Market Overview

Prudential, Aviva reach first longevity reinsurance agreement as U.K. pension de-risking market surges

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Prudential Retirement®, a unit of Prudential Financial, Inc. ((PRU),
and Aviva Life and Pensions U.K. Ltd. have struck their first longevity
reinsurance transaction, establishing a new reinsurance partnership
between these two market leaders. As part of the transaction, The
Prudential Insurance Company of America (PICA) assumes the longevity
risk for approximately £1 billion (nearly $1.4 billion) in pension
liabilities.

This agreement comes amid surging demand for de-risking from the U.K.,
where pension insurers are increasingly seeking to manage their risk and
capital with longevity reinsurance arrangements. Demand is also driven
by the increasing affordability of pension risk transfer, reflecting
attractive pricing and the enhanced capacity of insurers, as well as the
improved finances of U.K. schemes, many of which are approaching full
funding.

"We are delighted to establish a new relationship with Aviva," said
William McCloskey, Prudential's head of international transactions for
longevity reinsurance. "Over the last several years, Aviva has become a
premier pension insurance provider, one that has made thoughtful
investments in its capabilities to support the continued expansion of
the U.K. pension risk transfer market. We are thrilled to collaborate
and partner with Aviva on such an important agreement."

Tom Ground, managing director of defined benefit solutions at Aviva,
said: "We're delighted to have entered into this transaction with PICA.
As one of the leading reinsurers, it has the credentials and scale to
support our own growth ambitions as we continue to increase deal volumes
in the U.K. We hope this deal is just the start of a longer-term
relationship."

Amy Kessler, head of longevity risk transfer at Prudential, added:
"Market activity in 2018 is building toward a very strong second half.
Rising rates and equities, combined with lower-than-expected longevity
improvements, mean that pension schemes are very well-funded and that
de-risking is more affordable than ever. Leading pension schemes are
taking advantage of this favorable environment by locking in gains and
transferring risk, knowing that such advantageous markets are always
fleeting."

The agreement follows at least 10 others in the market during the last
12 months that have exceeded $1 billion in size. Collectively, these
U.K. longevity reinsurance and longevity swap agreements signify a
noticeable market surge, driven by pension schemes eager to capitalize
on their improved funded status, and take risk off the table.

Funding levels of U.K. pension schemes have improved markedly since the
Brexit vote of 2016, boosted by fresh contributions, strong investment
performance and higher gilt yields (which lower the present value of
future liabilities).

Prudential is a global leader in the pension reinsurance market with
more than $50 billion in international reinsurance transactions since
2011, including the largest longevity risk transfer transaction on
record, a $27.7 billion transaction involving the BT Pension Scheme.

About Aviva

Aviva provides life insurance, general insurance, health insurance and
asset management to 33 million customers. In the U.K., we are the
leading insurer serving one in every four households and have strong
businesses in selected markets in Europe, Asia and Canada. Our shares
are listed on the London Stock Exchange and we are a member of the FTSE
100 index.

Aviva's asset management business, Aviva Investors, provides asset
management services to both Aviva and external clients, and currently
manages over £350 billion in assets. Total group assets under management
at the Aviva group are £490 billion. Aviva helps people save for the
future and manage the risks of everyday life; we paid out £34.6 billion
in benefits and claims in 2017. By serving our customers well, we are
building a business which is strong and sustainable, which our people
are proud to work for, and which makes a positive contribution to
society.

About Prudential Financial, Inc.

Prudential Financial, Inc. ((PRU),
a financial services leader with more than $1 trillion in assets under
management as of June 30, 2018, has operations in the United States,
Asia, Europe, and Latin America. Prudential's diverse and talented
employees are committed to helping individual and institutional
customers grow and protect their wealth through a variety of products
and services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. For more information,
please visit news.prudential.com.

Prudential Retirement delivers retirement plan solutions for public,
private, and nonprofit organizations. Services include defined
contribution, defined benefit and non-qualified deferred compensation
recordkeeping, administrative services, investment management,
comprehensive employee education and communications, and trustee
services, as well as a variety of products and strategies, including
institutional investment and income products, pension risk transfer
solutions and structured settlement services. With more than 85 years of
retirement experience, Prudential Retirement helps meet the needs of 4.3
million participants and annuitants. Prudential Retirement has $433
billion in retirement account values as of June 30, 2018. Retirement
products and services are provided by The Prudential Insurance Company
of America (PICA), Newark, N.J., or its affiliates.

Reinsurance contracts are issued by either Prudential Retirement
Insurance and Annuity Company (PRIAC), Hartford, Conn., or PICA. Both
are wholly owned subsidiaries of Prudential Financial, Inc., and each
company is solely responsible for its financial condition and
contractual obligations. Neither PRIAC nor PICA is licensed or regulated
by the U.K. Prudential Regulation Authority as an insurer or regulated
by the Financial Conduct Authority, nor does either conduct business in
the United Kingdom or provide direct insurance to any individual or
entity therein. Prudential Financial, Inc. of the United States is not
affiliated with Prudential plc, a company headquartered in the United
Kingdom.

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