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This prospectus describes the VCA 2 group variable annuity contract (the Contract) offered by The Prudential Insurance Company of America (Prudential) and issued through The Prudential Variable Contract

Account-2

(VCA 2) for use with retirement arrangements qualified under Section 403(b) of the Internal Revenue Code. Contributions under the Contract are invested in VCA 2. The Fidelity VIP Index 500 Portfolio (Fidelity Fund), a series of Variable Insurance Products Fund II (VIP), is currently available through VCA 2. This prospectus sets forth information about VCA 2 that a prospective investor should consider before investing in the Contract.

Prudential no longer offers the VCA 2 group variable annuity contract for new sales. New participants may be added under an existing group variable annuity contract, and contributions can be made on behalf of existing participants.

The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Additional information about certain investment products, including variable annuities, has been prepared by the Securities and Exchange Commission’s staff and is available at Investor.gov.

©

2024 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc., and its related entities, registered in many jurisdictions worldwide, used under license.

 

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Table of Contents

 

3		GLOSSARY
4		KEY INFORMATION
7		OVERVIEW OF THE CONTRACT
8		FEE TABLE
10		SUMMARY
10		ABOUT THE CONTRACT
10		ABOUT PRUDENTIAL & VCA 2
12		PRINCIPAL RISKS OF PARTICIPATING IN THE CONTRACT
13		INVESTMENT OPTIONS
14		UNIT VALUE
14		HOW UNIT VALUE IS DETERMINED
15		CONTRACT CHARGES
15		CHARGES & FEES
16		THE CONTRACT
16		INTRODUCTION
16		ACCUMULATION PERIOD
22		ANNUITY PERIOD
24		OTHER INFORMATION
26		ADDITIONAL INFORMATION
26		SALE & DISTRIBUTION
26		FEDERAL TAXATION
28		WITHHOLDING
28		CARES ACT IMPACTS
29		DEATH BENEFITS
29		ADDITIONAL CONSIDERATIONS
29		TAXES ON PRUDENTIAL
29		LEGAL PROCEEDINGS
30		VCA 2 POLICIES
31		FINANCIAL STATEMENTS
31		OTHER INFORMATION
32		APPENDIX A - PORTFOLIO AVAILABLE UNDER THE CONTRACT

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GLOSSARY

We have tried to make this prospectus as readable and understandable for you as possible. By the very nature of the Contract, however, certain technical words or terms are unavoidable. We have identified the following as some of these words or terms. Many terms used within this prospectus are described within the text where they appear. Not all of the descriptions of those terms are repeated in this Glossary. The defined terms set out in this prospectus also appear in and apply to the related Statement of Additional Information (SAI).

Accumulation Period

: The period that begins with the Contract Date (as defined below) and ends when you start receiving income payments or earlier if the Contract is terminated through a full withdrawal or payment of a death benefit.

Code

: The Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

Contract

: The group variable annuity contract described in this prospectus.

Contract Date

: The date Prudential receives the initial contribution on behalf of a Participant (as defined below) and all necessary paperwork is in Good Order (as defined below). Contract anniversaries are measured from the Contract Date.

Contractholder

: The employer, association or trust to which Prudential has issued a Contract.

Contributions

: Payments made under the Contract for the benefit of a Participant.

Empower Care Center

: Empower Care Center, 8515 East Orchard Road, Greenwood Village, CO, 80111. The phone number is (855)

756-4738.

Empower’s website is www.empower.com.

Good Order

: Sufficiently clear instruction received by the Empower Care Center (or via the appropriate Empower address, telephone number, fax number or website if the item is a type we accept by those means) or a designated third-party pricing agent (if your plan is not serviced by Empower), on a business day before the close of business, which utilizes the applicable forms, and reflects the necessary signatures and dates required to ensure there is no need to exercise any discretion to follow such instruction. Good Order requires receipt of confirmation and all necessary information to ensure the instruction is permitted under and in compliance with the applicable retirement plan. Instructions that are not in Good Order will be effective on the business day that Good Order is determined. Instructions received on a day that is not a business day or after the close of a business day will be deemed to have been received on the next business day.

