Prudential (PRU) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 04, 2026

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Andrew Francis Sullivan
• Chief Financial Officer - Yanela del Carmen Frias

TAKEAWAYS

• After-tax Adjusted Operating Income -- $1.321 billion ($3.77 per share), reflecting lower earnings in Japan which more than offset solid performance in PGIM and U.S. Businesses.
• Net Income -- $1.388 billion ($3.96 per share), compared to $1.431 billion ($4.01 per share) in the year-ago quarter.
• Assets Under Management -- $1.616 trillion, representing an increase from $1.612 trillion in the prior year period.
• Latin America Divestitures -- $4.025 billion in total consideration for the sale of businesses in Brazil and Mexico to CNP Assurances as part of a capital rotation strategy.
• Expected Net Proceeds -- $3.1 billion expected from the Latin American sales after accounting for taxes, transaction fees, and closing costs.
• PGIM Pretax Adjusted Operating Income -- $263 million, an 8% increase driven by higher asset management fees and savings from integrating the investment platform.
• PGIM Adjusted Operating Margin -- 26.5%, expanding by 280 basis points over the prior year quarter.
• PGIM Third-Party Net Flows -- $9 billion, marking the highest level in 10 quarters, with positive contributions from both institutional and retail clients.
• Retail Annuity Sales -- $3.9 billion, the highest quarterly level since 2013, supported by record sales of Registered Index-Linked Annuities.
• Retirement Segment AOI -- $620 million, down from $637 million last year due to higher variable expenses and pension risk transfer (PRT) runoff.
• Group Insurance AOI -- $101 million, a 12% increase over the year-ago quarter driven by favorable mortality in National Account Life.
• Year-to-Date Group Insurance Sales -- $682 million, a 23% increase reflecting growth in the premier middle market segment and supplemental health products.
• Individual Life AOI -- $199 million, compared to $153 million last year, aided by a $30 million reserve refinement and higher new money yields.
• Japan Businesses AOI -- $559 million, a decline from $750 million primarily due to the $140 million impact of the Prudential of Japan (POJ) sales suspension.
• Japan Third-Party Sales -- 53% increase in the independent agent channel, demonstrating resilience outside of the suspended captive distribution channels.
• Corporate and Other Adjusted Loss -- $349 million, essentially unchanged from a loss of $353 million in the third quarter of 2025.
• Parent Company Liquidity -- $4 billion in highly liquid assets, remaining well above the $3 billion minimum target.
• Capital Returns -- $741 million returned to shareholders in the quarter, including $250 million in share repurchases and $491 million in dividends.
• Japan ESR Ratio -- 200% for Prudential Holdings of Japan as of Sept. 30, significantly exceeding the 150% operating target.
• AI-Related Investment Exposure -- $7.2 billion total in the general account, including $3.1 billion in data centers and $1.1 billion in GPU exposure.
• Full-Year Effective Tax Rate -- 20% to 21% expected for the full year, a reduction from the previous guidance range of 21% to 22%.
• Habitat Quarterly Earnings -- $25 million run rate, though results included a $6 million negative encaje impact due to higher interest rates.

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RISKS

• Frias stated, "our disability benefit ratio rose year over year due to elevated short and long term disability incidents and severity, amid ongoing macro uncertainty," noting specific impacts from behavioral health and high-wage earners.
• Frias reported that the sales suspension in Japan reduced adjusted operating income by $140 million this quarter, with a projected full-year 2026 impact of $500 million for POJ and $100 million for Gibraltar.
• Sullivan noted that the macro environment is leading to "employment insecurity" which may be structural due to shifts in artificial intelligence and resulting job losses.

SUMMARY

Prudential Financial, Inc. (NYSE:PRU) reported results for the third quarter of 2026, highlighting a strategic shift toward narrowing its geographic footprint and concentrating resources on retirement, asset management, and select protection businesses. Management confirmed the $4.025 billion sale of its Brazilian and Mexican operations, moving these entities into divested businesses to facilitate a multiyear capital rotation strategy. While the sales suspension in Japan created a $140 million headwind for the quarter, the company reported its highest retail annuity sales in 13 years and the strongest third-party net flows for PGIM in over two years. The company stated that it remains committed to disciplined capital deployment, maintaining parent company liquidity well above its stated minimum target of $3 billion.

• Management indicated that the Japan businesses are expected to return to the market in phases starting Feb. 1 with new governance and oversight frameworks.
• Sullivan stated, "The discipline we are demonstrating in selling businesses will be matched by the discipline we bring to deploying capital."
• The company is widening its aperture for M&A across PGIM, group insurance, and select retirement opportunities in Europe to accelerate its growth strategy.
• Sullivan reported that the Japan platform is shifting life planner compensation toward customer retention and compliance rather than being primarily focused on new sales.
• PGIM is well on track to exceed its target of expanding margins by 200 basis points in 2026, with an ultimate long-term goal of reaching a 30% margin.

INDUSTRY GLOSSARY

• AOI: Adjusted Operating Income, a non-GAAP financial measure used to evaluate business performance by excluding certain volatile or non-recurring items.
• PGIM: Prudential Global Investment Management, the global investment management division of Prudential Financial.
• RILA: Registered Index-Linked Annuity, a type of annuity that provides returns based on the performance of a stock market index.
• PRT: Pension Risk Transfer, a transaction in which an employer transfers a portion of its pension plan's risks and obligations to an insurance company.
• ESR: Economic Solvency Ratio, a regulatory measure of an insurance company's capital relative to its risk profile.
• Encaje: A regulatory capital requirement in certain jurisdictions, such as Chile, that requires fund managers to invest their own capital alongside their clients.
• GUL: Guaranteed Universal Life insurance, a type of life insurance policy that offers a guaranteed death benefit and fixed premiums.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Prudential's Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. Later. As a reminder, this conference is being recorded. Is now my pleasure to turn the call over to Tina Madon. Please go ahead.

Tina Madon: Thank you. Good morning, everyone, and thank you for joining us. Representing Prudential on today's call are Andy Sullivan, Chairman and Chief Executive Officer and Yanela del Carmen Frias, Chief Financial Officer. We will start with prepared remarks by Andy and Yanela, and then we will address your questions. Before we begin, I want to remind you that today's discussion may include forward looking statements. It is possible that our actual results may differ materially from those statements. In addition, remarks made on today's call and in our quarterly earnings press release, earnings presentation and quarterly financial supplement which can be found on our website at investor.prudential.com include references to non GAAP measures.

