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

Rhea-AI Summary

AM Best has affirmed Prudential Financial, Inc.'s (NYSE: PRU) Financial Strength Rating of A+ and Long-Term Issuer Credit Ratings of 'aa-'. The stable outlook reflects Prudential's very strong balance sheet, strong operating performance, and diversified product offerings in life, annuities, and asset management. Although the company faces headwinds from higher COVID-19-related claims in Japan and volatile earnings trends, its capital strength is supported by a solid investment portfolio and strong liquidity metrics.

Positive

• A+ Financial Strength Rating and 'aa-' Long-Term Issuer Credit Ratings affirmed by AM Best.
• Very strong balance sheet strength and strong operating performance noted.
• Diversified product offerings enhance Prudential's favorable business profile.
• Established market position in pension risk management with significant transactions.

Negative

• Near-term earnings pressured by higher COVID-19-related claims in Japan.
• Earnings trends have been volatile outside the domestic life and health market.

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 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 very favorable business profile is rooted in its vast and diversified product offerings for life, annuities and asset management services. The pension risk transfer business has also changed its risk profile over the past decade and the large deals and successful practice has positioned Prudential to be among the top market participants. The most recent transaction, in partnership with one of its largest competitors in this space, illustrates the value Prudential has in pension risk management and as an administrator. Additionally, Prudential has invested in technology to support new and expanding sales and administration capabilities to support its already large and expansive captive field sales forces. This has been especially important to maintain competitiveness in the market during the COVID-19 pandemic, when face-to-face selling has been challenging in the U.S. and Japan markets.

AM Best has a favorable view of Prudential’s long-term operating profile, but notes that near-term assumption updates and higher COVID-19-related claims due to interim regulatory requirements in Japan have pressured earnings for the year. From a balance sheet perspective, this does place pressure on the quality of capital given the earnings trend has been somewhat volatile outside of the domestic life and health market. Claims trends in Japan are primarily driven by lingering effects of COVID-19 and policy effects. However, these offsets may be temporary. In addition, Prudential’s balance sheet strength is foundationally driven by its investment portfolio and strategic allocations to higher performing, high quality assets with lower exposure to low quality structured securities. AM Best has observed adequate liquidity metrics and favorable financial flexibility options through its access to the capital markets and avenues such as the Federal Home Loan Bank membership.

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 Performance Assessments, 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 © 2022 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/20221215005775/en/

Wayne Kaminski, FLMI

Senior Financial Analyst

+1 908 439 2200, ext. 5061

wayne.kaminski@ambest.com

Edward Kohlberg

Director

+1 908 439 2200, ext. 5664

edward.kohlberg@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 439 2200, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What is the latest Financial Strength Rating of Prudential Financial (PRU) from AM Best?

AM Best has affirmed Prudential Financial's Financial Strength Rating at A+.

How does the AM Best rating reflect Prudential Financial's business performance?

The rating reflects Prudential's very strong balance sheet, strong operating performance, and favorable business profile.

What challenges is Prudential Financial facing in Japan?

Prudential is experiencing higher COVID-19-related claims, affecting near-term earnings.

What is the outlook for Prudential Financial's credit ratings?

The outlook for Prudential's credit ratings is stable.

How has Prudential Financial positioned itself in pension risk management?

Prudential has become a top market participant in pension risk management through significant transactions and partnerships.