Ladies and gentlemen, thank you for standing by, and welcome to the Prudential quarterly earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Mr. Darin Arita. Please go ahead. Good morning, and thank you for joining our call. Representing Prudential on today's call are Charlie Lowrey, Chairman and CEO, Rob Falzon, Vice Chairman, Andy Sullivan, Head of U.S. Businesses, Scott Sleyster, Head of International Businesses; Ken Tanji, Chief Financial Officer, and Rob Axel, Controller and Principal Accounting Officer. We will start with prepared comments by Charlie, Rob, and Ken, and then we will take your questions. Today's presentation may include forward-looking statements. It is possible that actual results may differ materially from the predictions we make today. In addition, this presentation may include references to non-GAAP measures. For a reconciliation of such measures to the comparable GAAP measures and a discussion of factors that could cause actual results to differ materially from those in the forward-looking statements, please see the slide titled "Forward-looking Statements and Non-GAAP Measures" in the appendix to today's presentation and the Quarterly Financial Supplement, both of which can be found on our website at investor.prudential.com. With that, I'll hand it over to Charlie. Thank you, Darin. Good morning, everyone, and thank you for joining us today. As we approach the one-year mark of the global pandemic, I hope that you, your families, and colleagues remain safe and healthy in this continuing difficult environment. As before, we remain deeply focused on the well-being of our employees, customers, communities, and other stakeholders, and on addressing their evolving needs and challenges. Amid the extraordinary events of 2020, we continue to take steps to evolve our business for the future while living up to our purpose. Turning to slide two, we successfully executed on a number of our strategic initiatives in 2020 to reduce our market sensitivity and increase our growth potential, including the expansion of our cost-savings program, while further solidifying our already robust financial position. We're now focused on building upon our achievements over the past year to further accelerate our strategy. I'll speak to this next phase of our transformation in more detail momentarily, but we'll start by recapping our accomplishments in 2020. Turning to slide three, we realized $215 million in cost savings during the year, exceeding our $140 million target. Recall that last quarter, we increased our cost-savings target to $750 million to be realized by the end of 2023. We also began to rotate our international earnings mix towards higher growth markets. During the year, we completed the sale of our Korea business and announced the sale of our Taiwan business. We also took significant steps to address the low interest rate environment with de-risking actions such as repricing products and pivoting to less interest rate-sensitive solutions. This pivot included discontinuing sales of variable annuities with guaranteed living benefits and launching a buffered annuity product, FlexGuard, which is less sensitive to market fluctuations while continuing to serve our customer needs. Turning to slide four, as we look ahead, we're building upon the actions we've already taken as well as our competitive strengths to significantly transform the company over the medium term. To achieve this transformation, we expect to deliver on our cost-savings program and to reallocate $5 billion-$10 billion in capital over the next three years as we pivot towards higher growth and less market-sensitive businesses. In parallel to this capital reallocation, we anticipate returning $10 billion of capital to shareholders over the next three years. This includes dividends as well as share repurchases that are resuming in the first quarter under our new $1.5 billion authorization. As a result of these efforts, Prudential should emerge as a higher growth, less market-sensitive, and more nimble business that is positioned not only to deliver growth for shareholders but also to make a more meaningful difference in the financial lives of more people around the world. Turning to slide five, as we transform to become a higher growth, less market-sensitive business, we expect to double our growth businesses to more than 30% of earnings and have our individual annuities business to 10% or less of earnings. We will change our business mix primarily through organic growth and programmatic acquisitions for both our global asset manager, PGIM, and in emerging markets within our international businesses. PGIM manages $1.5 trillion of assets, which we have grown both organically and through acquisitions of talent and capabilities. In emerging markets, we have expanded with joint ventures and acquisitions in regions with large markets and favorable demographic tailwinds such as Asia, Latin America, and Africa. We benefit from strong relationships with companies that have a large footprint and significant local market expertise. In addition, we will remain focused on investing in our other businesses to expand our addressable market as well as continue to improve expense and capital efficiency. Additional actions to change our business mix include de-risking and other transactions in conjunction with running off certain blocks of business. The $1.6 billion of capital generated from the sale of Korea business is included in the $5 billion-$10 billion we plan to reallocate into our growth businesses. Our change in business mix will obviously not be a straight line, but as we reallocate capital, we'll provide you with information to help you both understand and measure our progress. Turning to slide six, we are well-positioned to execute this strategic plan with a rock-solid balance sheet. At the end of the fourth quarter, we had $5.6 billion in highly liquid assets, and our operating subsidiaries continue to hold capital to support AA Financial Strength ratings. Finally, let's turn to slide seven. During this time of change and transformation, our commitment to our company purpose and to supporting all our stakeholders remains as fundamental as ever. The importance of this work is reflected in the multiple environmental, social, and governance initiatives that we advanced over the course of this quarter and throughout 2020. Here are some of the noteworthy accomplishments. We became the first