For a reconciliation of such measures to the most comparable GAAP measures, and a discussion of the factors that could cause actual results to differ materially from those in these forward looking statements please see the slides titled Forward Looking Statements and Non GAAP Measures in the appendices to our earnings presentation and quarterly financial supplement. With that, I will now turn the call over to Andy.

Andrew Francis Sullivan: Thank you, Tina, and good morning, everyone. Our third quarter results demonstrated the discipline and consistency with which we are executing and the progress we are making in creating a simpler, more focused Prudential. We are advancing our strategic priorities from a position of strength. In August, we laid out a clear direction concentrate our capital, talent and management attention on retirement, asset management and select protection businesses where we are best positioned to compete and scale. We have taken an important step forward on our first priority, narrowing our geographic footprint.

We recently announced the sale of Prudential of Brazil and Prudential of Mexico to C and P Assurances for $4.025 billion We also closed the sales of our insurance businesses in Indonesia and Kenya, and announced the sale of our South Africa business. Together, these actions are tangible proof of our strength and execution, and commitment to do what we say. As I said in August, a smaller footprint is not the objective. It is the enabler. We are creating the capacity to invest in the businesses where we can scale and lead. Global asset management, global retirement, and Select Protection businesses. We intend to rotate capital in a deliberate, sequenced way into each.

Every opportunity is being measured against its strategic fit, return profile, and contribution to earnings and free cash flow growth. The bar is high. The discipline we are demonstrating in selling businesses will be matched by the discipline we bring to deploying capital. With that, let me turn to the quarter. After tax adjusted operating income was $1.3 billion or $3.77 per share, compared with $1.4 billion or $4.05 per share in the prior year quarter. Year to date adjusted operating return on average equity was 14.5% in line with the prior year period. Lower earnings in Japan more than offset solid fundamentals in PGIM and our U.S. Businesses.

While the Prudential of Japan or POJ sales suspension was a headwind, our broader Japan platform continued to demonstrate resilience. Now for the highlights of our segment results. PGIM's AOI increased solidly year over year. Driven by higher asset management fees and additional progress in the integration of its investment platform. The earnings profile of this business continues to steadily improve as despite persistent macro pressure on the fixed income and real estate sectors. Which account for nearly 3 quarters of PGIM's assets under management. We sustained solid momentum in private assets. With fundraising up 10% year over year, led by direct lending, and real estate debt. Which made up nearly 70% of the private capital raised this quarter.

While overall deployment was down slightly from the year ago quarter, as fund raising cycles create variability in quarter-over-quarter origination, asset backed finance deployment increased nearly 30%. PGIM's third party net flows were the highest in 10 quarters. Totaling $9 billion with positive contributions from both institutional and retail clients. These results reflect the strength of our investment capabilities and client relationships. Public fixed income inflows were a key driver of that performance. While public equity outflows remained a challenge. Consistent with the industry shift away from active equities. Affiliated net outflows of $1.6 billion were mainly driven by variable annuity runoff, and the absence of PRT transactions in the quarter.

PGIM's $40 billion active ETF lineup continued to experience strong growth. With more than $6 billion of net inflows in the third quarter. Our focus is on translating PGIM scale into stronger growth and profitability while preserving the investment expertise that clients value. By expanding our private market offerings, and integrating our capabilities more effectively, we are making asset management a larger, more strategic contributor to Prudential in our U. S. Businesses, results reflect the focused actions we are taking to strengthen our competitive position. By expanding distribution, broadening our product offerings, investing in our capabilities, and we are capturing more demand and improving the fundamentals of our retirement and insurance franchises.

In retirement, we are seeing the value of product innovation backed by strong distribution. Retail annuity sales reached $3.9 billion our highest quarterly level since 2013. Including our highest RILA sales quarter ever reflecting the continued success of the enhanced product we introduced late last year. These results demonstrate our ability to meet customer demand for protected accumulation while delivering on our strategy to maintain a disciplined approach to pricing and returns. On the institutional side, PRT sales remained muted. Activity was quiet through the first 3 quarters of the year across the industry. But the pipeline has picked up. We closed 3 mid-sized transactions totaling $1.6 billion in October.

And anticipate closing several additional transactions by the end of this year. We remain confident in the opportunity in the institutional retirement market. Both in The U. S. And in Europe over the long term. We will pursue growth selectively. Prioritizing value over volume, while remaining a leader in this market. Our consortium partnership with Standard Life announced in August expands our access to the large UK retirement market and complements our longevity reinsurance and U. S. Pension risk transfer capabilities. Group insurance delivered solid quarterly earnings growth underscoring sustained momentum in this business. This result was driven by strong underwriting in our National Account Life business, reflecting continued favorable mortality experience.

While our overall benefit ratio improved year over year on strong performance in Group Life, this quarter's disability results reflect an uncertain macroeconomic environment. That said, we are confident in the fundamentals of this business is a key driver of earnings and free cash flow growth. Year to date sales increased 23% driven by growth in our premier middle market segment particularly in supplemental health products. Our brand and distribution partnerships position us well for further growth as we pair disciplined underwriting with consistent delivery for employers. Individual Life also delivered strong earnings growth. Reflecting the actions we have taken to strengthen our leadership position, through product portfolio diversification, distribution expansion, and a focus on profitable growth.

Record sales of our custom Premier II variable universal life product reflects the success of our shift toward accumulation focused offerings. Overall sales of $230 million were lower year over year reflecting normal quarter-to-quarter variation. The quality and profitability of new business remains strong. As we continue to reshape the portfolio toward more profitable capital efficient business. Now turning to our Japan businesses. Quarterly earnings declined 25% year-over-year primarily attributable to the $140 million impact of the sales suspension in the quarter and lower alternative investment income. Year to date, earnings were down 10% but the business remained resilient supported by a diversified platform. Third party sales were strong, particularly in the independent agent channel.

Which experienced a 53% year-over-year increase. We have top-10 businesses in both the independent agent and bank channels. And it is important to note that the FSA sales suspension orders do not apply to these third party channels. We have launched several additional retirement and savings products into the independent agent channel and expanded the number of agencies selling these products threefold over the last 12 months. In the bank channel, our new product launches are expanding our shelf space with Japan's major national banks. We are building on that presence and our product competitiveness to further expand into the major securities firms and larger regional banks.

