AM Best Affirms Credit Ratings of Prudential Financial, Inc. and Its Life/Health Subsidiaries

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 'aa-' (Superior) for Prudential Financial, Inc. (NYSE: PRU). This rating reflects Prudential's strong balance sheet strength, robust operating performance, and solid market positions across its core business lines. The outlook for these ratings is stable.

Despite challenges from low interest rates affecting net yields, Prudential's diversified earnings and liquidity resources remain strong, bolstered by recent agreements to sell its retirement and legacy annuity businesses.

Positive

• Affirmation of FSR A+ (Superior) and Long-Term ICR 'aa-' (Superior).
• Prudential's strong balance sheet and favorable financial flexibility.
• Market-leading positions in core business lines.
• Highly diversified earnings sources.

Negative

• Low interest rate environment negatively impacting net investment yields.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of the life/health insurance subsidiaries of Prudential Financial, Inc. (PFI) (Newark, NJ) [NYSE: PRU], referred to as Prudential. Concurrently, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of PFI and all existing Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the group. The outlook of these Credit Ratings (ratings) is stable. (Please see link below for a detailed listing of the companies and ratings.)

The ratings reflect Prudential’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management.

Prudential’s balance sheet strength is enhanced by solid Best’s Capital Adequacy Ratio (BCAR) results and favorable financial flexibility as its parent, PFI, has access to various sources of liquidity and a proven ability to access capital markets. Prudential also benefits from its market-leading positions in its core business lines. The rating affirmations of PFI reflect its highly diversified earnings sources, de-risking initiatives and strong liquidity. This includes the recently announced agreements to sell its full service retirement business to Empower Retirement (legally known as Great-West Life & Annuity Insurance Company) and its sale of a portion of Prudential’s in-force legacy variable annuity block to Fortitude Group Holdings, LLC.

During 2021, the company has generated solid adjusted operating returns due to favorable investment performance. PFI’s international segment, which is dominated by its Japan operations, remains the single-largest segment, representing roughly two-fifths of the company’s total pre-tax operating earnings. Although, the low interest rate environment continues to have a negative impact on net investment yields and margin compression in the United States and Japan. It is noted that PFI continues to maintain sizeable liquidity resources, and its prudent utilization will continue to be monitored by AM Best.

A complete listing of Prudential Financial, Inc.’s FSRs, Long-Term ICRs and Long- and Short-Term IRs also is available.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211202005754/en/

Edward Kohlberg

Director

+1 908 439 2200, ext. 5664

edward.kohlberg@ambest.com

Michael Porcelli

Senior Director

+1 908 439 2200, ext. 5548

michael.porcelli@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What is Prudential Financial's stock symbol?

Prudential Financial's stock symbol is PRU.

What did AM Best affirm about Prudential Financial on December 2, 2021?

On December 2, 2021, AM Best affirmed Prudential Financial's Financial Strength Rating of A+ and Long-Term Issuer Credit Ratings of 'aa-'.

What does the stable outlook for Prudential Financial's ratings indicate?

The stable outlook indicates that AM Best expects Prudential Financial to maintain its current rating level based on its overall financial strength.

How does Prudential Financial's balance sheet strength affect its ratings?

Prudential's very strong balance sheet strength enhances its ratings, reflecting solid capital adequacy and liquidity.

What impact do low interest rates have on Prudential Financial?

Low interest rates are negatively affecting Prudential's net investment yields and margins, particularly in the U.S. and Japan.