Income Period

: The period that begins when you start receiving income payments under the Contract.

Investment Option

: The Prudential Variable Contract

Account-2

(VCA 2).

Participant or you

: The person for whose benefit contributions are made under a Contract.

Prudential, we, us, or our

: The Prudential Insurance Company of America.

Prudential’s Group

Tax-Deferred

Annuity Program

: A Contractholders’ program providing for contributions under the Contract, a companion fixed-dollar annuity contract or a combination of the two.

Separate Account

: Contributions allocated to VCA 2 are held by Prudential in a separate account. VCA 2 is a separate account of Prudential and invests the assets in shares of the Fidelity VIP Index 500 Portfolio (Fidelity Fund).

Tax Deferral

: A way to increase your assets without being taxed every year. Taxes are not paid on investment gains until you receive a distribution, such as a withdrawal or annuity payment.

Unit and Unit Value

: You are credited with Units in VCA 2. Initially, the number of Units credited to you is determined by dividing the amount of the contribution made on your behalf by the applicable Unit Value for that day for VCA 2. After that, the value of the Units is adjusted each day to reflect the investment returns and expenses of VCA 2 plus any Contract charges and fees that may apply to you.

 

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KEY INFORMATION

 

Important Information You Should Consider About the Contracts

Fees and Expenses

Charges for Early Withdrawals

Prudential does not impose any charges for withdrawals. Your ability to make withdrawals under the Contract is limited by federal tax law and your employer—the Contractholder—may impose additional restrictions. Generally premature distributions or withdrawals may be restricted or subject to a 10% tax (which is in addition to normal ordinary income taxes) for early distribution. Because of these federal tax implications, we urge you to consult with your tax adviser before making any withdrawals under the Contract.   For more information on withdrawals, please refer to the section of this prospectus titled “The Contract-Withdrawal of Contributions.”

Transaction Charges

The Contract does not have any transaction charges. Although Prudential has no present intention to do so, please note that Prudential reserves the right in the future to impose or deduct a maximum sales charge of 2.5% from contributions.   Certain states and other jurisdictions impose premium taxes or similar assessments upon Prudential, either at the time contributions are made or when the Participant’s investment in VCA 2 is surrendered or applied to purchase an annuity. Prudential reserves the right to deduct an amount from contributions or the Participant’s investment in VCA 2 to cover such taxes or assessments, if any, when applicable.   For more information on transaction charges, please refer to the sections of this prospectus titled “Contract Charges” and “The Contract; Deductions for Taxes on Annuity Considerations.”

Ongoing Fees and Expenses (annual charges)

The table below describes the fees and expenses that you may pay each year, depending on the Contract and the options you choose. Please refer to information provided by your Employer for information about the specific fees you will pay each year based on the options you have elected.

 

VCA 2

Annual Fee

Minimum

Maximum

Base Contrac t*, **

0.375%

0.375%

Investment options (Portfolio fees and expenses)***

0.10%

0.10%

* As a percentage of average account value.

** “Base Contract” consists of the mortality and expense risk fee and the annual account fee of up to $30 (which rounds to less than 0.01%). In certain instances we do not charge the annual account fee or the mortality and expense risk fee.

*** “Investment options” denotes expenses that are deducted from Fidelity Fund assets, including investment management fees and other expenses.

The Contract is not customizable, and there are no choices you can make that will affect how much you will pay. To help you understand the cost of investing in the Contract, the following table shows the lowest and highest cost you could pay each year. This estimate assumes that you do not take withdrawals from the Contract, which could add charges for early withdrawals that substantially increase costs.

						Lowest Annual Cost		Highest Annual Cost
						$477		$477
						Assumes:		Assumes
						• Investment of $100,000		•  Investment of $100,000
						• 5% annual appreciation		•  5% annual appreciation
						•  Least expensive combination of Contract Classes and Fidelity Fund fees and expenses		•  Most expensive combination of Contract Classes and Fidelity Fund fees and expenses
						•  No sales charges		•  No sales charges
						•  No additional Contributions, transfers or withdrawals		•  No additional Contributions, transfers or withdrawals

 

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				For more information on ongoing fees and expenses, please refer to the section of this prospectus titled “Fee Table.”

