PRU 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider the following risks. Some of the factors, events, and contingencies discussed below may have occurred in the past, and the disclosures below are not representations as to whether or not the factors, events, or contingencies have occurred in the past but are provided because future occurrences of such factors, events, or contingencies could have a material adverse impact on our results of operations and financial condition. Additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in this Annual Report on Form 10-K. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition and liquidity.

We are exposed to investment risk through our investments, which primarily consist of public and private fixed maturity securities, commercial mortgage and other loans, structured finance, equity securities and alternative assets including private equity, hedge funds and real estate. For a discussion of our general account investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investments.” We are also exposed to investment risk through a potential counterparty default.

Investment risk may result from (1) economic conditions, (2) adverse capital market conditions, including disruptions in individual market sectors or a lack of buyers in the marketplace, (3) volatility, (4) credit spread changes, (5) benchmark interest rate changes, (6) changes in foreign currency exchange rates and (7) declines in value of underlying collateral. These factors may impact the credit quality, liquidity and value of our investments and derivatives, potentially resulting in higher capital charges and unrealized or realized losses. Also, certain investments we hold, regardless of market conditions, are relatively illiquid and our ability to promptly sell these assets for their full value may be limited. Additionally, our valuation of investments may include methodologies, inputs and assumptionsassumptions, which could result in changes to investment valuations that may materially impact our results of operations or financial condition. For information about the valuation of our investments, see Note 6 to the Consolidated Financial Statements.

Our investment portfolio is subject to credit risk, which is the risk that an obligor (or guarantor) is unable or unwilling to meet its contractual payment obligations on its fixed maturity security, loan or other obligations. Credit risk may manifest in an idiosyncratic manner (i.e., specific to an individual borrower or industry) or through market-wide credit cycles. Financial deterioration of the obligor increases the risk of default and may increase the capital charges required under such regimes as the NAICregulatory RBC,frameworks thewe FSAare SMRsubject or other constructs to hold the investment and in turn,to, potentially limitlimiting our overall capital flexibility. Credit defaults (as well as credit impairments, realized losses on credit-related sales, and increases in credit related reserves) may result in losses which adversely impact earnings, capital and our ability to appropriately match our liabilities and meet future obligations.

OurThe Company is subject to counterparty risk, which is the risk that the counterparty to a transaction could default or deteriorate in creditworthiness before or at the final settlement of a transaction. In the normal course of business, we enter into financial contracts to manage risks (such as derivatives to manage market risk and reinsurance treaties to manage insurance risk), improve the return on investments (such as securities lending and repurchase transactions) and provide sources of liquidity or financing (such as credit agreements, securities lending agreements and repurchase agreements). Reinsurance treaties may also be used to further strategic goals of the Company by facilitating the acquisitiontransfer orof divestiturerisk of a block of businessliabilities if an entity purchase or sale is not practical. These transactions expose the Company to counterparty risk. Counterparties include commercial banks, investment banks, broker-dealersbroker-dealers, and insurance and reinsurance companies. In the event of a counterparty deterioration or default, thewe magnitudemay of the losses (e.g.,incur replacement costs) willnecessary dependto on current market conditions andreallocate the feasibility (dependent on the complexity) and time requirement of entering a replacement transaction withto a new counterparty. HighlyAlso, bespoke transactions (e.g., strategic and asset intensive reinsurance) mayentail notless beliquid replicableinvestments withand anyare degreetypically ofdifficult certainty,to hedge, possibly causingrequiring us to recapture liabilities and reestablish or strengthen reserves and capital, which could reduce capital flexibility. The magnitude of the losses (e.g., replacement costs) will depend on current market conditions, the complexity of the transaction, and the time required to restructure or replace the transaction. Losses arewill likely to be higher under stressed conditions.

Our investment portfolio is subject to equity risk, which is the risk of loss due to deterioration in market value of public equity or alternative assets. We include public equity and alternative assets (including private equity, hedge funds and real estate) in our portfolio constructions, asand these asset classes can provide returns over longer periods of time, aligning with the long-term nature of certain of our liabilities. Public equity and alternative assetsinvestments have varying degrees of price transparency. Equities traded on stock exchanges (public equities) have significant price transparency, as transactions are often required to be disclosed publicly. Assets with less price transparency include private equity (joint ventures/limited partnerships) and direct real estate. As these investments typically do not trade on public markets and indications of realizable market value may not be readily available, valuations can be infrequent and/or more volatile. A sustained decline in public equity and alternative markets may reduce the returns earned by our investment portfolio through lower-than-expected dividend income, property operating income, and capital gains, thereby adversely impacting earnings, capital, and product pricing assumptions. These assets may also produce volatility in earnings as a result of uneven distributions on the underlying investments.

We provide a variety of insurance products, on both an individual and group basis, that are designed to help customers protect against a variety of financial uncertainties. Our insurance products protect customers against their potential risk of loss by transferring those risks to the Company, where those risks can be managed more efficiently through pooling and diversification over a larger number of independent exposures. During this transfer process, we assume the risk that actual losses experienced in our insurance products deviatesdeviate significantly from what we expect. More specifically, insurance risk is concerned with the deviations that impact our future liabilities. Our profitability may decline if mortality experience, morbidity experience or policyholder behavior experience differ significantly from our expectations when we price our products. In addition, if we experience higher than expected surrenders, withdrawals or claims, our liquidity position may be adversely impacted, and we may incur losses on investments if we are required to sell assets in order to fund surrenders, withdrawals or claims. If it is necessary to sell assets at a loss, our results of operations and financial condition could be adversely impacted. For a discussion of the impact of changes in insurance assumptions on our financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Policies and Pronouncements—Application of Critical Accounting Estimates—Insurance Liabilities.”

