Rob Falzon
Vice Chairman at Prudential Financial
Thanks, Charlie. I'll provide an overview of our financial results and business performance for our PGIM, US and international businesses. I'll begin on Slide 6 with our financial results. Our pretax adjusted operating income was $1.6 billion or $3.48 per share on an after-tax basis for the third-quarter of 2024 and $9.98 on a year-to-date basis, which is up 6%. These results reflect the execution of our strategy to grow our market-leading businesses and were driven by higher spread and fee income due to continued strong sales and the benefit of higher interest rates and equity markets, net of increased expenses to support the growth of our businesses.
Year-to-date adjusted operating return on equity of 13.7% has improved a 0.5% point from the prior year. This reflects the strength of our businesses, the benefits from the deliberate actions we have taken to pivot to more capital efficient and higher-growth products. Turning to the operating results from our businesses compared to the year ago quarter. PGIM, our global investment manager, had higher asset management fees driven by favorable investment performance, contributions from the Deerpath Capital acquisition and market appreciation. This was partially offset by higher expenses to support business growth.
Earnings growth in our US businesses reflected more favorable underwriting results from better than expected mortality experience in individual life and higher spread income driven by business growth and the benefit of higher interest rates. This was partially offset by lower legacy traditional variable annuity fee income as we intentionally pivot to less market sensitive products as well as higher expenses to support business growth. Results of our international businesses included less favorable underwriting results, primarily reflecting elevated US dollar product surrenders with the weakness in the yen and higher expenses to support business growth, partially offset by higher joint-venture earnings driven by encaje performance in Chile and higher spread income due to higher yields from the reinvestment of the portfolio.
Turning to Slide 7. PGIM, our global investment manager, has diversified capabilities in both public and private asset classes across fixed-income, equities and alternatives. PGIM's strong investment performance continues to improve with 86% of assets under management exceeding their benchmarks over the past year. This has contributed favorably to strong long-term performance with 79% and 85% of assets under management outperforming their benchmarks over the last five and 10-year periods, respectively.
PGIM's assets under management increased by 15% to $1.4 trillion from the year-ago quarter, driven by market appreciation, investment performance and net flows. Total net flows in the quarter of $3.2 billion included affiliated net flows of $6.4 billion, driven by strong retirement strategy sales, partially offset by $3.2 billion of third party net outflows. On a year-to-date basis, total net flows were $29 billion, including $15 billion in affiliated flows and $14 billion from third-party clients. These inflows reflect the net benefit from large episodic institutional pension plan activity. As the investment engine of Prudential, PGIM's capabilities support the success and growth of our US and international businesses in retirement, asset management and insurance.
PGIM's asset origination capabilities, investment management expertise and access to institutional and other sources of private capital, including through our sponsored reinsurer Prismic are a competitive advantage, helping our businesses bring enhanced solutions and create more value for our customers. Our insurance and retirement businesses in turn provide a source of growth for PGIM through affiliated net flows as well as unique access to insurance liabilities. In addition, our diversified PGIM private alternatives platform, which has assets under management of over $250 billion, experienced strong private credit origination activity driven by our direct lending businesses, including the benefit from our recent acquisition of Deerpath Capital.
Turning to Slide 8. Our US businesses produced diversified earnings from fees, net investment spread, and underwriting income and benefit from our complementary mix of longevity and mortality businesses and diversified sources of earnings. We continue to focus on growing our market-leading businesses by expanding our addressable market with new financial solutions delivered through a broader distribution footprint, leveraging capabilities across Prudential and enhancing those capabilities to improve the experience of our customers and distribution partners while driving operating efficiencies.
Retirement strategies generated strong sales of nearly $15 billion in the third-quarter across its institutional and individual lines of business. Institutional retirement sales totaled $11 billion in the quarter. US funded pension risk transfer transactions of $6.3 billion included the second PRT transaction with IBM. Additionally, longevity risk transfer sales totaled $2.8 billion for the quarter. Year-to-date, institutional retirement sales were over $26 billion as we have captured about 40% of the PRT market. Individual Retirement posted $3.6 billion in sales, its best quarter of sales in over a decade.
Our product pivots and innovation have resulted in continued strong sales of our registered index-linked annuities and fixed annuity products have more than doubled from the prior year. Additionally, we continue to reduce market sensitivity by running off our legacy variable annuities. Group insurance sales primarily occur in the first quarter of the year based on annual enrollments. On a year-to-date basis, sales increased 3% compared to the prior year, driven by growth in supplemental health.
We are executing our strategy of both product and client segment diversification, while leveraging technology to increase operating efficiency and enhance the customer experience. These actions to improve profitability and performance resulted in a benefits ratio of 83.4%, which is the low end of our target range. In Individual Life, sales increased 13% from the year-ago quarter and 9% year-to-date. These increases include the benefit from the strength and breadth of our distribution capabilities and expansion of our product offerings, including our pivot towards more capital-efficient products like FlexGuard Life, which reached its highest sales quarter since its launch in 2022.
Turning to Slide nine. Our international businesses include our Japanese life insurance companies where we have a differentiated multichannel distribution model as well as other businesses aimed at expanding our presence in targeted high-growth emerging markets. In Japan, we are focused on providing high-quality service and expanding our distribution and product offerings. Our needs-based selling approach and protection and retirement product focus continue to provide important value to our customers as we expand our product offerings to meet their evolving needs.
In emerging markets, we are focused on creating a selective portfolio of businesses in regions where customer needs are growing, where there are compelling opportunities to build market leading businesses and where the Prudential enterprise can add value. Sales in our international businesses were up 25% compared to the year-ago quarter. Higher sales in Japan are benefiting from recent product launches as we expand our retirement and savings offerings, which are gaining traction with customers and represented 75% of the current quarter sales. In addition, emerging market sales were also higher, driven by growth in Brazil as we continue to expand third-party distribution and benefit from the strong performance of our world-class life planners.
As we look ahead, we are well-positioned across our businesses to be a global leader in expanding access to investing, insurance and retirement security. We continue to focus on investing in growth businesses and markets delivering industry-leading customer and client experiences and creating the next-generation of financial solutions to serve the diverse needs of a broad range of customers. And with that, I'll now hand it over to Yanela.