By Daniel Webster, dWeb.News Publisher
NEWARK & JERSEY CITY, N.J.–(BUSINESS WIRE)–Prudential Financial, Inc. (“Prudential”) (NYSE: PRU) and Fortitude Group Holdings, LLC, the parent company of Bermuda’s largest multi-line reinsurer (“Fortitude Re”), today announced that they have entered into a definitive agreement under which Prudential will sell a portion of its in-force legacy variable annuity block to Fortitude Re for a total transaction value of $2.2 billion. 1
Under the terms of the agreement, Prudential will sell one of its stand-alone legal entity subsidiaries, Prudential Annuities Life Assurance Corporation (PALAC), including PALAC’s in-force annuity contracts, to Fortitude Re, for an all-cash purchase price of $1.5 billion, subject to certain adjustments at closing, plus a capital release to Prudential and an expected tax benefit.
The PALAC block primarily consists of non-New York traditional variable annuities with guaranteed living benefits that were issued prior to 2011, which constitute approximately $31 billion or 17% of Prudential’s total in-force individual annuity account values as of June 30, 2021. PALAC is a complement to Fortitude Re’s market-leading abilities in developing tailored solutions for leading insurers that improve capital efficiency and address strategic priorities.
Prudential continues to service and manage all contracts within the PALAC block to ensure customers have a consistent experience. Prudential doesn’t expect any impact on employee headcounts as a result.
“We’re pleased to have reached an arrangement with Fortitude Re. This is another important milestone in Prudential’s journey to become a more market-sensitive, faster growing, and more agile company,” stated Charles Lowrey, Prudential Chairman & CEO. “This transaction highlights how a partnership with financial strength and the right expertise can benefit our customers, investors, and unlock new opportunities for our business,” said Charles Lowrey, Prudential Chairman and CEO. James Bracken, Chief Executive Officer of Fortitude Re said that this transaction was an important step forward and demonstrated our expertise in providing comprehensive and value-enhancing solutions for clients. Our strong, diversified balance sheet and proven risk management capabilities as well as access to Carlyle’s asset origination franchise are key distinguishing factors that allow us to responsibly manage long-term, complex insurance liabilities. “I am excited about the partnership that Prudential has with Prudential, and the strategic opportunities it creates.”
Prudential will keep its interest in FlexGuard buffered and indexed annuity contracts. PALAC issued fixed and fixed indexed annuities via a reinsurance agreement. Upon regulatory approvals, Prudential intends to offer FlexGuard customers and other PALAC customers the opportunity to replace their contract issuer with another Prudential subsidiary. Additional details will be provided to the customers. Prudential will continue selling new FlexGuard products and other protected outcomes solutions through existing subsidiaries.
Prudential Executive Vice President, Head of U.S. Andy Sullivan. “Going forward, we will be better positioned to deliver new investment strategies like FlexGuard, which continues to achieve record success, and focus on creating the next generation of protected income solutions to help more Americans secure their financial future.”
The transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close during the first half of 2022.
Upon closing, Prudential anticipates a reduction to pre-tax annual adjusted operating income of approximately $290 million. The proceeds of the transaction will be used for corporate general purposes.
Debevoise & Plimpton LLP was Fortitude Re’s legal counsel. Sidley Austin LLP was Prudential’s legal counsel. Goldman Sachs & Co. LLC was the exclusive financial advisor.
 Total transaction value includes the purchase price for PALAC plus a capital release to Prudential and an expected tax benefit.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a global financial services leader and premier active global investment manager with more than $1.5 trillion in assets under management as of June 30, 2021, has operations in the United States, Asia, Europe, and Latin America. Prudential’s talented and diverse employees make life easier by providing financial opportunities for more people. Prudential’s iconic Rock symbol stands for strength, stability and innovation for over a century. Visit news.prudential.com for more information.
About Fortitude Re
Fortitude Re, Bermuda’s largest multiline composite reinsurer, has unique competitive advantages and the expertise to create bespoke transactional solutions. Fortitude Re is an independent company that is backed by a group of sophisticated investors led by The Carlyle Group as well as T&D Insurance Group. Fortitude Re holds approximately $45 billion in invested assets as of June 30, 2021. For more information, visit http://www.fortitude-re.com. Follow Fortitude Re via LinkedIn.