•Mortality calamity is the risk that mortality rates in a single year deviate adversely from whatour is expectedexpectations as the result of drivers such as pandemics, natural or man-made disasters, military actions or terrorism. A mortality calamity event will reduce our earnings and capital and we may be forced to liquidate assets before maturity in order to pay the excesshigher than expected level of claims. Mortality calamity risk is more pronounced in respect of specific geographic areas (including major metropolitan centers where we have concentrations of customers, including under group and individual life insurance, concentrations of employees or significant operations) and in respect of countries and regions in which we operate that are subject to a greater potential threat of military action or conflict. Ultimate losses would depend on several factors, including the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our investment portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables.

•Mortality trend is the risk that mortality improvements in the future deviate adversely from whatour is expected.expectations. Mortality trend is a long-term risk that could emerge gradually over time. Longevity products, such as annuities, pension risk transfer and long-term care, may experience adverse impacts due to higher-than-expected mortality improvement. Mortality products, such as life insurance, experience adverse impacts due to lower-than-expected mortality improvement. If this risk were to emerge, the Company would update assumptions used to calculate reserves for in-force business, which may result in additional assets needed to meet the higher expected annuity claims or earlier expected life claims. An increase in reserves due to revised assumptions hascould have an immediate adverse impact on our results of operations and financial condition;condition, however,and economically the impact iscan generallybe long term as the excess outflow is paid over time.

We manage mortality risk primarily through our underwriting practices. We use a variety of other strategies to further manage our mortality risks, including the use of reinsurancereinsurance, derivative instruments and derivativediversification instruments.of our product portfolio. These strategies, however, may not be fully effective and may lead to payments to counterparties in excess of recoveries depending on how actual mortality experience emerges and on future changes in the level of premiums we pay to reinsurers. We may also benefit from offsetting impacts between our mortality and longevity products in adverse mortality or longevity scenarios; however, the extent of this offset may vary.

Certain of our insurance products are subject to morbidity risk, which is the risk that either incidence, utilization or continuation experience deviates adversely from whatour is expected.expectations. Morbidity risk is a biometric risk that can manifest in the following ways:

In each case, an increase in claims, or an increase in reserves due to revised morbidity assumptions can have an immediate adverse impact on our results of operations and financial condition;condition, however, economicallyand the economic impact ofcan morbiditybe risk for products that pay out for ongoing illness or disability generally emerges over the longer termlong-term as the morbidity claims are paid.

Certain of our insurance products are subject to policyholder behavior risk, which is the risk that actual policyholder behavior deviates adversely from whatour isexpectations. expected.Policyholder behavior risk can manifest in the following ways:

•Lapse calamity is the risk that lapse rates over the short-term deviate adversely from whatour isexpectations. expected, forFor example, surrenders of certain insurance products may increase following a downgrade of our financial strength ratings or adverse publicity. Only certain products are exposed to this risk. Products that offer a cash surrender value that resides in the general account, such as non-participating whole life products, could pose a potential short-term lapse calamity risk. Surrender of these products can impact liquidity, and it may be necessary in certain market conditions to sell assets to meet surrender demands. Lapse calamity can also impactaffect our earnings and capital through its impact on estimated future profits.

•Policyholder behavior (long-term) risk is the risk that the behavior of our customers or policyholders deviates adversely from whatour isexpectations expected.over Policyholderthe behaviorlong-term. This risk arises through product features which provide some degree of choice or flexibility for the policyholder, which can impact the amount and/or timing of claims. Such choices include surrender, lapse, partial withdrawal, policy loan utilization, and premium payment rates for contracts with flexible premiums. While somePolicyholder behavior is driven by factors outside of our control, including macro factors such as market movements, policyholderas behaviorwell at a fundamental level is driven primarilyas by policyholders’ individual needs, which may differ significantly from product to product depending on many factors including the features offered, the approach taken to market each product, and competitor pricing. For example, persistency (the probability that a policy or contract will remain in force) within our annuities business may be significantly impacted by the value of guaranteed minimum benefits contained in many of our variable annuity products being higher than current account values in light of poor market performance as well as other factors. Many of our products also provide our customers with wide flexibility with respect to the amount and timing of premium deposits and the amount and timing of withdrawals from the policy’s value. Results may vary based on differences between actual and expected premium deposits and withdrawals for these products, especially if these product features are relatively new to the marketplace. The pricing of certain of our variable annuity products that contain certain living benefit guarantees is also based on assumptions about utilization rates, or the percentage of contracts that will utilize the benefit during the contract duration, including the timing of the first withdrawal. Results may vary based on differences between actual and expected benefit utilization. We may also be impacted by customers seeking to sell their benefits. In particular, the development of a secondary market for life insurance, including life settlements or “viaticals” and investor-owned life insurance, and third-party investor strategies in the annuities business, could adversely affect the profitability of existing business and our pricing assumptions for new business. Policyholder behavior risk is generally a long-term risk that emerges over time. An increase in reserves due to revised assumptions hascould have an immediate adverse impact on our results of operations and financial condition;condition, however,and from anthe economic or cash flow perspective, the impact iscan generallybe long termlong-term as the excess outflow is paid over time.paid.

The profitability of many of our insurance and annuity products depends in part on the value of the separate accounts supporting these products, which can fluctuate substantially depending on market conditions. Market conditions resulting in reductions in the value of assets we manage hashave an adverse effect on the revenues and profitability of our investment management business, which depends on fees related primarily to the value of assets under management, and could decrease the value of our strategic investments.

Our insurance and annuity products and certain of our investment products, and our investment returns, are subject to interest rate risk, which is the risk of loss arising from asset/liability duration mismatches within our general account investments as well as invested assets of other entities and operations. The risk of mismatch in asset/liability duration is mainly driven by the specific dynamics of product liabilities. SomeFor productexample, liabilities are expected to have only modest risk related to interest rates because cash flows can be matched by available assets; however, othersome product liabilities generate long-term cash flows (i.e., 30 years or more), resulting in significant interest rate risk, since these cash flows cannot be matched by assets for sale in the marketplace, exposing the Company to future reinvestment risk. In addition, certain of our products provide for recurring premiums which may be invested at interest rates lower than the rates included in our pricing assumptions. Market-sensitive cash flows exist with other product liabilities including products whose cash flows can be linked to market performance through secondary guarantees, minimum crediting rates, and/or changes in insurance assumptions.

