OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of the life/health insurance subsidiaries of Prudential Financial, Inc. (PFI) (Newark, NJ) [NYSE: PRU], referred to as Prudential. Concurrently, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of PFI and all Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the group. The outlook of these Credit Ratings (ratings) is stable. (Please see link below for a detailed listing of the companies and ratings.)
The ratings reflect Prudential’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management.
Prudential’s very favorable business profile is rooted in its vast and diversified product offerings for life, annuities and asset management services. The pension risk transfer business has also changed its risk profile over the past decade and the large deals and successful practice has positioned Prudential to be among the top market participants. The most recent transaction, in partnership with one of its largest competitors in this space, illustrates the value Prudential has in pension risk management and as an administrator. Additionally, Prudential has invested in technology to support new and expanding sales and administration capabilities to support its already large and expansive captive field sales forces. This has been especially important to maintain competitiveness in the market during the COVID-19 pandemic, when face-to-face selling has been challenging in the U.S. and Japan markets.
AM Best has a favorable view of Prudential’s long-term operating profile, but notes that near-term assumption updates and higher COVID-19-related claims due to interim regulatory requirements in Japan have pressured earnings for the year. From a balance sheet perspective, this does place pressure on the quality of capital given the earnings trend has been somewhat volatile outside of the domestic life and health market. Claims trends in Japan are primarily driven by lingering effects of COVID-19 and policy effects. However, these offsets may be temporary. In addition, Prudential’s balance sheet strength is foundationally driven by its investment portfolio and strategic allocations to higher performing, high quality assets with lower exposure to low quality structured securities. AM Best has observed adequate liquidity metrics and favorable financial flexibility options through its access to the capital markets and avenues such as the Federal Home Loan Bank membership.
A complete listing of Prudential Financial, Inc.’s FSRs, Long-Term ICRs and Long- and Short-Term IRs also is available.
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