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What changed in PRUDENTIAL FINANCIAL INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PRUDENTIAL FINANCIAL INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+863 added−1090 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in PRUDENTIAL FINANCIAL INC's 2025 10-K

863 paragraphs added · 1090 removed · 684 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

130 edited+52 added−210 removed55 unchanged
Biggest changeThese laws, regulations and directives also: • require protections regarding or limiting the use and disclosure of certain sensitive personal information such as national identifier numbers (e.g., social security numbers) or racial or ethnic origin; • require notice to affected individuals, regulators and others if there is a breach of the confidentiality, integrity, or availability of certain personal or confidential information; • require financial institutions and creditors to implement effective programs to detect, prevent, and mitigate identity theft; • regulate the process by which financial institutions make telemarketing calls and send e-mail, text, or fax messages to consumers and customers; • require oversight of third parties that have access to, and handle, personal or confidential information; • provide individuals with certain rights over their personal information, such as the right to know what personal information is being collected and whether the information is being sold or shared, and the right to obtain portable copies of or request the deletion or correction of their personal information; and • prescribe the permissible uses of certain personal information, including customer information and consumer report information.
Biggest changeGenerally, these U.S. and international laws, regulations and directives may require: • protecting sensitive personal information, such as national identifier numbers (e.g., social security numbers) or racial or ethnic origin, from unauthorized use or disclosure; • providing individuals with certain rights over their personal information, such as the right to access, correct, or delete their personal information; • notifying affected individuals, regulators and others if there is a breach of the confidentiality, integrity, or availability of certain personal or confidential information; • implementing programs to detect, prevent, and mitigate identity theft; • identification of permissible uses for personal information, such as customer information and consumer report information and permissible telemarketing calls, e-mails, texts, and other consumers and customers communications; • oversight of third parties that have access to, and handle, personal or confidential information; Regulatory and legislative activity in the areas of privacy, data protection, and cybersecurity continues to increase worldwide.
Certain coverages allow employees to retain their coverage when they change employers or retire, and we offer waiver of premium coverage in the event the insured suffers a qualifying disability. • Group corporate-, bank- and trust-owned life insurance in the form of group variable life insurance contracts utilizing separate accounts.
Certain coverages allow employees to retain their coverage when they change employers or retire, and we offer waiver of premium coverage in the event the insured suffers a qualifying disability. • Corporate-, Bank-, and Trust-owned coverages in the form of group variable life insurance contracts utilizing separate accounts.
Businesses — Individual Life Develops and distributes variable life, universal life and term life insurance products primarily to U.S. mass middle (households with investable assets in excess of $25,000 or annual income in excess of $50,000), mass affluent (households with investable assets or annual income in excess of $100,000) and affluent (households with investable assets in excess of $250,000) customers with a focus on providing life insurance solutions to protect individuals, families and businesses and to support estate and wealth transfer planning.
Individual Life Individual Life develops and distributes variable life, universal life, and term life insurance products primarily to U.S. mass middle (households with investable assets in excess of $25,000 or annual income in excess of $50,000), mass affluent (households with investable assets or annual income in excess of $100,000), and affluent (households with investable assets in excess of $250,000) customers with a focus on providing life insurance solutions to protect individuals, families, and businesses, and to support estate and wealth transfer planning.
Group-Wide Supervision The New Jersey Department of Banking and Insurance (“NJDOBI”) acts as the group-wide supervisor of Prudential Financial pursuant to New Jersey legislation that authorizes group-wide supervision of internationally active insurance groups (“IAIGs”).
The New Jersey Department of Banking and Insurance (“NJDOBI”) acts as the group-wide supervisor of Prudential Financial pursuant to New Jersey legislation that authorizes group-wide supervision of internationally active insurance groups (“IAIGs”).
Financial regulators in the U.S. and international jurisdictions in which we operate continue to focus on data privacy and cybersecurity, including in rulemaking and examinations of regulated entities, and have communicated heightened expectations.
Financial regulators in the U.S. and international jurisdictions in which we operate continue to focus on data privacy and cybersecurity, including rulemaking and examinations of regulated entities, and have communicated heightened expectations.
We hold seed and co-investments in some of our investment products to either (i) seed new products or investment strategies in order to develop a track record prior to obtaining third-party investments, or (ii) co-invest alongside clients in PGIM-managed funds to demonstrate that our interests are aligned with theirs.
Additionally, we hold seed and co-investments in some of our investment products to either (i) seed new products or investment strategies in order to develop a track record prior to obtaining third-party investments, or (ii) co-invest alongside clients in PGIM-managed funds to demonstrate that our interests are aligned with theirs.
We believe that these limitations do not materially affect our ability to operate or expand internationally. 17 Table of Contents Regulation Overview Our businesses are subject to comprehensive regulation and supervision. The purpose of these regulations is primarily to protect our customers and the overall financial system and not necessarily our shareholders or debt holders.
We believe that these limitations do not materially affect our ability to operate or expand internationally. 12 Table of Contents Regulation Overview Our businesses are subject to comprehensive regulation and supervision. The purpose of these regulations is primarily to protect our customers and the overall financial system and not necessarily our shareholders or debt holders.
Demographic trends in Japan suggest an increasing opportunity for product innovation, such as introducing insurance products that allow for savings and income and offering differentiated health products with value added services as a growing portion of the population prepares for retirement.
Demographic trends in Japan suggest an increasing opportunity for product innovation, such as introducing products that allow for savings and income, as well as offering differentiated health products with value added services as a growing portion of the population prepares for retirement.
Cybersecurity.” Artificial Intelligence Regulatory standards relating to the use of artificial intelligence (“AI”) are evolving in the countries where we do business, and may increase risks associated with bias, unfair discrimination, transparency, and information security.
Cybersecurity.” Artificial Intelligence Regulatory standards relating to the use of artificial intelligence (“AI”) are evolving in the countries where we do business, and our use of AI may increase risks associated with bias, unfair discrimination, transparency, and information security.
Accident and Health Products —that provide the following: • Benefits to cover accidental death and dismemberment, hospitalization, surgeries, as well as costs of cancer and other dread diseases often sold as supplementary riders and not as stand-alone products; and • Waiver of premium coverage where required premiums are waived in the event the customer suffers a qualifying disability.
Accident and Health Products that provide benefits to cover accidental death and dismemberment, hospitalization, surgeries, as well as costs of cancer and other dread diseases often sold as supplementary riders and not as stand-alone products. Also includes waiver of premium coverage where required premiums are waived in the event the customer suffers a qualifying disability.
(2) Represents the total number of full-time equivalent positions and does not reflect the total number of individual employees as some work part-time. Prudential’s Board of Directors, including its Corporate Governance and Business Ethics Committee, has oversight responsibility for our human capital resources, diversity and inclusion practices and corporate culture.
(2) Represents the total number of full-time equivalent positions and does not reflect the total number of individual employees as some work part-time. Prudential’s Board of Directors, including its Corporate Governance and Business Ethics Committee, has oversight responsibility for our human capital resources, inclusive practices, and corporate culture.
The sale was completed in the second quarter of 2022. 13 Table of Contents Closed Block Division In connection with the demutualization in 2001, we ceased offering domestic participating individual life insurance and annuity products under which policyholders are eligible to receive policyholder dividends reflecting experience.
The sale was completed in the second quarter of 2022. Closed Block Division In connection with the demutualization in 2001, we ceased offering domestic participating individual life insurance and annuity products under which policyholders are eligible to receive policyholder dividends reflecting experience.
Unclaimed Property Laws We are subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and we are subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see Note 25 to the Consolidated Financial Statements. Taxation U.S.
Unclaimed Property Laws We are subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and we are subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see Note 25 to the Consolidated Financial Statements.
The strategies provide an interest component linked to, but not an investment in, the selected index, and its performance over the elected term, subject to certain contractual minimums and maximums, and also provides varying levels of downside protection at pre-determined levels and durations.
The strategies provide an interest component linked to, but not an investment in, the selected index, and its performance over the elected term, subject to certain contractual provisions, and also provides varying levels of downside protection at pre-determined levels and durations.
Marketing and Distribution Our marketing and distribution efforts are conducted through the following proprietary agent models and third-party channels: • Proprietary agent models: ◦ Life Planners — focus on selling protection-oriented life insurance products on a needs basis to mass affluent and affluent customers, as well as retirement-oriented products to small businesses.
Marketing and Distribution Our marketing and distribution efforts are conducted through the following proprietary agent models and third-party channels: • Proprietary agent models: ◦ Life Planners — focus on selling protection-oriented life insurance products to mass affluent and affluent customers, as well as retirement-oriented products to small businesses.
Our profitability is substantially impacted by: • Macro market movements (e.g., interest rates, credit spreads and equity market performance). • Our ability to achieve investment returns above the target benchmarks. • Our ability to attract and retain client investments. Competition We compete with numerous asset managers and other financial institutions.
Our profitability is substantially impacted by macro market movements (e.g., interest rates, credit spreads, and equity market performance), our ability to achieve investment returns above the target benchmarks, and our ability to attract and retain client investments. 3 Table of Contents Competition We compete with numerous asset managers and other financial institutions.
Previously, Mr. Schmidt was the Head of Global Portfolio Management for Prudential from 2012 to 2018 and he was responsible for the overall asset/liability management for Prudential’s Retirement and Group Insurance businesses from 2010 to 2012. Prior to joining Prudential in July 2010, he served as Chief Financial Officer for MetLife’s Individual Business and had headed MetLife’s Wealth Strategy Group.
Previously, he served as Head of Global Portfolio Management for Prudential from 2012 to 2018 and, prior to that, he was responsible for the overall asset/liability management for Prudential’s Retirement and Group Insurance businesses. Prior to joining Prudential in 2010, he was Chief Financial Officer for MetLife’s Individual Business and had headed MetLife’s Wealth Strategy Group.
Change of Control Most states, including the states in which our U.S. insurance companies are domiciled, have insurance laws that require regulatory approval of a direct or indirect change of control of an insurer or an insurer’s holding company.
In addition, most states, including the states where our U.S. insurance companies are domiciled, have insurance laws that require regulatory approval of a direct or indirect change of control of an insurer or an insurer’s holding company.
Retirement Products —include retirement income products that combine insurance protection similar to term life with: • A lifetime income stream that commences at a predefined age; • A savings-oriented variable life product that provides a non-guaranteed return linked to an underlying investment portfolio of equity and fixed income funds selected by the customer; and • Endowments that provide payment of the face amount on the earlier of death or policy maturity.
Retirement Retirement income products that combine term-life protection with a lifetime income stream that commences at a predefined age; savings-oriented variable life products that provide a non-guaranteed return linked to an underlying investment portfolio of equity and fixed income funds selected by the customer; and endowments that provide payment of the face amount on the earlier of death or policy maturity.
(“Prudential Financial” or “PFI”), a global financial services leader and premier active global investment manager with approximately $1.512 trillion of assets under management as of December 31, 2024, has operations in the United States, Asia, Europe and Latin America.
(“Prudential Financial” or “PFI”), a global financial services leader and premier active global investment manager with approximately $1.609 trillion of assets under management as of December 31, 2025, has operations in the United States, Asia, Europe and Latin America.
Our organizational stability and robust institutional and retail businesses have helped attract and retain talent critical to delivering investment results for clients. Our private credit and commercial real estate lending businesses compete based on price, terms, execution and the strength of our relationship with the borrower. 4 Table of Contents U.S.
Our organizational stability and robust institutional and retail businesses have helped attract and retain talent critical to delivering investment results for clients. Our private credit and commercial real estate lending businesses compete based on price, terms, execution, and the strength of our relationship with the borrower.
U.S. State Insurance Holding Company Regulation We are subject to the insurance holding company laws in the states where our insurance subsidiaries are domiciled, which currently include New Jersey, Arizona and Indiana, or are treated as commercially domiciled, such as New York.
Insurance Operations Insurance Holding Company Regulation We are subject to the insurance holding company laws in the states where our insurance subsidiaries are domiciled, which currently include New Jersey, Arizona and Indiana, or are treated as commercially domiciled, such as New York.
We price our products based on: • An evaluation of the risks assumed and consideration of applicable risk management strategies, including hedging and reinsurance costs. • Assumptions regarding investment returns and contractholder behavior, including persistency, benefit utilization and the timing and efficiency of withdrawals for contracts with living benefit features, as well as other assumptions.
We price our products based on an evaluation of the risks assumed and consideration of applicable risk management strategies, including hedging and reinsurance costs, and assumptions regarding investment returns and contractholder behavior, including persistency, benefit utilization, and the timing and efficiency of withdrawals for contracts with living benefit features, as well as other assumptions. 5 Table of Contents Competition Institutional Retirement Strategies.
In September 2023, we, together with Warburg Pincus and a group of institutional investors, announced the launch of Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company.
In September 2023, we, together with Warburg Pincus and a group of institutional investors, launched Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company.
Universal Life —permanent coverage for life with the potential to accumulate policy cash value. • Our universal life policies offer flexibility in payment options and the potential to accumulate cash value in an account that earns interest based on a crediting rate determined by the Company, subject to contractual minimums. • Indexed universal life policies provide interest credited to the cash value that is linked to, but not an investment in, the performance of an external index subject to certain cap and participation rates as well as contractual minimums/maximums.
Universal Life Permanent coverage for life with the potential to accumulate policy cash value. • Universal life policies offer flexibility in payment options and the potential to accumulate cash value in an account that earns interest based on a crediting rate determined by the Company, subject to contractual minimums. • Indexed universal life policies provide interest credited to the cash value that is linked to, but not an investment in, the performance of an external index subject to certain provisions.
Earlier in his 25-year tenure at MetLife, Schmidt held various positions in the investment organization, including Head of MetLife’s Portfolio Management Unit, as well as its Structured Finance and Government Securities unit.
Earlier in his 25-year tenure at MetLife, he held various positions in the investment organization, including Head of MetLife’s Portfolio Management Unit, as well as its Structured Finance and Government Securities unit. 21 Table of Contents
In recent years we have experienced, and expect to continue to experience, extensive changes in the laws and regulations, and regulatory frameworks applicable to our businesses in the U.S. and internationally. We cannot predict how current or future initiatives will further impact existing laws, regulations and regulatory frameworks.
In recent years we have experienced, and expect to continue to experience, extensive changes in the laws and regulations, and regulatory frameworks applicable to our businesses. We cannot predict how current or future initiatives will further impact existing laws, regulations and regulatory frameworks. The primary regulatory frameworks applicable to the Company are described further below. U.S.
The information found on our website is not part of this or any other report filed with or furnished to the SEC. 32 Table of Contents Information About our Executive Officers The names of the executive officers of Prudential Financial and their respective ages and positions, as of February 13, 2025, were as follows: Name Age Title Other Public Directorships Charles F.
The information found on our website is not part of this or any other report filed with or furnished to the SEC. 19 Table of Contents Information About Our Executive Officers The names of the executive officers of Prudential Financial and their respective ages and positions, as of February 12, 2026, were as follows: Name Age Title Other Public Directorships Andrew F.
The insurance regulatory bodies for these businesses typically oversee such issues as: (1) company licensing; (2) the licensing of insurance sales staff; (3) insurance product approvals; (4) sales practices; (5) claims payment practices; (6) permissible investments; (7) solvency and capital adequacy; (8) insurance reserves; (9) privacy; and (10) anti-money laundering and financial crimes, among other items.
The insurance regulatory bodies for these businesses typically oversee such issues as: (1) company licensing; (2) the licensing of insurance sales staff; (3) insurance product approvals; (4) sales practices; (5) claims payment practices; (6) permissible investments; (7) solvency and capital adequacy (similar to the RBC ratios employed by U.S. insurance regulators); (8) insurance reserves; (9) privacy; and (10) anti-money laundering and financial crimes, among other items.
Our compensation program is an important component of these overall human resources policies. Equally important, we view compensation practices as a means for communicating our goals and standards of conduct and performance and for motivating and rewarding employees in relation to their achievements. We view retirement benefits as a key component of our compensation program because they encourage long-term service.
Equally important, we view compensation practices as a means for communicating our goals and standards of conduct and performance and for motivating and rewarding employees in relation to their achievements. We view retirement benefits as a key component of our compensation program because they encourage long-term service.
Businesses — Retirement Strategies Serves the retirement needs of both our institutional and individual customers. Our Institutional Retirement Strategies business develops and distributes retirement investment and income products and services to retirement plan sponsors in the public, private and not-for-profit sectors, both domestically and internationally, primarily within the United Kingdom.
Our Institutional Retirement Strategies business develops and distributes retirement investment and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors, both domestically and internationally, primarily within the United Kingdom.
Individual Retirement Strategies Our distribution efforts, which are supported by a network of internal and external wholesalers, are executed through a diverse group of distributors, including: • Third-party distribution through: ◦ Broker-dealers; ◦ Banks and wirehouses; ◦ Independent financial planners; and ◦ Independent Marketing Organizations (“IMO”) (specifically for SurePath ® and SurePath ® Income). • Financial professionals associated with Prudential Advisors, Prudential’s proprietary nationwide sales organization.
Individual Retirement Strategies. Our distribution efforts, which are supported by a network of internal and external wholesalers, are executed through a diverse group of distributors, including: • Third-party distribution through broker-dealers, banks, wirehouses, independent financial planners, and marketing organizations; and • Financial professionals associated with Prudential Advisors, Prudential’s proprietary nationwide advice organization. Revenues and Profitability Institutional Retirement Strategies.
Corporate Operations— Consists primarily of: (1) capital that is not deployed in any business segment; (2) investments not allocated to business segments; (3) capital debt; (4) our qualified and non-qualified pension and other employee benefit plans, after allocations to business segments; (5) corporate-level activities, after allocations to business segments, primarily including strategic expenditures, acquisition and disposition costs, corporate governance, corporate advertising, philanthropic activities, deferred compensation, and costs related to certain contingencies and legal matters; (6) expenses associated with the multi-year plan of programs that span across our businesses and the functional areas that support those businesses; (7) certain retained obligations relating to pre-demutualization policyholders; (8) impacts of risk management activities pursuant to our Risk Appetite Framework; (9) the foreign currency income hedging program used to hedge certain non-U.S. dollar denominated earnings in our International Businesses segment; (10) intercompany arrangements with our International Businesses and PGIM segments to translate certain non-U.S. dollar-denominated earnings at fixed currency exchange rates; (11) results of certain consolidated investment funds managed by our PGIM business; (12) Prudential Advisors, Prudential’s proprietary nationwide sales organization; (13) the Company’s share of earnings in Prismic as well as the invested assets supporting the contracts reinsured with Prismic Re via coinsurance with funds withheld arrangements and the offsetting funds withheld payable; and (14) transactions with and between other segments, including the elimination of intercompany transactions for consolidation purposes.
Results of the Closed Block, along with certain related assets and liabilities, are reported separately from the Divested and Run-off Businesses included in Corporate and Other. 10 Table of Contents Corporate Operations and Initiatives— Consists primarily of: (1) capital that is not deployed in any business segment; (2) investments not allocated to business segments; (3) capital debt; (4) our qualified and non-qualified pension and other employee benefit plans, after allocations to business segments; (5) corporate-level activities, after allocations to business segments, primarily including strategic expenditures, acquisition and disposition costs, corporate governance, corporate advertising, philanthropic activities, deferred compensation, and costs related to certain contingencies and legal matters; (6) expenses associated with the multi-year plan of programs that span across our businesses and the functional areas that support those businesses; (7) certain retained obligations relating to pre-demutualization policyholders; (8) impacts of risk management activities pursuant to our Risk Appetite Framework; (9) the foreign currency income hedging program used to hedge certain non-U.S. dollar denominated earnings in our International Businesses segment; (10) intercompany arrangements with our International Businesses and PGIM segments to translate certain non-U.S. dollar-denominated earnings at fixed currency exchange rates; (11) certain funding agreement issuances used in a spread lending capacity; (12) the consolidation of certain entities, including investment funds managed by our PGIM business, where the Company’s segments have collectively obtained controlling financial interest; (13) Prudential Advisors, Prudential’s proprietary nationwide advice organization; (14) the Company’s share of earnings in Prismic as well as the invested assets supporting the contracts reinsured with Prismic Re via coinsurance with funds withheld arrangements and the offsetting funds withheld payable; and (15) transactions with and between other segments, including the elimination of intercompany transactions for consolidation purposes.
