August 5, 2026 - 10-Q: Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 001-16707

Prudential Financial, Inc.

(Exact Name of Registrant as Specified in its Charter)


New Jersey			22-3703799
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)

751 Broad Street

Newark, NJ 07102

(973) 802-6000

(Address and Telephone Number of Registrant’s Principal Executive Offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, Par Value $.01	PRU	New York Stock Exchange
5.950% Junior Subordinated Notes	PRH	New York Stock Exchange
5.625% Junior Subordinated Notes	PRS	New York Stock Exchange
4.125% Junior Subordinated Notes	PFH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 31, 2026, 345 million shares of the registrant’s Common Stock (par value $0.01) were outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Unaudited Interim Consolidated Statements of Financial Position as of June 30 , 2026 and December 31, 2025	1
	Unaudited Interim Consolidated Statements of Operations for the three and six months ended June 30 , 2026 and 2025	2
	Unaudited Interim Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2026 and 2025	3
	Unaudited Interim Consolidated Statements of Equity for the three and six months ended June 30 , 2026 and 2025	4
	Unaudited Interim Consolidated Statements of Cash Flows for the six months ended June 30 , 2026 and 2025	6
	Notes to Unaudited Interim Consolidated Financial Statements	8
	1. Business and Basis of Presentation	8
	2. Significant Accounting Policies and Pronouncements	9
	3. Investments	10
	4. Variable Interest Entities	26
	5. Derivatives and Hedging	27
	6. Fair Value of Assets and Liabilities	37
	7. Deferred Policy Acquisition, Deferred Reinsurance, Deferred Sales Inducements and Value of Business Acquired	53
	8. Separate Accounts	56
	9. Liability for Future Policy Benefits	59
	10. Policyholders’ Account Balances	67
	11. Market Risk Benefits	72
	12. Reinsurance	75
	13. Closed Block	80
	14. Income Taxes	81
	15. Short-Term and Long-Term Debt	83
	16. Employee Benefit Plans	85
	17. Equity	86
	18. Earnings Per Share	89
	19. Segment Information	90
	20. Related Party Transactions	98
	21. Commitments and Contingent Liabilities	99

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	104
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	175
Item 4.	Controls and Procedures	175
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	176
Item 1A.	Risk Factors	176
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	176
Item 5.	Other Information	176
Item 6.	Exhibits	177
GLOSSARY		178
SIGNATURES		181

Table of Contents

Forward-Looking Statements

Certain of the statements included in this Quarterly Report on Form 10-Q, including any statements regarding the company’s strategy, objectives, goals, priorities, expectations, plans, initiatives, or anticipated future performance and the estimated financial impacts, outcomes and consequences of the investigation into and remediation of employee misconduct in Japan, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements. 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. There can be no assurance that future developments affecting Prudential Financial, Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) losses on investments or financial contracts due to deterioration in credit quality or value, or counterparty default; (2) losses on insurance products due to mortality experience, morbidity experience or policyholder behavior experience that differs significantly from our expectations when we price our products; (3) changes in interest rates, equity prices and foreign currency exchange rates that may (a) adversely impact the profitability of our products, the value of separate accounts supporting these products or the value of assets we manage, (b) result in losses on derivatives we use to hedge risk or increase collateral posting requirements and (c) limit opportunities to invest at appropriate returns; (4) guarantees within certain of our products which are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position; (5) liquidity needs resulting from (a) derivative collateral market exposure, (b) asset/liability mismatches, (c) the lack of available funding in the financial markets or (d) unexpected cash demands due to severe mortality calamity or lapse events; (6) financial or customer losses, or regulatory and legal actions, due to inadequate or failed processes or systems, external events, and human error or misconduct such as (a) disruption of our systems and data, (b) an information security breach, (c) a failure to protect the privacy of sensitive data, (d) reliance on third parties or (e) labor and employment matters; (7) changes in the regulatory landscape, including related to (a) financial sector regulatory reform, (b) changes in tax laws, (c) fiduciary rules and other standards of care, (d) U.S. state insurance laws and developments regarding group-wide supervision, capital and reserves, (e) insurer capital standards outside the U.S. and (f) privacy and cybersecurity regulation; (8) technological changes which may adversely impact companies in our investment portfolio or cause insurance experience to deviate from our assumptions; (9) an inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (10) ratings downgrades; (11) market conditions that may adversely affect the sales or persistency of our products; (12) competition; (13) reputational damage; (14) the costs, effects, timing, or success of our plans to execute our strategy; (15) the economic conditions, and impacts on the Company thereof, caused by the imposition of tariffs and retaliatory actions; and (16) uncertainty regarding the estimated financial impacts, outcome and consequences of the investigation into and remediation of employee misconduct in Japan, including the duration of the suspension of sales (see “Management’s Discussion and Analysis—Results of Operations by Segment—International Businesses” for more information). Prudential Financial, Inc. does not undertake to update any particular forward-looking statement included in this document. See “Risk Factors” included in the Annual Report on Form 10-K for the year ended December 31, 2025 for discussion of certain risks relating to our businesses and investment in our securities.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Financial Position

June 30, 2026 and December 31, 2025 (in millions, except share amounts)


	June 30, 2026		December 31, 2025
ASSETS
Fixed maturities, available-for-sale, at fair value (allowance for credit losses: 2026-$196; 2025-$183) (amortized cost: 2026-$364,941; 2025-$357,996)(1)	$	333,526	$	331,455

Fixed maturities, trading, at fair value (amortized cost: 2026-$17,658; 2025-$15,536)(1)	16,758		14,869
Assets supporting experience-rated contractholder liabilities, at fair value	5,405		4,842
Equity securities, at fair value (cost: 2026-$11,503; 2025-$8,303)(1)	14,389		10,972
Commercial mortgage and other loans (net of $505 and $469 allowance for credit losses; includes $959 and $1,056 of loans measured at fair value under the fair value option at June 30, 2026 and December 31, 2025, respectively)(1)	65,985		64,715
Policy loans	9,984		9,958
Other invested assets (net of $2 and $2 allowance for credit losses; includes $9,114 and $8,286 of assets measured at fair value at June 30, 2026 and December 31, 2025, respectively)(1)	28,574		27,294
Short-term investments (net of allowance for credit losses: 2026-$10; 2025-$0)	7,216		6,414
Total investments	481,837		470,519
Cash and cash equivalents(1)	15,162		19,712
Accrued investment income(1)	3,758		3,636
Deferred policy acquisition costs	21,880		21,530
Value of business acquired	366		397
Market risk benefit assets	2,430		2,330
Reinsurance recoverables and deposit receivables (net of $14 and $14 allowance for credit losses; includes $709 and $573 of embedded derivatives at fair value at June 30, 2026 and December 31, 2025, respectively)(2)	44,218		44,077
Income tax assets	37		279
Other assets (net of $4 and $1 allowance for credit losses; includes $0 and $0 of assets at fair value at June 30, 2026 and December 31, 2025, respectively)(1)(2)	14,916		15,009
Separate account assets	198,950		196,251
TOTAL ASSETS	$	783,554	$	773,740
LIABILITIES, MEZZANINE EQUITY AND EQUITY
LIABILITIES
Future policy benefits	$	260,944	$	266,914
Policyholders’ account balances	202,223		191,307
Market risk benefit liabilities	4,731		4,623
Policyholders’ dividends	1,002		1,272
Securities sold under agreements to repurchase	10,069		9,598
Cash collateral for loaned securities	9,236		8,700
Reinsurance and funds withheld payables (includes $166 and $174 of embedded derivatives at fair value at June 30, 2026 and December 31, 2025, respectively)(2)	19,864		18,844

Short-term debt	955		1,443
Long-term debt	19,663		18,856
Other liabilities (includes $16 and $16 allowance for credit losses and $5,759 and $6,215 of derivatives at fair value at June 30, 2026 and December 31, 2025, respectively)(1)	17,313		17,692
Notes issued by consolidated variable interest entities (includes $1,807 and $767 measured at fair value under the fair value option at June 30, 2026 and December 31, 2025, respectively)(1)	4,017		2,659
Separate account liabilities	198,950		196,251
Total liabilities	748,967		738,159
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 21)
MEZZANINE EQUITY
Redeemable noncontrolling interests	2,652		2,794
Total mezzanine equity	2,652		2,794
EQUITY
Preferred Stock ($0.01 par value; 10,000,000 shares authorized; none issued)	0		0
Common Stock ($0.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of both June 30, 2026 and December 31, 2025)	6		6
Additional paid-in capital	25,892		26,013
Common Stock held in treasury, at cost (321,092,506 and 318,361,498 shares at June 30, 2026 and December 31, 2025, respectively)	(25,685)		(25,335)
Accumulated other comprehensive income (loss)(2)	(4,060)		(3,077)
Retained earnings	35,424		34,831
Total Prudential Financial, Inc. equity	31,577		32,438
Noncontrolling interests	358		349
Total equity	31,935		32,787
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY	$	783,554	$	773,740

__________

(1)See Note 4 for details of balances associated with variable interest entities.

(2)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Operations

Three and Six Months Ended June 30, 2026 and 2025 (in millions, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
REVENUES
Premiums (includes $290 and $97, $295 and $98 of gains (losses) from changes in estimates on deferred profit liability amortization for the three months ended June 30, 2026 and 2025 and the six months ended June 30, 2026 and 2025, respectively)(1)	$	6,880	$	6,982	$	15,242	$	13,982
Policy charges and fee income	1,247		1,249		2,379		2,406
Net investment income	5,783		5,226		11,448		10,356
Asset management and service fees(1)	1,019		982		2,015		1,966
Other income (loss)(1)	2,369		1,412		2,399		1,692
Realized investment gains (losses), net(1)	(1,566)		(1,699)		(1,930)		(2,429)
Change in value of market risk benefits, net of related hedging gains (losses)	(71)		(426)		(366)		(777)
Total revenues	15,661		13,726		31,187		27,196
BENEFITS AND EXPENSES
Policyholders’ benefits(1)	7,751		8,181		17,284		16,321
Change in estimates of liability for future policy benefits(1)	513		(175)		552		(225)
Interest credited to policyholders’ account balances	1,974		1,138		3,083		1,963
Dividends to policyholders	478		259		710		404
Amortization of deferred policy acquisition costs(1)	430		407		841		814

General and administrative expenses(1)	3,337		3,176		6,806		6,259
Total benefits and expenses	14,483		12,986		29,276		25,536
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES	1,178		740		1,911		1,660
Total income tax expense (benefit)	218		195		347		402
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF JOINT VENTURES AND OTHER OPERATING ENTITIES	960		545		1,564		1,258
Equity in earnings of joint ventures and other operating entities, net of taxes	76		21		78		50


NET INCOME (LOSS)	1,036		566		1,642		1,308
Less: Income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests	51		33		60		68
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.	$	985	$	533	$	1,582	$	1,240
EARNINGS PER SHARE
Basic earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	2.81	$	1.49	$	4.50	$	3.46
Diluted earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	2.80	$	1.48	$	4.48	$	3.44

__________

(1)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Comprehensive Income

Three and Six Months Ended June 30, 2026 and 2025 (in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
NET INCOME (LOSS)	$	1,036	$	566	$	1,642	$	1,308
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments for the period	(101)		400		(170)		786
Net unrealized investment gains (losses)	454		(1,394)		(4,282)		(1,621)
Interest rate remeasurement of future policy benefits(1)	(890)		1,947		3,545		3,983
Gain (loss) from changes in non-performance risk on market risk benefits	(193)		5		15		172
Defined benefit pension and postretirement unrecognized periodic benefit (cost)	17		5		35		8
Total	(713)		963		(857)		3,328
Less: Income tax expense (benefit) related to other comprehensive income (loss)	(103)		143		127		538
Other comprehensive income (loss), net of taxes	(610)		820		(984)		2,790
Comprehensive income (loss)	426		1,386		658		4,098
Less: Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests	51		33		59		68
Comprehensive income (loss) attributable to Prudential Financial, Inc.	$	375	$	1,353	$	599	$	4,030

__________

(1)See Note 20 for additional information regarding related party transactions.

