Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to Prudential costs.
Really earnings conference call at this time, all participants are in the listen only mode. Later, we'll conduct a question and answer session instructions will be given at that time. If you should require assistance during the call. Please press Star then zero as a reminder, this conference is being recorded I would now like turn the conference over to your host Darin Arita. Please go ahead.
Good morning, and thank you for joining our call representing credential on todays call, our Charlie Lowrey, Chairman and CEO, Rob Falzon Vice Chairman.
He Sullivan head of U.S. businesses.
Got Flextor head of international businesses, Gen, Taji, Chief Financial Officer, and Rob Doxil Controller, and principal accounting officer, we will start with prepared comments by Charlie Robyn and.
And then we will take your questions.
Today's presentation May include forward looking statements, it's possible that actual results may differ materially from their predictions we make today.
In addition, this presentation may include references to non-GAAP measure.
For a reconciliation of such measures to the comparable GAAP measures.
A discussion of doctors that could cause actual results to differ materially from those into forward looking statements. Please see the slide titled forward looking statements and non-GAAP measures in the appendix to today's presentation, which can be found on our website at investor thought credential Dot com.
With that I'll hand, it over to Charlie.
Thank you Dan Good morning, everyone and thank you for joining us today.
Yesterday, we reported fourth quarter earnings per share of $2.33.
We also reported an adjusted operating return on equity of 12.1% for the full year.
Looking back on 2019, we implemented a number of important actions to enhance our business and financial performance for the long term.
As a result, we have begun 2020 with a clear set of initiatives against which we will execute.
With the renewed confidence that our businesses can deliver increased earnings performance.
I'll begin this morning by sharing a few accomplishments from 2019.
First we launched a process talent and technology transformation initiative, which is on track to realize 500 million in run rate cost savings by 2022.
As part of this program, we initiated a voluntary separation program for segments of our U.S. workforce during the fourth quarter, which is reducing our cost base over the course of 2020, and creating a more agile and competitive workforce.
We returned approximately $4 billion to shareholders via dividends and share repurchases that 10% increase in our dividend represents the 12 consecutive year of dividend increases and produces a yield on book value in excess of 4%.
Third we completed our acquisition of assurance to you in October.
Adding a leading direct to consumer financial wellness solutions platform.
We're encouraged by the growth in customer demand the interest from carriers wanting to put their products on the platform and the level of talent, we are attracting from well known technology companies.
Finally, we made progress in our ongoing efforts to reduce the variability of our quarterly earnings pattern and we added transparency to our quarterly financial performance.
In 2019, our financial performance was impacted by a low interest rate environment. The annual assumption update in our individual life business and higher than typical expenses in our international businesses.
In 2020, we're implementing a number of initiatives to drive improved financial performance in the years ahead.
We're focused on executing three key initiatives.
First we remain focused on enhancing the customer experience to produce long term sustainable growth, while generating $140 million in cost savings this year.
Second in our international businesses, we continue to focus on increasing the percentage of earnings coming from growth markets.
Supporting this objective this quarter, we closed on the acquisition of a Colombian pension fund manager with habitat expanding our presence in Latin America.
We also completed the sale of our Italian insurance business and are exploring strategic options for operations and other markets, including Korea.
What's your further details at the appropriate time.
And third we're continuing to take steps to mitigate the effects of the low interest rate environment, such as adjusting the mix and pricing of our products.
Turning to slide three I'll briefly touch upon some of the key drivers of our fourth quarter results, which Rob will cover in more detail.
Our U.S. businesses benefited from record account values and retirement and individual annuities.
Earnings increase from the prior year quarter, reflecting higher net investment spread results, partly offset by lower for use in our annuities business.
Hey, Jim our global asset manager reported record assets under management of 1.3 trillion dollars as well as higher net asset management fees and other related revenues.
Our international businesses increased earnings driven by higher net investment spread results in business growth.
Partly offset by higher than typical expenses.
Turning to slide four I'd like to touch briefly on four ways, we generate value to our stakeholders in a sustainable way.
First we are a purpose driven company.
We strive to make lives better by solving the financial challenges of are changing world.
And do so for a broad array of stakeholders.
In December our board introduced a multi stakeholder framework that extends the board's accountability to investors.