Our profitability is substantially impacted by our ability to appropriately price our products. We price our products based on pricing models that consider the investment environment and our risk, fees, expenses, profitability targets, and assumptions for mortality and potential for early retirement. These assumptions may be less predictable in certain markets.
We price our products based on pricing models that consider the investment environment and our risk, fees, expenses, profitability targets, and assumptions for mortality and potential for early retirement. These assumptions may be less predictable in certain markets. Individual Retirement Strategies.
In addition, we set underwriting limits together with each operation’s reinsurers. • Achieving a targeted rate of return for each operation, while taking into account the country-specific costs of capital, risks, and competitive environment. The profitability of our products is impacted by differences between actual mortality, morbidity, expense, and investment experience and the related assumptions used in pricing these policies.
We also price our products based on achieving a targeted rate of return for each operation while taking into account the country-specific costs of capital, risks, and competitive environment. The profitability of our products is impacted by differences between actual mortality, morbidity, expense, and investment experience and the related assumptions used in pricing these policies.
Short-term disability generally provides weekly benefits for three to six months while long-term disability benefits are typically paid monthly, following a waiting period, and generally continue until the insured either returns to work or reaches normal retirement age. • Other supplemental health solutions, including accident, critical illness and hospital indemnity plans which help offset expenses associated with medical events. • Plan administration and absence management services.
Short-term disability generally provides weekly benefits for three to six months while long-term disability benefits are typically paid monthly, and generally continue until the insured either returns to work or reaches normal retirement age. Supplemental Health Solutions Accident, critical illness and hospital indemnity plans that help offset expenses associated with medical events.
In some cases, our international investment operations are also subject to U.S. securities laws and regulations. Derivatives Regulation Prudential Financial and our subsidiaries use derivatives for various purposes, including hedging interest rate, foreign currency, equity market and other exposures. Dodd-Frank established a framework for regulation of the over-the-counter derivatives markets.
In some cases, our international investment operations are also subject to U.S. securities laws and regulations. Derivatives Regulation Prudential Financial and our subsidiaries use derivatives for various purposes, including hedging interest rate, foreign currency, equity market and other exposures.
Human capital is discussed by management at every Board meeting and, at least once per year, the Board devotes time to discuss human capital at each business and functional leadership level across the Company.
Human capital is discussed by management at every Board meeting and, at least once per year, the Board devotes time to discuss human capital at each business and functional leadership level across the Company. Attracting Employees Prudential is focused on attracting top-tier talent.
BUSINESS Table of Contents Page Overview 2 PGIM 3 Retirement Strategies 5 Group Insurance 7 Individual Life 9 International Businesses 11 Corporate and Other 13 Closed Block Division 14 Seasonality of Key Financial Items 15 Reinsurance 16 Intangible and Intellectual Property 17 Regulation 18 Human Capital Resources 31 Available Information 32 Information About our Executive Officers 33 1 Table of Contents Overview Prudential Financial, Inc.
BUSINESS Table of Contents Page Overview 2 PGIM 3 Retirement Strategies 4 Group Insurance 6 Individual Life 7 International Businesses 9 Corporate and Other 10 Closed Block Division 11 Seasonality of Key Financial Items 12 Intangible and Intellectual Property 12 Regulation 13 Human Capital Resources 18 Available Information 19 Information About our Executive Officers 20 1 Table of Contents Overview Prudential Financial, Inc.
We believe the pension risk transfer market continues to offer attractive opportunities that are aligned with our expertise. Individual Retirement Strategies We are among the industry’s largest providers of individual annuities and we compete with other providers of retirement savings and accumulation products, including large, well-established insurance and financial services companies, and private equity firms.
We are a leader in providing innovative pension risk management solutions to plan sponsors, and we believe the pension risk transfer market continues to offer attractive opportunities that are aligned with our expertise. Individual Retirement Strategies. We compete with other providers of retirement savings and accumulation products, including large, well-established insurance and financial services companies and private equity firms.
When they have the development tools and support they need to do their best work, the Company benefits. The talent practices and platforms we utilize have been designed to ensure all employees have the resources necessary to enhance their skills. Available resources include, among other things, on-demand learning content, coaching circles and live learning events.
The talent practices and platforms we utilize have been designed to ensure all employees have the resources necessary to enhance their skills. Available resources include, among other things, on-demand learning content, coaching circles, and live learning events.
The results of the Closed Block, along with certain related assets and liabilities, comprise the Closed Block division, which is treated as a divested business under our definition of adjusted operating income and reported separately from the other Divested and Run-off Businesses that are included in our Corporate and Other operations.
See Note 16 to the Consolidated Financial Statements for additional details regarding the Closed Block division. 11 Table of Contents The results of the Closed Block, along with certain related assets and liabilities, comprise the Closed Block division, which is treated as a divested business under our definition of adjusted operating income and reported separately from the other Divested and Run-off Businesses that are included in our Corporate and Other operations.
Insurance Operations State Insurance Regulation State insurance laws regulate all aspects of our U.S. insurance businesses. State insurance departments in the fifty states, the District of Columbia and various U.S. territories and possessions monitor our insurance operations. PICA is domiciled in New Jersey and its principal insurance regulatory authority is the NJDOBI.
State Insurance Regulation State insurance laws regulate every aspect of our U.S. insurance operations. The insurance departments of all fifty states, the District of Columbia, and various U.S. territories and possessions oversee our activities. PICA is domiciled in New Jersey, with its primary regulatory authority being NJDOBI.
Competition We compete with many large, well-established life and health insurance providers in mature markets. Our primary competitive advantages include brand recognition, financial strength and a diverse range of product offerings that help employers create comprehensive benefits programs that support the well-being of their employees. Additionally, we emphasize customer relationships and overall experience.
Our primary competitive advantages include brand recognition, financial strength and a diverse range of product offerings that help employers create comprehensive benefits programs that support the well-being of their employees. Additionally, we emphasize customer relationships and overall experience.
We price our products based on: • Underwriting practices and rating systems that consider company, industry and/or other experience. • The expected pay-out of benefits and other costs that we calculate using assumptions for mortality and morbidity rates, interest rates and expenses, depending upon the specific product features.
We price our products based on underwriting practices and rating systems that consider company, industry and/or other experience, along with the expected benefit payouts and other costs calculated using assumptions for mortality and morbidity rates, interest rates, and expenses based on specific product features.
Investment Products —primarily represented by U.S. dollar- and yen-denominated investment contracts sold by our operations in Japan and include: • Single-pay products where credited interest rates are guaranteed for a specified period of time and impose a market value adjustment if the contract is not held to maturity. • Variable and indexed annuities that provide a non-guaranteed return or a return based on a selected index with performance subject to certain contractual maximums and minimums providing downside protection.
Investment Contracts Single-pay products sold predominantly in Japan where credited interest rates are guaranteed for a specified period of time and impose a market value adjustment if the contract is not held to maturity; and variable and indexed annuities that provide a non-guaranteed return or a return based on a selected index with performance subject to certain provisions.
Privacy, Data Protection and Cybersecurity Regulation We are subject to U.S. federal laws, regulations and directives that require financial institutions and other businesses to protect the security and confidentiality of personal, proprietary, or other non-public information, including intellectual property, health-related, and customer information, which they may handle and process, and to notify their customers and other appropriate individuals of their policies and practices relating to the collection, use and disclosure of such information.
Privacy, Data Protection and Cybersecurity Regulation We are subject to U.S. federal and state laws, regulations, and directives that require (1) financial institutions and other businesses to protect the confidentiality, integrity, and availability of personal, proprietary, and other non-public information, including intellectual property, health-related and customer information; and (2) disclosure to customers and other appropriate individuals regarding the collection, disclosure and use of such information.
He also held various positions at John Hancock, First Union National Bank, and Bank of America. Timothy L. Schmidt was elected Senior Vice President and Chief Investment Officer of Prudential Financial and PICA in December 2018. He chairs the Senior Asset Liability Committee and serves as Prudential’s representative to the Institute of International Finance’s Committee on Asset and Investment Management.
Schmidt was elected Senior Vice President and Chief Investment Officer of Prudential Financial and PICA in December 2018. He chairs the Senior Asset Liability Committee and serves as Prudential’s representative to the Institute of International Finance’s Committee on Asset and Investment Management.
Human Capital Resources As of December 31, 2024, our employee population was comprised as set forth in the tables below: Global Employee Profile Region Number of Employees(1) Full-time Equivalent Positions(2) U.S. 14,087 13,868 Non-U.S. 24,109 24,068 Total 38,196 37,936 __________ (1) Excludes independent contractors and other individuals classified as non-employees in their respective jurisdictions.
Human Capital Resources As of December 31, 2025, our employee population was comprised as set forth in the tables below: Global Employee Profile Region Number of Employees(1) Full-time Equivalent Positions(2) U.S. 13,879 13,687 Non-U.S. 22,945 22,920 Total 36,824 36,607 __________ (1) Excludes independent contractors and other individuals classified as non-employees in their respective jurisdictions.
Term Life —coverage for a specified number of years with a guaranteed tax-advantaged death benefit. • Most of our term life policies offer an income tax-free death benefit and guaranteed premiums that will stay the same during the level-premium period. • Most of our term life policies also offer a conversion option that allows the policyholder to convert the policy into a permanent policy that can potentially cover the insured for life.
Term Life Coverage for a specified number of years with a guaranteed death benefit. Most of our term life policies offer an income tax-free death benefit and guaranteed premiums that will stay the same during the level-premium period.
International and Global Regulatory Initiatives The Group of Twenty nations (“G20”), the Financial Stability Board (“FSB”) and related bodies have developed proposals to address issues such as financial group supervision, capital and solvency standards, systemic risk, corporate governance including executive compensation, climate-related financial risks, and a host of related issues.
See “Income Taxes” in Note 2 to the Consolidated Financial Statements and Note 17 to the Consolidated Financial Statements for a description of the Company’s tax position and the impact of certain tax regulation. 17 Table of Contents International and Global Regulatory Initiatives The Group of Twenty nations (“G20”), the Financial Stability Board (“FSB”) and related bodies have developed proposals to address issues such as financial group supervision, capital and solvency standards, systemic risk, corporate governance including executive compensation, climate-related financial risks, and a host of related issues.
We believe our competitive advantage lies primarily in our innovative product features and our risk management strategies as well as brand recognition, financial strength, the breadth of our distribution platform and our customer service capabilities.
We believe our competitive advantage lies primarily in our innovative product features and our risk management strategies as well as brand recognition, financial strength, the breadth of our distribution platform, and our customer service capabilities. We periodically adjust product offerings, prices, and features based on the market and our strategy, with a goal of achieving customer and enterprise value.
The SEC, FINRA, the Commodity Futures Trading Commission (“CFTC”), National Futures Association (“NFA”), state securities commissions, state banking and insurance departments, DOL and the Department of the Treasury are the principal U.S. regulators that regulate our retirement and investment management operations. In some cases, our domestic U.S. investment operations are also subject to non-U.S. securities laws and regulations.
The SEC, the Financial Industry Regulatory Authority (“FINRA”), the Commodity Futures Trading Commission (“CFTC”), National Futures Association (“NFA”), state securities commissions, state banking and insurance departments, DOL and the Department of the Treasury are the principal U.S. regulators that regulate our U.S. retirement and investment management operations.
We are permitted under the Plan of Reorganization, with the prior consent of the Commissioner of Banking and Insurance for the State of New Jersey, to enter into agreements to transfer all or any part of the risks underlying the Closed Block policies. 14 Table of Contents Seasonality of Key Financial Items The following chart summarizes our key areas of seasonality in our results of operations: First Quarter Second Quarter Third Quarter Fourth Quarter PGIM Higher compensation expense(1) Individual Life Lowest underwriting gains Highest underwriting gains International Businesses Highest premiums Lower premiums Lowest premiums Corporate & Other Higher compensation expense(1) All Businesses Impact of annual assumption updates(2) Higher expenses(3) __________ (1) Long-term compensation expense for retirement eligible employees is recognized when awards are granted, typically in the first quarter of each year.
Seasonality of Key Financial Items The following chart summarizes our key areas of seasonality in our results of operations: First Quarter Second Quarter Third Quarter Fourth Quarter PGIM Higher compensation expense(1) Lower compensation expense Lower compensation expense Lower compensation expense Group Insurance Lowest underwriting gains Higher underwriting gains Higher underwriting gains Individual Life Lowest underwriting gains Higher underwriting gains Highest underwriting gains Lower underwriting gains International Businesses Highest premiums Lower premiums Lower premiums Lowest premiums Corporate & Other Higher compensation expense(1) Lower expenses Lower expenses Higher expenses All Businesses Impact of annual assumption updates(2) Higher expenses(3) __________ (1) Long-term compensation expense for retirement eligible employees is recognized when awards are granted, typically in the first quarter of each year.
Competition Institutional Retirement Strategies We compete with other large, well-established insurance companies, asset managers and diversified financial institutions primarily based on: • Pricing. • Structuring capabilities. • Our ability to offer innovative product solutions and successfully execute large-scale transactions. We are a leader in providing innovative pension risk management solutions to plan sponsors and in the stable value market.
We compete with other large, well-established insurance companies, asset managers and diversified financial institutions primarily based on pricing, structuring capabilities, and our ability to offer innovative product solutions and successfully execute large-scale transactions.
Previously, he served as Executive Vice President and Head of U.S. Businesses from December 2019 to December 2022. He also served as CEO of Prudential’s Workplace Solutions 33 Table of Contents Group, which consisted of Prudential Retirement and Prudential Group Insurance. Before joining Prudential in 2011, he served as Senior Vice President at CareFirst BlueCross BlueShield.
Businesses from December 2019 to December 2022. He also served as CEO of Prudential’s Workplace Solutions Group, which consisted of Prudential Retirement and Prudential Group Insurance. Prior to joining Prudential in 2011, he served as Senior Vice President at CareFirst BlueCross BlueShield. Previously, he spent eight years at Cigna where he held a number of senior leadership positions.
She also held various positions within Prudential, including serving as Chief Financial Officer for Prudential’s Individual Annuities and Individual Life Insurance businesses. Ms. Frias joined Prudential in 1997. Andrew F. Sullivan was elected Executive Vice President and Head of International Businesses and Global Investment Management for Prudential Financial and PICA in January 2023.
She also held various positions within Prudential, including serving as Chief Financial Officer for Prudential’s Individual Annuities and Individual Life Insurance businesses. Ms. Frias joined Prudential in 1997. Jacques P. Chappuis was elected President and Chief Executive Officer of PGIM in March 2025.
These products are typically used by large corporations to fund deferred compensation plans and benefit plans for retired employees. Group Disability Insurance & Other • Short-term and long-term group disability insurance, which protect against loss of wages due to illness or injury.
These products are typically used by large corporations to fund deferred compensation plans and retiree benefit plans. Group Disability Insurance & Other Short-term and Long-term Disability Provide protection against loss of wages due to illnesses or injury. Benefits are payable after satisfying a waiting period.
Federal and State Securities Regulation Affecting Insurance Operations Our variable life insurance, variable annuity and mutual fund products generally are “securities” within the meaning of federal securities laws and may be required to be registered under the federal securities laws and subject to regulation by the SEC and the Financial Industry Regulatory Authority (“FINRA”).
Federal and State Securities Regulation Affecting Insurance Operations Our variable life insurance, variable annuity and mutual fund products generally are considered “securities” and therefore may be required to be registered and subject to regulation and reporting requirements under federal and/or state securities laws.
Our profitability is substantially impacted by our ability to appropriately price our products. Sales and surrenders of non-yen denominated products in Japan can be sensitive to foreign currency relationships which are impacted by, among other things, the comparative interest rates in their respective countries.
Sales and surrenders of non-yen denominated products in Japan can be sensitive to foreign currency relationships which are impacted by, among other things, the comparative interest rates in their respective countries. We price our products based on local regulation, which is generally more restrictive than U.S. insurance regulation for product offerings, pricing, and structure.
See Note 1 to the Consolidated Financial Statements for additional information regarding this sale. Retirement Strategies Ceded/Assumed Institutional Retirement Strategies Ceded reinsurance of certain structured settlement annuity contracts issued by PICA. Assumed reinsurance as part of our international reinsurance pension risk transfer products.
Reinsurance Institutional Retirement Strategies. We use ceded reinsurance on certain structured settlement contracts and assumed reinsurance as part of our international reinsurance pension risk transfer products. See Note 15 to the Consolidated Financial Statements for additional details regarding the Company’s material reinsurance transactions. Individual Retirement Strategies .
We periodically adjust product offerings, prices and features based on the market and our strategy, with a goal of achieving customer and enterprise value. 12 Table of Contents Corporate and Other Includes corporate items and initiatives that are not allocated to our business segments, certain businesses whose financial results and operations are not considered significant, and businesses that have been or will be divested or placed in wind-down status, except for the Closed Block.
Corporate and Other Includes corporate operations and initiatives that are not allocated to our business segments, certain businesses whose financial results and operations are not considered significant, and businesses that have been or will be divested or placed in wind-down status, except for the Closed Block.
In conjunction with this announcement, we made an initial equity investment through our Corporate and Other operations of approximately $200 million, equivalent to a 20% interest, in Prismic Life Holding Company LP (“Prismic”), the Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re.
Through our Corporate and Other operations, we own an approximate 20% equity interest in Prismic Life Holding Company LP (“Prismic”), the Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re and Prismic Life Reinsurance International, Ltd. (“Prismic Re International”).
State insurance authorities have broad administrative powers with respect to all aspects of the insurance business including: (1) licensing to transact business; (2) licensing agents; (3) admittance of assets to statutory surplus; (4) regulating premium rates for certain insurance products; (5) approving policy forms; (6) regulating unfair trade and claims practices; (7) establishing reserve requirements and solvency standards; (8) fixing maximum interest rates on life insurance policy loans and minimum accumulation or surrender values; (9) regulating the type, amounts and valuations of investments permitted; (10) regulating reinsurance transactions, including the role of captive reinsurers; and (11) other matters.
State insurance authorities possess broad administrative powers concerning all aspects of insurance business, including, among other things: (1) licensing for business operations; (2) agent licensing; (3) asset admittance to statutory surplus; (4) regulation of premium rates for specific products; (5) policy form approvals; (6) oversight of unfair trade and claims practices; (7) establishment of reserve requirements and solvency standards; (8) determination of maximum interest rates on life insurance policy loans and minimum accumulation or surrender values; (9) regulation of permissible investments by type, amount, and valuation; and (10) oversight of reinsurance transactions, including captive reinsurers.
Index strategies credit interest to the cash value that is linked to, but not an investment in, the performance of an external index, subject to certain parameters such as cap, step, participation, and buffer rates, as well as contractual minimums/maximums.
Index strategies credit interest to the cash value that is linked to, but not an investment in, the performance of an external index, subject to certain provisions.
