Prudential Financial will discontinue sales of variable annuities with guaranteed living benefits, according to statements made by company executives during its third quarter earnings call.
This move aims to reduce the firm’s exposure to changes in market conditions and interest rates; instead, it will focus on other sources of revenue that are less rate sensitive.
Rob Falzon, vice chairman of Prudential Financial, said in a statement the company has “made progress” on its priorities: ”First, we continued to implement pricing and product actions to simplify and de-risk our business mix while protecting profitability.
“For example, we are further pivoting to less interest rate-sensitive solutions in individual annuities by discontinuing sales of traditional variable annuities with guaranteed living benefits, including both our highest daily income and Prudential defined income products,” according to Falzon.
“In our individual life business, we are repricing products to mitigate the impact of low rates, in addition to suspending sales of our single life guaranteed universal life product in July,” he explained.
The firm is not exiting the annuity business altogether, however. Charlie Lowrey, chairman and CEO of Prudential Financial, said it is focusing its efforts on “delivering protected outcome solutions” like Prudential’s FlexGuard product.
He also said the company will further explore strategic opportunities for blocks of business, including reinsurance and other transactions.
In its third-quarter earnings, Prudential Financial reported a profit increase of almost 5% to $1.49 billion, up from $1.42 billion in Q3 2019.
The company’s assets under management reached a record level of more than $1.4 trillion, up 11% from the year-ago quarter.