AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Distribution and PGIM capabilities are established, but comparative barriers and superior economics attributable to a defensible mechanism are not demonstrated.
durability · — · Long-duration obligations do not establish a durable competitive advantage; planned cross-selling gains remain prospective.
customer dependency · — · Contractual relationships exist, but customer switching penalties, superior persistency and dependence on Prudential-specific capabilities are not established.
erosion resilience · — · The Japanese suspension demonstrates erosion, while PGIM growth provides counterbalancing operating evidence. Resilience of a company-wide moat remains unestablished.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Management reports adjusting prices, but fee and revenue growth do not isolate realized rate changes or pricing relative to risk.
retention · 2/4 · Indirect evidence is mixed: continuing insurance revenue and third-party institutional fees support ongoing demand, while retail third-party fees declined slightly. Market values, investment income and new business confound retention; no retention rate is inferred.
margin resilience · 2/4 · PGIM's first-half revenue and adjusted operating income increased with much smaller expense growth. The estimated incurred Japanese suspension cost demonstrates meaningful vulnerability elsewhere; segment results do not prove pricing-driven resilience.
contractual freedom · 2/4 · Prudential adjusts product prices and features, but regulatory premium-rate powers and existing annuity guarantees constrain discretion. Broad freedom to reprice in-force obligations is not established.
Predictability64
Financial-sector stability over five consecutive reported annual periods: equal weights for nondeclining revenue frequency, revenue-growth volatility (5–40pp), positive consolidated earnings frequency, and net-income/revenue margin volatility (3–20pp). Uses reported accounting scope; not industrial FCF or a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 18.92
- positiveEarningsShare
- 80.00
- netMarginStdDev
- 4.26
Financial strength—
Insufficient current sector evidence for every criterion; no category score is inferred.
capital adequacy · — · The passages describe solvency regulation but omit current insurer capital ratios, exact denominators and applicable requirements. Earnings and repurchases cannot substitute for demonstrated solvency headroom.
liquidity funding · 2/4 · Current contractual derivative collateralization and management's operating-cash-flow adequacy assessment support a mixed assessment. Wholesale funding dependence remains relevant; unrestricted liquidity, maturities and stress coverage are not quantified. No funding shortfall is demonstrated.
asset liability risk · 2/4 · Currency-matched Japanese assets and predominantly stronger loan debt-service coverage support risk management. Loans with debt-service coverage below 1.0x, growing unstabilized-property exposure and unfavorable policyholder-behavior assumption updates offset this. Duration matching and aggregate reinsurance recoverability remain incomplete.
earnings resilience · 2/4 · First-half 2026 consolidated net income increased to $1.642 billion from $1.308 billion despite the Japanese suspension, and PGIM improved. Incurred suspension costs and unfavorable actuarial updates temper resilience; the disclosed period does not demonstrate exceptional performance through a full stress cycle.
Capital allocation50
Qualitative insurance assessment: equal-weight average of four current evidence-backed grades (0–4), scaled to 100. Policy financial-industry-1; not an industrial ratio score or credit rating.
capital efficiency · 2/4 · Consolidated GAAP return on average equity rose from 9.6% in 2024 to 11.7% in 2025, with equity defined as average total Prudential Financial equity. This demonstrates improvement, but does not establish exceptional capital productivity or superior insurer-level statutory returns.
distributions and buffers · 2/4 · Actual second-quarter repurchases and positive first-half consolidated earnings support distributions. The remaining authorization indicates spending discretion, and subsidiary transfers face statutory restrictions. Missing total dividends and solvency headroom prevent a strong buffer assessment.
dilution and cost · 2/4 · First-half basic weighted-average shares fell from 353.7 million to 347.0 million, with diluted shares also declining. Compensation remains dilutive, and adopted award modifications added approximately 600,000 shares and $62 million of costs. Total current compensation and financing costs are not supplied.
investment discipline · 2/4 · Separate investment authorization controls and disclosed loan collateral coverage support discipline. Rising exposure to unstabilized properties adds risk. The Deerpath purchase is an agreement, with neither purchase economics nor subsequent returns supplied, so acquisition success is unproven.