Our profitability is substantially impacted by our ability to appropriately price our products. We price our products based on our assumptions of future: • Mortality and morbidity; • Policyholder behavior; • Interest rates and investment returns; • Expenses; • Premium payment patterns; • Performance and cost of ceded reinsurance; • Separate account fund performance; and • Product-generated tax deductions.
We price our products based on our assumptions of future mortality and morbidity, policyholder behavior, interest rates and investment returns, expenses, premium payment patterns, performance and cost of ceded reinsurance, separate account fund performance, and product-generated tax deductions. Competition We compete with many large, well-established life insurance companies in a mature market.
In some jurisdictions, for certain products, regulators will also mandate premium rates (or components of pricing) or minimum guaranteed interest rates. Periodic examinations of insurance company books and records, financial reporting requirements, market conduct examinations and policy filing requirements are among the techniques used by these regulators to supervise our non-U.S. insurance businesses.
In some jurisdictions, for certain products, regulators will also mandate premium rates (or components of pricing) or minimum guaranteed interest rates. Regulators employ methods such as periodic audits of insurance company books and records, financial reporting obligations, market conduct examinations, and policy submission requirements to oversee our international insurance operations.
The application of existing law and introduction of new or revised laws and regulations may require changes in our operations, increased compliance costs and reduce benefits from our adoption of artificial intelligence technologies. 27 Table of Contents Anti-Money Laundering and Anti-Bribery Laws Our businesses are subject to various anti-money laundering and financial transparency laws and regulations that seek to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.
Anti-Money Laundering and Anti-Bribery Laws Our businesses are subject to various anti-money laundering and financial transparency laws and regulations that seek to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.
Products We offer a variety of products, consisting of base contracts and riders (such as our accelerated death benefit rider), that serve different protection needs and goals, including: Variable Life —permanent coverage for life with potential to accumulate policy cash value based on underlying investment options. • Our variable life policies offer flexibility in payment options and the potential to accumulate cash value through a suite of underlying investment options or a fixed rate option. • Indexed variable life policies provide index-linked investment options (index strategies) in addition to a suite of underlying investment options or a fixed rate option.
Products The primary components of our material product types are described as follows: 7 Table of Contents Variable Life Permanent coverage for life with potential to accumulate policy cash value based on underlying investment options. • Variable life policies offer flexibility in payment options and the potential to accumulate cash value through a suite of underlying investment options or a fixed rate option. • Indexed variable life policies provide index-linked investment options (index strategies) in addition to a suite of underlying investment options or a fixed rate option.
Stable Value : products where our obligations are backed by our general account, and where we bear some or all of the investment and asset-liability management risk, depending on the product. • Investment-only products—for use in institutional capital markets and qualified plans primarily including fee-based wraps through which customers’ funds are held in a client-owned trust and investment results pass through to the customer.
Investment-Only Stable Value Wraps Investment-only products for use in institutional capital markets and qualified plans, primarily including fee-based wraps through which customer funds are held in a client-owned trust and investment results are passed through to the customer.
In addition, we have subsidiaries that are investment advisers registered under the Investment Advisers Act of 1940, as amended. Our third-party advisors and licensed sales professionals within Prudential Advisors and other employees, insofar as they sell products that are securities, are subject to the Exchange Act and to examination requirements and regulation by the SEC, FINRA and state securities commissioners.
Our employees, as well as third-party advisors and licensed sales professionals within Prudential Advisors, insofar as they sell products that are securities, are subject to the Exchange Act and to examination requirements and regulation by the SEC, FINRA and state securities commissioners. Regulation and examination requirements also extend to various Prudential entities that employ or control those individuals.
Intangible and Intellectual Property We capture and protect the innovation in our financial services products by applying for federal business method patents and implementing copyright and trade secret controls, as appropriate.
(2) Impact of annual reviews and update of assumptions and other refinements. Excludes PGIM. (3) Expenses are typically higher than the quarterly average in the fourth quarter. Intangible and Intellectual Property We capture and protect the innovation in our financial services products by applying for federal business method patents and implementing copyright and trade secret controls, as appropriate.
To the extent permitted by local regulation, we base premiums and policy charges for our products on expected death and morbidity benefits, surrender benefits, expenses, required reserves, interest rates, investment returns, policy persistency and premium payment patterns. In setting underwriting limits, we also consider local industry standards to prevent adverse selection and to stay abreast of industry trends.
Each international insurance operation has its own underwriting department that employs variations of U.S. practices in underwriting individual policy risks. To the extent permitted by local regulation, we base premiums and policy charges for our products on expected death and morbidity benefits, surrender benefits, expenses, required reserves, interest rates, investment returns, policy persistency, and premium payment patterns.
Marketing and Distribution Our distribution efforts, which are supported by a network of internal and external wholesalers, are executed through a diverse group of distributors, including: • Third-party distribution through: ◦ Independent brokers; ◦ Banks and wirehouses; and ◦ General agencies and producer groups. • Financial professionals associated with Prudential Advisors, Prudential’s proprietary nationwide sales organization. • Trusted Partnerships, via embedded digital solutions through: ◦ Credit Unions; ◦ Mortgage originators; ◦ Affinities; and ◦ Digital marketing affiliates/paid media efforts. 9 Table of Contents Individual Life (Continued) Revenues and Profitability Our revenues primarily come in the form of: • Premiums that are fixed in accordance with the terms of the policies. • Policy charges and fee income consisting of in-force policy- and/or asset-based fees. • Investment income (which contributes to the net spread over interest credited on our products and related expenses).
Marketing and Distribution Our distribution efforts, which are supported by a network of internal and external wholesalers, are executed through a diverse group of distributors, including: • Third-party distribution through independent brokers, banks, wirehouses, general agencies and producer groups; • Financial professionals associated with Prudential Advisors, Prudential’s proprietary nationwide advice organization; and • Trusted partnerships, via embedded digital solutions through credit unions, mortgage originators, affinities, and digital marketing affiliates/paid media efforts.
The ability to sell through multiple and complementary distribution channels is also a competitive advantage; however, competition for sales personnel, as well as access to third-party distribution channels, is intense. In Brazil, while life insurance penetration remains relatively low, the life insurance market has exhibited continuous growth driven by an increased awareness of life insurance needs.
The ability to sell through multiple and complementary distribution channels is also a competitive advantage; however, competition for sales personnel, as well as access to third-party distribution channels, is intense. The life insurance market in Brazil continues to grow steadily, driven by rising middle-class income and increasing demand for protection and retirement solutions.
Eligible U.S. employees are also required to participate in a suite of training courses on critical topics including, among other things, our code of conduct, security and safety, social media standards and digital communication. 31 Table of Contents Retaining Employees We believe that our rigorous talent acquisition process, provision of opportunities for professional enrichment and advancement throughout our employees’ careers, and our diverse and inclusive culture will enhance our ability to retain employees.
Eligible U.S. employees are also required to participate in a suite of training courses on critical topics including, among other things, our code of conduct, security and safety, social media standards, and digital communication.
Marketing and Distribution We primarily distribute products through a proprietary sales force organized around market segments in conjunction with employee benefit brokers and consultants.
Marketing and Distribution We primarily distribute our products through a proprietary sales force organized around market segments in conjunction with employee benefit brokers and consultants across the U.S. to institutional employers, professional associations, and affinity 6 Table of Contents groups to enhance employee membership benefit plans.
We expect the increased reinsurance capacity that this partnership provides to support our vision of expanding access to investing, insurance, and retirement security for people around the world. As this investment is accounted for under the equity method, both Prismic and Prismic Re are considered related parties.
We expect the increased reinsurance capacity that this partnership provides to support our vision of expanding access to investing, insurance, and retirement security for people around the world. See Note 15 to the Consolidated Financial Statements for additional information regarding our transactions with Prismic Re and Prismic Re International.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. 2 Table of Contents PGIM Provides investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies, to institutional and retail clients globally, as well as our insurance and retirement businesses.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. 2 Table of Contents PGIM PGIM provides a comprehensive array of investment management solutions to institutional investors, retail clients, and our affiliated insurance and retirement businesses.
Fiduciary Rules and Other Standards of Care The Company and our distributors are subject to rules regarding the standard of care applicable to sales of our products and the provision of advice to our customers, including, among others, the DOL fiduciary rule, the Securities and Exchange Commission (“SEC”) Regulation Best Interest, and the National Association of Insurance Commissioners (“NAIC”) and Japanese Financial Services Agency (“FSA”) Standard of Care regulations.
Fiduciary Rules and Other Standards of Care The Company and our distributors are subject to rules regarding the standard of care applicable to sales of our products and the provision of advice to our customers, including, among others, the U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOperational Risk Types • People: Internal fraud, breaches of employment law, unauthorized activities; loss or lack of key personnel, inadequate training; inadequate supervision. • Processes: Processing failure; failure to safeguard or retain documents/records; errors in valuation/pricing models and processes; project management or execution failures; improper sales practices; improper administration of our products; failure to adhere to clients’ investment guidelines. • Technology: Failures during the development and implementation of new systems; systems failures. • External Events: External crime; cyber-attack; outsourcing risk; vendor risk; natural and other disasters; changes in laws/regulations. 40 Table of Contents • Legal and Regulatory: Legal and regulatory compliance failures.
Biggest changeFor a discussion of the Company’s liquidity and sources and uses of liquidity, including information about legal and regulatory limits on the ability of our subsidiaries to pay dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity.” 27 Table of Contents Operational Risk Operational Risk Types The types of operational risks that may impact the Company include, among others, the following: • People: Internal fraud, breaches of employment law, unauthorized activities; loss or lack of key personnel, inadequate training; inadequate supervision. • Processes: Processing failure; failure to safeguard or retain documents/records; errors in valuation/pricing models and processes; project management or execution failures; improper sales practices; improper administration of our products; failure to adhere to clients’ investment guidelines. • Technology: Failures during the development and implementation of new systems; systems failures. • External Events: External crime; cyber-attack; outsourcing risk; vendor risk; natural and other disasters; changes in laws/regulations. • Legal and Regulatory: Legal and regulatory compliance failures.
We are subject to the risk that the integrity, confidentiality, or availability of this information may be compromised, including as a result of an information security breach described above, or that such events occurring at third parties may not be disclosed to us in a timely manner.
We are subject to the risk that the integrity, confidentiality, or availability of this information may be compromised, including as a result of an information security breach as described above, or that such events occurring at third parties may not be disclosed to us in a timely manner.
Even if the malicious actors are discovered quickly, it could take considerable additional time for us to determine the scope of compromise, and the extent, amount, and type of information compromised, if any, and to fully contain the malicious actors, remediate and recover. • Employees, third-party service providers or other individuals purportedly acting on behalf of the Company may fail (as a result of human error or misconduct) to comply with applicable policies and procedures, and/or circumvent controls or safeguards for unauthorized purposes.
Even if the malicious actors are discovered quickly, it could take considerable additional time for us to determine the scope of compromise, and the extent, amount, and type of information compromised, if any, and to fully contain the malicious actors, remediate and recover. • Employees, third-party service providers or other individuals purportedly acting on behalf of the Company may fail (as a result of human error or misconduct) to comply with applicable policies and procedures, and/or intentionally circumvent controls or safeguards for unauthorized purposes.
The costs associated with potential changes with respect to these independent contractor and franchisee classifications have impacted our results previously and could have a material adverse effect on our business in the future. Although we distribute our products through a wide variety of distribution channels, we do maintain relationships with certain key distributors.
The costs associated with potential changes with respect to these independent contractor and franchisee classifications have impacted our results previously and could have a material adverse effect on our business in the future. Although we distribute our products through a wide variety of distribution channels, we maintain relationships with certain key distributors.
Because the Generative AI technology is so new, some of the potential risks of Generative AI are currently unknowable; however, specific risks relating to AI and Generative AI could include, among others: • Reputational Damage: Malicious actors could use AI to create deepfakes of the Company's executives or manipulate financial documents, leading to loss of customer trust and significant reputational damage.
Because AI technology is so new, some of the potential risks of AI are currently unknowable; however, specific risks relating to AI could include, among others: • Reputational Damage: Malicious actors could use AI to create deepfakes of the Company's executives or manipulate financial documents, leading to loss of customer trust and significant reputational damage.
AI technologies offer potential benefits in areas such as customer service personalization and process automation, and we expect to use AI and Generative AI to help deliver products and services and support critical functions. We also expect third parties on whom we rely to do the same.
AI technologies offer potential benefits in areas such as customer service personalization and process automation, and we expect to use AI to help deliver products and services and support critical functions. We also expect third parties on whom we rely to do the same.
Our insurance products protect customers against their potential risk of loss by transferring those risks to the Company, where those risks can be managed more efficiently through pooling and diversification over a larger number of independent exposures. During this transfer process, we assume the risk that actual losses experienced in our insurance products deviates significantly from what we expect.
Our insurance products protect customers against their potential risk of loss by transferring those risks to the Company, where those risks can be managed more efficiently through pooling and diversification over a larger number of independent exposures. During this transfer process, we assume the risk that actual losses experienced in our insurance products deviate significantly from what we expect.
Our Company is subject to counterparty risk, which is the risk that the counterparty to a transaction could default or deteriorate in creditworthiness before or at the final settlement of a transaction .
The Company is subject to counterparty risk, which is the risk that the counterparty to a transaction could default or deteriorate in creditworthiness before or at the final settlement of a transaction .
Any compromise or perceived compromise of the security of our systems or data or of that of one of our vendors could damage our reputation, cause the deterioration or termination of relationships with, among others, customers, distributors, government-run health insurance exchanges, marketing partners and insurance carriers, reduce demand for our services, result in the loss of business opportunities, and subject us to significant liability and expense as well as regulatory action, penalties and lawsuits, which would harm our business, operating results and financial condition.
Compromise or perceived compromise of the security of our systems or data or of that of one of our vendors has damaged and could damage our reputation, cause the deterioration or termination of relationships with, among others, customers, distributors, government-run health insurance exchanges, marketing partners and insurance carriers, reduce demand for our services, result in the loss of business opportunities, and subject us to significant liability and expense as well as regulatory action, penalties and lawsuits, any or all of which would harm our business, operating results and financial condition.
Policyholder behavior risk arises through product features which provide some degree of choice or flexibility for the policyholder, which can impact the amount and/or timing of claims. Such choices include surrender, lapse, partial withdrawal, policy loan utilization, and premium payment rates for contracts with flexible premiums.
This risk arises through product features which provide some degree of choice or flexibility for the policyholder, which can impact the amount and/or timing of claims. Such choices include surrender, lapse, partial withdrawal, policy loan utilization, and premium payment rates for contracts with flexible premiums.
Risks related to cyber-attack arise in various areas, including: 41 Table of Contents • Protecting sensitive information is a constant need; however, some risks cannot be fully mitigated using administrative, technological, or physical controls, or otherwise. • Employees, customers, third-party service providers on whom we rely, or other users of our systems continue to be a key avenue for malicious external parties to gain access to our network, systems, data, or that of our customers.
Risks related to cyber-attack arise in various areas, including: • Protecting sensitive information is a constant need; however, some risks cannot be fully mitigated using administrative, technological, or physical controls, or otherwise. • Employees, customers, third-party service providers on whom we rely, or other users of our systems continue to be a key avenue for malicious external parties to gain access to our network, systems, data, or that of our customers.
Our sales could be adversely affected if we are unable to attract, retain or motivate third-party distributing firms or if we do not adequately provide support, training, compensation, and education to this sales network regarding our products, or if our products are not competitive and not appropriately aligned with consumer needs.
Our sales could be adversely affected if we are unable to attract, retain or motivate captive sales agents or third-party distributing firms or if we do not adequately provide support, training, compensation, and education to this sales network regarding our products, or if our products are not competitive and not appropriately aligned with consumer needs.
These investigations and examinations have resulted in enforcement actions against us and companies in our industry and brokers and agents marketing and selling those companies’ products. Enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products.
Regulatory investigations and examinations have resulted in enforcement actions against us and companies in our industry and brokers and agents marketing and selling those companies’ products. Enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products.
Our competitors may also adopt AI or Generative AI more quickly or more effectively than we do, which could cause competitive harm.
Our competitors may also adopt AI more quickly or more effectively than we do, which could cause competitive harm.
Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain products. ◦ Sales of our investment-based and asset management products and services may decline, and lapses and surrenders of certain insurance products and withdrawals of assets from investment products may increase if a market downturn, increased market volatility or other market conditions result in customers becoming dissatisfied with their investments or products. ◦ Changes in our discount rate, expected rate of return, life expectancy, health care cost and assumptions regarding compensation increases for our pension and other postretirement benefit plans may result in increased expenses and reduce our profitability. • Our reputation may be adversely impacted if any of the risks described in this section are realized.
Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain products. ◦ Sales of our investment-based and asset management products and services may decline, and lapses and surrenders of certain insurance products and withdrawals of assets from investment products may increase if a market downturn, increased market volatility or other market conditions result in customers becoming dissatisfied with their investments or products. ◦ Changes in our discount rate, expected rate of return, life expectancy, healthcare costs and assumptions regarding compensation increases for our pension and other postretirement benefit plans may result in increased expenses and reduce our profitability. • Our reputation may be adversely impacted if any of the risks described in this section are realized.
Market conditions resulting in reductions in the value of assets we manage has an adverse effect on the revenues and profitability of our investment management business, which depends on fees related primarily to the value of assets under management, and could decrease the value of our strategic investments.
Market conditions resulting in reductions in the value of assets we manage have an adverse effect on the revenues and profitability of our investment management business, which depends on fees related primarily to the value of assets under management, and could decrease the value of our strategic investments.
For a discussion of our hedging program and the impact of foreign currency exchange rates on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Foreign Currency Exchange Rates.” Guarantees within certain of our products, in particular our variable annuities and to a lesser extent certain individual life and international insurance products, are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position.
For a discussion of our hedging program and the impact of foreign currency exchange rates on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—External and Economic Factors—Impact of Foreign Currency Exchange Rates.” Guarantees within certain of our products, in particular our variable annuities and to a lesser extent certain individual life and international insurance products, are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position.
For a discussion of our ratings and the potential impact of a ratings downgrade on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Ratings.” For example, a downgrade in our financial strength or credit ratings may negatively affect the statutory capital position of our Japanese insurance subsidiaries and reduce their ability to return capital to Prudential Financial due to affiliate transactions involving our Japan insurance subsidiaries.
For a discussion of our ratings and the potential impact of a ratings downgrade on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Ratings.” For example, a downgrade in the financial strength or credit ratings of our U.S. entities may negatively affect the statutory capital position of our Japanese insurance subsidiaries and reduce their ability to return capital to Prudential Financial due to affiliate transactions involving our Japan insurance subsidiaries.
We may also incur significant costs in connection with our response, recovery, remediation, modification of protective measures, and compliance efforts, including costs associated with mitigating the impact of any errors, interruptions, delays or cessations of service. Additionally, our failure to timely or accurately communicate cyber incidents to relevant parties could result in regulatory, operational and reputational risk.
We have also incurred and could incur significant costs in connection with our response, recovery, remediation, modification of protective measures, and compliance efforts, including costs associated with mitigating the impact of any errors, interruptions, delays or cessations of service. Additionally, our failure to timely or accurately communicate cyber incidents to relevant parties could result in regulatory, operational and reputational risk.
We are exposed to investment risk through our investments, which primarily consist of public and private fixed maturity securities, commercial mortgage and other loans, equity securities and alternative assets including private equity, hedge funds and real estate.