Risks
Risk of Loss				You can lose money by participating in the Contract.   For more information on the risk of loss, please refer to the section of this prospectus titled “Principal Risks of Participating in the Contract.”
Not a Short-Term Investment				The Contract is not a short-term investment vehicle and is not an appropriate investment for an investor who needs ready access to cash. The Contract is designed to provide benefits on a long-term basis. Consequently, you should not use the Contract as a short-term investment or savings vehicle. Because of the long-term nature of the Contract, you should consider whether investing Contributions in the Contract is consistent with the purpose for which the investment is being considered.   For more information on the short-term investment risks, please refer to the section of this prospectus titled “Principal Risks of Participating in the Contract.”
Risks Associated with Investment Options				An investment in the Contract is subject to the risk of poor investment performance and can vary depending on the performance of the investment option available under the Contract (the Fidelity Fund). The Contract has its own unique risks, and you should review the Contract before making an investment decision.   For more information on the risks associated with the Contract, please refer to the section of this prospectus titled “Principal Risks of Participating in the Contract.”
Insurance Company Risks				An investment in the Contract is subject to the risks related to Prudential. No company other than Prudential has any legal responsibility to pay amounts that Prudential owes under the Contract. You should look to the financial strength of Prudential for its claims-paying ability. More information about Prudential is available upon request. Such requests can be made at (855) 756-4738. Information about Prudential’s financial strength ratings can be found under “Investor Relations” at the bottom of the home page at www.prudential.com.   For more information on insurance company risks, please refer to the section of this prospectus titled “Principal Risks of Participating in the Contract.”

Restrictions
Investments				Unless the Contract specifically provides otherwise, you can transfer all or some of the number of Units credited to you to a fixed dollar annuity contract issued under Prudential’s Group Tax Deferred Annuity Program. Although there is no charge for transfers currently, we may impose one at any time upon notice to you. Different procedures may apply if the Contract has a recordkeeper other than Prudential. Prudential reserves the right to limit how many transfers you may make in any given period of time.   For more information on investment and transfer restrictions , please refer to the section of this prospectus titled “The Contract; Transfer Payments.”

 

Optional Benefits		The Contract does not offer any optional benefits, but it does provide for a death benefit.   For mo r e information on the death benefit, please refer to the section of this prospectus titled “Death Benefits.”

 

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Taxes
Tax Implications		You should consult with a tax professional to determine the tax implications of an investment in and payments received under the Contract. Withdrawals will be subject to ordinary income tax, and may be subject to tax penalties.   For more information on tax implications, please refer to the section of this prospectus titled “Additional Information.”
Conflicts of Interests
Investment Professional Compensation		Investment professionals may receive compensation for selling the Contracts to investors and may have a financial incentive to offer or recommend the Contracts over another investment. Compensation (commissions, overrides, and any expense reimbursement allowance) is paid to broker-dealers that are registered under the Securities Exchange Act of 1934 and/or entities that are exempt from such registration (firms). The individual representative will receive all or a portion of the compensation, depending on the practice of the firm.   For more information on investment professional compensation, please refer to the Statement of Additional Information (SAI).
Exchanges		Some investment professionals may have a financial incentive to offer you an annuity in place of the one you already own. You should only exchange the Contract if you determine after comparing the features, fees, and risks of both contracts, that it is preferable to purchase the new contract, rather than continue to own your existing Contract.   For more information on exchanges, please re fer to the section of this prospectus titled “Additional Information.”

 

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OVERVIEW OF THE CONTRACT

Prudential no longer offers the VCA 2 group variable annuity Contract for new sales. New participants may be added under an existing Contract, and contributions can be made on behalf of existing participants.

The VCA 2 Contract is a group variable annuity contract. A group variable annuity contract is a contract between a Contractholder and Prudential, an insurance company. The Contract is intended for retirement savings or other long-term investment purposes.

