Robert M. Falzon
Vice Chair at Prudential Financial
Thank you, 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 six with our financial results for the second quarter of 2022. Pre-tax adjusted operating income was $872 million or $1.74 per share on an after-tax basis and included a $1.4 billion increase in reserves from our annual assumption update and other refinements.
We strengthened our Individual Life reserves, primarily reflecting updates to policyholder behavior and revised mortality assumptions. These updates were based on several industry studies; emerging practices and our own experience, following our well-established annual assumption update process. Current quarter results also included an $852 million gain from completing the sale of PALAC, a legacy block of Variable Annuities.
Our GAAP net loss was $1.4 billion lower than our after-tax adjusted operating income, primarily driven by the mark-to-market impact from higher interest rates on derivatives that are used for asset liability management, partially offset by a gain on the full -- on the sale of our full service business. Turning to the operating results of our businesses, excluding the impacts of the annual assumption update and the gain on the sale of PALAC. PGIM, our global investment manager reported lower other related revenues driven by a decrease in seed and co-investment income and incentive fees, as well as lower asset management fees compared to the year ago quarter.
Results of our US businesses were lower than the year ago quarter, reflecting lower spread income due to less favorable variable investment income and lower fee income resulting from the decline in equity markets, partially offset by more favorable underwriting. The decrease in earnings in our International Businesses primarily reflected lower earnings from joint venture investments, lower net investment results driven by less favorable variable investment income and less favorable underwriting results, partially offset by business growth.
Turning to slide seven. PGIM, our global active investment manager, has diversified capabilities in both public and private asset classes across fixed income, alternatives, real estate and equities. PGIM's long-term investment performance remains attractive with 75% to 85% of assets under management outperforming their benchmarks over the last three, five and ten-year periods.
PGIM benefited from its diversified business mix, as strong institutional net inflows of $8.1 billion, primarily driven by fixed income, offset retail outflows as investors repositioned their portfolios in a rising rate environment. As the investment engine of Prudential, the success and growth of PGIM and of our US and international insurance and retirement businesses are mutually enhancing.
PGIM's asset origination capabilities, investment management expertise and access to institutional and other sources of private capital are our competitive advantage, helping our businesses bring enhanced solutions, innovation and create more value for our customers. 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.
PGIM's average fee rate increased due to the successful execution of our strategy, including the continued mix shift toward higher fee strategies in our alternatives and private credit business. As a result, asset management fees decreased by only 6% despite assets under management declining by 11% due to rising rates, widening spreads and equity market depreciation.
We continue to grow our alternatives in private credit business, which has assets under management of approximately $230 billion across private credit, real estate equity and debt and private equity secondaries and benefits from our global scale and market-leading positions. Notably, across PGIM's private platform, we deployed nearly $15 billion of capital, up nearly 40% from the year ago quarter, reflecting the continued strong environment for private credit.
PGIM also raised nearly $3 billion in new private capital commitments across real estate and private credit. Turning to slide eight. 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. 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.
Retirement Strategies achieved solid sales in the second quarter across its institutional and individual lines of business. Institutional stable value sales were $1.6 billion. International reinsurance closed $1.4 billion of longevity reinsurance transactions during the quarter, and US pension risk transfer closed several transactions totaling more than $725 million. Our product pivots in individual retirement have resulted in strong sales of more simplified solutions with nearly $1.5 billion of FlexGuard and FlexGuard Income sales in the second quarter.
Our strong FlexGuard sales benefited from implementing a fully digital and automated new business experience. This tech-forward approach helps to maintain our record pace of sales. Our Individual Life sales also reflect our earlier product pivot strategy, with variable life products representing approximately 71% of sales for the quarter. The improved group insurance benefits ratio for the quarter reflects the transition from a pandemic to an endemic phase of COVID, as well as favorable experience in both group life and disability.
In addition, we're focused on creating the next generation of financial solutions to serve the diverse needs of a broader range of customers and clients. This quarter, we launched the Prudential simplified issue final expense product on the Assurance platform. Turning to slide nine. Our International Businesses include our Japanese life insurance companies, where we have a differentiated multi-channel distribution model, as well as other businesses aimed at expanding our presence 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. And we continue to enhance customer experience and agent support, including through digital tools. For example, this quarter, Gibraltar launched an exclusive website dedicated to teachers to help serve this market.
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 where the Prudential enterprise can add value. In the second quarter, we continued to focus on expanding product and business capabilities in emerging markets to meet the evolving needs of customers. In Brazil, we achieved record sales, driven by the expansion of our third-party distribution channel, where sales increased 120% compared to the year ago quarter, as well as by the continued strength of the Life Planner channel.
We established a partnership with Mercado Libre in Latin America to expand access to customers in the region. In the first two weeks following the launch in June, we have sold Life and A&H policies in every state in Brazil. This was accomplished through a fully digital sales, customer service and claims experience. We also continue to expand our wellness platform across Latin America by establishing a partnership with Medife, a health service provider to 300,000 customers in Argentina.
In addition, we are expanding our presence in Africa through an investment in South African-based Alex Forbes, as Charlie discussed earlier. As we look ahead, we're well positioned across our businesses to be a global leader in expanding access to investing, insurance and retirement security. We 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, I'll hand it over to Ken.
