Ladies and gentlemen, please take your seats. Our event is about to begin. Thank you.
Meet you all the way. Rosanna, yeah. Meet you all the way.
Good afternoon, thank you for joining Prudential's 2019 Financial Strength Symposium. Please welcome Darin Arita, Head of Investor Relations.
Welcome. Welcome to our 2019 Financial Strength Symposium, welcome to Newark. We appreciate all of you coming here to our home. You're in one of our, actually our newest building here in Newark. It's less than 4 years old, and the hall that you're in is named after Kiyofumi Sakaguchi. Sakaguchi-san was a great leader here for Prudential. As many of you know, he founded our business in Japan more than 30 years ago, and that business has grown significantly, today, Japan represents close to 40% of Prudential's operating income. You'll get to meet many more of our great leaders here today at our Financial Strength Symposium. What we also hope you get out of today is get a better understanding of how we're differentiated and how we will grow. Then finally, to see the financial strength across our business. Just a few housekeeping items here.
Please note that today's presentation may include forward-looking statements. It is possible that actual results may differ materially from the predictions we make today. In addition, this presentation may include references to non-GAAP measures. A reconciliation of such measures to the comparable GAAP measures and a discussion of factors that could cause actual results to differ materially from those in the forward-looking statements are included in today's presentation, which is available on our website at investor.prudential.com. For the Q&A session, there'll be plenty of time for questions. If you could just raise your hand if you want to ask a question, wait for the microphone, and please state your name, your company, and if you could limit yourself to one question and one follow-up, just to give others a chance to participate.
If you wouldn't mind taking a moment to check your mobile devices, just make sure it's on silent mode. Finally, as a way to help you to get to know our presenters, on their name tags, you might notice there's also their hometown written on there, as well as some fun fact about them. I think it's only fair that I'll go first here. I was born in Honolulu, Hawaii. Despite having a fear of heights, about six months ago, some friends took me to a rock climbing gym, and I really liked it. That free solo stuff without the ropes, thousands of feet up in the air, I'm definitely not doing that. Without any further ado, let me introduce our first presenter. He's our Chief Financial Officer. He's from Minneapolis, Minnesota. He plays ice hockey. Did I say he's from Minnesota?
He has a dog named Doug. Please join me in welcoming Ken Tanji.
Okay. Thanks, Darin. Thanks for my introduction. As you know, this is my first chance to do this session as CFO, referencing my dog gets me off to a good start. Darin did level the score with self-disclosure there, but I thought I'd make it even fairer and reveal another fun fact about Darin, who's joined us now for about a year as Head of Investor Relations. He does have a favorite karaoke song, if anybody's interested. It's by Michael Jackson. You probably are starting to guess what that might be, but it's "I'm Bad." Maybe in the cocktail hour, if you get a time, you might want to see if he can break into a little bit of that. No, thanks for joining us here today. We really appreciate your interest in Prudential.
We hope you get a lot out of today's session. I'm going to start by providing an overview of what we're going to cover, then you're going to get much more of these topics, with each of the presentations that follow. Here are the three messages that we would like to convey today. First, that we have a very strategic mix of businesses with scale and growth potential that is not easily replicated. Second, we are accelerating the transformation of our technology process and talent to enhance our customer experience and position Prudential to accelerate growth. That's through providing financial wellness to a very broad market. We believe this will result in near-term margin expansion as well as sustainable top-line growth into the future, enhancing our earnings growth, return on equity, and free cash flow.
Overall, we are very confident in the power of our business mix, with that confidence, we are accelerating the execution of our strategy. Over the past 20 years, we've very deliberately simplified our business mix, which has resulted in a laser focus on three lines of business. That's financial wellness, PGIM, and International. Each of our businesses are at scale. We are a top 10 in all of our major U.S. financial wellness businesses, including our industry-leading positions in pension risk transfer and variable annuities. We are a top 10 global asset manager with a leading positions in both alternatives and fixed income. We're the number 1 life insurance company in Japan on several metrics, as well as having operations in emerging markets, such as Brazil, that are growing and gaining scale. Now, scale and breadth are real differentiators for us in financial wellness.
We have the scale to deliver financial wellness across the marketplace with a breadth of capabilities that span advice, investments, retirement income, and protection solutions. Hopefully, you got a sense of that in some of our experience that we had in the lobby. We believe this positions us for solid growth all across our businesses. Let go. Okay. Now, in addition to scale, our high-quality businesses cannot easily be replicated. Each of them serves a market in a very differentiated way, leading sustainable competitive advantages. First, our U.S. financial wellness business is comprised of our Workplace and Individual Solutions. No other company has the critical components at scale that we have, measured in the terms of the number of customers, the asset management capabilities, retirement income, and protection solutions, and distribution.
We're able to advise customers towards financial wellness with our Prudential Advisors, hybrid advisors, digitally or through third-party advisors, we have a solution set that enables us to successfully serve these customers and grow our business. PGIM is a very successful multi-manager model. Each of PGIM's businesses specializes in a particular asset class, has its own culture, and is compensated on their own performance. This world-class talent has led to differentiated investment results and very consistent organic growth. International also has very differentiated approach to serving customers. As an example, in Japan, we have a deep and strong focus on high-quality life planners and life consultants that serve their clients' needs. This has resulted in industry-leading customer satisfaction, productivity, and steady growth year after year.
In our other international markets, we take a very similar approach to serving our customers, with a differentiated focus on quality and service. Our businesses, again, gain competitive advantages from each other as well and collectively generate diversified sources of earnings, free cash flow, and capital benefits. Separately, each of our businesses is well-positioned and strong, but together, our businesses are even stronger. Each of our businesses has an attractive financial profile with strong profitability, meaningful free cash flow, and attractive growth prospects. I'd like to touch on these growth prospects a little bit more, you're going to hear more about that in the business presentations. First, in the U.S., we believe our unique financial wellness solutions are addressing a critical societal need, helping Americans achieve financial security that provides us the opportunity to significantly expand our addressable market.
You're going to hear a lot more about this from our panel session in a more in-depth way. We already believe we're having success in this approach, success that we believe will continue to build and gain momentum in. We believe the success has the potential to increase our growth rate in the U.S. into the mid-to-high single digits, growth will emerge on a number of dimensions. First, we believe our operating margins will increase across our businesses, resulting from the investments we're making to enhance the customer experience and build capabilities. Second, we believe revenue will increase as the competitiveness of our financial wellness platform increases utilization within the employee benefit plans by individuals. We also expect over time, revenue will increase as we deliver individual solutions directly to employees of our institutional clients and other retail customers.
Now, turning to PGIM. PGIM has generated consistent and strong investment performance, that in turn results in 16 consecutive years of positive third-party institutional net flows and a stable asset management fee rate. Consistent with their historical earnings, we expect PGIM to generate mid-to-high single-digit earnings growth rates. This, again, will be driven by our proven ability to capture asset flow and market share in areas where we have leading capabilities, also from our strong presence and position in high-growth areas such as alternatives and international markets. We expect revenue growth and margin expansion from both our past investments as well as our future strategic investments. Finally, International Insurance also has realized sustained and stable growth in earnings of about 5% per year and mid-teen ROEs and significant capital generation and free cash flow.
Now, looking ahead, we expect growth will be fueled by continued expansion of our life planners and life consultants, as well as expansion in third-party distribution. Additionally, we have gaining momentum in markets like Brazil and other high-growth markets. Over time, we expect to reap the benefits from our investments we're making in digital capabilities as well in our international markets to enhance their customer experience as well. Overall, we believe the combination of our competitive position, breadth of capabilities, strategic investments, and disciplined execution provide very attractive growth opportunities. Across Prudential, we are also accelerating the pace of our execution. The world is rapidly changing, our customers are expecting more, we believe it's imperative we move faster to, again, enhance the customer experience, transform our technology, integrate business operations, and simplify our processes.
At the center of this transformation will be the customer experience. We're focused on the customer's needs and the ability to reach more customers through fully integrated workplace and digital channels. We're investing in talent, reimagining our processes, and developing state-of-the-art technology with a goal of integrating our businesses to produce better and faster results. We expect the acceleration of our strategy to drive very tangible benefits over the next few years for our customers, but also our shareholders. By 2022, we expect this will lead to approximately $500 million in run rate margin expansion. This is not simply an expense reduction project. In fact, we've been very disciplined in the way we've managed expenses in the past, and we've always maintained our expense growth within our earnings growth. We think we can accelerate gaining efficiencies.
We expect to improve our margins by also enhancing the customer experience, reimagining end-to-end operations, leveraging technology, and investing in our talent. We'll also be incurring costs to achieve this objective. We expect between $600 million-$700 million in one-time expenses to invest in our new technologies, new training, severance, and other restructuring charges as we implement this at a very accelerated pace. With the confidence in our capabilities, strategies, and talent, we are taking steps to accelerate our progress to enhance the experiences for our customers in order to drive higher margins, earning growth, and returns. Also looking ahead, we believe the combination of our business mix and strategy will also drive a higher ROE and growth rate. As we accelerate our strategy, we are increasing our expected ROE range, which used to be 12%-13%, to now 12%-14%.
We also believe our earnings growth rate of our businesses, combined with capital management, will enable an earnings growth rate per share in the high single digits in the intermediate term. Over the longer term, there are multiple drivers of growth, which you're going to hear about from each of the presentations that follow, that we believe will increase our EPS growth rate into the low double digits. First, by accelerating our strategy in business integration. Second, by increased progress in financial wellness. Third, by continued growth in PGIM, in international. Lastly, with the ability to pursue strategic M&A. We believe the combination of our capabilities, scale, brand, talent, uniquely position us to serve customers in new and differentiated ways, which result in both higher ROE and a higher earnings growth rate.
One of the most fundamental ingredients of our success will be our purpose and our culture. Our purpose, which you see here on the slide, we make lives better by solving the financial challenges of a changing world. That very much speaks to our 140-year tradition of creating financial opportunities for individuals, families, institutions, and communities. It also highlights our ability to improve the quality of life for more people through solutions that solve their financial challenges. It underscores our determination to tackle their toughest problems and to shape our changing world for the better. Our culture is reflected by our people and our purpose moving into action. We look to continue for ways to make an impact, both around the world, but also right here in Newark, which we've called our home for a century and a half.
Today, you're in the Prudential Tower, which is one of our largest commitments to the community of Newark, and it's the cornerstone of a amazing, big difference. This is just one of the many examples of our longstanding commitment to help our the communities in which we work. Our purpose and culture will also help us recruit and retain the best talent. Mark Grier, who'll be retiring soon, has for many years said that talent and culture are the soft stuff that makes accomplishing the hard stuff that we do possible. Our talent and culture, and you've heard us describe this as low ego and high collaboration, enables us to work across businesses, and many of you join us in working across those businesses, to provide relevant and timely solutions to our clients' most pressing and complex financial needs.
While we're really optimistic about our business prospects, it's our sense of purpose and shared culture that continues to be the foundation of our success. Wrapping up here, I'd like to reiterate that we are very confident about the opportunities to serve customers and to grow our business, and we have a very strong sense of urgency to execute on our strategies. Our hope is, by the end of the day, you're going to understand what is really different about Prudential. We're delivering a comprehensive set of financial solutions to customers through financial wellness, and there's a real sense of conviction and urgency in what we're doing. Our financial performance has been strong, but we think it can get even stronger, and it's founded in a very strong sense of purpose and a unique culture. With that, thanks.
I'm going to take questions at the end after you've heard all of our business presentations. With that, I will turn it back over to Darin. Thanks.
Thank you, Ken. Our next session will have four presenters covering the U.S. financial wellness businesses. Our first presenter will be Steve Pelletier. He is our Executive Vice President, Chief Operating Officer of our U.S. businesses. Steve is from Darien, Connecticut, and he's a recently retired surfer. Someone might want to ask him about that later. Second is Andy Sullivan. He is our CEO of Workplace Solutions. Andy is from Wilmington, Delaware, and he spent two years underwater. He's actually a submarine officer. Third is Caroline Feeney. She's our CEO of Individual Solutions from Chatham, New Jersey, and she likes to do spinning. I can envision Caroline doing one of those Peloton classes there, leading that. Finally, we have Naveen Agarwal. He is our Chief Marketing Officer. Naveen is from New Delhi, India.
Naveen's an avid traveler, having been to 42 states, including Hawaii, and more than 30 countries. Please join me in welcoming Steve, Andy, Caroline, and Naveen.
