Prudential Financial : Acquisition of Assurance IQ

Acquisition of Assurance IQ

Personalized financial solutions for all, made easy

September 5, 2019

Forward-Looking Statements

Certain of the statements included in this presentation, including those regarding share repurchases, the expected closing of the transaction, profit targets and expected earnings, expense and margin benefits resulting from the transaction, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as "expects," "believes," "anticipates," "includes," "plans," "assumes," "estimates," "projects," "intends," "should," "will," "shall" or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management's current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. There can be no assurance that future developments affecting Prudential Financial, Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, purchase price adjustments; the successful fulfillment or waiver of all closing conditions without unexpected delays or conditions; the successful closing of the transaction within the estimated timeframe; the failure to realize the expected synergies and benefits of the transaction or delay in realization thereof; the successful financing of the transaction; the retention of certain key employees; and other factors, risks and uncertainties including: (1) losses on investments or financial contracts due to deterioration in credit quality or value, or counterparty default; (2) losses on insurance products due to mortality experience, morbidity experience or policyholder behavior experience that differs significantly from our expectations when we price our products; (3) changes in interest rates, equity prices and foreign currency exchange rates that may (a) adversely impact the profitability of our products, the value of separate accounts supporting these products or the value of assets we manage, (b) result in losses on derivatives we use to hedge risk or increase collateral posting requirements and (c) limit opportunities to invest at appropriate returns; (4) guarantees within certain of our products which are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position; (5) liquidity needs resulting from (a) derivative collateral market exposure, (b) asset/liability mismatches, (c) the lack of available funding in the financial markets or (d) unexpected cash demands due to severe mortality calamity or lapse events; (6) financial or customer losses, or regulatory and legal actions, due to inadequate or failed processes or systems, labor and employment, external events and human error or misconduct such as (a) disruption of our systems and data, (b) an information security breach, (c) a failure to protect the privacy of sensitive data or (d) reliance on third-parties; (7) changes in the regulatory landscape, including related to (a) financial sector regulatory reform, (b) changes in tax laws, (c) fiduciary rules and other standards of care, (d) U.S. state insurance laws and developments regarding group-wide supervision, capital and reserves, (e) insurer capital standards outside the U.S. and (f) privacy and cybersecurity regulation; (8) technological changes which may adversely impact companies in our investment portfolio or cause insurance experience to deviate from our assumptions; (9) an inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others;

1. ratings downgrades; (11) market conditions that may adversely affect the sales or persistency of our products; (12) competition; (13) reputational damage; and (14) the costs, effects, timing or success of our plans to accelerate our Financial Wellness strategy. Prudential Financial, Inc. does not undertake to update any particularforward-looking statement included in this document. See "Risk Factors" included in the Annual Report on Form 10-K for the year ended December 31, 2018 for discussion of certain risks relating to our businesses and investment in our securities.

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Deal terms

• Prudential will acquire Assurance IQ, a leading consumer solutions platform for health and financial wellness solutions, with an expected close early in the fourth quarter of 2019
• The Assurance platform, combined with Prudential's scale, products, and capabilities, represents anend-to-end engagement model for financial wellness in the U.S., with potential to grow internationally over time

Transaction Details(1)

• $2.35 billion upfront consideration, funded via:
• • $1.20 billion cash
  • $0.68 billion debt
  • $0.47 billion stock and equity awards
• Additional earnout of up to $1.15 billion
• Expect to fully utilize increased share repurchase authorization by end of 2019(2)

Financial Highlights

• High growth, high return
• Capital-lightwith high free cash flow conversion
• Expected to be modestly accretive to EPS and ROE in 2020
• Creates new earnings stream that is not sensitive to equity markets, interest rates, and credit

1. See Form8-K filed on September 5, 2019 for additional details. Earnout is contingent upon Assurance's achievement of certain profit targets over the period from January 1, 2020 through December
   31, 2022 and would be paid 75% in stock and 25% in cash.
2. Prudential's Board of Directors has authorized a $500 million increase to the share repurchase authorization for the calendar year 2019.

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Management has a track record of driving growth and innovation

Michael Rowell

Founder & CEO

• Prior to Assurance, Mr. Rowell founded a nationaldirect-to- consumer life insurance distribution business and served as the CEO between 2002 and 2016
• Mr. Rowell holds a B.S. from Washington State University and an MBA from Massachusetts Institute of Technology

Michael Paulus

Founder & President

• Prior to Assurance, Mr. Paulus was a partner at Andreessen Horowitz, where he focused on insurtech investments. He was also the founding president of Addepar, where he patented technology that modeled financial assets
• Mr. Paulus holds a B.A. in Economics and an M.S. in Management Science and Engineering from Stanford University

Supported by a highly skilled management teamwith diverse backgrounds and experience based in the Seattle, WA area

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United by a common purpose of bringing financial opportunity to more people

Solve the financial		To protect and
challenges of a		improve the personal
changing world		and financial health of
		all consumers

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A strategically and financially compelling acquisition