The Contract, like all deferred annuity contracts, has two phases—an accumulation period and an annuity phase (which is sometimes referred to as a payout period or an income period). During the accumulation period, since you have purchased the Contract through a qualified retirement plan, any earnings grow on a tax deferred basis and are generally taxed as income only when you make withdrawals. That means you are only taxed on the earnings when you withdraw them. The amount of money earned during the accumulation period determines the amount of payments you will receive during the income period.

The second phase—the income period—occurs when you begin receiving regular payments from the Contract. During this phase (after the Annuity Date), you can make an irrevocable election to have all or a part of your interest in the Participant Account used to purchase a fixed dollar annuity under the Contract. The annuity payments you receive may take the following forms, unless the retirement arrangement covering you provides otherwise: (1) variable life annuity; (2) variable life annuity with payments certain; (3) variable joint and survivor annuity; (4) variable annuity certain; and (5) variable joint and survivor annuity with 120 payments certain. Your ability to make withdrawals under the Contract is limited by federal tax law and your employer—the Contractholder—may impose additional restrictions. Generally premature distributions or withdrawals may be restricted or subject to a 10% tax (which is in addition to normal ordinary income taxes) for early distribution. Because of these federal tax implications, we urge you to consult with your tax adviser before making any withdrawals under the Contract.

VCA 2 is a separate account of Prudential. The value of a Participant’s investment depends upon the value of VCA 2’s assets. We invest the assets of the Separate Account in the Fidelity Fund. For more information on the Fidelity Fund, including its investment objective and policies, please refer to the section of this prospectus titled “Investment Options.”

The Contract generally is issued to employers who make contributions on behalf of their employees under Section 403(b) of the Internal Revenue Code. In this case, the employer is called the “Contractholder” and the person for whom contributions are being made is called a “Participant” or “you.” Once a Participant begins to receive annuity payments, Prudential will provide to the Contractholder—for delivery to the Participant—a certificate which describes the variable annuity benefits which are available to the Participant under the Contract.

In the event a Participant dies before the accumulation period under a Contract is completed, a basic death benefit will be paid to the Participant’s designated beneficiary. The death benefit will equal the value of the Participant’s Units (less the full annual account fee) on the day we receive the claim in Good Order. This could protect your retirement savings if you die during a period of declining markets, depending on when you die.

The annuity payments you receive under the Contract once you reach the income phase will depend on the following factors:

 

The Prudential Insurance Company of America (Prudential) offers the VCA 2 group tax-deferred variable annuity contract issued through The Prudential Variable Contract Account-2 (VCA 2) for use in connection with retirement arrangements that qualify for federal tax benefits under Section 403(b) of the Internal Revenue Code of 1986, as amended. Contributions made on behalf of Participants are invested in VCA 2, a unit investment trust invested in shares of the Fidelity VIP Index 500 Portfolio (the Fidelity Fund), a series of Variable Insurance Products Fund II (VIP).

Table of Contents

GENERAL INFORMATION ABOUT PRUDENTIAL AND VCA 2

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Prudential is a New Jersey stock life insurance company that has been doing business since October 13, 1875. Prudential is licensed to sell life insurance and annuities in the District of Columbia, Guam, Puerto Rico, U.S. Virgin Islands, and in all states. Prudential is a wholly-owned subsidiary of Prudential Financial, a New Jersey insurance holding company.

Prudential has developed long-term savings and retirement products, which are distributed through Empower Financial Services, Inc.

Neither Prudential Financial nor any of its subsidiaries are affiliated in any manner with Prudential plc, a company incorporated in the United Kingdom. As Prudential’s ultimate parent, Prudential Financial exercises significant influence over the operations and capital structure of Prudential. However, neither Prudential Financial nor any other related company has any legal responsibility to pay amounts that Prudential may owe under the contract or policy.

On July 21, 2021, Great-West Life & Annuity Insurance Company (“Great-West”) and Prudential Financial, Inc. (“PFI”), Prudential’s parent company, announced a strategic transaction, whereby, Great-West would, among other things, administer and reinsure the VCA 2 Contracts (the “Transaction”). The Transaction closed April 1, 2022. On or about October 1, 2022, Great-West changed its name to Empower Annuity Insurance Company of America.