See Notes to Unaudited Interim Consolidated Financial Statements

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Equity

Three and Six Months Ended June 30, 2026 (in millions)


	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance, December 31, 2025	$	6	$	26,013	$	34,831	$	(25,335)	$	(3,077)	$	32,438	$	349	$	32,787	$	2,794
Common Stock acquired							(251)				(251)				(251)
Contributions from noncontrolling interests													12		12		213
Distributions to noncontrolling interests													(17)		(17)		(62)
Consolidations (deconsolidations) of noncontrolling interests															0		(345)
Stock-based compensation programs			(65)				125				60				60
Dividends declared on Common Stock					(496)						(496)				(496)
Comprehensive income:
Net income (loss)					597						597		1		598		8
Other comprehensive income (loss), net of tax									(373)		(373)		(1)		(374)
Total comprehensive income (loss)					597				(373)		224		0		224		8
Balance, March 31, 2026	$	6	$	25,948	$	34,932	$	(25,461)	$	(3,450)	$	31,975	$	344	$	32,319	$	2,608
Common Stock acquired							(252)				(252)				(252)
Contributions from noncontrolling interests													24		24		179
Distributions to noncontrolling interests													(15)		(15)		(36)
Consolidations (deconsolidations) of noncontrolling interests															0		(251)
Remeasurement of redeemable noncontrolling interests			(106)								(106)				(106)		106
Stock-based compensation programs			50				28				78				78
Dividends declared on Common Stock					(493)						(493)				(493)
Comprehensive income:
Net income (loss)					985						985		5		990		46
Other comprehensive income (loss), net of tax									(610)		(610)				(610)
Total comprehensive income (loss)					985				(610)		375		5		380		46
Balance, June 30, 2026	$	6	$	25,892	$	35,424	$	(25,685)	$	(4,060)	$	31,577	$	358	$	31,935	$	2,652

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PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Equity—Continued

Three and Six Months Ended June 30, 2025 (in millions)


	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance, December 31, 2024	$	6	$	25,901	$	33,187	$	(24,511)	$	(6,711)	$	27,872	$	315	$	28,187	$	1,939
							(251)				(251)				(251)
Contributions from noncontrolling interests													4		4		64
Distributions to noncontrolling interests													(21)		(21)		(18)
Consolidations (deconsolidations) of noncontrolling interests													13		13		8
Stock-based compensation programs			(30)				101				71				71
Dividends declared on Common Stock					(486)						(486)				(486)
Comprehensive income:
Net income (loss)					707						707		9		716		26
Other comprehensive income (loss), net of tax									1,970		1,970				1,970
Total comprehensive income (loss)					707				1,970		2,677		9		2,686		26
Balance, March 31, 2025	$	6	$	25,871	$	33,408	$	(24,661)	$	(4,741)	$	29,883	$	320	$	30,203	$	2,019
Common Stock acquired							(252)				(252)				(252)
Contributions from noncontrolling interests													1		1		73
Distributions to noncontrolling interests													(10)		(10)		(19)
Consolidations (deconsolidations) of noncontrolling interests													21		21		96
Stock-based compensation programs			56				27				83				83
Dividends declared on Common Stock					(485)						(485)				(485)
Comprehensive income:
Net income (loss)					533						533		(11)		522		44
Other comprehensive income (loss), net of tax									820		820				820
Total comprehensive income (loss)					533				820		1,353		(11)		1,342		44
Balance, June 30, 2025	$	6	$	25,927	$	33,456	$	(24,886)	$	(3,921)	$	30,582	$	321	$	30,903	$	2,213

See Notes to Unaudited Interim Consolidated Financial Statements

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Cash Flows

Six Months Ended June 30, 2026 and 2025 (in millions)


	Six Months Ended June 30,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,642	$	1,308
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Realized investment (gains) losses, net(1)	1,930		2,429
Change in value of market risk benefits, net of related hedging (gains) losses	366		777
Policy charges and fee income	(1,185)		(1,009)
Interest credited to policyholders’ account balances	3,083		1,963
Depreciation and amortization	33		321
(Gains) losses on assets supporting experience-rated contractholder liabilities, net	(531)		38
Change in:
Deferred policy acquisition costs(1)	(417)		(657)
Future policy benefits and other insurance liabilities	(301)		89
Reinsurance related-balances(1)	(1,167)		(1,253)
Income taxes	314		(635)
Derivatives, net	2,544		(1,590)
Other, net(1)	(2,957)		(3,125)
Cash flows from (used in) operating activities	3,354		(1,344)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	31,081		20,299

Fixed maturities, trading	2,548		1,445
Assets supporting experience-rated contractholder liabilities	671		733
Equity securities	3,671		4,621
Commercial mortgage and other loans	3,325		3,662
Policy loans	901		956
Other invested assets	1,460		1,519
Short-term investments	20,782		13,632
Payments for the purchase/origination of:
Fixed maturities, available-for-sale	(40,567)		(34,918)

Fixed maturities, trading	(4,615)		(2,693)
Assets supporting experience-rated contractholder liabilities	(898)		(1,024)
Equity securities	(6,507)		(2,470)
Commercial mortgage and other loans	(4,974)		(3,809)
Policy loans	(773)		(789)
Other invested assets	(1,652)		(1,586)
Short-term investments	(21,360)		(10,910)


Derivatives, net	(450)		113
Other, net(1)	(90)		(74)
Cash flows from (used in) investing activities	(17,447)		(11,293)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholders’ account deposits	19,213		19,940
Policyholders’ account withdrawals	(11,105)		(9,446)
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities	1,007		955
Cash dividends paid on Common Stock	(992)		(972)
Net change in financing arrangements (maturities 90 days or less)	20		156
Common Stock acquired	(496)		(496)
Common Stock reissued for exercise of stock options	56		57
Proceeds from the issuance of debt (maturities longer than 90 days)	927		910
Repayments of debt (maturities longer than 90 days)	(612)		(1,194)
Proceeds from notes issued by consolidated VIEs	2,093		192
Repayments of notes issued by consolidated VIEs	(733)		0


Other, net(1)	259		546
Cash flows from (used in) financing activities	9,637		10,648
Effect of foreign exchange rate changes on cash balances	(76)		170
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	(4,532)		(1,819)
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR	19,749		18,520
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	15,217	$	16,701

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PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Cash Flows

Six Months Ended June 30, 2026 and 2025 (in millions)


	Six Months Ended June 30,
	2026		2025

NON-CASH TRANSACTIONS DURING THE PERIOD
Treasury Stock shares issued for stock-based compensation programs	$	195	$	176

Novation of investment contracts(2)	$	1,659	$	0






























Prismic Re International reinsurance transaction(3):
Net assets transferred, excluding Cash and cash equivalents	$	0	$	6,069
Deposit assets established for Policyholders’ account balances ceded	0		(6,366)
Unwind of Deferred policy acquisition costs ceded	0		219
Net cash received (paid)	$	0	$	(78)
RECONCILIATION TO THE UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Cash and cash equivalents	$	15,162	$	16,638
Restricted cash and restricted cash equivalents (included in “Other assets”)	55		63
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	15,217	$	16,701

__________

(1)See Note 20 for additional information regarding related party transactions.

(2)“Cash flows from (used in) operating activities” exclude certain non-cash activities related to the novation of certain investment contracts from the Company to Empower Annuity Insurance Company of America and Empower Life & Annuity Insurance Company of New York (collectively, “Empower”). See note 12 for additional information regarding the reinsurance agreement with Empower.

(3)See Note 12 for additional information regarding the reinsurance agreement with Prismic Life Reinsurance International, Ltd. (“Prismic Re International”).

See Notes to Unaudited Interim Consolidated Financial Statements

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements

1. BUSINESS AND BASIS OF PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) and its subsidiaries (collectively, “Prudential” or the “Company”) provide a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the United States and in many other countries. Principal products and services provided include life insurance, annuities, retirement-related services, mutual funds and investment management.

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. See Note 19 for additional information regarding the Company’s segments.

The Company’s principal operations now consist of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of Retirement, Group Insurance, Individual Life and U.S. Legacy Products), the International Businesses, the Closed Block division, and the Company’s 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 within Corporate and Other operations. 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 U.S. GAAP. The Company’s 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.

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 “—Litigation and Regulatory Matters—Regulatory” within Note 21 for additional information.

Basis of Presentation

The Unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). The Unaudited Interim Consolidated Financial Statements include the accounts of Prudential Financial,

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner, and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information regarding the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining future policy benefits; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products; market risk benefits (“MRBs”); the measurement of goodwill and any related impairment; the valuation of investments including derivatives, the measurement of allowance for credit losses, and the recognition of other-than-temporary impairments (“OTTI”); pension and other postretirement benefits; any provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

Out of Period Adjustments

The Company recorded out of period adjustments resulting in a net charge of $150 million to “Income (loss) from operations before income taxes and equity in earnings of joint ventures and other operating entities” for the first quarter of 2025. The adjustments included an overstatement of “Reinsurance recoverables and deposit receivables” and an understatement of “Deferred policy acquisition costs.” The impact of these adjustments, individually and in the aggregate, was not material to any previously reported quarterly or annual financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year and/or those that have been issued but not yet adopted as of June 30, 2026, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.

