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Prudential CEO mulls shrinking life insurance, "low growth" businesses

Feb 5 (Reuters) - Prudential Financial Inc, which has already halted sales of some variable annuities, said on Friday that it will also consider scaling back its individual life insurance and other “market sensitive, low growth” businesses.

“Life will be one of the businesses we look at in addition to annuities but not the only one,” said Chief Executive Officer Charles Lowrey in a call with analysts to discuss the New Jersey insurer’s fourth-quarter results.

More insurers are selling off individual life insurance businesses. Large life insurance investment portfolios are highly sensitive to already low interest rates, which have dropped further during the pandemic, and dragged on industry earnings along with higher COVID death rates.

Private equity firms see opportunity. Last month, Allstate Corp said it had agreed to sell most of its life insurance business to entities managed by buyout firm Blackstone Group Inc for $2.8 billion. Last year, American International Group Inc said it will separate its life insurance business from the company.

In November, Prudential said that it would stop selling variable annuities with so-called “guaranteed living benefits,” which for a fee offer features such as set minimum income for life or the ability to withdraw funds.

That move was also aimed at curbing the company’s interest rate risk.

Lowrey on Friday said that Prudential would look at “blocks of businesses in terms of runoff, reinsurance or sales.”

Prudential is also looking into mergers and acquisitions opportunities for PGIM, its asset management arm, said Prudential’s head of U.S.-based businesses Andy Sullivan.

“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,” Sullivan said. (Reporting by Suzanne Barlyn; Editing by Cynthia Osterman)

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