VCA 2

Prudential offers the VCA 2 group tax-deferred variable annuity contract issued through The Prudential Variable Contract Account-2 (VCA 2) for use in connection with retirement arrangements that qualify for federal tax benefits under Section 403(b) of the Internal Revenue Code of 1986, as amended. Contributions made on behalf of Participants are invested in VCA 2. VCA 2 is registered with the SEC as a unit investment trust, which is a type of investment company. VCA 2 was established by Prudential on February 16, 1968, under New Jersey Insurance Law as a variable contract account. VCA 2 meets the definition of a “separate account” under federal securities laws.

ADMINISTRATION

The assets of VCA 2 are invested in shares of the Fidelity VIP Index 500 Portfolio, a series of VIP. The prospectus and statement of additional information of VIP describe the investment management and administration of the Fidelity VIP Index 500 Portfolio.

Empower is responsible for the administrative and recordkeeping functions of VCA 2 and pays the expenses associated with them. These functions include enrolling Participants, receiving and allocating contributions, maintaining Participants’ Accumulation Accounts, preparing and distributing confirmations, statements, and reports. The administrative and recordkeeping expenses borne by Empower include salaries, rent, postage, telephone, travel, legal, actuarial and accounting fees, office equipment, stationery and maintenance of computer and other systems.

An annual account charge for administrative expenses of not greater than $30 may be assessed against a Participant’s Accumulation Account. The annual account charge amount varies with each VCA 2 group variable annuity contract described in the Prospectus, but which is not more than $30 for any accounting year. The following table identifies, for the three most recent fiscal years, the amount of annual charges collected by Prudential.

VCA 2 is subject to a maximum daily charge that is equal to an effective annual rate of 0.375% of its assets. All of this charge is for administrative expenses not covered by the annual account charge. The following table identifies, for the three most recent fiscal years, the daily charges received by Prudential.

No sales charge is deducted from contributions, meaning that the entire amount of a contribution is invested in VCA 2. Although Prudential has no present intention to do so, please note that Prudential reserves the right in the future to impose or deduct a maximum sales charge of 2.5% from contributions.

NON-PRINCIPAL RISKS OF INVESTING IN VCA 2

CYBER SECURITY RISK. With the increasing use of technology and computer systems in general and, in particular, the Internet to conduct necessary business functions, VCA 2 is susceptible to operational, information security and related risks. These risks, which are often collectively referred to as “cyber security” risks, may include deliberate or malicious attacks, as well as unintentional events and occurrences. Cyber security is generally defined as the technology, operations and related protocol surrounding and protecting a user’s computer hardware, network, systems and applications and the data transmitted and stored therewith. These measures ensure the reliability of a user’s systems, as well as the security, availability, integrity, and confidentiality of data assets.

Deliberate cyber attacks can include, but are not limited to, gaining unauthorized access to computer systems in order to misappropriate and/or disclose sensitive or confidential information; deleting, corrupting or modifying data; and causing operational disruptions. Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (in order to prevent access to computer networks). In addition to deliberate breaches engineered by external actors, cyber security risks can also result from the conduct of malicious, exploited or careless insiders, whose actions may result in the destruction, release or disclosure of confidential or proprietary information stored on an organization’s systems.

Cyber security failures or breaches, whether deliberate or unintentional, arising from VCA 2’s third-party service providers (e.g., custodians, financial intermediaries, transfer agents), subadvisers, shareholder usage of unsecure systems to access personal accounts, as well as breaches suffered by the issuers of securities in which VCA 2 invests, may cause significant disruptions in the business operations of VCA 2. Potential impacts may include, but are not limited to, potential financial losses for VCA 2 and the issuers’ securities, the inability of shareholders to conduct transactions with VCA 2, an inability of VCA 2 to calculate unit values, and disclosures of personal or confidential shareholder information.

In addition to direct impacts on participants, cyber security failures by VCA 2 and/or their service providers and others may result in regulatory inquiries, regulatory proceedings, regulatory and/or legal and litigation costs to VCA 2, and reputational damage. VCA 2 may incur reimbursement and other expenses, including the costs of litigation and litigation settlements and additional compliance costs. VCA 2 may also incur considerable expenses in enhancing and upgrading computer systems and systems security following a cyber security failure.