Our mitigation efforts with respect to interest rate risk are primarily focused on maintaining an investment portfolio with diversified maturitiesmaturities. thatThe has aportfolio’s key rate duration profile thatis isdesigned to be approximately equal to the key rate duration profilethat of our liability and surplus benchmarksbenchmark; however, these benchmarks are based on estimates of the liability cash flow profiles which are complex and could be inaccurate, especially when markets are volatile. In addition, there are practical and capital market limitations on our ability to accomplish this matching. Due to these and other factors we may need to liquidate investments prior to maturity at a loss in order to satisfy liabilities or be forced to reinvest funds in a lower rate environment.

Our significant business operations outside the U.S. subject us to foreign exchange risk, which is the risk of loss arising from assets that are invested in a different currency than the related liability, as well as the unhedged portion of the Company’s earnings from, and capital supporting, operations in a foreign currency. As a U.S.-based company with significant business operations outside of the U.S., particularly in Japan, we are exposed to foreign currency exchange rate risk related to these operations, as well as in our investment portfolio. This is because, for financial reporting purposes, income and expenses are reported in local currency and translated into the U.S. dollar at the applicable currency exchange rate for inclusion in our financial statements. Therefore, if the U.S. dollar strengthens against other currencies such as the Japanese yen, our revenues reported in U.S. dollars would decline, even if there was no corresponding reduction in the health of our business. Fluctuations in foreign currency exchange rates could adversely affect our profitability, financial condition and cash flows, as well as increase the volatility of our results of operations under U.S. GAAP. In the short-term, solvency margins in our Japan businesses can also be impacted by fluctuations in exchange rates.

For our International Businesses’ operations, our Retirement Strategies segment’s earnings on non-U.S. dollar-denominated reinsurance contracts and PGIM’s investment activities based in currencies other than the U.S. dollar, changes in foreign currency exchange rates create risk that we may experience volatility in the U.S. dollar-equivalent earnings and equity of these operations. We seek to manage this risk through various hedging strategies, including the use of foreign currency hedges and through holding U.S. dollar-denominated securities in the investment portfolios of certain of these operations. Additionally, our Japanese insurance operations offer a variety of non-Japanese yen-denominated products. For certain of our international insurance operations outside of Japan, we elect to not hedge the risk of changes in our subsidiary equity investments due to foreign exchange rate movements.

For our domestic investment portfolios supporting our U.S. insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies. We manage this risk by hedging substantially all domestic foreign currency-denominated fixed-income investments into U.S. dollars. We generally do not hedge all of the foreign currency risk of our investments in equity securities of unaffiliated foreign entities. The value and liquidity of our foreign currency investments could be adversely affected by local market, economic and financial conditions.

There can be no assurance that our hedging and other strategies will effectively mitigate foreign exchange risk. For a discussion of our hedging program and the impact of foreign currency exchange rates on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—External and Economic Factors—Impact of Foreign Currency Exchange Rates.”

Guarantees within certain of our products, in particular our variable annuities and to a lesser extent certain individual life and international insurance products, are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position. Certain of our products, particularly our variable annuity products and to a lesser extent certain international insurance products, include guarantees of minimum surrender values or income streams for stated periods or for life, which may be in excess of account values. Our valuation of the liabilities for the minimum benefits contained in many of our variable annuity products requires us to consider the market perception of our risk of non-performance, and a decrease in our own credit spreads resulting from ratings upgrades or other events or market conditions could cause the recorded value of these liabilities to increase, which in turn could adversely affect our results of operations and financial position. Certain of our products, particularly our variable annuity and variable life products, include minimum death benefits or “no-lapse guarantees” that guarantee a death benefit as long as the “no-lapse guarantee” premium is paid. Certain of our products, particularly certain index-linked annuity and individual life products, include interest crediting guarantees based on the performance of an index. Downturns in equity markets, increased equity volatility, increased credit spreads, or (as discussed above) reduced interest rates could result in an increase in the valuation of liabilities associated with such guarantees, resulting in increases in reserves and reductions in net income. We use a variety of hedgingHedging and risk management strategies, including product features, that we use to mitigate these risks in part and we may periodically change our strategies over time. These strategies may, however, not be fully effective. In addition, we may be unable or may choose not to fully hedge these risks. Hedging instruments may not effectively offset the costs of guarantees or may otherwise be insufficient in relation to our obligations. Hedging instruments also may not change in value correspondingly with associated liabilities due to equity market or interest rate conditions, non-performance risk or other reasons. We may choose to hedge these risks on a basis that does not correspond to their anticipated or actual impact upon our results of operations or financial position under U.S. GAAP. Changes from period to period in the valuation of these policy benefits, and in the amount of our obligations effectively hedged, will result in volatility in our results of operations and financial position under U.S. GAAP and the statutory capital levels of our insurance subsidiaries. Estimates and assumptions we make in connection with hedging activities may fail to reflect or correspond to our actual long-term exposure from our guarantees. Further, the risk of increases in the costs of our guarantees not covered by our hedging and other capital and risk management strategies may become more significant due to changes in policyholder behavior driven by market conditions or other factors. The above factors, individually or collectively, may have a material adverse effect on our results of operations, financial condition or liquidity.