ASUs issued but not yet adopted as of June 30, 2026

Standard

Description

Effective date and method

of adoption

Effect on the financial statements or other significant matters

ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (DISE)

This ASU requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.

Effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or retrospectively.

The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

3. INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturities, available-for-sale, as of the dates indicated:


	June 30, 2026
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	26,516	$	449	$	4,752	$	0	$	22,213
Obligations of U.S. states and their political subdivisions	5,357		98		514		0		4,941
Foreign government securities	58,818		242		13,914		0		45,146
U.S. public corporate securities	116,555		1,370		9,809		35		108,081
U.S. private corporate securities(1)	46,227		922		2,236		37		44,876
Foreign public corporate securities	25,729		251		1,308		21		24,651
Foreign private corporate securities	41,596		1,093		2,832		102		39,755
Asset-backed securities(2)	26,560		243		70		1		26,732
Commercial mortgage-backed securities	9,445		35		306		0		9,174
Residential mortgage-backed securities(3)	8,138		21		202		0		7,957
Total fixed maturities, available-for-sale(1)	$	364,941	$	4,724	$	35,943	$	196	$	333,526

__________

(1)Excludes notes with amortized cost of $16,372 million (fair value, $16,372 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, home equity loans, auto loans, education loans and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.


	December 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	26,334	$	668	$	4,823	$	0	$	22,179
Obligations of U.S. states and their political subdivisions	5,881		138		554		0		5,465
Foreign government securities	62,469		497		12,352		0		50,614
U.S. public corporate securities	115,160		1,977		9,345		11		107,781
U.S. private corporate securities(1)	47,976		1,177		1,964		88		47,101
Foreign public corporate securities	24,496		413		1,178		28		23,703
Foreign private corporate securities	41,099		1,638		2,523		55		40,159
Asset-backed securities(2)	19,130		226		26		1		19,329
Commercial mortgage-backed securities	9,958		87		302		0		9,743
Residential mortgage-backed securities(3)	5,493		43		155		0		5,381
Total fixed maturities, available-for-sale(1)	$	357,996	$	6,864	$	33,222	$	183	$	331,455

__________

(1)Excludes notes with amortized cost of $15,744 million (fair value, $15,744 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, home equity loans, auto loans, education loans and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables set forth the fair value and gross unrealized losses on fixed maturities, available-for-sale without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the dates indicated:


	June 30, 2026
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	7,060	$	174	$	10,859	$	4,578	$	17,919	$	4,752
Obligations of U.S. states and their political subdivisions	563		11		3,248		503		3,811		514
Foreign government securities	12,682		392		23,453		13,522		36,135		13,914
U.S. public corporate securities	27,605		494		47,707		9,315		75,312		9,809
U.S. private corporate securities	8,086		157		21,759		2,078		29,845		2,235
Foreign public corporate securities	6,066		93		8,038		1,212		14,104		1,305
Foreign private corporate securities	6,937		199		14,406		2,632		21,343		2,831
Asset-backed securities	6,809		35		687		34		7,496		69
Commercial mortgage-backed securities	1,669		13		4,264		293		5,933		306
Residential mortgage-backed securities	4,715		35		1,151		167		5,866		202
Total fixed maturities, available-for-sale	$	82,192	$	1,603	$	135,572	$	34,334	$	217,764	$	35,937


	December 31, 2025
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	3,644	$	83	$	12,075	$	4,740	$	15,719	$	4,823
Obligations of U.S. states and their political subdivisions	399		9		3,631		545		4,030		554
Foreign government securities	9,886		510		23,570		11,842		33,456		12,352
U.S. public corporate securities	9,789		218		52,459		9,114		62,248		9,332
U.S. private corporate securities	3,297		68		24,064		1,895		27,361		1,963
Foreign public corporate securities	2,253		35		8,586		1,142		10,839		1,177
Foreign private corporate securities	849		44		16,286		2,473		17,135		2,517
Asset-backed securities	2,979		6		626		20		3,605		26
Commercial mortgage-backed securities	249		1		5,435		301		5,684		302
Residential mortgage-backed securities	353		2		1,210		153		1,563		155
Total fixed maturities, available-for-sale	$	33,698	$	976	$	147,942	$	32,225	$	181,640	$	33,201

As of June 30, 2026 and December 31, 2025, the gross unrealized losses on fixed maturities, available-for-sale securities without an allowance of $34,854 million and $32,392 million, respectively, related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $1,083 million and $809 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. As of

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

June 30, 2026, the $34,334 million of gross unrealized losses of twelve months or more were concentrated in the consumer non-cyclical, finance and utility sectors within corporate securities, as well as in foreign government securities. As of December 31, 2025, the $32,225 million of gross unrealized losses of twelve months or more were concentrated in the consumer non-cyclical, finance and utility sectors within corporate securities, as well as in foreign government securities.

In accordance with its policy described in 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, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at June 30, 2026. This conclusion was based on detailed analysis of the underlying credit and cash flows for each security. Gross unrealized losses are primarily attributable to increases in interest rates, general credit spread widening and foreign currency exchange rate movements. As of June 30, 2026, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the amortized cost basis.

The following table sets forth the amortized cost and fair value of fixed maturities, available-for-sale by contractual maturities, as of the date indicated:


	June 30, 2026
	Amortized Cost		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
Due in one year or less	$	19,811	$	19,897
Due after one year through five years	66,075		65,889
Due after five years through ten years	58,431		57,654
Due after ten years(1)	176,481		146,223
Asset-backed securities	26,560		26,732
Commercial mortgage-backed securities	9,445		9,174
Residential mortgage-backed securities	8,138		7,957
Total	$	364,941	$	333,526

__________

(1)Excludes notes with amortized cost of $16,372 million (fair value, $16,372 million), which have been offset with the associated debt under a netting agreement.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above, as they do not have a single maturity date.

The following table sets forth the sources of fixed maturities, available-for-sale proceeds and related investment gains (losses), as well as losses on write-downs and the allowance for credit losses, for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	8,091	$	4,191	$	16,572	$	9,103
Proceeds from maturities/prepayments	7,767		5,252		14,561		11,013
Gross investment gains from sales and maturities	155		126		514		408
Gross investment losses from sales and maturities	(598)		(233)		(1,470)		(540)
Write-downs recognized in earnings(2)	(86)		(57)		(251)		(176)
(Addition to) release of allowance for credit losses	53		27		(13)		107

__________

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlements of $(52) million and $183 million for the six months ended June 30, 2026 and 2025, respectively.

(2)Amounts represent write-downs on credit adverse securities and securities actively marketed for sale.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables set forth the balance of and changes in the allowance for credit losses for fixed maturities, available-for-sale, as of and for the periods indicated:


	Three Months Ended June 30, 2026
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Securities		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	247	$	2	$	0	$	0	$	249
Additions to allowance for credit losses not previously recorded	0		0		20		0		0		0		20
Reductions for securities sold during the period	0		0		(13)		0		0		0		(13)
Additions (reductions) on securities with previous allowance	0		0		33		(1)		0		0		32
Write-downs charged against the allowance	0		0		(92)		0		0		0		(92)
Balance, end of period	$	0	$	0	$	195	$	1	$	0	$	0	$	196


	Three Months Ended June 30, 2025
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Securities		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	250	$	1	$	0	$	0	$	251
Additions to allowance for credit losses not previously recorded	0		0		1		0		0		0		1
Reductions for securities sold during the period	0		0		(6)		0		0		0		(6)
Additions (reductions) on securities with previous allowance	0		0		28		0		0		0		28
Write-downs charged against the allowance	0		0		(50)		0		0		0		(50)
Balance, end of period	$	0	$	0	$	223	$	1	$	0	$	0	$	224

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2026
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Securities		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	182	$	1	$	0	$	0	$	183
Additions to allowance for credit losses not previously recorded	0		0		75		1		0		0		76
Reductions for securities sold during the period	0		0		(15)		0		0		0		(15)
Additions (reductions) on securities with previous allowance	0		0		68		(1)		0		0		67
Write-downs charged against the allowance	0		0		(115)		0		0		0		(115)
Balance, end of period	$	0	$	0	$	195	$	1	$	0	$	0	$	196


	Six Months Ended June 30, 2025
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Securities		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	331	$	0	$	0	$	0	$	331
Additions to allowance for credit losses not previously recorded	0		0		17		1		0		0		18
Reductions for securities sold during the period	0		0		(12)		0		0		0		(12)
Additions (reductions) on securities with previous allowance	0		0		31		0		0		0		31
Write-downs charged against the allowance	0		0		(144)		0		0		0		(144)
Balance, end of period	$	0	$	0	$	223	$	1	$	0	$	0	$	224

For additional information regarding the Company’s methodology for developing its allowance and expected losses, see 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.

For the three months ended June 30, 2026, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to write-downs charged against the allowance of distressed securities within the transportation, technology and energy sectors, partially offset by net additions in the industrial other and utility sectors within corporate securities, due to adverse projected cash flows. For the three months ended June 30, 2025, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to write-downs charged against the allowance due to settlements and security restructures in the consumer cyclical and consumer non-cyclical sectors within corporate securities, partially offset by net additions within the technology sector within corporate securities due to adverse projected cash flows.

For the six months ended June 30, 2026, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the consumer cyclical, energy and industrial other sectors within corporate securities, due to adverse projected cash flows, partially offset by write-downs charged against the allowance of distressed securities within the transportation and technology sectors. For the six months ended June 30, 2025, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to write-downs charged against the allowance due to security

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

restructures and settlements in the communications, capital goods and consumer non-cyclical sectors within corporate securities, partially offset by net additions in the technology sector within corporate securities due to adverse projected cash flows.

The Company did not have any fixed maturity securities purchased with credit deterioration as of both June 30, 2026 and December 31, 2025.

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:


	June 30, 2026				December 31, 2025
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Fixed maturities:
Corporate securities	$	61	$	58	$	57	$	55
Foreign government securities	614		597		611		596
Obligations of U.S. government authorities and agencies and obligations of U.S. states	233		251		227		245
Total fixed maturities(1)	908		906		895		896
Equity securities	2,372		4,499		2,234		3,946
Total assets supporting experience-rated contractholder liabilities	$	3,280	$	5,405	$	3,129	$	4,842

__________

(1)As a percentage of amortized cost, 100% and 99% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of June 30, 2026 and December 31, 2025, respectively.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities still held at period end, recorded within “Other income (loss),” was $602 million and $253 million during the three months ended June 30, 2026 and 2025, respectively, and $452 million and $54 million during the six months ended June 30, 2026 and 2025, respectively.