The rapid proliferation of technologies, as well as the increased sophistication and activities of organized crime, hackers, terrorists, and others continue to pose new and significant cyber security threats. Although VCA 2 and its service providers and subadvisers may have established business continuity plans and risk management systems to mitigate cyber security risks, there can be no guarantee or assurance that such plans or systems will be effective, or that all risks that exist, or may develop in the future, have been completely anticipated and identified or can be protected against. Furthermore, VCA 2 cannot control or assure the efficacy of the cyber security plans and systems implemented by third-party service providers, the subadvisers, and the issuers in which VCA 2 invests.

FOREIGN MARKET DISRUPTION AND GEOPOLITICAL RISKS. International wars or conflicts and geopolitical developments in foreign countries, along with instability in regions such as Asia, Eastern Europe, and the Middle East, possible terrorist attacks in the United States or around the world, public health epidemics such as the outbreak of infectious diseases like the recent global outbreak of the COVID-19 or the 2014–2016 outbreak in West Africa of the Ebola virus, and other similar events could adversely affect the U.S. and foreign financial markets and may cause further long-term economic uncertainties in the United States and worldwide generally.

SALE OF GROUP VARIABLE ANNUITY CONTRACTS

INFORMATION ABOUT CONTRACT SALES

Prudential offers the Contracts on a continuous basis through Corporate Office, regional home office and group sales office employees in those states in which the Contracts may be lawfully sold. It may also offer the Contracts through licensed insurance brokers and agents, or through appropriately registered direct or indirect subsidiary(ies) of Prudential, provided clearances to do so are secured in any jurisdiction where such clearances may be necessary or desirable.

The table below sets forth, for VCA 2’s three most recent fiscal years, the amounts received by Prudential as sales charges in connection with the sale of these contracts, and the amounts credited by Prudential to other broker-dealers in connection with such sales.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF VCA 2 & FINANCIAL STATEMENTS FOR THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

The statutory financial statements for Prudential included herein should be distinguished from the financial statements for VCA 2, and should be considered only as bearing upon the ability of Prudential to meet its obligations under the Contract. Also included herein are certain financial statements of VCA 2.

FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

STATEMENT OF NET ASSETS

December 31, 2023

The accompanying notes are an integral part of these financial statements.

A1

FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

The accompanying notes are an integral part of these financial statements.

A2

NOTES TO FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

December 31, 2023

Note 1: General

The Prudential Variable Contract Account-2 (“VCA-2” or the “Account”) was established under the laws of the State of New Jersey as a separate investment account of The Prudential Insurance Company of America (“Prudential”), which is a wholly-owned subsidiary of Prudential Financial, Inc. (“Prudential Financial”). The Account was registered with the SEC as an open-end, diversified management investment company under the 1940 Act and registered as a unit investment trust investing solely in initial class of shares of an underlying fund — the Fidelity VIP index 500 Portfolio (Initial Class) (“Portfolio”) on January 6, 2023.

Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Prudential. Proceeds from purchases of group variable annuity contract (a “contract” or “product”) are invested in the Account. The portion of the Account’s assets applicable to the contracts is not chargeable with liabilities arising out of any other business Prudential may conduct.

The Account is used in connection with contracts designed for use by employers (individually, a “contractholder”, and collectively, the “contractholders”) in making retirement arrangements on behalf of their employees (individually, a “participant” and collectively, the “participants”). Although variable annuity payments differ according to the investment performance of the Account, they are not affected by mortality or expense experience because Prudential assumes the expense and the mortality risks under the contracts. The Account is a funding vehicle for the contracts which offer the option to invest in a subaccount, which in turn invests in shares of the Portfolio.

There were no mergers for the period ended December 31, 2023.

The Portfolio is a diversified open-end management investment company. The Account indirectly bears exposure to risks which may be interrelated and include, but are not limited to, the market, credit and liquidity risks of the Portfolio in which it invests. These financial statements should be read in conjunction with the financial statements and footnotes of the Portfolio. Additional information on the Portfolio is available upon request.