In POJ, we continue to make good progress on the reforms identified by the FSA in its sales suspension order. And we remain committed to implementing the changes to strengthen the way we conduct business in Japan. Our objective is not simply to restart sales, but to build a business model that sustains customer trust, and supports responsible growth. Our priority is to complete this work and demonstrate that our new governance and oversight frameworks are effective in practice. We expect that POJ will be positioned to return to the market in phases beginning on February 1st, with strong oversight, clear accountability and customer outcomes at the center of how it operates.

We are also applying the relevant lessons from the POJ experience of the past year to the Gibraltar business. And expect that Gibraltar will also return to the market on February 1st as we previously discussed. The organizational and operational changes we are making as outlined on our October 9 call, are meaningful and enduring. We are confident that they will position our businesses in Japan to serve customers more effectively, operate with greater accountability, and create long term value. We remain convinced that we will exit this period with a strong franchise built for the long term opportunity. In closing, we are making tangible progress on the priorities we set out in August.

We are reshaping our portfolio, investing in the businesses where we have the strongest opportunities to grow, and building a more efficient operating model. There is more work ahead and the full benefits will take time to materialize. But we are clear on where we will compete, how we will allocate capital, and how we will deliver superior shareholder value. The progress we made this quarter strengthens our conviction in both our strategy and in our ability to build a more focused higher performing Prudential over time. With that, let me turn the call over to Yanela.

Yanela del Carmen Frias: Thank you, Andy, and good morning, everyone. Our third quarter results reflected solid underlying business performance and disciplined execution as we continue to simplify the portfolio improve earnings quality and deploy capital with discipline. As Andy noted, we reported after tax adjusted operating income of $1.3 billion or $3.77 per share. Compared to $1.4 billion or $4.05 per share in the year ago quarter. Year over year, higher spread income and favorable underwriting results in our U. S. Businesses as well as higher asset management fees at PGIM were key contributors to this performance.

These increases were more than offset by the impact of the sales suspension in Prudential of Japan, or POJ and higher variable expenses to support growth in our U. S. Businesses. Excluding the costs related to the POJ sale suspension, underlying operating expenses for the quarter and year-to-date were lower than in the prior year period. We have improved operating leverage through expense discipline. While continuing to invest in capabilities that support business growth and improve the customer experience. Year to date, we are ahead of our target on realizing our previously communicated $150 million in pre-tax run rate benefits in 2027. Now turning to our third quarter results by business.

PGIM reported pretax adjusted operating income of $263 million up 8% year-over-year. The pretax adjusted operating margin was 26.5%. Expanding by 280 basis points. These results were driven by higher asset management fees, equity market appreciation and strong investment performance as well as lower expenses. The lower expenses reflected the absence of a reorganization charge in the prior year quarter as well as savings from the ongoing integration of PGIM's operating platform. Offsetting these positives were lower other related revenues, primarily driven by reduced earnings from certain seed investments and weaker agency earnings due to the higher rate environment.

PGIM's year to date margin was 24.6% excluding the reorganization charge this represents a 240 basis point increase over the prior year period. Ahead of PGIM's target. Of at least 200 basis points of margin expansion in 2026. Our U. S. Businesses generated pretax adjusted operating income of $1.2 billion essentially in line with the year ago quarter. Our Retirement businesses reported pretax adjusted operating income of $620 million down modestly year over year. Higher spread income driven primarily by strong retail annuity growth higher prepays and higher alternative investment income was offset by the impact of PRT runoff.

Results also reflected less favorable mortality as well as lower encaje earnings in our Habitat business now part of Retirement due to higher interest rates. Expenses increased compared to the prior year quarter primarily driven by higher variable expenses related to continued business growth. Net account values were $364 billion at quarter end. Up modestly year over year. Retail annuity account values rose 25% to $68 billion supported by $14 billion in sales over the last 12 months reflecting the strength of our diverse product portfolio. As Andy highlighted, year to date institutional volumes reflect the episodic nature of pension and longevity risk transfer, with limited transactions industry wide. However, momentum has picked up in the fourth quarter.

And we have multiple transactions scheduled to close by year end. We remain disciplined on pricing and focused on writing business that meets our return objectives. Group Insurance delivered pretax adjusted operating income of $101 million up 12% year-over-year. Driven primarily by higher underwriting results. Life underwriting results reflect a more favorable mortality in the working age population, while earnings also benefited from continued growth in our supplemental health offering as we further expand in these markets. Operating expenses were also higher as we made investments in our claims and service organizations to support growth improve efficiency enhance operating leverage.

Our overall benefit ratio of 81% was below our target range reflecting strong Life results and the strategic actions we are taking to diversify our business mix by segment and product. However, our disability benefit ratio rose year over year due to elevated short and long term disability incidents and severity, amid ongoing macro uncertainty. While disability incidence remains elevated, we are actively managing through the environment. With disciplined claims execution and strong risk management. Over the past several years, we have made meaningful investments to enhance our claims organization, which have increased our ability to effectively manage higher claim volumes. And support better outcomes for our customers.

Individual Life reported pre tax adjusted operating of $199 million compared to $153 million in the prior year quarter. The year over year increase primarily reflected more favorable underwriting results driven by a reserve refinement of about $30 million in the current quarter and increased spread income reflecting higher new money yields due to higher rates. The evolution of the Individual Life business over the last several years has fundamentally reshaped its financial profile. Delivering stronger, more consistent underlying earnings growth higher cash flow and greater capital efficiency. Our U. S. Legacy products segment generated pretax adjusted operating income of $253 million compared to $308 million a year ago.

This decrease primarily reflected lower net fee income from ongoing runoff of the variable annuity block partially offset by equity market appreciation and less favorable underwriting results in the GUL block. Now turning to our Japan businesses. As a reminder, last month we restated our international results moving emerging markets to divested businesses and therefore outside of AOI. Our Habitat joint venture to retirement and presenting Japan on a standalone basis. Our Japan businesses reported pre tax adjusted operating income of $559 million compared to $750 million in the year ago quarter. Strong underlying business fundamentals were more than offset by the expenses and lower underwriting results related to the POJ sales suspension. As well as lower alternative investment income.