U.S. insurer to insure a green bond aligned with the United Nations Sustainable Development Goals. We furthered our commitment to environmental transparency and accountability by disclosing our environmental impact through CDP, the world's leading environmental disclosure platform. Prudential scored an A- on CDP's 2020 Climate Change Survey. We introduced nine commitments to advance further the work we've been doing on racial equity, spanning our talent practices, our design and delivery of products, our investments and public policy work, and our support of community institutions working to remove persistent obstacles to Black economic empowerment. I'm also pleased that we'll continue to tie inclusion and diversity with executive compensation. Three years ago, we added an inclusion and diversity performance modifier that factored into our 2020 compensation plan. Over this period, diverse representation amongst senior management has increased. We're including this type of modifier again to drive us to improve further our inclusion and diversity over the next three years. Before closing, I'd like to say thank you to all our employees around the world. It's through your hard work and dedication that we've been able to successfully help our customers and advance our transformation. With that, I'll turn it over to Rob for more specific details on our business performance. Thank you all for your time this morning. Thank you, Charlie. I'll provide an overview of our financial results, an update on our strategic progress, and highlights of our outlook for our U.S., PGIM, and international businesses. Turning to slide eight, I'll begin with our financial results for the year. On a pre-tax adjusted operating income for 2020, it was $5.1 billion, or $10.21 per share on an after-tax basis. In the fourth quarter, our pre-tax adjusted operating income was $1.5 billion, or $2.93 a share. Earnings exceeded the year-ago quarter as increases in our PGIM and international businesses, as well as our corporate and other operations, offset a decline in our U.S. businesses. Results of our U.S. businesses reflected a heightened COVID-19-related mortality experience, as well as lower fee income in our individual annuities business, primarily due to outflows. This was partially offset by higher net investment spread results driven by higher variable investment income and lower expenses. In addition, we made a change in our individual life procedures that provides policyholders information to better manage their policies and premiums for certain flexible premium policies. Due to this change, we have revised the estimated premiums to be paid for these policies, resulting in an adjustment to reserves. We also established an incurred but not reported, or IBNR, reserve in our group insurance business for the expected increase in disability claims as a result of the lag effect from higher unemployment. PGIM, our global asset manager, reported record assets under management of $1.5 trillion, up 13% from a year ago, as well as higher net asset management fees and record high other related revenues. Earnings in our international businesses increased 6%, reflecting business growth, lower expenses, and more favorable underwriting results, partially offset by lower net investment spread. Turning to slide nine, our U.S. businesses produce a diversified source of earnings from fees, net investment spread, and underwriting income, which includes the benefits from netting longevity and mortality experience. We continue to make progress this quarter, executing on our priorities, including implementing pricing and product actions to de-risk our business mix while protecting profitability and expanding our addressable market. Our product pivot has worked well with sales of our buffered annuity, FlexGuard, doubling to $1.2 billion in the fourth quarter from $600 million in the third quarter. The pandemic has increased awareness of the value of our broad set of life insurance and financial solutions as we continue to enhance our capabilities to reach people when, where, and how they want. These capabilities include traditional agents and financial advisors, the workplace, and over 20 million people have access to our financial wellness. With respect to Assurance IQ, we launched our Medicare business a little more than a year ago. As a result of investments in our distribution capacity, marketing capabilities, and development of new technology, we nearly tripled our fourth quarter Medicare revenues versus the year-ago quarter. We expect to continue to grow these revenues as we further expand distribution, utilize newly developed tools for data-driven consumer product recommendations, and broaden our marketing. In addition, this gives us further confidence as we develop and launch additional product lines. Customer interest for our Simply Term Life Insurance product through Assurance IQ has been strong, although sales have been lower than expected. We continue to modify our underwriting processes to allow for more instant decisions. As we streamline this process and improve the customer experience, we expect our life revenues to grow. Total revenues, our primary financial metric for Assurance as we concentrate on scaling the business, doubled versus the year-ago quarter. We're adding more carriers in all of our existing markets and expanding into new product lines. To execute this expansion, we have increased our investments in marketing, distribution, and infrastructure. We expect operating losses in the near term and earnings to emerge as we reach scale. Now turning to slide ten, PGIM continues to demonstrate the strength and resilience of its diversified platform as a top 10 active global investment manager. PGIM's strong investment performance and diversified global investment capabilities in both public and private asset classes across fixed income, alternatives, real estate, and equities position us favorably to capture flows. PGIM's investment performance demonstrated resiliency with more than 90% of assets under management outperforming their benchmarks over the last three, five, and ten-year periods. This investment performance contributed $6.3 billion of third-party net flows during the fourth quarter, including $3.8 billion of retail and $2.5 billion of institutional flows, resulting in $20 billion of net flows for the year. Of note, PGIM investments achieved the second highest U.S. mutual fund