As far as specific to your question, the outlook looking forward, we like the fundamentals that we’re seeing as the environment is clearly improving, and our investment performance is very, very strong. But we also know that a sticky inflationary environment we’ll keep money on the sidelines a little while longer and that our large client flows can remain episodic. But the key punchline is, over time, we are very confident that we’ll be a net winner and a net grower.
Tom Gallagher: Great. Thanks for the color. And Rob, just if I could slip one more in about a follow-up to what Ryan asked about Prismic. Have you guys done any additional fundraising beyond the first $1 billion for Prismic. And if you haven’t, any thoughts on how much you would be looking to raise in a potential next fundraising?
Rob Axel: Yes, Tom, the investors that we have in Prismic and our conversations with them have indicated their desire to put a significant amount of capital to work and the strategy that we’ve outlined to them. And so expectations are that these are firms that deal on the billions, not the millions or hundreds of millions. And they’ve indicated that their desire is to scale the initial investment that they’ve made, which is, frankly, small by their standards and would be uneconomic if it were not for their anticipation that it was going to be followed by investments that would be multiples of what they’ve contributed upfront. That having been said, this is not a fund. It is a collaborative of investors that have committed to working with us in this strategy and they will fund as we develop and execute against pipeline.
Tom Gallagher: Okay. Thanks.
Operator: Thank you. Next question today is coming from Joel Hurwitz from Dowling & Partners. Your line is now live.
Joel Hurwitz: Hey, good morning. So I want to go back to the individual retirement sales. So a very strong quarter, including sizable growth in fixed annuity sales. Can you just talk about the pivot to fixed annuities? And I guess, what’s your plan to grow in this product line?
Caroline Feeney: Yes. Of course, Joel. Good morning. It’s Caroline, and I’ll take your question. So first of all, the individual annuities market had a record year last year with about $380 billion of sales, and fixed annuities were a key piece of that given the rapid rises that we did see in interest rates. We’re seeing continued momentum for fixed annuities this year, as the value proposition remains strong, driving industry sales of over $100 billion in the first quarter, putting the industry on track for another record year. In terms of our own growth, Joel, fixed annuities, represented almost half of our sales last quarter mirroring the broader market shift we’ve seen over the past few years — past year, excuse me, our sales growth is a testament to three things: first, our successful expansion of our product portfolio to include more fixed annuity solutions such as our WealthGuard MIGA, allowing us to meet more customer needs across a broader set of channels.
Second, our brand and our distribution strength, which enables us to scale quickly to meet increasing market demand. We continue to expand our partnerships across multiple channels and platforms, which also had a significant impact on our business this past quarter. And finally, our dynamic and proactive pricing process, which allows us to react quickly to changing market conditions, to maintain competitive pricing while maximizing shareholder value. So overall, Joe, we’re pleased with our ability to meet the increased demand while maintaining favorable returns. We like the diversification these products bring to our business mix and the role they can play as a strong complement to our FlexGuard suite of solutions?
Joel Hurwitz: Okay. So it sounds like this will be a core product in your line of filing forward then?
Caroline Feeney: Absolutely, Joel. Yes, we see it as a core product as we broaden our portfolio.
Joel Hurwitz: Okay. And then just moving over to pension risk transfer. Just any update on your outlook and obviously, a very strong start to the year, I guess, how should we think about your desire to grow this business year-on-year out?
Caroline Feeney: Yes. So as you said, Joel, and rightly so, we had a very strong start here. We finished actually the strongest first quarter ever in PRT, leading the market, including two transactions with Shell and Verizon totaling nearly $9 billion. In terms of our outlook on growth, last year’s market volume was roughly $45 billion, and we expect to see that healthy pipeline continue this year supported by favorable funding positions of over 100%. And although the market is highly competitive, very few carriers have actually executed transactions exceeding $1 billion. And I should call out that our expertise and our ability to handle large complex transactions along with our financial strength, position us to continue to be a leader in the space.
Joel Hurwitz: Okay. I guess, just how do you balance the capital strain from growing that business? Just how should we think about your appetite for overall growth this year after doing $9 billion in Q1?
Caroline Feeney: Yes. So I’d say, in general, Joel, obviously, each large transaction naturally consumes its appropriate share of capital. We believe these deals are a very effective way of deploying capital and we like the returns that we’re generating. First, PRT remains a great source for organic growth. It represents one of the few products that can allow us to originate billions of insurance liabilities in a single transaction. And as a market leader in the space, we continue to see, as I mentioned, a strong pipeline of those large-sized opportunities. I’ll also add that the success of our PRT business benefits PGIM as we continue to originate these deals PGIM can match our insurance liabilities with a high-quality portfolio of assets. So with all that being said, Joel, we do expect to continue to opportunistically deploy capital in the space and we feel good about the returns as well as the benefits PRT brings to Prudential.
Joel Hurwitz: Make sense. Thank you.
Operator: Thank you. Your next question today is coming from Wes Carmichael from Autonomous. Your line is now live.
Wes Carmichael: Hey, good morning. Thanks for taking my question. Rob, on your answer on Prismic, you mentioned the transactions require a regulatory coordination as one of the considerations here. I’m just wondering if you can give us an update on the regulatory environment in Bermuda and how that’s changed, if at all, over the past year if the CMA is more involved in improving potential deals or input structure of transactions.
Rob Axel: Yeah, Wes, happy to do so. So, we’ve actually been highly engaged with the DNA throughout the consultation process that it recently went through and provided feedback on the proposed enhancements to their regime directly with the BMA as well as in coordination with the broader industry. I think what I would characterize is that while the BMA’s updates to regulatory regime are generally going to result in a more conservative level of capital required and reserving than what they had prior to their consultation process. That’s going to vary significantly by product type. And the BMA is committed to continuing to maintain a principles based economically driven regime. And we believe that the combination of that approach to managing insurance assets and liabilities along with its status with reciprocal jurisdiction in the US and equivalency in Europe is going to continue to make it a very attractive jurisdiction to do business for insurers.