Thank you, Darin. Good afternoon, everyone. Darin referred to my recent retirement from surfing. I just this morning took the sling off my right arm that I've been wearing for several days. My right arm is still hanging fairly uselessly by my side, so I can assure you that my recent retirement is permanent. I really do appreciate the opportunity to speak to you about our financial wellness effort. As Ken noted, it really plays a critical role in our business strategy going forward. We expect it to contribute meaningfully to our growth rate in the ways that Ken discussed. It's not as if this is the first time you've heard from us on this topic. Over the past couple of years in various communications, we provided examples from time to time of our progress in the financial wellness front. Today we'd like to do something different.
We'd like to give you a much fuller end-to-end perspective on our financial wellness strategy, what we believe makes it different in the marketplace, the traction that we've gained, and what we hope to ultimately accomplish from it. We're successful today if we leave you with three key messages. First, financial wellness is a particularly compelling opportunity for Prudential. I say that because of our differentiated approach, which we'll talk about in a minute, but also because of our combination of solutions, especially about income, protection, and investments, and in particular, the full continuum of education and advice that we're able to provide. Second, financial wellness serves the need of both institutional clients, corporate employers, and the individuals who work for them. In creating value for both of those groups, we create shareholder value and stakeholder value across our businesses.
The third point, financial wellness, as Ken mentioned, expands our addressable market. It complements but does not replace advisor-based distribution, both our own Prudential Advisors and the third-party distribution partners with whom we work, that part of our business remains vibrant and very important to our future. Let me start with this notion of how we're positioned for differentiation. Several years ago, we began to increase meaningfully our investment in our digital properties and in our data analytics capabilities, all by way of significantly improving the customer experience in more direct, personalized, and cost-effective ways. We did this in large measure on a pay-as-you-go basis, making those investments as the cost of doing so was reported in our regular quarterly results. As Ken mentioned, we're poised to significantly accelerate that path forward.
Furthermore, 2 years ago, as our financial wellness strategy came into sharper focus, we reorganized the U.S. businesses into the U.S. Workplace Solutions, comprising retirement and group, and the U.S. Individual Solutions comprising annuities and individual life insurance. Those two sectors along, of course, with PGIM. We feel that this structure aligns to the key customer groups that we serve, in particular, we feel that it better expresses the relationship between our various businesses, a relationship that is key to successful execution of our financial wellness strategy. We feel with great conviction that we're positioned to deliver distinctively and at scale, given a few different factors. First, 20 million people who already come to us via our group and retirement businesses.
We are hardly the only company using the term financial wellness, we are one of a very few, by that I mean just two or three significant financial wellness players who have both the group and retirement businesses at the top of the funnel. Second, the range of solutions that we're able to provide. We create some of those solutions, especially around income, retirement, and investments. In doing so, we're playing to long-established strengths for us, we're positioning ourselves to be able to realize the full economics of offering those solutions. Other solutions we source through partners, such as in the student loan debt management, in providing services to 1099 workers. Partners who are drawn to us by the size of our footprint by the 20 million individual size of the market that they can access through doing business with us.
Final point of differentiation, this continuum of education and advice that I spoke about. It certainly includes Prudential Advisors, it's now been expanded to include full digital engagement and hybrid advisory programs. This continuum enables us to access more customers in ways that are relevant to them, also scalable and practical to us. Let's cover a little further this point about how our business mix, our capabilities, and our strategy enable us to address the financial wellness needs of institutions and individuals. Employers have always been concerned about the financial wellness of their employees, that's particularly been the case over the past few years, now more than ever, as the impact of financial stress among their employee base becomes ever clearer to those employers. Employers see both the need, imperative need, and the potential for meaningful improvement in areas such as productivity, absenteeism, and delayed retirement.
We're already seeing promising signs of how a successful financial wellness program can address these needs. Andy will speak more on this in just a bit. It's probably useful at this point to state how we define financial wellness. We define it as helping people take action, I can't emphasize that point enough. Take actions that build foundational elements of financial security, especially in three areas. First, management of day-to-day finances. Even for households of moderate to higher income, growing household debt and growing expenses can be challenges. Second, achieving important longer-term financial goals that may be large ticket in nature, such as education and retirement. Third, protection against key risks like the loss of income due to the death or disability of an employee or his or her spouse.
I mention this because if you define financial wellness in this way, it really becomes clear to us that this has to be much more than some sort of cross-sell initiative or rollover program. A financial wellness program to deliver against these needs has to meet three criteria. First, financial wellness has to have something in it for everyone, regardless of their needs and resources. I state that with full emphasis on the fact that we remain a for-profit enterprise, but I also state it to state the simple and very important reality that unless that test is met, a financial wellness program is not addressing the employer need for improved outcomes across the employee base.
For many people, the answer to that question, what's in it for me, will mean simply using education and information to get their household finances in better order on a day-to-day basis before they're able to address longer-term goals. Digital engagement means that we can help in ways that are both effective for those individuals and scalable for us. Second, financial wellness has to be needs-based and completely agnostic on the type of action that an individual chooses to take. By type of action, I mean in plan, in a company-sponsored plan, or out of a company-sponsored plan. Most people will choose in plan, making better use of either their group benefit plan or their retirement plan to achieve that financial wellness progress. Some will choose individualized, personalized retail solutions.
Either way, our business mix and our capabilities means that we will be there with solutions whichever choice people take in this regard. Finally, financial wellness has to be holistic. It has to be a seamless and a personalized experience. I mention that not just because it looks cool on the screen, but because only that will drive actions. Websites with dropdown menus won't get people to where they need to be. If we're able to deliver on these elements, we'll be creating revenue growth in three discrete but related ways that spread across our businesses, and you see that illustrated here. First, growth from the value proposition for employers themselves. By this, I mean, the recent financial wellness-based wins in group and retirement. We see this emerging right now in the very near term, in fact, in the present day.
We're particularly pleased that we see financial wellness having a particularly strong impact on priority employer segments that we've targeted for growth in our workplace businesses. We're starting to see financial wellness having an emerging impact on our ability to retain that business at an employer level. Second, what we call individuals within institutions. This refers to something I just mentioned earlier, employees increasing plan contributions and optimizing their benefit plan UCITS with the benefit of financial wellness education. These first two drivers, Andy will speak to in a moment. The third is about creating enduring, personalized relationships, serving more people, that expanded addressable market, over longer periods of time, and being able to realize lifetime value of those customer relationships as we're able to serve the needs of those customers as those needs evolve over time. Naveen and Caroline will cover this driver.
Ken spoke earlier about our transformative efforts in technology, talent, and process. He spoke of the margin expansion that will be created by those efforts to enhance earnings over the next few years. In this session, we're speaking of either further earnings enhancement by virtue of market-facing, revenue-driving impact of these and other efforts. That'll enhance earnings even further over a somewhat longer timeframe, producing an additional earnings stream that by 2025 will be measured in the hundreds of millions of dollars and will be rapidly growing. With that, I'll hand over to Andy.
Thanks, Steve. Good afternoon, everyone. We view the workplace as a very good environment to help individuals solve their most pressing and prominent needs. As a matter of fact, sometimes we refer to the workplace as the front line of impacting financial wellness. It is why we feel so strongly about the strategic advantage of our workplace businesses and of the 20 million individuals we serve. Why do we feel so strongly about this? First and foremost, because employees trust their employers. Just to share some quick data from the 2019 Edelman Trust Barometer, which is one of the most trusted research sources. Trust in the employer outranks trust in any other institution across the globe.
When you look at trust of how employees trust their employers, they trust them far more than they trust the government, than they trust media, than they trust business in general, and even the trust they place in nonprofits. This is a key reason that when we deploy our tools and our capabilities in the workplace, we see far greater levels of engagement. Just as a simple example, when we deploy emails in the workplace, we see a 10% higher open rate than when we deploy them to pure individual prospects. Add on top of that fact that employers believe in and have a vested interest in driving and helping the financial wellness of their employees. We are absolutely seeing our employer customers lean into the value proposition that we're creating, it makes great sense to us. It's why we chose the strategy that we chose.
It's why we're so focused on bringing financial wellness to life in the workplace. We have been delivering a very clear value prop around financial wellness, it is resonating with our customers. As Steve mentioned, this financial wellness value prop provides a number of benefits for both institutions and individuals within those institutions. For the institutions that we serve, it helps them understand and experience the benefits of having financially well employees. That leads to, they see an impact on their bottom line, and every single step of the way as we work together with our financial wellness programs and these institutions, they can monitor and measure the progress. There are a few aspects that have been really important and have been part of our success and our secret sauce. First, Steve mentioned this, we have created capabilities that clearly can help all employees.
This is very important. This cannot be about just serving the senior management or the top individuals in a corporation. One of the most important groups that we're serving is the middle market affluent segment in these organizations. These are individuals that have unmet needs. They have the discretionary income and assets to meet those needs, and traditional retail distribution channels are not properly serving these individuals. Caroline's going to speak more to that when she comes up. The second secret to our success, employers that we work with are rightfully protective of their employees. That's why a needs-based approach is so very important. The rapid adoption that we've seen in our capabilities across our employer base is evidence to us that our needs-based approach is working.
Just as an example, in less than 18 months' time, we've had 3,500 employers adopt our digital financial wellness platform, allowing us to help and serve 8 million individuals in new and different ways. That represents about 40% of our employer customer base. Finally, most importantly, employers expect results from their financial wellness programs. They want to see results in the areas that Steve mentioned. They want to see lower absenteeism. They want to see lower healthcare costs, higher productivity. They want to have employees that can retire on time, and they want these programs to help them with talent retention. We are showing our clients clear evidence that these programs work with their populations. As that evidence deepens and it grows, our differentiation deepens and the value that we derive goes up.
Let me go a little deeper on the capabilities that we've delivered. Hopefully when you came in, you had an opportunity to see some of these capabilities. Just to reiterate what Steve said, this is about helping individuals go from education to action, because only if individuals act do they actually become financially well. We first help people by improving their understanding of personal finance topics, budgeting, debt management, credit counseling. Then we help them to more clearly understand their personal financial needs. That education and that understanding leads them to take better advantage of their employer benefit plans, inclusive of their voluntary offerings. Finally, we are providing access to a broad set of individual services and solutions. Those individual services and solutions complement and solve the remaining financial needs of the individuals.
These are things like one-on-one financial coaching, emergency savings, and student loan assistance. Our student loan assistance offering was adopted by over 400 employers in the first few months of rolling it out. It's important as we talk about this, when we more broadly and deeply serve the needs of the individual in the workplace, that strengthens and reinforces the employer value proposition, and it brings to life that first value bucket that Steve mentioned. Our needs-based approach has resulted in us prioritizing those solutions that are most critical to the middle market and mass affluent segment. A lot of these solutions we already have great depth in, income, investments, and protection. The depth that we have there, we see as differentiating versus narrower competitive offerings in the marketplace.
As we continue to lean in, we are learning about more employee needs, and we're broadening our solution set. As Steve mentioned, in that endeavor, we often are partnering with others, deciding when and where it makes sense to do so. We're about two years in to this focus on financial wellness, and we absolutely like what we're seeing. The evidence we have been clear signs of success and are reinforcing our belief that this is and will accelerate our growth rate over time. Those signs are emerging in the three buckets that Steve mentioned. I'll go more deeply now on two of those buckets, the first two. The first is what we call institutional value. If you listen into our earnings calls, you've heard us talk about the enhanced level of group insurance and retirement wins that we're experiencing. Obviously, we like that very much.
Within the U.S. Workplace Solutions, we have defined target market segments where we expect to grow at 2x plus the rate of market growth. For group insurance, this is the premier segment, so the segment that has employers that have between 100 and 5,000 employees, and the association segment. For our retirement business, this is the non-jumbo corporate plan segment, so plans that have assets between $50 million and $500 million. Outside of those targets, though, we're also highly encouraged by what we're seeing in areas that we've traditionally been less dominant. Just as a quick example, our full-service retirement business achieved its two largest client wins ever in the last 12 months, and we are seeing more $1 billion-plus asset flow from an RFP perspective than we've ever seen before in that business. We also expect to see better client persistency across both group insurance and retirement.
As you might imagine, the more capabilities and services that an employer adopts, we move from being a vendor to being a strategic partner. As that relationship deepens and broadens, we expect that will show up and be reflected in pricing levels that we achieve during contract renewal. The second value bucket is what we refer to as individuals within institutions. This is all about participations and flows from our current employee customers. This emerges directly from the access that we have from that digital financial wellness platform that I referenced. We expect to more than double the individuals on that platform from 8 million today to 12 million by the end of the year, to 20 million by 2025. That will lead to better participation and contribution from retirement plan participants and better voluntary participation rates from our group insurance customers.