Fixed Maturities, Trading

The net change in unrealized gains (losses) from fixed maturities, trading still held at period end, recorded within “Other income (loss),” was $92 million and $229 million during the three months ended June 30, 2026 and 2025, respectively, and $(216) million and $416 million during the six months ended June 30, 2026 and 2025, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $883 million and $374 million during the three months ended June 30, 2026 and 2025, respectively, and $555 million and $145 million during the six months ended June 30, 2026 and 2025, respectively.

Concentrations of Financial Instruments

The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any single issuer.

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2026				December 31, 2025
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	50,988	$	38,107	$	54,863	$	43,554
Fixed maturities, trading	18		17		19		18
Assets supporting experience-rated contractholder liabilities	537		509		536		510
Total	$	51,543	$	38,633	$	55,418	$	44,082


	June 30, 2026				December 31, 2025
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Brazilian government and government agency securities:
Fixed maturities, available-for-sale	$	4,329	$	3,630	$	3,651	$	3,152
Short-term investments	0		0		1		1
Cash equivalents	291		291		260		260
Total	$	4,620	$	3,921	$	3,912	$	3,413

Commercial Mortgage and Other Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:


	June 30, 2026				December 31, 2025
	Amount		% of Total		Amount		% of Total
	($ in millions)
Commercial mortgage and agricultural property loans by property type:
Office	$	6,584	10.5	%	$	6,517	10.4	%
Retail	5,534		8.9		5,680		9.0
Apartments/Multi-Family	18,601		29.8		18,522		29.5
Industrial	17,575		28.0		17,280		27.5
Hospitality	1,615		2.6		1,738		2.8
Self-Storage	2,228		3.6		2,245		3.6
Health Care Senior Living	1,691		2.7		1,832		2.9
Other	537		0.9		689		1.1
Total commercial mortgage loans	54,365		87.0		54,503		86.8
Agricultural property loans	8,130		13.0		8,275		13.2
Total commercial mortgage and agricultural property loans	62,495		100.0	%	62,778		100.0	%
Allowance for credit losses	(423)				(414)
Total net commercial mortgage and agricultural property loans	62,072				62,364
Other loans:
Residential mortgage loans	3,106				1,632
Other collateralized loans	727				603
Uncollateralized loans	162				171
Total other loans	3,995				2,406
Allowance for credit losses	(82)				(55)
Total net other loans	3,913				2,351
Total net commercial mortgage and other loans(1)	$	65,985			$	64,715

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

__________

(1)Includes loans which are carried at fair value under the fair value option and are collateralized primarily by apartment complexes. As of June 30, 2026 and December 31, 2025, the net carrying value of these loans was $959 million and $1,056 million, respectively.

As of June 30, 2026, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in California (27%), Florida (7%) and Texas (6%) and included loans secured by properties in Europe (6%), Mexico (2%), Australia (1%) and Japan (1%).

As of June 30, 2026, the residential mortgage loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in Florida (13%), California (12%) and New York (9%).

The following tables set forth the balance of and changes in the allowance for credit losses for commercial mortgage and other loans, as of and for the periods indicated:


	Three Months Ended June 30, 2026
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Mortgage Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	350	$	59	$	22	$	31	$	25	$	487
Addition to (release of) allowance for expected losses	30		(17)		6		(2)		0		17
Write-downs charged against the allowance	0		0		0		0		0		0
Other	1		0		0		0		0		1
Allowance, end of period	$	381	$	42	$	28	$	29	$	25	$	505


	Three Months Ended June 30, 2025
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Mortgage Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	460	$	123	$	0	$	34	$	15	$	632
Addition to (release of) allowance for expected losses	(11)		85		0		(2)		(1)		71
Write-downs charged against the allowance	0		(150)		0		0		0		(150)
Other	1		0		0		0		0		1
Allowance, end of period	$	450	$	58	$	0	$	32	$	14	$	554


	Six Months Ended June 30, 2026
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Mortgage Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	366	$	48	$	15	$	40	$	0	$	469
Addition to (release of) allowance for expected losses	13		(6)		13		(11)		25		34
Write-downs charged against the allowance	0		0		0		0		0		0
Other	2		0		0		0		0		2
Allowance, end of period	$	381	$	42	$	28	$	29	$	25	$	505

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2025
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Mortgage Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Allowance, beginning of period	$	407	$	121	$	0	$	32	$	14	$	574
Addition to (release of) allowance for expected losses	42		87		0		0		0		129
Write-downs charged against the allowance	0		(150)		0		0		0		(150)
Other	1		0		0		0		0		1
Allowance, end of period	$	450	$	58	$	0	$	32	$	14	$	554

For the three months ended June 30, 2026, the net addition to the allowance for credit losses on commercial mortgage and other loans was primarily due to increases in loan-specific reserves on commercial mortgage loans within the office and retail sectors, partially offset by a decrease in loan-specific reserves on an agricultural property loan and a decrease in the general reserve. For the three months ended June 30, 2025, the net decrease to the allowance for credit losses on commercial mortgage and other loans was primarily related to a write-down against a loan-specific reserve within agricultural property loans.

For the six months ended June 30, 2026, the net addition to the allowance for credit losses on commercial mortgage and other loans was primarily due to increases in loan-specific reserves on commercial mortgage loans within the office and retail sectors, agricultural property loans and an uncollateralized loan, partially offset by a decrease in the general reserve and a decrease in loan-specific reserves on an agricultural property loan. For the six months ended June 30, 2025, the net decrease to the allowance for credit losses on commercial mortgage and other loans was primarily related to a write-down against a loan-specific reserve within agricultural property loans, partially offset by increases in loan-specific reserves within the retail sector.

The following table sets forth the write-downs of agricultural property loans by origination year for both the three and six months ended June 30, 2025:


	June 30, 2025
	2025		2024		2023		2022		2021		Prior		Total
	(in millions)
Agricultural property loans	$	0	$	0	$	13	$	117	$	1	$	19	$	150



Total	$	0	$	0	$	13	$	117	$	1	$	19	$	150

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the dates indicated:


	June 30, 2026
	Amortized Cost by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
	(in millions)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%	$	1,621	$	2,456	$	2,782	$	2,221	$	1,407	$	17,585	$	57	$	28,129
60%-69.99%	1,196		3,211		3,847		1,682		990		4,112		0		15,038
70%-79.99%	804		615		507		963		476		2,953		0		6,318
80% or greater	55		48		35		89		197		4,456		0		4,880
Total	$	3,676	$	6,330	$	7,171	$	4,955	$	3,070	$	29,106	$	57	$	54,365
Debt Service Coverage Ratio:
Greater than 1.2x	$	2,605	$	5,771	$	6,686	$	4,660	$	2,777	$	26,688	$	45	$	49,232
1.0 - 1.2x	921		461		458		161		236		681		12		2,930
Less than 1.0x	150		98		27		134		57		1,737		0		2,203
Total	$	3,676	$	6,330	$	7,171	$	4,955	$	3,070	$	29,106	$	57	$	54,365
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%	$	115	$	813	$	605	$	268	$	906	$	3,653	$	137	$	6,497
60%-69.99%	0		62		139		554		38		113		0		906
70%-79.99%	0		24		0		0		0		0		56		80
80% or greater	2		4		0		27		419		188		7		647
Total	$	117	$	903	$	744	$	849	$	1,363	$	3,954	$	200	$	8,130
Debt Service Coverage Ratio:
Greater than 1.2x	$	112	$	903	$	703	$	794	$	732	$	3,455	$	193	$	6,892
1.0 - 1.2x	5		0		22		41		64		235		0		367
Less than 1.0x	0		0		19		14		567		264		7		871
Total	$	117	$	903	$	744	$	849	$	1,363	$	3,954	$	200	$	8,130

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2025
	Amortized Cost by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
	(in millions)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%	$	2,816	$	2,088	$	2,057	$	1,270	$	2,570	$	16,546	$	62	$	27,409
60%-69.99%	3,670		4,506		1,873		1,250		1,581		3,048		0		15,928
70%-79.99%	677		711		1,242		506		901		1,948		0		5,985
80% or greater	0		36		0		258		454		4,433		0		5,181
Total	$	7,163	$	7,341	$	5,172	$	3,284	$	5,506	$	25,975	$	62	$	54,503
Debt Service Coverage Ratio:
Greater than 1.2x	$	6,602	$	6,779	$	4,673	$	2,963	$	5,333	$	23,384	$	45	$	49,779
1.0 - 1.2x	463		534		499		238		82		885		17		2,718
Less than 1.0x	98		28		0		83		91		1,706		0		2,006
Total	$	7,163	$	7,341	$	5,172	$	3,284	$	5,506	$	25,975	$	62	$	54,503
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%	$	813	$	624	$	296	$	977	$	1,944	$	1,927	$	143	$	6,724
60%-69.99%	76		140		554		8		15		85		58		936
70%-79.99%	0		0		0		0		0		16		0		16
80% or greater	4		0		5		433		10		104		43		599
Total	$	893	$	764	$	855	$	1,418	$	1,969	$	2,132	$	244	$	8,275
Debt Service Coverage Ratio:
Greater than 1.2x	$	893	$	741	$	799	$	741	$	1,849	$	1,756	$	201	$	6,980
1.0 - 1.2x	0		19		40		65		62		148		0		334
Less than 1.0x	0		4		16		612		58		228		43		961
Total	$	893	$	764	$	855	$	1,418	$	1,969	$	2,132	$	244	$	8,275

Residential mortgage loans primarily include fixed-rate, amortizing mortgage loans on rental properties owned by borrowers with FICO scores typically considered prime or above. The primary credit quality indicator is whether a loan is performing or nonperforming. The Company defines nonperforming residential mortgage loans as those that are 90 days or more past due and/or in nonaccrual status.


	June 30, 2026
	Amortized Cost by Origination Year
	2026		2025		2024		2023		2022		Prior		Total
	(in millions)
Residential mortgage loans
Performing	$	534	$	2,487	$	58	$	0	$	0	$	12	$	3,091
Nonperforming	0		15		0		0		0		0		15
Total	$	534	$	2,502	$	58	$	0	$	0	$	12	$	3,106

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2025
	Amortized Cost by Origination Year
	2025		2024		2023		2022		2021		Prior		Total
	(in millions)
Residential mortgage loans
Performing	$	1,561	$	57	$	0	$	0	$	0	$	14	$	1,632
Nonperforming	0		0		0		0		0		0		0
Total	$	1,561	$	57	$	0	$	0	$	0	$	14	$	1,632

For additional information regarding the Company’s commercial mortgage and other loans credit quality monitoring process, see 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.

