PRUDENTIAL FINANCIAL INC (PRU)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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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 June 30, 2026, compared with December 31, 2025, and its consolidated results of operations for the three and six months ended June 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.

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Introduction

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations is to provide readers with a foundational understanding of our Company, our consolidated financial statements, and the significant internal and external drivers of our results. The discussion of financial results within is focused on adjusted operating income, which is the Company’s segment-level measure of performance, and provides readers with period-over-period analysis of operating results and significant drivers. In addition to discussing our detailed segment results of operations, we have also provided supplemental information that we believe assists with a greater understanding of our overall financial results.

A brief description of these key informational sections follows:

•“Executive Summary” provides an overview of the Company and its operations, along with any recent significant events that have impacted our organizational structure or financial results.

•“External and Economic Factors” includes a discussion of how the impact of potential changes in foreign currency exchange rates may impact our overall operations and financial position.

•“Accounting Policies & Pronouncements” discusses the equity and interest rate assumptions used in evaluating liabilities for future policy benefits for certain of our products. This section should be read in conjunction with “Accounting Policies & Pronouncements” and Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

•“Liquidity and Capital Resources” provides information about our liquidity and capital positions, including any significant actions that have impacted, or are expected to impact, these positions. Information is also provided on our insurance companies’ regulatory capital positions, the sources and uses of our holding company’s cash, and additional information about financing activities of the Company.

•“General Account Investments” provides information about the overall portfolio composition of the general account that supports the liabilities of our insurance companies. In addition, investment results are presented separately for our 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.

•“Valuation of Assets and Liabilities” provides additional breakouts of the fair value of assets and liabilities for Prudential Financial Inc., excluding those held in the Closed Block division and Funds Withheld portfolios, and separately for the Closed Block division and Funds Withheld portfolios. This section should be read in conjunction with Note 6 to the Unaudited Interim Consolidated Financial Statements.

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Executive Summary

Company Overview

Prudential Financial, a financial services leader with approximately $1.642 trillion of assets under management as of June 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.

Effective January 1, 2026, the Company made the following segment reporting changes to isolate the impacts of certain discontinued products that were previously commingled with the results of actively sold products that more closely reflect the Company’s strategic focus. These changes are consistent with the Company’s recent organizational changes and strategy and reflect how the Chief Operating Decision Maker (“CODM”) assesses performance and allocates resources:

•“U.S. Legacy Products” segment: (i) traditional variable annuities with guaranteed living benefit riders and certain other annuity products, previously included in the former Individual Retirement Strategies segment, and (ii) guaranteed universal life policies, previously included in the Individual Life segment, have been combined into a new reportable segment named “U.S. Legacy Products.” This segment represents run-off blocks of business consisting of products that are no longer being sold in U.S. markets and will be managed with a focus on reducing risk and optimizing value.

•“Retirement” segment: The blocks of business in the former Individual Retirement Strategies segment that were not moved into the U.S. Legacy Products segment, discussed above, consisting primarily of registered index-linked annuity and fixed annuity products, and the products previously included in the former Institutional Retirement Strategies segment have been combined into a new reportable segment named “Retirement.” This combined segment better represents the Company’s strategic management, growth trajectory, and resource allocation policies.

•“Individual Life” segment: There were no other impacts to this segment other than the transfer of the guaranteed universal life policies, discussed above. The remaining blocks of business contained within this segment primarily consist of term, indexed universal life, and variable universal life products.

These segment reporting changes are being applied retrospectively and do not have an impact on any of the Company’s previously issued Consolidated Financial Statements.

Our principal operations now consist of PGIM (our global investment management business), our U.S. Businesses (consisting of Retirement, Group Insurance, Individual Life and U.S. Legacy Products), our International Businesses, the Closed Block division, and our 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. 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 generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments as well as the Divested and Run-off Businesses described above.

We attribute financing costs to each segment based on the amount of financing used by each segment, excluding financing costs associated with corporate debt, which are reflected in our Corporate and Other operations. The net investment income of each segment includes earnings on the amount of capital that management believes is necessary to support the risks of that segment.

We believe we are a uniquely integrated financial services company, with a competitive position supported by our longstanding brand, broad customer relationships, global distribution capabilities, and a diversified business model that combines liability generation across retirement and protection products with PGIM’s asset management expertise across public and private markets. Together, these capabilities enable us to originate, manage, and allocate capital at scale, meet evolving customer and client needs, and generate earnings and cash flow across market cycles.

In August 2026, we announced a deliberate, multi-year strategy to become a more focused, higher-performing enterprise. We intend to exit emerging markets and concentrate capital, talent, and management attention on large, developed markets where we believe we have the greatest opportunity to compete and scale, including the United States, Japan, and select markets in Europe; strengthen leadership positions in global retirement, asset management, and select protection businesses; optimize

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capital deployment toward higher-return and less capital-intensive opportunities; and leverage global scale, technology, and simplification initiatives to improve efficiency. As part of this strategy, we are undertaking an enterprise-wide cost savings initiative expected to reduce annual operating expenses by approximately $750 million by year-end 2028. Through these actions, we seek to deliver earnings growth, increase free cash flow conversion, maintain strong returns on capital, and create durable long-term value for shareholders.

As previously disclosed, in January 2026, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), a Japanese insurance subsidiary of the Company, reported the findings of its internal investigation into incidents of misconduct involving certain employees of Prudential of Japan. In response to these findings, Prudential of Japan is implementing a series of actions which include strengthening oversight of sales practices, governance and risk management, as well as leadership changes. Moreover, in February 2026, following discussions with the Japanese regulator, the Company voluntarily suspended new sales activity at Prudential of Japan for a 90-day period commencing February 9, 2026. In April 2026, the Company announced the voluntary extension of the suspension of new sales for an additional 180 days through November 5, 2026. See Note 21 to the Unaudited Interim Consolidated Financial Statements “—Litigation and Regulatory Matters—Regulatory” for additional information.