Fast growing, highly scalable business model

Significantly accelerating our U.S. Financial Wellness strategy

Attractive financial benefits with upside potential

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Assurance offers a transformational model for financial services distribution

Direct-to-consumer engagement platform recommending personalized financial

solutions through a unique online and agent-assisted model

Customer Journey

ATTRACT

ASSESS

RECOMMEND

CONVERT

100% primary online	Utilize extensive	Recommend a	Provide on-demand
and affinity partner-	data to assign to	personalized plan	service with an
based acquisition of	cohort	based on cohorts	expert 24 hours a
customers		and predictive	day / 7 days a week
		buying patterns

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Entire business built "customer in"

with advanced data science and analytics

Make a Difference

Improve the Personal and

Financial Health of

Consumers

Serve All Customers

Offer Solutions,

Regardless of

Demographic Status

Eliminate Industry Waste

Reduce Transaction and

Process Related

Inefficiencies

Art	Science
of the	Of Systems
Human	Personalizing
Touch	Every Interaction

Deliver the Human Touch

Augment Digital Journeys

With Experts When

Needed

Personalize Every Detail

Let Models Drive the

Journey Based on

Customer Data

Provide Better Solutions

Superior Solutions Via

BetterProducts and

Smarter Science

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Highly scalable Digital Guide and Agent model

Digital Guides

Support team managing the customer experience and providing leverage

for the digital agents to solely focus on sales

Digital Agents

Licensed agents providing professional advice and closing the insurance sales

More Flexibility	Increased Efficiency
Digital Guides and	Instead of spending the majority
Agents work	of their time prospecting
independently - when	customers and generating
and where they want	leads, Digital Agents focus
	their skills on helping people
	find the right solution, while the
	platform and Digital Guides
	handle the rest

Enhanced Support

With the use of data science, a technology-driven platform and a real-time connection to 3rdparty databases, Digital Agents are well equipped to

meet customers' need

Higher Compensation

Warm leads provided by the platform allow Digital Agents to focus on customer needs, leading to higher sales closing rates than traditional agents

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A strategically and financially compelling acquisition

Fast growing, highly scalable business model

Significantly accelerating our U.S. Financial Wellness strategy

Attractive financial benefits with upside potential

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Accelerates our Financial Wellness strategy

Near Term	Intermediate Term
Growth	Growth

Institutions	Individuals
Winning and retaining	within Institutions
institutional clients in	Increasing utilization of our
Retirement and Group	savings and benefit
Insurance	programs offered to
	employees

Individuals	Assurance
Providing individuals with	acquisition
retail solutions that address	accelerates
broader financial needs	our growth

Longer Term

Growth

Individuals

Providing individuals with retail solutions that address broader financial needs

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Creates a broad end-to-end engagement model for financial wellness

Expanded			+
Solutions
Income	Investment	Life	Health	Medicare	Auto

Expanded

+

Channels

Digital

Face-to-Face

Hybrid

On-Demand

3,000+

Advisory

3,000+

Pru Advisors

Agents & Guides

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Assurance helps Prudential expand our addressable market

Mass Affluent+

>$500K

Middle Market

$100K - $500K

Mass Market

<$100K

Expanding our reach to all markets through multiple channels - engaging where, how, and when people want - with a holistic solution set

Note: Market demographics defined by total investable assets.

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Advanced data science & human touch combined with scale accelerate ecosystem growth

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A strategically and financially compelling acquisition

Fast growing, highly scalable business model

Significantly accelerating our U.S. Financial Wellness strategy

Attractive financial benefits with upside potential

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Immediate value creation

Financial Impacts

Underlying Assumptions

Free Cash Flow Conversion Ratio

Market Factors

• Expected to be accretive to EPS by ~$0.10 in 2020 and $0.30 - $0.35 in 2021, and modestly accretive to ROE
• 2021 EBITDA multiple of ~11x before synergies;mid-to-high teens expected internal rate of return
• Expected annual revenues of ~$0.7 billion in 2020 and ~$1.0 billion in 2021
• Pre-taxoperating margin of 19% in 2020 and 20%+ beyond 2020
• Pre-taxannual amortization expense of ~$60 million over five years
• Includes cost synergies, reported outside of Assurance, of $25 - $50 million in 2020 and $50 - $100 million by 2022, incremental to the $500 million margin expansion stated at June Investor Day
• Minimal revenue synergies
• $500 million increase to share repurchase authorization for 2019 will offset equity issued for the upfront consideration
• Effective tax rate of ~24%
• Expected over time to be above the current company free cash flow ratio of 65%
• Not sensitive to equity markets, interest rates, and credit

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Significant upside potential

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Prudential to help Assurance with its growth roadmap

• Sell Prudential products on Assurance platform
• International expansion

Assurance to help Prudential deepen relationships

• Integrate advanced data science and analytics capability
• Offer broader solution set to Prudential customers

Opportunities to create efficiencies

• Increase operational speed and productivity
• Focus on highervalue-added activities

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A strategically and financially compelling acquisition

Fast growing, highly scalable business model

Significantly accelerating our U.S. Financial Wellness strategy

Attractive financial benefits with upside potential

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