Based on evidence that we already have, we expect that those areas will see an improvement of 10% over our current levels of performance. That leads directly to revenue growth and growth on the bottom line. In summary, we are finding the workplace as a very good environment to deliver financial wellness solutions. We're seeing the metrics and value begin to emerge as we expected and on the timeline that we had expected. We always knew that institutional value would show up first, and this is strengthening our core business and beginning to accelerate our growth rates. With that, I'm going to hand it off to Caroline. Caroline will go more deeply about how her businesses are deepening the value proposition. She'll also cover that third and final value bucket, individuals. Caroline?
Thanks, Andy. Good afternoon, everyone. Today, we serve about 5 million individual customers through our advisory channels and roughly about 20. Excuse me, which includes just over 1 million annuity customers and the balance are individual life insurance customers. Virtually all of those customers come to us through financial advisors. Just over 20% come through Prudential Advisors, and the balance comes through third-party clients. We know that overall, a third of Americans' financial needs are also met through traditional advisors. That's important to us, also is why our commitment to doing business this way through face-to-face advice remains a key part of our overall strategy. We do believe, however, that it is absolutely critical that we meet customers in the way in which they want to be met, on their own terms, and in the way in which they want to engage with us.
Whether that be through online, whether that be through a hybrid platform where we can serve clients on the phone, or whether we're serving clients through virtual video conferencing, or whether that be through a more traditional face-to-face engagement. Prudential is uniquely positioned to provide advice across this entire continuum because we do have direct digital capabilities and because we do have a fully tested, fully functioning hybrid center, and of course, we have our own Prudential Advisors. This ability for us to combine high touch and high tech enables us to serve much larger segments of Americans than the industry to date has been able to reach through the traditional advisory model. As you can see from the slide behind me, we're reaching about two-thirds of the affluent market through traditional advisors.
However, through the advice continuum that I mentioned earlier and our high touch, high tech approach, we are going to be able to reach a much broader group of individuals and help them with much needed solutions and much needed advice in the other two segments that you see here behind me. These we see as underserved segments of the population. Today, we're only reaching 48% and 20% of them respectively. This is where we believe that our digital solutions, as well as our hybrid-based platform, are going to play critical roles and going to be a very important part of the success story here. It's also why we believe that the workplace is a key way in which we are going to be able to expand our reach to be able to tap into these underserved markets.
If we couple the needs-based advice continuum with our strategic decisions to focus on businesses that offer guaranteed income, that offer investments, that offer protection solutions, we're able to offer a very broad array of needs-based solutions and advice. We have evidence that this is already working through a program that we call Prudential Pathways. Pathways is our worksite financial education program. It's delivered today through financial advisors, but it's now also available digitally as well. Pathways actually has been one of the foundational elements of our entire financial wellness offering. It's a highly differentiated offering for the employer. It's delivered in a non-solicitation environment, delivered to employers and employees at no additional charge.
This program has actually grown to the point now where we have provided financial wellness education seminars to over 600 institutional clients, and we've had over 50,000 individuals complete the program to date. Pathways has been very much welcomed by employers and by the individuals, as evidenced by our very detailed survey results that we've been tracking since the inception of the program. For example, 96% of seminar attendees would recommend the Pathways program to a coworker or to a friend, which obviously helps us organically promote the value of these educational seminars. For those seminar attendees, 96% of them plan to update or create a will, 97% of them plan to maximize their employee benefits, and 98% of them plan to create a household budget or change and update beneficiary forms.
I think we all know that planning to do something and actually doing something are two very different things. Even more importantly, we have many different examples where attendees then subsequently do take the action, and they do take the steps to improve their financial wellness, including increasing their participation in sponsored retirement plans, increasing their utilization of group benefits as well. In fact, for attendees for our retirement Pathways seminars, they actually increase their 401 contribution an average of 2.5 percentage points, which based on our contribution average rate for the business, is about a 35% increase in their withholding. Remember that our advisors are actually going in there as teacher first, with the goal of providing financial education for those individuals.
Yet for all of the attendees, 25% of those individuals will ask for a one-on-one follow-up appointment for that advisor who led the seminar, and 20% of those ultimately are purchasing one or more financial solutions with us. Pathways is also a powerful retention tool, and it also serves as a qualified lead source mechanism for our advisors. Because it gives us access to a new group of retail customers, we've also been very successful in attracting a significant number of experienced financial professionals to Prudential. Pathways is working well, we are seeing tangible results, we also recognize that we're not going to be able to reach 20 million individuals through 3,000 advisors. What we did is we took our financial wellness seminar education material, we optimized it for online learning.
That gave us additional access to over 3,000 additional institutional clients and the 8,000 additional individuals that Andy mentioned previously, all through our digital financial wellness platform. Our experience from Pathways, which is essentially a proof of concept for our full financial wellness strategy, in addition to driving value on its own accord, also has really helped us in designing this entire experience in a highly engaging and a highly relevant way. As Andy mentioned, these individual relationships are built over a longer period of time as we continue to be able to provide value in the education and content that is relevant to people over many different life events and needs. However, once these relationships are in fact established, they do tend to last longer. That drives greater overall lifetime value for Prudential, and of course, for our customers as well.
Andy also shared some numbers with you that related to the scope of access that we have to individuals for both educational as well as retail solutions. Based on that access, we expect to add approximately 1 million new retail customers by the year 2025. That is modest relative to the large base of individuals that we have in the workplace, but it is quite significant and sizable when we think about it relative to the current base of retail customers that we have today, which is 5 million within the U.S. Individual Solutions. To cover how we're going to be doing that and some of our early results, I'm going to turn it over to Naveen.
Thanks, Caroline. When I think about our journey, the 20 million customers, I think that's kind of the forefront of acquiring customers at scale and doing it through our workplace chassis. When I travel to West Coast and talk to lots of startups for partnerships and so on, one thing everybody talks about is, well, how can we engage with these customers? How can we partner with you? It's an exciting thing for those companies. The good news is at Prudential, we're doing exactly that, right? How do you take these 20 million customers and engage with them? How do we do that? That's where the power of customer experience comes in. Last year, there was a Forrester survey, and Forrester looked at companies like ourselves, P&C insurance companies, and benchmarked all of us.
We were number 2 in that survey. Came in number 2. In practically every category that we looked at, we were number 1 except for 1, which was buying life insurance online. At the time, we didn't have that capability. Today, not only do we have that, if you go to Google and say, "Buy life insurance online," please do not do that right now, but if you go to Google later on and try that, buy life insurance online, you will see us showing up as the first place. Okay? There's only 1 number 1 on Google, and that's the power of our customer experience. How do you build this customer experience? To do that, you need talent. The first thing we've done is, in Raleigh, we have hired about 125 people now who sit in Sunnyvale, really close to where Google and Facebook are.
Also in Minneapolis, we talked about this hybrid advisory service. We built a service where you can actually talk to our advisors in a full fiduciary context as well as they can refer you to, again, phone and video-based advisors who can sell you broker products as well. Our life insurance and annuity solutions. To do all this, what we are trying to do is look at the power of Prudential. We have great solutions. We have great distributions. We can manufacture things. We have customers. If we can add a personalized customer experience into that creates tremendous value and expands the pie of customers we can serve. That's what you hear my colleagues talk about, that that's the conviction we have around our financial wellness strategy.
Link, which you may see outside, actually, we are showing it, and if you have seen it, I'm sure you liked what you've seen, but we'll urge you to see that. Link is a highly interactive, human-centric online tool whereby you can go and create your financial plan. What it does is it allows, in a very simple human-centric way, for our customers to think about their life, think about their needs. That connects you to financial wellness solutions. It connects you to solutions across income, across investments, across protection, and over time, we're also bringing in our partnered solutions into it. This is the idea of engaging at scale. By the way, we have partnered with PGIM, and David will talk to us very soon around QMA to create our investment solutions.
Again, yet another way our manufacturing capabilities are creating value now in broader context of retail solutions as well. Right. If you think about what we are trying to do here is build capabilities in Newark, in California, in Prudential to bring the scale to our company. If you let me go to the economic outcomes this is going to create. While all this is great, how does this translate into economic outcomes? Here are three simple charts that will show you that. I think both Andy and Caroline talked about the 8 million customers that we already have on the workplace side, where we can engage them in educational solutions. We expect that number to grow to 12 million by end of the year, and we think that number will go to 20 million by 2025. Right. That's the growth path we are on.
If you think about the next stage of that customer, how can we engage this customer in solutions? Earlier this year in March, we started small. We said, "Let's take the 200,000 customers and start working with them to understand how do they go through this journey." How do they go through Link? That customer base, now we feel really good about it. Why? The proof points we are seeing is 50% of customers who register on Link are actually completing their plan all the way. Think about that. This is a five to seven-minute process. On the internet, to keep somebody on your website for five to seven minutes is a really hard thing. The fact that they're completing all the way to the plan shows you the power of the customer experience.
Also what we are seeing is, for customers who are coming on the education side of things, we are seeing 40% of our customers are engaging on content and tools. Right. These are significant numbers because if you think about the online world, if you can get to 10%, 12% customers to engage, that's quite significant. Right. The second bucket is about taking that 200,000 customers, and we believe by end of the year, we'll be at 2.5 million. Relative to the 8 million customers, that gives you why we feel confident about that. Right. If you think about 2025, we believe that number will grow to about 12 million. Right. In terms of solutions, again, if you take the solutions side of things, I want to urge this point, which I think Steve talked about, which is personalization.
It's really important if we think about personalization, we think about what will it take. If we can take 2% of our customers annually and convert them into solutions, okay, just think about percentages here. These are not large numbers. If we can convert 2% of our customers every year annually, that'll get us to our financial aspirations in terms of that third bucket, the retail customer engagement bucket, and giving them solutions bucket. Right. Personalization plays a huge part in this. Why I'm saying that is if you can put yourself in the need of the customer, again, not thinking cross-sell, but more we understand our customers when they come to our websites, when they engage with our tools, our content, understanding them, personalizing them. I talked to you about Google being number one.
On our website, if you come to a tool called Get a Quote, which means the customer already knows what their needs are. Right. You know your need because if you're asking for a life insurance quote, at that point of time, you establish the fact that you really want to buy this thing. We are seeing 20% conversion. Okay. I just want to put you that in the context of our aspirations of if we can bring 2% of our customers through the entire funnel convert annually, we'll meet our financial aspirations. I mean, the whole idea here is with the financial wellness is how do we serve that customer who in the past has not been served and leverage technology, customer experience, a full advice continuum to expand the pie of our business. With that, thank you. Pass it to Steve.
Okay. Just to close up and to wrap up, and then we'll take a few questions. Again, our intent was to provide this full end-to-end perspective on financial wellness. Those critical takeaways. First of all, financial wellness is a critical market need for individuals and the companies that employ them. It requires holistic and compelling experiences that drive outcomes by helping people take action. Second, our differentiated mix of capabilities and solutions, education and advice, and the continuum of ways that we're able to engage individuals, and offer them the information they need to take action, all of that positions us as a compelling financial wellness choice for institutions and individuals.
Third, delivering on this strategy will lead to three drivers of revenue growth over the near, intermediate, and longer term, each of which will contribute meaningfully to our ability to generate earnings and expand our addressable market over time. With that, Darin, you're going to lead us in a few questions?
That's right. All right, questions for Steve, Andy, Caroline, Naveen? Here.
Thank you for your excellent presentations. Joel Gross from ICMA Retirement Corporation. I'm wondering if you have any concern about some of the big giant tech companies, Microsoft, Amazon, Google, Facebook, may be trying to enter this field and would they possibly hamper your ability to achieve your high growth targets?
Let me take that one. I think, in terms of the ecosystems that exist, large customer-based ecosystems, they'll always be a threat to any incumbent in any business today. I think saying that we don't think about that, it would not be fair. If you step back, if you think about the kind of solutions that these companies are going after, what you would see is the first entries are happening in highly transactional payment kind of markets. I'm highly connected to, like, for example, Google and Facebook and their efforts. Their entire thinking is based on what I generally call fast money, which is transactions that can happen really quickly, and they exist in the path of, like, an e-commerce purchase or a search purchase, right? If you think about deeper solutions, can they eventually come into those spaces? Yes.
I think our capability to engage our customers who already understand the deep trust and solutions that we create is not that easy. Second thing I would say is the framework around regulations and compliance that live in businesses like ours, I do not know how many of them want to just step into that and have the scrutiny and disclosures of what we do. I think there are certain areas where they would enter. Again, I think the approach they would take would not necessarily be targeting us at the first go.
I'd mention one other point, which is we are very mindful of whether those companies are exactly in our space or not. They do compete with us in one really critical way, which is a company like Amazon, for example, basically sets the rules for client expectations, individual expectations, as it relates to the customer experience. In our investment in and design of our experience, we're very mindful of the standards that we have to meet. That bar continues to be raised, and we address that head-on in the way we create those properties and those experiences.
