Prudential Financial, Inc. Barclays 24th Annual Global Financial Services Conference

Well, thank you for having me. Great to be here. Of course.

Yeah. Well, agree there is a lot there. I would say we are not starting from scratch, right? This is something that has been well underway. Obviously, we rolled it out very recently, but we have been working through it, developing the strategy, and beginning to execute for a while. Maybe just let me go through each of the components. When we think about the capital rotation, which will generate well north of $3 billion, we have been really executing that for a while now. We have announced a couple of the smaller emerging market transactions, Indonesia, Kenya, for example. There are a few other small ones that are very close to completion. Then, the larger ones, Mexico, Brazil, those processes are well underway, that we think through this year will play out over time.

From that capital rotation and the exiting of emerging markets, we feel really good about where we are and how we've been executing. Second is PGIM. We have a stated objective of doubling PGIM's contribution, making it 25% of PFI's AOI. Half of that is organic, with the other half being inorganic. That organic piece has very much been underway in terms of us investing in capabilities that will drive higher fee asset growth. Those investments are going quite well. Frankly, we've been executing them for a while, and they're starting to hit the J curve. They're really contributing to the earnings. That, plus the fact that the integration of the multi-asset model to one PGIM, we're almost a year into that, and that also has been delivering results, including expense and revenue synergies. That's PGIM. Third is the $750 million expense saves and what we call optimization.

That's another thing that's been well underway. If you remember, we put out a goal of $150 million in saves back at the end of last year through 2027. Those saves are coming along. We've been executing on that, and the $750 million is just sort of an expansion of that and of looking at us operating differently, and there's several levers that we're looking at that we can talk about. But that's a process that's been underway as well, and we're starting to see the benefits in the earnings coming through already. Then lastly, there's inorganic, which obviously is a little bit more out of our control. But the way we think about that is we're very active. We're constantly out there in the know, in the flow.

We're not waiting for auctions to come to us. We're engaged in the process. That's something that we will be driving and highly engaged in going forward and on an ongoing basis. The last thing I would say is, also very important for us is that continuous execution of the day-to-day business. We want to be excellent operators, excellent allocators of capital. That will show up every quarter, has been showing up every quarter, and that's a big part, especially in the near term, of how we intend to demonstrate progress towards this longer-term strategy.

Yeah. I think on M&A, we have been open about it, about the fact that it is part of the strategy, and we've opened the aperture a bit. Historically, when we spoke about M&A, it was constantly about PGIM, about smaller programmatic transactions that would enhance our capabilities, and we've done those, and they've gone well. DeerPath, for example, being one of them. We do think as we think about the longer-term strategy and the more ambitious goals that we have, that larger transactions will be more impactful. That's when we say open the aperture in terms of the size, but also in terms of the areas that we're focused. When we think about where we're focused, I will start with PGIM. That is an area of focus. Obviously, we will continue to look at the smaller single-asset capabilities because that will be helpful.

We've also expanded to look at platforms that have multi-asset that will bring in more capabilities within one transaction, which will result in revenue and expense synergies. That's an area that we've been focused on. Second is in group insurance. We believe that group insurance is a strong business for us, strong opportunity, capital-light business, where we have a very strong current position, brand distribution, and part of our goal is to grow those capital-light earnings, PGIM and group insurance. The strategy there has been to go down market and to diversify from a segment perspective, and there is inorganic opportunity there, an example being dental and vision as a capability we don't have today. Third would be around expanding our presence in U.K. retirement.

You've actually seen us already transact in terms of our partnership with Standard Life and CVC to expand and to participate in the U.K. BPA market. That also brings on board a significant client for PGIM in terms of managing the assets. I would highlight that transaction also, in terms of opening the aperture as to what types of transactions we do, how we leverage our capabilities, how we leverage our balance sheet. It doesn't all have to be an outright acquisition. That's one, I think, a creative way of entering and expanding our presence in U.K. retirement while not going out there, having an outright acquisition, acquiring a license in the U.K., which we don't have today. Those are the three areas of focus. I think we will continue to be very active.

We will be very disciplined in terms of the type of transaction and the economics, to your question. We'll be active, we'll be disciplined. It has to be the right transaction strategically. Culturally, it has to bring on the right capabilities. We have multiple levers of funding. We have the well north of $3 billion, but there are other levers that we do have. In terms of the dilution altering our capital deployment plans, there will be a very high bar for dilution. There will be a very high bar for us to alter our current capital deployment plans. Ultimately, the transaction has to add long-term value to the shareholder, and we will look at it in terms of what are the returns, what are the economics relative to other capital deployment plans and opportunities, including giving that capital back to shareholders.

It has to be additive and contribute to our objectives of top-quartile earnings growth, higher cash flow generation, and market-leading returns on equity.