Ladies and gentlemen, thank you for standing by, and welcome to Prudential's Quarterly Earnings Conference Call. At this time, all participants have been placed 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 any assistance during the call, please press star zero and an operator will assist you offline. As a reminder, today's call is being recorded. I will now turn the call over to Mr. Bob McLaughlin. 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's 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 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 turn it over to Charlie. Thank you, Bob, and thanks to everyone for joining us today. As always, we hope you and your families remain safe and healthy. Prudential delivered solid financial results for the third quarter, reflecting our strong investment performance and high demand for the products we've introduced to support our customers as they solve their financial challenges in a changing world. We also made significant progress executing on our transformation strategy to become a higher growth, less market sensitive, and more nimble company. First, we reached agreements to divest our full-service record-keeping business and to sell a portion of our traditional variable annuities, advancing our pivot towards less market sensitive and higher growth businesses. Second, we continue to advance our cost savings program and remain on track to achieve $750 million of savings by the end of 2023. Third, with the support of our rock-solid balance sheet, we're maintaining a disciplined and balanced approach to redeploying capital. I'll provide an update on each of these transformation initiatives before turning it over to Rob and Ken. Turning to slide 3. In September, we reached an agreement to sell a block of our traditional variable annuities to Fortitude Re. This divestiture, which is expected to close in the first half of 2022, represents approximately 20% of our traditional individual annuities account values, and significantly advances our goal of cutting in half the earnings contribution of legacy variable annuities products through a mix of strategic transactions and natural runoff. This transaction expands upon our prior divestiture activity, including the agreement we announced in July to sell all our full-service record-keeping business and the successful completion of the sales of our Taiwan and Korea insurance businesses. As a result of these divestitures to date, we expect to generate net proceeds of approximately $6 billion by the first half of 2022, and we continue to explore additional opportunities to de-risk in-force blocks of business. With the pending sale of our full-service record-keeping business and our annuities block transaction, we have combined our individual annuities and retirement businesses to better serve the retirement needs of both individuals and institutions and support our growth strategy. Turning next to our cost savings program on slide four. We are progressing well and remain on track to achieve our $750 million cost savings target by the end of 2023 as we look to reduce expenses while improving both the customer and employee experience. To date, we have achieved $590 million in run rate cost savings, exceeding our $500 million target for the full year. These savings include $145 million achieved in the third quarter, for a total of $385 million this year. Turning to slide 5. We continue to demonstrate a disciplined and balanced approach to capital deployment by enhancing returns to shareholders, reducing leverage, and investing in the growth of our businesses, all supported by our rock-solid balance sheet. Year to date, we returned $3.5 billion to shareholders, including $2.1 billion of share buybacks and $1.4 billion in dividend payments, reflecting a 5% increase in our quarterly dividend compared to last year. We're targeting to return $11 billion of capital to shareholders by the end of 2023. During the third quarter, we also took steps to enhance our financial flexibility by redeeming $900 million of outstanding debt. This reduced financial leverage and generated $30 million in annual interest savings going forward. We also continue to deploy capital in our businesses to drive long-term growth. For example, this quarter we completed a $5 billion funded pension risk transfer transaction, which is the fourth largest transaction in the history of the PRT market and demonstrates our expertise, ability to execute at scale, and commitment to this market. We also deployed capital to support our ongoing pivot to less interest rate sensitive and higher growth products, including our FlexGuard and variable life products. Our capital deployment is supported by our balance sheet strength, including highly liquid assets of $3.8 billion at the end of the third quarter, and a capital position that continues to support a double-A financial strength rating. Turning to slide 6, I'm pleased to report a meaningful expansion of our environmental, social, and governance commitments. Earlier this week, we announced our commitment to achieve net zero emissions across our primary global home office operations by 2050, with an interim goal of becoming carbon neutral by 2040. We're also carefully assessing the emissions impact of our investment portfolio. As an immediate action, we will restrict new direct investments in companies that derive a material portion of their revenues from thermal coal. Separately, on the social front, The Prudential Foundation achieved an important milestone during the quarter, reaching $1 billion in funding to partners aimed at eliminating barriers to financial and social mobility around the world since making its first grant in 1978. These investments include funding aligned with our racial equity commitments to support organizations such as those supporting minority-owned small businesses