franchise ranking based on net flows in 2020. PGIM's strong overall flows were driven by continued investor appetite for fixed income strategies, particularly higher-yielding strategies, and for real estate. PGIM's asset management fees increased 12% compared to the year-ago quarter, reflecting growth in average assets under management. In addition, record high agency loan production and the effect of strong investment performance on incentive fees, as well as co-investment and seed investment earnings, drove significant growth in other related revenues. These results contributed to an increase in PGIM's operating margin, which was in excess of 36% for the quarter. While PGIM's operating margin will vary with market conditions, we expect to sustain a margin of approximately 30% across the cycle. Turning to slide 11, our international businesses include our Japanese life insurance operation, where we have a differentiated multi-channel distribution model, as well as other operations focused on high-growth markets. As anticipated, Life Planner sales in the quarter were reduced by the accelerated sales in Japan last quarter, following the U.S. dollar-denominated product repricing in August. For the year, we were pleased that sales were about flat as our high-quality distribution overcame the effect of the pandemic-related shutdown. Similar to Life Planner, Gibraltar sales were reduced in the current quarter, and sales for the full year were about even with the prior year. While we do not report separately on our emerging markets businesses, we would note that Brazil's life insurance in force grew by 10% from a year ago, and our Chilean pension business held its number one ranking for market share, benefiting from continued favorable investment performance. On slide 17 in the appendix, we listed some of the emerging markets that we're in and our local relationships that have significant market leadership positions. With that, I'll hand it over to Ken. Thanks, Rob. I'll begin on slide 12, which provides insight into earnings for the first quarter of 2021 relative to our fourth quarter results. Pre-tax adjusted operating income in the fourth quarter was $1.5 billion and resulted in earnings per share of $2.93 on an after-tax basis. We adjust for the following items. First, variable investment income outperformed expectations in the fourth quarter, which is worth $360 million. Second, we adjust underwriting experience by a net $65 million. This includes a placeholder for COVID-19 claims experience across our businesses of $170 million based on 250,000 COVID-19-related fatalities in the U.S. during the first quarter. Third, we expect expenses to be $165 million lower in the first quarter, primarily due to seasonal items in the fourth quarter. Fourth, there are other items that may be $40 million more favorable in the first quarter. As Rob discussed, in the fourth quarter, we recorded a charge for the change in our individual life business practice, which was partially offset by strong other-related revenues in PGIM. Fifth, we anticipate net investment income will be reduced by $15 million, reflecting the difference between new money rates and disposition yields of our investment portfolio. Last, we expect the first quarter effective tax rate to normalize. These items combined get us to a baseline of $2.54 per share for the first quarter. I'll note that if you exclude items specific to the first quarter, earnings per share would be $2.90 per share. The key takeaway is that this is roughly in line with the prior quarter. While we have provided these items to consider, please note that there may be other factors that affect earnings per share in the first quarter. As we look forward, I'd like to bring your attention to a few other items in the appendix. In addition to the seasonal considerations on slide 25, we have included other considerations for 2021 on slide 26. Notably, we expect to realize an increase in cost savings from $250 million in 2020 to $400 million in 2021. We also provided the expected net cost for Corp & Other, the yen foreign exchange rate, and the effective tax rate for 2021. On slide 13, we provided an update on the potential impact of the pandemic. The estimated sensitivity of operating income for 100,000 incremental U.S. deaths due to the pandemic is $85 million based on our updated outlook. This is up slightly from our prior sensitivity as the virus more broadly spreads across demographics and geographies, including the insured population. As I noted earlier, our first quarter baseline includes a net mortality impact of $170 million due to COVID-19. The actual impact will depend on a variety of factors such as infection and fatality rates, geographic considerations, and the speed and effectiveness of the vaccine rollout. Turning to slide 14, we maintain a robust capital position and adequate sources of funding. Our capital position continues to support a double-A financial strength rating, and we have substantial sources of funding. Our cash and liquid assets at the parent company were $5.6 billion at the end of the quarter, which is greater than three times annual fixed charges. Other sources of funds include free cash flow from our businesses and other contingent capital facilities. Turning to slide 15 and in summary, we successfully executed our 2020 initiatives, and we are building on those initiatives to transform Prudential into a higher-growth, less market-sensitive, and more nimble business. We continue to benefit from the strength of our rock-solid balance sheet. Now I'll turn it to the operator for your questions. Ladies and gentlemen, if you wish to ask a question, please press one, then zero on your telephone keypad. You may withdraw your question at any time by repeating the one-zero command. We ask you, please limit your question to one and also one follow-up. Once again, if you have a question today, please press one, then zero at this time. Our first question comes from the line of Suneet Kamath with Citi. Please go ahead. Thanks. I wanted to start high level if I could. Charlie, at the 2019 Investor Day, I think you guys laid out a strategy around financial wellness, and that initiative was supposed to get you to double-digit EPS growth and a 12%-14% ROE kind of over the long term. Based on what you're talking about today, do you need to take these additional capital reallocation steps to get there, or should we think about these