We are subject to counterparty risk associated with reinsurance transactions. To mitigate this risk, we may use coinsurance with funds withheld or modified coinsurance. With these reinsurance arrangements, we retain assets on our balance sheet whose related investment performance accrues to third-party reinsurers. The composition of these assets is subject to investment guidelines specific to the reinsurance treaties and may differ from those we would normally invest in. Under GAAP, funds withheld and modified coinsurance reinsurance most often create embedded derivatives for the ceding company and the reinsurer, which are measured at fair value. The valuation of these embedded derivatives is sensitive to market factors, including credit spreads of the assets held byon theour cedingbalance insurer,sheet, and can generate significant volatility in net income depending on market conditions. Changes in the fair value of embedded derivatives are included in “Realized investment gains (losses), net” on the Consolidated Statements of Operations, whereas changes in the fair value of assets are recorded primarily in “Accumulated other comprehensive income.”

•Client service impacts: The Company may not be able to service customers. This may result if the Company is unable to continue operations during a business continuation event or if systems are compromisedcompromised, dueincluding toas a result of a cyber-attack involving malware and/or a virus.

•Cyber-attacks, both systemic (e.g., affecting the internet, cloud services, and/or other financial services industry infrastructure) and targeted (e.g., failures in or breach of our systems or that of third-parties on whom we rely), such as the cybersecurity incident we experienced and disclosed in February 2024;

We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and continuing availability of data we use to run our businesses and service our customers. These systems, and any available backups, have and may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control.control, including cyber-attacks, denial of service, viruses or other malicious activities, power outages, hardware or software malfunctions, defects or degradation, lack of proper maintenance, human error or misuse, and similar events.

We, or third parties on whom we rely, may not adequately maintain information security. There continues to be significant and increased cyber-attack activity against businesses, including but not limited to Prudential and others in the financial services sector, and no organization, regardless of measures implemented to safeguard the systems and detect threats, is fully immune to cyber-attacks. Our cybersecurity risk remains heightened because of, among other things, the rapidly evolving nature and pervasiveness of cyber threats, including advances in artificial intelligence (“AI”), our brand and reputation, our size and scale, our geographic presence and our role in the financial services industry and the broader economy. See “Item 1C. Cybersecurity” for additional information about cybersecurity risk management and governance. Risks related to cyber-attack arise in various areas, including:

•Employees, third-party service providers or other individuals purportedly acting on behalf of the Company may fail (as a result of human error or misconduct) to comply with applicable policies and procedures, and/or intentionally circumvent controls or safeguards for unauthorized purposes. Our increased adoption of remote working increases these risks, as our interaction with employees and external service providers occur on information systems, networks and environments over which we have less control and which may be more difficult to monitor.

•The proliferation of third-party financial data aggregators and emerging technologies, including the development and use of artificial intelligence,AI, increase our information security risks and exposure.

The development and adoption of artificial intelligence ("AI"),AI, including generative artificialAI intelligenceand (“Generativeagentic AI”),AI, and its use and anticipated use by us or by third parties on whom we rely, may increase the operational risks discussed above or create new operational risks that we are not currently anticipating. AI technologies offer potential benefits in areas such as customer service personalization and process automation, and we expect to use AI and Generative AI to help deliver products and services and support critical functions. We also expect third parties on whom we rely to do the same. There are significant risks involved in developing and deploying AI and there can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability. AI and Generative AI may be misused by us or by such third parties, andor thatthe riskmodels isor datasets on which the models are trained may be flawed or otherwise may function in an unexpected manner. Such risks are increased by the relative newness of the technology, the speed at which it is being adopted, and the lackdeveloping ofand evolving laws, regulations or standards governing its use. SuchSee misuse“Business — Regulation — Artificial Intelligence” for a discussion of the applicable laws and regulations relating to the use of AI. Misuse of AI or external data, failure to comply with regulatory requirements, or conflicting interpretations of requirements could expose the Companyus to legal or regulatory risk, subject us to adverse regulatory examinations or audits, damage customer relationships or cause reputational harm. Further, our ability to continue to develop and efficiently deploy AI technologies depends on access to specific third-party equipment and other physical infrastructure, such as processing hardware and network capacity, as to which we cannot control the availability or pricing, especially in a highly competitive environment. Our competitors may also adopt AI or Generative AI more quickly or more effectively than we do, which could cause competitive harm. Because the Generative AI technology is so new, some of the potential risks of Generative AI are currently unknowable; however, specific risks relating to AI and Generative AI could include, among others:

•Misinformation and Disinformation: The ability to generate realistic and convincing synthetic media has been and could be used to spread misinformation and disinformation, impacting public opinion and undermining trust in the financial system.

•Cybersecurity Threats: AI could be used to create sophisticatedsophisticated, long-term and persistent phishing attacks or bypass security measures, increasing the risk of cyberattacks and data breaches.

We, or third parties on whom we rely, may not adequately ensure the integrity, confidentiality, or availability of personal and confidential information. In the course of our ordinary business, we collect, store and disclose to various third parties (e.g., service providers, reinsurers, etc.) substantial amounts of personal and confidential information, including in some instances sensitive personal information, including health-related information. We are subject to the risk that the integrity, confidentiality, or availability of this information may be compromised, including as a result of an information security breach as described above, or that such events occurring at third parties may not be disclosed to us in a timely manner. And we may have insufficient recourse against such third parties from which such breaches originate. We have experienced cybersecurity events resulting in, among other things, the compromise of personal and confidential information, including sensitive health information, of our employees, customers and other stakeholders. See “Business—Regulation—Privacy and Cybersecurity Regulation” for a discussion of the applicable laws and regulations (including those requiring notice, disclosure or remediation) relating to cybersecurity events.