and historically black colleges and universities that foster black economic empowerment and address the racial wealth gap. This milestone by the foundation follows the $1 billion investment mark achieved in our impact investing portfolio in 2020. We are confident these actions, taken alongside of our strategic transformation, will help us build a more sustainable company on behalf of all our stakeholders. Thank you for your time this morning. With that, I'll turn it over to Rob. Thank you, Charlie. I'll provide an overview of our financial results and business performance for our PGIM, U.S., and international businesses. I'll begin on slide seven with our financial results for the third quarter. Our pre-tax adjusted operating income was $1.8 billion or $2.78 per share on an after-tax basis, and reflected the benefit of strong markets and business growth, which exceeded the net mortality impacts from COVID-19. PGIM, our global asset manager, had record-high asset management fees driven by record account values of over $1.5 trillion that were offset by lower other related revenues relative to the elevated level in the year-ago quarter, as well as higher expenses supporting business growth. Results of our U.S. businesses increased approximately 29% from the year-ago quarter and reflected higher net investment spread, driven by higher variable investment income and higher fee income primarily driven by equity market appreciation, partially offset by less favorable underwriting experience driven by COVID-19 related mortality. Earnings in our international businesses increased 14%, reflecting continued business growth, higher net investment spread, lower expenses, and higher earnings from joint venture investments. This increase was partially offset by less favorable underwriting results, primarily driven by higher COVID-19 claims. Turning to slide 8, PGIM continues to demonstrate the strength of its diversified capabilities in both public and private asset classes across fixed income, alternatives, real estate, and equities as a top 10 global active investment manager. PGIM's investment performance remains attractive, with more than 94% of assets under management outperforming their benchmarks over the last 3-, 5-, and 10-year periods. Third-party net flows were $300 million in the quarter, including institutional net flows of $700 million, primarily driven by public fixed income flows. Modest retail net outflows of $400 million were due to equity outflows from sub-advised mandates and client reallocations due to rising rates and inflation concerns. As the investment engine of Prudential, PGIM benefits from a mutually beneficial relationship with our U.S. and international insurance businesses. PGIM's asset origination capabilities and investment management expertise provide a competitive advantage by helping our businesses to bring enhanced solutions and more value to our customers. Our businesses, in turn, provide a source of growth for PGIM through affiliated flows that complement its successful third-party track record of growth. PGIM's asset management fees reached another record, up 13% compared to the year ago quarter as a result of strong flows driven by investment performance and market appreciation. PGIM's alternatives business, which has assets in excess of $250 billion, continues to demonstrate momentum across private credit and real estate equity and debt, benefiting by our global scale and market-leading positions. As an example, PGIM's private businesses deployed almost $12 billion of capital this quarter, 28% more than the year ago quarter. This strategic focus on expanding higher yielding products has resulted in stable fee rates over time despite industry-wide fee pressures. Now, turning to slide 9. Our U.S. businesses produce diversified earnings from fees, net investment spread, and underwriting income and benefit from our complementary mix of longevity and mortality businesses. We continue to shift our business mix away from low growth, capital intensive, and interest rate sensitive products and businesses, transform our capabilities and cost structure, and expand our addressable markets. In addition to the agreement that we announced in July to sell our full service retirement business, this quarter, we also announced the sale of a portion of our legacy in-force annuities block to reduce the overall contribution of traditional variable annuities. These transactions are significant steps forward in shifting our business mix and product portfolio to reduce market sensitivity and accelerate long-term growth. In addition, our product pivots have worked well, demonstrated by continued strong sales of our buffered annuity products, which were $1.3 billion in the third quarter, representing 88% of total individual annuity sales. Since the launch of FlexGuard in 2020, sales have exceeded $6 billion. These sales reflect customer demand for investment solutions that offer the potential for appreciation from equity markets combined with downside protection. We have also exercised discipline through frequent pricing actions, and our sales continue to benefit from having a strong and trusted brand and highly effective distribution team. Also, our individual life sales continue to be strong and reflect our product pivot strategy with higher variable life sales compared to the year ago quarter. Our retirement business reflected strong sales in the quarter, including a $5.2 billion funded pension risk transfer transaction and $1.6 billion of international reinsurance transactions, demonstrating our market-leading capabilities. With respect to Assurance, our digitally enabled distribution platform, total revenues, our primary financial metric as we concentrate on scaling the business, were up 47% over the prior year quarter. During the third quarter, we increased the number of agents to prepare for the seasonally higher expected demand of the Medicare annual enrollment period that occurs in the fourth quarter. Turning to slide 10. 