We are exposed to investment risk through our investments, which primarily consist of public and private fixed maturity securities, commercial mortgage and other loans, structured finance, equity securities and alternative assets including private equity, hedge funds and real estate.
Moreover, the use of AI trained on inaccurate data sets could result in inaccurate or biased decisions. • Fraudulent Activity: AI could be used to create forged documents or impersonate individuals to commit financial fraud, leading to financial losses and regulatory scrutiny. • Misinformation and Disinformation: The ability to generate realistic and convincing synthetic media could be used to spread misinformation and disinformation, impacting public opinion and undermining trust in the financial system. • Privacy Concerns: AI could be used to create synthetic identities or manipulate personal data, raising privacy concerns related to data breaches and other potential violations of consumer rights and data protection regulations. • Cybersecurity Threats: AI could be used to create sophisticated phishing attacks or bypass security measures, increasing the risk of cyberattacks and data breaches.
Moreover, the use of AI trained on inaccurate data sets could result in inaccurate or biased decisions. • Fraudulent Activity: AI could be used to create forged documents or impersonate individuals to commit financial fraud, leading to financial losses and regulatory scrutiny. • Misinformation and Disinformation: The ability to generate realistic and convincing synthetic media has been and could be used to spread misinformation and disinformation, impacting public opinion and undermining trust in the financial system. • Privacy Concerns: AI could be used to create synthetic identities or manipulate personal data, raising privacy concerns related to data breaches and other potential violations of consumer rights and data protection regulations. • Cybersecurity Threats: AI could be used to create sophisticated, long-term and persistent phishing attacks or bypass security measures, increasing the risk of cyberattacks and data breaches.
Fluctuations in foreign currency exchange rates could 38 Table of Contents adversely affect our profitability, financial condition and cash flows, as well as increase the volatility of our results of operations under U.S. GAAP. In the short-term, solvency margins in our Japan businesses can also be impacted by fluctuations in exchange rates.
Fluctuations in foreign currency exchange rates could adversely affect our profitability, financial condition and cash flows, as well as increase the volatility of our results of operations under U.S. GAAP. In the short-term, solvency margins in our Japan businesses can also be impacted by fluctuations in exchange rates.
Certain of our products, particularly our variable annuity and variable life products, include minimum death benefits or “no-lapse guarantees” that guarantee a death benefit as long as the “no-lapse guarantee” premium is paid. Certain of our products, particularly certain index-linked annuity and individual life products, include interest crediting guarantees based on the performance of an index.
Certain of our products, particularly our variable annuity and variable life products, include minimum death benefits or “no-lapse guarantees” that guarantee a death benefit as long as the “no-lapse guarantee” premium is paid. Certain of our products, particularly certain index-linked annuity and individual life products, include interest crediting guarantees based 26 Table of Contents on the performance of an index.
Ultimate losses would depend on several factors, including the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our investment portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables. • Mortality trend is the risk that mortality improvements in the future deviate adversely from what is expected.
Ultimate losses would depend on several factors, including the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our investment portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables. • Mortality trend is the risk that mortality improvements in the future deviate from our expectations.
In the normal course of business, we enter into financial contracts to manage risks (such as derivatives to manage market risk and reinsurance treaties to manage insurance risk), improve the return on investments (such as securities lending and repurchase transactions) and provide sources of liquidity or financing (such as credit agreements, securities lending agreements and repurchase agreements).
In the normal course of business, we enter into financial contracts to manage risks (such as derivatives and reinsurance treaties), improve the return on investments (such as securities lending and repurchase transactions) and provide sources of liquidity or financing (such as credit agreements, securities lending agreements and repurchase agreements).
Although some of our products permit us to increase premiums or adjust other charges and credits during the life of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability or may cause the policies or contracts to lapse.
Although some of our products permit us to increase premiums or adjust other charges and credits during the life 24 Table of Contents of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability or may cause the policies or contracts to lapse.
Market conditions can limit availability of hedging 37 Table of Contents instruments, require us to post additional collateral, and further increase the cost of executing product related hedges and such costs may not be recovered in the pricing of the underlying products being hedged.
Market conditions can limit availability of hedging instruments, require us to post additional collateral, and further increase the cost of executing product related hedges and such costs may not be recovered in the pricing of the underlying products being hedged.
And we may have insufficient recourse against such third parties from which such breaches originate. We have experienced cybersecurity events resulting in, among other things, the compromise of personal and confidential information, including sensitive health information, of our employees, customers and other stakeholders.
And we may 30 Table of Contents have insufficient recourse against such third parties from which such breaches originate. We have experienced cybersecurity events resulting in, among other things, the compromise of personal and confidential information, including sensitive health information, of our employees, customers and other stakeholders.
If our products are distributed in an inappropriate manner, or to customers for whom they are unsuitable, or distributors of our products otherwise engage in misconduct, we may suffer reputational and other harm to our business and be subject to regulatory action, penalties or damages.
If our products are distributed in an inappropriate manner, or to customers for whom they are unsuitable, or distributors of our products otherwise engage in misconduct, we may suffer reputational and other harm to our 31 Table of Contents business and be subject to regulatory action, penalties or damages.
Our increased adoption of remote working increases these risks, as our interaction with employees and external service providers occur on information systems, networks and environments over which we have less control and which may be more difficult to monitor. • We rely on third parties to provide services, as described further below.
Our adoption of remote working increases these risks, as our interaction with employees and external service providers occur on information systems, networks and environments over which we have less control and which may be more difficult to monitor. 29 Table of Contents • We rely on third parties to provide services, as described further below.
When interest rates decline or remain low, we must invest in lower-yielding instruments, potentially reducing net investment income and constraining our ability to offer certain products. This risk is increased as more policyholders may retain their policies in a low rate environment.
When interest rates decline or remain low, we must invest in lower-yielding instruments, potentially reducing net investment income and constraining our ability to offer certain 25 Table of Contents products. This risk is increased as more policyholders may retain their policies in a low rate environment.
Further, our ability to continue to develop and efficiently deploy AI technologies depends on access to specific third-party equipment and other physical infrastructure, 42 Table of Contents such as processing hardware and network capacity, as to which we cannot control the availability or pricing, especially in a highly competitive environment.
Further, our ability to continue to develop and efficiently deploy AI technologies depends on access to specific third-party equipment and other physical infrastructure, such as processing hardware and network capacity, as to which we cannot control the availability or pricing, especially in a highly competitive environment.
If we were found to have infringed or misappropriated a third-party 44 Table of Contents patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses.
If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses.
See “Business—Regulation—Privacy and Cybersecurity Regulation” for a discussion of the applicable laws and regulations (including those requiring notice, disclosure or remediation) relating to cybersecurity events. We may incur significant costs and other negative consequences resulting from cyber-attacks or other information security breaches.
See “Business—Regulation—Privacy and Cybersecurity Regulation” for a discussion of the applicable laws and regulations (including those requiring notice, disclosure or remediation) relating to cybersecurity events. We have incurred and could incur significant costs and other negative consequences resulting from cyber-attacks or other information security breaches.
Reputational risk could manifest from any of the risks as identified in the Company’s risk identification process. Failure to effectively manage risks across a broad range of risk issues exposes the Company to reputational harm. If the Company were to suffer a significant loss in reputation, both policyholders and counterparties could seek to exit existing relationships.
Reputational risk could manifest in connection with any of the risks identified in the Company’s risk identification process. Failure to effectively manage risks across a broad range of risk issues exposes the Company to reputational harm. If the Company were to suffer a significant loss in reputation, both policyholders and counterparties could seek to exit existing relationships.
For example, in PGIM, we expect to see continued pressure on fees given the focus on passive investment and the growth of the robo-advice channel. • Climate change may increase the severity and frequency of calamities, or adversely affect our investment portfolio or investor sentiment. Climate change may increase the frequency and severity of weather-related disasters and pandemics.
For example, in PGIM, we expect to see continued pressure on fees given the focus on passive investment and the growth of the robo-advice channel. • Climate change may increase the severity and frequency of calamities, or adversely affect our investment portfolio or investor sentiment.
We may experience a disruption in business continuity as a result of, among other things, the following: • Severe pandemic, epidemic, or other public health crises, either naturally occurring or resulting from intentionally manipulated pathogens; • Geo-political risks, including armed conflict and civil unrest; • Terrorist events; • Significant natural or accidental disasters; • Cyber-attacks, both systemic (e.g., affecting the internet, cloud services, and/or other financial services industry infrastructure) and targeted (e.g., failures in or breach of our systems or that of third-parties on whom we rely); • Insider threats; • Physical infrastructure outages; and • Workforce unavailability resulting from any of the above events, among others.
We may experience a disruption in business continuity as a result of, among other things, the following: • Severe pandemic, epidemic, or other public health crises, either naturally occurring or resulting from intentionally manipulated pathogens; • Geo-political risks, including armed conflict and civil unrest; • Terrorist events; • Significant natural or accidental disasters; • Cyber-attacks, both systemic (e.g., affecting the internet, cloud services, and/or other financial services industry infrastructure) and targeted (e.g., failures in or breach of our systems or that of third-parties on whom we rely), such as the cybersecurity incident we experienced and disclosed in February 2024; 28 Table of Contents • Insider threats; • Physical infrastructure outages; and • Workforce unavailability resulting from any of the above events, among others.
In 35 Table of Contents addition, if we experience higher than expected surrenders, withdrawals or claims, our liquidity position may be adversely impacted, and we may incur losses on investments if we are required to sell assets in order to fund surrenders, withdrawals or claims.
In addition, if we experience higher than expected surrenders, withdrawals or claims, our liquidity position may be adversely impacted, and we may incur losses on investments if we are required to sell assets in order to fund surrenders, withdrawals or claims.
We may fail to meet our commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not be completely effective or satisfy investors, customers, regulators, or others.
We may fail to meet our commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not be 34 Table of Contents completely effective or satisfy investors, customers, regulators, or others.
Reinsurance treaties may also be used to further strategic goals of the Company by facilitating the acquisition or divestiture of a block of business if an entity purchase or sale is not practical. These transactions expose the Company to counterparty risk. Counterparties include commercial banks, investment banks, broker-dealers and insurance and reinsurance companies.
Reinsurance may also be used to further strategic goals of the Company by facilitating the transfer of risk of a block of liabilities if an entity purchase or sale is not practical. These transactions expose the Company to counterparty risk. Counterparties include commercial banks, investment banks, broker-dealers, and insurance and reinsurance companies.
The development and adoption of artificial intelligence ("AI"), including generative artificial intelligence (“Generative AI”), and its use and anticipated use by us or by third parties on whom we rely, may increase the operational risks discussed above or create new operational risks that we are not currently anticipating .
The development and adoption of AI, including generative AI and agentic AI, and its use and anticipated use by us or by third parties on whom we rely, may increase the operational risks discussed above or create new operational risks that we are not currently anticipating .
For additional information, see “Item 1. Business—Regulation—International Insurance Regulation—Solvency Regulation” and “Item 7. Management Discussion and Analysis—Liquidity and Capital Resources—Dividends and Returns of Capital from Subsidiaries.” We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business.
For additional information, see “Item 7. Management Discussion and Analysis—Liquidity and Capital Resources—Dividends and Returns of Capital from Subsidiaries.” We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business.
In addition, there have been a number of investigations regarding the marketing practices of brokers and agents selling financial services products and the payments they receive. Furthermore, sales practices and investor protection have increasingly become areas of focus in regulatory examinations.
In addition, there have been a number of investigations regarding the marketing practices of brokers and agents selling financial services products and the payments they receive. Furthermore, sales practices and investor protection have increasingly become areas of focus for our regulators.
An increase in reserves due to revised assumptions has an immediate impact on our results of operations and financial condition; however, economically the impact is generally long term as the excess outflow is paid over time. • Mortality base is the risk that actual base mortality deviates adversely from what is expected in pricing and valuing our products.
An increase in reserves due to revised assumptions could have an immediate adverse impact on our results of operations and financial condition, and economically the impact can be long term as the excess outflow is paid over time. • Mortality base is the risk that actual base mortality deviates adversely from what is expected in pricing and valuing our products.
Mortality risk is a biometric risk that can manifest in the following ways: • Mortality calamity is the risk that mortality rates in a single year deviate adversely from what is expected as the result of pandemics, natural or man-made disasters, military actions or terrorism.
Mortality risk is a biometric risk that can manifest in the following ways: • Mortality calamity is the risk that mortality rates in a single year deviate adversely from our expectations as the result of drivers such as pandemics, natural or man-made disasters, military actions or terrorism.
Our ratings could be downgraded at any time and without notice by any rating agency. Credit rating agencies continually review their methodologies, including capital and earnings assessment models, as well as their ratings for the companies that they follow, including us.
Our ratings could be downgraded at any time and without notice by any rating agency. Credit rating agencies continually review their methodologies, including capital and earnings assessment models, as well as their ratings for the companies that they follow, including us. • The changing competitive landscape may adversely affect the Company.
Base mortality risk can arise from a lack of credible data on which to base the assumptions. We manage mortality risk primarily through our underwriting practices. We use a variety of strategies to further manage our mortality risks, including the use of reinsurance and derivative instruments.
Base mortality risk can arise from a lack of credible data on which to base the assumptions. 23 Table of Contents We manage mortality risk primarily through our underwriting practices. We use a variety of other strategies to further manage our mortality risks, including the use of reinsurance, derivative instruments and diversification of our product portfolio.
We believe the following aspects of technological and other changes would significantly impact our business model. There may be other unforeseen changes in technology and the external environment, including the regulatory response to technological change, which may have a significant impact on our business model. 45 Table of Contents • Interaction with customers .
Rapid technological change puts pressure on existing business models. We believe the following aspects of technological and other changes would significantly impact our business model. There may be other unforeseen changes in technology and the external environment, including the regulatory response to technological change, which may have a significant impact on our business model. • Interaction with customers .
This may result if the Company is unable to continue operations during a business continuation event or if systems are compromised due to malware or virus. • Regulatory fines or sanctions: When the Company fails to comply with applicable laws or regulations, regulatory fines or sanctions may be imposed.
This may result if the Company is unable to continue operations during a business continuation event or if systems are compromised, including as a result of a cyber-attack involving malware and/or a virus. • Regulatory fines or sanctions: When the Company fails to comply with applicable laws or regulations, regulatory fines or sanctions may be imposed.
ITEM 1A. RISK FACTORS You should carefully consider the following risks. Additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in this Annual Report on Form 10-K.
Additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in this Annual Report on Form 10-K.
A mortality calamity event will reduce our earnings and capital and we may be forced to liquidate assets before maturity in order to pay the excess claims.
A mortality calamity event will reduce our earnings and capital and we may be forced to liquidate assets before maturity in order to pay the higher than expected level of claims.
Lapse calamity can also impact our earnings and capital through its impact on estimated future profits. • Policyholder behavior risk is the risk that the behavior of our customers or policyholders deviates adversely from what is expected.
Lapse calamity can also affect our earnings and capital through its impact on estimated future profits. • Policyholder behavior (long-term) risk is the risk that the behavior of our customers or policyholders deviates adversely from our expectations over the long-term.
Although we endeavor to protect our rights, third parties may infringe or misappropriate our intellectual property. We may have to litigate to enforce and protect our copyrights, trademarks, patents, trade secrets and know-how or to determine their scope, validity or enforceability. This would represent a diversion of resources that may be significant, and our efforts may not prove successful.
We may have to litigate to enforce and protect our copyrights, trademarks, patents, trade secrets and know-how or to determine their scope, validity or enforceability. This would represent a diversion of resources that may be significant, and our efforts may not prove successful.
See “Business—Regulation” for a discussion of certain recently enacted and pending proposals by international, federal and state regulatory authorities and their potential impact on our business, including in the following areas: • Financial sector regulatory reform. • U.S. federal, state and local and non-U.S. tax laws, including BEAT, GILTI and CAMT. • Fiduciary rules and other standards of care. • Our regulation under U.S. state insurance laws and developments regarding group-wide supervision and capital standards, accounting rules, RBC factors for invested assets and reserves for life insurance, variable annuities and other products. • Insurer capital standards in Japan and other non-U.S. jurisdictions. • Privacy, data, artificial intelligence and cybersecurity regulation.
See “Business—Regulation” for a discussion of certain recently enacted and pending proposals by international, federal and state regulatory authorities and their potential impact on our business, including in the following areas: • Financial sector regulatory reform. • U.S. federal, state and local and non-U.S. tax laws, including Base Erosion and Anti-Abuse Tax (“BEAT”), Global Intangible Low-Taxed Income (“GILTI”) and Corporate Alternative Minimum Tax (“CAMT”). • Fiduciary rules and other standards of care. • Our regulation under U.S. state insurance laws and developments regarding group-wide supervision and capital standards, accounting rules, RBC factors for invested assets and reserves for life insurance, variable annuities and other products. • Insurer capital standards in Japan and other non-U.S. jurisdictions. • Privacy, data, artificial intelligence and cybersecurity regulation.
We, or third parties on whom we rely, may not adequately ensure the integrity, confidentiality, or availability of personal and confidential information. In the course of our ordinary business, we collect, store and disclose to various third parties (e.g., service providers, reinsurers, etc.) substantial amounts of personal and confidential information, including in some instances sensitive personal information, including health-related information.
In the course of our ordinary business, we collect, store and disclose to various third parties (e.g., service providers, reinsurers, etc.) substantial amounts of personal and confidential information, including in some instances sensitive personal information, including health-related information.
We generally do not hedge all of the foreign currency risk of our investments in equity securities of unaffiliated foreign entities. The value and liquidity of our foreign currency investments could be adversely affected by local market, economic and financial conditions. There can be no assurance that our hedging and other strategies will effectively mitigate foreign exchange risk.
The value and liquidity of our foreign currency investments could be adversely affected by local market, economic and financial conditions. There can be no assurance that our hedging and other strategies will effectively mitigate foreign exchange risk.
While some behavior is driven by macro factors such as market movements, policyholder behavior at a fundamental level is driven primarily by policyholders’ individual needs, which may differ significantly from product to product depending on many factors including the features offered, the approach taken to market each product, and competitor pricing.
Policyholder behavior is driven by factors outside of our control, including macro factors such as market movements, as well as by policyholders’ individual needs, which may differ significantly from product to product depending on many factors including the features offered, the approach taken to market each product, and competitor pricing.
Our cybersecurity risk remains heightened because of, among other things, the rapidly evolving nature and pervasiveness of cyber threats, our brand and reputation, our size and scale, our geographic presence and our role in the financial services industry and the broader economy. See “Item 1C. Cybersecurity” for additional information about cybersecurity risk management and governance.
Our cybersecurity risk remains heightened because of, among other things, the rapidly evolving nature and pervasiveness of cyber threats, including advances in artificial intelligence (“AI”), our brand and reputation, our size and scale, our geographic presence and our role in the financial services industry and the broader economy. See “Item 1C.
For example, see “Business—Regulation—ERISA.” In those jurisdictions where we are constrained by law from owning a majority interest in jointly owned operations, our remedies in the event of a breach by a joint venture partner may be limited (e.g., we may have no ability to exercise a “call” option). 43 Table of Contents Affiliate and third-party distributors of our products present added regulatory, competitive and other risks to our enterprise.
For example, see “Business—Regulation—ERISA.” In those jurisdictions where we are constrained by law from owning a majority interest in jointly owned operations, our remedies in the event of a breach by a joint venture partner may be limited (e.g., we may have no ability to exercise a “call” option).