Okay, thank you. One follow-up question. What is the target size of the institutions that you're going after with this program?
The offering is for all the segments that we're in, but where we're looking for the accelerated growth rate is really in what we call Premier in our group-insured space. Employers between 100 and 5,000 and our non-jumbos in the retirement plan. This offering is inclusive of jumbos and national accounts as well.
Thank you.
Other questions? In there. In the middle.
Hi, thank you. That was excellent. Really fascinating. Lisa Granat, Bank of America. When you think about your growth and how fast it is in these segments, and you talk about the institutional side, how quickly can you implement that for those institutional investors? Because that speed seems to be to your advantage, and I'm curious if there's any concerns you have about not being able to achieve it or implement it for any of those clients.
There are some, what I would call some natural dynamics that we face when we're leaning into this, and we do see differences between businesses, but also between segments. The one that I mentioned is we are gaining rapid speed in that premier segment, in that middle-market segment, the non-jumbo. Because of those institutions tend to buy bundled things anyway. They tend to want to do a lot of different things with us as an organization, as opposed to sort of go out and have different providers for each thing. As well as in that national account jumbo space, so think of the biggest corporations in America, their decision-making is naturally slower. We're making faster progress in the middle market, and speed does matter in this, to establish this as a deep capability.
Any other questions? All right.
Okay.
Well, thank you.
Thank you very much.
Thank you.
Thank you, Steve, Andy, Caroline, Naveen. Our next presenter is our President and CEO of PGIM, our global investment management business. He's from Swarthmore, Pennsylvania. He's an avid tennis player and a tennis fan. Now with the French Open behind us, I'm wondering whom he's going to be rooting for Wimbledon. Please join me in welcoming David Hunt.
Good afternoon to everybody. Thank you very much for being here and spending your afternoon with us. I do want to start with an important disclaimer, however. There is a rumor that the PGIM global strategy has been carefully woven around the globe to start in Australia, move to Paris, then to London, and then back here to the U.S. I just want to assure you there's no truth to that at all. I can't help it if the French clients want to see me in May. It does happen. You have to be client-responsive in this business. Anyway, thank you for being here. I want to talk a little bit, just about PGIM and our performance over the last couple of years, just to ground you in some of the facts of the business.
Secondly, I want to talk about our strategic investments, and how we're building for the future and the progress we've made around that. Last, talk about how we see our growth rates. I want to address very directly some of the headwinds that asset management faces, and why we believe we're well-positioned to take on some of those headwinds. First, just the starting spot. PGIM is the 10th largest asset manager in the world, which I think is reasonably well-known, at least here in the U.S., and I'll come back to brand in a moment. I do think what is less well-known is some of the other capabilities that we have. We are actually the third-largest alternatives manager in the world. That is primarily our very large real estate business, which is also the third-largest real estate investment manager in the world.
It's also our private credit business, which we've seen very significant growth in. It's also surprising to me that people aren't as aware at how large we are in Japan. Clearly, we have a very successful insurance business, which you're going to hear more about a little bit later today. We do manage the general account assets there, but we also manage money for a good majority of the pension funds and financial institutions there, so that we're now actually the third-largest foreign asset manager in Japan. People think of us often in terms of kind of traditional stocks and bonds, and indeed, that is true. We are much more than that, and we actually do manage money right across the public and private spectrum. Here's the split by asset class.
You can see that we're about half public fixed income, about a quarter public equities. A good 30% is alternatives when you think about our economics from a fee basis. Indeed, as we look at the industry, there are parts of the industry that are growing faster and slower. About half of our fees are coming from parts of the industry, in particular the alternatives area, which we project will grow significantly faster than some of the public markets. Just a little bit on our client base. About half of our clients are very large third-party institutions. You should think about our client base as really the largest, most sophisticated clients in the world, from sovereign wealth funds to the large pension funds around the world, endowments and foundations. About a third of our fees come from our retail business, and that's retail broadly defined.
It includes our mutual fund business, but also separately managed accounts and other ways that we serve the retail world. About 18% of our fees come from the management of the general account assets, which occurs mostly in the public fixed income markets and in our private credit businesses, as well as commercial mortgages. That's the rough split of clients. It is, in fact, a global business. It does indeed have offices just where you'd like it if you're a tennis fan. We do manage the business on a global basis. We have 37 offices in 15 countries around the world. We have about 30% of our assets are managed for institutions that are outside the U.S., and about 25% of our employees are outside the U.S. It really is very much of an integrated global business.
Every business has its own virtuous cycle, and this is ours. I'm very mindful that these also run quickly in reverse if you're not careful. For ours, it starts with investment performance. The markets that we're in are the most sophisticated investment markets of the world, and if we aren't delivering investment performance, then we are really not there to last. Our objective starts with investment performance. I think our model is very aligned on that. Because we manage so many of the general account assets, when Tim Schmidt calls me up and says, "How's it going?" He means, "How's my investment performance?
Because you manage a lot of my money." It's very important to see that the overall incentive of the organization here is for us to drive to investment performance, not necessarily size or margin, and I'm going to come back to that. Our objective is investment performance, and that is very much what we have been able to deliver. I've given you here the gross of fees numbers for three years, five years, and 10 years. This is for all of our assets that have a benchmark. You can see that we really do deliver strong investment returns. On a relative basis, if you were to look at other players in the industry, you would see that these are consistently higher than other asset managers. That's the top of the virtuous cycle.
That leads to flows if we do it well, and good client flows leads to increased earnings, which we then invest back in the business. I'll show you a little bit more of how that economic cycle works. As I say, this can go in reverse, too, and we're very aware of it, and that has indeed happened. If you look around the industry, there is a number of examples right now of people who lost their way on investment performance. As they have struggled with that, they've had real outflows. That in turn has real hit their earnings, and the whole thing quickly does become a bit of a downward spiral. It's fragile, but certainly over the last few years, we've been building this into a very nice virtuous cycle. Here's the third-party flows.
Ken mentioned this a moment ago, 16 consecutive years of positive institutional net flows. We can't find another large asset manager that's had this consistency of flows. We're very proud of this, and we think that it's a good testament to the fact that we've had strong investment performance. This really only speaks to the public businesses that we have. Obviously, a large part of our businesses are in the private area, which I mentioned before. Here's our two private lending businesses. We're always a little amused that the asset management industry overall is still sort of discovering the wonderful world of lending. Given our insurance heritage, we've been doing this obviously for many years. We have one of the largest commercial mortgage businesses and one of the largest private credit businesses.
Here you can see that last year was an absolute record in terms of our lending originations. The last six years have been really, really strong, right across the board with both commercial mortgage and our private credit businesses. The third part of this virtuous cycle then is earnings. If we're bringing in the money, that drives our earnings. We are very fortunate that the asset management, because we're kind of simple people, the economic results are pretty simple. You take AUM, you multiply by your fee yield, you multiply by your margin, there you go, you have your earnings. When you ply that forward here, our pre-tax AOI has basically doubled since 2010. We've gone from $500 million to $1 billion.
Our adjusted operating return on equity has more than doubled, and that's been because we've been a lot more efficient with our use of capital, particularly in our real estate business. Our operating margin has grown by 200 basis points on this. Because I know a lot of people here in the room believe in the follow the cash approach to financial statements, the important thing about the asset management business is that this really is cash. It comes in in terms of fee cash. It goes back out dividend up to the parent in cash. More than 90% of the money that you see coming in in AOI is coming up in cash dividends every quarter. I want to talk a little bit about the investments we've made in the business, and exactly how we've thought about operating leverage in that context.
If you go back to 2010, you can see that our margin was 29%. Over these eight years, we've basically driven operating leverage in the business of 360 basis points. That operating leverage has largely come from the fact that we have had a lot of inflows into strategies that we already manage. Scale is an important part of the asset management business, and there's no better scale than raising more money into a fund that you already manage or a strategy you already manage. The marginal margin on that extra dollar that comes in is very high, and we've had really good success in being able to do that. That's driven operating leverage. We've taken 170 of those basis points and we've reinvested it back in the business, in the next section I'll tell you where that's gone.
That's the chunk that we've said we need in order for us to continue to grow and to meet our clients' needs. That's the investments that need to go back in for the future. We've passed the 200 basis points here back to shareholders, in the form of an increased margin. Let me turn to the 170 basis points. I'm sure a lot of you are out there, saying, "That's fine, where did you spend all of that money?" Let me go through each of the spots where we have been putting money to work. This is our strategy house. We really have spent a lot of time on the actual words here. Our vision at the top is to be widely regarded as a premier active global investment manager across a broad range of public and private asset classes.
You'll note that it does not say the largest. You'll note that it is very clear that we are an active manager, and it's very clear about the scope of asset classes that we want to be in. We've essentially defined four pillars of investment for the future. The first is to broaden and globalize our products. The second is to modernize the multi-manager model that we have, which is essentially to build common elements across them. Third is to invest in our brand and reputation, and last is the investment in our people, which is our single most important asset bar none. In terms of the different elements, here are some of the highlights from that investment. First of all, the globalization, as I mentioned a moment ago, has really moved the needle, I think, more quickly than we had thought it would.
We are now 29% of our assets from non-U.S. clients, up from 11 just eight years ago. The net flows have come far more from outside the United States, and our growth rates have been much higher, particularly in Japan and in Europe, than they have been in the U.S. Secondly, this modernization of the multi-manager effectively has taken the form of trying to make sure that we have the full set of vehicles for clients to buy our strategies from. We really do believe that clients want to be able to choose a strategy, and then they want to be able to buy it in a They may want it in a UCITS, they may want it in an ETF, they may want it in a CIT.
We need to be able to provide that for where it makes sense based on the tax domicile of the client, or on the particular usage that they're going to have, for example, a retirement account. We want to only build those once. We build that for all of the PGIM businesses, and everybody shares the infrastructure that sits underneath the vehicles. Reputation and brand has been a really important focus for us. Many of you will know that the PGIM brand was launched about three and a half years ago now. It was really launched because we needed a single name for the business around the world. As we were building out the global expansion, we really needed to have a single common nomenclature, and we couldn't use Prudential in many parts of the world because of the Prudential PLC in London.
We played with a lot of, as you can imagine, letters, numbers, and everything else, and we came up with PGIM because it rolls off the tongue. We've now been driving that out pretty hard across the U.S. I will say that for a brand that's only three and a half years old, last year in the institutional survey, we were ranked 12th in terms of unaided recognition. We feel like we have made pretty good progress, but we have a long way to go on this outside the U.S. When I spend time on the continent, we're still not very well known. In parts of Asia, we still don't have the brand recognition that we need. You will see us continuing to invest in both paid and earned media around the brand. Last is selective bolt-on acquisitions.
It's really important for us to be able to offer a broad range of investment products for our clients. We have found that for the most part, we've been able to do that organically. Occasionally we'll hire one or two people, combine them with some internal people, and that's been our preferred way of growing. I would say that will continue to be our preferred way of growing. We have scale in our businesses. We don't need to do a large-scale merger. Where we do find opportunities, and a really interesting high-quality manager that offers something that our clients would like, we will do bolt-on acquisitions. The best example of that was our purchase of a risk premia firm that started out basically as a managed futures business in London, called Wadhwani.
They are a really first-class investment firm, but which needed help with distribution. We were able to come to an agreement where we would actually buy all of the equity of the business, but we're doing it very much in keeping as our multi-manager. They'll be part of the QMA family, but they will remain an independent investment entity, and we believe that we'll be able to drive a lot of growth for them through our distribution force. That's the, I think, good archetype of the kind of M&A that you can imagine from us. Not the large-scale variety, but certainly where we find targeted capabilities. Let me turn then to the future. I think that the investment business is going through maybe more change than many of us have seen over the last two decades.
A lot of this is really, I would say, for the positive. It certainly is causing, I would say, a larger change between those who are winning and those who are losing in the business than we've seen before. I would point to a couple of major trends, and then I'll come back to some of the winning business models. The first thing that's happening is that our very large clients are saying to us and to others, "We want to do more business with fewer players." Many large pension funds have found that they had 150 or even 200 external managers, and they kind of looking back on that, realized that they had created the world's most expensive index fund. They really had created something that wasn't generating true alpha. They are dramatically shrinking the number of managers that they use.
We're seeing the same thing on the retail side. Our major partners in retail are saying, "We want to do more business with you, but it's going to be many fewer players." The bar, if you want to be one of those strategic partners, is going way up. That's one thing that is really squeezing some parts of the industry. The move to passive and the fact that now in equities and increasingly in fixed income, you can buy very cheap beta, is changing the dynamic of the industry. If you aren't performing, if you're an active manager that is either just hugging the benchmark or you're not generating real alpha, you're not going to hang around very long. Personally, I think that's a good thing. I think investors have benefited from that, we're not fighting it. We're rather working with it.
