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Best’s News & Research Service - March 01, 2023 09:51 AM (EST)

AM Best Assigns Issue Credit Rating to Prudential Financial, Inc.’s New Junior Subordinated Notes

  • March 01, 2023 09:51 AM (EST)
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Oldwick //BestWire// - AM Best has assigned a Long-Term Issue Credit Rating of “bbb” (Good) to the $500 million, 6.75% fixed to fixed reset rate junior subordinated notes, due March 1, 2053, of Prudential Financial, Inc. (Prudential) (Newark, NJ) [NYSE: PRU]. The outlook assigned to this Credit Rating (rating) is stable. All other ratings of Prudential and its subsidiaries are unchanged.

The proceeds from this debt issuance are expected to be used for general corporate purposes, which may include repurchasing all of Prudential’s $500 million, 5.2% fixed to fixed reset junior subordinated notes aggregate principal amount of its 2044 notes callable in 2024. The impact on Prudential’s debt leverage is expected to be neutral over the medium term as a higher leverage ratio will be realized prior to the note redemption before decreasing to the mid 20% range, and the interest coverage with this debt issue is expected to remain favorable. Prudential’s liquidity position is strong, with the parent company holding highly liquid assets of $4.5 billion at year-end 2022. The company’s full-year 2022 pre-tax adjusted operating income was $4.65 billion; however, on a net basis, the company reported losses of $1.44 billion. In its most recent disclosure, a primary driver of the results was attributed to a $903 million pre-tax charge to goodwill related to Assurance IQ; however, the company also reported continued growth momentum in its pension risk transfer business in the fourth quarter of 2022.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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