with you today how I see us getting there. First, we will evolve and deliver on our strategy. Our world is evolving. We will adapt to meet the opportunity and prioritize the allocation of our capital accordingly. The areas that present the greatest opportunities for profitable growth will get more capital. Those that do not will get less. Second, we will execute with consistency. We must raise the bar as we execute. Specifically, that means continuing to evolve to a more favorable product and business mix, improving our track record of delivering the expected returns of our inorganic and organic capital deployment, and continuing to improve our expense profile across our operations. Finally, we will focus on our culture. We benefit from strong talent, expertise, and diversity of perspectives. But we must move faster to ensure we capture new opportunities as they emerge and take greater accountability for outcomes. We've already taken action to align incentives even more closely to earnings per share growth. These are my priorities, evolving and delivering on our strategy, improving on our execution, and fostering a high performance culture. Coupled with our differentiated position serving 50 million customers and clients with a diverse range of financial solutions, I have every confidence that we can and we will evolve our business and drive sustainable, profitable growth in the years ahead. Moving to slide four and before turning it over to Janella to provide greater detail on our results, let me briefly reflect on how we're positioned in the current macroeconomic and market environment. Prudential has a long history of navigating economic cycles and global events, and we are well positioned to support our customers and capitalize on new opportunities as they emerge. Our diversified business mix provides stability across a variety of macroeconomic scenarios. Our balance sheet includes nearly $5 billion in highly liquid assets, strong statutory solvency ratios, and access to significant off-balance sheet resources that support our AA financial strength. In addition, we have a high-quality, well-diversified investment portfolio and disciplined approach to asset liability and risk management, which is designed for times like these, to perform through periods of stress, uncertainty, and volatility. And with that, I'll turn it over to Janella.