It has meant that if you are a public equity-only manager and you basically do retail in the U.S., you're having a really tough time at the moment. Here's what we're seeing in the industry. We're seeing the very large, read BlackRock here, folks who are offering cheap index who are doing really well. They have found a real niche. They have found that people will pay for a lot more intricate ways of cutting up cheap beta, but that is really generating flows. There's nothing wrong with the good old-fashioned specialized asset manager. You do infrastructure equity in Asia, and you have a really good track record, you're doing great. There's nothing wrong with the position that you're in.
If you are in the U.S. and you have a really good specialized debt capability, I don't think there's any reason why you can't carry on with those positioning. I would say the other group that's winning is people who are global and at scale, and who are active managers who are delivering real alpha across both public and private businesses. That's where I would put us. That is a pretty tall order. You need to be at scale, you need to be an active manager that's delivering those returns, and you do need to be, I think, across both public and private asset classes. You've got an awful lot of folks down here who are generally in the public markets who are seeing real outflows, whose asset investment performance is not as strong as it needs to be.
We're going to see both increased consolidation, and you'll see a number of firms here that simply will gradually shrink as the industry consolidates. It's this bifurcation of increasingly winners and losers that is the dynamic of the industry today, and that's really different from 10 years ago. Where basically the rising tide floated all boats, and if you did reasonably well and the markets did reasonably well, everybody was fine. That's just no longer true today. As I lay all of that out, I think it's very reasonable for you to say, "Well, why do you think you can grow at a high single-digit growth rate with some of these headwinds that are in here?" I want to lay out why we do believe that that will be true through a cycle.
First of all, we think that there is increased operating leverage in our business because we already do have scale. We aren't one of these players that's kind of stuck in the middle and needs to do either a large acquisition or some other move to play. We already have that to drive our operating leverage. Last, we have four major areas that we think are going to grow much more rapidly than the average asset management category. Let me go through each one of them. The first one is alternatives. As I go around the world and I visit with CIOs, the one common theme that I hear is that we're investing less in public equities and we're investing more in private and alternative capabilities. We are a top three player in alternatives. We're a top three player in real estate.
We're a top three player in private credit. We think that we're well-positioned to capture the money that's moving in to these alternatives capabilities. We think that will be an important driver of our success going forward. Secondly is retail. I mentioned before that some of the changes that were happening in retail with the consolidation of the number of managers. The other thing that is happening is that retail now really looks like an institutional market. When we go in and we have a due diligence meeting with one of the large wire houses, or we talk to the very large RIAs, it feels like Texas teachers. It is a highly sophisticated group who are looking at our risk systems, at our compliance risk management. In all respects, it's an institutional game.
That actually really plays to our advantage because all of our strategies were first incubated and sold in the institutional market and then moved to retail. We've got the answers to the attribution analysis, to the risk management piece. Whereas people who started in the retail business are increasingly struggling as the business moves to a more institutional basis. We do think that this will be a very good and growing business for us. We've been one of the top fastest-growing mutual fund complexes in the U.S. for the last five years, and we think that that trend will continue. The third area is international markets. I mentioned that as an important priority for us, we're still small in quite a number of these. I would point out Japan as a good example. We've made terrific progress.
We have a really good brand at this point, and I think we're increasingly well-known. To be honest, there's a lot more that could be done there. Our market share is still small. I'd point out Europe in the same way. We are growing, our usage platform is still only $4 billion. We can absolutely grow that quite considerably from where we are. There's room to run there. The last thing I wanted to point out is just technology. We've been investing significantly in technology, and indeed, in conjunction with the big push overall at Prudential, we'll be investing more. We've been doing it in two areas. One I would call offensive, and the other I would say is almost more defensive.
On the offensive side, on the left-hand side of this, we do believe that through the use of alternative data sets and data science, we will be able to gain an advantage in the investing world. At the moment, we found that in natural language processing, we found that to some extent, in our use of satellite imagery, but we will find more and more. I would say that we also think this is the most overhyped area that there is right now in asset management. I feel like if I just put AI on the name of a fund, I'd raise $1 billion more. It's actually really hard. It's really hard to get consistent signals. We do believe over time that it will work. Secondly, we are using, obviously, technology more and more to automate.
We do use bots in a lot of our automated systems. We have done quite a lot of the use of our affiliate in Ireland, where a lot of our IT and our operations are done, and we continue to find that moving operations and processes to what are lower costs, but in some ways, more importantly, are higher quality centers, is really important. We have 270 people in Letterkenny, Ireland, that do a lot of this for us. We think we're actually ahead of where many of our competitors are in terms of being thoughtful about where work gets done. With that, just to sum up, it's a little bit of a performance of the business over the last couple of years. The four pillars of where we're investing, that 170 basis points.
Last, a bit of the conviction that we have on why we do believe that we'll grow a good deal faster than the industry. With that, let me pause. I'd love to take questions, thoughts. Darin, do you want to?
Sure
facilitate?
Questions for David? Right here.
Thanks. Ilya Ivushkin from GAC. I really appreciate your presentation, very helpful. I'd be curious to know where you stand on the shift from active to passive assets. If you want to use an inning analogy or where we are in that evolution of the industry and how you're adapting to that?
Let me take the equity markets first. Although I do think that cheap beta is starting to move into some other markets. In the U.S., we've just gone through roughly 40% of the U.S. public equity markets are now managed in a passive format. We actually think that that has room to run. That will grow. The international markets are well behind that, and we think that passive will continue to grow in international markets. We generally think that this has been a good thing for investors. We think it's reduced their cost and that their ability to buy cheap beta has enabled them, in some ways, to focus more fundamentally on alpha drivers. That's how we focused our equity businesses. We have two equity businesses, one of them under the brand name of Jennison, which focuses on high-conviction equity strategies.
If you think of core satellite, we're the satellite, if you will. We're the global equities, we're the healthcare, we're an industry vertical like utilities or financials, which can be done with a passive core. The second one is quant. We do believe that increasingly quantitative strategies, which are priced a bit higher than index, but generate a consistent low tracking error, but higher Sharpe ratio, will actually outperform. We think both of those strategies will work well in conjunction with the continued growth of passive. We're not trying to fight it. We actually think that it's generally good for our clients, and it will work well in conjunction with the strategies that we use.
Other questions? If not, well, thank you very much, David.
Thank you very much.
We're going to take a quick break here, call it 10 minutes. Why don't we come back at about 3:50 P.M.? Thank you.
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Ladies and gentlemen, please make your way back to [Dr. Sanbo Sakaguchi Hall. Our event will begin momentarily. Thank you.
Take my hand. You know I'm running for love. Take my hand. You know I'm running for love. Take my hand. I'm running for love.
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Ladies and gentlemen, please make your way back to Dr. Sanbo Sakaguchi Hall. Our event will begin momentarily. Thank you.
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Ladies and gentlemen, please be seated. Our event will begin momentarily.
Welcome back. Okay, our next presenter is our Executive Vice President. He's our Chief Operating Officer of our International Businesses. He is born in St. Louis, Missouri. I just recently learned that pronunciation. He's very active in high-performing charter schools here in New York, which is a fantastic story. Please join me in welcoming Scott Sleyster.
Thank you, Darin. I don't know what it means when he sent me to the stage with the Talking Heads playing. We'll let that go. Good afternoon. I know quite a few of you from my background, originally in retirement and then as CIO, so I look forward to working with you in this role. I took the role of the head of our International Businesses last December when Charlie ascended to the office of Chairman and CEO.
I actually think there's some symbolic messaging or a signal there in that now that international is over 40% of Prudential's earnings, to have a leader of the company come into that role without having sort of the international experience, I think would be the exception versus the rule in the future, and it just speaks to the importance of these activities, and I feel really fortunate to have this opportunity. Let me jump in with the three messages that I really want to make today. First and foremost, the core of this business continues to be our life planner operations, and that continues to be driven by Japan, but we also have big life planner operations in Korea, Brazil, and Argentina, Taiwan, other places. Second, we are confident in our ability to continue to deliver mid-digit earnings growth out of this business.
That may not sound heroic, maybe compared to certain other businesses, but when you're operating with a big operation in Japan and in developed markets, some people question that, and I think our message in response on that's quite strong, so I want to go through that. Finally, my predecessors had been making investments in emerging markets for a long time, and some of those are really starting to come to fruition. In particular, we're happy with what we're seeing in Brazil, but we planted seeds in other markets, and I want to speak to that because I think that's a bit of a new story for you. Okay. PII's success has always been driven by the LP model, and that, in fact, is true today. Why do we feel good about that? Why do we feel that that is solid?
If you look over the long history of our international business, you'll see that we have been able to continue to grow life planners by 2%-3% a year. We can't grow them faster than that because I think if you understand our model, it's homegrown. We carefully recruit people. We don't poach from other companies because we want to train our own. The pace at which you can bring those in in our model, given that some LPs ultimately become sales managers and then agency managers, you can't really grow it much faster than 3%. 2%-3% is what we're doing. Given that we're in growing markets, like Brazil, for example, you continue to see the life planner grow. We sell highly persistent business. I'll show some stats later in the discussion.
With that persistency, obviously the block of business grows. When you combine strong, persistent business with 2%-3% LP growth, it generates those returns. Our developed market businesses are all at scale. We're very big in Japan. In fact, we're number 2 in sales. We're actually number 2 in individual life in Brazil. Our big businesses, in fact, are quite big. They're operating at scale, and they produce mid-digit margins and mid-digit ROEs. Very attractive businesses. Finally, because of that maturity, we're not consuming a lot of that capital to grow anymore in those markets. They're kicking off actually very high percentages of cash flow. We are redeploying some of that in growth markets, so I'd say it doesn't all go to Ken. But when you look at our really developed markets businesses, we're over 80% cash generation.
We're redeploying, that allows us to stay in the 60-plus range very consistently. Let me do two maps because when you do international, you always have to do maps. I'll do a few map comments, I'll really drill down into the points. This is where we started 30 years ago. Our business really was built in Japan. We also started in Korea within two years of that and not much further behind on Taiwan. We've been in the developed market part of the world for a large time. It's large, it's wealthy, but it is mature. It continues to perform well for us. Over 90% of our earnings, call it 90%, comes out of Japan. Korea continues to be our second largest business, although it is starting to get challenged.
On the emerging market side, you can see that we're in a lot of the right markets that you read about, that many of you visited, that your own businesses are operating in. You know why we like those markets, right? These are the faster-growing countries around the world. It's where the future populations are going to be. It's where people are emerging from middle class to more affluent classes and out of lower classes into the middle class. Compared to the developed markets where you have some demographic headwinds and a lot of competition and other challenges, in these markets, you actually have demographic tailwinds working for you. Our ownership strategies vary by country. There are legal regulations that require you to have a partner in a number of countries that we're in. In those where we can be wholly owned, we're wholly owned.
The really big businesses for us, or the really big markets that we're in are Brazil, China, India, and Indonesia. We've also been in Mexico for a number of years. Let me speak to Japan right away because it's often on people's mind. Why will you be able to continue to perform in Japan? Why do we think we can do that when there are such challenging demographics? Well, first of all, the quality of our needs-based selling life planner model is truly distinct. We've built it out over 30 years. We do it extremely carefully. You'll hire a person at a time. You bring them in. The whole flow, every one of our agency managers used to be a sales manager, you can't be a sales manager until you've been a life planner, it just builds out like that.
The experience you have in needs-based selling among this force is really hard to replicate. It's very, very expensive to replicate. I'm going to show you some stats shortly that'll really demonstrate how strong it is. Second, since we built that foundation, we've then added independent agency and banc assurance channels on that, we've, in many cases, seconded former life planners into those systems, that has really strengthened our offering to our partners. Charlie would often say that when you look at the life planner model, there's three things you have to do. You have to understand needs-based selling really, really well. You have to go prospect for clients. You have to close a sale. Out of those three things, one is really, really hard, and I think you know which one it is. Prospecting is hard.
By the time someone's entered life planner, we've trained them, worked with them, and if they're struggling, they obviously have learned needs-based selling, and they've obviously learned how to close a sale. What we've done is taken some struggling life planners and we've consistently put them into these other channels, and then you end up with a really high quality, experienced person in there, and they tend to be stronger than what our competitors offer in those channels. Finally, Japan remains a very wealthy country. The amount of money that is still in the banks in Japan is extremely large. The returns on that aren't very high. We are increasingly finding those customers willing to look at dollar products and to look at income products instead of just insurance products.