The Company may grant loan modifications in its commercial mortgage and other loan portfolios to borrowers experiencing financial difficulties. These loan modifications may be in the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension or some combination thereof. The amount, timing and extent of modifications granted and subsequent performance are considered in determining any allowance for credit losses.

The following table sets forth the amortized cost basis of loan modifications made to borrowers experiencing financial difficulties during the periods indicated:


	Three Months Ended June 30,
	2026						2025
	Term Extension		Other Than Insignificant Delay in Payment		% of Amortized Cost		Term Extension		Other Than Insignificant Delay in Payment		% of Amortized Cost
	($ in millions)
Commercial mortgage loans	$	0	$	0	0.0	%	$	0	$	0	0.0	%
Agricultural property loans	$	0	$	0	0.0	%	$	0	$	0	0.0	%


	Six Months Ended June 30,
	2026						2025
	Term Extension		Other Than Insignificant Delay in Payment		% of Amortized Cost		Term Extension		Other Than Insignificant Delay in Payment		% of Amortized Cost
	($ in millions)
Commercial mortgage loans	$	44	$	0	0.0	%	$	0	$	0	0.0	%
Agricultural property loans	$	0	$	0	0.0	%	$	0	$	0	0.0	%

For the six months ended June 30, 2026, the modifications added less than one year to the weighted average life in the commercial mortgage loan portfolio.

The Company did not have any commitments to lend additional funds to borrowers experiencing financial difficulties on modified loans as of both June 30, 2026 and December 31, 2025.

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2026
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)(2)		Total Past Due		Total Loans		Non-Accrual Status(3)
	(in millions)
Commercial mortgage loans	$	54,064	$	0	$	48	$	253	$	301	$	54,365	$	289
Agricultural property loans	7,446		0		0		684		684		8,130		718
Residential mortgage loans	3,042		0		49		15		64		3,106		15
Other collateralized loans	727		0		0		0		0		727		0
Uncollateralized loans	162		0		0		0		0		162		25
Total	$	65,441	$	0	$	97	$	952	$	1,049	$	66,490	$	1,047

__________

(1)As of June 30, 2026, there were no loans in this category accruing interest.

(2)Includes loans for which no credit losses are expected due to U.S. agency guarantees.

(3)For additional information regarding the Company’s policies for accruing interest on loans, see 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.


	December 31, 2025
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)(2)		Total Past Due		Total Loans		Non-Accrual Status(3)
	(in millions)
Commercial mortgage loans	$	54,349	$	0	$	0	$	154	$	154	$	54,503	$	190
Agricultural property loans	7,443		8		0		824		832		8,275		875
Residential mortgage loans	1,630		2		0		0		2		1,632		0
Other collateralized loans	603		0		0		0		0		603		0
Uncollateralized loans	171		0		0		0		0		171		25
Total	$	64,196	$	10	$	0	$	978	$	988	$	65,184	$	1,090

__________

(1)As of December 31, 2025, there were no loans in this category accruing interest.

(2)Includes loans for which no credit losses are expected due to U.S. agency guarantees.

Loans on non-accrual status recognized interest of $0 million and $1 million for the three months ended June 30, 2026 and 2025, and $0 million and $6 million for the six months ended June 30, 2026 and 2025, respectively. Loans on non-accrual status that did not have a related allowance for credit losses were $757 million and $442 million as of June 30, 2026 and December 31, 2025, respectively.

For the three months ended June 30, 2026 and 2025, there were $1 million and $0 million, respectively, of commercial mortgage loans acquired, other than those through direct origination. For the six months ended June 30, 2026 and 2025, there were $31 million and $0 million, respectively, of commercial mortgage loans acquired, other than those through direct origination.

For both the three and six months ended June 30, 2026 and 2025, there were no commercial mortgage loans sold.

For the three months ended June 30, 2026 and 2025, there were $713 million and $0 million, respectively, of residential mortgage loans acquired. For the six months ended June 30, 2026 and 2025, there were $1,557 million and $0 million, respectively, of residential mortgage loans acquired.

For the three months ended June 30, 2026 and 2025, there were $7 million and $0 million, respectively, of residential mortgage loans sold. For the six months ended June 30, 2026 and 2025, there were $11 million and $0 million, respectively, of residential mortgage loans sold.

The Company did not have any commercial mortgage and other loans purchased with credit deterioration as of both June 30, 2026 and December 31, 2025.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Other Invested Assets

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:


	June 30, 2026		December 31, 2025
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	10,920	$	10,832
Hedge funds	3,151		2,909
Real estate-related(1)	2,988		2,761
Subtotal equity method	17,059		16,502
Fair value:
Private equity	713		848
Hedge funds	2,048		1,964
Real estate-related	765		810
Subtotal fair value	3,526		3,622
Total LPs/LLCs	20,585		20,124
Real estate held through direct ownership(1)	1,965		1,888
Total alternative assets	22,550		22,012
Credit-like instruments(2)	2,738		1,929
Derivative instruments	1,721		1,667
Other(3)	1,565		1,686
Total other invested assets	$	28,574	$	27,294

_________

(1)As of June 30, 2026 and December 31, 2025, real estate held through direct ownership had mortgage debt of $226 million and $217 million, respectively.

(2)Includes structured debt investments in feeder funds that are consolidated, resulting in the Company reporting the consolidated feeder funds’ proportionate share of the net assets of the master fund within “Other invested assets.”

(3)Primarily includes equity investments accounted for under the measurement alternative, tax advantaged investments, strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Bank of New York. For additional information regarding the Company’s holdings in the Federal Home Loan Bank of New York, see Note 18 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the dates indicated:


	June 30, 2026		December 31, 2025
	(in millions)
Fixed maturities	$	3,188	$	3,089
Equity securities	20		11
Commercial mortgage and other loans	267		250
Policy loans	236		230
Other invested assets	10		10
Short-term investments and cash equivalents	37		46
Total accrued investment income	$	3,758	$	3,636

Write-downs on accrued investment income were less than $1 million for both the three months ended June 30, 2026 and 2025, and $1 million for both the six months ended June 30, 2026 and 2025.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(in millions)
Fixed maturities, available-for-sale(1)	$	4,290	$	3,885	$	8,474	$	7,658
Fixed maturities, trading	201		177		417		344
Assets supporting experience-rated contractholder liabilities	13		14		28		28
Equity securities	97		49		162		93
Commercial mortgage and other loans	771		691		1,511		1,383
Policy loans	121		123		243		247
Other invested assets	463		418		914		814
Short-term investments and cash equivalents	213		230		445		497
Gross investment income	6,169		5,587		12,194		11,064
Less: investment expenses	(386)		(361)		(746)		(708)
Net investment income	$	5,783	$	5,226	$	11,448	$	10,356

__________

(1)Includes income on credit-linked notes which are reported on the same financial statement line as related surplus notes, as conditions are met for right to offset.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(in millions)
Fixed maturities(1)	$	(476)	$	(137)	$	(1,220)	$	(201)
Commercial mortgage and other loans	(8)		(66)		(14)		(124)
Investment real estate	0		(1)		14		(11)
LPs/LLCs	39		6		39		5
Derivatives	(962)		(1,345)		(403)		(1,794)
Ceded (income) loss on funds withheld assets(2)	(158)		(156)		(353)		(319)
Other	(1)		0		7		15
Realized investment gains (losses), net	$	(1,566)	$	(1,699)	$	(1,930)	$	(2,429)

__________

(1)Excludes fixed maturity securities classified as trading.

(2)Includes changes in the value of reinsurance and funds withheld payables, primarily reflecting the impact of net investment income on withheld assets that are ceded to certain reinsurance counterparties under modified coinsurance and funds withheld coinsurance arrangements.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Unrealized Gains (Losses) on Investments within AOCI

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:


	June 30, 2026		December 31, 2025
	(in millions)
Fixed maturity securities, available-for-sale with an allowance	$	14	$	(4)
Fixed maturity securities, available-for-sale without an allowance	(31,233)		(26,354)
Derivatives designated as cash flow hedges(1)	141		(231)
Derivatives designated as fair value hedges(1)	(136)		(123)
Other investments(2)	89		67
Net unrealized gains (losses) on investments	$	(31,125)	$	(26,645)

__________

(1)For additional information regarding cash flow and fair value hedges, see Note 5.

(2)Includes net unrealized gains (losses) on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:


	June 30, 2026								December 31, 2025
	Remaining Contractual Maturities of the Agreements								Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total		Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	9,451	$	0	$	0	$	9,451	$	7,277	$	1,701	$	0	$	8,978
U.S. public corporate securities	0		539		0		539		0		527		0		527
Foreign public corporate securities	0		18		0		18		0		18		0		18
Commercial mortgage-backed securities	61		0		0		61		75		0		0		75
Total securities sold under agreements to repurchase	$	9,512	$	557	$	0	$	10,069	$	7,352	$	2,246	$	0	$	9,598

The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2026						December 31, 2025
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)

Obligations of U.S. states and their political subdivisions	$	25	$	0	$	25	$	45	$	0	$	45
Foreign government securities	183		0		183		226		0		226
U.S. public corporate securities	6,820		108		6,928		7,068		152		7,220
Foreign public corporate securities	1,085		14		1,099		1,157		16		1,173
Equity securities	1,001		0		1,001		36		0		36
Total cash collateral for loaned securities(1)	$	9,114	$	122	$	9,236	$	8,532	$	168	$	8,700

__________

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

4. VARIABLE INTEREST ENTITIES

In the normal course of its activities, the Company enters into relationships with various special-purpose entities and other entities that are deemed to be variable interest entities (“VIEs”). For additional information, see Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Consolidated Variable Interest Entities

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.


	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs
	June 30, 2026		December 31, 2025		June 30, 2026		December 31, 2025
	(in millions)
Fixed maturities, available-for-sale	$	2,160	$	1,870	$	615	$	663

Fixed maturities, trading	1,348		442		0		0
Equity securities	54		106		0		0
Commercial mortgage and other loans	563		583		241		244
Other invested assets	9,282		8,227		474		477
Cash and cash equivalents	523		654		0		0
Accrued investment income	17		12		1		1
Other assets	1,235		1,594		726		716
Total assets of consolidated VIEs	$	15,182	$	13,488	$	2,057	$	2,101
Other liabilities	$	709	$	603	$	4	$	3
Notes issued by consolidated VIEs(2)	4,003		2,644		14		15
Total liabilities of consolidated VIEs	$	4,712	$	3,247	$	18	$	18

__________

(1)Total assets of consolidated VIEs reflect $4,972 million and $4,801 million as of June 30, 2026 and December 31, 2025, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of June 30, 2026, the maturities of these obligations were between 0 and 13 years.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Unconsolidated Variable Interest Entities

The Company has determined that it is not the primary beneficiary of certain VIEs for which it may or may not be the investment manager. The Company’s maximum exposure to loss resulting from its relationship with unconsolidated VIEs is limited to its investment in the VIEs, which was $1,584 million and $1,484 million as of June 30, 2026 and December 31, 2025, respectively. These investments are reflected in “Fixed maturities, available-for-sale,” “Fixed maturities, trading,” “Equity securities” and “Other invested assets.” There are no liabilities associated with these unconsolidated VIEs on the Company’s Unaudited Interim Consolidated Statements of Financial Position.

