NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) today reported third quarter results. Net income attributable to Prudential Financial, Inc. was $1.487 billion ($3.70 per Common share) for the third quarter of 2020, compared to net income of $1.418 billion ($3.44 per Common share) for the third quarter of 2019. After-tax adjusted operating income was $1.291 billion ($3.21 per Common share) for the third quarter of 2020, compared to $1.274 billion ($3.09 per Common share) for the third quarter of 2019.

Consolidated adjusted operating income and adjusted book value are non-GAAP measures. These measures are discussed later in this press release under “Forward-Looking Statements and Non-GAAP Measures” and reconciliations to the most comparable GAAP measures are provided in the tables that accompany this release.

RESULTS OF ONGOING OPERATIONS

The Company’s ongoing operations include PGIM, U.S. Businesses (consisting of U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ), International Businesses, and Corporate & Other. In the following business-level discussion, adjusted operating income refers to pre-tax results.

PGIM

PGIM, the Company’s global investment management business, reported record high adjusted operating income of $370 million for the third quarter of 2020, compared to $232 million in the year-ago quarter. The increase reflects higher Other Related Revenue, driven by an increase in co- and seed investment earnings, record high agency revenue, and higher incentive fees, as well as higher asset management fees, driven by an increase in average account values, partially offset by higher expenses.

PGIM assets under management of $1.443 trillion, a record high, were up 11% from the year-ago quarter, reflecting market appreciation and public fixed income inflows, partially offset by public equity outflows. Third-party net inflows of $7.3 billion in the current quarter reflect retail inflows of $5.3 billion and institutional inflows of $2.0 billion.

U.S. Businesses

U.S. Businesses reported adjusted operating income of $873 million for the third quarter of 2020, compared to $910 million in the year-ago quarter. The decrease reflects lower net fee income, net of distribution expenses and other associated costs, in our Individual Annuities business and less favorable underwriting results, driven by COVID-19 related net mortality experience, partially offset by higher net investment spread results, driven by higher variable investment income.

U.S. Workplace Solutions, consisting of Retirement and Group Insurance, reported adjusted operating income of $394 million for the third quarter of 2020, compared to $392 million in the year-ago quarter.

Retirement:

• Reported adjusted operating income of $372 million in the current quarter, compared to $302 million in the year-ago quarter. The increase reflects higher net investment spread results, driven by higher variable investment income, and higher reserve gains, including favorable impacts due to COVID-19.

• Account values of $520 billion, a record high, were up 9% from the year-ago quarter, primarily driven by market appreciation and net inflows. Net inflows in the current quarter totaled $3.8 billion with $5.2 billion from Full Service, primarily driven by a large defined contribution plan sale, partially offset by $1.4 billion of net outflows from Institutional Investment Products.

Group Insurance:

• Reported adjusted operating income of $22 million in the current quarter, compared to $90 million in the year-ago quarter. The decrease primarily reflects less favorable underwriting results in our Group Life business due to COVID-19.

• Reported earned premiums, policy charges, and fees of $1.3 billion in the current quarter were consistent with the year-ago quarter.

U.S. Individual Solutions, consisting of Individual Annuities and Individual Life, reported adjusted operating income of $509 million for the third quarter of 2020, compared to $518 million in the year-ago quarter.

Individual Annuities:

• Reported adjusted operating income of $408 million in the current quarter, compared to $459 million in the year-ago quarter. The decrease reflects lower fee income, net of distribution expenses and other associated costs, partially offset by higher net investment spread results.

• Account values of $164 billion were down 1% from the year-ago quarter, reflecting net outflows, partially offset by equity market appreciation. Gross sales of $1.6 billion in the current quarter reflect our continued product repricing and pivot strategy.

Individual Life:

• Reported adjusted operating income of $101 million in the current quarter, compared to $59 million in the year-ago quarter. The increase reflects higher net investment spread results and lower expenses.

• Sales of $172 million in the current quarter were down 2% from the year-ago quarter, as higher Variable sales were largely offset by lower Term and other Universal Life sales.

Assurance IQ reported a loss, on an adjusted operating income basis, of $30 million in the current quarter. This reflects the impact of higher expenses driven by recruiting, training, and licensing costs in preparation for the Medicare annual enrollment period in the fourth quarter.

International Businesses

International Businesses,consisting of Life Planner and Gibraltar Life & Other, reported adjusted operating income of $775 million for the third quarter of 2020, compared to $721 million in the year-ago quarter. The increase reflects lower expenses, business growth, and more favorable underwriting results, partially offset by lower earnings from joint venture investments and lower net investment spread results.

Life Planner:

• Reported adjusted operating income of $414 million in the current quarter, compared to $297 million in the year-ago quarter. The increase reflects lower expenses, business growth, and more favorable underwriting results.

• Constant dollar basis sales of $395 million in the current quarter increased 57% from the year-ago quarter, primarily reflecting higher sales in Japan ahead of August U.S. dollar-denominated product repricing and from the easing of COVID-19 restrictions.

Gibraltar Life & Other:

• Reported adjusted operating income of $361 million in the current quarter, compared to $424 million in the year-ago quarter. The decrease reflects lower earnings from joint venture investments, higher expenses, and lower net investment spread results, partially offset by more favorable underwriting results.

• Constant dollar basis sales of $408 million in the current quarter increased 30% from the year-ago quarter, reflecting higher sales in Japan ahead of August U.S. dollar-denominated product repricing.

Corporate & Other

Corporate & Other reported a loss, on an adjusted operating income basis, of $455 million for the third quarter of 2020, compared to a loss of $281 million in the year-ago quarter. The higher loss reflects higher expenses, lower net investment income, higher interest expense on debt, and lower income from pension and other employee benefit plans.

NET INCOME

Net income in the current quarter included $134 million of pre-tax losses related to market experience updates, $132 million of pre-tax net losses from divested and run-off businesses driven by a charge to adjust the carrying value of Prudential of Taiwan in anticipation of its sale, and $153 million of pre-tax net realized investment gains and related charges and adjustments, including $12 million from impairment and credit-related losses.

Net income for the year-ago quarter included $239 million of pre-tax net realized investment gains and related charges and adjustments, including $99 million from impairment and credit-related losses, and $314 million of pre-tax losses related to market experience updates.

Prudential Financial, Inc. (NYSE: PRU), a financial wellness leader and premier active global investment manager with more than $1.5 trillion in assets under management as of September 30, 2020, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees help to make lives better by creating financial opportunity for more people. Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit news.prudential.com.