In fact, right now, about 40% of our sales in Japan are actually retirement and income oriented products, and that was a lot less a few years ago. Arguably, I would say we're riding that age wave to some extent. Okay. Here's the proof points I was referring to. I'm going to start on the top half of the page. The first one is we're the first company in the history of J.D. Power work in Japan to ever win this triple crown in the insurance space. What does that mean? It means they survey people on these factors after they have an insurance experience. When they buy a product, when they check annual servicing, and when they have a claim. We are actually number one and have been for two years straight in all three of those categories.
The process of buying an insurance policy, the service you get on it, and even dealing with a claim. That is the whole life cycle of an insurance product, purchasing, servicing, claim. We're number one in all of those categories. I guess a secondary proof point is a lot of people like to look at net promoter scores. We're number one in Japan, and that means we have customers not only are satisfied, but they're loyal and they're advocates for Prudential. That's very powerful. Over on the right side, I'll talk a bit about the productivity measures that are there. Our life planners sell about a little over six policies per month. In the life consultant channel We're over four policies per month. These are much, much higher than the industry averages, if you take a look.
The proof point for that is that if you look at the Million Dollar Round Table organization in Japan, we actually make up 35% of the MDRT, and yet we only represent 9% of new business premium. We're dramatically out-punching our weight. We've been doing that for 22 years. We're reasonably confident that we can continue to do this, and that we've got a system that's sustainable. Down on the bottom half of the page, I think is sort of the proof point. If you were concerned, if you will, about the industry and you see a couple of red arrows there, it's not inappropriate to be concerned about it being a challenging market. You can see that our system has dramatically outperformed in Japan, the overall industry. We continue to take share from others.
We have extremely loyal customers, and we believe that is quite sustainable and very hard to replicate. All right. Let me do a case study on Brazil. Why Brazil? It's the 9th-largest economy in the world, and it's the 5th-largest country by population in the world. There's over 210 million people there. It's actually the largest insurance sector in all of Central and Latin America, and it has a relatively low level of insurance penetration. This is an example of a market of where you'd want to be. The chart up there points out that in addition to having a lot of people, there's that increasing affluence that I was talking about. Since 2005, it's moved from 49% to 64%, a growing affluent middle class. Here's a little roadmap of our history. In Brazil, we actually started a Life Planner model in 2002.
Think of that as being almost 20 years after we started in Japan, or high teens. We took a whole 10 years building that out, getting the foundation set before we did anything else. In 2013, we entered the third-party distribution segment of the market. A lot of insurance in Brazil is actually sold in the group market. We entered that market in 2017, and within a year and a half of doing the transaction with Itaú, they've now invited us in to be the sole provider of digital services in their affluent bank channel. It's called Personnalité. Just to give you a sense of that exclusive group of folks, it's about 1.6 million customers. On average, they have 10 times more assets than the average Brazilian. It's a very affluent group.
That's an example of how we're continuing to invest in digital transformation. The point I guess I would like to make here is that obviously this is a good market to be in, but the way we're approaching it is similar to what we did in Japan. We are just doing it on a much accelerated pace. Fundamentally, that's the strategy that I think we need to follow in the other high potential markets that we're in. We're actually now the largest non-bank insurer in Brazil. We're number 2 in non-bank sales, and we're number 6 overall. What does that look like in numbers? I think the numbers kind of speak for themselves. If you look at the bottom, the foundation was the LP count because we're not saturated, if you will. We're not even in all the states.
We've got a fair amount of room to grow there. We've been growing at 13%. Sales over the last five years have grown at 27%. Because the business is persistent, our actual in-force face amount has grown at 28%. That is a very attractive profile for a business, I think it has a long way to run. I'd like to tell you we have five more of these, but we don't. Brazil is our best story. We have been in these other markets for a fair amount of time, I think we're definitely operating differently than we had in the past, where it was kind of LP only and LP forever. Now it's LP or maybe even another form of tied agency if the market isn't ready for Life Planner, which requires quite a bit of affluence.
We're also moving faster in third-party distribution and digital. Let me kind of start to bring things home with kind of a big picture of how we're thinking about these emerging markets. I hope the map kind of convinced you we are in the right places, I think. There are some other big places we're not, but where we don't think we need to be. Russia has a lot of people, but that's a market we're not going in, and we're not pushing into Pakistan. We think out of the big markets, we're really in the right places and the ones we want to be. We're focused on what I just ran through. We'll start with tied agency or LP if it fits, but we'll quickly build out.
We think we can bring faster product innovation to some of these markets by leveraging across not only Prudential international insurance, but by also leveraging everything that goes on here in the U.S. We really think that's a competitive advantage. We're moving as fast as we can with digital and data, and we are willing to use M&A when it makes sense for us to really bolt onto a foundation. Generally, we've been reluctant to just enter a market through M&A. We've kind of wanted to get in there, get the right partner, and know what we're doing before we do that. We do have to work with partners, and we actually think it's sensible to work with partners in these markets. We often don't know the regulator. We don't know the lay of the land.
Even if it weren't required, sometimes it's extremely helpful, and in many cases it's required. Let me mention a few of our partners. I'll start with CT Corp. CT is our partner in Indonesia. They're a real estate conglomerate that owns neighborhoods, but they're also the operator of the biggest grocery store chain. They have a number of retail outlets, and they're actually the franchise runner of CNN and CNBC. They also control a lot of the news distribution there. Their ecosystem touches over 100 million people, and we think they're a great partner, and we're going to have to move fast, actually digitally, to keep up with them. We partnered with a company called Habitat in Chile on the pension market, and I would say they're a very high-quality partner, top tier player.
We partnered with Fosun Group in China, and we've been there seven years at this point. Fosun's a very successful, widespread operator conglomerate manager in China. Finally, we did enter Africa a couple of years ago. We partnered with Enterprise Group, which is actually the largest insurance life company in Ghana, but they're also number 2 in general insurance. They're a pension provider, and they even provide some health business. In those smaller markets, you often have to be in more lines of business to make it meaningful. The last piece I have here is some of the digital things we're doing. Some of you are probably familiar with Vitality, a South African company that's health-oriented and started with wearables.
They started in South Africa, they rolled out in Asia. Now they're coming into Latin America. We signed up the first partnership and have exclusivity with them. We're actually working on a pilot right now in Argentina. Finally, Climber is the first insurance-only kind of web portal being offered in Latin America. We were an early mover there. I hope that gives you a sense for what we're doing. Look, if you're looking at the numbers in total, thinking about Japan and the developed markets is still the heart of the story. I wanted you to know these other things are going on. If you looked back, I think it's to 2005, only 1% of our earnings actually came from developing markets. In fact, I think I'm being generous. I think it was a negative number.
In 2018, that was 5%. We expect that number to be growing to 8%-10%, say by 2022 or so. By the way, that's pretty hard to do when 90% of your business is coming out of a vibrant business and a healthy business like Japan that's growing at 5%. That's some of the momentum we see. I think that would be a good stopping point. I'd be happy to take any questions.
Great. Questions for Scott?
Yes.
What are your thoughts on growth in China?
China is the number two economy in the world now. There's a lot of cases that can be made that it'll be number one, and there continues to be a great deal of people moving sort of up the economic chain. It's not all easy in China. There are some gigantic competitors with tons and tons of agents. There's two companies with over 1 million agents in China. In addition to that, I guess I would say there's also some really aggressive activities with some providers, and there's some really strong digital competitors. Everybody would argue that Ping An is the most successful company in China. I think you find a lot of people that would argue they're the most successful company right now in the world. It's a very competitive place.
I think you have to figure out how to come to market in a differentiated way, and that's really what we've been trying to do. It is a market that we want to be in. They also have demographic challenges. I know if you look, I think it's out to 2050, the average age in Japan is going to be something like 53 or something like that. China's only two years behind because of what they had with the one-child policy. There are challenges in China, but we view it as a market you really need to be in it when it's the second largest economy in the world.
Other questions? Right here.
Thank you for the excellent presentation, Scott. Joel Gross from ICMA Retirement Corp. Some thoughts from you on the so-called trade wars and the tariff situations. How is that impacting Prudential's international business?
The good news is, when you look at our block of business, there's so much in force that's growing. It's not impacting, if you will, right now, our life planner growth. For the most part, I think our international businesses are a great diversifier. Some of you may remember during the great financial crisis, I certainly remember that in my former role. You remember that?
Yes.
During that period, POJ actually had a record year, right in the heart of the financial crisis. We do get this diversification benefit. That being said, I don't want to diminish it. There are customers in Japan who are wondering, they're buying a lot of dollar products and they find volatility or a lot of noise coming out of the U.S. that's hard for some people to interpret. I can tell you when we go to China, that's often all we get asked about. I was at a board meeting in China two, three weeks ago with our former Vice Chairman, Mark Grier, who's on the board. A very senior executive flew over from Hong Kong to meet with us, to meet with Mark, and specifically ask him that question. We saw him at the airport on the way out.
A very senior person flies from Hong Kong because they want to talk to an American that they think is plugged into the D.C. system to understand what's going on. It is important. People around the world are noticing. I think it is, in fact, scary if we don't get it right. It is a threat. I think it's a bigger threat to the overall economy than it is to our international business.
A follow-up question. I noticed that you have that subsidiary now in Ghana. Is Africa possibly a target market over the long term?
I might add an edge. I might say the very long term. I don't think anything is going to happen there fast. My predecessor, Charlie, said, "Let's start planting some seeds there, but let's do it different." They are not ready for a life planner model. We have brand challenges in certain places because of Pru UK. We don't own the brand in Africa. What they decided to do was try and pick a company in East Africa and a company in West Africa that we could use that we think have strong brands, the kind of people we want to work with, and then might be able to be a hub and spoke in those regions. We made our first move in West Africa with Ghana. Could be before year-end, we'll have a second announcement in East Africa.
I would say you're really looking out 10 years or more there.
Thank you.
Any other questions?
Okay.
All right.
Thank you.
Thank you, Scott. All right. Our next presenter is our Chief Investment Officer. He is from Moline, Illinois, and he likes to play golf, tennis, and he does paddleboarding, and he claims to be good at none of them. Please join me in welcoming Timothy Schmidt.
Thank you. Thank you. It's great to be here today. I was telling my wife that Darin had asked for these little fun facts about us in terms of something interesting about us. I don't have a lot of interesting stuff. I said, I told them three things that I like to do that I'm not very good at. She looked at me and she says, "How'd you winnow the list down to only three?" We all have our support frameworks at home, right? Anyway, one of the things not on her mind was investment portfolio construction and management, so you can rest easy. It's my pleasure to be here to talk about the investment portfolio that Prudential has and a little bit more about our disciplined approach to asset liability management.
Hopefully, when I finish my presentation, you'll get a sense that we have a broadly diversified, high quality, well-matched portfolio. In constructing and managing this portfolio, the general account gets distinctive competitive advantages from our affiliation with PGIM, David Hunt's organization that you heard about earlier, both in terms of asset origination and their investment market expertise and credit expertise. Finally, these two factors, plus our disciplined ALM framework overall, I think ensures that we have a portfolio that's well-constructed to weather the next financial downturn at the end of this cycle, and there will be an end to this cycle whenever that happens. We've talked about our approach to portfolio management before with you at these types of sessions.
Because I think it's so critical to understanding and having an appreciation for the quality of the portfolio and our disciplined approach, I just want to spend a second reviewing it. Our approach is really based on four key principles you see here, the first is a fundamental understanding of the liabilities. There are portfolio managers in my organization that actually are aligned by the business that they support, both in the U.S. and international. There are people in those teams that spend a fair amount of time working with our business partners, often co-locating with them to some extent, to make sure we understand the nature of the liabilities that we're selling so they can construct portfolios most effectively to hedge those liabilities. They're also involved in product design and pricing to various degrees, and that's really important.
Second, we have a very disciplined approach to interest rate risk management. I'll show you a slide on this a little bit later, but it's this matching of assets to liabilities across the curve that really helps mitigate the risk we have in our portfolio to shocks or changes in interest rates over time. Third, we believe in broad diversification. I'll show you a number of slides that speaks to that, not only across asset classes but within asset classes, within credit names, and when I get to the credit portfolio. Finally, we rely on rigorous security selection and underwriting. For that, we rely on PGIM to do the security underwriting and the security selection at an individual name basis because they're the most expert in that area. Here you see our total PFI portfolio, excluding the closed block, broken down by NAIC rating.
I'm sorry, in terms of asset sectors. As you can see, over a third of the portfolio, in fact, 36% of the portfolio is in government security. These are U.S. Treasuries, high-quality municipal bonds, and a fairly sizable JGB portfolio, which we have to back the Japan businesses you just heard about. Investment grade and corporates, both public and private, constitute 31% of the portfolio. The mortgage loan portfolio is 12%. Structured products is about 5% of the portfolio. Our below investment grade exposure is only 4% of the portfolio. Equity and alts is a relatively small but important component of the portfolio at 3%. The slice here you see that says 7%, that's other assets. Those are assets that support experience-rated contract liabilities. The investment performance is largely passed through to the policy holders.