Please customers and society at large reinforcing the board's commitment and hours to enabling positive change as well as strong financial returns.
Third this multi stakeholder framework is reflected in our continued pursuit of exemplary environmental social and governance practices.
Finally, we provide transparency so investors can measure our progress.
We disclose metrics and targets related to the financial stability boards task force on climate related financial disclosures. This includes quantifying greenhouse gas emissions recycling and water usage.
In addition, we publish metrics in accordance with the sustainability accounting standards Board.
We continue to be recognized for our commitment and standards we uphold.
Just last month.
Fortune included us on its list of world's most admired companies for the fifth consecutive year.
We're proud to have earned the first place distinction in the life and health insurance category each year.
In closing, we continue to move quickly and with conviction to execute on our strategy that we put into place, including the three initiatives I have outlined for 2020.
With that I'll turn it over to Rob for a closer look at our business performance for the quarter and our earnings outlook.
Thank you Charlie.
Slide more color on how we are executing on our strategy within our U.S.P., Jim and international businesses and at our near term earnings growth outlook turning to slide five.
You asked businesses consist of the workplace solutions individual solutions and assurance acuity patients that produce a diversified source of earnings from fees investment spread and underwriting income.
You asked businesses had three key priorities for growth first we're investing in transforming our capabilities and the way we work to deliver a better customer experience, while realizing efficiencies that will improve our margins.
Second we will continue to pursue targeted growth opportunities, including by way of example, the non jumbo corporate segment of the full service retirement market and the Premier segment dog and voluntary products offered by our group insurance business.
And third we remain committed to expanding our addressable market, including through workplace financial wellness and assurance on Q.
As a result of the continued thoughtful execution of these priorities overtime, we expect higher earnings growth and improved returns.
In the near term, we expect underlying earnings in the U.S. businesses to be relatively consistent with current levels as underlying business growth in retirement group insurance and assurance I Q offset the impact from low interest rates and the net outflows in our individual annuities business as we maintain pricing discipline.
Well, we have included a slide in the appendix that provides our expected underlying earnings outlook by business.
Now turning to slide six.
PGM, our asset management business continues to leverage its diversified multi manager model global distribution and affiliated flows to grow and higher value added strategies that serve investors globally.
With a record 1.3 trillion dollars of assets under management as of year end PJM is a top 10 global asset manager. It is the fifth largest investor and fixed income globally and one of the largest in alternative investments was significant real estate and private investment platforms.
We continue to broaden and globalize, our products and capabilities by developing and launching private and alternative investment strategies and expanding in both retail and international markets.
And at the investment engine of potential PJM benefits from a symbiotic relationship with our U.S. and international businesses.
Our investment performance is a key driver of our business success more than 80% of assets under management have outperformed their benchmarks over the last three five and 10 year periods.
This performance helped us to generate $1.9 billion net third party flows during the fourth quarter, including 1.2 billion of institutional and 700 million of retail net flows.
In addition, PJM rose to the seventh highest ranking mutual fund franchise based on 2019 net flows up from 14 in 2018.
Pgms adjusted operating margin of 32% in the fourth quarter was 180 basis points higher than a year ago quarter and has grown over the last three years as we balanced business reinvestment margin expansion.
For the full year 2019, PJM had a record level of adjusted operating income that was 4% higher than 2018, and 6% higher after adjusting for business acquisition related costs.
Looking ahead, we believe PJM is well positioned to deliver mid to high single digit earnings growth across the cycle driven by asset class expertise, while leveraging at scale and reach as a global asset manager and we expect to grow earnings in 2020, Despite the absence of wells Fargo fee arrangement.
Ended last year.
Turning to slide seven.
Our international businesses continue to benefit from our World Class Japanese life insurance operation, where we have a differentiated business model, we can be distribution as well as from our focus on other operations in high growth markets.
Life planner sales increased by 17% compared to the year ago quarter. This increase was driven by record life planner count at higher sales in Brazil, Korea and Taiwan.
Sales for Gibraltar were 14% lower than a year ago quarter. This primarily reflects lower single pay U.S. dollar fixed annuity sales in our life consultant and independent agency channels as the recent decline in U.S. interest rates led us to lower crediting rates.