Prudential Forward-Looking Statements and Non-GAAP Measures
Certain of the statements included in this release, such as those regarding the expected closing of the transaction and the receipt and use of the proceeds thereof, the company’s strategy with respect to the products it offers, the growth prospects and market sensitivity of its business, the expected impact of the transaction on the company’s head count, the expected tax benefit to Prudential resulting from the transaction and the expected reduction in pre-tax adjusted operating income as a result of the transaction constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include words such as “believes,”” “expects,” and “anticipates,” and “includes,” and “plans,” and “assumes,” and “projects,” and variations thereof. Forward-looking statements reflect management’s current beliefs and expectations regarding future developments and the potential consequences for Prudential Financial, Inc., and its subsidiaries. Management cannot guarantee that future developments that could affect Prudential Financial, Inc. or its subsidiaries will occur as planned. These forward-looking statements do not guarantee future performance. They also involve risks and uncertainties. There are important factors that could cause actual results and expectations to differ materially from those reflected in 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 in Prudential’s Annual Report on Form 10-K. Prudential does not undertake to update any particular forward-looking statement included in this document.
This release contains a reference to adjusted operational income. Prudential uses adjusted operating income to assess segment performance and allocate resources. We cannot reliably quantify future realized investment gains/losses or changes in asset and liabilities values due to their uncertain timing and potential significance. Therefore, we are unable to provide an estimate for expected lost income from continued operations. This GAAP measure is most comparable to adjusted operational income. More information about adjusted operating income can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included in Prudential’s Annual Report on Form 10-K.
This press release does not constitute an offer of novation or exchange with respect to any insurance policies or contracts.
Annuities can be issued by Pruco Life Insurance Company (main office), or Prudential Annuities Life Assurance Corporation, Shelton, CT (mainoffice). Prudential Annuities Distributors, Inc., Shelton, CT distributes variable annuities. Each Prudential Financial company is responsible for its financial condition and contractual obligations. Prudential Annuities, Inc. is a Prudential Financial business. Click here for more information about FlexGuard.
More dWeb.News Business News at https://dweb.news/news-sections/business-news/
In the role of Judas in the traveling Broadway show “Jesus Christ Superstar,” James Beeks’s onstage career was about to take off. Beeks, whose stage name is James T. Justis, was lauded for his role as the disciple who betrayed Jesus.But it was his side job as a Michael Jackson impersonator that unintentionally brought about…
(CNN)A pair of payments the Republican National Committee made to a law firm representing former President Donald Trump is raising questions among former and current GOP officials about the party’s priorities in a critical election year and its ability to remain neutral — as long-standing RNC rules require — in the 2024 presidential primary. The…
(CNN)About two-thirds of the country should be truly thankful for the weather this holiday season as Thanksgiving travel picks back up to pre-pandemic levels. “A relatively tranquil stretch of weather persists in the final days leading up to Thanksgiving,” says the Weather Prediction Center (WPC). It only takes a run-of-the mill rain shower or wind…
BUFFALO, N.Y., and BELMONT PARK, N.Y., Nov. 4, 2021 /PRNewswire/ — UBS Arena, the metropolitan area’s most anticipated live entertainment venue and future home of the New York Islanders Hockey Club, will boast a distinctively “New York” flavor when it opens its doors later this month. Global hospitality company Delaware North has partnered with an array…
7:00 PM ETNFL NationESPN Week 10 of the NFL season has several compelling matchups. The week is headlined by the Seattle Seahawks facing the Green Bay Packers, and both teams could see their quarterbacks return.Aaron Rodgers could be activated from the reserve/COVID-19 list on Saturday. For Seattle, Russell Wilson is on track to start after…
Most Popular Articles on dWeb.News
- FRONT PAGE: Magnus Medical Launches With Breakthrough Device Designation For Rapid, Individualized Treatment Of Major Depression And $25M In Series A Financing
- SCIENCE NEWS: Researchers discover new insights about tau proteins in people living with ALS
- SOCIAL MEDIA: 2021 Founder’s Letter
- ASIA NEWS: Major Arena Soccer League and SCCG Management Partner on Sports Betting for the MASL
- Brooklyn Business Owner Charged with Bank Fraud, Identity Theft and Witness Tampering
- Pokemon Unite All Rounder Guide: Moves Lists, Stats And Strategies For All All-Rounder Type Pokemon
- BUSINESS: New Book by Louis Gallo – Why Is There Something Rather Than Nothing: Poems
- RUSSIA NEWS: Russia imposes hospitality curfew to tackle spread of Covid
- BUSINESS: NWEA, Center For Education Policy Research At Harvard University, And CALDER At The American Institutes For Research Announce New Initiative To Help Examine District COVID-19 Recovery Efforts
- RECIPE: How To Use Leftover Pumpkin Puree