initiatives as potentially pushing you above what you guided to? Suneet, it's Rob. I'll jump in on that if you don't mind. A couple of thoughts. One, since our Investor Day, obviously rates have declined quite materially. Given our current business mix, a low interest rate environment with a 10-year hovering around 1.1-1.5, presents headwinds to an improving ROE. I would note, nonetheless, that in a challenging year for the industry, 2020, we achieved an ROE of just under 11%. I think that speaks to the strength and earnings potential of the mix of businesses that we have. I'd also add that our focus, Suneet, is on not just ROE, but also on cost of equity, and importantly, the spread between the two. The strategies and initiatives that Charlie outlined, I think around de-risking, simplifying, and reducing market sensitivity, and changing the business mix, I would look at as very much geared toward expanding that spread between our return on equity and our cost of equity. Okay. As we think about that $5 billion- $10 billion of capital that you're going to reallocate, is it fair to think about most of that coming from life and annuities? Can you give us the amount of capital that's currently being consumed by those two businesses? Yeah, let me jump in on that, Suneet. As we've said in the past, I think everything's on the table, right? What we've also said in this call is that we're really focused on annuities, and one of our priorities is annuities and shrinking annuities to 10% or less of earnings. In addition to that, what we're doing is that we're looking at all market-sensitive, low-growth businesses or blocks of businesses in terms of runoff, reinsurance, or sales. We're going to continue to look at those. Life will be one of the businesses we look at in addition to annuities, but not necessarily the only one. Yeah, go ahead. Yeah, it's Ken. I just asked about the amount of capital. Our annuities business is predominantly within one company and one statutory company called Prudential Life Insurance Company. Its statutory capital is a little bit more than $6 billion. Our life business is well-capitalized, but it's across a number of companies, and I do not have that aggregate number handy here. Okay. Thanks, Ken. Thank you. Our next question comes from the line of Yaron Kinar with Goldman Sachs. Please go ahead. Thank you. Good morning, everybody. My first question is around the reduction of earnings coming from individual annuities. Can you achieve that without a block transfer or reinsurance deal? The reason I ask that is I would think that there may be a bit more of a challenge to dispose of that, given that it is more of a GLWB variable annuity block. We have not seen a lot of appetite for that in the market to date. Maybe you could address those questions. Yeah, Yaron and Rob, I'll jump in first, and then maybe Ken and/or Andy might want to jump in after me. Just with respect to the first part of your question, as we think about our objective of getting our annuities business to represent 10% or less of our overall earnings, I think, as we indicated in our slides, a non-inconsequential component of that comes from the runoff of the existing legacy block to the tune of about that legacy block runs off at about $3 billion a quarter. That gets us to a range of 40%-45% of our objective just with respect to runoff. Why don't I ask to defer to Ken and Andy to talk a little bit about the multiples and deployment of capital in the market? Yeah, sure. Yaron, our variable annuity business is, as we've said in the past, very well-capitalized. It has a good profitability, cash flow, and risk profile. We don't see the fact that it's a GMWB book to present any unique or difficult challenges. Okay. That's helpful. I guess on the flip side of that, in terms of growth into the double-growth markets, I'm assuming there's a large inorganic component there, just considering the $5 billion- $10 billion that you're looking to deploy. Those markets, I would think the valuations there may be a little bit higher. How do you go about determining the use of prioritization of capital between buybacks, inorganic growth, and organic growth in those emerging markets, asset management, and the like? Yaron, it's Rob. I'll start out with that, and then I'll turn it over to others to answer the second part of your question. Just in terms of the amount of inorganic versus organic, as you think about the businesses that are grouped together in that sort of area that we're trying to grow to an excess of 30% or more of our earnings, those are higher-growth businesses. They're dominated by PGIM. And PGIM, as we've said before, is a business that is growing in the mid to high single digits on an organic basis. As we think about that combined with the emerging markets and Assurance, which we think have the potential for quite high growth rates, we think that an excess of a third of our objective can be accomplished simply by organic growth. Let me stop there and turn it over to others to answer the second part of your question. Yaron it's Andy, maybe I'll jump in. This is a good spot to talk about PGIM and our plans around PGIM and how to accelerate into programmatic M&A. First, I re-emphasize what Rob said. We've had great growth in that business, and we expect that great growth to continue. When we look at our M&A opportunities in PGIM, we're looking to do, as we've termed, programmatic, which we would frame as methodical and planful, specifically leaning into new product and investment strategy capabilities. We feel very confident that when we do that, we can gain leverage from our distribution might and strength. Obviously, anything we do has to fit with our multi-manager model because we don't want to be disruptive to that multi-manager model. Particular areas of interest are areas that are higher growth as parts of the asset management business. I would name alternatives as a key area as well as international. Got it. Thank you. Good luck with the execution. Thank you. Our next question comes from the line of Erik Bass with Autonomous Research. Please go ahead. Hi, thank you. How are you evaluating potential acquisitions in the growth markets that you've highlighted? Are you focused on near-term earnings accretion, or is the bigger priority finding scalable properties with large addressable markets that you can grow over time? This is Scott. Why don't I start with that on the emerging markets