The sales suspension reduced third quarter adjusted operating income by $140 million bringing the year to date impact to approximately $375 million in line with our expectations. We continue to expect a full year 2026 impact of approximately $500 million for POJ and $100 million for Gibraltar. Sales were $291 million down 36% year-over-year due to the POJ sales suspension but up 11% sequentially driven by strong third party distribution. This underscores the underlying strength of the franchise. And the value of our diversified distribution model. Retirement and savings products remained a meaningful contributor to sales. Now let me turn to capital ESR and cash flows.

Our strong capital position and regulatory capital ratios support our AA financial strength ratings and provide flexibility to invest in and grow our core businesses. We ended the quarter with $4 billion of cash in highly liquid assets, well above our $3 billion minimum liquidity target. As well as substantial off balance sheet resources. Our Japan businesses remain well capitalized and are managed to levels aligned with our AA objective. Later this month, Prudential Holdings of Japan will report a consolidated ESR ratio as of September 30th of approximately 200%. Well above our 150% operating target. We do not expect the sales suspension to materially affect capital, ESR or cash flows in 27.

We continue to take actions that support disciplined capital deployment. We intend to deploy the expected proceeds from the sales of our Brazil and Mexico businesses into targeted acquisitions that advance our growth strategy. We do not expect the receipt of the proceeds to change our total capital deployment plans. which we will announce with our fourth quarter earnings in February of next year. Before closing, an update on tax guidance. We now expect a full year effective tax rate of 20% to 21% down from 21% to 22% primarily due to moving emerging markets into divested businesses. In closing, we delivered another solid quarter supported by strong underlying earnings momentum business growth and expense discipline.

At the same time, we continue to address the sales suspension in Japan with urgency and transparency and a strong commitment to reform. We are building a simpler, more focused company, with higher quality earnings, greater capital flexibility and a stronger foundation for long term growth. This coupled with consistent execution is the path to sustain value creation. With that, let me now turn the call over to the operator for Q&A.

Operator: Thank you. We will now be conducting a question-and-answer session. As a reminder, we ask you to please ask 1 question and 1 follow-up. Our first question today is coming from Tom Gallagher from Evercore ISI. Your line is now live.

Tom Gallagher: Good morning. First question I had is, I know just related to the LATAM sale, the $4 billion I know you mentioned the sale price. Can you talk about what the after tax proceeds are expected to be?

Yanela del Carmen Frias: Yes. Hi, Tom. Well, first of all, let me start by saying that we are very pleased with the economics from the sale of Brazil and Mexico with the consideration being a total of $4.025 billion clearly north of $3 billion The net proceeds will reflect taxes, transaction fees and closing costs. Expect that value to be approximately $3.1 billion and the majority of the difference there is taxes. We will be-- we expect to close in the second half of next year, and we will confirm the net proceeds at that time. Got you. Thanks for that, Yanela.

Tom Gallagher: The I guess my-- so my follow-up is Andy, I heard you say I think asset management and selected benefits businesses are potential focus for M&A. Are you leaning in 1 direction or the other? And should we assume in terms of M&A that you probably need to close on this deal first? Or would you potentially look to do something sooner? Thanks.

Andrew Francis Sullivan: Yes. So Tom, good morning. Let me start by reiterating some of the comments I made in my opening. You know, we are pursuing a deliberate sequence capital rotation strategy. So that means step 1 in the sequence is divesting our emerging markets businesses, as an important source of capital. Obviously, what we are looking to do there, our goals were to have clean exits and to be well paid for the value of the franchises. And I think you could see that we are making great progress. As far as your question about leaning, we are not leaning, in a particular direction. As we look to deploy the capital, we are widening our aperture.

And I think that those would be the keywords across PGIM, group insurance, and select opportunities for retirement in Europe. As we are doing that, we are ensuring that we are thinking very creatively on a wide range of possible deal structures. And you have heard me use these words before, make sure we are in the know and in the flow. We believe strongly the best deals happen principle to principle, that we do not rely on investment banking auctions. So the reason I say widening the aperture, M&A is always a low probability endeavor.

So you need to have a wide aperture and look at many, many things to make sure that what you do is good and strong for the shareholders. I will reiterate, we have a high bar. Every opportunity we are measuring against our strategy to make sure it has good strategic fit, has a good return profile, and is a strong contributor over time to earnings and free cash flow growth. So we are certainly looking in asset management and looking at a wide range of opportunities and in group insurance. To keep accelerating our strategy. I would not think of this even though, we are pursuing a deliberate sequence rotation.

I would not take that literally, like, we are going to finish 1 and start the other. We are working on both the divestitures and the acquisitions at the same time. A lot of my time and my senior team's time is actually spent out and about principal to principal. So we have been working on this at the same time. But what you should expect from us is we are going to be patient, we are gonna be persistent, and we are gonna be disciplined. Because that is what is required when you are looking at the acquisition side.

We are confident that we will be able to successfully redeploy this capital in a manner that is gonna produce a good shareholder result. Thank you.

Operator: Our next question is coming from Joel Hurwitz from Dowling and Partners.

Joel Hurwitz: Hey, good morning. Maybe start with Japan. Can you just provide some color on how surrenders have trended versus expectations over the past month since the FSA order?

Yanela del Carmen Frias: Yes. Hi, Joel. So first of all, I would say surrenders through the year have been a little bit lower than what we originally estimated. We had the spike early in April and when we announced the suspension, but then they moderated down. We did see an uptick of surrenders following the October announcement, but that has reverted back to normal levels So we expected this increase. It was part of our estimates And what I would say is through the end of the year, expect that to be consistent with what is built into our estimates.

Joel Hurwitz: Got it. that is helpful. And then can you just talk about corporate losses, right? it is consistently better than sort of the expectations that you have put out there just what are the drivers And what should we expect for losses, like a loss run rate running forward?

Yanela del Carmen Frias: Yeah. So we do continue to project the full year 2026 loss at $1.55 billion I know we have there is a number of moving pieces with the emerging markets restatement and some timing of expenses. So I would highlight a couple of things. The impact of the emerging markets restatement which reduced the loss because we removed-- increased the loss, excuse me, because we removed some earnings, was largely offset by expense saves. So you heard on my prepared remarks that we are ahead of target with our expense saves, the original $150 million commitment So that is coming through within the businesses and in corporate.

And then the offset to that is that we do expect higher losses and higher expenses in the fourth quarter in corporate That is due to higher benefit expenses, higher brand spend in the fourth quarter and there is some timing of initiative spend from earlier in the year that got pushed to the fourth quarter. Thank you.