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 emerging markets. Sales across both Life Planner and Gibraltar Life operations were higher than last quarter amidst the state of emergency in Japan that ended on September 30. However, sales were lower than the prior year quarter, which were elevated ahead of the U.S. dollar-denominated product repricing in Japan that we implemented in the third quarter of last year. We also continue to see sales momentum in Brazil, particularly within the third-party distribution channel. We remain encouraged by the resiliency of our unique distribution capabilities, which have supported the continued growth of our in-force business. With that, I'll hand it over to Ken. Thanks, Rob. I'll begin on slide 11, which provides insight into earnings for the fourth quarter of 2021 relative to our third quarter results. Pre-tax adjusted operating income in the third quarter was $1.8 billion and resulted in earnings per share of $3.78 on an after-tax basis. To get a sense for how our fourth quarter results might develop, we suggest adjustments for the following items. First, variable investment income outperformed expectations in the third quarter by $570 million. Next, we included a placeholder for COVID-19 claims experience in the fourth quarter that is a similar level to our experience in the third quarter. While we have provided this placeholder for COVID-19 related claims experience, the actual impact will depend on a variety of factors such as infection and fatality rates, geographic and demographic mix, and the continued acceptance and effectiveness of vaccines. Third, we expect seasonal expenses and other items will be higher in the fourth quarter by $140 million. Fourth, we anticipate net investment income will be reduced by about $10 million, reflecting the difference between new money rates and disposition yields of our investment portfolio. Last, we expect the fourth quarter effective tax rate to normalize. These items combined get us to a baseline of $2.27 per share in the fourth quarter. I'll note that if you exclude items specific to the fourth quarter, earnings per share would be $3.05. The key takeaway is that our underlying earnings power has increased from last quarter, driven by the benefits of business growth, our cost savings program, and market appreciation. While we have provided these items to consider, please note that we, there may be other factors that affect earnings per share in the fourth quarter. Turning to slide 12. We continue to maintain a robust capital position and adequate sources of funding. Our capital position continues to support a double-A financial strength rating and have substantial sources of funding. Our cash and liquid assets were $3.8 billion, which is greater than 3 times annual fixed charges. Other sources of funds include free cash flow from our businesses and contingent capital facilities. Turning to slide 13, in summary, we are executing on divestitures. We are on track to achieve our targeted cost-saving initiatives. With the support of our rock-solid balance sheet, we are thoughtfully redeploying capital. Now I'll turn it to the operator for your questions. Thank you. We'll now be conducting a question and answer session. We ask you please ask one question and one follow-up, then return to the queue. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. Once again, we ask you please ask one question and one follow-up, then return to the queue. Our first question today is coming from Erik Bass from Autonomous Research. Your line is now live. Hi. Thank you. We've recently seen asset managers such as T. Rowe and Franklin announce sizable deals to acquire private and alternative asset capabilities and transactions that were generally well received by investors. I'm wondering if you see more properties like these available in the market, and would this be the type of programmatic M&A that you might consider for PGIM? Thanks, Erik. It's Andy, and good morning. I'll take your question. Let me start by reiterating that PGIM is a business that has demonstrated incredibly strong ability to grow organically year after year, and that's really due to the success of our multi-manager model. The team's very strong execution. You know, we've seen $55 billion in net flows over the last five years, and we've seen $11 billion in year-to-date flows. As we've talked about in the past, though, we do wanna build upon that track record with programmatic bolt-on M&A. We've been very assertive in making sure that we're both in the know and in the flow, and we are aware of these transactions in the marketplace. We're leaned into areas that are higher growth and higher fee oriented areas. Three I would mention, we're looking to continue to globalize the business, specifically in Europe and Asia. We're looking to continue to build on our already strong alternatives business, where we have $250 billion in assets under management, and our acquisition of Montana Capital Partners is a great example of that. We're looking in the area of real assets. You know, as always, we're gonna be disciplined in what we do and in how we deploy capital. To your question about sizable deals, you know, we very much feel if you look across our managers in PGIM, we are at scale. It's unlikely that you would see us do what I would call a big pure play scale deal. To the degree that we would look and potentially do something larger, it would come with a key capability or strengthen us in a material way in a key geography, and also bring along with it synergies. Got it. That's helpful. Thank you. I was hoping you could talk a little bit or provide some more color on your group claims experience this quarter, and particularly the