front? First of all, we expect to remain focused on Latin America, emerging Asia, and Africa, and primarily on those markets where we already have established operations and partners. In some cases, I think that would include expansion into adjacent markets. For the most part, we've been looking at, if you will, expanding into the markets that we're already in. We might be adding a capability or a little bit of scale. I think in those situations, the valuations have been relatively attractive. Going back to Charlie's opening remarks, we're going to be a disciplined buyer and make sure that we're earning an attractive return over our cost of capital before we deploy any funds over a reasonable amount of time. Thanks. Thanks. Maybe another one on a similar topic, but as you consider annuity reinsurance transactions, how do you think about the challenge of replacing the lost earnings and potential for EPS solution if you're selling with a relatively low multiple business to potentially buy higher multiple businesses? Hey, Erik. It's Ken. We are reallocating capital, as you suggest, to achieve better growth, to lower our market sensitivity, and improve our quality of earnings. The combination, again, will deliver higher growth and less market sensitivity. That, we believe, will get recognized in terms of a lower cost of capital and expanded valuation that would offset the dilution. Got it. Thank you. That's helpful. Thank you. Our next question comes from the line of Jimmy Bhullar with JP Morgan. Please go ahead. Hi, good morning. First, I just had a question on the Assurance IQ results. It was a good quarter on revenues, but you generated a loss. It seems like, at least from the outside, the business has done significantly worse than would have been expected when you announced the deal. What are your impressions of how that transaction has gone now that you've had it for about a year, a little bit over a year? Yeah, Jimmy, it's Andy. I'll handle your question. You're correct. We now have four full quarters of operating the business under our belt. We are very encouraged and glad that we have Assurance as part of our business mix and see it as an expansion extension of our business model. Pretty early on in 2020, we made an explicit decision because we saw market opportunity to both expand and broaden the Assurance platform. We did that from both a product and a distribution perspective. If you think of from a product perspective, we began to add on additional product lines, product categories like Medicare and like property and casualty. On the distribution side, we determined that we would be more successful over the long term if we added onto the on-demand agent model. We now have an external BPO agent component, and we're building out a Prudential W-2 agent component. That leaning into organically growing the business and expanding the business has led to a pretty significant increase in outback's, as you would expect. That is why we're so focused on revenues, because now it's about scaling up the platform. We are very confident over the long term about the growth potential, both from a revenue perspective, but also expanding margins over time. As we said in previous quarters, we do not intend to provide or update any assurance-specific guidance other than what Rob sort of said at the top of the section about in the near term. Given our organic investment that I spoke to, we expect operating losses. Okay. And then just on your annuity business, sequentially, you saw an improvement in variable annuity sales. I wanted to get an idea, and a lot of that, I think, is being driven by the FlexGuard product. I just wanted to get an idea on, is that fully rolled out to your distribution, or is there sort of still ramp-up potential for sales in that product? Relatedly, should we assume that sales in Q1 and through the first half of this year would be weak because you're withdrawing the traditional living benefit products? Jimmy, it's Andy. I'll take the question. Let me start with FlexGuard. Yeah, we've been very, very pleased with the success that we've had of the FlexGuard Buffered Annuity product. In essence, we rolled it out in May, and through May through December, we almost crossed $2 billion in sales. We think it's one of the most successful launches probably in the industry. The strength there is really coming from the strength of our business, the fact that our brand is so strong, our distribution and our relationships are so strong, and we came out with a very good product. To your question around momentum, we still are rolling it out to additional third-party intermediaries. We have some additional work to go there. We also have a couple of states left that haven't rolled out. We're seeing great momentum and expect that momentum to continue. To the second part of your question, given the pivot that we're doing in that business, it was a pretty assertive and material change to cease selling of our highest daily income and Prudential Defined Income products. They were a big part of our sales in the past. That will have an impact on our overall sales and flows. I think you could expect that we will see outflows from the business due to that change. Thank you. Thank you. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead. Hi, thanks. My first question, I guess, is going back to some of the transactions you've been talking about on the annuity side. Depending upon how this is structured, you could potentially, and how the sales or transaction takes place, there could potentially be some hits that I imagine you could potentially take to equity. How do we think about leverage within your capital plan? You could update us in where you would see leverage going. I'm assuming, as you think through kind of freeing up capital, that you're taking this into account and that you could probably absorb some hits and still keep your leverage within target. The capital freed up could, like you said, be used for some of this M&A within the growth market. Yeah, Elyse, it's Ken. As we look at these transactions, we'll be looking at a number of key metrics and making sure we keep them all in balance. That's whether it's potential charges or gains to our equity, depending upon the transaction terms, what it would do to our cash flow going forward, our earnings, and our risk profile. Very importantly, we'll be focused and disciplined on looking at fair value as we conduct these