Management44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Consolidated GAAP ROE improved and repurchases accompanied lower weighted-average shares. Missing solvency headroom, full distributions and transaction returns limit confidence that capital deployment optimally balanced returns and buffers.
incentive alignment · 2/4 · Actual performance-share delivery below target and adopted clawbacks support alignment. Earlier award modifications increased share delivery and compensation costs, weakening strict pay-for-performance interpretation. Executive ownership is not quantified.
execution · 2/4 · Observed PGIM growth and improved consolidated earnings support execution, but employee misconduct and the extended Japanese suspension demonstrate a material operational failure. This assessment uses operating outcomes, not management reputation.
governance · 1/4 · Independent key committees and an adopted clawback policy provide safeguards, but realized misconduct and prolonged disruption demonstrate fragile oversight effectiveness. The chairman and CEO roles were combined; remediation effectiveness is not yet demonstrated.
Evidence
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.
Business: distribution advantage assertion and competition for personnel and channels · Filed 12/02/2026
In both of these markets, rather than competing primarily based on price, we generally compete on the basis of customer service, including our needs-based approach to selling, the quality and diversity of our distribution capabilities, and our financial strength.
Business: management's description of service-based international competition · Filed 12/02/2026
Operating Results The following table sets forth PGIM’s operating results for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions) Operating results(1): Revenues $ 1,107 $ 1,043 $ 2,147 $ 2,028 Expenses 813 814 1,663 1,643 Adjusted operating income 294 229 484 385 Equity in earnings of joint ventures and other operating entities, and earnings attributable to noncontrolling interests and redeemable noncontrolling interests 32 42 41 52 Other adjustments(2) (1) (1) (4) 27 Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities $ 325 $ 270 $ 521 $ 464 __________ (1)Certain of PGIM’s investment activities are based in currencies other than the USD and are therefore subject to foreign currency exchange rate risk.
MD&A, page 116: PGIM operating results · Filed 05/08/2026
116 Table of Contents The following table sets forth PGIM’s revenues, presented on a basis consistent with the table above under “—Operating Results,” by type: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions) Revenues by type: Asset management fees by source: Institutional - Third Party $ 402 $ 387 $ 800 $ 774 Retail - Third Party 224 219 440 444 Affiliated(1) 238 219 471 435 Total asset management fees 864 825 1,711 1,653 Other related revenues by source: Incentive fees 25 24 38 34 Transaction fees 4 5 15 12 Seed and co-investments 34 28 46 34 Commercial mortgage(2) 31 25 60 40 Total other related revenues 94 82 159 120 Service, distribution and other revenues 149 136 277 255 Total revenues $ 1,107 $ 1,043 $ 2,147 $ 2,028 __________ (1)Includes revenues from the Company’s general account assets, as well as certain separate account assets of the Company’s insurance and retirement businesses managed by PGIM.
MD&A, page 116: PGIM fees by affiliated and third-party source · Filed 05/08/2026
Products The primary components of our material product types are described as follows: Institutional Retirement Strategies Group Annuities and Other Products • Pension risk transfers, which include non-participating group annuity insurance and reinsurance contracts issued to pension plan sponsors and intermediaries, under which we assume all investment and actuarial risk associated with a group of specified participants within a plan in return for a premium typically paid as a lump-sum at inception.
Business: pension risk transfer contractual obligations · Filed 12/02/2026
• Aflac Incorporated • Brighthouse Financial • CNO Financial Group • Globe Life • Lincoln National • MetLife, Inc.
Compensation discussion: marketplace competitors used as performance peers · Filed 26/03/2026
(“Prudential of Japan”), a Japanese insurance subsidiary of the Company, reported the findings of its internal investigation into incidents of misconduct involving certain employees of Prudential of Japan.
