Featured Insurer: Prudential Financial Inc. Interview with John Strangfeld-Shifting Retirement Risks (Back) to Insurers

1 FINANCIAL SBILITY AT ION NEWSLETTER INSURANCE AND FINANCE Featured Insurer: Prudential Financial Inc. Interview with John Strangfeld Shifting Retirement Risks (Back) to Insurers1 by Etti Baranoff John Strangfeld is Chairman and Chief Executive Officer of Prudential Financial, Inc., a financial services leader with operations in the United States, Asia, Europe and Latin America. With nearly 140 years of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth through its life insurance, annuities, retirement-related services and investment management businesses. Q1. Retirement readiness is a critical issue in the U.S. and countries around the world. How can life insurers help meet that challenge? Retirement readiness is a big challenge and a big opportunity, and meeting retirement challenges is one of the major growth drivers for our industry. You may ask what?s new about this. ?What?s new? is not the macro forces?they have been prevalent for some time. What?s new is the way we can participate. I suggest this is a step-function opportunity to take our business to an entirely different level. Let?s bring it down to the essence of what we do, what we have done for many years, helps people manage risks. We help protect against the financial consequences of dying early and the risks of outliving retirement savings. More specifically, we assume risks are better borne by an institution than by an individual. The risks that seem random to an individual?a pool of one?become much more predictable when pooled across large numbers of people. That leads to our ability to provide cost-effective retirement solutions and take financial uncertainty out of the equation for individuals. Q2. You?ve talked about bringing these risks ?back? to insurers. Why is that? Decades ago, defined benefit pension [DB] plans were the norm in corporate America. And insurance companies managed a significant portion of pension risks. Over the years, management of those risks was assumed by many employers, on their balance sheets and through their own or third-party investment management resources. Today, it is increasingly shifting to employees, as defined contribution [DC] plans have grown in popularity and are replacing pension plans. The result is a significant burden on individuals. But we can help fill the retirement protection gap by shifting longevity and investment risks back to insurers. We have the expertise and scale to manage them much more effectively than individuals or even employers. In the process, we can increase both our impact on society and our share of the broader financial services marketplace. 1 This Q&A discussion draws on a speech delivered by Mr Strangfeld at the International Insurance Society?s 51st Annual Global Insurance Forum on 16 June 2015 in New York, NY. No. 16 September 2015 @TheGenevaAssoc INSURANCE AND FINANCE