In addition, we continue to focus on quality distribution.
The number of life planners as a result has declined.
The lower life consultant sales were partially offset by higher bank channel sales.
We continue to innovate new products and implement pricing actions to maintain both sales and our targeted level of profitability.
Total inforce for international increased by 3% from the prior year, including a 5% increase in life planner and a 1% increase in Gibraltar.
In the near term, we expect total enforced grow at a similar level, we expect underlying earnings to be relatively consistent with current levels as business growth will offset the impact of low interest rates.
With that I'll hand over to Ken.
Thanks, Rob I'll begin on slide eight which provides insight into the earnings for force first quarter 2020 relative to our fourth quarter 2019 results. We began with pre tax adjusted operating income in the fourth quarter, which was $1.2 billion and resulted in earnings per share of $2.33 on an after.
Tax basis.
When we adjust for the following items first in the fourth quarter, we had favorable variable investment income driven by equity market performance and prepayment income, which was a benefit of $175 million second the first quarter is expected to have lower seasonal expenses and implementation costs, which will result in a net bennett.
At a $435 million or 85 cents per share and is comprised of two items. The fourth quarter included $160 million of seasonally higher expenses and 365 million of implementation costs, including the impact from the voluntary separation program.
As indicated in the NK filing on December 17, we expect implementation costs of $175 million in 2020 with about 20 million of these costs in the first quarter.
And long term compensation expense for retiree eligible employees is recognized when awards are granted which is typically in the first quarter of each year in the first quarter of 2020, we expect this expense to me about $70 million split between PJM and corporate another.
These items net to 85 cents per share.
Third there are other considerations that we we expect will have a $20 million more favorable impact in the first quarter relative to our to the fourth quarter.
And fourth we anticipate net investment income will be reduced by $10 million, assuming reinvestment rates are held flat with the fourth quarter.
Combined this gets us to baseline of $2, a 95 cents per share for the first quarter of 2020 before including the impact to share repurchases business growth and market impacts in 2020.
The baseline also includes items specific to the first quarter that reduces EPS by approximately 15 cents per share.
While we have provided these items to consider there may be other factors that affect earnings per share in the first quarter of 2020.
I'd also like to bring your attention to a few additional items that are included in the appendix on slide 18, we have provided additional information that shows the adjusted operating income roll forward by business and as slide 19, we provided updated information regarding seasonal items by business. In addition, we have included some other consent.
Patients for 2020 on slide 21 regarding corporate and other net costs the yen foreign exchange rate and the effective tax rate.
Now turning to slide nine all provide an update on capital deployment liquidity and leverage we feel very good about the overall strength of our capital position, we returned $900 million to shareholders during the fourth quarter through dividends and share repurchases, which were largely funded by the cash flows generated by our businesses on.
December 19th we announced the board's authorization to repurchase up to 2 billion of common stock in 2020.
In addition, we increased the first quarter dividend to $1.10 per share, which represents a 10% increase from our dividend in the fourth quarter of 2019, and a 4.4% yield on our adjusted book value.
We also continued to maintain a rock solid balance sheet, our regulatory capital ratios continued to be above our double a financial strength targets and our financial leverage ratio remains better than our target.
Our cash and liquid assets at the parent company were $4.1 billion at the end of the quarter and at the midpoint of our three to 5 billion dollar liquidity target range.
We will continue to invest in the growth of our businesses assess acquisition opportunities to build scale organ capabilities and return capital to shareholders.
Turning to slide 10, and in summary, we had numerous accomplish complements in 2019, we are focused on executing our key initiatives in 2020, leading to greater earnings in 2021 now alternative to the operator for your questions.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command.
If you're using a speakerphone please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one Lin zero at this time and one moment. Please.
Your first question comes from the line of Nigel Daily from Morgan Stanley. Please go ahead.
Great. Thanks, and good morning, I had a question on annuities is one of the or anything you do expect a decline in earnings in Twentytwenty say just wanted to take you said just because of a modest decline in a way in because the anticipated outflows overwhelming market appreciation or at the also an underlying element of them.
Creation in the return on return on assets and if it is OLED, what's driving that.