We mayhave incurred and could incur significant costs and other negative consequences resulting from cyber-attacks or other information security breaches. Any compromiseCompromise or perceived compromise of the security of our systems or data or of that of one of our vendors has damaged and could damage our reputation, cause the deterioration or termination of relationships with, among others, customers, distributors, government-run health insurance exchanges, marketing partners and insurance carriers, reduce demand for our services, result in the loss of business opportunities, and subject us to significant liability and expense as well as regulatory action, penalties and lawsuits, any or all of which would harm our business, operating results and financial condition. We mayhave also incurred and could incur significant costs in connection with our response, recovery, remediation, modification of protective measures, and compliance efforts, including costs associated with mitigating the impact of any errors, interruptions, delays or cessations of service. Additionally, our failure to timely or accurately communicate cyber incidents to relevant parties could result in regulatory, operational and reputational risk. To the extent we maintain cyber insurance, liabilities or losses arising from certain cyber incidents may not be covered or fully covered under such policies, including if our insurer denies coverage as to any particular claim in the future, and may not take into account reputational damage, the costs of which are impossible to quantify, and the amount of insurance may not be adequate. In addition, our insurance coverage with respect to cyber incidents may increase in cost or cease to be available on commercially reasonable terms, or at all, in the future.

Third parties (outsourcing providers, vendors and suppliers and joint venture partners) present added operational risk to our enterprise. The Company's business model relies heavily on the use of third parties to deliver contracted services in a broad range of areas. This reliance presents the risk that the Company is unable to meet legal, regulatory, financial or customer obligations because third parties fail to deliver contracted services, or that the Company is exposed to reputational damage because third parties fail to operate in aaccordance poorlywith controlledour manner.specifications and expectations. We use affiliates and third-party vendors located outside the U.S. to provide certain services and functions, which also exposes us to business disruptions and political risks as a result of risks inherent in conducting business outside of the United States. In our investments in which we hold a minority interest, or that are managed by third parties, we lack management and operational control over operations, which may subject us to additional operational, compliance and legal risks and prevent us from taking or causing to be taken actions to protect or increase the value of those investments. For example, see “Business—Regulation—ERISA.” In those jurisdictions where we are constrained by law from owning a majority interest in jointly owned operations, our remedies in the event of a breach by a joint venture partner may be limited (e.g., we may have no ability to exercise a “call” option).

AffiliateThe manner in which our products are distributed, including by affiliate and third-party distributors of our productsproducts, presentpresents added regulatory, competitive and other risks to our enterprise. Our products are sold primarily through captive/affiliated distributors and third-party distributing firms. Our captive/affiliated distributors are made up of sales personnel who are generally compensated based on commissions. The third-party distributing firms are rarely dedicated to us exclusively and may frequently recommend and/or market products of our competitors. Accordingly, we must compete for their services. Our sales could be adversely affected if we are unable to attract, retain or motivate captive sales agents or third-party distributing firms or if we do not adequately provide support, training, compensation, and education to this sales network regarding our products, or if our products are not competitive and not appropriately aligned with consumer needs. While third-party distributing firms have an independent regulatory accountability, regulatorsunder haveapplicable beenregulations clearand with expectations thatguidance, product manufacturers retain significant sales practices accountability.

The Company and our distributors are subject to rules regarding the standard of care applicable to sales of our products and the provision of advice to our customers, and in recent years many of these rules haveare beenroutinely revised or re-examined. In addition, there have been a number of investigations regarding the marketing practices of brokers and agents selling financial services products and the payments they receive. Furthermore, sales practices and investor protection have increasingly become areas of focus infor regulatoryour examinations.regulators. TheseRegulatory investigations and examinations have resulted in enforcement actions against us and companies in our industry and brokers and agents marketing and selling those companies’ products. Enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products. If our products are distributed in an inappropriate manner, or to customers for whom they are unsuitable, or distributors of our products otherwise engage in misconduct, we may suffer reputational and other harm to our business and be subject to regulatory action, penalties or damages. Our business may also be harmed if captive/affiliate distributors engage in inappropriate conduct in connection with the sale of third-party products.

Although we distribute our products through a wide variety of distribution channels, we do maintain relationships with certain key distributors. For example, a significant amount of our sales in Japan are derived through major Japanese banks and a significant portion of our sales in Japan through Life Consultants is derived through a single association relationship. We periodically negotiate the terms of these relationships, and there can be no assurance that such terms will remain acceptable to us or such third parties. An interruption in certain key relationships could materially affect our ability to market our products and could have a material adverse effect on our business, operating results and financial condition. Distributors may elect to reduce or terminate their distribution relationships with us, including for such reasons as adverse developments in our business, competitiveness of product offerings, adverse rating agency actions or concerns about market-related risks. We are also at risk that key distribution partners may merge, change their business models in ways that affect how our products are sold, or terminate their distribution contracts with us, or that new distribution channels could emerge and adversely impact the effectiveness of our distribution efforts. An increase in bank and broker-dealer consolidation activity could increase competition for access to distributors, result in greater distribution expenses and impair our ability to market products through these channels. Consolidation of distributors and/or other industry changes may also increase the likelihood that distributors will try to renegotiate the terms of any existing selling agreements to terms less favorable to us. Finally, we also may be challenged by new technologies and marketplace entrants that could interfere with our existing relationships.

In addition, other risks may become strategic risks. For example, we have considered and must continue to consider the impact of the interest rate environment on new product development and continued sales of interest sensitive products. Our strategic initiatives may fail to achieve their intended results, due to inadequate execution, incorrect assumptions, global or regional economic conditions, competition, changes in the industries in which we operate or other reasons.

Actions by foreign governments could adversely affect the value and long-term growth prospects of our businesses, particularly in emerging markets. For example, pension system reforms being proposed in some jurisdictions (including Chile, Colombia and Peru) may limit the role of private companies, fundamentally changing our business in these markets. Likewise, geopolitical tensions (including those between China and Taiwan) may cause governments to take actions such as the implementation of sanctions or other measures to restrict commercial activity in or among markets where we operate or have other interests. The timing and magnitude of any potential actions is uncertain, as is the effectiveness of any measures we may take to help limit the impact of these actions.

•U.S. federal, state and local and non-U.S. tax laws, including BEAT,Base GILTIErosion and CAMT.Anti-Abuse Tax (“BEAT”), Global Intangible Low-Taxed Income (“GILTI”) and Corporate Alternative Minimum Tax (“CAMT”).

