Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Segments

The Company’s principal operations consist of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the Retirement Strategies, Group Insurance and Individual Life businesses), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other operations. Divested and Run-off Businesses consist of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind-down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP.

As discussed in Note 1, effective January 1, 2023, AIQ is now included within Corporate and Other operations. Also effective January 1, 2023, Prudential Advisors, which was previously part of the Individual Life segment, is now included within Corporate and Other operations. There are no impacts to the Company's consolidated financial statements from these reporting changes and historical segment results have been updated to conform to the current period presentation.

Adjusted Operating Income

The Company analyzes the operating performance of each segment using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of operating joint ventures” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s chief operating decision maker to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Adjusted operating income is calculated by adjusting each segment’s “Income (loss) before income taxes and equity in earnings of operating joint ventures” for the following items:

•Realized investment gains (losses), net, and related adjustments;

•Charges related to realized investment gains (losses), net;

•Change in value of market risk benefits, net of related hedging gains (losses);

•Market experience updates;

•Divested and Run-off Businesses;

•Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests; and

•Other adjustments.

These items are important to an understanding of overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies. The Company, however, believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses. For additional information regarding these reconciling items, see Note 22 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

As a result of the adoption of ASU 2018-12 in the first quarter of 2023, the Company is required to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value. In order to enhance the understanding of our underlying performance trends, the Company excludes from adjusted operating income “Change in value of market risk benefits, net of related hedging gains (losses)”, which reflects the impact from changes in current market conditions. In addition, “Charges related to realized investment gains (losses)”, no longer includes the current period impact of net realized investment gains (losses) on the amortization of DAC and related balances, and “Market experience updates” no longer includes the immediate impact on DAC and related balances from changes in current market conditions on estimates of profitability. In both cases, the amortization of DAC and related balances is independent of these factors under ASU 2018-12. See Note 2 regarding additional information about the adoption of ASU 2018-12, including market risk benefits and the amortization of DAC and other balances.

Reconciliation of adjusted operating income to net income (loss)

The table below reconciles “Adjusted operating income before income taxes” to “Income (loss) before income taxes and equity in earnings of operating joint ventures”:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Adjusted operating income before income taxes by segment:
PGIM	$	211	$	219	$	541	$	613
U.S. Businesses:
Institutional Retirement Strategies	439		268		1,263		1,215
Individual Retirement Strategies	502		387		1,391		2,567
Retirement Strategies(1)	941		655		2,654		3,782
Group Insurance	89		30		253		(31)
Individual Life(1)	58		(70)		(103)		(1,750)
Total U.S. Businesses	1,088		615		2,804		2,001
International Businesses	811		748		2,435		2,391
Corporate and Other	(504)		(415)		(1,516)		(1,152)
Total segment adjusted operating income before income taxes	1,606		1,167		4,264		3,853
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(2,430)		(1,128)		(2,965)		(4,981)
Charges related to realized investment gains (losses), net	(61)		(115)		78		(421)
Change in value of market risk benefits, net of related hedging gains (losses)	(251)		(58)		(160)		(1,072)
Market experience updates	143		125		188		617
Divested and Run-off Businesses:
Closed Block division	2		(21)		(50)		22
Other Divested and Run-off Businesses	(46)		(53)		125		175
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(11)		(33)		(42)		(18)
Other adjustments(2)	(10)		(10)		(28)		(27)
Income (loss) before income taxes and equity in earnings of operating joint ventures per Unaudited Interim Consolidated Financial Statements	$	(1,058)	$	(126)	$	1,410	$	(1,852)

________

(1)The Retirement Strategies and Individual Life segments’ results reflect DAC as if the business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

(2)Includes components of consideration for business acquisitions, which are recognized as compensation expense over the requisite service period.

Reconciliation of select financial information

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Unaudited Interim Consolidated Financial Statements. 