In addition, in the normal course of its activities, the Company will invest in structured investments including VIEs for which it is not the investment manager. These structured investments typically invest in fixed income investments and are managed by third parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment. See Note 3 for details regarding the carrying amounts and classification of these assets. The Company has not provided material financial or other support that was not contractually required to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not control these entities.

Limited Partnerships and Limited Liability Companies

In the normal course of its activities, the Company will invest in limited partnerships and limited liability companies (“LPs/LLCs”), which include hedge funds, private equity funds and real estate-related funds and may or may not be VIEs. The Company classifies these investments as “Other invested assets” and its maximum exposure to loss associated with these VIE and non-VIE entities is limited to the amount of its investment, which was $20,981 million and $20,509 million as of June 30, 2026 and December 31, 2025, respectively.

5. DERIVATIVES AND HEDGING

Types of Derivative and Hedging Instruments

The Company utilizes various derivatives and hedging instruments to manage certain of its risks. Commonly used derivative and non-derivative hedging instruments include, but are not necessarily limited to:

•Interest rate contracts: futures, swaps, forwards, options, caps and floors

•Equity contracts: futures, options and total return swaps

•Foreign exchange contracts: futures, options, forwards, swaps, and foreign currency debt instruments

•Credit contracts: single and index reference credit default swaps

Other types of financial contracts that the Company accounts for as derivatives are:

•To-be-announced (“TBA”) forward contracts, loan commitments, embedded derivatives and synthetic guaranteed investment contracts (“GICs”).

For detailed information regarding these contracts and the related strategies, see Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Primary Risks Managed by Derivatives

The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks they are utilized to manage, excluding embedded derivatives. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral. These netting impacts resulted in total derivative assets of $1,725 million and $1,671 million as of June 30, 2026 and December 31, 2025, respectively, and total derivative liabilities of $5,759 million and $6,215 million as of June 30, 2026 and December 31, 2025, respectively, reflected in the Unaudited Interim Consolidated Statements of Financial Position.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


Primary Underlying Risk /Instrument Type	June 30, 2026						December 31, 2025
			Fair Value						Fair Value
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	5,229	$	24	$	(363)	$	5,083	$	23	$	(344)
Interest Rate Forwards	351		1		0		10		0		0
Foreign Currency
Foreign Currency Forwards	4,883		48		(223)		4,912		28		(208)
Currency/Interest Rate
Foreign Currency Swaps	34,542		1,365		(1,123)		33,823		1,286		(1,440)
Total Derivatives Designated as Hedge Accounting Instruments	$	45,005	$	1,438	$	(1,709)	$	43,828	$	1,337	$	(1,992)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	251,182	$	11,216	$	(23,546)	$	244,336	$	10,825	$	(23,617)
Interest Rate Futures	9,800		9		(36)		12,079		7		(22)
Interest Rate Options	28,105		58		(1,217)		30,025		134		(1,382)
Interest Rate Forwards	6,412		21		(41)		3,658		11		(7)
Interest Rate Total Return Swaps	2,557		432		(438)		1,434		217		(221)
Foreign Currency
Foreign Currency Forwards	38,323		1,836		(1,611)		34,149		1,356		(1,383)
Currency/Interest Rate
Foreign Currency Swaps	7,216		394		(185)		7,318		370		(179)
Credit
Credit Default Swaps	5,833		97		(8)		5,784		112		0
Equity
Equity Futures	1,822		8		(1)		1,033		3		(6)
Equity Options	261,847		15,328		(12,825)		200,661		10,378		(9,189)
Equity Total Return Swaps	19,794		2,307		(2,168)		14,973		1,366		(1,159)
Other
Other(1)	1,250		0		0		1,250		0		0
Synthetic GICs	75,552		0		0		75,883		0		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	709,693	$	31,706	$	(42,076)	$	632,583	$	24,779	$	(37,165)
Total Derivatives(2)(3)	$	754,698	$	33,144	$	(43,785)	$	676,411	$	26,116	$	(39,157)

__________

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $22,270 million (including the Prismic funds withheld related embedded derivative net liability of $189 million) and $18,404 million (including the Prismic funds withheld related embedded derivative net liability of $194 million) as of June 30, 2026 and December 31, 2025, respectively, primarily included in “Policyholders’ account balances” and “Reinsurance and funds withheld payables.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

As of June 30, 2026, the following amounts were recorded on the Unaudited Interim Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges.


	June 30, 2026				December 31, 2025
Balance Sheet Line Item in which Hedged Item is Recorded	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)		Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)

	(in millions)
Fixed maturities, available-for-sale, at fair value	$	355	$	8	$	594	$	11

Policyholders’ account balances	$	(1,598)	$	314	$	(1,588)	$	299
Future policy benefits	$	(2,384)	$	325	$	(2,405)	$	300

__________

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

Most of the Company’s derivatives do not qualify for hedge accounting for various reasons. For example: (i) derivatives that economically hedge embedded derivatives do not qualify for hedge accounting because changes in the fair value of the embedded derivatives are already recorded in net income; (ii) derivatives that are utilized as macro hedges of the Company’s exposure to various risks typically do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedge accounting rules; and (iii) synthetic GICs, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

Offsetting Assets and Liabilities

The following tables present recognized derivative instruments (excluding embedded derivatives), and repurchase and reverse repurchase agreements that are offset in the Unaudited Interim Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Unaudited Interim Consolidated Statements of Financial Position.


	June 30, 2026
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	33,002	$	(31,419)	$	1,583	$	(669)	$	914
Securities purchased under agreement to resell	0		0		0		0		0
Total Assets	$	33,002	$	(31,419)	$	1,583	$	(669)	$	914
Offsetting of Financial Liabilities:
Derivatives	$	43,785	$	(38,026)	$	5,759	$	(5,691)	$	68
Securities sold under agreement to repurchase	10,069		0		10,069		(10,069)		0
Total Liabilities	$	53,854	$	(38,026)	$	15,828	$	(15,760)	$	68

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2025
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	25,990	$	(24,445)	$	1,545	$	(637)	$	908
Securities purchased under agreement to resell	0		0		0		0		0
Total Assets	$	25,990	$	(24,445)	$	1,545	$	(637)	$	908
Offsetting of Financial Liabilities:
Derivatives	$	39,157	$	(32,942)	$	6,215	$	(6,011)	$	204
Securities sold under agreement to repurchase	9,598		0		9,598		(9,523)		75
Total Liabilities	$	48,755	$	(32,942)	$	15,813	$	(15,534)	$	279

__________

(1)Amounts exclude the excess of collateral received/pledged from/to the counterparty.

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above, see “—Counterparty Credit Risk” below. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information regarding the Company’s accounting policy for securities repurchase and resale agreements, see 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.

Cash Flow, Fair Value and Net Investment Hedges

The primary derivative and non-derivative instruments used by the Company in its fair value, cash flow and net investment hedge accounting relationships are interest rate swaps, currency swaps, currency forwards, and foreign currency denominated debts. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, or equity derivatives in any of its fair value, cash flow or net investment hedge accounting relationships.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables provide the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.


	Three Months Ended June 30, 2026
	Realized Investment Gains (Losses)		Change in Value of MRBs, Net of Related Hedging Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	4	$	0	$	0	$	0	$	0	$	(17)	$	(11)	$	0
Currency	0		0		0		0		0		0		11		0
Total gains (losses) on derivatives designated as hedge instruments	4		0		0		0		0		(17)		0		0
Gains (losses) on the hedged item:
Interest Rate	(3)		0		7		0		0		12		7		0
Currency	0		0		0		0		0		0		(12)		0
Total gains (losses) on hedged item	(3)		0		7		0		0		12		(5)		0
Amortization for gains (losses) excluded from assessment of the effectiveness

Currency	0		0		0		0		0		0		(4)		3
Total amortization for gains (losses) excluded from assessment of the effectiveness	0		0		0		0		0		0		(4)		3
Total gains (losses) on fair value hedges net of hedged item	1		0		7		0		0		(5)		(9)		3
Cash flow hedges
Interest Rate	0		0		(2)		0		0		0		0		0
Currency	0		0		0		0		0		0		0		(34)
Currency/Interest Rate	(22)		0		76		4		0		0		0		(361)
Total gains (losses) on cash flow hedges	(22)		0		74		4		0		0		0		(395)
Net investment hedges
Currency	0		0		0		0		0		0		0		6
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		6
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	172		(221)		0		0		0		0		0		0
Currency	(57)		0		0		0		0		0		0		0
Currency/Interest Rate	(78)		0		0		0		0		0		0		0
Credit	59		0		0		0		0		0		0		0
Equity	4,270		(824)		0		0		0		0		0		0
Embedded Derivatives(2)	(5,307)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(941)		(1,045)		0		0		0		0		0		0
Total	$	(962)	$	(1,045)	$	81	$	4	$	0	$	(5)	$	(9)	$	(386)

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2026
	Realized Investment Gains (Losses)		Change in Value of MRBs, Net of Related Hedging Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	6	$	0	$	(1)	$	0	$	0	$	(25)	$	(12)	$	0
Currency	0		0		0		0		0		0		(24)		0
Total gains (losses) on derivatives designated as hedge instruments	6		0		(1)		0		0		(25)		(36)		0
Gains (losses) on the hedged item:
Interest Rate	(6)		0		14		0		0		14		1		0
Currency	0		0		0		0		0		0		24		0
Total gains (losses) on hedged item	(6)		0		14		0		0		14		25		0
Amortization for gains (losses) excluded from assessment of the effectiveness

