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],
collectively 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 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 strong balance sheet assessment is supported
by its investment portfolio and strategic allocations to higher
performing, high quality assets with lower exposure to low quality
structured securities. Absolute capital growth of Prudential’s
insurance subsidiaries is reflective of the strong operating gains
in its core insurance operations. The U.S. insurance companies have
adequate liquidity metrics and favorable financial flexibility
options through its access to the capital markets and membership in
the Federal Home Loan Bank.
AM Best also has a favorable view of Prudential’s operating
performance profile, as revenues are diversified across its
insurance premiums, mortality and expense fees and administration
fees from insurance and investment products. The group’s net
investment income is a steady driver of earnings, with growth of
approximately 5% of general account invested assets over the past
five years for the current rated statutory entities. AM Best also
recognizes the geographic diversification of earnings; non-U.S.
business contributes approximately 43% of GAAP earnings for
PFI.
Prudential’s vast and diversified product offerings for life,
retirement strategies and asset management services is the
foundation of its very favorable business profile. 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. AM Best also
acknowledges the strategies Prudential employs to transition to
less market-sensitive variable annuity and universal life products,
which has resulted in lowering the company’s traditional variable
annuities account values by approximately 40% and is projected to
reduce their guaranteed universal life reserves by approximately
33% following the closing of its deal with Somerset Reinsurance
Ltd. Additionally, Prudential has invested in technology to support
new and expanding sales and administration capabilities to support
its large and expansive captive field sales forces. The company has
done buildouts or acquired its advisor and client value
capabilities with varied levels of success.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed with stable outlooks for the
following subsidiaries of Prudential Financial, Inc.:
- The Prudential Insurance Company of America
- Pruco Life Insurance Company
- Pruco Life Insurance Company of New Jersey
The following Short-Term IRs have been affirmed:
Prudential Financial, Inc.— -- AMB-1 (Outstanding) on $3 billion
commercial paper program
Prudential Funding, LLC— -- AMB-1 (Outstanding) on $7 billion
commercial paper program
PRICOA Short-Term Funding, LLC— -- AMB-1 (Outstanding) on $3
billion Funding Agreement Backed Commercial Paper
The following Long-Term IRs have been affirmed with stable
outlooks:
Prudential Financial, Inc.— -- “a-” (Excellent) on JPY 23.0
billion 2.62% senior unsecured notes, due 2026 -- “a-” (Excellent)
on JPY 17.5 billion 2.76% senior unsecured notes, due 2026 -- “a-”
(Excellent) on JPY 9 billion 3.099% senior unsecured notes, due
2027 -- “a-” (Excellent) on $500 million 5.75% senior unsecured
notes, due 2033 -- “a-” (Excellent) on $350 million 6.625% senior
unsecured notes, due 2040 -- “a-” (Excellent) on $325 million 5.80%
senior unsecured notes, due 2041 -- “a-” (Excellent) on $895.8
million 3.905% senior unsecured notes, due 2047 -- “a-” (Excellent)
on $1.039 billion 3.935% senior unsecured notes, due 2049 -- “bbb”
(Good) on $500 million 5.20% fixed to floating junior subordinated
notes, due 2044 -- “bbb” (Good) on $1.0 billion 5.375% fixed to
floating junior subordinated notes, due 2045 -- “bbb” (Good) on
$750 million 4.5% fixed to floating junior subordinated notes, due
2047 -- “bbb” (Good) on $1.0 billion 5.70% junior subordinated
notes, due 2048 -- “bbb” (Good) on $800 million 3.70% junior
subordinated notes, due 2050 -- “bbb” (Good) on $1.0 billion 5.125%
junior subordinated notes, due 2052 -- “bbb” (Good) on $1.2 billion
6.0% junior subordinated notes, due 2052 -- “bbb” (Good) on $500
million 6.75% junior subordinated notes, due 2053 -- “bbb” (Good)
on $500 million 5.625% junior subordinated notes, due 2058 -- “bbb”
(Good) on $500 million 4.125% junior subordinated notes, due 2060
-- “bbb” (Good) on $300 million 5.95% junior subordinated notes,
due 2062
Prudential Financial, Inc.— “a-” (Excellent) program rating --
“a-” (Excellent) on all outstanding notes issued under the
program
The Prudential Insurance Company of America— -- “a” (Excellent)
on $350 million 8.30% surplus notes, due 2025
PRICOA Global Funding I— “aa-” (Superior) program rating --
“aa-” (Superior) on all outstanding notes issued under the
program
Prudential Funding, LLC— “a+” (Excellent) program rating
The following indicative Long-Term IRs have been affirmed with
stable outlooks:
Prudential Financial, Inc.— -- “a-” (Excellent) on senior
unsecured debt -- “bbb+” (Good) on subordinated debt -- “bbb”
(Good) on preferred stock
Prudential Financial Capital Trust II and III— -- “bbb” (Good)
on preferred securities
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.
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