things. We've managed our leverage ratio over time within our objectives to maintain our AA credit rating, and we'll continue to keep that a priority. How high could it go? How high could the debt to cap go? We have some room and some flexibility. I don't want to pinpoint a number, but we managed to make sure we keep our objectives with our credit rating. Okay. My second question, on your slide deck, when you guys talk about the growth market, doubling that to the greater than 30%, that does include, you do mention that your growth markets do include Assurance IQ. I guess following up on one of the earlier questions, they are obviously embedded within the three-year outlook. There is some assumption for the Assurance contribution to earnings, as it sounds like your margins improve as the business scales. Could you give us a sense as you put this plan together over this three-year time period, what you are kind of assuming Assurance does ultimately add to earnings over time? Yeah, Elyse, it's Ken. As Andy mentioned, we are very focused on growing this business. That includes expanding distribution, expanding product lines. That is requiring that we make some investments to realize the growth potential that is in the business that will lead to a modest loss in the near term. As that business scales and gains efficiency, we would see that gaining profitability. That is what I'd add. Okay. Thank you. Thank you. Our next question comes from the line of Ryan Krueger. Please go ahead with KBW. Hi, good morning. In terms of the $5 billion-$10 billion of capital reallocation, given that the higher growth businesses are generally not, wouldn't be very capital consumptive, is it fair to assume that $5 billion-$10 billion would also equate to the rough amount of programmatic M&A that you're anticipating to do? Yeah, Ryan, it's Charlie. I think that's a fair assumption. In other words, as we think about reallocating capital, we're reallocating capital from the lower growth, less market-sensitive businesses into the opposite, right? Higher growth, higher market-sensitive businesses. It really is a reallocation of that capital, if you will, between the businesses. Got it. On the individual annuity business, can you give us a rough sense of what percentage of those earnings are generated from the block that you've now discontinued that have living benefit guarantees? Right now, our current earnings are driven largely by our legacy business. We're new in the FlexGuard space. We're gaining great traction, and it's going well. The majority of our current earnings are from our legacy business. Got it. Thank you. Thank you. Our next question comes from the line of Andrew Sullivan with Credit Suisse. Please go ahead. Thank you very much. Another question on your M&A approach. You've mentioned asset management, emerging markets. I haven't heard anything about retirement and group. I'm wondering if these are growth businesses. I'm wondering whether full service and record keeping and various group and voluntary businesses might be attractive M&As as well. Hey, Andrew, it's Charlie. Let me start, and then I'll turn it over to Andy and Scott to elaborate some. I think it's important to start with what we're not interested in, right? We're not interested in doing a mega transaction that expands over multiple businesses. What we've said and what we're going to stick to is really looking at our less market-sensitive, higher growth businesses, in this case, emphasizing asset management and emerging markets. That's what we're going to do. We're going to do it in terms of programmatic M&A that really emphasizes the multi-manager model in PGIM and certain specific markets in emerging markets. I'll turn it over to Andy and to Scott to elaborate on that. Yeah, Andrew, it's Andy. I would just add you specifically mentioned our institutional businesses. I'll frame it that way in full service and in group assurance. We've seen very good success, in particular with our financial wellness strategy at strengthening our institutional value prop in general. That has led to good growth in both of those businesses. I would say our focus in those businesses is to lean into that organic growth and to continue to see net revenue growth that flows from the investment in financial wellness. That is very helpful. In the individual life segment, I saw a line item, $130 million from reserve refinement. I think, as I kind of very generally understand it, it was providing customers with information around options that they could have maybe in their UL policies. I am wondering, what are those options? What exactly was offered to the customers? Just how did that $130 million reserve impact evolve? Andrew, it's Andy again. I'll take your question. This was a business practice change where, in essence, we're giving more detailed communications to certain of our flexible premium product holders. The intention of that information is to help them proactively manage their policies and premiums. We believe that it will lead to less premiums coming in over time, thus the financial charge. It does not have a material impact from a go-forward perspective on earnings. I'm just trying to understand what would it mean that they don't have to pay premiums? They could use their cash value, and that might prompt them to think, "Wow, I shouldn't have been putting cash into the product." I just would like to understand what behaviors will change as a function of that because $130 million is a significant charge. Yeah. Andrew, it's Andy again. In essence, on their annual statements and their payment notices, we're giving them more details around their premium flexibility, their requested premium amounts, and their guarantees against luxation. We think that the customers working with their advisors, that'll lead to less premiums coming in over time. Thanks, Andy. Thank you. Next, we go to the line of Tracy Benguigui with Barclays. Please go ahead. Good morning. As you're in the market, speaking with potential buyers of closed-block sales, wondering if PGIM Third Party Investor, maybe Consortium, has expressed any interest or appetite? I mean, that does not preclude other buyers. Just wanted to get a sense if PGIM's familiarity proof can reduce the bid-ask spread at all. Tracy, it's Andy. Thank you very much for your question. We absolutely think PGIM clearly is a net positive to this overall process. We see more and more capital that sees