Prudential Q2 profits rise as new CEO champions strategic overhaul

Prudential Financial is evolving under new CEO Andy Sullivan and saw second-quarter profits rise as new plans took shape.

In June, Prudential announced a major consolidation of fixed income and private credit units within PGIM – the company’s global investment management business – to create a nearly $1 trillion credit platform.

John Vibert, as head of fixed income, is leading the unified platform, with Matt Douglass continuing to oversee private credit under him.

“Our new structure enables us to better serve clients with differentiated origination and alpha-generating capabilities, including the rapidly growing market for private credit solutions, and to drive operating efficiencies, cross-selling opportunities, and increased revenue over time,” said Sullivan, who succeeded Charles Lowrey on March 31.

PGIM reported an adjusted operating income of $229 million versus $206 million a year ago. Assets under management of $1.4 trillion were up 8% from the year-ago quarter driven by fixed income and equity market appreciation, net inflows, and strong investment performance, the company said.

“This is a substantive change that will lead to stronger revenues, reduce costs and improve margins over time,” Sullivan told Wall Street analysts during a Thursday conference call.

In Other News:

RILA sales. Registered indexed-linked annuity sales were down 23% despite being a popular product with overall industry sales up 20% overall.

A RILA is a long-term, tax-deferred insurance contract that’s designed to help people save for retirement. RILAs work by tying the performance of the contract to one or more stock market indexes, and offering a level of protection from market downturns.

Prudential’s Individual Retirement segment reported adjusted operating income of $326 million in the quarter, compared to $439 million in the year-ago quarter. Lifewise, sales of $3.1 billion in the quarter decreased 10% from the year-ago quarter due to the RILA sales decline.

Sullivan noted how the competitive landscape is changing, with 25 annuity sellers pushing RILA products, compared to just five a few years ago.

“With 25 competitors in the market, there’s a lot of levers to try and accelerate sales, whether that be leaning in on pricing or leaning in on commissions that are being paid,” Sullivan explained. “You should expect that all those levers are being utilized by competitors.”

Pension risk transfer. “Uncertainty” in the economy is likely to blame for a slowdown in pension risk transfer deals, Sullivan said. In 2024, the PRT market reached $51.8 billion, LIMRA reported, a 14% increase from the previous year. PRT volume is expected to be between $30 to $40 billion this year, Sullivan said.

Prudential has been involved in some of the largest PRT deals in the U.S., including the $16 billion IBM deal, and recent transactions with Verizon and Shell.

“In the smaller end of the market, transaction volume has remained strong,” Sullivan noted. “But in the jumbo space, it has definitely been quieter this year. … We’re optimistic that the market conditions will improve over time, and when that happens, we’ll benefit.”

Quarterly Snapshot:

• Group insurance sales of $477 million increased 13% from prior year-to-date, driven by growth in both group life and disability.
• Life insurance sales of $223 million increased 10% from the year-ago quarter, driven by higher variable life and term product sales.
• Individual Retirement reported adjusted operating income of $396 million in the quarter, compared to $550 million in the year-ago quarter.
• International Businesses reported adjusted operating income of $761 million for the second quarter, compared to $702 million in the year-ago quarter.

Management Perspective:

“This is about focus, focusing our management attention and our capital deployment on the areas with the greatest opportunities to deliver profitable and sustainable growth.”

CEO Andy Sullivan

By The Numbers:

• Net Income: $533 million ($1.2 billion in Q2 2024)
• Earnings Per Share: $3.58 per common share ($3.28 in Q2 2024)
• Assets Under Management: $1.6 trillion ($1.5 trillion in Q2 2024)
• Share Repurchases: $250 million in Q2 2025
• Dividend Declared: $485 million in Q2 2025
• Stock Price Movement: Stock is up 3% to $104.81.

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