What I'd like to do now is to drill down on some of these asset sectors and give you a sense for the diversification and the quality. This slide shows the portfolio of fixed maturities broken down by NAIC quality rating for both Prudential as well as our peer group. As you can see, 77% of the portfolio is rated NAIC I, which is essentially A or better, compared to a peer average of 63%. NAIC II, BBB, we're at 18%. The peer average is 31%. Below investment grade on fixed maturities, we're at 5%, and I would argue that ours is skewed towards the higher quality, which you'll see in a second, compared to peer average of about 6% in below investment grade or NAIC 3 through 6.
Let me dig a little deeper in terms of the credit quality of the $147 billion of corporate credit portfolio that we have. First of all, as you can see here, 50% of the corporate credit portfolio is A-rated or better. 39% is BBB. Together we have almost 90% of our credit portfolio is investment grade. About 30% of the overall credit portfolio, the lighter blue you see on this slide, is constituted of private placements. These are traditional private placements originated by PGIM's private capital group with full financial covenants, structural protections, and other types of protections as a lender to these companies. Over time, what we've seen in those assets through cycles is that our loss, less recovery, our experience is much better than what we see in public corporates. Almost an entire rating category higher in terms of the performance.
PGIM's direct origination capabilities is really a distinct competitive advantage for us in generating those private placements and improving the overall credit quality of the portfolio. Looking at our BBB exposure, almost a half of our BBB exposure are privates. If you go a little deeper in the BBB exposure, which I broke out here, you can see that the composition within BBB, we are heavily skewed towards BBB+. When you look at the BBB flat and the BBB minus, more than half, more than 50%, almost 60% at least, is in private placements. As you can see, we have a relatively small, about a 10% allocation to below investment grade. A few slides earlier, I showed you how diversified we are across asset classes.
What I wanted to do now is to dive a little deeper into the diversification that we have within our credit portfolio. This slide shows the cumulative exposure in our credit portfolio of our top 25 holdings. As you can see, it totals 12.3%. Our top 25 added up 12.3% of the credit portfolio, which makes us slightly more diversified than our peer average in this group, significantly more diversified than some in our peer group. If you took the average amount of our top 25 exposures in dollars, the average of that would be just 20 basis points of our overall portfolio. It's broadly diversified. When you add in the fact that we have private placements in this credit portfolio, those are essentially names that generally speaking aren't tapping the public markets.
That credit mix even further diversifies our credit exposure across companies. Finally, all of our credit exposures, but in particular our largest exposures, are continuously monitored and managed by the credit expertise that we have in PGIM. This is our structured products portfolio. It's a $22 billion portfolio, represents about 5% of our invested assets. Again, you can see it's a broadly diversified portfolio across CMBS, RMBS, CLOs, and other asset-backed securities, more traditional credit card type receivables. What we can also notice here is that 98% of the portfolio is AA or AAA across all of structured product. I'd like to draw your attention to our CLO portfolio. That's been getting a lot of commentary in business press and a lot of news headlines. Even the Fed has started to talk a little bit about CLOs. We have about a $7.3 billion portfolio in CLOs.
All of the investments in CLOs for us are AAA rated. I'd like to go a little deeper in terms of our CLO portfolio. Why do I stress that 100% of our portfolio of CLOs is AAA? What you see on the slide behind me is the typical structure of a CLO. If you look at the AAA tranche section of the bar chart, what you can see is that there's a 37% loss absorbency cushion beneath the AAA. 37% loss absorbency before you start losing any money in the AAA. If you drop down to the AA tranche, that cushion drops to 25%. When you go down to the A tranche, that cushion is only 19%. That cushion is about half at the A of what it is at the AAA tranche.
Frankly, given where we are in the credit cycle and the things that you hear about going on in the loan market these days, we don't think that from a relative value perspective, the double and the single A tranches of CLOs are attractive for our portfolio. We don't have any of those in our portfolio. That's not enough, though. We actually stochastically stress test our CLO portfolio through 1,000 scenarios. Then we do 1 in 10 stresses to make sure we understand what we'll experience during credit losses in a normal cyclical downturn, and we're very comfortable with what we would expect to see in a normal downturn.
Perhaps the most important point I would make around our CLO exposure is that our PGIM public fixed income credit analysts have fundamental credit opinions, meaning they know the credits either because they're a public bond issuer or because they buy loans in accounts managed for third parties that want a loan portfolio, not the general account. They have fundamental credit opinions on over 80% of the individual credits in those CLO structures. We're very comfortable with our exposure to CLOs. Turning to our $50 billion commercial mortgage loan portfolio. This is another asset sector that we're very fond of. It's a great diversifier from corporate credit. It offers attractive yields as well. Like private placements for PGIM for the general account, PGIM's ability to generate, really on a global basis, commercial mortgages for the general account is another distinct competitive advantage for us.
As you can see versus the ACLI average, this bar chart I have behind me, you can see that we are heavily skewed towards the more defensive sectors in commercial mortgage loan properties, overweighted in industrial properties, which are, think, heavy into distribution facilities, which are very secure, very safe types of investments, overweighted in multifamily, underweighted in office and retail. There's two other statistics here that are not on the slide that I want to give you. First of all, our average loan-to-value on this portfolio is 56%. So a lot of equity cushion, and those are on values conservatively valued by the PGIM team, which are often significantly below recent transaction values associated with those properties. Second, our debt service coverage ratio on this portfolio is about 2.4 times in total.
We regularly monitor this portfolio, if you look at kind of a matrix of debt service coverage and LTV, loan-to-values, the hot zone that we would want to monitor are the mortgage portfolio, where let's say our debt service coverage is below 1.2 times and loan-to-values might be at 80% or a little bit higher. That would be the area you'd be most concerned about. We have about $175 million of mortgage loans in that hot zone on a $50 billion mortgage portfolio. It's a very healthy portfolio. Finally, our equity and alts portfolio is about a $12 billion portfolio. As I said before, it's relatively small, but it's a very important part of our portfolio. You can see it's broadly diversified.
While these are by definition riskier assets, I would say that our portfolio, especially in private equity and hedge funds, is on the more conservative side or the less risky side, I probably should say, of the alternative space. As you know, the short-term returns on these types of assets can be pretty volatile from period to period. If you look at the lower right side, what I show you here is that our cumulative return on this portfolio for the last six years has far exceeded what we had assumed in our pricing models, what our expected returns are or were. Now I'd like to spend just a few minutes on the impact that this low rate environment is having on the investment portfolio. I've got three slides on this topic, and I'd like to use them to illustrate three points with you.
First, as you see here in our domestic portfolio as well as in our U.S. dollar Japan businesses, our acquisition yields are essentially right on top of our portfolio yields. For our yen products in Japan, you can see the acquisition yields are still a little bit below our portfolio yields. The good news here is that there's not a lot of further downward pressure on investment yields in the overall portfolio, given we've been at these low rate levels now for a significant amount of time. My second point is illustrated here, frankly, I think this is really more relevant regarding interest rate risk and the impact of low rates. I talked earlier about our discipline around interest rate risk management as one of our four key disciplines.
What you see here is the distribution, our key rate duration, our interest rate exposure across 10 key rate duration buckets. We manage the general account portfolio is actually a composition of well over 200 portfolios. We manage the interest rate exposure across all of those liabilities, all of those portfolios, as tightly as we possibly can. That's what you see here. That insulates us for the vast majority of the cash flows associated with our liabilities. That insulates us from short-term shocks or changes in interest rates over time. The interest rate risk management that we show you here and how we manage this portfolio is actually also embedded in the product pricing discipline that we have when we design, sell, and price products.
Obviously we have some liabilities that have recurring cash flows that are difficult to hedge when you don't have the cash yet. We also have liabilities that have cash flows that go beyond the investable horizon, 30 years in the U.S. or 40 years in Japan. I want to use this slide to illustrate my third point. I talked earlier about our alternatives portfolio, which is relatively small but important. That's what you see on this slide. Our alternatives portfolio does generate volatile returns over relatively short time periods, but over the long term, our expectation is that that portfolio will generate returns far in excess of what you could get in fixed income markets.
That becomes essentially a natural hedge for what interest rates may be in the future when you need to invest those cash flows that are either coming in over time or are beyond the investable horizon. I mentioned the significant benefits the general account gets from our affiliation with PGIM, specifically in the area of asset origination, private placements, commercial mortgage loans, real estate, which is part of our alternatives portfolio, and also from the public market credit expertise we get from PGIM for our public fixed income. Really the combination of our disciplined ALM and risk management processes with PGIM's origination capabilities in these sectors as well as their credit and public market expertise really is what leads to a strong general account portfolio that meets or exceeds our product pricing targets. Let me see if I can quantify this a little bit for you.
While we don't manage the general account on a total rate of return basis, we do measure the total rate of return of our portfolio versus a benchmark for a lot of reasons, which I won't go into today. The benchmark is basically public corporate bonds. Public investment-grade corporate bonds is our benchmark. What you see on this slide is standard performance attribution across duration, allocation, and security selection. In 2018, which is what's shown here, the portfolio outperformed by a little over 200 basis points versus an all-public corporate bond benchmark. Only 15 basis points came from duration. That's good because I just told you how tightly matched we are versus our duration targets. Obviously, there's going to be a little curve movement, so there's a little bit that can sneak in there.
Allocation is really the allocation to these high-value asset categories like private placements and commercial mortgages. That contributed 64 basis points. Over 120 basis points came from security selection. That's the fundamental security underwriting credit analysis I was talking about earlier that we get from PGIM. That contributed over 120 basis points last year. Over a longer timeframe, 2016 to 2018, security selection contributed 96 basis points. Finally, as you know, there's a fair amount of uncertainty in the markets these days about the credit cycle. When will it end? Is it ending now? Is it going to end in three minutes? Who knows? We try to construct a portfolio that's going to weather credit cycles. That doesn't mean we just sit idly by, buy this stuff, and let it happen.
We actually have been de-risking the portfolio, I'd say, over the last 18 months to kind of better position it for whenever that cycle turns down, and we've been taking a number of actions, which I list here. We have been shifting to some more defensive sectors within the asset sector, so away from retail into non-cyclicals, things like that. We continue to emphasize PGIM's capabilities in generating private placements and commercial mortgage loans. We've had slight upshifts in credit quality within the various asset classes. We've shortened our spread duration exposure in corporate credit, and we continuously rotate out of credits that we're concerned about from a downgrade perspective or credit migration over time. We think the portfolio is well-positioned for whenever this next downturn occurs, and as this slide shows, our portfolio is actually better positioned now than it was heading into the 2008 period.
This compares our portfolio currently with where we were in 2007. As you can see, we have significantly more government securities. A lot of that has come from our growth in Japan and JGBs, but the overall credit quality of the portfolio with regard to government securities is much higher. NAIC-1, so A or better corporates, we have more. NAIC-2, the triple B exposure is actually lower. Structured product is down dramatically from where it was back in 2007, where we had had a lot of problems in structured product in that crisis, and some of that is our CLO portfolio, which I just talked to you about. One of the good things that's come out of PGIM's growth is their ability to produce commercial mortgage loans and private placements.
Despite what you see here is significant growth in the portfolio, $160 billion to a little over $410 billion over this time period, our exposure to mortgage loans and private placements has remained basically the same. My intent today was to hopefully give you a little bit of an insight into the quality and the diversification embedded in the portfolio, to give you a better sense for the disciplined ALM processes and structures we have, and to help you understand some of the key benefits the general account gets from PGIM's expertise and asset origination capabilities. When we put it all together, we feel that the portfolio is well-constructed for where we are in the credit cycle, well-matched against our liabilities, and we're confident we're in a good position regardless of when the credit cycle turns. With that, I'll turn it back to Darin.
We'll take questions, I guess, as a group a little bit later. Thank you.
Thank you, Tim. Our next presenter is our treasurer. She's from Delhi, India. She is an early riser and also is very particular about her morning tea. I should look to her for some tips in getting my day started. Please join me in welcoming Yanela Frias .
Darin is right about that. I am very particular about my morning tea. I actually have two to three cups of it. That's just the fact. The fun part or the quirky part, which is an endless source of amusement, really, for my family, is I dip my teabag 126 times for each cup to get that perfect taste. When I first actually shared that, my fun fact, with the team, you should have seen the look of horror on their face. They looked at me and they said, "You know this is the Financial Strength Symposium. We don't want them to think that we have a crazy treasurer." They all calmed down when I said, "No, it's for the taste.