So Nigel Thanks for your question. This is Andy Theres really two major impacts that we're seeing in the annuities business. One as you pointed out is the is the outflow that really is coming from we're being very disciplined in our pricing of product and in our return on new sales.
And if you look back where we had some pretty sizable blocks back in the 2010 to 2012 range. So that's creating that outflow.
The other thing I would point to though is as that businesses is rolling across it surrender period, we are seeing.
Business go to lower fee tiers, and getting fee pressure from that effect.
Nigel This is Ken I'd, just add I know there's been some.
Questions about our away.
Our primary objective with the profitability of our annuity business is to achieve a high ROI.
And our variable annuity business is very profitable and that as evidenced by the high ROI. We that's it that's in the high teens.
And that high ROI, we reflects our unique product design, our robust risk management and disciplined pricing and our hedging program is highly effective and it results in fable very stable earnings capital on cash flow, even with significant market moves so as a result, our earnings.
Capital and cash flow will be less sensitive to markets. Then then the account values and the our away may move as market moves, but again, our earnings capital and cash flow will be stable and our away as simply an outcome. So the decline in rates and the increase in equity markets. While it had an increase in account.
Use.
Had a less meaningful impact on our earnings again due to our robust risk management.
Okay got it second question with guest on dividends that good to see the incremental dividends again this quarter I think that brings a payout ratio to around 35% that ultimately how high you'd like to go or incremental upside there.
Yes, sure. So maybe just a little bit reflection of our capital management in shareholder distribution philosophy.
And very consistent overtime.
And it starts with our free cash flow, which is about 65% of after tax earnings.
This year, a little bit better than that.
And.
We then distribute in both the forms of dividends and share repurchases. Our dividends have increased actually 12 years in a row now and if you looked at the average increased over the last five years, it's been 11% and now that dividend represents as I mentioned in my opening comments or 4.4% yield on.
On book value our board as is authorized also authorized to billions of share repurchases for 2020, so generally a very consistent approach to our shareholder distributions which balances.
Both dividends and returns of excess capital through share repurchases.
Very helpful. Thank you.
Your next question comes from the line of Andrew quicker men from Credit Suisse. Please go ahead.
Hey, good morning.
So maybe.
A question on interest rates on last quarter's call. You you increased your guided interest rate sensitivity to 30 cents EPS impact for 50 basis point drop in rates and now we've seen in 2020, well maybe not today, but I was estimated.
30 basis points, so far in 2020, so I just want to make sure. They are no changes should we expect a 15 to 20 cents negative impact on 2020 bps based on that are there some.
Other factors at work and with that maybe you can tell us what your new money yields on our Q1.
Yes sure so the.
The the sensitivity that we gave to interest rates of 50 basis points at 30 cents. That's still good so the that rough rule of thumb and how do you apply did I think that has still is appropriate.
Our new money yields in the second half of the year were about 3.65% and you can think of that relative to our and that's in the U.S.
Relative to our us portfolio yield of about.
4.2%.
Thank you and then just shifting over to the individual life segment and kind of thinking that second quarter, you had that 200 plus million dollars charge.
Third quarter there was.
About 30 million of underwriting income below expectations in Fourq Q is about 16 million minimal.
The wall expectations. So I'm wondering if as we look forward.
Are you comfortable with underwriting assumptions.
To the year and your sales were really robust at 290 million is that you cited as a record since 2013 so.
What are you selling that you're excited about.
Yes, Andrew it's Andy Thanks. Thanks for your question. So we would consider our actual to expected in the fourth quarter as inline with our expectations. The result was 103% and I would encourage you to think of Theres a quarter around that 100 of.
Plus or minus a couple of percent. So that we really think thats in line as far as you referenced the assumption updates.
We're seeing that our business performance has been consistent with the updates that we made in the second quarter.
Shifting over to the new business sales were very very pleased with the performance of sales in the individual life business as you cited its.
Last quarter in five years.
We're probably even more pleased.
Versus the absolute level in the mix of sales the mix has shifted pretty meaningfully away from guaranteed Universal life, which obviously is highly interest rate sensitive and over a two where almost half of the sales are variable life, which has a much much less sensitivity to interest rate. So pleased with what we're seeing the success is really come in.
From.
We have a very very strong brand name.