	September 30, 2023		December 31, 2022
	(in millions)
Assets by segment:
PGIM	$	44,250	$	48,364
U.S. Businesses:
Institutional Retirement Strategies	107,935		108,565
Individual Retirement Strategies	131,231		130,173
Retirement Strategies	239,166		238,738
Group Insurance	36,451		38,201
Individual Life	108,077		102,445
Total U.S. Businesses	383,694		379,384
International Businesses	177,597		186,791
Corporate and Other	26,985		23,556
Closed Block division	48,728		50,934
Total assets per Unaudited Interim Consolidated Financial Statements	$	681,254	$	689,029

	Three Months Ended September 30, 2023
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	976	$	42	$	765	$	0	$	0	$	0	$	28	$	0
U.S. Businesses:
Institutional Retirement Strategies	221		1,098		(218)		(438)		146		0		(6)		3
Individual Retirement Strategies	1,153		393		651		21		124		0		20		86
Retirement Strategies	1,374		1,491		433		(417)		270		0		14		89
Group Insurance	1,576		130		1,487		1,179		39		0		1		1
Individual Life	1,589		734		1,531		831		231		8		211		114
Total U.S. Businesses	4,539		2,355		3,451		1,593		540		8		226		204
International Businesses	4,566		1,316		3,755		2,742		239		9		3		156
Corporate and Other(1)	45		180		549		(4)		25		0		165		(9)
Total revenues, and benefits and expenses on an adjusted operating income basis	10,126		3,893		8,520		4,331		804		17		422		351
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(2,408)		(5)		22		19		3		0		0		0
Charges related to realized investment gains (losses), net	12		0		73		72		(8)		0		0		7
Change in value of market risk benefits, net of related hedging gains (losses)	(251)		0		0		0		0		0		0		0
Market experience updates	39		0		(104)		4		0		0		0		0
Divested and Run-off Businesses:
Closed Block division	615		511		613		535		30		(20)		(1)		3
Other Divested and Run-off Businesses	241		172		287		202		43		0		0		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(22)		0		(11)		0		0		0		0		0
Other adjustments	0		0		10		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	8,352	$	4,571	$	9,410	$	5,163	$	872	$	(3)	$	421	$	361

	Three Months Ended September 30, 2022
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	907	$	56	$	688	$	0	$	0	$	0	$	14	$	1
U.S. Businesses:
Institutional Retirement Strategies	11,468		824		11,200		11,028		100		0		6		2
Individual Retirement Strategies	971		204		584		14		43		0		(16)		98
Retirement Strategies	12,439		1,028		11,784		11,042		143		0		(10)		100
Group Insurance	1,525		121		1,495		1,196		37		0		1		2
Individual Life	1,457		580		1,527		774		233		8		206		111
Total U.S. Businesses	15,421		1,729		14,806		13,012		413		8		197		213
International Businesses	4,618		1,112		3,870		2,896		180		9		11		150
Corporate and Other(1)	134		150		549		0		35		0		185		(9)
Total revenues, and benefits and expenses on an adjusted operating income basis	21,080		3,047		19,913		15,908		628		17		407		355
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(1,136)		(4)		(8)		15		(23)		0		0		0
Charges related to realized investment gains (losses), net	33		0		148		139		3		0		0		6
Change in value of market risk benefits, net of related hedging gains (losses)	(58)		0		0		0		0		0		0		0
Market experience updates	26		0		(99)		(2)		0		0		0		0
Divested and Run-off Businesses:
Closed Block division	710		434		731		549		30		72		4		3
Other Divested and Run-off Businesses	(427)		154		(374)		(457)		53		1		(1)		(1)
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(27)		0		6		0		0		0		0		0
Other adjustments	0		0		10		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	20,201	$	3,631	$	20,327	$	16,152	$	691	$	90	$	410	$	363