I don't do it because I just like dipping it 126 times." With that, what I will say is hopefully you've had, over the course of the day, a really good sense of the strength of the franchise. You've heard a lot about our plans to provide financial wellness services to the broad market. You've heard that we're accelerating our efforts, which are really going to result in margin expansion, a higher growth rate in earnings, as well as higher returns. Our PGIM and our international insurance businesses drive high-quality outcomes for our clients, and they do deliver consistent growth. I'm going to highlight today for you the distinguishing characteristics of our combined financial profile, which I summarize in four key messages. We've delivered strong financial performance over time. We have robust risk management, diversified sources of free cash flow, and consistent capital deployment.
We've been demonstrating financial strength and flexibility. We'll start by looking at our track record of delivering strong performance over time. As you see here, earnings per share have grown 8% per year over the last five years. Book value per share has grown at 10% per year as well. We've had strong returns on equity. Last year it was 12.7%. It's right in the middle of the 12%-14%, which is our new ROE target. These results over time really reflect the combination of a very focused strategy, high-quality businesses, and disciplined execution, which together you'll see have contributed to both growth and very attractive profitability.
Looking ahead, really, we believe that the power of our collective capabilities and scale on the one hand, combined with the acceleration that we've talked about of the transformation of our customer experience as well as our operational excellence, is going to result in expanded margins, the higher growth rate, as well as a lift in our ROE. When we look back, our financial performance has been strong. Looking ahead, we believe it's going to be even stronger. What you see on this slide is our sources of earnings, it's really the combination of our investment, our retirement income, and our protection solutions businesses that provide us with a diversified and balanced sources of earnings. On the left, you see our mix of earnings by type. Fee-based businesses represent our largest type of earnings at 43%. This is primarily from PGIM.
It's from our retirement business and annuities. Insurance underwriting is 39% of our earnings. This is primarily from our U.S. financial wellness and international insurance operations. Net spread represents about 18% of our earnings, this is primarily from our retirement business. On the right, you see our earnings by business. What you're going to see is basically a balance of earnings between U.S. financial wellness and international insurance. PGIM is actually a meaningful contributor to our earnings at 12%. Our mix of businesses really combines to provide earnings from diverse sources, both by type of earnings as well as by business segment. Our businesses also provide the opportunity for us to grow across the diverse market segments that they serve with a balanced risk profile.
On this slide, we take a moment to highlight the financial profile of our annuities business, which we find very attractive and we think is very different from any other variable annuity businesses. Just as a reminder, over 80% of our variable annuities have an auto-rebalancing feature that substantially reduces risk from market declines, and that protects both our clients as well as Prudential. It was this unique feature that really enabled us to continue to offer retirement income solutions at a time where many people retreated from the market, and in particular over 2010, 2011, and 2012. Since that time, the S&P has actually doubled in value. Since the end of 2012, it's actually delivered a compound annual growth rate of about 11%, which exceeded our expectations.
Again, that has been good for our clients, but it has also been very good for the profitability of this business. Three years ago, we actually restructured our variable annuity business in a way that is very highly aligned with the proposed new regulatory and capital standards that will take effect next year. Our business continues to be robustly capitalized with risk management that is highly effective. When you put it all together, you see very strong profitability with a return on assets of about 120 basis points and an ROE of 18%-19%. It's this high profitability, combined with strong risk management and capital, that generates the robust and stable free cash flows that are being released at about 85% of after-tax adjusted operating income.
Again, I'll sort of leave this slide by saying our variable annuity business is distinctly different, and it has a combination of both high profitability and regular free cash flow, which we find very attractive. Our balance sheet strength, supported by robust risk management, really allows us to actually manage the impact of market and other events that can emerge either suddenly or over a prolonged period of time. Importantly, we can do this without disrupting our strategic objectives as well as our business mix while continuing to meet our customer obligations. Our risk management framework incorporates worst in history stresses, and you can see on this slide some of the dimensions. It's across equities, interest rates, credit spreads, as well as currencies. We view potential impact of these stresses through economic, statutory, as well as GAAP lenses.
We have maintained, as you can tell, significant balance sheet resources and contingent capital and liquidity sources to address the outcomes of these stress scenarios. I'm going to take a sidestep with this slide for a few minutes and just talk about topics that have been on the minds of our stakeholders. Over the years, we've made substantial progress in addressing areas that have led to GAAP net income differing from operating earnings. On the left, you see that during the period from 2012-2014, our GAAP net income was lower than our adjusted operating income. The primary reasons for this were structural, non-economic outcomes, accounting outcomes, I should say, we took actions to fix these. The steps that we have taken have been very effective. Over the last four years, GAAP net income has been in line with our after-tax adjusted operating income.
We know that we need to continue to refine the connection between our operating results and our financial outcomes. If you do actually, though, zoom out and look at financial results over a longer horizon, the connection between our fundamental progress and financial outcomes are much clearer. In the short term, quarter to quarter, we do have a few items that tend to vary. These items tend to fall into 3 categories. The first category is seasonal items. We have items that occur at certain times in the year, either due to the nature of the business or due to the timing of accounting recognition. The second is variable investment income. We have short-term returns that will vary from period to period, but as you heard Tim show you in the results, over the long term, we have exceeded our expectations and what we had priced for.
In the third area that can lead to quarter-to-quarter volatility is update to insurance reserves for both market and actuarial assumptions. This is where even small changes to long-term reserves can cause our earnings to vary in any given period. Over the short term, we will have items that will vary quarter-to-quarter. With that, we are in the second quarter. I'll take a minute to just mention a few items and remind you. First is that we have seasonality of premiums in our international insurance business. Premiums tend to be the highest in the first quarter. This drove earnings in our first quarter, $55 million higher relative to an average quarter. In the second quarter, premiums tend to be the lowest in the year relative to an average quarter. We expect that to occur this year as well.
Also in the second quarter is where we update our experience studies. We look to see if there are any new trends or patterns that would lead us to change our assumptions. Related to that, we know that there are certain topics that are on people's minds. Tim touched on this as well, given what is going on with the interest rate environment. Long-term interest rates are an area of focus. Just as a reminder, two years ago, we actually did reduce our long-term assumption for the 10-year U.S. Treasury, as an example, from 4%-3.75%. Although rates have declined recently, they're right now are about where they were two years ago when we made that adjustment. When we set our long-term interest rate assumptions, we also evaluate several reference points, including forecasts of economists and other benchmarks.
That's the process that we are undergoing at the moment. The second topic of recent interest has been long-term care. Last year, we updated our morbidity assumption to more prudent assumptions. Since last year, experience has been consistent with our updated assumptions. It's actually been a little bit better. Albeit it's a very small sample size, we will factor that into our analysis along with other industry data. The third area of interest involves our individual life business and our mortality experience. Our recent mortality experience has been within the range of what we would expect our normal volatility to be, but net, it has been below our expectations. In the ordinary course of our rigorous experience study process, we will take a close look at that. While these may be the areas of recent interest, our process is comprehensive.
The work is underway. It's not yet complete. We cannot comment on potential outcomes. On this slide, we've summarized our free cash flow and capital deployment over the last five years. It's been a very consistent picture. On the left, you'll see that free cash flow from our businesses total $16.1 billion. Our sources of cash flow are balanced across U.S. Financial Wellness, PGIM, and our international insurance businesses. This is after funding the corporate expenses that you see in the middle. The U.S. Financial Wellness business cash flows include our annuities business, which is now paying regularly quarterly dividends, as I had mentioned earlier. PGIM's fee-based businesses are another stable source of free cash flow, with regular dividends paid each quarter. Free cash flow from PGIM totaled $2.8 billion over the last five years.
Cash flows from our international insurance business are primarily from our Japan insurance operations. Looking ahead, will benefit from the ability to reinsure business to our newly established reinsurer in Bermuda. In total, free cash flow of $16.1 billion, with 69% of after-tax AOI over that five-year period. Now on the right, you see how that free cash flow was deployed. We paid $6.2 billion in dividends to our shareholders. We bought back $6.8 billion of stock. We deployed $1.2 billion for M&A, and we also reduced debt by $700 million. Overall, we have diversified sources of free cash flow and have consistently deployed capital both to grow our businesses as well as increasing distribution to shareholders. Let's take a look at our financial strength and flexibility. We feel very good about the overall strength of our capital position.
At the end of the first quarter, highly liquid assets at the parent company was $5.5 billion, slightly above our range of $3 billion-$5 billion. That gives us flexibility to deploy towards attractive opportunities when we see them. Our financial leverage was also better than our target. We are really pleased that Moody's recently upgraded our ratings, acknowledging our franchise position, market-leading businesses, and our healthy capital position. It's really the combination of robust levels of highly liquid assets at the parent company and regulatory capital ratios that are in excess of our AA objectives that provide us with this financial strength and flexibility. In closing, I'll just reiterate the key messages. Strong financial performance over time, robust risk management, diversified sources of free cash flow, and consistent capital deployment while demonstrating financial strength and flexibility. With that, thank you.
I think we'll open it up to questions.
We're going to take questions now and invite also Ken and Tim back up to the stage.
I think we're okay
to join Yanela Frias.
We're good. We'll just stand. I know we're on borrowed time and encroaching the cocktail hour, but please, if there are questions, take them.
Any questions for them? Front there.
Are there asset classes that you would like to invest more aggressively in if you weren't RBC constrained?
Well, I don't think so because I think the ones that are most penalized on in RBC would be equity and alts and things like that that have a 20% RBC factor. Even if that factor were lower, that wouldn't reduce the impact of the volatility on earnings and things like that, the other factors there. Plus, because of the nature of our liabilities, they're more fixed income like in general. Fixed income is probably the most appropriate asset class in general for our liability. At the margin, maybe a little bit in some of those, but I don't think materially so, no.
I'm not sure I'd characterize this as being RBC constrained.
Right.
We manage, as you saw, multiple lenses. We make sure we are well managed within RBC frameworks, but our own economic frameworks, and we get those to balance out. We look at multiple lenses.
If you were looking forward five years, would you think that PGIM would be a larger or smaller percentage of your earnings?
Well, just given our natural growth rate, it's our highest grower right now, it is growing a little bit faster than our other segments. Yes, we would think that's going to be a growing proportion. Again, all of our businesses are growing, it won't move the needle a lot, but it will grow a little bit faster. That would be our expectation.
Thank you.
Question here.
Thank you. I'm curious if you could kind of quantify the impact of not being a non-bank SIFI anymore on your operating expenses. Is there any concern that as Prudential grows both domestically and internationally, about possibly being redesignated a non-bank SIFI at some point in the future?
Yeah. We no longer have the designation of being a non-bank SIFI. Just maybe a little bit more broadly, background, we didn't believe we were systemic. We didn't think we deserved the designation. Although we're not opposed to group supervision, in fact, we still have New Jersey as our group supervisor. As a result, we demonstrated that we were well-governed, well-capitalized, well-controlled, and didn't have to change our strategy or approach to capital management. We did add a little bit more expense. I think we've disclosed that our total enhanced supervision expense was about a little over $100 million, and that some of that would go away immediately, which it already has, about a third of it, in terms of fees and other direct expenses. Another third would dissipate over time, but another third would remain as we are.
We still have group supervision in our things that we would otherwise need to retain. That's about the impact.
Thank you.
Any other questions? Okay.
Okay.
Okay.
Great.
Thanks.
Thank you, Ken and Nandini. All right, we've got one final presenter. It's just closing remarks. He is our president of Prudential Retirement. He actually grew up only about three blocks away from an ice skating rink. So he would walk there, and he picked up ice hockey. He is not from Minnesota. He's actually from Cleveland, Ohio. Please join me in welcoming Phil Waldeck.
Thanks, Darin. Thanks, everybody. Didn't know they were going to do the whole personal thing on each of your hometowns, so we'll have to navigate that. I'd like to close with a thank you and a comment on why we do this Financial Strength Symposium, and it's about you. This is a really diverse audience in terms of the various organizations and sectors that you come from. Let me just take a second on why this is so important to us, why you are such critical stakeholders and partners essential to our growth and our successful and profitable growth. There are representatives that are debt investors. There are stable value investors. There are structured settlements brokers, pension risk transfer advisors, pension risk transfer independent fiduciaries. These are just examples. Full service solution, 401(k), and other defined contribution markets.
You come from a lot of perspectives, but with a common interest in Pru, and we take that really seriously, which is why we put such focus on this event. My closing thought is this is really an opportunity for us to showcase our financial and business strengths, and in particular, where we are going in terms of managing our growth, managing our balance sheet, but also to make an impact. That is in the businesses that we're in today, but also how we can make a much bigger impact in terms of the financial wellness of millions of Americans. We're just getting started. With that, we'll start with the cocktail hour. Thank you