We believe our product portfolio is very strong and our distribution system is top notch.
And term license at the balance of sales margin yes.
Awesome. Thanks, so much.
Your next question comes from the line of Tom Gallagher from Evercore ISI. Please go ahead.
Good morning, just first question on the assurance I Q deal in terms of Hi, how are you thinking about it.
The results so far it looks to me.
Base based on the disclosure that the revenues are coming in below.
What was projected initially I think it was 500 million.
What's the 2019 guide and looks closer to maybe 300 million on our full year basis.
I guess first question is that right and then secondly does that has that caused you to rethink.
Revenue and earnings projections 2020 2021.
So maybe Tom this is Andy I'll start and then I'll hand, it off to Ken So.
As you'd imagine these are early days, we just closed the acquisition October but I tell you. There is a lot of things that we're excited about.
Where as we sit here today, even more excited about the strategic growth potential of this business.
In fourth quarter, we saw very very strong consumer demand flow across the platform, we saw six and a half million shoppers and just to define that for you we define us shopper as an individual that has.
Absolute intention to buy a financial service product and thats willing to share their their contact information with us. So we saw six an AFE millions shoppers across the platform and for Q, that's compared against three and a half million in the year ago quarter. So we're very pleased with the level of consumer flow and consumer demand.
A very positive for us on that as we have product providers literally lining up of every shape and size that want to go head and get on the platform.
So from a revenue potential perspective, where were we are every bit as strong as we work.
We are in kind of where we're focused right now is getting those additional products onto the platform as far as your numbers around revenue, yes, our revenue for the year came in just north of 300 million.
And really what I would tell you. There is we had a lot more consumer demand than we had appointed agent.
We'll call it capacity on the platform.
We learned some lessons in the quarter.
Around the effort in energy and timeline it takes to get the Medicare advantage.
And under 65.
Healthcare agents onto the platform.
I will tell you that were already well underway in getting those agents appointed for Fourq you have 2020, so thats a completely rectify able situation and we're well out in front of it.
The only thing I'd add there is.
As you heard from Andy describe this this businesses in a very high growth phase and we were not expecting meaningful earnings.
In the near term or in 2020 as as a result, and so it's early days and we'll report this information to each quarter and just as Andy indicated just a reminder, that is a seasonal business primarily fourth quarter loaded.
Got it and Ken would you guys would you say.
You're sticking to the 700 million revenue projection for 2020 still or.
Is that sort of TBD.
Yes.
Given the high growth nature of this business, we don't want to get into the practice of updating each and every quarter. So again, we're going to where you're going to see the results as they occur.
The separate segments.
Okay. Thanks, again, and then just my follow up is.
It is true planning on early adopting variable annuity reform at year end 2019, and if not.
Just a plan to do a full implementation in 2020 or three year phase and.
We're going to adopt on the effective date was January onest 2020, but but it reminds you that we may make structural changes.
That were very much aligned with a new reform many years ago, So we're well positioned.
And expect to be very well capitalized.
For the reform and after before.
Okay, and can know through your phase and you'd fully adopt and Tony Tony only adopt January onest. Okay. Thanks.
As a reminder, if you'd like to ask a question. Please press one then zero.
Next we'll go to the line of Erik bass from Autonomous Research. Please go ahead.
Hi, Thank you.
Clearly taken some big steps to accelerate the timing of realizing the expense savings you've talked about can you just help us think about when we'll start to see these and results and where they'll come through.
There in terms of the business segments or through our incorporate.
Yes sure.
In our 8-K that we filed.
We do some information of our belief of the progression of the of the saves.
They were modest in 2019, and we provided an estimate for 2020 that 140 million would be realized in the CNL in the year.
Those results you can expect to build as we go through the year.
And.
And you can expect to see them emerge.
Primarily in the us businesses and in corporate.
But throughout.
Those businesses, but again, because it's a company is it was a us business wide program.
Got it and when you're giving sort of your walk through in the slides of kind of future earnings trajectory am I right that theres nothing really explicit we contemplated there from.
Savings in the businesses.
Only what was accomplished in the through 2019 or the first for the fourth quarter.
And then any future improvement, whether it's from business growth or share repurchases or or.
Additional expenses incremental expense saves would not be included in that baseline that's all in the future.