The suspension of sales resulted in an estimated reduction of $235 million in International Businesses’ pre-tax adjusted operating income through the first six months of 2026. We estimate that the suspension of new sales as extended will result in a reduction of

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Certain of the statements included in this section constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. Prudential Financial, Inc.’s actual results may differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in the “Risk Factors” and “Forward-Looking Statements” sections included herein.

Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2024 in comparison to the year ended December 31, 2023 have been omitted. For such omitted discussions, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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Introduction

The purpose of this Management’s Discussion and Analysis of Financial Condition and Results of Operations is to provide readers with a foundational understanding of our Company, our consolidated financial statements, and the significant internal and external drivers of our results. The discussion of financial results within is focused on adjusted operating income, which is the Company’s segment-level measure of performance, and provides readers with period-over-period analysis of operating results and significant drivers. In addition to discussing our detailed segment results of operations, we have also provided supplemental information that we believe assists with a greater understanding of our overall financial results.

A brief description of these key informational sections follows:

•“Executive Summary” provides an overview of the Company and its operations, along with recent significant events that have impacted our organizational structure or financial results. This section also provides management’s outlook for each respective business segment.

•“External and Economic Factors” discusses industry trends, including the economic environment and demographics for each of our businesses, and includes a discussion of how the impact of potential changes in either interest rates or foreign currency exchange rates may impact our overall operations and financial position.

•“Accounting Policies & Pronouncements” discusses the accounting policies applied in preparing our consolidated financial statements that management believes are most dependent on the application of estimates and assumptions and which require management’s most difficult, subjective, or complex judgments. This section should be read in conjunction with Note 2 to the Consolidated Financial Statements.

•“Liquidity and Capital Resources” provides information about our liquidity and capital positions, including any significant actions that have impacted, or are expected to impact, these positions. Information is also provided on our insurance companies’ regulatory capital requirements, the sources and uses of our holding company’s cash, and additional information about financing activities of the Company.

•“Ratings” provides information on the ratings for Prudential Financial and certain of its subsidiaries as of the date of this filing.

•“General Account Investments” provides information about the investment objectives, strategies and overall portfolio composition of the general account that supports the liabilities of our insurance companies. Investment results are presented separately for our U.S.-based and Japanese-based operations, our Closed Block division, and our Funds Withheld portfolios, which support 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 Consolidated Financial Statements.

•“Valuation of Assets and Liabilities” provides additional breakout of the fair value of assets and liabilities for Prudential Financial Inc., excluding those held in the Closed Block division and Funds Withheld portfolios, and separately for the Closed Block division and Funds Withheld portfolios. This section should be read in conjunction with Note 6 to the Consolidated Financial Statements.

•“Income Taxes” provides information about our effective tax rate and unrecognized tax benefits. This section should be read in conjunction with Note 17 to the Consolidated Financial Statements.

•“Risk Management” provides detail about our risk governance structure and the framework for evaluating the risks across the Company. This section should be read in conjunction with “Item 1A. Risk Factors.”

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Executive Summary

Company Overview

Our 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.

Our principal operations consist of PGIM (our global investment management business), our U.S. Businesses (consisting of our Retirement Strategies, Group Insurance and Individual Life businesses), our International Businesses, the Closed Block division, and our 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. Divested and Run-off Businesses are composed 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 generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments as well as the Divested and Run-off Businesses described above. See “Business—” for a description of our sources of revenue and details on how our profitability is impacted. In addition, our profitability is impacted by our ability to effectively deploy capital, utilize our tax capacity and manage expenses.

Effective in the first quarter of 2025, consistent with changes to the Company’s internal management structure, our International Businesses are reflected as a single operating and reportable segment, which is how the chief operating decision maker (“CODM”) now assesses its performance and allocates resources. Prior to the first quarter of 2025, our International Businesses consisted of the Life Planner and Gibraltar Life and Other operating segments, each of which was a reportable segment under U.S. GAAP. The change has been applied retrospectively and did not have any impact on the Company’s Consolidated Financial Statements contained herein or to any previously issued financial statements.

Management expects that results will continue to benefit from our mutually-reinforcing business system, which includes a mix of businesses that complement each other to provide competitive advantages, earnings diversification and capital benefits from a balanced risk profile. We believe we are well-positioned to tap into market opportunities to meet the evolving needs of our clients and society at large. Our mix of high-quality protection, retirement and investment management businesses enables us to offer solutions that cover a broad range of financial needs and to engage with our clients through multiple channels.

In September 2023, we, together with Warburg Pincus and a group of institutional investors, launched Prismic Life Reinsurance, Ltd. (“Prismic Re”), a licensed Bermuda-based life and annuity reinsurance company. Through our Corporate and Other operations, we own an approximate 20% 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 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. See Note 15 to the Consolidated Financial Statements for additional information regarding our 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 recorded charges of $135 million in the fourth quarter of 2025 and $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.

In February 2026, in conjunction with our previously announced internal investigation into employee misconduct in Japan, we voluntarily suspended new sales activity at Prudential of Japan for a 90-day period, commencing February 9, 2026. See “—Litigation and Regulatory Matters—Regulatory” within Note 25 to the Consolidated Financial Statements and “Results of Operations by Segment—International Businesses” below for additional information.

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Business Outlook

We feel confident about our prospects for the future based on the foundation of our integrated and complementary businesses. We are focused on evolving our strategy to transform our market-leading businesses to become a higher growth, more capital efficient company. We plan to continue investing in growth businesses and markets around the world, delivering industry-leading customer and client experiences, and creating the next ge

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