Operator: Our next question today is coming from Ryan Krueger from KBW. Your line is now live.

Ryan Krueger: Hey, thanks. Good morning. I guess, Andy, maybe following up on the M&A discussion. Just as you are out there talking and looking for things, how would you characterize the overall M&A environment in terms of opportunities in the areas that you are targeting?

Andrew Francis Sullivan: Yeah. Thanks, Ryan. Well, maybe let me start with that last part of your question. There are many opportunities in the marketplace. So we are not, for a lack of things to look at and conversations to have. And that is not surprising. Look, when you talk about asset management and when you talk about group insurance, these are very attractive spaces. They are capital-light, cash flow generative type businesses. That people want to continue to grow and add on to, and people want to be in. So it is competitive for these assets, In both these industries, scale matters more than ever. And I think that is clear.

But, you know, I think the most important thing is we have a lot to offer counterparties. As Prudential. You know, our capabilities, our size, our scale, our breadth, is highly attractive, to many of the counterparties that we talk to. If you think about the asset management business, you know, first and foremost, we have a $1.5 trillion asset manager that is well diversified, with nearly $300 billion in private alternatives, that is an attractive platform in and of itself. But when you couple that with our liability generation capability and our balance sheet, what we see is counterparties want to talk to us.

Similarly, in the group insurance business, you know, we are 1 of the biggest out there in national account life and disability. So, counterparties look and say that, you know, they could see where you could produce real synergy. So, you know, I would just frame it as it is a competitive M&A environment, but there are multitude of opportunities, and we think that we have very special characteristics and capabilities that make us highly attractive to counterparties. Thank you.

Ryan Krueger: And then, any color you can provide, Yanela, on the improvement in ESR from I think it was up about 20 points, I guess, the midpoint of your guidance from last quarter.

Yanela del Carmen Frias: Yes, Ryan. So a couple of things there. As you know, we manage ESR to a cushion above our 100% operating target and that cushion is meant to support volatility that has absorbed some of the volatility we have seen around rates and yen. So it has worked as intended. In addition, we continue to execute actions to manage ESR and help offset the headwinds that we see. And the last item I would highlight is that we did refine some of the assumptions used in the ESR calculation, which when you combine that the natural buildup of earnings, did also drive the ESR slightly higher. Thank you.

Operator: Our next question today is coming from Suneet Kamath from Jefferies. Your line is now live.

Suneet Kamath: Great. Thanks. Good morning. So first, Andy, on the capital rotation, you gave us a lot of aspirational goals in terms of what you want Prudential to look like. post this strategic shift that you are planning on making. Is $3 billion of dry powder enough to kind of get you where you need to be to hit some of those targets? Or is this part of even bigger capital deployment opportunity you will need in order to achieve those targets? Thanks.

Andrew Francis Sullivan: Yeah. So, Suneet, thanks for the question. So what I would. Where I would start on that is, remember when we put out these targets that this is a longer term aspiration, and you should be thinking over a period of 5 years. So, I would certainly not think that. I would not say $3 billion. Oh, that is what the company has as far as firepower to redeploy. And I also would not necessarily draw the conclusion that this is a 1 step type capital rotation. You know, there are a of capabilities that we are looking to get into our manager and into our group insurance business. We may or may not find that in 1 counterparty.

So I would expect that this will be a multistep journey and that we will rotate, capital over that 5-year period and not. Do not draw the conclusion that means $3 billion. The other thing I would say is you know, this is also about organic growth. We have incredible growth opportunities across all of our chosen businesses. We are already, in many of them, category leaders. And in others, we are we are not that far away from getting to category leadership. So, you know, I think, we have talked about in the past, but we would expect, as an example, in asset management, we said we want to go from 12% of earnings to 25%.

You know, at least half of that journey, we see line of sight to from an organic growth perspective. So I think it is really important that we do not lose focus on the organic growth potential of the company. With this capital rotation strategy. it is about both.

Suneet Kamath: Okay. That makes sense. And then I guess just, drilling into the annuity business, I think your sales were up maybe 15% year-over-year. I have not seen the industry data, but my guess is you probably gained some share. If that is the case, what would you attribute that to? And then separately or relatedly, are you seeing anything in terms of features or offerings in the market that give you a little bit of pause When we hear these annuity guys get aggressive in terms of sales, sometimes there is a downside to it in terms of more aggressive features and feature creep, that kind of thing. So any thoughts there would be helpful. Thanks.

Andrew Francis Sullivan: Yeah. Suneet. Maybe let me just give you some overall thoughts and then I will answer your specific questions. So first and foremost, the individual annuities market continues to just be incredibly strong and growing. You know, this is-- the market again is going to be over $120 billion this quarter. that is the 12th consecutive quarter it is been above $100 billion. We expect that the market will just continue to grow. You know, it is a $500 billion market as we sit here today. The aging of society that needs protected income the trillions of dollars of retirement that are that are in motion.

So you know, we are executing in this business against the backdrop of a market that has incredible tailwinds as far as, you know, why we are being so successful, it really gets to our strengths and our capabilities. You know, we have a broad all weather product portfolio across RILA and across fixed annuities. We have incredible distribution. it is very expansive, that we are adding to. As we have entered the IMO space. And then we feel very strongly that we have a brand that is second to none. So we sell on our value prop in that space. You know, I see just continued growth for us as we look ahead.

As for any particular, you know, product features that might give me pause, I have to be very upfront about this. We focus on us. We focus on making sure that we put product into the market that provides great consumer value and a great return for the shareholder. We have been an innovation leader. You have seen us do that with Flex FlexGuard and FlexGuard 2.0. So really nothing specific I point to that gives me pause, in the marketplace. Thank you.

Operator: Our next question is coming from Pablo Singzon from JPMorgan. Your line is now live. Hello, Pablo. Perhaps your phone is on mute. Please pick up your handset.

Pablo Singzon: Oh, yes. Sorry about that. For PGIM, it sounds like you are making good progress in your ETF offering, which is helping offset outflows in active equity strategies. Do you see the mix shift there being meaningful enough to weigh on your overall fee rate? And I also recognize you are growing private assets. And I guess tied with that, if you could also discuss your aspiration to improve margins in that business too. I think you had said before 30% over time. You made good progress so far in 2026, but any indications on what the path might look like from here? Thank you.