While we maintain certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, have become subject to security breaches, including as a result of their failure to perform in accordance with their contractual obligations. • Hardware, software or applications developed by, obtained from, or implemented in accordance with specifications provided by third parties may contain vulnerabilities in design, maintenance or manufacturing that could be exploited to compromise the Company’s information security. • Continuing use of remote or flexible work arrangements, including remote access tools and mobile technology (including use of personal devices), have expanded potential attack surfaces. • The proliferation of third-party financial data aggregators and emerging technologies, including the development and use of artificial intelligence, increase our information security risks and exposure.
While we maintain certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, have become subject to security breaches, including as a result of their failure to perform in accordance with their contractual obligations. • Hardware, software or applications developed by, obtained from, or implemented in accordance with specifications provided by third parties may contain vulnerabilities in design, maintenance or manufacturing that could be exploited to compromise the Company’s information security. • Continuing use of remote or flexible work arrangements, including remote access tools and mobile technology (including use of personal devices), have expanded potential attack surfaces. • The proliferation of third-party financial data aggregators and emerging technologies, including the development and use of AI, increase our information security risks and exposure. • Costs and security risks associated with maintaining, upgrading, or replacing our information technology, including legacy systems, could exceed our expectations or we may be required to dedicate additional resources to these activities. • Planned system upgrades may not be successful or operate as intended, may take longer than anticipated, may exceed their budget, or create or exacerbate previously unknown security vulnerabilities.
This presents the risk that the Company is unable to meet legal, regulatory, financial or customer obligations because third parties fail to deliver contracted services, or that the Company is exposed to reputational damage because third parties operate in a poorly controlled manner.
This reliance presents the risk that the Company is unable to meet legal, regulatory, financial or customer obligations because third parties fail to deliver contracted services, or that the Company is exposed to reputational damage because third parties fail to operate in accordance with our specifications and expectations.
We may not be able to protect our intellectual property and may be subject to infringement claims . We rely on a combination of contractual rights with employees and third parties and on copyright, trademark, patent and trade secret laws to establish and protect our intellectual property.
We rely on a combination of contractual rights with employees and third parties and on copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. Although we endeavor to protect our rights, third parties may infringe or misappropriate our intellectual property.
Technology may have a significant impact on the companies in which the Company invests. For example, environmental concerns spur scientific inquiry which may reposition the relative attractiveness of wind or sun power over oil and gas. The transportation industry may favor alternative modes of conveyance of goods which may shift trucking or air transport out of favor.
Technology may have a significant impact on the companies in which the Company invests. For example, environmental concerns spur scientific inquiry which may reposition the relative attractiveness of wind or sun 33 Table of Contents power over oil and gas.
As our businesses continue to grow and evolve, the number and complexity of models we utilize expands, increasing our exposure to error in the design, implementation or use of models, including the associated input data and assumptions. Furthermore, model risk will be elevated during periods of transformation or due to new or changing laws or regulations.
As our businesses continue to grow and evolve, the number and complexity of models we utilize expands, increasing our exposure to error in the design, implementation or use of models, including the associated input data and assumptions.
See “Business—Regulation” for a discussion of the regulations applicable to the Company. Potential Impacts • Financial losses: The Company experiences a financial loss. This loss may originate from various causes including, but not limited to, transaction processing errors and fraud. • Client service impacts: The Company may not be able to service customers.
This loss may originate from various causes including, but not limited to, transaction processing errors and fraud. • Client service impacts: The Company may not be able to service customers.
Our mitigation efforts with respect to interest rate risk are primarily focused on maintaining an investment portfolio with diversified maturities that has a key rate duration profile that is approximately equal to the key rate duration profile of our liability and surplus benchmarks; however, these benchmarks are based on estimates of the liability cash flow profiles which are complex and could be inaccurate, especially when markets are volatile.
The portfolio’s key rate duration profile is designed to be approximately equal to that of our liability and surplus benchmark; however, these benchmarks are based on estimates of the liability cash flow profiles which are complex and could be inaccurate, especially when markets are volatile.
Our practices may be judged by ESG standards that are continually evolving and not always clear. Prevailing ESG standards and expectations may 46 Table of Contents also reflect contrasting or conflicting values or agendas.
Certain of our regulators have proposed or adopted, or may propose or adopt, ESG rules or standards that would apply to our business. Our practices may be judged by ESG standards that are continually evolving and not always clear. Prevailing ESG standards and expectations may also reflect contrasting or conflicting values or agendas.
For a discussion of our general account investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investments.” We are also exposed to investment risk through a potential counterparty default. 34 Table of Contents Investment risk may result from (1) economic conditions, (2) adverse capital market conditions, including disruptions in individual market sectors or a lack of buyers in the marketplace, (3) volatility, (4) credit spread changes, (5) benchmark interest rate changes, (6) changes in foreign currency exchange rates and (7) declines in value of underlying collateral.
Investment risk may result from (1) economic conditions, (2) adverse capital market conditions, including disruptions in individual market sectors or a lack of buyers in the marketplace, (3) volatility, (4) credit spread changes, (5) benchmark interest rate changes, (6) changes in foreign currency exchange rates and (7) declines in value of underlying collateral.
Our products are sold primarily through captive/affiliated distributors and third-party distributing firms. Our captive/affiliated distributors are made up of sales personnel who are generally compensated based on commissions. The third-party distributing firms are rarely dedicated to us exclusively and may frequently recommend and/or market products of our competitors. Accordingly, we must compete for their services.
The third-party distributing firms are rarely dedicated to us exclusively and may recommend and/or market products of our competitors. Accordingly, we must compete for their services.
In each case, an increase in claims, or an increase in reserves due to revised morbidity assumptions can have an immediate impact on our results of operations and financial condition; however, economically the impact of morbidity risk for products that pay out for ongoing illness or disability generally emerges over the longer term as the morbidity claims are paid.
In each case, an increase in claims, or an increase in reserves due to revised morbidity assumptions can have an immediate adverse impact on our results of operations and financial condition, and the economic impact can be long-term as the morbidity claims are paid.
Some product liabilities are expected to have only modest risk related to interest rates because cash flows can be matched by available assets; however, other product liabilities generate long-term cash flows (i.e., 30 years or more), resulting in significant interest rate risk, since these cash flows cannot be matched by assets for sale in the marketplace, exposing the Company to future reinvestment risk.
The risk of mismatch in asset/liability duration is mainly driven by the specific dynamics of product liabilities. For example, some product liabilities generate long-term cash flows (i.e., 30 years or more), resulting in significant interest rate risk, since these cash flows cannot be matched by assets for sale in the marketplace, exposing the Company to future reinvestment risk.
For our domestic investment portfolios supporting our U.S. insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies. We manage this risk by hedging substantially all domestic foreign currency-denominated fixed-income investments into U.S. dollars.
For our domestic investment portfolios supporting our U.S. insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies. We generally do not hedge all of the foreign currency risk of our investments in equity securities of unaffiliated foreign entities.
We may choose to hedge these risks on a basis that does not correspond to their anticipated or actual impact upon our results of operations or financial position under U.S. GAAP.
Hedging instruments also may not change in value correspondingly with associated liabilities due to equity market or interest rate conditions, non-performance risk or other reasons. We may choose to hedge these risks on a basis that does not correspond to their anticipated or actual impact upon our results of operations or financial position under U.S. GAAP.
We use a variety of hedging and risk management strategies, including product features, to mitigate these risks in part and we may periodically change our strategies over time. These strategies may, however, not be fully effective. In addition, we may be unable or may choose not to fully hedge these risks.
Hedging and risk management strategies, including product features, that we use to mitigate these risks may not be fully effective. In addition, we may be unable or may choose not to fully hedge these risks. Hedging instruments may not effectively offset the costs of guarantees or may otherwise be insufficient in relation to our obligations.
The timing and magnitude of any potential actions is uncertain, as is the effectiveness of any measures we may take to help limit the impact of these actions. Changes in the regulatory landscape may be unsettling to our business model.
The timing and magnitude of any potential actions is uncertain, as is the effectiveness of any measures we may take to help limit the impact of these actions. Our ability to successfully execute on strategic transactions is subject to risks .
Strategic Risk We are subject to the risk of events that can cause our fundamental business model to change, either through a shift in the businesses in which we are engaged or a change in our execution. In addition, other risks may become strategic risks.
Furthermore, model risk will be elevated during periods of transformation or due to new or changing laws or regulations. 32 Table of Contents Strategic Risk We are subject to the risk of events that can cause our fundamental business model to change, either through a shift in the businesses in which we are engaged or a change in our execution.
Rapidly rising interest rates may also adversely impact, and have adversely impacted, our liquidity and capital positions, cash flows, results of operations, and financial position.
Rapidly rising interest rates may also adversely impact, and have adversely impacted, our liquidity and capital positions, cash flows, results of operations, and financial position. Our mitigation efforts with respect to interest rate risk are primarily focused on maintaining an investment portfolio with diversified maturities.
Our investment portfolio is subject to equity risk, which is the risk of loss due to deterioration in market value of public equity or alternative assets .
Our investment portfolio is subject to equity risk, which is the risk of loss due to deterioration in market value of public equity or alternative assets . We include public equity and alternative assets (including private equity, hedge funds and real estate) in our portfolio constructions, and these investments have varying degrees of price transparency.
Only certain products are exposed to this risk. Products that offer a cash surrender value that resides in the general account, such as non-participating whole life products, could pose a potential short-term lapse calamity risk. Surrender of these products can impact liquidity, and it may be necessary in certain market conditions to sell assets to meet surrender demands.
For example, surrenders of certain insurance products may increase following a downgrade of our financial strength ratings or adverse publicity. Only certain products are exposed to this risk. Products that offer a cash surrender value that resides in the general account, such as non-participating whole life products, could pose a potential short-term lapse calamity risk.
We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and continuing availability of data we use to run our businesses and service our customers. These systems, and any available backups, may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control.
We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and continuing availability of data we use to run our businesses and service our customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+2 added−1 removed11 unchanged
Biggest changeWe expect these employees to, among other things, understand computer systems, networks, and security technologies and be proficient in a variety of security tools and techniques. The CISO has served in various roles in information technology and information security for over 25 years, including serving as the head of information technology risk at two large public companies.
Biggest changeWe expect these employees to, among other things, understand computer systems, networks, and security technologies and be proficient in a variety of security tools and techniques.
We regularly engage with the broader cybersecurity community and monitor cyber threat information. To address risks associated with third parties, Prudential has established an enterprise-wide Third-Party Risk Management Program. This program’s features include, among other things, identifying, assessing and managing cybersecurity risks throughout the life of our third-party relationships.
We also regularly engage with the broader cybersecurity community and monitor cyber threat information. To address risks associated with third parties, Prudential has established an enterprise-wide Third-Party Risk Management Program. This program’s features include, among other things, identifying, assessing and managing cybersecurity risks throughout the life of our third-party relationships.
Cybersecurity risk management is integrated within our risk management framework. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” for additional information on our risk management processes. We conduct risk identification through several processes at the business unit, corporate, senior management, and Board levels.
Cybersecurity risk management is integrated within our risk management framework. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” for additional information regarding our risk management processes. We conduct risk identification through several processes at the business unit, corporate, senior management, and Board levels.
At least annually, the Board and the Audit Committee also receive updates about the results of program reviews, including exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of our technical program and internal response preparedness.
At least annually, the Board and the Audit Committee also receive updates about the results of program reviews, including assessments led by outside advisors who provide a third-party independent assessment of our technical program and internal response preparedness.
Employees with access to our Company’s systems are subject to comprehensive annual training on responsible information security, data security, and cybersecurity practices and how to protect data against cyber threats. 47 Table of Contents As part of the information security program, we conduct periodic exercises with independent outside advisors to assess the effectiveness of our program and our internal response preparedness.
Employees with access to our Company’s systems are subject to comprehensive annual training on responsible information security, data security, and cybersecurity practices and how to protect data against cyber threats. 35 Table of Contents As part of the information security program, we routinely engage independent outside advisors to assess the effectiveness of our program and our internal response preparedness.
Business—Information About our Executive Officers.” The Audit Committee of the Board of Directors, which is responsible for oversight of certain risk issues, including cybersecurity, receives reports from the CISO, the HGTO and Operational Risk Management throughout the year.
For a description of the relevant expertise of the HGTO, see “Item 1. Business—Information About our Executive Officers.” The Audit Committee of the Board of Directors, which is responsible for oversight of certain risk issues, including cybersecurity, receives reports from the CISO, the HGTO and Operational Risk Management throughout the year.
Governance The Company’s information security program is overseen by the Chief Information Security Officer (“CISO”) and Information Security Office, as well as the Head of Global Technology and Operations (“HGTO”). The CISO and Information Security Office are responsible for monitoring for, and informing management of, cybersecurity incidents impacting Prudential’s systems.
Governance The Company’s information security program is overseen by the Chief Information Security Officer (“CISO”) and Information Security Office, as well as the Head of Global Technology and Operations (“HGTO”).
Removed
The CISO holds a graduate degree in technology management and has attained the professional certifications of Certified Information Systems Security Professional and Certified Information Privacy Professional. For a description of the relevant expertise of the HGTO, see “Item 1.
Added
The CISO and Information Security Office are responsible for monitoring for cybersecurity incidents impacting Prudential’s systems, and ensuring appropriate processes are maintained to inform management of the prevention, detection, mitigation, and remediation of such cybersecurity incidents.
Added
The current CISO, who is serving in an interim capacity, has served in various roles in information security for over 20 years, including as Deputy CISO and roles overseeing cyber defense, investigations, and incident response. The interim CISO holds a law degree and has attained numerous Global Information Assurance Certifications..

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed2 unchanged
Biggest changeFor PGIM’s international operations, as of December 31, 2024, we lease home offices located in Japan, Taiwan, the United Kingdom, India and Ireland.
Biggest changeFor PGIM’s international operations, as of December 31, 2025, we lease home offices located in Japan, the United Kingdom, India and Ireland.
ITEM 2. PROPERTIES We own our headquarters building located at 751 Broad Street, Newark, New Jersey. Excluding our headquarters building and properties used by our International Businesses and the international operations of PGIM, which are discussed below, as of December 31, 2024, we conduct our business and home office functions in both owned and leased locations throughout the United States.
ITEM 2. PROPERTIES We own our headquarters building located at 751 Broad Street, Newark, New Jersey. Excluding our headquarters building and properties used by our International Businesses and the international operations of PGIM, which are discussed below, as of December 31, 2025, we conduct our business and home office functions in both owned and leased locations throughout the United States.
We also lease principal properties and other branch and field offices in other countries where PGIM conducts business. 48 Table of Contents We believe our properties are adequate and suitable for our business as currently conducted and are adequately maintained. The above properties do not include properties we own solely for investment purposes.
We also lease principal properties and other branch and field offices in other countries where PGIM conducts business. 36 Table of Contents We believe our properties are adequate and suitable for our business as currently conducted and are adequately maintained. The above properties do not include properties we own solely for investment purposes.
We also conduct back-office functions in leased properties outside of the United States. For our International Businesses, as of December 31, 2024, we own and lease home offices located in Japan, Brazil and Mexico. We also conduct our business in owned and leased properties, primarily field offices, located throughout these same countries.
We also conduct back-office functions in leased properties outside of the United States. For our International Businesses, as of December 31, 2025, we own and lease home offices located in Japan, Brazil and Mexico. We also conduct our business in owned and leased properties, primarily field offices, located throughout these same countries.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged
Biggest changeIssuer Purchases of Equity Securities (c) The following table provides information about purchases by the Company during the three months ended December 31, 2024, of its Common Stock: Period Total Number of Shares Purchased(1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program October 1, 2024 through October 31, 2024 679,420 $ 123.85 672,930 November 1, 2024 through November 30, 2024 666,408 $ 125.74 662,617 December 1, 2024 through December 31, 2024 687,131 $ 121.86 684,318 Total 2,032,959 2,019,865 $ 0 __________ (1) Includes shares of Common Stock withheld from participants for income tax withholding purposes whose shares of restricted stock units vested during the period.
Biggest changeIssuer Purchases of Equity Securities (c) The following table provides information about purchases by the Company during the three months ended December 31, 2025, of its Common Stock: Period Total Number of Shares Purchased(1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased under the Program October 1, 2025 through October 31, 2025 824,672 $ 102.39 813,708 November 1, 2025 through November 30, 2025 790,394 $ 106.11 785,119 December 1, 2025 through December 31, 2025 738,947 $ 113.41 735,363 Total 2,354,013 2,334,190 $ 0 __________ (1) Includes shares of Common Stock withheld from participants for income tax withholding purposes whose shares of restricted stock units vested during the period.
Such restricted stock units were originally issued to participants pursuant to the Prudential Financial Inc. Omnibus Incentive Plan. On December 10, 2024, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $1.0 billion of its outstanding Common Stock during the period from January 1, 2025 through December 31, 2025.
Such restricted stock units were originally issued to participants pursuant to the Prudential Financial Inc. Omnibus Incentive Plan. On December 10, 2025, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $1 billion of its outstanding Common Stock during the period from January 1, 2026 through December 31, 2026.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES General Prudential Financial’s Common Stock trades on the New York Stock Exchange under the symbol “PRU.” On January 31, 2025, there were 1,019,340 registered holders of record for the Common Stock and 354 million shares outstanding.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES General Prudential Financial’s Common Stock trades on the New York Stock Exchange under the symbol “PRU.” On January 31, 2026, there were 981,472 registered holders of record for the Common Stock and 348 million shares outstanding.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

418 edited+102 added−179 removed256 unchanged
Biggest changeGAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in “Realized investment gains (losses), net.” 96 Table of Contents Year Ended December 31, 2024 PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld Closed Block Division Funds Withheld Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 5.53 % $ 8,538 3.15 % $ 4,358 4.40 % $ 12,896 $ 1,491 $ 828 $ 15,215 Assets supporting experience-rated contractholder liabilities 0.00 0 1.11 38 1.11 38 0 0 38 Equity securities 3.23 121 3.29 49 3.25 170 35 1 206 Commercial mortgage and other loans 4.81 1,605 3.81 632 4.48 2,237 325 13 2,575 Policy loans 5.18 194 3.81 98 4.62 292 204 (4) 492 Short-term investments and cash equivalents 6.46 870 5.57 126 6.35 996 72 9 1,077 Gross investment income 5.42 11,328 3.21 5,301 4.44 16,629 2,127 847 19,603 Investment expenses (0.20) (787) (0.12) (329) (0.16) (1,116) (288) (3) (1,407) Investment income after investment expenses 5.22 % 10,541 3.09 % 4,972 4.28 % 15,513 1,839 844 18,196 Other invested assets(3) 546 489 1,035 209 448 1,692 Investment results of other entities and operations(4) 21 0 21 0 0 21 Total net investment income $ 11,108 $ 5,461 $ 16,569 $ 2,048 $ 1,292 $ 19,909 Year Ended December 31, 2023 PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations(6) Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld(6) Closed Block Division Funds Withheld(6) Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 5.18 % $ 8,114 2.92 % $ 4,004 4.12 % $ 12,118 $ 1,489 $ 105 $ 13,712 Assets supporting experience-rated contractholder liabilities 0.00 0 1.13 25 1.13 25 0 0 25 Equity securities 2.82 95 3.61 61 3.09 156 41 0 197 Commercial mortgage and other loans 4.19 1,299 3.70 649 4.01 1,948 322 0 2,270 Policy loans 5.07 191 3.88 99 4.59 290 209 0 499 Short-term investments and cash equivalents 5.62 748 3.72 94 5.41 842 55 0 897 Gross investment income 5.17 10,447 3.03 4,932 4.24 15,379 2,116 105 17,600 Investment expenses (0.13) (551) (0.13) (318) (0.13) (869) (254) (1) (1,124) Investment income after investment expenses 5.04 % 9,896 2.90 % 4,614 4.11 % 14,510 1,862 104 16,476 Other invested assets(3) 629 306 935 97 78 1,110 Investment results of other entities and operations(4) 279 0 279 0 0 279 Total net investment income $ 10,804 $ 4,920 $ 15,724 $ 1,959 $ 182 $ 17,865 97 Table of Contents Year Ended December 31, 2022 PFI Excluding Closed Block Division, funds Withheld and Japanese Insurance Operations(7) Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld(7) Closed Block Division Funds Withheld(7) Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 4.56 % $ 7,036 2.75 % $ 3,831 3.71 % $ 10,867 $ 1,375 $ 0 $ 12,242 Assets supporting experience-rated contractholder liabilities 1.68 123 1.01 30 1.49 153 0 0 153 Equity securities 1.95 56 3.59 67 2.59 123 37 0 160 Commercial mortgage and other loans 3.67 1,164 3.67 686 3.67 1,850 322 0 2,172 Policy loans 4.94 184 3.90 99 4.52 283 216 0 499 Short-term investments and cash equivalents 2.70 340 3.75 31 2.75 371 24 0 395 Gross investment income 4.19 8,903 2.86 4,744 3.61 13,647 1,974 0 15,621 Investment expenses (0.13) (350) (0.13) (281) (0.13) (631) (155) 0 (786) Investment income after investment expenses 4.06 % 8,553 2.73 % 4,463 3.48 % 13,016 1,819 0 14,835 Other invested assets(3) 744 208 952 157 0 1,109 Investment results of other entities and operations(4) 93 0 93 0 0 93 Total net investment income $ 9,390 $ 4,671 $ 14,061 $ 1,976 $ 0 $ 16,037 __________ (1) The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance.