Got it and then you mentioned.
Remarks potential actions to continue streamlining gear business portfolio and realize it's premature to say much specific but how would you think of redeploying any proceeds you potentially generate would you look to reinvest these in the businesses or potentially would they be available to return to shareholders.
The answer is yes.
So what we mean is.
We'll cross that bridge, when we come to it but.
Let me take a step back for a moment and make a more general come on how we think about capital in particular, the optimization of our capital, which I think we've been doing for years. So we always look across our businesses, both domestically and internationally to ensure that we're optimizing capital deployment.
And when we see attractive opportunities you've seen us invest in growth and make acquisitions and you've also seen a scaled back or look for divestitures over the years. When they are better uses of capital and then put that capital to use either in growing the franchise or if there aren't opportunities returning it to shareholders. So we'll continue to look for ways to opt.
Hi, guys capital deployment and to maximize outcomes for our shareholders whether that be in investing in new business opportunities, which again, you've seen us do or return returned capital to shareholders.
Thank you.
Your next question comes from the line of Ryan Krueger from KBW. Please go ahead.
Hi, good morning.
I guess first.
Have you completed the yearend cash flow testing analysis, and if so can you give us any indication of of the impact.
The statutory filings will come out at the end of a month.
And so yes that will include our updated cash flow testing or asset adequacy testing.
You will see those results when we report them.
What I offer you now is given lower rates, we would expect some strengthening in our anti reserves or cash flow testing.
But we have derivative gains or interest rate hedges that offset that and.
We expect to have.
RBC ratios that are above our double a financial strength objectives.
Got it thanks and then.
When you did that the second quarter assumption review.
And had some impacts to the individual life business at the time, you talked about reinsurance as being a potential option.
To improve returns in that business, that's something that you're still contemplating and can you give us any any update there.
Yeah, Ryan this is Andy so.
Would broaden your question and say, we're taking a number of actions to strengthen the performance of our life business.
First and foremost where we are working diligently on expense efficiencies and you can think about in that in the context of the broader work going on at the company in the 500 million and outcomes. We expect over the next couple of years.
We already talked about the sales, which we think is a meaningful I will be a meaningful contributor to giving earnings lift overtime and the business and then yes. You are correct. We have been looking at options and we'll continue to look at options from a reinsurance perspective on with the block.
And what we're looking for there obviously is the right partner and the right terms that make economic sense for us Theres. Nothing currently that we want to report, but we'll keep you posted as we go forward.
Alright, thank you.
Your next question comes from the line of Suneet come up from Citi. Please go ahead.
Thanks, just focusing on slide 20 of your deck in the international businesses it looks like.
At least over the next 12 months life planner and Gibraltar are expected to be flat, which is lower than that intermediate.
Earnings growth guidance, you gave at Investor day mid single digit so just want to get a sense. If we stay in this interest rate environment, what kind of gets us from flat backup to the mid single digits and sort of over what timeframe.
Hi, Suneet. This is Scott let me take that so as you pointed out the underlying business fundamentals.
For our international business is actually look.
Right strong as Rob pointed out our.
Our our enforced block is growing at about 4% four to five and LP and about 1% in Gibraltar.
Unfortunately, given the low rate environment for the most part we're giving back a lot of the earnings growth associated in the block and we're continuing to make some.
Portfolio.
Investments on technology, and the like so right now I would say over the certainly looking out to this year, we think we're going to be closer to.
Last.
We hope overtime as we make adjustments that'll that'll start to build but I would say even right now looking at the intermediate term, we'd say, we're looking at low single digit growth.
Okay. Thanks, and then a follow up as to some assurance I Q. I think it was mentioned that.
Yes about 6.5 million shoppers in the fourth quarter.
Should we expect to be that conversion rate.
Of that but that balance in other words of the 6.5 million how many would you expect actually five product.
So we need its Andy I'll take your question.
Conversion rate is a very complex topic. So it very much depends on the product mix.
That's on the platform and as we talked about we are in a phase of rapidly looking out looking to roll new products onto the platform. So the conversion rates that were currently experiencing are going to change quite a bit with that product mix shift.
As well as as you can imagine with the shopper demand, we had but the mismatch with our agent capacity our conversion was lower than we would expect going forward.