value in the types of things that we do. We think that does enhance our opportunity in many different ways. We feel advantaged in that we own world-class origination capabilities, very strong asset liability matching capabilities, and PGIM, as a world-class investment manager, in particular, being very strong in alternatives. As I said earlier, that being one of the areas that we look to strengthen even further. I do think that that's a positive for us, and we're excited for the possibilities that could create over time. Okay. Great. Besides your motivation of reducing market sensitivity, is part of the motivation to complete a block sale from the upcoming accounting changes from LDTI? Another insurer is divesting their own life and annuity business and said that the reduction to equity under LDTI would have been worse than the book value lost from the sale. Now, I'm not asking you to comment on that specific transaction, but just to get a sense of your willingness to sell at a loss and how LDTI may be a motivating factor. Hey, Tracy, it's Ken. First, TI is a few years away, and I do not want to comment on someone else's deal, nor do I have a specific transaction for us to comment on. Like I said, we are going to evaluate things through a number of metrics. One will be its impact on book value, earnings, cash flow, capital risk. We will take that all into consideration. I cannot comment beyond there because it would be being too general. Although you can't maybe understand, Tracy, recall our accounting that we use for our annuities is different than most others that are in the industry are using for their accounting. Under LDTI, there actually is not a significant change to the accounting of the living benefit in our book. These would be the way in which we currently account for it. That may be part of the explanation to your question as well. Okay. Thank you for the color. Thank you. Our next question comes from the line of Humphrey Lee with Dowling & Partners. Please go ahead. Good morning, and thank you for taking my questions. Just to follow back on Assurance IQ, I understand that you do not want to provide any kind of updated guidance in terms of revenue or margin since the original announcement, but basically suggesting it will be in offering losses in the near term. Given the, I guess, where it has been trending, do you feel like it could turn to be profitable by 2022? Also, how should we think about the impact on the additional earnout? Looking at it right now, it does not look like that may be achievable. Could there be any impact to the key person retention issues given the changes or the challenges on the earnout? Humphrey, it's Andy. As we talked about, we are seeing progress. As we launch product lines, the process we basically go through is we need to become more efficient at marketing those products. Then, obviously, as we build out the distribution end of things, we need to get to a place where we're getting better and better at conversion. We have seen quarter over quarter throughout 2020, our conversion rates get better. We have seen, and we won't get into specifics, but product lines that we've started to see start to get towards the levels of profitability that we would expect. We're still not going to comment on specific timing, but we do like the trajectory that we're on, and we intend to continue to invest in. The operating losses near term have everything to do with the decision we made to really accelerate our investment. We have the job in front of us that we're confident in of scaling up the revenue. Humphrey, it's Ken. On the earnout, it's based upon variable profits, and it's over a three-year period. It's still in place till the end of 2022. It was designed to incent them to outperform our expectations. Right now, it still has two years to go, and it's still in place. Okay. Shifting gear, as you shrink the annuity business, how should we think about the overhead or kind of potential strand of cost related to shrinking that book of business? Especially given two years ago, when you talk about the financial wellness, part of the cost synergy was having all the different businesses sharing the call center and the back office support. Now you have a major part of that potentially shrinking and reducing your overall earnings contribution. How should we think about the potential kind of overheads related to that type of business, and how are you going to address that? Yeah. First, as we indicated with our progress in 2020, we're making really good progress when we accelerated our progress and increased our objectives with our transformation program. It's also given us capabilities that we'll be able to apply should, as we reallocate capital, we need to deal with stranded costs. Also, keep in mind we're reallocating that capital. As we may shift it from annuities, we'll be redeploying it into new earnings opportunities as well. Got it. Thank you. Thank you. Our next question comes from the line of John Barnidge with Piper Sandler. Please go ahead. Thank you very much. Does it seem reasonable to think that there will be elevated administrative expenses in group disability to process COVID claims as long as the pandemic remains? I ask that in light of the two-point increase through the year. Yeah. John, it's Andy. I'll take your question. Yes, your assumption is absolutely reasonable. I mean, one of the most important things during a period of time like this as a disability carrier is properly investing in the disability claims staff. Some of what you saw in our admin ratio in the fourth quarter was adding to staff. That's claims managers, that's nurses, that's folks, specialists to make sure that our claims personnel have the adequate time and space to properly help our customers and help them return to work. It is reasonable to assume as incidence goes up, which typically happens during the recession, we have not yet seen that on the LTD side, but we are expecting to see it, that we would continue to invest and maintain the right level of claims teams, and that would be a higher level of investment. Great. Then unrelated to that, Israel has been the country that has enacted the most aggressive vaccination program globally. Are there any markers that you've seen out of the country in the weeks since it began this that provide maybe some insight around timing of maybe COVID tapering off a little bit? John, this is Charlie. I think we're