Andrew Francis Sullivan: Yeah. Pablo, thanks. A lot in there, so let me dissect it. Let me start with your question about active ETFs and what is going on in the equity side. You know, our active ETF platform continues to be a very important area of growth for us. And we have shown great success both in the quarter and year to date. You know, the fact is we have doubled our assets under management. We are now over $40 billion on that ETF platform. Because we keep innovating from a product perspective, and now have over 70 ETFs on the platform.

So what you are seeing from us in the ETF space is we continue to move up the lead tables We are now number 10 in flows and number 10 in assets under management overall. We expect that to continue. I would not you know. If you step back, we are a $1.5 trillion asset manager. You know, it takes time to move your average fee rate. So you will. You should expect to see that move over years, not over quarters. That does not mean that it is not meaningful because you change that fee rate by a couple of bps. You know, over a $1.5 trillion, it makes a big difference.

But you should not be looking, quarter to quarter, on that. As far as margins, you know, we have a very intentional strategy to expand our margin to 30% over the multiyear. And over the longer period of time to go north of 30%. We are very pleased with what we are showing in PGIM from a margin perspective. You know, as Janella noted in her remarks, we are well on track to exceed the expectation we set to improve margins 200 bps year over year. And we expect that is going to continue. First and foremost, because we expect over time, fixed income and real estate market will improve.

That has been delayed by the macro environment up to this point. Second, we are absolutely seeing positive organic traction in higher fee, higher margin products like direct lending, asset-backed finance, and as we mentioned, ETFs. And finally, and we are very proud of this, we have a laser focus on expense management. And we are ahead of our commitments overall. And we are also ahead of our commitments in our asset management business. So over time, why that margin might fluctuate quarter to quarter, we feel very confident in marching it to 30% and then over a longer time frame marching it north of there.

Pablo Singzon: Thanks, Andy. And then my second question for Yanela and perhaps a simpler question. How much were Habitat earnings this quarter? And what is the earnings contribution for Habitat in an quarterly basis? Thank you.

Yanela del Carmen Frias: Yeah. So, Pablo, the quarterly run rate for Habitat is $25 million a quarter. So you can think about that as the expected earnings. Now there is some volatility in encaje earnings. And this quarter, we had negative impact of that of about $6 million and so that is what you see there. Last quarter, last year, third quarter, we had a positive of $10 million, so there was a flip of $16 million in Cave, the expected earnings are $25 million per quarter. Thank you.

Operator: Our next question today is coming from Wesley Carmichael from Wells Fargo. Your line is now live.

Wesley Carmichael: Hey, good morning. Just on the retirement segment again, but it is just on earning. It looks like spread increased pretty materially sequentially. So I am just wondering, was there any prepayment or onetime income that helped spread in the quarter? Or do you guess, said differently, think the $6.15 of $615 million pre-tax implied by the slides is a good run rate going forward?

Yanela del Carmen Frias: Yes. Hi, Wesley. So yes, we had a nice healthy increase in quarter-over-quarter core earnings. And the majority of that is the benefit of growth in the business. We have had very healthy retail annuities sales and that is driving the growth. We did have slightly higher prepayment income this quarter versus last quarter. So in third. Second quarter 26, we had $22 million of prepays in retirement. This quarter, we had $30 million So your quarter-over-quarter an $8 million variance If you strip that out, that still shows a quarter over quarter growth of $20 million in core earnings. But the $615 million does have $30 million of prepaid. Got it. that is helpful. Thanks, Yanela.

Wesley Carmichael: And just a separate topic, but back to capital management. Just curious, Andy, as you have had a little more time at the helm, do you think that roughly $2 billion of capital allocated to the common dividend with flattish buyback is kind of the right strategy going forward. And I guess as you are rotating the capital into the business, I just wanted to get your updated thoughts around uses of capital on a go forward basis.

Yanela del Carmen Frias: Yes. Wesley, let me start, and Andy could add. I think we have had a very consistent philosophy around capital deployment and capital management. It starts with maintaining our AA financial strength and strengthen the balance sheet, investing in our organic growth in the business and then the deployment to the buyback and to dividends. That total deployment plan has not changed. It will not change with the strategy. We obviously will be looking at it and we always look at balancing growth and returns. And that will not change. So we do not expect the total capital deployment plans to change as a result of the capital rotation.

Andrew Francis Sullivan: Yeah. I mean, the only thing the only thing I would add, Wesley, is, you know, that priority order is important. And, you know, I think as you have heard us say before, we have raised the bar on deployment expectations, the return levels that we are achieving and expecting inside the company. But we have also been very pleased that given the strength of our franchise, we are able to achieve those levels And we are seeing very healthy organic, opportunities across the set. So, you know, that order of priority is important as we look at how do we wanna grow the company and what organic things do we wanna, deploy capital into. Thank you.

Operator: Our next question is coming from Jack Madden from BMO Capital Markets. Your line is now live.

Jack Madden: Hey, good morning. First 1's on group disability. Can you unpack the drivers of the benefit ratio increase this quarter? 1 of your peers cited a material uptick in behavioral health related claims incidents I am curious if that was a driver for you or were there other underlying drivers you would point to?

Andrew Francis Sullivan: Yeah, Jack. Thanks. We experienced a slight increase in our disability benefit ratio this quarter versus a year ago. The primary driver of the year over year increase is higher incidence and severity in both short term disability and long term disability. And we are we are aware of what some others have said. And, in a similar way, we are seeing higher behavioral health claims, and we are seeing higher claims from high wage earners. Importantly, this is across most of the sectors that we have business in. So it is not any specific sector or any specific case type.

I would remind you though that, the way we view this you know, we went through a few years as a. as an industry post-COVID Of, what we would call abnormally low claims or abnormally strong experience. So it is not surprising to see somewhat of a of a reversion to the mean. The other thing, I would point out is the macro environment is leading to, what I would term employment insecurity. May or may not be a traditional cycle. It may be something more structural given the shift with AI and job losses. We will stay on top of that. Really important is we focus on controlling what we can control.

First, ensuring that we, have extreme discipline in pricing and underwriting, and where we are seeing higher experience, we are putting rate into the book. Second, and I have been consistent on this, all the time, investing in our claims operation as a risk management operation. That investment is paying off. And you saw we had very strong resolutions this quarter. We had the best resolutions in over 2 years. So while we have a cautious outlook about incidents and severity looking forward, we know that we have the discipline and the capabilities to navigate, the environment as it comes.