trends you're seeing in both group life and disability. Sure, Erik. It's Andy. I'll take that one again. Let me start on the group life side. So as I'm sure you know and you've seen in the press, Delta has had a large impact on the country. You know, the deaths in 2022 were three times what were expected. We were expecting 30,000 deaths, and we saw 95,000. You know, we are a top three life and disability carrier, so and because of that, we have a very big and broad book of business. There's really three effects that I would point to that we saw in the quarter. First, U.S. deaths in the age group between 35 and 54 tripled from a percentage perspective, and we cover a lot of younger workers. The average age of our group block is in the neighborhood of 46 years old. Second, as you probably know and expect, we have a large national account book of business and have a very strong share in healthcare, in retail, and in manufacturing. These are areas where frontline workers are out and about by the definition and nature of their job, and therefore more exposed. The third thing I would mention is, you know, about 50% of the pandemic impact we saw on the life side came from claims in the Southern United States. You know, clearly, this is very unfortunate that we keep experiencing this, but we're proud that we're able to deliver on our promises and help these families. You know, as I flip to the group disability side, I would frame it as, you know, we're seeing what we expected to see, and we're seeing what we prepared for, as an organization. As I frame this impact on the disability side, it was not the predominant impact on group insurance. It was the life side. Having said that, the disability benefit ratio was somewhat elevated at 85.9%. There were really two effects that were at play. You know, in our fee-based STD and absence business, we are continuing to see a higher level of absence in STD claims. That really leads to more expense in the business, and you see that show up in the admin ratio. On the LTD side, as we talked about in previous quarters, we had both put up IBNR, but also we had built claim staffing to be able to be ready to handle what we expected to come, which we thought we would see enhanced incidence due to both the morbidity impacts of the pandemic, but also the impacts from the unemployment, the subsequent unemployment. We are seeing that. Our incidence on LTD was up about 10% in the quarter, and our severity was up as well about 10% in the quarter. This is what we expected to see, and this is what we prepared for, we're handling it well. We would expect, obviously, for this to improve and subside over time. Great. Thank you. Thank you. Our next question today is coming from Ryan Krueger from KBW. Your line is now live. Hey, good morning. First question was, what areas are you focused on additional de-risking? Does that include more potential variable annuity transactions? Is individual life also part of the consideration? Yeah. Hi, Ryan. It's Charlie Lowrey. I'll take that. As we stated in our opening remarks, we're making significant progress on executing to become a higher growth, less market sensitive and more nimble business. This includes, as you rightly point out, the sales of our full service record-keeping business and our block of traditional variable annuities, as well as the completed sales of what we've talked about in Korea, Taiwan, Italy, and Poland. We have also noted, to your point, that in the past, we're looking at other blocks of business that may include the areas that you spoke about. We're accomplishing a significant amount, but we still have a lot of work to do. I would note that in terms of our overall goals, we have, which we stated is between $5 billion and $10 billion of capital that we wanted to free up to reposition. We're already $6 billion into that, right? We don't need to do other deals at this point. We're very happy with the economics of the deals we've done, as we think it reflects the high quality of the businesses we have. We'll only transact other deals if they make sense for all our stakeholders as we go forward. Thanks. A bit of a follow-up on M&A. You, you've done a few deals, but they've been on the pretty small side, I think, in terms of capital. You have a fair amount of capital coming in next year from the transactions you've announced. Do you still anticipate ultimately redeploying that additional capital freed up into M&A transactions over time? If not, would you consider upping the buybacks again? Yeah, I think what we've always said in the past, Ryan, is that if we can't find good uses for that capital, we will return that capital to stakeholders. What I would also say is that we are looking both organically and inorganically at ways of redeploying that capital. Organic investment is another way of doing that. We'll be very disciplined as we go forward in looking at potential acquisitions. The M&A is going to focus on, again, asset management and emerging markets as we increase the percentage of earnings from growth areas and reduce the percentage of our legacy traditional variable annuities. We'll continue to focus in a very disciplined way on those two areas. Andy mentioned in his previous comment, the acquisition of Montana Capital Partners as an example of that. We'll look at the pipeline that's out there and see if there are good deals to do. If they're not, we'll return capital to shareholders as we have in the past. Thanks, Charlie. Thank you. Our next question today is coming from Humphrey Lee from Dowling & Partners. Your line is now live. Good morning, and thank you for taking my questions. My first question is regarding the fourth quarter outlook for Assurance IQ. Can you talk about the preparation you've done so far in terms of for the enrollment period, and how confident are you in terms of kind of generating the necessary