August 7, 2026

Prudential to exit emerging markets and shift $3B to core businesses

Prudential Financial will narrow its global footprint, exit emerging markets and redirect more than $3 billion in capital toward retirement, asset management and U.S. insurance businesses.

The overhaul represents the latest sweeping strategy employed by CEO Andy Sullivan in his second year leading the venerable insurer. It is aimed at accelerating earnings growth and improving cash generation, he said Thursday during a conference call with Wall Street analysts.

Prudential intends to cut its retirement and insurance footprint from more than a dozen countries to roughly half that number, focusing on the United States, Japan and select European markets while exiting emerging markets.

“We are concentrating on global retirement, asset management and select protection businesses, areas with long-term structural demand where our capabilities are most differentiated,” Sullivan explained. “We intend to lead in these businesses as the strongest returns accrue to the top-tier market leaders.”

He added that Prudential will target both organic and inorganic sources of growth to strengthen its asset management platform, expand its retirement footprint in the U.S., Europe and Japan, and enhance group insurance product diversification in the U.S.

“We will evolve from a portfolio of good businesses to a company built around category leaders, powered by an integrated model that drives compounding value over time,” Sullivan said.

The strategy centers on four priorities: shrinking the company’s geographic footprint; expanding leadership positions in retirement, asset management and select protection businesses; optimizing capital deployment; and improving efficiency across the enterprise.

Prudential said those efforts are expected to produce about $750 million in annual pretax run-rate benefits by the end of 2028, up sharply from a previous target of $150 million by 2027.

Expanding asset management

A key component of the plan is expanding PGIM, Prudential’s asset management business. Sullivan said he wants PGIM to account for about 25% of adjusted operating income – more than double its current contribution – by growing private credit, infrastructure, asset-backed finance and other higher-fee investment strategies.

Prudential also plans to invest further in its U.S. retirement and group insurance operations. Sullivan said the company sees continued opportunity in retail annuities, pension risk transfer and employer-sponsored benefits while maintaining its leadership position in national accounts and expanding into the middle market.

“Our brand, product breadth, distribution and differentiated service model have more than tripled our addressable market in the past three years, and our expansion into the IMO channel has meaningfully increased our reach,” Sullivan said. “We will continue expanding products and distribution to capture the most attractive opportunities.”

During the second quarter, retail annuity sales rose 14% to $3.6 billion, driven by continued demand for registered index-linked annuities through the company’s FlexGuard 2.0 product and higher sales of fixed annuities.

Pension risk transfer activity remained slow during the quarter because of a lack of large transactions but activity is expected to increase during the second half of the year, Sullivan said.

Group insurance posted record quarterly earnings, benefiting from growth in national accounts, the middle market and supplemental health products, while individual life insurance also reported record quarterly sales amid continued demand for cash-value accumulation products.

Japan a drag

International operations remained profitable despite the ongoing suspension of sales at Prudential of Japan (POJ). The company said the suspension reduced pretax adjusted operating income by $105 million during the quarter and reaffirmed its expectation that the full-year impact will total between $525 million and $575 million.

POJ continues to address widespread allegations of misconduct. Included are measures to reimburse impacted customers, restructure employee incentive compensation, and strengthen oversight of sales practices, governance, and risk management. The plans also include enhanced education, training and recruitment standards for POJ employees.

Prudential said it remains on track to resume sales by Nov. 5 after implementing governance, agency redesign and compensation changes.

During a question-and-answer session, Sullivan said Prudential expects most emerging-market exits to occur through business sales rather than closures and described the strategy as a five-year effort focused on maximizing value for customers, employees and shareholders.

Quarterly Highlights

The Retirement segment reported adjusted operating income of $392 million in the quarter, compared to $397 million in the year-ago quarter.
Total Retirement sales of $6.8 billion included $3.6 billion of retail annuity sales, “reflecting continued strong momentum” following the December 2025 launch of a new RILA product.
The Group Insurance segment reported year-to-date sales of $599 million, up 26% from the prior year period, driven by strong growth in disability product sales, including supplemental health products, and continued momentum in the premier middle-market segment.
The Individual Life segment reported adjusted operating income of $176 million in the quarter, compared to $82 million in the year-ago quarter. Record sales of $237 million increased 9% from the year-ago quarter, primarily driven by variable accumulation products.
The U.S. Legacy Products segment reported adjusted operating income of $234 million in the quarter, compared to $351 million in the year-ago quarter. Net legacy annuities account values of $76 billion decreased 7% from the year-ago quarter.

By The Numbers

Adjusted Operating Income: $1.4 billion ($1.3 billion in Q2 2025)
Net Income: $985 million ($533 million in Q2 2025)
Earnings Per Share: Adjusted after-tax income per share was $4.08 ($3.58 in Q2 2025)
Share Repurchases: $250 million in Q2 2026
Dividend Declared: $493 million in Q2 2026
Stock Price Movement: After a mild selloff Wednesday, shares rebounded to $121-$122 by Friday morning.