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Prudential Financial looks to reinsurance, other options for individual life

Prudential Financial Inc. will consider a "range of reinsurance" options and other tactics to improve returns in its individual life business over the next few years.

The company took a $49 million reserve charge in its individual life and updated assumptions in mortality after conducting its annual actuarial review in the second quarter.

A pattern of reserve charges in individual life over the past several years is part of what has led Prudential to launch a plan to "bolster and improve" the business block, Steve Pelletier, COO of the company's U.S. businesses, said on a conference call.

Pelletier said the new business the company has been writing over the last two years has been priced using "much more current" assumptions different from those that have been causing some of the recent charges. He also said the company is exploring options for how to optimize its in-force management, which "largely refers" to a wider range of reinsurance options.

Andrew Kligerman, an analyst for Credit Suisse, questioned if exploring reinsurance options could end up in another charge, but executives declined to give specifics.

Another part of the plan is to improve returns in individual life is to enhance the cost-effectiveness of the business operating platform, including innovative ways of delivering life insurance products to the marketplace, Pelletier said.

Pelletier said recent updates in mortality were mostly related to "longer-dated vintages" in the block. The charges over the past several years have mostly been due to adjustments on the mortality front and were also offset to a "meaningful degree" with positive longevity experience in the company's retirement business, he said.