level of activities to support the break-even AOI? Humphrey, good morning. It's Andy, and thanks for your question. As you know, and as we've talked about in the past, we do expect our revenue at Assurance IQ to be strongest in the fourth quarter, given the annual enrollment season. Medicare Advantage remains a very strong opportunity for us. If you look last year, we had a little under a 1% share in that marketplace, and that marketplace is growing at 10% per year. There's a lot of space to operate. You know, as you saw in the quarter, we continue to invest in the platform, both in the business overall, but specifically, in the quarter, we invested in building out our W-2 Prudential agent force. What we saw is coming into the annual enrollment period season, we came in with more agents than we had last year, and those agents were operating at a higher level of productivity right out of the gate. We're encouraged versus last year. As I've said before, we're confident in what the platform can do for us in the long term, and its ability to scale. Just for modeling pur- Hey, Humphrey, it's Ken. If I could add, you know, as Andy said, we're well prepared. For the purposes of the baseline for the fourth quarter, we just simply put in a placeholder for Assurance at a break even, because we wanted to neutralize for the seasonality. But it's not a forecast, it's just a placeholder to neutralize the earnings for the fourth quarter. Okay. Got it. I see. Yeah, because I was just thinking, like, what type of revenue level would you need to have in order to get to that break-even target, but it seems like this is just more of a placeholder as opposed to anything. That's right. Okay. All right. My second question is regarding PGIM, especially on the retail side. The flow seems to have softened a bit over the past couple quarters. Can you provide some color in terms of what you're seeing there and what kind of actions that you have taken to improve retail flows? Yeah, Humphrey, it's Andy again. Thank you for your question on PGIM. You know, as we've discussed in the past, we will see natural variability and variation quarter to quarter when it comes to flows. This quarter, in aggregate, we saw modest inflows driven by a positive result on the institutional side, thanks to our work in fixed income and real estate. We did experience modest outflows on the retail side as a result of client reallocation out of equities and in the fixed income space into shorter duration strategies. You know, what I would say is in any given quarter, you could experience client reallocations, and that can go either way. You know, what we think is very important to keep your eye on is the long-term track record. You know, as I've said, this is a business where we've experienced a lot of flows over the long term and $11 billion year to date. That really comes from both outstanding capabilities and strong execution. You know, we have a broad and diversified product portfolio in PGIM, and as you've seen in the release, we continue to have exceptional investment performance with 94% plus outperforming benchmarks in the three-, five-, and 10-year period. We're confident that while there'll be variability quarter to quarter, potentially in the near term, we will be a net winner over time. Got it. Thank you. Thank you. Our next question today is coming from Tracy Benguigui from Barclays. Your line is now live. Thank you. I've seen this quarter so far is an early glimpse on LDTI with some company disclosures. There was one that was quantitative, another more qualitative. Your 10-Q is not out yet, but are you planning to add any disclosures there, like either now this quarter or in the near future? Hey, Tracy, it's Ken. You know, we continue to evaluate the new standards and refine our methods. We continue to adjust as we move towards the effective date. The effective date is, you know, still over a year away. You know, the impact also will be subject to rates at the time of the effective date, as well as the actions that we have been taking and will continue to make to shift our business to be less market sensitive. That'll have an impact, obviously, at the time of the effective date. Overall, we're making good progress on implementing the new standards, but it's too early to provide estimates. That's where we are. Okay. Maybe just one question on that. Your Japanese business, to the extent that there are dollar-denominated products, does that act like a mitigant at all in your view, when those liabilities have to be marked to market? Yeah. We've had a long-standing capability and competitive advantage in U.S. dollar business in Japan. Again, our Japan business is focused on serving the lifetime needs of our customers with a primary focus on debt protection, including those that are denominated in U.S. dollars. It does have a long duration profile, and it's supported with robust reserves and a high quality investment portfolio. It's, you know, very financially resilient. Again, we're not. It's too early for us to provide estimates. Overall, you know, although the accounting will be modified, we feel very good about the overall profitability of the business, the risk profile, and the financial strength of our Japan business, including the U.S. dollar business. Okay. Thank you. Thank you. Our next question today is coming from Andrew Kligerman from Credit Suisse. Your line is now live. Hey, good morning. I guess the first question is a follow-up on your capital management. Charlie, you know, you made a comment, two comments that you would look at the pipeline and that organic investing is a way to deploy the capital. Could you clarify what you meant by organic investing and the amount of money that might require? And then with regard to the pipeline, you know, a little color on that. Is there, you know, because the two deals you did were