Biggest changeGAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in “Realized investment gains (losses), net.” 99 Table of Contents Year Ended December 31, 2025 PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld Closed Block Division Funds Withheld Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 5.52 % $ 9,313 3.24 % $ 4,521 4.48 % $ 13,834 $ 1,450 $ 720 $ 16,004 Assets supporting experience-rated contractholder liabilities 0.00 0 1.17 49 1.17 49 0 0 49 Equity securities 2.18 114 3.35 59 2.48 173 26 0 199 Commercial mortgage and other loans 4.87 1,881 3.85 580 4.58 2,461 335 20 2,816 Policy loans 4.99 190 3.83 102 4.51 292 196 (5) 483 Short-term investments and cash equivalents 5.53 674 4.36 162 5.26 836 44 4 884 Gross investment income 5.32 12,172 3.28 5,473 4.45 17,645 2,051 739 20,435 Investment expenses (0.20) (860) (0.13) (349) (0.17) (1,209) (241) (2) (1,452) Investment income after investment expenses 5.12 % 11,312 3.15 % 5,124 4.28 % 16,436 1,810 737 18,983 Other invested assets(3) 743 650 1,393 246 667 2,306 Investment results of other entities and operations(4) 184 0 184 0 0 184 Total net investment income $ 12,239 $ 5,774 $ 18,013 $ 2,056 $ 1,404 $ 21,473 Year Ended December 31, 2024 PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld Closed Block Division Funds Withheld Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 5.36 % $ 8,538 3.15 % $ 4,358 4.33 % $ 12,896 $ 1,491 $ 828 $ 15,215 Assets supporting experience-rated contractholder liabilities 0.00 0 1.11 38 1.11 38 0 0 38 Equity securities 3.23 121 3.29 49 3.25 170 35 1 206 Commercial mortgage and other loans 4.65 1,605 3.81 632 4.38 2,237 325 13 2,575 Policy loans 5.18 194 3.81 98 4.62 292 204 (4) 492 Short-term investments and cash equivalents 6.46 870 5.57 126 6.35 996 72 9 1,077 Gross investment income 5.26 11,328 3.21 5,301 4.37 16,629 2,127 847 19,603 Investment expenses (0.19) (787) (0.12) (329) (0.16) (1,116) (288) (3) (1,407) Investment income after investment expenses 5.07 % 10,541 3.09 % 4,972 4.21 % 15,513 1,839 844 18,196 Other invested assets(3) 546 489 1,035 209 448 1,692 Investment results of other entities and operations(4) 21 0 21 0 0 21 Total net investment income $ 11,108 $ 5,461 $ 16,569 $ 2,048 $ 1,292 $ 19,909 100 Table of Contents Year Ended December 31, 2023 PFI Excluding Closed Block Division, Funds Withheld and Japanese Insurance Operations Japanese Insurance Operations PFI Excluding Closed Block Division and Funds Withheld Closed Block Division Funds Withheld Total(5) Yield(1) Amount Yield(1) Amount Yield(1) Amount Amount Amount Amount ($ in millions) Fixed maturities(2) 5.18 % $ 8,114 2.92 % $ 4,004 4.12 % $ 12,118 $ 1,489 $ 105 $ 13,712 Assets supporting experience-rated contractholder liabilities 0.00 0 1.13 25 1.13 25 0 0 25 Equity securities 2.82 95 3.61 61 3.09 156 41 0 197 Commercial mortgage and other loans 4.19 1,299 3.70 649 4.01 1,948 322 0 2,270 Policy loans 5.07 191 3.88 99 4.59 290 209 0 499 Short-term investments and cash equivalents 5.62 748 3.72 94 5.41 842 55 0 897 Gross investment income 5.17 10,447 3.03 4,932 4.24 15,379 2,116 105 17,600 Investment expenses (0.13) (551) (0.13) (318) (0.13) (869) (254) (1) (1,124) Investment income after investment expenses 5.04 % 9,896 2.90 % 4,614 4.11 % 14,510 1,862 104 16,476 Other invested assets(3) 629 306 935 97 78 1,110 Investment results of other entities and operations(4) 279 0 279 0 0 279 Total net investment income $ 10,804 $ 4,920 $ 15,724 $ 1,959 $ 182 $ 17,865 __________ (1) The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance.
An increase in discount rate by 100 bps would result in an increase in net periodic pension costs of $1 million; conversely, a decrease in discount rate by 100 bps would result in an increase in net periodic pension costs of $0 million.
An increase in discount rate by 100 bps would result in an increase in net periodic pension costs of $0 million; conversely, a decrease in discount rate by 100 bps would result in an increase in net periodic pension costs of $1 million.
As of December 31, 2024 , our Japanese insurance operations had $88.1 billion, at carrying value, of investments denominated in U.S. dollars, including $1.0 billion that were hedged to yen through third-party derivative contracts and $80.5 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure to U.S. dollar-equivalent equity.
As of December 31, 2024, our Japanese insurance operations had $88.1 billion, at carrying value, of investments denominated in U.S. dollars, including $1.0 billion that were hedged to yen through third-party derivative contracts and $80.5 billion that support liabilities denominated in U.S. dollars, with the remainder constituting part of the hedging of foreign currency exchange rate exposure of U.S. dollar-equivalent equity.
The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, uncollateralized loans, other collateralized loans and residential property loans. For commercial mortgage and agricultural property loans, the allowance is calculated using an internally developed CECL model.
The allowance is calculated separately for commercial mortgage loans, agricultural property loans, residential mortgage loans, uncollateralized loans and other collateralized loans. For commercial mortgage and agricultural property loans, the allowance is calculated using an internally developed CECL model.
(5) See Note 13 to the Consolidated Financial Statements for information regarding cash surrender values associated with policyholders’ account balances. The liabilities presented above are primarily supported by invested assets in our general account. When selecting assets to support these contractual obligations, we consider the risk of policyholder and contractholder withdrawals of funds earlier than our assumptions.
See Note 13 to the Consolidated Financial Statements for information regarding cash surrender values associated with policyholders’ account balances. The liabilities presented above are primarily supported by invested assets in our general account. When selecting assets to support these contractual obligations, we consider the risk of policyholder and contractholder withdrawals of funds earlier than our assumptions.
As part of our quarterly market experience updates, we update our near-term projections of interest rates to reflect changes in current rates. For additional information regarding discount rates used to establish the liability for future policy benefits, see Note 2 to the Consolidated Financial Statements. The following paragraphs provide additional details about the reserves we have established: International Businesses.
As part of our quarterly market experience updates, we update our near-term projections of interest rates to reflect changes in current rates. For additional information regarding discount rates used to establish the liability for future policy benefits, see Note 2 to the Consolidated Financial Statements. The following paragraphs provide additional details about the material reserves we have established: International Businesses.
The drivers of our business results are generally included in adjusted operating income, with exceptions related to certain guarantees, as discussed below. Under U.S. GAAP, our guaranteed living and death benefit riders on variable annuities (e.g., GMAB, GMIB, GMWB, GMIWB and GMDB) are accounted for as MRBs and reported at fair value.
The results of our business are generally included in adjusted operating income, with exceptions related to certain guarantees, as discussed below. Under U.S. GAAP, our guaranteed living and death benefit riders on variable annuities (e.g., GMAB, GMIB, GMWB, GMIWB and GMDB) are accounted for as MRBs and reported at fair value.
Our asset/liability management process has enabled us to manage our portfolios through several market cycles. We implement our portfolio strategies primarily through investment in a broad range of fixed income assets, including government and agency securities, public and private corporate bonds and structured securities and commercial mortgage loans.
Our asset/liability management process has enabled us to manage our portfolios through several market cycles. We implement our portfolio strategies primarily through investment in a broad range of fixed income assets, including government and agency securities, public and private corporate bonds and structured securities and mortgage loans.
(2) Additions primarily include: group annuities and funded pension reinsurance calculated based on premiums received; international longevity reinsurance contracts calculated as the present value of future projected benefits; investment-only stable value contracts calculated as the fair value of customers’ funds held in a client-owned trust; and funding agreements issued calculated based on premiums received.
(2) Additions primarily include: group annuities and funded pension reinsurance calculated based on premiums received; longevity reinsurance contracts calculated as the present value of future projected benefits; investment-only stable value contracts calculated as the fair value of customers’ funds held in a client-owned trust; and funding agreements issued calculated based on premiums received.
(2) Amounts are reflected gross of affiliated reinsurance recoverables. (3) See Note 13 to the Consolidated Financial Statements for information regarding cash surrender values associated with policyholders’ account balances. The liabilities presented above are primarily supported by invested assets in our general account.
(2) Amounts are reflected gross of affiliated reinsurance recoverables. See Note 13 to the Consolidated Financial Statements for information regarding cash surrender values associated with policyholders’ account balances. The liabilities presented above are primarily supported by invested assets in our general account.
The NAIC Designations for commercial mortgage-backed securities and non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages, are based on security level expected losses as modeled by an independent third party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized. 103 Table of Contents As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the fixed maturity portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date.
The NAIC Designations for commercial mortgage-backed securities and non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages, are based on security level expected losses as modeled by an independent third party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized. 106 Table of Contents As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the fixed maturity portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date.
We use privately-placed corporate debt securities and commercial mortgage loans, which consist of mortgages on diversified properties in terms of geography, property type and borrowers, to enhance the yield on our portfolios and to improve the overall diversification of the portfolios.
We use privately-placed corporate debt securities and mortgage loans, which consist of mortgages on diversified properties in terms of geography, property type and borrowers, to enhance the yield on our portfolios and to improve the overall diversification of the portfolios.
For a description of captive reinsurance company financing activities, see below under “—Financing Activities—Subsidiary Borrowings—Term and Universal Life Reserve Financing.” Shareholder Distributions Share Repurchase Program and Shareholder Dividends In December 2023, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to an aggregate of $1.0 billion of its outstanding Common Stock during the period from January 1, 2024 through December 31, 2024.
For a description of captive reinsurance company financing activities, see below under “—Financing Activities—Subsidiary Borrowings—Term and Universal Life Reserve Financing.” Shareholder Distributions Share Repurchase Program and Shareholder Dividends In December 2024, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to an aggregate of $1.0 billion of its outstanding Common Stock during the period from January 1, 2025 through December 31, 2025.
Given the amount of pension and postretirement obligations as of December 31, 2023, the beginning of the measurement year, if we had assumed a discount rate for both our domestic pension and other postretirement benefit plans that was 100 bps higher or 100 bps lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below.
Given the amount of pension and postretirement obligations as of December 31, 2024, the beginning of the measurement year, if we had assumed a discount rate for both our domestic pension and other postretirement benefit plans that was 100 bps higher or 100 bps lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below.
Contracts or contract features reported in “Market risk benefit assets” and “Market risk benefit liabilities” and embedded 114 Table of Contents derivatives reported in “Policyholders’ account balances” that are included in Level 3 of our fair value hierarchy represent general account assets and liabilities pertaining to living benefit features of the Company’s variable annuity contracts and the index-linked interest credited features on certain life and annuity products.
Contracts or contract features reported in “Market risk benefit assets” and “Market risk benefit liabilities” and embedded derivatives reported in “Policyholders’ account balances” that are included in Level 3 of our fair value hierarchy represent 117 Table of Contents general account assets and liabilities pertaining to living benefit features of the Company’s variable annuity contracts and the index-linked interest credited features on certain life and annuity products.
In addition, as of December 31, 2024, for purposes of financing Guideline AXXX non-economic reserves, one captive had $3,982 million of surplus notes outstanding that were issued to affiliates. The Company introduced updated versions of its individual life products in conjunction with the requirement to adopt principle-based reserving by January 1, 2020.
In addition, as of December 31, 2025, for purposes of financing Guideline AXXX non-economic reserves, one captive had $3,982 million of surplus notes outstanding that were issued to affiliates. The Company introduced updated versions of its individual life products in conjunction with the requirement to adopt principle-based reserving by January 1, 2020.
Best, Fitch, S&P and Moody’s currently have the Company’s ratings on Stable outlook. 129 Table of Contents Requirements to post collateral or make other payments because of ratings downgrades under certain agreements, including derivative agreements, can be satisfied in cash or by posting permissible securities held by the subsidiaries subject to the agreements. In addition, a ratings downgrade by A.M.
Best, Fitch, Moody’s and S&P currently have the Company’s ratings on Stable outlook. 94 Table of Contents Requirements to post collateral or make other payments because of ratings downgrades under certain agreements, including derivative agreements, can be satisfied in cash or by posting permissible securities held by the subsidiaries subject to the agreements. In addition, a ratings downgrade by A.M.
The mortality assumptions are based on standard industry mortality tables that were used to determine the cash surrender value of the policies, and the interest rates used are the interest rates used to calculate the cash surrender value of the policies.
The mortality assumptions are based on standard industry mortality tables that were used to determine the cash surrender value of the policies, and the interest rates used are the interest rates used to calculate the cash surrender value of the policies. Other.
Dividends in excess of these amounts and other forms of capital distribution may require the prior approval of the FSA. The regulatory fiscal year end for both Prudential of Japan and Gibraltar Life is March 31, 2025, after which time the Common Stock dividend amount permitted to be paid without prior approval from the FSA can be determined.
Dividends in excess of these amounts and other forms of capital distribution may require the prior approval of the FSA. The regulatory fiscal year end for both Prudential of Japan and Gibraltar Life is March 31, 2026, after which time the Common Stock dividend amount permitted to be paid without prior approval from the FSA can be determined.
The fair value of PGIM as of December 31, 2024 was estimated by utilizing a market approach based on an earnings multiple. The average of forward earnings multiples of comparable publicly traded companies based on independent analysts’ consensus estimates for each company’s forecasted earnings was applied to PGIM’s forecasted results and an implied control premium was added.
The fair value of PGIM as of December 31, 2025 was estimated by utilizing a market approach based on an earnings multiple. The average of forward earnings multiples of comparable publicly traded companies based on independent analysts’ consensus estimates for each company’s forecasted earnings was applied to PGIM’s forecasted results, and an implied control premium was added.
As of December 31, 2024 and 2023, the Company was in compliance with all debt covenants related to the borrowings in the table above. For additional information regarding the Company’s short- and long-term debt obligations, see Note 18 to the Consolidated Financial Statements. Based on the use of proceeds, we classify our borrowings as capital debt and operating debt.
As of December 31, 2025 and 2024, the Company was in compliance with all debt covenants related to the borrowings in the table above. For additional information regarding the Company’s short- and long-term debt obligations, see Note 18 to the Consolidated Financial Statements. Based on the use of proceeds, we classify our borrowings as capital debt and operating debt.
(2) There was no allowance for credit losses as of both December 31, 2024 and 2023. (3) Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.” Assets Supporting Experience-Rated Contractholder Liabilities For information regarding the composition of “Assets supporting experience-rated contractholder liabilities,” see Note 3 to the Consolidated Financial Statements.
(2) There was no allowance for credit losses as of both December 31, 2025 and 2024. (3) Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading.” Assets Supporting Experience-Rated Contractholder Liabilities For information regarding the composition of “Assets supporting experience-rated contractholder liabilities,” see Note 3 to the Consolidated Financial Statements.
(6) Equity in earnings of joint ventures and other operating entities is included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as it is reflected on an after-tax U.S. GAAP basis as a separate line in the Consolidated Statements of Operations.
(3) Equity in earnings of joint ventures and other operating entities is included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as it is reflected on an after-tax U.S. GAAP basis as a separate line in the Consolidated Statements of Operations.
We determine our discount rate, used to value the pension and postretirement benefit obligations, based upon rates commensurate with current yields on high quality corporate bonds. See Note 19 to the Consolidated Financial Statements for information regarding the December 31, 2023 methodology we employed to determine our discount rate for 2024.
We determine our discount rate, used to value the pension and postretirement benefit obligations, based upon rates commensurate with current yields on high quality corporate bonds. See Note 19 to the Consolidated Financial Statements for information regarding the December 31, 2024 methodology we employed to determine our discount rate for 2025.
In addition, each of our businesses and corporate centers have forums for leaders to identify, assess, and monitor risk and exposure issues and to review new business activities and initiatives. Risk Management Oversight Risk Management manages the risk management framework. The function operates independently and is responsible for recommending policies, limits and standards for all risks.
In addition, each of our businesses and corporate functions have forums for leaders to identify, assess, and monitor risk and exposure issues and to review new business activities and initiatives. Risk Management Oversight Risk Management manages the risk management framework. The function operates independently and is responsible for recommending policies, limits and standards for all risks.
(4) Primarily includes equity investments accounted for under the measurement alternative, tax advantaged investments, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding our holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements.
(3) Primarily includes equity investments accounted for under the measurement alternative, tax advantaged investments, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding our holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements.
Best to “A-” for our domestic life insurance companies would require PICA to either post collateral or a letter of credit in the amount of approximately $0.9 billion, based on the level of statutory reserves related to the variable annuity business acquired from Allstate.
Best to “A-” for our domestic life insurance companies would require PICA to either post collateral or a letter of credit in the amount of approximately $0.8 billion, based on the level of statutory reserves related to the variable annuity business acquired from Allstate.
Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. For our Japan operations, we used an exchange rate of 129 yen per USD.
Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. For our Japan operations, we used an exchange rate of 143 yen per USD.
As part of our investment management operations, we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds. “Other invested assets” also include certain assets in consolidated investment funds where the Company is deemed to exercise control over the funds.
As part of our investment management operations, we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds. “Other invested assets” also includes certain assets in consolidated investment funds where the Company is deemed to exercise control over the funds.