Currency	0		0		0		0		0		0		(8)		(13)
Total amortization for gains (losses) excluded from assessment of the effectiveness	0		0		0		0		0		0		(8)		(13)
Total gains (losses) on fair value hedges net of hedged item	0		0		13		0		0		(11)		(19)		(13)
Cash flow hedges
Interest Rate	0		0		(4)		0		0		0		0		1
Currency	0		0		0		0		0		0		0		30
Currency/Interest Rate	1		0		149		58		0		0		0		341
Total gains (losses) on cash flow hedges	1		0		145		58		0		0		0		372
Net investment hedges
Currency	0		0		0		0		0		0		0		16
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		16
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	187		(298)		0		0		0		0		0		0
Currency	(57)		0		0		0		0		0		0		0
Currency/Interest Rate	31		0		0		0		0		0		0		0
Credit	30		0		0		0		0		0		0		0
Equity	2,883		(554)		0		0		0		0		0		0
Embedded Derivatives(2)	(3,478)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(404)		(852)		0		0		0		0		0		0
Total	$	(403)	$	(852)	$	158	$	58	$	0	$	(11)	$	(19)	$	375

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Three Months Ended June 30, 2025
	Realized Investment Gains (Losses)		Change in Value of MRBs, Net of Related Hedging Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	(3)	$	0	$	0	$	0	$	0	$	7	$	(2)	$	0
Currency	0		0		0		0		0		0		109		0
Total gains (losses) on derivatives designated as hedge instruments	(3)		0		0		0		0		7		107		0
Gains (losses) on the hedged item:
Interest Rate	2		0		2		0		0		5		3		0
Currency	0		0		0		0		0		0		(110)		0
Total gains (losses) on hedged item	2		0		2		0		0		5		(107)		0
Amortization for gains (losses) excluded from assessment of the effectiveness

Currency	0		0		0		0		0		0		(3)		(34)
Total amortization for gains (losses) excluded from assessment of the effectiveness	0		0		0		0		0		0		(3)		(34)
Total gains (losses) on fair value hedges net of hedged item	(1)		0		2		0		0		12		(3)		(34)
Cash flow hedges
Interest Rate	0		0		(4)		0		0		0		0		2
Currency	0		0		0		0		0		0		0		(116)
Currency/Interest Rate	(14)		0		93		(344)		0		0		0		(2,142)
Total gains (losses) on cash flow hedges	(14)		0		89		(344)		0		0		0		(2,256)
Net investment hedges
Currency	0		0		0		0		0		0		0		(39)
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		(39)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(215)		(271)		0		0		0		0		0		0
Currency	(413)		0		0		0		0		0		0		0
Currency/Interest Rate	(343)		0		0		(5)		0		0		0		0
Credit	52		0		0		0		0		0		0		0
Equity	2,484		(592)		0		0		0		0		0		0
Embedded Derivatives(2)	(2,908)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,343)		(863)		0		(5)		0		0		0		0
Total	$	(1,358)	$	(863)	$	91	$	(349)	$	0	$	12	$	(3)	$	(2,329)

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	Six Months Ended June 30, 2025
	Realized Investment Gains (Losses)		Change in Value of MRBs, Net of Related Hedging Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited to Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	(6)	$	0	$	0	$	0	$	0	$	41	$	28	$	0
Currency	0		0		0		0		0		0		162		0
Total gains (losses) on derivatives designated as hedge instruments	(6)		0		0		0		0		41		190		0
Gains (losses) on the hedged item:
Interest Rate	4		0		7		0		0		(43)		(29)		0
Currency	0		0		0		0		0		0		(162)		0
Total gains (losses) on hedged item	4		0		7		0		0		(43)		(191)		0

Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		0		(7)		(103)
Total amortization for gains (losses) excluded from assessment of the effectiveness	0		0		0		0		0		0		(7)		(103)
Total gains (losses) on fair value hedges net of hedged item	(2)		0		7		0		0		(2)		(8)		(103)
Cash flow hedges
Interest Rate	0		0		(7)		0		0		0		0		10
Currency	0		0		0		0		0		0		0		(142)
Currency/Interest Rate	8		0		189		(491)		0		0		0		(2,245)
Total gains (losses) on cash flow hedges	8		0		182		(491)		0		0		0		(2,377)
Net investment hedges
Currency	0		0		0		0		0		0		0		(55)
Currency/Interest Rate	0		0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		0		(55)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(26)		(130)		0		0		0		0		0		0
Currency	(587)		0		0		(1)		0		0		0		0
Currency/Interest Rate	(370)		0		0		(5)		0		0		0		0
Credit	41		0		0		0		0		0		0		0
Equity	1,015		(390)		0		0		0		0		0		0
Embedded Derivatives(2)	(1,651)		0		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,578)		(520)		0		(6)		0		0		0		0
Total	$	(1,572)	$	(520)	$	189	$	(497)	$	0	$	(2)	$	(8)	$	(2,535)

__________

(1)Excludes changes related to net investment hedges using non-derivative instruments of $23 million and $37 million for the three and six months ended June 30, 2026, respectively, and $(37) million and $(88) million for the three and six months ended June 30, 2025, respectively.

(2)Includes the Prismic funds withheld related embedded derivative realized gain (loss) of $(84) million and $4 million for the three and six months ended June 30, 2026, respectively, and $11 million and $(136) million for the three and six months ended June 30, 2025, respectively.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:


	(in millions)
Balance, December 31, 2025	$	(231)
Amount recorded in AOCI:
Interest Rate	(3)
Currency	24
Currency/Interest Rate	549
Total amount recorded in AOCI	570
Amount reclassified from AOCI to income:
Interest Rate	4
Currency	6
Currency/Interest Rate	(208)
Total amount reclassified from AOCI to income	(198)
Balance, June 30, 2026	$	141

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Unaudited Interim Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using June 30, 2026 values, it is estimated that a pre-tax gain of $314 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending June 30, 2027.

The exposures the Company is hedging with these qualifying cash flow hedges include the variability of future cash flows from forecasted transactions denominated in foreign currencies, the purchases of invested assets, and the receipt or payment of variable interest on existing financial instruments. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is 25 years.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. In addition, there were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

For net investment hedges, in addition to derivatives, the Company uses foreign currency denominated debt to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. For effective net investment hedges, the amounts, before applicable taxes, recorded in the cumulative translation adjustment within AOCI were $29 million and $53 million for the three and six months ended June 30, 2026, respectively, and $(76) million and $(142) million for the three and six months ended June 30, 2025, respectively.

Credit Derivatives

The following tables provide a summary of the notional and fair value of written credit protection, presented as assets (liabilities). The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 10 years for index reference and 5 years for single name reference.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	June 30, 2026
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6(2)				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(3)	$	0	$	0	$	9	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	9	$	0
Index reference(3)	0		0		0		0		4,711		53		0		0		0		0		697		44		5,408		97
Total	$	0	$	0	$	9	$	0	$	4,711	$	53	$	0	$	0	$	0	$	0	$	697	$	44	$	5,417	$	97


	December 31, 2025
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6(2)				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(3)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(3)	0		0		0		0		5,043		61		0		0		0		0		741		51		5,784		112
Total	$	0	$	0	$	0	$	0	$	5,043	$	61	$	0	$	0	$	0	$	0	$	741	$	51	$	5,784	$	112

_________

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, an NAIC 6 rating is used.

(2)The NAIC rating designation is due to approximately 4% and 3% of the index reference name rated as NAIC 6 as of June 30, 2026 and December 31, 2025, respectively.

(3)Single name credit default swaps may make reference to the credit of corporate debt, sovereign debt, and structured finance. Index reference NAIC designations are based on the lowest rated single name reference included in the index.

In addition to writing credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio. As of June 30, 2026 and December 31, 2025, the Company had $415 million and $0 million of outstanding notional amounts, respectively, and reported at fair value as a liability of $8 million and an asset of $0 million, respectively.

Counterparty Credit Risk

The Company is exposed to losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. The Company manages credit risk by: (i) entering into derivative transactions with highly rated major financial institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading through central clearing and over-the-counter (“OTC”) parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

Substantially all of the Company’s derivative agreements have zero thresholds which require daily full collateralization by the party in a liability position. In addition, certain of the Company’s derivative agreements contain credit-risk related contingent features; if the credit rating of one of the parties to the derivative agreement is to fall below a certain level, the party with positive fair value could request termination at the then fair value or demand immediate full collateralization from the party whose credit rating fell and is in a net liability position.

As of June 30, 2026, there were no net liability derivative positions with counterparties with credit risk-related contingent features. All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

6. FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement—Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value.

For a discussion of the Company’s valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in the Company’s valuation techniques during the period represented by these Unaudited Interim Consolidated Financial Statements.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Assets and Liabilities by Hierarchy Level—The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.


	June 30, 2026
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	22,213	$	0	$		$	22,213
Obligations of U.S. states and their political subdivisions	0		4,936		5				4,941
Foreign government securities	0		45,141		5				45,146
U.S. corporate public securities	0		108,041		40				108,081
U.S. corporate private securities(2)	0		40,519		4,357				44,876
Foreign corporate public securities	0		24,613		38				24,651
Foreign corporate private securities	0		38,030		1,725				39,755
Asset-backed securities(3)	0		19,858		6,874				26,732
Commercial mortgage-backed securities	0		8,329		845				9,174
Residential mortgage-backed securities	0		7,876		81				7,957
Subtotal	0		319,556		13,970				333,526
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		251		0				251

Foreign government securities	0		597		0				597
Corporate securities	0		58		0				58



Equity securities	2,550		1,949		0				4,499

Subtotal	2,550		2,855		0				5,405
Market risk benefit assets	0		0		2,430				2,430
Fixed maturities, trading	0		14,129		2,629				16,758
Equity securities	11,186		2,575		628				14,389
Commercial mortgage and other loans	0		685		274				959
Other invested assets(4)	309		32,835		1,151		(31,419)		2,876
Short-term investments	1,757		4,899		21				6,677
Cash equivalents	1,247		7,914		0				9,161
Reinsurance recoverables and deposit receivables	0		231		478				709

Separate account assets(5)(6)	10,493		160,574		170				171,237
Total assets	$	27,542	$	546,253	$	21,751	$	(31,419)	$	564,127
Market risk benefit liabilities	$	0	$	0	$	4,731	$		$	4,731
Policyholders’ account balances	0		0		22,809				22,809
Reinsurance and funds withheld payables	0		166		0				166
Other liabilities	293		43,492		0		(38,026)		5,759
Notes issued by consolidated VIEs	0		0		1,807				1,807
Total liabilities	$	293	$	43,658	$	29,347	$	(38,026)	$	35,272

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	December 31, 2025
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	22,179	$	0	$		$	22,179
Obligations of U.S. states and their political subdivisions	0		5,460		5				5,465
Foreign government securities	0		50,609		5				50,614
U.S. corporate public securities	0		107,718		63				107,781
U.S. corporate private securities(2)	0		42,007		5,094				47,101
Foreign corporate public securities	0		23,661		42				23,703
Foreign corporate private securities	0		38,425		1,734				40,159
Asset-backed securities(3)	0		15,227		4,102				19,329
Commercial mortgage-backed securities	0		8,890		853				9,743
Residential mortgage-backed securities	0		5,281		100				5,381
Subtotal	0		319,457		11,998				331,455
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		245		0				245