rather small, is it possible that there might not be anything that really intrigues you and you might, you know, have other uses for that capital? Sure. A couple of comments, taking them in order. In terms of organic growth, if you look at FlexGuard as an example. We have pivoted away from the variable annuities with guaranteed living benefits, and then started with new products and are investing in those and supporting those as they grow. That really ties into becoming a less market sensitive company and frankly, a higher growth company. That's an example. We'll look at the product pivots that we do as an example of organic growth. In terms of inorganic growth, I think there are going to be plenty of opportunities as we go forward, especially in the areas that we want to invest in, namely asset management and emerging markets, some of the growth areas. Over time, I think we will find good places to put the capital. As always, if we don't find places to put that capital to the extent that we don't have attractive opportunities that meet our strategic and financial criteria, we'll return the excess capital to shareholders as we've done in the past. Got it. That makes sense, Charlie. With regard to your international businesses in Japan, Gibraltar, and the Life Planners, sales were off pretty sharply in the 30%+ range. In the press release, you cited the dollar-denominated product repricing that went on in the year-ago quarter. You know, the people wanted to catch these products. You know, could you clarify for us, you know, whether those products written a year ago were adequately priced at adequate returns? You know, was there a possibility for anti-selection? Now going forward, with you know, an Emergency Act and kind of that getting out of the rear view, is there a possibility that as COVID subsides, these sales could really jet upward? Thanks, Andrew. This is Scott. I'll go ahead and take that one. You know, as you recall, we took significant crediting rate actions last August on our U.S. dollar products. That's really just part of our ongoing effort to maintain strong profitability on all of our new business activity. That's across Japan, but across all of our other operations. As is typical, that does create a sales surge ahead of the crediting rate, which typically pulls sales forward from a quarter or two. Additionally, I would say the impact of COVID emergency states as well as the Olympics in Japan also dampened sales for a period. We are happy with the recovery that we've had in sales. If you look at the third quarter, y ou know, quarter- over- quarter, it looks good. In Japan, we benefit from having multiple distribution channels. We've got Life Planners, life consultants, the affinity channel bank and third-party distribution. Further, I would say that we've made significant progress in using and enhancing technology and new strategies to support both our customers and our distribution channels. I think all of that, you know, put together says we feel pretty good about the sales momentum that we have, and we maintain a strong discipline and a continuous watch on our pricing actions and where we're priced now. Quite frankly, we don't foresee any material repricing actions on the horizon in Japan. I think we made the actions that we took a year ago in a timely manner. Ken, were you going to say something? No. I was just going to say, you know, our Japan business has consistently written business above its cost of capital. We are happy with the returns last year, and it's these pricing actions that keep us in good position for both profitability and customer value proposition. It's been a pretty consistent story. Andrew, it's Charlie, if I could just add one- Thank you. Andrew, if I could add one other thing, and that is what Scott alluded to, which is that, we have been extraordinarily disciplined in looking at the pricing of all our products around the world, not just in Japan, but as Scott said, in all the other countries, including the U.S. We've been really pleased as we've increased the pricing as we've had to with the low interest rates, the strength of the sales, and I think that comes from three points of view. One is the strength of our brand. Second is the strength of the solutions we provide, such as with a new introduction of FlexGuard in this example. Third is the quality of our distribution, which is both in-house distribution and through third parties. We have plenty of different ways of distributing the product, and I think that inures to our benefit. Thanks, Charlie. Thank you. Our next question today is coming from Tom Gallagher from Evercore ISI. Your line is now live. Good morning. Individual mortality held up pretty well this quarter, despite the increase in COVID mortality and also by some measures, there was elevated non-COVID mortality also this quarter. You know, in terms of describing why you think your block only had minor sensitivity, can you comment on what that might be? Is it just vaccination levels, older age, demographics and geography or anything you could share on that? Yeah, Tom, it's Andy. I'll take your question, and thanks for the question. When you think about our individual life block in the third quarter, I'd go through a series of items here. I think we did see lift. Third quarter, I think as you're aware, is our highest underwriting gain quarter, so there's definitely seasonality that's showing in the results. We also saw in the quarter a fewer large face amount claims. Again, that's the type of thing that will vary quarter to quarter. This quarter, we happened to just see a fewer of those. I guess when it comes to the pandemic effect in particular, I would say that our block tends to be more oriented towards the Northeast, as far as geographic distribution. I think it's pretty clear that from a U.S. death perspective, it was heavier in the