encouraged by what we see in terms of both the introduction of the Pfizer and Moderna vaccines, but also the potential of Johnson & Johnson coming with a completely different kind of vaccine, right? It's a one-shot vaccine. It doesn't need cold chain storage. We think that could have a large effect on the ability of this country to get vaccinations, if you will. Over the course of the next three to six months, we're not going to say it's going to happen overnight, but we think there's going to be a material change in the ability to vaccinate people as we go forward. That can only inure to the country's benefit and to the reduction in the transmission of the virus. Thank you for your answers. Thank you. Next, we go to the line of Tom Gallagher with Evercore. Please go ahead. Hi. First question is, you mentioned that 1/3 of the $5 billion-$10 billion of capital deployment will come through organic growth. I guess that seems like a high number considering PGIM and Assurance IQ should not have much capital intensity. Is that largely coming from the EM side? Yes. Let me clarify what I said, Tom. Apologies if I was not clear. What I was saying is that in excess of 1/3 of the earnings growth that gets us from 18% of our total earnings to 30% of our total earnings comes from organic growth. Not that in excess of 1/3 of the capital is organic. I hope that clarifies that point. That does. The other question I had is just a follow-up on the broader M&A strategy. I get group benefits and retirement are not high-growth businesses, but they are capital efficient. I am just curious why these would not be M&A areas. Let me start with that. Andy, you may want to join in afterwards. The way we look at those businesses, and I think consistent with what Andy said before, is it is not that we are not investing in those businesses. We will continue to invest in them for purposes of organic growth. When you think about the areas in which we want to reallocate capital, if you will, to higher growth businesses with less market sensitivity, those are our priorities, are certainly PGIM and emerging markets. Andy, I do not know if you want to expand on that. No, nothing to add, Charlie. Okay. Okay. Thanks. Thank you. Our next question comes from Josh Shanker with Bank of America Securities. Please go ahead. Yes. Thank you for taking my question late in the call. If we go back to the Investor Day that we keep bringing up, I guess the big difference is the departing weight of the annuities, or at least certainly the high capital consumptive annuities. If I want to, are there other strategic changes that really come out? Have you just put numbers to things that were already in motion, or are there other strategic changes embedded in those numbers that we really should focus on? I'll take a first stab at that. Rob, maybe you want to join in. I think when you look at our strategy, we still have the wellness strategy. That still exists. It's still very much part of what was our Investor Day presentation back then and continues to be there. What we've done with a much lower interest rate environment and with a strategic review is, again, say where we want to reallocate capital. That's new, and that's what we've come out with this quarter in terms of thinking where we want to be in three years with the higher growth businesses. If I were to articulate a difference, it would be there. Rob, I don't know if you have other things you can elaborate on. Yeah. Josh, so thank you for the question. Just elaborate a little bit on what Charlie's saying. I think, Josh, if you think about what we said in Investor Day, all of that is largely intact as we described it around our organic growth opportunities. We have said that our near-term aspirations around some of that are we're facing headwinds with regard to a much lower interest rate environment than we were in at the point in time in which we articulated that. I think it's not just the pivot away from annuities, but as Charlie said, it's also, as contrasted to what we described in Investor Day, the reallocation of the active reallocation of capital more broadly and into those growth businesses. I would call out not just the emphasis of annuities because of its not because we don't think incidentally it's a very good business. We think it produces tremendous cash flows. It's well capitalized. It's well hedged. We just happen to believe that it's a business that will get better value in private markets than how we're getting rewarded in the public market for that today. That gives us an opportunity to arbitrage capital and to reinvest it into areas in which we can be rewarded in the public market. Those would be the growth areas that we've articulated. In presenting the plan to the board where it's going to be probably earnings dilutive, but we're going to get higher multiple earnings out of it and less market sensitivity, is there any frame for the magnitude of the dilution that was presented in order to make this change? Let me take a stab at that. What we present to the board and what we present externally is it's really a balance, right? It's a balance between the reallocation of capital into these higher growth businesses, but also a redeployment of capital. In this case, we've articulated $10 billion to shareholders in terms of share repurchases and dividends. What we've attempted to do is balance the two, right? Say we're going into higher growth markets, and so therefore, hopefully, we will have a higher multiple as we go forward and yet return a significant amount of capital to shareholders as we have done in the past and will continue to do in the future. Okay. I am trying to do some math, and maybe Darin will help me out down the line. Appreciate it. Thank you. Thank you. Now we will send it back to Charlie Lowrey for closing comments. Okay. Thank you very much. In closing today, I'd just like to reinforce our commitment to creating a new and more nimble Prudential, one that remains deeply focused on its customers, that will have a higher growth potential, and will be less market sensitive in the future. We're excited and we're optimistic about this next phase of our transformation, and we look forward to keeping you updated on our progress. Thanks again for joining us today. Thank you, ladies and gentlemen. That does conclude our conference for today. We thank you for your participation and for using AT&T conferencing service. You may now disconnect.