MD&A: internal investigation findings involving employee misconduct in Japan · Filed 05/08/2026
In April 2026, the Company announced the voluntary extension of the suspension of new sales for an additional 180 days through November 5, 2026.
MD&A: sales suspension extended through November 5, 2026 · Filed 05/08/2026
The suspension of sales resulted in an estimated reduction of $235 million in International Businesses’ pre-tax adjusted operating income through the first six months of 2026.
MD&A: estimated suspension impact incurred through the first six months of 2026 · Filed 05/08/2026
Consolidation of distributors and/or other industry changes may also increase the likelihood that distributors will try to renegotiate the terms of any existing selling agreements to terms less favorable to us.
Risk factors: potential distributor renegotiation · Filed 12/02/2026
We expect this new organizational structure, which includes a centralized distribution capability for institutional investors, will help double the percentage of clients engaging with two or more of our asset management businesses and drive additional margin growth over time.
Board strategy discussion: expected future cross-selling and margin improvements · Filed 26/03/2026
We periodically adjust product offerings, prices and features based on the market and our strategy, with a goal of achieving customer and enterprise value.
Business: management's disclosed adjustment of products, prices and features · Filed 12/02/2026
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.
Regulation: premium-rate, policy-form and contractual-value restrictions · Filed 12/02/2026
The Company issues certain variable annuity insurance contracts where the Company contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract adjusted for any partial withdrawals plus a minimum return, and/or (2) the highest anniversary contract value on a specified date adjusted for any withdrawals.
Market risk benefits: contractual variable-annuity guarantees · Filed 05/08/2026
equity. Return on average equity (based on net income (loss)) was 11.7% and 9.6% for the years ended December 31, 2025 and December 31, 2024, respectively.
Non-GAAP reconciliation discussion: consolidated GAAP return on average equity · Filed 26/03/2026
EARNINGS PER SHARE A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the periods indicated is as follows: Three Months Ended June 30, 2026 2025 Income Weighted Average Shares Per Share Amount Income Weighted Average Shares Per Share Amount (in millions, except per share amounts) Basic earnings per share Net income (loss) $ 1,036 $ 566 Less: Income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 51 33 Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards 12 6 Net income (loss) attributable to Prudential Financial available to holders of Common Stock $ 973 346.4 $ 2.81 $ 527 353.1 $ 1.49 Effect of dilutive securities and compensation programs Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic $ 12 $ 6 Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted 12 6 Stock options 0.0 0.1 Deferred and long-term compensation programs 1.7 1.7 Diluted earnings per share Net income (loss) attributable to Prudential Financial available to holders of Common Stock $ 973 348.1 $ 2.80 $ 527 354.9 $ 1.48 Six Months Ended June 30, 2026 2025 Income Weighted Average Shares Per Share Amount Income Weighted Average Shares Per Share Amount (in millions, except per share amounts) Basic earnings per share Net income (loss) $ 1,642 $ 1,308 Less: Income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 60 68 Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards 21 16 Net income (loss) attributable to Prudential Financial available to holders of Common Stock $ 1,561 347.0 $ 4.50 $ 1,224 353.7 $ 3.46 Effect of dilutive securities and compensation programs Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic $ 21 $ 16 Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted 21 16 Stock options 0.1 0.1 Deferred and long-term compensation programs 1.7 1.7 Diluted earnings per share Net income (loss) attributable to Prudential Financial available to holders of Common Stock $ 1,561 348.8 $ 4.48 $ 1,224 355.5 $ 3.44 89 Table of Contents PRUDENTIAL FINANCIAL, INC.
Note 18, page 89: consolidated earnings and basic and diluted weighted-average shares · Filed 05/08/2026
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (c) The following table provides information about purchases by the Company during the three months ended June 30, 2026, 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(2) Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(2) April 1, 2026 through April 30, 2026 861,126 $ 97.56 853,910 May 1, 2026 through May 31, 2026 823,270 $ 101.43 821,255 June 1, 2026 through June 30, 2026 788,002 $ 106.16 785,669 Total 2,472,398 2,460,834 $ 500,000,000 __________ (1)Includes shares of Common Stock withheld from participants for income tax withholding purposes whose shares of restricted stock units vested during the period.