southern region of the United States. You mentioned this, but the average age of our ILI block tends to be older, and those older age demographics tend to have higher vaccination rates. Got you. Okay, thanks. For my follow-up, just curious, any updates on economic solvency regime in Japan? Is that still? I think last I heard it was like 2025. Is that still the timing? And if so, how do you feel that you're positioned to adopt that? Hey, Tom, it's Rob. I'll take a shot at that. To our knowledge, there's not been any change in the timing of that. The JFSA has been well synchronized with the broader Insurance ICS or the Insurance Capital Standard that's being rolled out. It's their plan has always been to sort of be slightly behind the implementation of that as their new solvency regime is closely aligned to that. With respect to our Japan business, I think as both Ken and Scott have pointed out, the underlying economics of our Japan business are incredibly strong. We would hope that, you know, under both accounting and regulatory constructs, that ultimately is visible. Having said that, we have articulated some concerns, as others in the industry have with regard to both the Insurance Capital Standard that's being proposed, in terms of some fundamental flaws that continue to persist there. To the extent that those carry over into Japan's economic solvency regime, that would be a concern that we would have. We continue to be in an active dialogue, both on the international front, and in Japan, along with a number of our peers. We're, you know, optimistic that, through that continued engagement, we can ensure that the economics of the underlying business get appropriately reflected in the regulatory constructs. Okay, thanks, Rob. Thank you. Our next question today is coming from Elyse Greenspan from Wells Fargo. Your line is now live. Hi. Thanks. Good morning. My first question on the PRT business, you guys had some pretty good activity in the third quarter. Can you just talk about the pipeline there for the fourth quarter? I know that tends to be heavy towards the end of the year. The initial outlook for 2022. Yeah. Elise, hi, it's Andy. I'd be happy to take the question. We think the market in 3Q was in and around $17 billion, and that's very consistent with what we communicated on the previous couple calls, that we felt the back half of the year would be very healthy. You know, the average funded status for plans is around 97%, which is the best level in 10 years, and they still have a very strong desire to transact. We think the total market size for the year will be in the neighborhood of $40 billion. We think that level of momentum will continue in the near term. You know, this is a space that in many ways we're a pioneer in and very much a leader in the space. As we've said in the past, we are very committed to it, and we are gonna pick our spots. You know, we're very confident that the strength of our brand and our capabilities and our track record, we're gonna gain more than our fair share over time. In the near term, we do think the market's gonna be healthy. Okay, thanks. Then my second question, going on to your Group Life book. You guys gave some good color on what your losses will be elevated COVID losses there in the third quarter. As we think about the fourth quarter in 2022, do you expect that you would see losses in line with kind of that same elevated severity that you've been seeing? How much of your losses that you've set up so far for COVID are IBNR? Elyse, maybe I'll start and then Ken could follow up. I kind of went through the dynamics of what's causing the elevated mortality. You know, the three predominant things being the average age, the predominance of our book in certain segments, and the distribution of the claims being in places where the vaccination rates are lower. We would expect those underlying drivers to continue near term into the fourth quarter. Yeah. Elyse, in terms of IBNR, you know, we stay pretty current on claim activity. You know, the lag is measured in weeks, and we have a pretty established process to measure that. That continues. In terms of an outlook for 2022, we have not provided an outlook beyond the current quarter and based upon, as Andy described, just sort of the continuation of current trends. We think that's the most reasonable approach. You know, the situation's very unique and very dynamic. You know, a lot of variables at play, whether it's social distancing or other preventive measures or vaccines and treatments and variants. you know, we've in our baseline, we've extrapolated the current trends, and that's what that reflects. Thank you. Thank you. Our next question today is coming from John Barnidge from Piper Sandler. Your line is now live. Thank you. Just sticking with the Group business. Given the enduring nature of the pandemic, unfortunately, is there a need to build more administrative expenses to support that effort? John, it's Andy. You know, I think as we've talked about in the past, we actually have a higher level of both call and claim staff across our product lines. We hired out ahead of what we expected to see, so we were well prepared as it was coming in. We think that level is already reflected in the admin ratio that you see. That's great. Thank you. Then maybe my follow-up, just wanted to touch on that comment around LTD incidence increase in frequency and severity. How should we be thinking of this maybe in light of vaccine mandates? There's headlines about Boeing and Raytheon and percentage of workers there. I'm just trying to think through that, in light of core focus within the Group market. Thank you. It's Andy again. I guess I'd say two things. Our expectation for the number of deaths in the quarter take into account what we think the current approach is in the employer marketplace and the current landscape of