Foreign government securities	0		596		0				596
Corporate securities	0		55		0				55



Equity securities	2,225		1,721		0				3,946

Subtotal	2,225		2,617		0				4,842
Market risk benefit assets	0		0		2,330				2,330
Fixed maturities, trading	0		12,556		2,313				14,869
Equity securities	8,052		2,294		626				10,972
Commercial mortgage and other loans	0		793		263				1,056
Other invested assets(4)	301		25,816		1,088		(24,445)		2,760
Short-term investments	116		5,664		1				5,781
Cash equivalents	1,466		11,372		0				12,838
Reinsurance recoverables and deposit receivables	0		206		367				573

Separate account assets(5)(6)	9,419		159,115		211				168,745
Total assets	$	21,579	$	539,890	$	19,197	$	(24,445)	$	556,221
Market risk benefit liabilities	$	0	$	0	$	4,623	$		$	4,623
Policyholders’ account balances	0		0		18,799				18,799
Reinsurance and funds withheld payables	0		174		0				174
Other liabilities	280		38,877		0		(32,942)		6,215
Notes issued by consolidated VIEs	0		0		767				767
Total liabilities	$	280	$	39,051	$	24,189	$	(32,942)	$	30,578

__________

(1)“Netting” amounts represent cash collateral of $(6,607) million and $(8,497) million as of June 30, 2026 and December 31, 2025, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreements.

(2)Excludes notes with fair value of $16,372 million (carrying amount of $16,372 million) and $15,744 million (carrying amount of $15,744 million) as of June 30, 2026 and December 31, 2025, respectively, which have been offset with the associated debt under a netting agreement.

(3)Includes credit-tranched securities collateralized by loan obligations, home equity loans, auto loans, education loans and other asset types.

(4)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of June 30, 2026 and December 31, 2025, the fair value of such investments was $6,238 million and $5,526 million, respectively.

(5)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. As of June 30, 2026 and December 31, 2025, the fair value of such investments was $27,713 million and $27,506 million, respectively.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(6)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information regarding significant internally-priced Level 3 assets and liabilities.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	As of June 30, 2026
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	6,824	Discounted cash flow	Discount rate	1.17%	31.61%	9.96%	Decrease
			Market comparables	EBITDA multiple(4)	5.5X	8.5X	6.9X	Increase
			Liquidation	Liquidation value	16.56%	72.50%	33.59%	Increase
Asset backed securities	$	3,166	Discounted cash flow	Discount rate	1.90%	10.56%	4.87%	Decrease
				Liquidity premium	1.50%	2.60%	2.02%	Decrease
Commercial mortgage-backed securities	$	844	Discounted cash flow	Liquidity premium	0.90%	0.90%	0.90%	Decrease
Market risk benefit assets(6)	$	2,430	Discounted cash flow	Lapse rate(8)	0%	40%		Increase
				Spread over SOFR(9)(10)	0.41%	1.70%		Increase
				Utilization rate(11)	37%	96%		Decrease
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	16%		Increase
				Equity volatility curve	17%	25%		Decrease
Equity securities	$	184	Discounted cash flow	Discount rate(5)	40%	40%		Decrease
			Market comparables	EBITDA multiple(4)	6.0X	8.0X	7.4X	Increase
			Net Asset Value	Share price	$3	$1,432	$521	Increase
Commercial mortgage and other loans	$	274	Discounted cash flow	Spread	2.00%	4.05%	2.50%	Decrease
Reinsurance recoverables and deposit receivables	$	478	Discounted cash flow	Lapse rate(8)	0%	65%		Increase
				Spread over SOFR(9)	0.41%	1.70%		Increase
				Option Budget(14)	0%	7%		Decrease
Liabilities:
Market risk benefit liabilities(6)	$	4,731	Discounted cash flow	Lapse rate(8)	0%	40%		Decrease
				Spread over SOFR(9)(10)	0.41%	1.70%		Decrease
				Utilization rate(11)	37%	96%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	16%		Decrease
				Equity volatility curve	17%	25%		Increase
Policyholders’ account balances(7)	$	22,700	Discounted cash flow	Lapse rate(8)	0%	96%		Decrease
				Spread over SOFR(9)	0.41%	1.70%		Decrease
				Mortality rate(13)	0%	22%		Decrease

				Option Budget(14)	(1)%	9%		Increase
Notes issued by consolidated VIEs	$	598	Liquidation	Liquidation value	100%	100%	100%	Increase

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)


	As of December 31, 2025
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	7,702	Discounted cash flow	Discount rate	1.10%	25.50%	8.47%	Decrease
			Market comparables	EBITDA multiple(4)	5.5X	8.5X	7.5X	Increase
			Liquidation	Liquidation value	12.01%	39.00%	30.18%	Increase
Asset backed securities	$	1,767	Discounted cash flow	Discount rate	2.10%	10.05%	6.10%	Decrease
				Liquidity premium	1.50%	2.60%	1.89%	Decrease
Commercial mortgage-backed securities	$	853	Discounted cash flow	Liquidity premium	0.90%	0.90%	0.90%	Decrease
Market risk benefit assets(6)	$	2,330	Discounted cash flow	Lapse rate(8)	1%	20%		Increase
				Spread over SOFR(9)(10)	0.38%	1.61%		Increase
				Utilization rate(11)	37%	94%		Decrease
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	16%		Increase
				Equity volatility curve	15%	25%		Decrease
Equity securities	$	214	Discounted cash flow	Discount rate(5)	40%	40%		Decrease
			Market comparables	EBITDA multiple(4)	7.0X	7.0X	7.0X	Increase
			Net Asset Value	Share price	$3	$1,809	$778	Increase
Commercial mortgage and other loans	$	263	Discounted cash flow	Spread	2.15%	3.10%	2.63%	Decrease
Reinsurance recoverables and deposit receivables	$	367	Discounted cash flow	Lapse rate(8)	1%	50%		Increase
				Spread over SOFR(9)	0.38%	1.61%		Increase
				Option Budget(14)	0%	6%		Decrease
Liabilities:
Market risk benefit liabilities(6)	$	4,623	Discounted cash flow	Lapse rate(8)	1%	20%		Decrease
				Spread over SOFR(9)(10)	0.38%	1.61%		Decrease
				Utilization rate(11)	37%	94%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	16%		Decrease
				Equity volatility curve	15%	25%		Increase
Policyholders’ account balances(7)	$	18,716	Discounted cash flow	Lapse rate(8)	0%	80%		Decrease
				Spread over SOFR(9)	0.38%	1.61%		Decrease
				Mortality rate(13)	0%	23%		Decrease

				Option Budget(14)	(2)%	9%		Increase
Notes issued by consolidated VIEs	$	382	Liquidation	Liquidation value	100%	100%	100%	Increase

___________

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(2)Includes assets classified as fixed maturities, available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities, trading.

(3)Excludes notes which have been offset with the associated debt under a netting agreement.

(4)Represents multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)For these investments, a range of discount rates is typically used and is therefore a more meaningful representation of the unobservable inputs used in the valuation rather than weighted average.

(6)Market risk benefits primarily represent fair value for all living benefit guarantees including accumulation, withdrawal and income benefits. Since the valuation methodology for these assets and liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(7)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these balances.

(9)The spread over the secured overnight financing rate (“SOFR”) swap curve represents the premium added to the proxy for the risk-free rate (SOFR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees as of June 30, 2026 and December 31, 2025, respectively. This spread includes an estimate of non-performance risk (“NPR”), which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements are insurance liabilities and are therefore senior to debt.

(10)Effective April 2023, the Company entered into an agreement with The Ohio National Life Insurance Company, now known as AuguStar Life Insurance Company (“AuguStar”), an affiliate of Constellation Insurance Holdings, Inc., to reinsure approximately $10 billion of account values of Prudential Defined Income (“PDI”) traditional variable annuity contracts with guaranteed living benefits. See Note 12 for additional information regarding this transaction. As a result of this transaction, a ceded MRB asset balance was established to fair value the reinsurance reimbursements to the Company. The establishment of the fair value also required an estimate of NPR for AuguStar, which may differ from the Company’s; however, the NPR spreads for AuguStar were developed using a methodology similar to that of the Company.

(11)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(12)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of June 30, 2026 and December 31, 2025, the minimum withdrawal rate assumption is 80% and 78%, respectively. As of June 30, 2026 and December 31, 2025, the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(13)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 50 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

(14)Option budget estimates the expected long-term cost of options used to hedge exposures associated with equity price and interest rate changes. The level of option budget determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities—The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increase, credit spreads widen, which results in a decrease in fair value.

Commercial Mortgage-backed Securities—Interrelationships may exist between the prepayment rate, the default rate and/or loss severity, depending on specific market conditions. In stronger economic cycles, prepayment rates are generally driven by underlying property appreciation and subsequent cash-out refinances, while default rates and loss severity may be lower. During weaker economic cycles, prepayment rates may decline, while default rates and loss severity increase. Generally, a change in the assumption used for the probability of default would be accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates. The impact of these factors on average life and economics varies with the deal structure and tranche subordination.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Market Risk Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods (excluding MRBs disclosed in Note 11). When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.


	Three Months Ended June 30, 2026(6)
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3(7)		Transfers out of Level 3(7)		Fair Value, end of period		Unrealized gains (losses) for assets and liabilities still held(2)
	(in millions)
Fixed maturities, available-for-sale:

U.S. states	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	5	$	0
Foreign government	5		0		0		0		0		0		0		0		0		5		0
Corporate securities(3)	7,465		(16)		435		(193)		0		(352)		(1,205)		26		0		6,160		(22)
Structured securities(4)	5,896		1		1,505		(104)		0		(220)		1,223		41		(542)		7,800		(1)






Other assets:
Fixed maturities, trading	2,915		2		527		(210)		0		(96)		(11)		22		(520)		2,629		(5)
Equity securities	568		(22)		65		(5)		0		0		20		2		0		628		(23)
Commercial mortgage and other loans	270		0		5		0		0		(1)		0		0		0		274		0
Other invested assets	1,134		(6)		32		0		0		(9)		0		0		0		1,151		(6)
Short-term investments	44		(3)		1		0		0		0		(21)		0		0		21		(2)
Cash equivalents	0		0		0		0		0		0		0		0		0		0

Form: 10-Q

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