Changes in technology and other external factors may be unsettling to our business model. Rapid technological change puts pressure on existing business models. We believe the following aspects of technological and other changes would significantly impact our business model. There may be other unforeseen changes in technology and the external environment, including the regulatory response to technological change, which may have a significant impact on our business model.

•Interaction with customers. Technology is moving rapidly and as it does, it puts pressure on existing business models. Some of the changes we can anticipate are increased choices about how customers want to interact with the Company or how they want the Company to interact with them. Evolving customer preferences and changing privacy regulations may drive a need to redesign products and change the way we interact with customers. Our distribution channels may change to become more automated, at the place and time of the customer’s choosing. Such changes clearly have the potential to disrupt our business model.

The following items are examples of other factors which could have aan meaningfuladverse impact on our business.

•A downgrade in our financial strength or credit ratings could potentially, among other things, adversely impact our business prospects, results of operations, financial condition and liquidity. For a discussion of our ratings and the potential impact of a ratings downgrade on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Ratings.” For example, a downgrade in ourthe financial strength or credit ratings of our U.S. entities may negatively affect the statutory capital position of our Japanese insurance subsidiaries and reduce their ability to return capital to Prudential Financial due to affiliate transactions involving our Japan insurance subsidiaries. For additional information, see “Item 1. Business—Regulation—International Insurance Regulation—Solvency Regulation” and “Item 7. Management Discussion and Analysis—Liquidity and Capital Resources—Dividends and Returns of Capital from Subsidiaries.” We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business. Our ratings could be downgraded at any time and without notice by any rating agency. Credit rating agencies continually review their methodologies, including capital and earnings assessment models, as well as their ratings for the companies that they follow, including us. The credit rating agencies also evaluate the industry as a whole and may change our credit rating based on their overall view of our industry. In addition, a sovereign downgrade could result in a downgrade of our subsidiaries operating in that jurisdiction, and ultimately of Prudential Financial and our other subsidiaries.

•Climate change may increase the severity and frequency of calamities, or adversely affect our investment portfolio or investor sentiment. Climate change may increase the frequency and severity of weather-related disastersdisasters, pandemics and/or pandemics.other natural disasters. In addition, climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation. Climate change may also influence investor sentiment with respect to the Company and investments in our portfolio.

We haveOur operations are primarily in the United States of America (“U.S.”), Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement solutions, mutual funds and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.

In September 2023, we, together with Warburg Pincus and a group of institutional investors, announced the launch oflaunched Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company. In conjunction with this announcement, we made an initial equity investment throughThrough our Corporate and Other operationsoperations, ofwe approximatelyown $200an million, equivalent to aapproximate 20% interest,equity interest in Prismic Life Holding Company LP (“Prismic”), the Bermuda-exempted limited partnership that owns all of the outstanding capital stock of Prismic Re.Re and Prismic Life Reinsurance International, Ltd. (“Prismic Re International”). We expect the increased reinsurance capacity that this partnership provides to support our vision of expanding access to investing, insurance, and retirement security for people around the world. Our initial transaction, effective September 2023, was to reinsure approximately $9 billion, or 70%, of reserves related to our structured settlement annuities business with Prismic Re. See Note 15 to the Consolidated Financial Statements for additional information regarding thisour transaction.transactions with Prismic Re and Prismic Re International.

As part of our continuous improvement process, we are working to become a leaner and more agile company by simplifying our management structure, empowering our employees with faster decision-making processes and investing in technology and data platforms. As part of this, we implementedrecorded changescharges toof our$135 organizationalmillion structurein the fourth quarter of 2025 and recorded a restructuring charge of $200 million in the fourth quarter of 2023. These charges, primarily related to our domestic operations and PGIM, were recorded within our Corporate and Other operations and reflect management’s ongoing efforts in evaluating the optimal workforce structure required to deliver on our long-term growth strategy. We expect these continued actions will create operating efficiencies, and provide reinvestment capacity to build capabilities, realize additional efficiencies, strengthen our competitiveness and fuel future growth.

Business Outlook

•PGIM. Our global investment management business, PGIM, is focused on maintaining strong investment performance while leveraging the scale of its approximately $1.375$1.466 trillion of assets under management and diversified global operations. We are broadeningcurrently centralizing our distribution channels and unifying our asset management capabilities through acquisitions and organic initiatives to better serve our clients and support growthsustainable asgrowth. wellIn asaddition, we remain focused on broadening our market share through acquisitions and organic initiatives, including providing asset management services to Prismic.third-party reinsurers. In addition to serving third-party institutional and retail clients, we provide our U.S. and International businesses with a competitive advantage through our investment expertise across a broad array of asset classes, including public and private asset class capabilities. Underpinning our growth strategy is our ability to continue to deliver robust investment performance and to attract and retain high-caliber investment talent.

•Retirement Strategies. We remain focused on helping customers meet their investment and retirement needs by expanding access to retirement security and broadening distribution through new relationships, platforms and advisors. Our Institutional Retirement Strategies business continues to be focused on providing products that respond to the needs of plan sponsors, retirees, and annuitants while maintaining appropriate pricing and return expectations under changing market conditions. We expect our differentiated capabilities and execution to drive our business momentum in the pension risk transfer and international reinsurance markets; however, we expect that growth will not be linear due to the episodic nature of these transactions. In Individual Retirement Strategies, we continue to execute on our strategy tostrategic pivot toof replacing the intentional run-off of legacy variable annuities with new indexed and fixed annuity products that generate less interestvolatile, rate-sensitiveand productsmore tocapital ensureefficient we realize appropriate returns within the current economic environment.earnings. We expect to continue to shiftfocus on expanding our focusdiverse product portfolio and distribution channels to productsmeet thatmore provideof the growing demand among retail investors for protected growth and outcomeslifetime for our customers across a wide range of economic environments through simpler, technology-enabled channels.income.