mandates. You know, to the degree our book tends to be more of a national account book of business, and there are more mandates in that segment, I think that would be a help to us and a tailwind. Great. Thank you for your answers, and best of luck. Thank you. Our next question today is a follow-up from Tracy Benguigui from Barclays. Your line is now live. Thanks for taking another question. I just want to touch on your upcoming combination of individual and institutional retirement business. Is this just to simplify your operational model after the pending full service sale, or should we expect anything strategic coming out of that, either, like, on the expense or revenue side? Tracy, it's Andy. Let me take your question of, you know, about the driver. First and foremost, this is really a statement about our commitment as a firm to helping solve the retirement needs in America. We continue to see a real need in the pension de-risking area. We continue to see the need to lean in and help individuals in their retirement accumulation and decumulation journeys. You know, this was really about taking two businesses that had great momentum, that were market leaders in their space, and combining together the market-leading talent and the market-leading capabilities. You know, the benefits we expect to see is it will accelerate our decision-making, as we continue to go after the retirement need and sharpen our focus on the retirement space. You know, that was really the driver, and it's an important step in how we're transforming our business mix and system. Thank you. Thank you. Our next question is coming from Jimmy Bhullar from JP Morgan. Your line is now live. Hey, just a follow up question, on Charlie, your comments around dispositions and/or, de-risking reinsurance type transactions. I think you mentioned, annuities potentially and individual life as well, but how do you think about long-term care in that context? And is that a business where you're seeing counterparties emerge, or is it, still like the bid-ask is too wide to, expect a transaction in the near future? Yeah. I'll start and then maybe Ken can add to that, Jimmy. I think what you observed is exactly correct. It is something that we would obviously look at if the market was there. I think the market is extraordinarily thin at this point for bidders on blocks like that. I would also observe that we have a relatively small block of business and a bit relatively young block of business. As a result, one frankly that we feel reasonably good about, in fact, quite good about. If we are, as we said, going to be very disciplined about the divestitures we make and with an eye toward creating shareholder value, we need to get... Make sure that if we did transact something, that it would be a transaction that was in the economic interests of our shareholders. Given the young block that it is, the bid-ask spread, if you will, can be quite large. We'll continue to evaluate options if they come up, but at this point, we are continuing to run the book, and the book is going quite well. Ken, anything to add? No, I think that covers it well, Charlie. Nothing to add from me. Just on can you talk about the operating environment in your two largest international markets in Japan and in Brazil? Obviously, different stages in terms of COVID in both the markets. How are those businesses faring and what your outlook is for sales given the pandemic and economic conditions in Latin America? Hi. Well, why don't I start, Jimmy, with Japan, which you know, I think I covered a little bit before. I would say that the combined impact of the states of emergency and then the Olympics really did slow things down, and the effect of that really ran through September twenty-ninth with the state of emergency. We've come out of that nicely, and we really feel that our channels have benefited from our, you know, use of technology, as have our customers during this period. We really feel like our sales organizations have adapted well to the new environment. Now that we see things, you know, out of a state of emergency and returning to a more normal state, you know, you've seen a good sequential quarter. I would also say that, you know, recruiting has been somewhat challenged during a COVID environment. We've also learned how to recruit and bring people on board in a more remote environment. I think as we come out of COVID, both the actual sales activity and the ability to recruit will continue to improve, and we see that as a positive sign. In Brazil, our sales have been improving from the combination of having a strong Life Planner model, but more importantly, we've been building out third-party distribution, and most recently that's now exceeded a third of our sales. You know, just a few years ago, that was closer to 10%. We've seen positive momentum from the channels that we sell in. COVID hit harder, quite frankly. It hit harder in Brazil than it did in Japan. We're really happy with the resiliency that our sales force has shown there. Overall, we feel good about the trends in both markets, and I think the most recent quarter is indicative of why we maintain that confidence. Okay. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Mr. Lowrey for any further closing comments. Thank you, and thank you all for joining us today. Our performance this year and the progress we're making on repositioning our business mix and advancing the cost savings program, along with disciplined capital deployment, reinforces our confidence in our strategy to transform Prudential and generate substantial growth. We remain optimistic about the opportunity to continue to deliver strong financial outcomes to all our stakeholders. Thank you again for joining us today and for your time. Thank you. That does conclude today's teleconference and webinar. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.