(Aug 6): Prudential Financial Inc aims to reap more than US$3 billion (RM12.28 billion) from exiting its emerging markets businesses as it looks to focus on core markets and bolster its asset management unit.

The company, whose insurance business now operates in 10 countries, is actively pursuing sales that will cut that number by roughly half as it seeks to concentrate on the US, Europe and Japan, chief executive officer Andy Sullivan said in an interview. The strategy is expected to play out over the next 24 to 36 months, he said.

“We want to be in big, large addressable markets with strong structural tailwinds, where we know that we have the capabilities to compete and win,” Sullivan said in the interview.

Prudential’s current emerging markets include Brazil, Mexico, India, Ghana and South Africa. The firm has already announced the disposal of its insurance businesses in Kenya and Indonesia.

The company’s second-quarter earnings, announced on Tuesday, beat Wall Street estimates. After-tax operating earnings per share climbed roughly 14% from a year ago, to US$4.08. Its asset management arm PGIM reported a 28% surge in operating adjusted income to US$294 million, in part from higher asset management fees.

Sullivan, who became CEO last year, is looking to shrink Prudential’s footprint and redeploy money to its capital-light businesses — asset manager PGIM, as well as its group insurance and individual life units — to boost earnings growth and shareholder value. The firm’s stock has climbed roughly 12% since Sullivan became CEO, while the Dow Jones US Life Insurance Index gained 19%.

Since taking over, Sullivan has had to respond to a regulatory probe involving employee misconduct at its Japan unit. Earlier this year, the firm voluntarily paused life insurance sales in the country until Nov 5, in a move to restore trust. This forced Prudential to walk back its earnings per share growth objective, only a year after introducing it.

Sullivan said the firm remains committed to Japan, even as its relative contribution to earnings may decline as other businesses grow.

The CEO intends to grow PGIM in part through acquisitions, with the goal of bringing the unit’s contribution to Prudential’s earnings to 25% of its adjusted operating income, compared with about 12% today. 

PGIM also aims to improve its margin and bring it to more than 30% over time. 

Sullivan intends to expand the asset manager’s offerings in the asset-backed finance and direct-lending asset classes, as the firm seeks higher yields to support competitive pricing for its retirement products.

“We’re looking to get accelerated growth in the private alt space in particular,” Sullivan said. “Those are higher fee rate-type assets, higher margin-type assets.”

The push comes after a period of unease in private credit markets, with investors in several business development companies seeking to pull cash from those funds. Alternative asset managers including Blue Owl Capital Inc, Blackstone Inc and Apollo Global Management Inc each capped redemption requests at private credit funds for retail investors earlier this year.

Sullivan said the liquidity issues tied to retail-oriented strategies do not undermine the asset class’s prospects.

“Our portfolios are very well underwritten, are performing very well,” he said. “This will be a good long-term growth area.”

Prudential also intends to enter new asset classes, including infrastructure equity and private equity. PGIM is already active in private equity secondaries.

Prudential plans to ramp up its cost-cutting initiatives, with the goal of generating US$750 million in pretax savings through 2028, compared with its previous target of US$150 million through 2027. 

These measures include offshoring part of Prudential’s support operations outside of the US, as well as reducing its management layers. The moves are expected to result in headcount cuts, chief financial officer Yanela Frias said in the interview, though the company doesn’t have a target.

The firm now expects to reduce its adjusted operating expense ratio, which stood at 9.5% in 2025, by 150 basis points — or 1.5 percentage points — over the next three years. Prudential previously said it aimed to keep that metric between 8.5% and 10.5% until 2027.

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