For additional information regarding the key estimates and assumptions surrounding the determination of fair value of fixed maturity and equity securities, as well as derivative instruments, embedded derivatives and other investments, see Note 6 to the Consolidated Financial Statements and “—Valuation of Assets and Liabilities—Fair Value of Assets and Liabilities.” 67 Table of Contents For our investments classified as available-for-sale, the impact of changes in fair value is recorded as an unrealized gain or loss in AOCI, a separate component of equity.
For additional information regarding the key estimates and assumptions surrounding the determination of fair value of fixed maturity and equity securities, as well as derivative instruments, embedded derivatives and other investments, see Note 6 to the Consolidated Financial Statements and “—Valuation of Assets and Liabilities—Fair Value of Assets and Liabilities.” For our investments classified as available-for-sale, the impact of changes in fair value is recorded as an unrealized gain or loss in AOCI, a separate component of equity.
Corporate centers manage key risks and initiatives through existing senior leadership team structures. • Senior Management and the Board: Senior management plays a critical role in reviewing the risk profile of the Company, including identifying impacts to the business strategy and risks in any new strategies under consideration.
Corporate functions manage key risks and initiatives through existing senior leadership team structures. • Senior Management and the Board: Senior management plays a critical role in reviewing the risk profile of the Company, including identifying impacts to the business strategy and risks in any new strategies under consideration.
Gross account withdrawals for our domestic insurance operations’ products in 2024 were generally consistent with our assumptions in asset/liability management, and the associated cash outflows did not have a material adverse impact on our overall liquidity. International insurance operations.
Gross account withdrawals for our domestic insurance operations’ products in 2025 were generally consistent with our assumptions in asset/liability management, and the associated cash outflows did not have a material adverse impact on our overall liquidity. International insurance operations.
December 31, 2024 2023 (in billions) Foreign currency hedging instruments: USD-denominated assets associated with yen-based entities(1) $ 6.1 $ 7.2 Dual currency and synthetic dual currency investments(2) 0.3 0.3 Total foreign currency hedges $ 6.4 $ 7.5 __________ (1) Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding.
December 31, 2025 2024 (in billions) Foreign currency hedging instruments: USD-denominated assets associated with yen-based entities(1) $ 7.5 $ 6.1 Dual currency and synthetic dual currency investments(2) 0.3 0.3 Total foreign currency hedges $ 7.8 $ 6.4 __________ (1) Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding.
Although not yet filed, we expect the RBC ratios for PICA and our other domestic insurance subsidiaries as of December 31, 2024 to continue to be above target levels that would support “AA” financial strength ratings.
Although not yet filed, we expect the RBC ratios for PICA and our other domestic insurance subsidiaries as of December 31, 2025 to continue to be above target levels that would support “AA” financial strength ratings.
Risk Management, led by the Chief Risk Officer, oversees these risks under the guidance of the Executive Risk Committee (“ERC”) and Enterprise Risk Management Council (“ERMC”). Additionally, Risk Management works with Prudential’s businesses and corporate centers to identify, monitor and manage risks that Prudential may face.
Risk Management, led by the Chief Risk Officer, oversees these risks under the guidance of the Executive Risk Committee (“ERC”) and Enterprise Risk Management Council (“ERMC”). Additionally, Risk Management works with Prudential’s businesses and corporate functions to identify, monitor and manage risks that Prudential may face.
We utilized the entirety of this $1.0 billion share repurchase authorization in 2024. In December 2024, the Board authorized the Company to repurchase, at management’s discretion, up to $1.0 billion of its outstanding Common Stock during the period from January 1, 2025 through December 31, 2025.
We utilized the entirety of this $1.0 billion share repurchase authorization in 2025. In December 2025, the Board authorized the Company to repurchase, at management’s discretion, up to $1.0 billion of its outstanding Common Stock during the period from January 1, 2026 through December 31, 2026.
These liquidity needs can vary materially due to, among other items, changes in interest rates, equity markets, mortality and policyholder behavior. The hedging portion of our Individual Retirement Strategies’ ALM strategy may also result in derivative related collateral postings to (when we are in a net post position) or from (when we are in a net receive position) counterparties.
These liquidity needs can vary materially due to, among other items, changes in interest rates, equity markets, mortality and policyholder behavior. 88 Table of Contents The hedging portion of our Individual Retirement Strategies’ ALM strategy may also result in derivative related collateral postings to (when we are in a net post position) or from (when we are in a net receive position) counterparties.
The following tables set forth the breakdown of the gross carrying values of commercial mortgage and agricultural property loans by geographic region and property type, as of the dates indicated: December 31, 2024 December 31, 2023 Gross Carrying Value % of Total Gross Carrying Value % of Total ($ in millions) Commercial mortgage and agricultural property loans by region: U.S.
The following tables set forth the breakdown of the gross carrying values of commercial mortgage and agricultural property loans by geographic region and property type, as of the dates indicated: December 31, 2025 December 31, 2024 Gross Carrying Value % of Total Gross Carrying Value % of Total ($ in millions) Commercial mortgage and agricultural property loans by region: U.S.
Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The following table summarizes the ratings for Prudential Financial and certain of its subsidiaries as of the date of this filing: 128 Table of Contents A.M.
Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The following table summarizes the ratings for Prudential Financial and certain of its subsidiaries as of the date of this filing: 93 Table of Contents A.M.
The continued adequacy of this liquidity will depend upon factors such as future securities market conditions, changes in interest rate levels, policyholder perceptions of our financial strength, policyholder behavior, catastrophic events and the relative safety and attractiveness of competing products, each of which could lead to reduced cash inflows or increased cash outflows.
The continued adequacy of this liquidity will depend upon factors such as future securities market conditions, changes in interest rate levels, policyholder perceptions of our financial strength, policyholder behavior, catastrophic events and the relative safety and attractiveness of competing products, each of which could lead to reduced cash 85 Table of Contents inflows or increased cash outflows.
The future policy benefit reserves for the traditional participating life insurance products of the Closed Block division, which as of December 31, 2024, represented 16% of our total future policy benefit reserves are determined using the net premium valuation methodology.
The future policy benefit reserves for the traditional participating life insurance products of the Closed Block division, which as of December 31, 2025, represented 16% of our total future policy benefit reserves are determined using the net premium valuation methodology.
In addition, a portion of our fixed products has a market value adjustment provision that affords protection of lapse in the case of rising interest rates. We also manage these risk exposures through external reinsurance for certain of our fixed annuity products. For additional information regarding our external reinsurance agreements, see “Business—Reinsurance” and Note 15 to the Consolidated Financial Statements.
In addition, a portion of our fixed products has a market value adjustment provision that affords protection of lapse in the case of rising interest rates. We also manage these risk exposures through external reinsurance for certain of our fixed annuity products. For additional information regarding our external reinsurance agreements, see Note 15 to the Consolidated Financial Statements.
Liquidity associated with other activities Hedging activities associated with Individual Retirement Strategies 123 Table of Contents For the portion of our Individual Retirement Strategies’ ALM strategy executed through hedging, we enter into a range of exchange-traded, cleared and other OTC equity and interest rate derivatives in order to hedge certain capital market risks related to more severe market conditions.
Liquidity associated with other activities Hedging activities associated with Individual Retirement Strategies For the portion of our Individual Retirement Strategies’ ALM strategy executed through hedging, we enter into a range of exchange-traded, cleared and other OTC equity and interest rate derivatives in order to hedge certain capital market risks related to more severe market conditions.
Although the accounting guidance provides for an optional qualitative assessment for testing goodwill impairment, the Company performed the quantitative test for all reporting units and compared each reporting unit’s estimated fair value to its carrying value as of December 31, 2024. The carrying value represents the capital that the business would require if operating as a standalone entity.
Although the accounting guidance provides for an optional qualitative assessment for testing goodwill impairment, the Company performed the quantitative test for its reporting units and compared each reporting unit’s estimated fair value to its carrying value as of December 31, 2025. The carrying value represents the capital that the business would require if operating as a standalone entity.
See Note 16 to the Consolidated Financial Statements for additional information. 89 Table of Contents Each year, the Board of Directors of The Prudential Insurance Company of America (“PICA”) determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains (losses), mortality experience and other factors.
See Note 16 to the Consolidated Financial Statements for additional information. Each year, the Board of Directors of The Prudential Insurance Company of America (“PICA”) determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains (losses), mortality experience and other factors.
Risk Identification Prudential relies on a combination of activities to ensure that all material risks have been identified and managed as appropriate. The Company conducts risk identification through several processes at the business unit, corporate, senior management, and Board levels to provide a “top-down” and “bottom-up” three-dimensional view of risk.
Risk Identification Prudential relies on a combination of activities to ensure that all material risks have been identified and managed as appropriate. The Company conducts risk identification through several processes at the business unit, corporate, senior 119 Table of Contents management, and Board levels to provide a “top-down” and “bottom-up” three-dimensional view of risk.
Historically, the causes of credit losses have been specific to each individual issuer and have not directly resulted in credit losses to other securities within the same industry or geographic region. We may also realize additional credit and interest rate-related losses through sales of investments pursuant to our credit risk and portfolio management objectives.
Historically, the causes of credit losses have been specific to each individual issuer and have not directly resulted in credit losses to other securities within the same industry 103 Table of Contents or geographic region. We may also realize additional credit and interest rate-related losses through sales of investments pursuant to our credit risk and portfolio management objectives.
For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $1.1 billion and $1.4 billion as of December 31, 2024 and 2023, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold.
For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $1.0 billion and $1.1 billion as of December 31, 2025 and 2024, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold.
Enterprise Group, our strategic investment in Ghana, has historically utilized the Ghanaian cedi as its functional currency given it is the currency of the primary economic environment in which the entity operates. In the fourth quarter of 2023, Ghana experienced a cumulative inflation rate that exceeded 100% over a 3-year period.
Highly inflationary economy Enterprise Group, our strategic investment in Ghana, has historically utilized the Ghanaian cedi as its functional currency given it is the currency of the primary economic environment in which the entity operates. In the fourth quarter of 2023, Ghana experienced a cumulative inflation rate that exceeded 100% over a 3-year period.
For purposes of measuring segment performance, adjusted operating income excludes the changes in fair value of MRBs and instead reflects the performance of these riders in net income, net of related hedges, in “Change in value of market risk benefits, net of related hedging gains (losses),” except for the portion of the change attributable to changes in the Company’s NPR which is recorded in OCI.
For purposes of measuring segment performance, adjusted operating income excludes the changes in fair value of MRBs and instead reflects the performance of these riders in net income, net of related hedges, in “Change in value of market risk benefits, net of related hedging gains (losses),” except for the portion of the change attributable to changes in the Company’s non-performance risk (“NPR”) which is recorded in OCI.
A description of the estimates and assumptions used in the preparation of each of these financial statement balances is provided above. Changes to the insurance cash flow assumptions are reflected in net income through the retrospective unlocking method for traditional long duration, limited-payment and universal life type products.
A description of the estimates and assumptions used in 75 Table of Contents the preparation of each of these financial statement balances is provided above. Changes to the insurance cash flow assumptions are reflected in net income through the retrospective unlocking method for traditional long duration, limited-payment and universal life type products.
We have retained the risk that the total amount of death benefit payable may be greater than the contractholder account value; however, a substantial portion of the account values associated with GMDBs are subject to an automatic rebalancing feature because the contractholder also selected a living benefit guarantee which includes an automatic rebalancing feature.
We have retained the risk that the total amount of 61 Table of Contents death benefit payable may be greater than the contractholder account value; however, a substantial portion of the account values associated with GMDBs are subject to an automatic rebalancing feature because the contractholder also selected a living benefit guarantee which includes an automatic rebalancing feature.
This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities. 120 Table of Contents Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support.
This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities. Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support.
For a full discussion of our Individual Retirement Strategies’ risk management strategy, see “—Results of Operations by Segment—U.S. Businesses—Retirement Strategies.” This portion of our Individual Retirement Strategies’ ALM strategy requires access to liquidity to meet payment obligations relating to these derivatives, such as payments for periodic settlements, purchases, maturities and terminations.
For a full discussion of our Individual Retirement Strategies’ risk management strategy, see “—Results of Operations by Segment—Retirement Strategies.” This portion of our Individual Retirement Strategies’ ALM strategy requires access to liquidity to meet payment obligations relating to these derivatives, such as payments for periodic settlements, purchases, maturities and terminations.
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2023 in comparison to the year ended December 31, 2022 have been omitted.
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2024 in comparison to the year ended December 31, 2023 have been omitted.
The information below is for illustrative purposes and includes only the hypothetical impact on December 31, 2024 balances of changes in a single assumption and not changes in any combination of assumptions.
The information below is for illustrative purposes and includes only the hypothetical impact on December 31, 2025 balances of changes in a single assumption and not changes in any combination of assumptions.
GAAP, policyholder liabilities associated with our fixed and variable indexed annuity products are recorded in “Policyholders’ account balances,” and include both the contract value that has accrued to the benefit of the policyholder and the fair value of embedded derivative instruments associated with the index-linked features for these products.
Under U.S. GAAP, policyholder liabilities associated with our fixed and variable indexed annuity products are recorded in “Policyholders’ account balances,” and include both the contract value that has accrued to the benefit of the policyholder and the fair value of embedded derivative instruments associated with the index-linked features for these products.
Private placements typically offer enhanced yields due to an illiquidity premium and generally offer enhanced credit protection in the form of covenants. Our origination capability offers the opportunity to lead transactions and gives us the opportunity for better terms, including covenants and call protection, and to take advantage of innovative deal structures.
Private placements typically offer enhanced yields due to an illiquidity premium and generally 96 Table of Contents offer enhanced credit protection in the form of covenants. Our origination capability offers the opportunity to lead transactions and gives us the opportunity for better terms, including covenants and call protection, and to take advantage of innovative deal structures.
The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’s USD-equivalent earnings. For additional information regarding this intercompany arrangement, see “—Results of Operations—Impact of Foreign Currency Exchange Rates,” above.
The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’s USD-equivalent earnings. For additional information regarding this intercompany arrangement, see “—External and Economic Factors—Impact of Foreign Currency Exchange Rates,” above.
Given the amount of plan assets as of December 31, 2023, the beginning of the measurement year, if we had assumed an expected rate of return for both our domestic pension and other domestic postretirement benefit plans that was 100 bps higher or 100 bps lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below.
Given the amount of plan assets as of December 31, 2024, the beginning of the measurement year, if we had assumed an expected rate of return for both our domestic pension and other 77 Table of Contents domestic postretirement benefit plans that was 100 bps higher or 100 bps lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below.
The increase in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio for 2024 compared to 2023 was primarily the result of higher fixed income reinvestment rates.
The increase in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio for 2025 compared to 2024 was primarily the result of higher fixed income reinvestment rates.
The primary investment objectives of the Closed Block division include: • providing for the reasonable dividend expectations of the participating policyholders within the Closed Block division; and • optimizing total return, including both investment income yield and capital appreciation, within risk constraints, while managing the market risk exposures associated with the major products in the Closed Block division.
The primary investment objectives of the Closed Block division include: • providing for the reasonable dividend expectations of the participating policyholders within the Closed Block division; and • optimizing total return, including both investment income yield and capital appreciation, within risk constraints, while managing the market risk exposures associated with the major product liabilities in the Closed Block division.
Our Chief Investment Officer Organization (“CIO Organization”) develops investment policies subject to risk limits proposed by our Risk Management group for the general account portfolios excluding Funds Withheld of our domestic and international insurance 92 Table of Contents subsidiaries and directs and oversees management of the general account portfolios within risk limits approved annually by the Investment Committee.
Our Chief Investment Officer Organization (“CIO Organization”) develops investment policies subject to risk limits proposed by our Risk Management group for the general account portfolios excluding Funds Withheld of our domestic and international insurance subsidiaries and directs and oversees management of the general account portfolios within risk limits approved annually by the Investment Committee.
We believe the cash flows from our fee-based PGIM businesses are adequate to satisfy the current liquidity requirements of these operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.
We believe the cash flows from our fee-based PGIM businesses are adequate to satisfy the current liquidity requirements of these operations, as well as 89 Table of Contents requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.
As part of this review, we may update these assumptions and make refinements to our models 63 Table of Contents based upon emerging experience, future expectations and other data, including any observable market data we feel is indicative of a long-term trend.
As part of this review, we may update these assumptions and make refinements to our models based upon emerging experience, future expectations and other data, including any observable market data we feel is indicative of a long-term trend.
(5) Represents the change in fair value of the derivatives utilized to hedge potential claims associated with our variable annuity living and death benefit guarantees.
(4) Represents the change in fair value of the derivatives utilized to hedge potential claims associated with our variable annuity living and death benefit guarantees.
As of December 31, 2024 and 2023, $25.1 billion and $17.3 billion, respectively, of the insurance-related liabilities for Gibraltar Life (including PGFL) are primarily associated with yen- and USD-denominated products that are coinsured to Gibraltar Re and primarily supported by yen- and USD-denominated assets. (3) Reflects the impact of intercompany eliminations. (4) Amounts are reflected gross of affiliated reinsurance recoverables.
As of December 31, 2025 and 2024, $31.0 billion and $25.1 billion, respectively, of the insurance-related liabilities for Gibraltar Life (including PGFL) are primarily associated with yen- and USD-denominated products that are coinsured to Gibraltar Re and primarily supported by yen- and USD-denominated assets. (3) Reflects the impact of intercompany eliminations. (4) Amounts are reflected gross of affiliated reinsurance recoverables.
See Note 6 to the Consolidated Financial Statements for an additional description of the valuation hierarchy levels as well as for the balances of assets and liabilities measured at fair value on a recurring basis by hierarchy level presented on a consolidated basis. 112 Table of Contents The table below presents the balances of assets and liabilities measured at fair value on a recurring basis, as of the periods indicated, and the portion of such assets and liabilities that are classified in Level 3 of the valuation hierarchy.
See Note 6 to the Consolidated Financial Statements for an additional description of the valuation hierarchy levels as well as for the balances of assets and liabilities measured at fair value on a recurring basis by hierarchy level presented on a consolidated basis. 115 Table of Contents The table below presents the balances of assets and liabilities measured at fair value on a recurring basis, as of the dates indicated, and the portion of such assets and liabilities that are classified in Level 3 of the valuation hierarchy.
For additional information regarding our hedging strategy, see “—Results of Operations—Impact of Foreign Currency Exchange Rates.” Cash settlements from these hedging activities result in cash flows between subsidiaries of Prudential Financial and either international-based subsidiaries or external parties. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged.
For additional information regarding our hedging strategy, see “—External and Economic Factors—Impact of Foreign Currency Exchange Rates.” Cash settlements from these hedging activities result in cash flows between subsidiaries of Prudential Financial and either international-based subsidiaries or external parties. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged.
The change in the liability for these products is measured utilizing a valuation methodology required under U.S GAAP, and includes the fair value of all index credits for the current term and future projected renewals of the policy.
The change in 56 Table of Contents the liability for these products is measured utilizing a valuation methodology required under U.S GAAP and includes the fair value of all index credits for the current term and future projected renewals of the policy.
Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein. Effective and prudent liquidity and capital management is a priority across the Company.
Our ability to generate and maintain sufficient liquidity and capital 79 Table of Contents depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein. Effective and prudent liquidity and capital management is a priority across the Company.
Includes approx imately $9 billion of account values in relation to the PDI reinsurance transaction, as discussed above, and certain Highest Daily Lifetime Income (“HDI”) v.3.0 business for the period April 1, 2015 through December 31, 2016. The HDI contracts with living benefits also have an automatic rebalancing feature. See Note 15 to the Consolidated Financial Statements for additional information.