	Nine Months Ended September 30, 2023
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	2,723	$	189	$	2,182	$	0	$	0	$	0	$	84	$	1
U.S. Businesses:
Institutional Retirement Strategies	7,847		3,174		6,584		6,175		415		0		0		13
Individual Retirement Strategies	3,367		1,055		1,976		103		350		0		53		262
Retirement Strategies	11,214		4,229		8,560		6,278		765		0		53		275
Group Insurance	4,738		384		4,485		3,537		124		0		7		4
Individual Life	4,680		2,112		4,783		2,478		681		26		666		342
Total U.S. Businesses	20,632		6,725		17,828		12,293		1,570		26		726		621
International Businesses	14,304		3,922		11,869		8,539		680		18		18		466
Corporate and Other(1)	215		542		1,731		(9)		90		0		496		(27)
Total revenues, and benefits and expenses on an adjusted operating income basis	37,874		11,378		33,610		20,823		2,340		44		1,324		1,061
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(2,482)		(14)		483		65		418		0		0		0
Charges related to realized investment gains (losses), net	95		0		17		(48)		10		0		0		21
Change in value of market risk benefits, net of related hedging gains (losses)	(160)		0		0		0		0		0		0		0
Market experience updates	58		0		(130)		7		0		0		0		0
Divested and Run-off Businesses:
Closed Block division	2,541		1,491		2,591		1,716		89		574		0		10
Other Divested and Run-off Businesses	1,020		512		895		565		145		1		(3)		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(51)		0		(9)		0		0		0		0		0
Other adjustments	0		0		28		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	38,895	$	13,367	$	37,485	$	23,128	$	3,002	$	619	$	1,321	$	1,092

	Nine Months Ended September 30, 2022
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	2,662	$	38	$	2,049	$	0	$	0	$	0	$	30	$	3
U.S. Businesses:
Institutional Retirement Strategies	16,637		2,684		15,422		15,516		255		0		8		8
Individual Retirement Strategies	4,493		644		1,926		105		221		0		5		284
Retirement Strategies	21,130		3,328		17,348		15,621		476		0		13		292
Group Insurance	4,560		362		4,591		3,693		112		0		3		1
Individual Life	4,301		1,838		6,051		2,503		691		25		593		333
Total U.S. Businesses	29,991		5,528		27,990		21,817		1,279		25		609		626
International Businesses	14,551		3,695		12,160		9,148		545		37		19		455
Corporate and Other(1)	135		440		1,287		(4)		103		0		514		(31)
Total revenues, and benefits and expenses on an adjusted operating income basis	47,339		9,701		43,486		30,961		1,927		62		1,172		1,053
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(5,077)		(18)		(96)		74		(170)		0		0		0
Charges related to realized investment gains (losses), net	43		0		464		261		34		0		0		28
Change in value of market risk benefits, net of related hedging gains (losses)	(1,072)		0		0		0		0		0		0		0
Market experience updates	139		0		(478)		(11)		0		0		0		1
Divested and Run-off Businesses:
Closed Block division	2,204		1,508		2,182		1,810		91		55		4		10
Other Divested and Run-off Businesses	(149)		736		(324)		(210)		(487)		1		0		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	21		0		39		0		0		0		0		0
Other adjustments	0		0		27		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	43,448	$	11,927	$	45,300	$	32,885	$	1,395	$	118	$	1,176	$	1,092

________

(1)Corporate and Other operations, through AIQ and Prudential Advisors, generates fee revenues from the sale and distribution of certain insurance, annuity and investment products offered by Prudential and third-parties.

Intersegment revenues

Management has determined the intersegment revenues with reference to market rates. Intersegment revenues are eliminated in consolidation in Corporate and Other operations. The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
PGIM segment intersegment revenues	$	201	$	199	$	604	$	631

Segments may also enter into internal derivative contracts with other segments. For adjusted operating income, each segment accounts for the internal derivative results consistent with the manner in which that segment accounts for other similar external derivatives.

Asset management and service fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Asset-based management fees	$	799	$	820	$	2,377	$	2,642
Performance-based incentive fees	26		15		33		25
Other fees	127		131		377		419
Total asset management and service fees	$	952	$	966	$	2,787	$	3,086