Jack Madden: that is helpful. Thank you. And then regarding the strong growth in third party sales in Japan, just curious how the return profile or the product profile of the business you sell through those channels compares to what you sell through your captive distribution. Do you expect to see continued see stronger growth in those channels even after the sales suspension ends?

Yanela del Carmen Frias: Yes. Jack, I would say we are very pleased with the growth in that independent channel. I think it does demonstrate our diverse business there and distribution. And in terms of profitability, we are very comfortable with the profitability of those products. And they are well in excess of our cost of capital as intended.

Andrew Francis Sullivan: So Jack, I would add, you know, when we talk about, we expect to emerge from, the issues in Japan a stronger company. there is reasons behind why we say that. And this third party channel success, I think, is a big reason. First, the market opportunity in Japan for retirement and savings products is very, very strong, and is a high growth area. The third party channels are higher growth channels versus the captive channels. So we see great potential to continue to growing in both independent agency and bank channel. What we saw this quarter, a 9% overall growth year-over-year in the third party channels, and 53% in independent agencies.

What we are seeing is institutions candidly vote with their feet and give us a vote of confidence. So we have expanded the number of agencies that we work with. And we have expanded the shelf space that we have with the banks that we do business with in Japan. That is because they know that we are a high quality organization with great product portfolio that always follows through. And is why we believe that our brand will be stronger at the end of the day and why we feel so strongly about our resilience. Thank you.

Operator: Our next question today is coming from Tracy Benguigui from Wolfe Research. Your line is now live.

Tracy: Thank you. A lot of my questions have been asked, so I am going to ask some follow ups. First, on the behavioral LTD submissions. I am just curious what is the typical duration on behavioral claims in terms of years? Is it, like 2 years? And how deep your in house behavioral expertise to manage these claims? It to the same rigor as physical, disability claim?

Andrew Francis Sullivan: So Tracy, let me take the second part and then the first part. And I will start with the word absolutely. We have a very, very strong and deep and broad claims capability. That includes specialists in a number of areas, behavioral specialists, vocational specialists, physical therapists, nurses, doctors. So, you know, while the incidence on these types of claims is up, these are claims that we have managed for decades given how long we have been in this business. And have everything that we need to be able to manage those types of claims. And it does tie to why we are seeing success, on the resolution side.

You know, as far as the duration of the claim, you know, the reality is duration of claim is very individual specific, and is much more tied to the presence or lack of presence of comorbidities and comorbid conditions. So, you know, I would not, provide any data around the specific duration of a specific claim type. And I also would be careful to draw any conclusions around that. The punch line is though we have strong capabilities to manage the claims and to help all of these individuals get back to productive work.

Tracy: Okay. Another follow-up. it is good to see the ESR of 200%. I am curious how many points of that would you attribute to the refinements to the ESR calculation assumptions that you mentioned Also, how much of the improvement came from the sales suspension at POJ? Is it fair to say that with less new business means less capital strain?

Yanela del Carmen Frias: Yeah, Tracy. So first of all, we do not do that we do not provide that detailed attribution to ESR. There are not a number of moving pieces, the earnings buildup, etcetera. So, you know, obviously, it is got the right direction. How we manage ESR is working as intended. So I would leave it at that. In terms of the suspension, no. that is not really driving too much of the increase in ESR. Obviously, we have lower earnings which of the suspension, including the expenses that we are incurring, to sustain the business and that those 2 things kind of offset. Thank you.

Operator: Our next question today is coming from Wilmer Burdis from Raymond James. Your line is now live.

Wilmer Burdis: Hey, good morning. Retail annuity sales have been particularly strong this quarter. But retirement operating earnings have declined year over year. Can you just walk us through what primarily drove this? Thanks.

Yanela del Carmen Frias: Hi, Wilmer. So year over year, we did have a decline. We are, obviously, still seeing the impact of business growth net of related sales expenses, mainly that increase in annuities, but that has been partially offset by 2 things. The runoff of PRT, it has been a slower year in general in the industry. Although as we said, we had strong October results. So we have the runoff of PRT and we also have seen less favorable underwriting mortality in retirement as well. Okay, great. Thank you.

Wilmer Burdis: And then how much of the recent fundraising momentum in PGIM is coming from higher fee private asset strategies? Versus traditional fixed income products And what are the implications for the segment's margin outlook? Thanks.

Andrew Francis Sullivan: Thanks, Wilma. So let me just start by talking about how pleased we are with the flows that we are seeing in PGIM. Our total net flows improved again this quarter. This is the third quarter in a row that total flows have improved in a very good trajectory. With the predominance of this, given the softness of PRT market this year coming from third party assets that are flowing in. Into the business. You know, as you look at the $9 billion, in third party flows, that came in, it was both on the institutional and retail client side, so we are seeing success on both. The majority of those assets are public credit. Assets.

You are correct that some of the flows are private credit. But, the way that works is, we fundraise, and then when we call the capital, that is when the private credit shows up in the business. That is becoming a stronger, more important part of our business over time. As I mentioned, we have a private alts business now that is approaching $300 billion. That is higher fee and higher margin. It is part of what is strengthening our average fee rate. I will go back to the comments I made earlier that will be a change that occurs over a few years. As we march the margin towards 30% and north of 30%.

But that absolutely core to the strategy, and is playing through. Thank you.

Operator: Our next question is coming from Yaron Kinar from Mizuho Securities. Your line is now live.

Yaron Kinar: Thank you. Good morning. Want to start with the PRT pipeline and The UK partnership. It just seems like year to date, the deal flow has been quite modest. And even with the pickup in the fourth quarter, should we expect maybe increased competition just given that year to date numbers have been so low? And if so, you do you expect the returns and the profile of the economics of these deals show some increased competition?

Andrew Francis Sullivan: Thanks, Yaron. So year to date, industry volumes as I just said, have been softer, with no jumbos through the end of Q3, and I am speaking there up through Q3. That reduced activity really was driven by the economic and uncertainty, CEOs and CFO decision makers, slowed up for lack of a better term. But as we often see, the pipeline has picked up for Q4. And as I said in my opening remarks, we closed 3 mid sized and anticipate closing more deals in Q4 expecting to have a strong Q4. You know, as far as competition, you know, this is a marketplace.