At this point, we're not going to put out explicit numbers, but hopefully that gives you a weighted to think about it.
And have you put any crew products on that platform yet I know that was one of your objectives. When you announced the deal yes. So it absolutely is one of our primary objectives, we have been working diligently to get our simply term life product on the platform. We are ahead of schedule on those plans and we will get that product on the platform in the second quarter.
Of this year and where we're very encouraged with our brand name and the quality of our product that that'll give both assurance and obviously mother Prudential some lift.
Okay. Thanks.
As a reminder, if you'd like to ask a question. Please press one than zero next we'll go to the line of John Barnidge from Sandler O'neil. Please go ahead.
Thank you have you seen any meaningful acceleration in Pgms UK business post election, where demand for product from that market in continental Europe.
So John this is Andy I'll I'll take that question. So what I would tell you is in the short term with all the flux that's been going on we havent seen any any meaningful change or lift.
Which kind of frame it as in many ways the marketplace is a bit hunker down.
So as an example on the real estate side.
We haven't seen a whole lot of capital fund raising and deployment.
We are absolutely ready no matter how that plays out we have licenses and all the right places in people and all the rate places.
Take to continue not a serving our current clients but to capitalize on.
Potential opportunities, if and when the dust settles.
Okay, and then my follow up as we look back to Sars over 15 years ago in light of Corona virus do you see increased demand for your products on the benefits side to note.
Hi, This is Scott again on the on the specific question I would say history would show that anytime there is a widespread illness. It creates a greater sensitivity among the customer base about the kinds of products that we sell in particular as you know like.
Side, especially were very focused on.
Death protection.
Products and so anytime you have something like this that goes on.
You are very concerned about your employees and your customers and you taking lots of actions there.
But I do think there is a follow on a effect of greater greater sensitivity to the to the products that we offer.
Great. Thank you.
Your next question comes from the line of Humphrey Lee from Dowling and partners. Please go ahead.
Good morning, Thanks, taking my questions.
A question related to PJM. So looking at your retail flows it looks very strong from the inflows perspective.
Thinking maybe even a record number but then at the same time you use it seems like you have reckless withdrawals. This while I was just wondering if you can provide some color in terms of where do you see the inflows and what happened in the outflows and how they're thinking about it in 2020.
So yes.
This is Andy Humphrey. So we we're very pleased and proud of the retail flows that we saw as as I think Rob mentioned in his opening.
We moved up to number seven in the quarter. The retail flows are really coming from an expansion of our product portfolio on that platform.
As well as the work that we've done our around new sets.
Yeah.
From an outflow perspective.
What I would say is that will tend to be episodic and I think over the long term, we feel very very good that due to our investment performance and our range as strategies that we will see a continued upward trend over time.
I'm, sorry, I would I would just add on the institutional side, but.
Those those flows can be a little bit lumpy.
And we saw a couple of clients, who want to consolidate this year and sometimes with the beneficiary of consolidation, sometimes we're not and a couple of dominoes tilted against us this year, but.
That doesn't.
That doesn't affect how we think about our institutional capability or the quality of flows that we can have going forward.
That makes sense.
Just a clarification of regarding assurance Q so.
Kevin was talking about the given the growth are you expecting and then you would not necessarily expect tank any earnings.
On a from assurance Q in 2020, I just wanted to make sure that I've heard that correctly, because I think we'll regionally at that time with the announcement you are expecting maybe a 10 cents EPS accretion for 2020. So I just wanted to bridge. The differences, yes, I didn't mean to say no earnings not meaningful earnings.
Again, because of the high growth nature of the phase that they're going through.
So the test as still kind of I understand you're not going to an update guidance on anything like that but it's a 10 cents due a reasonable expectation.
Again, we don't want to getting the practice and having to update. This every every quarter. Okay. All right thing, though thank you.
And I'd now like to turn the call back to Chary Laurie for any closing comments.
Okay. Thank you very much so in closing I hope you all walk away from this call with a clear picture of our progress and priorities.
Our continued sense of conviction and urgency.
And our path forward to deliver meaningful outcomes for all of our stakeholders, including investors. So thanks again for joining us today and have a nice day.
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