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S&P Global Ratings downgraded its outlook on Prudential Financial to negative from stable, citing regulatory and operational challenges in Japan that threaten dividend flows to the parent company. The agency affirmed its A/A-1 credit ratings and maintained stable outlooks on major operating subsidiaries, supported by their strong U.S. insurance and asset management businesses.
The decision follows sales suspension orders issued by Japan’s Financial Services Agency after irregularities were uncovered at Prudential of Japan and Gibraltar Life Insurance. S&P estimates pretax financial impacts of approximately $600 million in 2026 and $675 million–$725 million in 2027, with suspensions expected to expire early next year.
Japan historically contributes around 30% of holding-company dividends, raising concerns about liquidity and earnings diversification if the disruption persists. S&P forecasts adjusted return on equity will fall to 8%–10% in 2026 and 6%–8% in 2027.
$PRU