I would frame it is not different today than it was 12 months ago or 24 months ago. Over the last 5 years, it has become a more competitive market with multiple entrants coming into the space and more and more people trying to go up market into the jumbo space. You know, so it. it is not more competitive. it is the same. We are well positioned. Candidly, we are a category leader here. We have done most of the large deals in this space over the last 10 to 15 years. And that is because of the strength of our underwriting the strength of our asset management, and our distribution.

We are achieving the returns that we wanna achieve. We are we are quite pleased. We always will stay disciplined. We are about value over volume. And, you know, we have been able to achieve in all the deals we have done this year returns in excess of our expectations. So you know, if the market does get, more competitive and returns do not make sense, we will not do the deals. Thank you.

Yaron Kinar: And then my second question is just around PJM AUM. Is there any AUM that is attributable to the soon to be disposed of Brazil and Mexico businesses? And if so, what would the impact be on AUM and on fees at PGIM?

Yanela del Carmen Frias: Yaron, PGIM does not manage any assets for Brazil or Mexico, so there is no impact to PGIM. Thank you.

Operator: Our next question is coming from Alex Scott from Barclays. Your line is now live.

Alex Scott: Hey, thanks for taking it. So I wanted to ask about Japan and just the reinsurance. I think there were some comments made intra quarter about 70% of the business being reinsured now to I think, some combination of Bermuda and Pika. And I just wanna understand how that is trended over the last year or 2. And I think it may have increased quite materially. If it did, you know, what is happened to the freed up capital in Japan? I mean, that just sort of in that higher ESR Did you. Were you able to dividend any of that up in 3Q? I think 3Q is the normal cadence of dividends.

So I would just be interested if you could opine on all that. Thank you.

Yanela del Carmen Frias: Yeah. Hi, Alex. So yeah, let me start with sort of how we think about reinsurance and use reinsurance. So we use reinsurance especially this internal reinsurance to manage reserves and capital in jurisdictions that best reflect the economics of the products. We have 2 captives in Bermuda, that is what we use them for. We have been reinsuring business out of Japan since 2019 for this reason. So this was well before ESR. So the 70% of Japan business being reinsured out of Japan is something that is accumulated since 2019. Obviously, we have continued to use reinsurance and will continue. To use reinsurance to manage ESR volatility.

But there is been no particular increase in reinsurance out of Japan over the last few quarters. We did announce a transaction in October with Prismic for $5 billion of U. S. Dollar whole life Japan product. That was actually out of Bermuda, so that had already been managed within our internal captive framework. And that was just a transaction with Prismic for balance sheet optimization. So Alex, since 2019, we were using the PICA entity before that. Okay. The 70% was not materially different going back a year ago? No. No. Absolutely not. it is been it is been a long time. Got it. Okay. Thanks.

Alex Scott: And then just to follow-up, are you able to answer at all the question around the dividend? Because I think Japan usually sends up dividend in Q3. Is that something you could tell us about?

Yanela del Carmen Frias: Yeah. No. I mean, obviously, timing of dividends varies between these operating companies. And what I would say is what we said consistently, the impact of the sales suspension will have no impact on cash flows or dividends out of the Japan businesses. Thank you.

Operator: Our final question today is coming from Mike Ward from UBS. Your line is now live.

Mike Ward: Hi. Thank you. So maybe to spin off of that last 1, just on the kind of the long term implications for the Japan business. I definitely appreciate the improvement and the coming out of this stronger company in Japan. But just curious like if you can help us think about the margin profile in the out years and the change in the compensation structure and whatnot, if there is anything incremental you can share.

Yanela del Carmen Frias: Yeah, Mike. Let me start. I mean, we do not expect any material changes to the margin of the products that we sell. In terms of the earnings trajectory, a couple of things. As we previously shared, over 90% of the earnings in Japan come from the in force. And we do continue to expect that roughly 15% reduction in the in force due to the sales suspension. But I would also highlight that we have a higher rate environment, which drives earnings up as well as strength in our retirement and saving sales and our other channels as we spoke about earlier in the call.

So I think, you know, obviously, the sales suspension has negative pressure on earnings, but we see higher rates and the opportunity in Japan through the diversified distribution. And the strength of retirement and savings to be a tailwind against those headwinds.

Andrew Francis Sullivan: And then, Mike, I would add, you had a comment in there about the compensation of, life planners, life consultants. that is just a shift in how that compensation occurs. it is not compensating them more or compensating them less. It is just shifting it to be less compensation focused on new sales, and more focused on an additional number of elements like compliance orientation, like customer retention, and the pay stream will be over a longer time frame, much less in year 1 and payout over a multitude of number of years, but it is not a higher level of compensation. I see.

Mike Ward: Thank you, Andy. that is helpful. So it is it is it is not literally a shift from sort of variable comp to fixed. it is it is just kind of spreading out variable.

Andrew Francis Sullivan: it is a. It. there is there is there is some of both because we are also implementing a higher base salary that is fixed cost. So it is both effects, but if you look in total, the dollars spent across the categories are not expected to go up or down. Okay. Thanks.

Mike Ward: The last 1 was just on data center finance, Curious about your activity in PGIM in that asset class. Both, like, originating for third parties, but also your exposure on the general account Thank you.

Andrew Francis Sullivan: Yes. So, Mike, let me take PGIM first and then Yanela will talk about the general account. So, you know, this is a capability that we have in PGIM. You know, if you think about, both our private credit business and our real estate business, we have digital infrastructure funds and have done loans for data centers. So it has been an area of growth in our private alternatives business. Where we. Candidly, this is not new for us. We have been in these businesses for a very long time, and have seen some lift in the space.

In the overall story of PGIM, though, it is only a component of many different things we are doing to both, accelerate the growth and expand the margin.

Yanela del Carmen Frias: Yeah, Mike. And then in terms of the exposure, let me take sort of AI exposure in total because I know it is been an important topic. So the total. We have a total of $7.2 billion of AI related exposure in the general account that is less than 2% of the general account. 60% of that exposure is tied to hyperscaler credit with diversified revenue streams, and we believe that diversification is quite important. $3.1 billion of the exposure is data centers that are either backed by long term investment grade leases or diversified tenant pools with no specific construction risk. Again, importantly, no speculative construction risk.

And then lastly, we have $1.1 billion of that $7.2 billion is GPU exposure backed by investment grade leases. Thank you.

Operator: We Reached the end of our question and answer session. And ladies and gentlemen, that does conclude today's webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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