Robert Michael Falzon
Vice Chairman at Prudential Financial
Thank you, Charlie. Ill provide an overview of our financial results and business performance for our PGIM, U.S. and International Businesses. Ill begin on slide six with our financial results for the first quarter of 2022. Our pretax adjusted operating income was $1.6 billion or $3.17 per share on an after-tax basis and reflected a benefit from variable investment income, which exceeded the net mortality impact from COVID-19. PGIM, our global investment manager had higher asset management fees than the year ago quarter. However, these were more than offset by lower other related revenues as well as investments made to support business growth.
Results of our U.S. businesses increased 12% from the year ago quarter and reflected higher net investment spread, including benefits from variable investment income and rising interest rates, more favorable underwriting, primarily due to declining COVID-19-related mortality experience and lower expenses, primarily driven by our cost savings initiatives, partially offset by lower fee income resulting from the runoff of our legacy variable annuities. Earnings in our International Businesses decreased by 8%, reflecting lower net investment results, less favorable underwriting results and lower earnings from joint venture investments, partially offset by continued business growth.
Turning to slide seven. PGIM, our top 10 global investment manager has diversified capabilities in both public and private asset classes across fixed income, alternatives, real estate and equities. PGIMs long-term investment performance remains attractive with more than 84% of assets under management outperforming their benchmarks over the last three-, five- and 10-year periods. PGIM experienced third-party net outflows of $4.3 billion in the quarter as institutional net inflows, driven by fixed income and real estate, were more than offset by retail outflows, driven by mutual fund investors rebalancing out of fixed income due to rising rates and inflation expectations. As the investment engine of Prudential, the success and growth of PGIM and of our U.S. and international insurance and retirement businesses, are mutually enhancing.
PGIMs asset origination capabilities, investment management expertise and access to institutional and other sources of private capital or a competitive advantage, helping our businesses bring enhanced solutions, innovation and more value to our customers. And our insurance and retirement businesses, in turn, provide a source of growth for PGIM through affiliated flows and unique access to insurance liabilities that complement its successful third-party track record of growth. PGIMs asset management fees increased by 2% compared to the year ago quarter, reflecting positive third-party flows and a continued shift towards higher fee-yielding strategies, including the benefits from recent acquisitions over the past year, partially offset by the impact of rising rates.
As rates rise in the near term, investor demand for some fixed income strategies could continue to moderate. However, over the longer term, a stabilized higher rate environment would be a positive for fixed income demand and PGIMs business. We continue to grow our alternatives in private credit business, which has assets under management of approximately $240 billion, across private credit, real estate equity and debt and private equity secondaries, and benefits from our global scale and market-leading capabilities. Notably, across PGIMs private platform, we deployed nearly $10 billion of capital, up 20% from the year ago quarter, reflecting the continued strong environment for both real estate and private credit.
Now turning to slide eight. Our U.S. businesses produced diversified earnings from fees, net investment spread and underwriting income and benefit from our complementary mix of longevity and mortality businesses. We continue to shift our business mix towards higher growth and less market-sensitive products and businesses to transform our capabilities and cost structure and to further expand our addressable markets. Our product pivots have worked well, as demonstrated by strong sales of recently launched simplified solutions. Our FlexGuard and FlexGuard income products represented $1.4 billion or over 90% of total individual annuity sales in the first quarter. We continue to exercise pricing discipline informed by changing market conditions and our sales benefit from having a strong and trusted brand and a highly effective distribution team.
Our Individual Life sales also reflect our earlier product pivot strategy with variable life products representing approximately 70% of sales for the quarter. We also successfully completed the national rollout of our Individual Life Express term plus product with a large national distributor and recently launched a final expense product continuing to expand our middle market presence. And we are focused on enhancing customer experience through digital tools, including automated underwriting, resulting in more than 90% utilization for eligible policies in the first quarter of 2022. Our retirement business has market-leading capabilities, which drove funded pension risk transfer sales of $700 million in the quarter.
And our group insurance business reflected sales growth of 5% compared to the prior year quarter driven by an increase in supplemental health sales. 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 in high-growth emerging markets. In Japan, we are focused on providing high-quality service and expanding our geographic coverage and product offerings. Our needs-based approach and mortality protection focus continue to provide important value to our customers as we expand our product offerings to meet their evolving needs. We continue to enhance customer experience and agent support, including through digital tools.
The value we provide customers was recently recognized by the 2022 J.D. Power life insurance customer satisfaction survey. Prudential of Japan was ranked #1 in all three categories: contract; servicing; and claims. In emerging markets, we are focused on creating a carefully selected portfolio of businesses in regions where customer needs are growing, where there are compelling opportunities to build market-leading businesses and partnerships and where the Prudential enterprise can add value. In the first quarter, we continued to focus on expanding product and business capabilities in emerging markets to meet the evolving needs of our customers.
We launched a new accident and health product in the large and growing Brazil market, and continue to expand our wellness platform across Latin America. In addition, as Charlie discussed earlier, we are pleased to expand our presence in Africa with the announcement to acquire a minority interest in Alexander Forbes through our existing partnership with LeapFrog investments. As we look ahead, were well positioned across our businesses to be a global leader in expanding access to investing, insurance and retirement security. We plan to continue to invest in growth businesses and markets, deliver industry-leading customer experiences and create the next generation of financial solutions to better serve the diverse needs of a broad range of customers.
And with that, Ill hand it over to Ken.