•International Businesses. We remain focused on meeting customers’ protectionevolving protection, retirement, and financialsavings needs as well as maintaining the underlying strength of our distribution channels. Our strategy is to strengthen our position in Japan whileand expanding our footprint in select high-growth emerging markets. Wewe remain committed to enhancingoptimizing our existing operations while exploring acquisition opportunities to expand scale and complement our portfolio of businesses in emerging markets in support of our long-term growth objectives.operations.

•PGIM. After a long period of lowsignificantly increased interest rates and benignvolatile economic conditions,conditions in 2022 and 20232023, we experienced a sharpmodest risedecline in rates,rates during 2024 and 2025, combined with higherimproved equity market volatilityconditions and a downturnslight rebound in the commercial real estate industry. While the economic outlook has improved, interest ratesrate movements remain elevateduncertain and the real estate market is still in thea early stages ofmodest recovery. We expect that a stabilized or declining rate environment over time will positively impact PGIM, particularly as investors reallocate record-high money market assets to fixed income, real estate, and other higher-yielding asset classes. Conversely, a deterioration in market conditions (e.g., equity market declines, higher interest rates, credit spread widening or real estate value declines) could lead to lower fee-based revenues, incentive fees taking longer to be realized and losses in our seed and co-investments. An economic downturn could also have impacts on real estate prices as well as transaction volumes in certain private asset classes. In addition, the continued shift from active strategies to passive index products, particularly in equities, could present additional headwinds for active managers such as PGIM. We believe PGIM’s uniquely diversified global platform is well positioned to be resilient in the face of market and industry headwinds.

•U.S. Businesses. AsThrough discussed further under “—Impact of Changes in the Interest Rate Environment” below,2021, interest rates in the U.S. had experienced a prolonged period of historically low levels,levels. This was followed by asignificant sharp riseincreases in 2022 through 2023. While there have been modest declines in 2024 and 2025, rates have sustained higher levels inrelative 2023to andhistorical 2024.periods. We expect that a continued level of relative higher interest rates will benefit our results over time. We continue to monitor current market conditions and the potential impact to our businesses fromin the event of slowing or negative economic growth. In addition, we are subject to financial impacts associated with movements in equity markets and the evolution of the credit cycle as discussed in “—Segment Results of Operations,” where applicable, and more broadly in “Item 1A. Risk Factors.”

•International Businesses. OurInterest International Businesses’ operations, especiallyrates in Japan,Japan have operated inexperienced a lowprolonged interest rate environment for many years, as discussed under “—Impactperiod of Changes in the Interest Rate Environment” below, and thesehistorically low interest rateslevels, negatively impactimpacting our net investment spread results and reinvestment yields.yields; however, beginning in 2024, the Bank of Japan began raising its key short-term interest rates, marking their highest levels since September 1995. We expect that a continued level of higher interest rates will benefit our results over time. In addition, we are subject to financial impacts associated with movements in foreign currency rates, particularly the Japanese yen. Fluctuations in the value of the yen can impact the relative attractiveness to customers of both yen-denominated and non-yen denominated products thereby impacting both sales and surrenders. In addition, we are subject to financial impacts associated with movements in equity markets and the evolution of the credit cycle as discussed in “—Segment Results of Operations,” where applicable, and more broadly in “Item 1A. Risk Factors.” Brazil’s life insurance industry is supported by a stable economic outlook and its long-term growth prospects remain strong as economic conditions show sustained growth.

•International Businesses. Japan has an aging population as well as a large pool of household assets invested in low-yielding deposit and savings vehicles. The aging of Japan’s population, along with strains on government pension and healthcare programs, have led to a growing demand for products that provide financial solutions for retirement, investment and wealth transfer, as well as for health-related products. Brazil hasBrazil, the largest country by population in South AmericaAmerica, is experiencing rising life expectancy and hasan recentlyexpanding experiencedmiddle aclass, modestalong increasewith inincreasing population.disposable The nation is undergoing a rapid demographic transition characterized by a growing proportion of agingincome and middlegreater classfinancial populations.awareness. ThisThese demographictrends transition has drivendrive demand for diverse life insurance products,products particularlythat tailored toprioritize financial securitysecurity, wealth preservation, and wealthretirement protection.planning, and underscore the need for diversified solutions, including protection-oriented, savings, and health related policies.

In order to manage the impacts that changes in interest rates have on our net investment spread, we employ a proactive asset/liability management program, which includes strategic asset allocation and hedging strategies within a disciplined risk management framework. These strategies seek to match the liability characteristics of our products,products and to closely approximate the interest rate sensitivity of the assets with the estimated interest rate sensitivitythat of the product liabilities. Our asset/liability management programWe also helps manage duration gaps, currency and other risks between assets and liabilities through the use of derivatives.derivatives, Weand adjust thisthese dynamic processstrategies as products change, asproducts, customer behavior changesbehavior, and as changes in the market environmentconditions occur. As a result, our asset/liability management process has permitted us to manage the interest rate risk associated with our products through several market cycles.evolve. Our interest rate exposure is also mitigated by our business mix, which includes lines of business for whichwhere fee-based and insurance underwriting earnings play a more prominent role in product profitability. We also regularly examine our product offerings and their profitability. As a result, we may reprice certain products andor discontinue sales of othercertain products that do not meet our profit expectations. Additionally, in our Japanese operations, our diverse product portfolio in terms of currency mix and premium payment structure allows us to further manage any impacts from changes in the interest rate environment. For additional information regarding sales within our Japanese operations, see “—International Businesses—Sales Results,” below.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the consolidated financial condition of Prudential Financial, Inc. (“Prudential,” “Prudential Financial,” “PFI,” or “the Company”) as of MarchJune 31,30, 2026, compared with December 31, 2025, and its consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025. You should read the following analysis of our consolidated financial condition and results of operations in conjunction with the MD&A, the “Risk Factors” section, and the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as the statements under “Forward-Looking Statements,” and the Unaudited Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

•“General Account Investments” provides information about the overall portfolio composition of the general account that supports the liabilities of our insurance companies. InvestmentIn addition, investment results are presented separately for our U.S.-based and Japanese-based operations, our Closed Block division, and our Funds Withheld portfolios, the latter of which supports liabilities relating to reinsurance agreements where the economic benefits and associated investment risk ultimately inure to the reinsurer. This section should be read in conjunction with Note 3 to the Unaudited Interim Consolidated Financial Statements.