Part II, Item 2: actual second-quarter 2026 repurchases and remaining authorization · Filed 05/08/2026
Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Prudential Financial and other affiliates under applicable insurance law and regulation.
Liquidity and capital resources: statutory limitations on subsidiary distributions · Filed 12/02/2026
• Pay for Performance. Each of our NEOs received an annual incentive award of 106% of his or her target, consistent with the Company performance factor of 1.060.
Compensation highlights: actual annual incentive awards · Filed 26/03/2026
The Performance Shares component of our 2023-2025 Long-Term Incentive Program delivered less than the target number of shares (88.3%).
Compensation highlights: actual 2023–2025 performance-share delivery · Filed 26/03/2026
These modifications 1) mitigate the impact of outsized interest rate volatility, both positive and negative, as it relates to achieving adjusted book value per share growth goals, and 2) reduce certain book value per share goals and maximum payout opportunities.
Stock compensation note: adopted performance-award modifications · Filed 12/02/2026
The impact from these modifications increased shares to be delivered to 161 employees across all three performance plans by a total of approximately 600,000 shares.
Stock compensation note: additional shares resulting from award modifications · Filed 12/02/2026
In addition, total compensation costs resulting from these modifications increased by approximately $62 million.
Stock compensation note: incremental compensation cost from award modifications · Filed 12/02/2026
In accordance with SEC requirements and related NYSE listing standards, we maintain a clawback policy that covers all executive officers (including the NEOs), applies to all incentive-based compensation (including stock options and other equity awards) paid to or in respect of an executive officer, and includes separate triggers for financial restatements and improper conduct (including failure to report).
Compensation policies: adopted clawback coverage and triggers · Filed 26/03/2026
Each member of the Audit, Compensation and Human Capital, and Corporate Governance and Business Ethics Committees has been determined by the Board to be independent for purposes of the NYSE Corporate Governance listing standards.
Corporate governance: independence of key board committees · Filed 26/03/2026
• Mr. Sullivan became Chairman, in addition to CEO, on March 10, 2026.
Leadership disclosures: combination of chairman and CEO roles · Filed 26/03/2026
All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.
Derivatives note: compliance with contractual collateral requirements · Filed 05/08/2026
In each of our major insurance subsidiaries, we believe that the cash flows from operations are adequate to satisfy current liquidity requirements.
Liquidity: management's assessment of insurance operating cash flows · Filed 12/02/2026
•Wholesale funding: The Company depends upon the financial markets for funding (such as through the issuance of commercial paper, securities lending and repurchase arrangements and other forms of borrowings in the capital markets).
Risk factors: dependence on wholesale funding markets · Filed 12/02/2026
Separate from this program, our Japanese operations also have $92.3 billion and $90.0 billion as of June 30, 2026 and December 31, 2025, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.