Includes approx imately $8 billion of account values in relation to the PDI reinsurance transaction, and certain Highest Daily Lifetime Income (“HDI”) v.3.0 business for the period April 1, 2015 through December 31, 2016. The HDI contracts with living benefits also have an automatic rebalancing feature. See Note 15 to the Consolidated Financial Statements for additional information.
We have taken pricing and product actions to ensure we realize appropriate returns for the current economic environment and to diversify our product mix to further limit our sensitivity to interest rates. • International Businesses. We remain focused on meeting customers’ protection and financial needs as well as maintaining the underlying strength of our distribution channels.
We have taken pricing and product actions to ensure we realize appropriate returns for the current economic environment and to diversify our product mix to further limit our sensitivity to interest rates. • International Businesses. We remain focused on meeting customers’ evolving protection, retirement, and savings needs as well as maintaining the underlying strength of our distribution channels.
Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $83.2 billion and $80.0 billion as of December 31, 2024 and 2023, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.
Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $90.0 billion and $83.2 billion as of December 31, 2025 and 2024, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.
An increase or decrease in our effective tax rate by one percentage point would have resulted in a decrease or increase in our 2024 “Total income tax expense (benefit)” of $32 million. Contingencies A contingency is an existing condition that involves a degree of uncertainty that will ultimately be resolved upon the occurrence of future events.
An increase or decrease in our effective tax rate by one percentage point would have resulted in a decrease or increase in our 2025 “Total income tax expense (benefit)” of $47 million. Contingencies A contingency is an existing condition that involves a degree of uncertainty that will ultimately be resolved upon the occurrence of future events.
For a further discussion of our allowance for credit losses, including our assertions regarding any intention or requirement to sell debt securities before anticipated recovery, see “—Realized Investment Gains and Losses—Credit Losses” below.
For a further discussion of our allowance for credit losses, including our 95 Table of Contents assertions regarding any intention or requirement to sell debt securities before anticipated recovery, see “—Realized Investment Gains and Losses—Credit Losses” below.
The reserves for future policy benefits of our Institutional Retirement Strategies segment, which as of December 31, 2024, represented 32% of our total future policy benefit reserves, primarily relate to our non-participating life contingent group annuity and structured settlement products and are generally calculated using the net premium valuation methodology, as described above.
The reserves for future policy benefits of our Institutional Retirement Strategies segment, which as of December 31, 2025, represented 32% of our total future policy benefit reserves, primarily relate to our non-participating life contingent group annuity and structured settlement products and are generally calculated using the net premium valuation methodology.
(3) Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $185 million and $157 million as of December 31, 2024 and 2023, respectively, and a draw on a credit facility with recourse only to collateral pledged by the Company of $255 million as of both December 31, 2024 and 2023, respectively.
(3) Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $216 million and $185 million as of December 31, 2025 and 2024, respectively, and a draw on a credit facility with recourse only to collateral pledged by the Company of $255 million as of both December 31, 2025 and 2024.
The Board has authorized our Chairman and Chief Executive Officer and Vice Chair to approve certain capital actions on behalf of the Company and to further delegate authority with respect to capital actions to appropriate officers, up to specified limits. Any capital commitment that exceeds the authority granted to senior management must be separately authorized by the Board.
The Board has authorized our Chief Executive Officer and Chief Financial Officer to approve certain capital actions on behalf of the Company and to further delegate authority with respect to capital actions to appropriate officers, up to specified limits. Any capital commitment that exceeds the authority granted to senior management must be separately authorized by the Board.
Amounts noted are from the U.S.-based entities’ perspectives. (2) Includes non-yen related cash settlements received (paid) of $9 million, primarily denominated in Brazilian real, Chilean peso and Australian dollar, and ($37) million, primarily denominated in Brazilian real, Australian dollar and Chilean peso for the years ended December 31, 2024 and 2023, respectively.
Amounts noted are from the U.S.-based entities’ perspectives. (2) Includes non-yen related cash settlements received (paid) of ($11) million, primarily denominated in Brazilian real, Australian dollar and Chilean peso and ($9) million, primarily denominated in Brazilian real, Chilean peso and Australian dollar for the years ended December 31, 2025 and 2024, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe estimated changes in fair values do not include separate account assets. 133 Table of Contents As of December 31, 2024 As of December 31, 2023 Notional Fair Value Hypothetical Change in Fair Value Notional Fair Value Hypothetical Change in Fair Value (in millions) Financial assets with interest rate risk(1): Fixed maturities(2) $ 309,562 $ (26,593) $ 318,108 $ (30,804) Commercial mortgage and other loans 58,932 (2,148) 56,148 (2,275) Derivatives with interest rate risk: Swaps $ 285,786 (11,014) (2,428) $ 276,414 (11,980) (3,768) Futures 11,792 (16) (369) 11,120 (20) (460) Options 139,693 (436) 20 85,760 (777) (166) Forwards 35,144 268 (112) 36,112 (116) (125) Synthetic GICs 76,416 0 (1) 78,009 0 (9) Indexed universal life contracts (1,434) 179 (1,348) 169 Indexed annuity contracts (11,312) 137 (6,404) (645) Total embedded derivatives(3) (12,746) 316 (7,752) (476) Financial liabilities with interest rate risk(4): Short-term and long-term debt 19,092 2,730 18,886 3,026 Policyholders’ account balances—investment contracts 74,871 3,048 68,883 2,786 Insurance liabilities with interest rate risk: Benefit reserves (traditional and limited-payment contracts)(5) 186,845 21,294 192,302 25,711 Market risk benefits(6) 2,124 1,602 3,486 2,113 Net estimated potential loss $ (2,641) $ (4,447) __________ (1) Excludes financial assets that are considered Funds Withheld, where the economic benefits and investment risk associated with the Funds Withheld assets ultimately inure to the reinsurer.
Biggest changeAs of December 31, 2025 As of December 31, 2024 Notional Fair Value Hypothetical Change in Fair Value Notional Fair Value Hypothetical Change in Fair Value (in millions) Financial assets with interest rate risk(1): Fixed maturities(2) $ 331,379 $ (25,936) $ 309,562 $ (26,593) Commercial mortgage and other loans 63,971 (2,242) 58,932 (2,148) Derivatives with interest rate risk: Swaps $ 312,751 (12,761) (1,144) $ 285,786 (11,014) (2,428) Futures 13,112 (18) (468) 11,792 (16) (369) Options 231,936 (59) 253 139,693 (436) 20 Forwards 42,729 (203) (275) 35,144 268 (112) Synthetic GICs 75,883 0 0 76,416 0 (1) Indexed universal life contracts (2,295) 363 (1,434) 179 Indexed annuity contracts (16,504) 158 (11,312) 137 Total embedded derivatives(3) (18,799) 521 (12,746) 316 Financial liabilities with interest rate risk(4): Short-term and long-term debt 19,794 2,653 19,092 2,730 Policyholders’ account balances—investment contracts 85,107 3,418 74,871 3,048 Insurance liabilities with interest rate risk: Benefit reserves (traditional and limited-payment contracts)(5) 183,428 19,427 186,845 21,294 Market risk benefits(6) 2,293 1,317 2,124 1,602 Net estimated potential loss $ (2,476) $ (2,641) __________ (1) Excludes financial assets that are considered Funds Withheld, where the economic benefits and investment risk associated with the Funds Withheld assets ultimately inure to the reinsurer.
The following table sets forth the net estimated potential loss in fair value from such a change as of December 31, 2024 and 2023. While these scenarios are for illustrative purposes only and do not reflect our expectations regarding future changes in foreign exchange markets, they represent reasonably possible near-term hypothetical changes that illustrate the potential impact of such events.
The following table sets forth the net estimated potential loss in fair value from such a change as of December 31, 2025 and 2024. While these scenarios are for illustrative purposes only and do not reflect our expectations regarding future changes in foreign exchange markets, they represent reasonably possible near-term hypothetical changes that illustrate the potential impact of such events.
The following table sets forth the net estimated potential loss in fair value on these financial instruments from a hypothetical 100 basis point upward shift as of December 31, 2024 and 2023. This table is presented on a gross basis and excludes offsetting impacts to certain insurance liabilities that are not considered financial liabilities under U.S. GAAP.
The following table sets forth the net estimated potential loss in fair value on these financial instruments from a hypothetical 100 basis point upward shift as of December 31, 2025 and 2024. This table is presented on a gross basis and excludes offsetting impacts to certain insurance liabilities that are not considered financial liabilities under U.S. GAAP.
We manage our exposure to certain risks driven by fluctuations in capital markets primarily through a combination of product design features, such as an automatic rebalancing feature and/or 136 Table of Contents inclusion in our ALM strategy. In addition, we may also utilize external reinsurance as a form of addi tional risk mitigatio n.
We manage our exposure to certain risks driven by fluctuations in capital markets primarily through a combination of product design features, such as an automatic rebalancing feature and/or inclusion in our ALM strategy. In addition, we may also utilize external reinsurance as a form of addi tional risk mitigatio n.
For our domestic general account investment portfolios supporting our U.S. insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies. We manage this risk by hedging substantially all domestic foreign currency denominated fixed income investments into USD.
GAAP earnings” above. For our domestic general account investment portfolios supporting our U.S. insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies. We manage this risk by hedging substantially all domestic foreign currency denominated fixed income investments into USD.
(4) Excludes approximately $169 billion and $155 billion as of December 31, 2024 and 2023, respectively, of certain insurance reserve and deposit liabilities that are not considered financial liabilities. We believe that the interest rate sensitivities of these insurance liabilities would serve as an offset to the net interest rate risk of the financial assets and liabilities, including investment contracts.
(4) Excludes approximately $185 billion and $169 billion as of December 31, 2025 and 2024, respectively, of certain insurance reserve and deposit liabilities that are not considered financial liabilities. We believe that the interest rate sensitivities of these insurance liabilities would serve as an offset to the net interest rate risk of the financial assets and liabilities, including investment contracts.
(5) Changes in fair value of benefit reserves (traditional and limited-payment contracts) are included in AOCI. (6) Amounts reported net of third-party reinsurance. Under U.S.
(5) Changes in fair value of benefit reserves (traditional and limited-payment contracts) are included in AOCI. (6) Amounts reported net of third-party reinsurance. 122 Table of Contents Under U.S.
Changes in equity prices create risk that the resulting changes in asset values will differ from the 134 Table of Contents changes in the value of the liabilities relating to the underlying or hedged products.
Changes in equity prices create risk that the resulting changes in asset values will differ from the changes in the value of the liabilities relating to the underlying or hedged products.
For certain of our international insurance operations outside of Japan, we elect to not hedge the risk of changes in our equity investments due to foreign exchange rate movements. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Foreign Currency Exchange Rates—Impact of products denominated in non-local currencies on U.S. GAAP earnings” above.
For certain of our international insurance operations outside of Japan, we elect to not hedge the risk of changes in our equity investments due to foreign exchange rate movements. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—External and Economic Factors—Impact of Foreign Currency Exchange Rates—Impact of products denominated in non-local currencies on U.S.
GAAP due to the fact that the policyholders own the underlying assets, and we only provide a book value “wrap” on the customers’ funds, which are held in a client-owned trust.
GAAP due to the fact that 124 Table of Contents the policyholders own the underlying assets, and we only provide a book value “wrap” on the customers’ funds, which are held in a client-owned trust.
For additional information regarding our risk management strategies, including our ALM strategy and product design features, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—U.S. Businesses—Retirement Strategies” above. 137 Table of Contents
For additional information regarding our risk management strategies, including our ALM strategy and product design features, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Retirement Strategies” above. 125 Table of Contents
As of December 31, 2024 As of December 31, 2023 Fair Value Hypothetical Change in Fair Value Fair Value Hypothetical Change in Fair Value (in millions) Unhedged portion of equity investment in international subsidiaries and foreign currency denominated investments in domestic general account portfolio $ 2,859 $ 286 $ 3,808 $ 381 For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investments—Portfolio Composition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—International Businesses” above.
As of December 31, 2025 As of December 31, 2024 Fair Value Hypothetical Change in Fair Value Fair Value Hypothetical Change in Fair Value (in millions) Unhedged portion of equity investment in international subsidiaries and foreign currency denominated investments in domestic general account portfolio $ 4,106 $ 411 $ 2,859 $ 286 For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investments—Portfolio Composition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—International Businesses” above.
For information regarding the impacts of changes in the interest rate environment, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Impact of Changes in the Interest Rate Environment” above.
For information regarding the impacts of changes in the interest rate environment, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—External and Economic Factors—Impact of Changes in the Interest Rate Environment” above.
We estimate our equity risk from a hypothetical 10% decline in equity benchmark market levels. The following table sets forth the net estimated potential loss in fair value from such a decline as of December 31, 2024 and 2023.
We target price sensitivities that approximate those of the benchmark indices. We estimate our equity risk from a hypothetical 10% decline in equity benchmark market levels. The following table sets forth the net estimated potential loss in fair value from such a decline as of December 31, 2025 and 2024.
This volatility has been mitigated by disaggregating the USD and AUD-denominated businesses in Gibraltar 135 Table of Contents Life into separate divisions, each with its own functional currency that aligns with the underlying products and investments.
This volatility has been mitigated by disaggregating the USD and AUD-denominated businesses in certain of our Japanese operations into separate divisions, each with its own functional currency that aligns with the underlying products and investments.
As a result, the actual loss in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.
As a result, the actual loss in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations. The estimated changes in fair values do not include separate account assets.
We assess the impact of interest rate movements on the value of our financial assets, financial liabilities and derivatives using hypothetical test scenarios that assume either upward or downward 100 basis point parallel shifts in the yield curve from prevailing interest rates, reflecting changes in either credit spreads or the risk-free rate.
We consider risk-based capital and tax implications as well as current market conditions in our asset/liability management strategies. 121 Table of Contents We assess the impact of interest rate movements on the value of our financial assets, financial liabilities and derivatives using hypothetical test scenarios that assume either upward or downward 100 basis point parallel shifts in the yield curve from prevailing interest rates, reflecting changes in either credit spreads or the risk-free rate.
Prior period amounts have been updated to conform to current period presentation. (2) Includes assets classified as “Fixed maturities, available-for-sale, at fair value,” “Assets supporting experience-rated contractholder liabilities, at fair value” and “Fixed maturities, trading, at fair value.” Approximately $304 billion and $310 billion as of December 31, 2024 and 2023, respectively, of fixed maturities are classified as available-for-sale.
(2) Includes assets classified as “Fixed maturities, available-for-sale, at fair value,” “Assets supporting experience-rated contractholder liabilities, at fair value” and “Fixed maturities, trading, at fair value.” Approximately $325 billion and $304 billion as of December 31, 2025 and 2024, respectively, of fixed maturities are classified as available-for-sale.
As of December 31, 2024 As of December 31, 2023 Notional Fair Value Hypothetical Change in Fair Value Notional Fair Value Hypothetical Change in Fair Value (in millions) Equity securities(1) $ 12,298 $ (1,230) $ 10,282 $ (1,028) Equity-based derivatives(2) $ 116,253 720 (1,538) $ 61,701 (441) (679) Indexed universal life contracts (1,434) 23 (1,348) 21 Indexed annuity contracts (11,312) 2,278 (6,404) 1,388 Total embedded derivatives(2)(3) (12,746) 2,301 (7,752) 1,409 Market risk benefits(4) 2,124 (848) 3,486 (1,069) Net estimated potential loss $ (1,315) $ (1,367) __________ (1) Includes equity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Equity securities, at fair value.” (2) The notional and fair value of equity-based derivatives and the fair value of embedded derivatives are also reflected in amounts under “Market Risk Related to Interest Rates” above, and are not cumulative.
As of December 31, 2025 As of December 31, 2024 Notional Fair Value Hypothetical Change in Fair Value Notional Fair Value Hypothetical Change in Fair Value (in millions) Equity securities(1) $ 14,918 $ (1,492) $ 12,298 $ (1,230) Equity-based derivatives(2) $ 216,667 1,393 (2,532) $ 116,253 720 (1,538) Indexed universal life contracts (2,295) 55 (1,434) 23 Indexed annuity contracts (16,504) 3,033 (11,312) 2,278 Total embedded derivatives(2)(3) (18,799) 3,088 (12,746) 2,301 Market risk benefits(4) 2,293 (737) 2,124 (848) Net estimated potential loss $ (1,673) $ (1,315) __________ (1) Includes equity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Equity securities, at fair value.” 123 Table of Contents (2) The notional and fair value of equity-based derivatives and the fair value of embedded derivatives are also reflected in amounts under “Market Risk Related to Interest Rates” above, and are not cumulative.
In certain markets, capital market limitations that hinder our ability to acquire assets that approximate the duration of some of our liabilities are considered in setting duration targets. We consider risk-based capital and tax implications as well as current market conditions in our asset/liability management strategies.
In certain markets, capital market limitations that hinder our ability to acquire assets that approximate the duration of some of our liabilities are considered in setting duration targets.
Asset/liability mismatches create the risk that changes in liability values will differ from the changes in the value of the related assets.
Market Risk Related to Interest Rates We perform liability-driven investing and engage in careful asset/liability management. Asset/liability mismatches create the risk that changes in liability values will differ from the changes in the value of the related assets.
We benchmark our return on equity holdings against a blend of market indices, mainly the S&P 500 and Russell 2000 for U.S. equities. We benchmark foreign equities against the Tokyo Price Index, and the MSCI EAFE, a market index of European, Australian, and Far Eastern equities. We target price sensitivities that approximate those of the benchmark indices.
We benchmark our return on equity holdings against a blend of market indices, mainly the S&P 500 and Russell 2000 for U.S. equities. We benchmark foreign equities against the Tokyo Price Index, and the MSCI EAFE, a market index which captures large and mid cap representation across developed markets around the world, excluding the U.S. and Canada.
Our risk management process utilizes a variety of tools and techniques, including: • Measures of price sensitivity to market changes (e.g., interest rates, equity index prices, foreign exchange); • Asset/liability management; • Stress scenario testing; • Hedging programs; and • Risk management governance, including policies, limits, and a committee that oversees investment and market risk.
Market Risk Management Management of market risk, which we consider to be a combination of both investment risk and market risk exposures, includes the identification and measurement of various forms of risk, the establishment of risk thresholds and the creation of processes intended to maintain risks within these thresholds while optimizing returns on the underlying assets or liabilities. 120 Table of Contents Our risk management process utilizes a variety of tools and techniques, including: • Measures of price sensitivity to market changes (e.g., interest rates, equity index prices, foreign exchange); • Asset/liability management; • Stress scenario testing; • Hedging programs; and • Risk management governance, including policies, limits, and a committee that oversees investment and market risk.
For example, for our variable annuities business , potential living benefit claims resulting from more severe market conditions are hedged using derivative instruments. • Management of portfolio concentration risk.
For example, for our variable annuities business , potential living benefit claims resulting from more severe market conditions are hedged using derivative instruments. • Management of portfolio concentration risk. For example, ongoing monitoring and management at the enterprise level of key rate, currency and other concentration risks support diversification efforts to mitigate exposure to individual markets and sources of risk.
Removed
Market Risk Management Management of market risk, which we consider to be a combination of both investment risk and market risk exposures, includes the identification and measurement of various forms of risk, the establishment of risk thresholds and the creation of processes intended to maintain risks within these thresholds while optimizing returns on the underlying assets or liabilities.
Removed
For example, ongoing monitoring and management at the enterprise level of key rate, currency and other concentration risks support diversification efforts to mitigate exposure to individual markets and sources of risk. 132 Table of Contents Market Risk Related to Interest Rates We perform liability-driven investing and engage in careful asset/liability management.

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