Prudential Financial, a financial services leader with approximately $1.576$1.642 trillion of assets under management as of MarchJune 31,30, 2026, has operations primarily in the United States of America (“U.S.”), Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.

The suspension of sales resulted in an estimated reduction of $130$235 million in International Businesses’ pre-tax adjusted operating income forthrough the first quartersix months of 2026. We estimate that the suspension of new sales as extended will result in a reduction of pre-tax adjusted operating income in the range of $525 to $575 million for 2026, inclusive of the firstsix quartermonth impact,impact above, and in the range of $400 to $450 million for 2027, reflecting remediation costs associated with sustaining the business, one-time and other operating costs, and lower earnings attributable to the gradual ramp-up of new sales after sales resume. Should the suspension of new sales activities extend beyond November 2026, we estimate that International Businesses’ pre-tax adjusted operating income would be reduced by $50 to $60 million per each additional month. We do not expect a material impact to capital, Economic Solvency Ratios (“ESR”) or cash flows. It is also possible that reputational and other harm resulting from or in connection with this matter will negatively impact our other businesses in Japan beyond Prudential of Japan. We are proactively reviewing the sales practices of Gibraltar Life Insurance Company, which distributes its products through life consultants and independent agencies. Actual results may differ materially from these preliminary expectations, as covered under “Forward-Looking Statements.”

(1)Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding. Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $91.6$92.3 billion and $90.0 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.

(2)As of both MarchJune 31,30, 2026 and 2025, the total notional amount of these forward currency contracts within our Corporate and Other operations was $0.8 billion.

As a result, we implemented a structure in certain of our Japanese operations that disaggregated the USD- and AUD-denominated businesses into separate divisions, each with its own functional currency that aligns with the underlying products and investments. The result of this alignment was to reduce differences in the accounting for changes in the value of these assets and liabilities that arise due to changes in foreign currency exchange rate movements. For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $0.8 billion and $1.0 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold. Absent the sale of any of these assets prior to their stated maturity, approximately 3%2% of the $0.8 billion balance as of MarchJune 31,30, 2026 will be recognized throughout the remainder of 2026, approximately 3% will be recognized in 2027, and the remaining balance will be recognized from 2028 through 2051.

“Net income (loss) attributable to Prudential Financial, Inc.” for the firstsecond three monthsquarter of 2026 compared to the firstsecond three monthsquarter of 2025 decreasedincreased $110$452 million, inclusive of a $78$23 million favorableunfavorable variance from income taxes,taxes that was primarily driven by the decreaseincrease in pre-tax earnings, as described below, andpartially offset by a lower effective tax rate in the current period.year. See Note 14 to the Unaudited Interim Consolidated Financial Statements for additional information regarding income taxes.

On a pre-tax basis, “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” decreasedincreased $187$438 million, reflecting the following notable items:

•“Net investment income” — $535$557 million favorable variance, primarily reflecting business growth,growth and higher reinvestment ratesrates. and higher prepayment fee income (seeSee “—General Account Investments—Investment Results” for additional information); and

•“Policyholders’ benefitsPremiums” — $1,393$102 million unfavorable variance, primarily reflecting higherlower pension risk transfer premiums, with corresponding offsets in “policyholders’ benefits,” as discussed above;below.

•“Interest credited to policyholders’ account balances” — $284$836 million unfavorable variance, primarily reflecting businessan growthunfavorable comparative impact from our annual reviews and aupdate higherof weighted-averageassumptions creditingand rateother refinements, as well as the impact from the favorable changes in Japan.assets supporting experience-rated contractholder liabilities, as described above, and business growth, primarily driven by retirement products. See Note 10 to the Unaudited Interim Consolidated Financial Statements for additional information regarding policyholders’ account balances.balances;

(4)Equity in earnings of joint ventures and other operating entities is included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as it is reflected on an after-tax U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests and redeemable noncontrolling interests are excluded from adjusted operating income but included in “Income (loss) before income taxes and equity in earnings of joint ventures and other operating entities” as they are reflected on a U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations.Operations Earningsand attributable to noncontrolling interests representsrepresent the portion of earnings from consolidated entities that relates to the equity interests of minority investors.

PGIM. Results for both the second quarter and the first quartersix months of 2026 increased in comparison to the prior year period,periods, primarily reflecting higher net asset management feesfees, higher net service, distribution and other revenues, and higher net other related revenues, partially offset by higher expenses.revenues.

International Businesses.Retirement. Results for the firstsecond quarter of 2026 decreased in comparison to the prior year period, inclusive of ana less unfavorable comparative net impact from foreignour currencyannual exchangereviews rates.and update of assumptions and other refinements. Excluding this item, results for the first quarter of 2026 decreased, primarily reflecting lower underwriting results and higher expenses, including remediation costs associated with the Prudential of Japan matter, partially offset by higher net investment spread results. Results for the first six months of 2026 increased in comparison to the prior year period, inclusive of a less unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results increased, primarily reflecting higher net investment spread results, partially offset by lower underwriting results and higher underwriting results.expenses.

Corporate and Other. Results for the second quarter of 2026 were relatively flat in comparison to the prior year period. Results for the first quartersix months of 2026 were less unfavorable in comparison to the prior year period, primarily reflecting lower net charges from other corporate activities.

Closed Block Division. Results for both the second quarter and the first quartersix months of 2026 increased in comparison to the prior year period,periods, primarily reflecting higher net investment activity results, partially offset by changes in the policyholder dividend obligation.