MD&A: USD-denominated assets supporting USD-denominated Japanese liabilities · Filed 05/08/2026
The following tables set forth the gross carrying value of our commercial mortgage and agricultural property loans by loan-to-value and debt service coverage ratios, as of the dates indicated: June 30, 2026 Debt Service Coverage Ratio > 1.2x 1.0x to < 1.2x < 1.0x Total Commercial Mortgage and Agricultural Property Loans Loan-to-Value Ratio (in millions) 0%-59.99% $ 27,769 $ 1,472 $ 654 $ 29,895 60%-69.99% 13,388 444 275 14,107 70%-79.99% 4,696 420 151 5,267 80% or greater 3,001 265 1,436 4,702 Total commercial mortgage and agricultural property loans $ 48,854 $ 2,601 $ 2,516 $ 53,971 December 31, 2025 Debt Service Coverage Ratio > 1.2x 1.0x to < 1.2x < 1.0x Total Commercial Mortgage and Agricultural Property Loans Loan-to-Value Ratio (in millions) 0%-59.99% $ 27,975 $ 798 $ 520 $ 29,293 60%-69.99% 13,706 956 213 14,875 70%-79.99% 4,810 270 173 5,253 80% or greater 2,942 312 1,523 4,777 Total commercial mortgage and agricultural property loans $ 49,433 $ 2,336 $ 2,429 $ 54,198 168 Table of Contents The following table sets forth the breakdown of our commercial mortgage and agricultural property loans by year of origination, as of the date indicated: June 30, 2026 Gross Carrying Value % of Total Year of Origination ($ in millions) 2026 $ 2,551 4.7 % 2025 6,822 12.6 2024 7,237 13.4 2023 5,247 9.7 2022 3,822 7.1 2021 6,272 11.6 2020 2,837 5.3 2019 & Prior 18,981 35.2 Revolving Loans 202 0.4 Total commercial mortgage and agricultural property loans $ 53,971 100.0 % Residential Mortgage Loans Residential mortgage loans primarily include fixed-rate, amortizing mortgage loans on rental properties owned by borrowers with FICO scores typically considered prime or above.
MD&A, page 168: mortgage and agricultural loan collateral and debt-service coverage · Filed 05/08/2026
In both 2026 and 2025, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update for direct and assumed MRBs, primarily due to updates to policyholder behavior assumptions.
Market risk benefits: unfavorable actuarial assumption updates in 2026 and 2025 · Filed 05/08/2026
Our commercial mortgage and agricultural property loan portfolio included $3.6 billion and $2.7 billion of such loans as of June 30, 2026 and December 31, 2025, respectively.
Investment risk: growth in loans against unstabilized properties · Filed 05/08/2026
We have separate pricing and authorization processes to establish “checks and balances” for new investments.
Investment management: separate investment pricing and authorization processes · Filed 05/08/2026
Results of Operations by Segment PGIM Business Updates •In July 2026, the Company entered into an agreement to acquire the remaining 25% interest in Deerpath Capital Management, LP (“Deerpath”), bringing the Company’s ownership to 100% after acquiring a 75% majority stake in December 2023.
PGIM business updates: agreement to acquire remaining Deerpath interest · Filed 05/08/2026
GAAP. Annualized new business premiums measure the current sales performance of the business, while revenues primarily reflect the renewal persistency of policies written in prior years and net investment income, in addition to current sales.
Operating measures: insurance revenue reflects renewal persistency, investment income and current sales · Filed 12/02/2026
The following table sets forth the International Businesses’ operating results for the periods indicated: Year Ended December 31, 2025 2024 2023 (in millions) Operating results: Revenues $ 18,148 $ 17,925 $ 18,682 Benefits and expenses 14,901 14,819 15,499 Adjusted operating income 3,247 3,106 3,183 Realized investment gains (losses), net, and related charges and adjustments 123 (911) 93 Change in value of market risk benefits, net of related hedging gains (losses) 18 17 14 Market experience updates 98 89 (46) Equity in earnings of joint ventures and other operating entities and earnings attributable to noncontrolling interests (157) (116) (76) Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities $ 3,329 $ 2,185 $ 3,168 2025 to 2024 Annual Comparison Adjusted operating income increased $141 million, including an unfavorable comparative net impact of $14 million from currency fluctuations.
MD&A, page 67: International Businesses operating results for 2023–2025 · Filed 12/02/2026
All else being equal, these loans are inherently riskier than those collateralized by properties that have already stabilized.
Investment risk: relative risk of unstabilized property collateral · Filed 05/08/2026
We estimate that the suspension of new sales as extended will result in a reduction of pre-tax adjusted operating income in the range of $525 to $575 million for 2026, inclusive of the six month impact above, and in the range of $400 to $450 million for 2027, reflecting remediation costs associated with sustaining the business, one-time and other operating costs, and lower earnings attributable to the gradual ramp-up of new sales after sales resume.
MD&A: forecast suspension effects for 2026 and 2027 · Filed 05/08/2026