On April 1, 2022, Prudential Financial completed the sale of its Full Service Retirement business to Great- West Life & Annuity Insurance Company, renamed to Empower Annuity Insurance Company of America (“Empower”), by ceding of certain insurance policies through reinsurance which includes the Account and contracts. The reinsurance agreement does not extinguish Prudential Financial’s obligations to the contractholders, and Prudential Financial continues to be responsible for all contract terms and conditions of the contracts. On April 1, 2022, in connection with the reinsurance agreement, Prudential and Empower also entered into an Administrative Services Agreement whereby Empower administers and services the contracts.

Note 2: Significant Accounting Policies

The Account is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services-Investment Companies, which is part of the generally accepted accounting principles in the United States of America (“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and the reported amounts of increases and

A3

Note 2: Significant Accounting Policies (continued)

decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates. The most significant estimates relate to the valuation of investment in the Portfolio. Subsequent events have been evaluated through the date these financial statements were issued, and no adjustment or disclosure is required in the financial statements.

Investments - The investment in shares of the Portfolio is stated at the reported net asset value per share of the respective Portfolio, which is based on the fair value of the underlying securities in the Portfolio. All changes in fair value are recorded as net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

Security Transactions - Purchase and sale transactions are recorded as of the trade date of the security being purchased or sold. Realized gains and losses on security transactions are determined based upon the specific identification method.

Dividend Income and Distributions Received - Dividend and capital gain distributions received are reinvested in additional shares of the Portfolio and are recorded on the ex-distribution date.

Contracts in payout (annuitization period) – Net assets allocated to contracts in the payout period are computed according to the industry standard mortality tables. The assumed investment return (“AIR”), elected by the annuitant, is 3.5%, 4.0%, 4.5%, 5.0% or 5.50%. The mortality risk is fully borne by Prudential and may result in additional amounts being transferred into the Account by Prudential to cover greater longevity of annuitants than expected. A receivable is established for amounts due to the subaccount from Prudential but not yet received. The amounts are included in “Net transfers” on the Statements of Changes in Net Assets. Once a contract enters the payout period, no planholder initiated transactions are permitted and, therefore, the calculation of unit value is no longer relevant, although still performed. The unit values for such contracts in payout are therefore excluded from the Financial Highlights in Note 7.

Note 3: Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Account can access.

Level 2 - Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the investment, either directly or indirectly, for substantially the full term of the investment through corroboration with observable market data. Level 2 inputs include the reported net asset value per share of the underlying portfolio, quoted market prices in active markets for similar investments, quoted market prices in markets that are not active for identical or similar investments, and other market observable inputs.

Level 3 - Fair value is based on at least one significant unobservable input for the investment, which may require significant judgment or estimation in determining the fair value.

As of December 31, 2023, management determined that the fair value inputs for the Account’s investment, which is an open-end mutual fund registered with the SEC, was considered Level 2.

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Note 4: Taxes

Prudential is taxed as a “life insurance company” as defined by the Internal Revenue Code. The results of operations of the Account form a part of Prudential Financial’s consolidated federal tax return. No federal, state or local income taxes are payable by the Account. As such, no provision for tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law.

Note 5: Purchases and Sales of Investments

The aggregate costs of purchases and proceeds from sales, excluding distributions received and reinvested, of investments in the Portfolio for the period ended December 31, 2023 were as shown below.

(1) Includes the day 1 purchase into the Fidelity VIP Index 500 Portfolio (Initial Class) on January 6, 2023.

Note 6: Related Party Transactions

There were no transactions with related parties during the period ended December 31, 2023.

Note 7: Financial Highlights

The contracts have unique combinations of features and fees that are charged against the assets in each subaccount. Differences in the fee structure result in a variety of unit values, expense ratios and total returns.

In the table below, the units, the net assets, the investment income ratio, and the ranges of lowest to highest unit values, expense ratios, and total returns are presented for the products offered by Prudential and funded through the Account. Only contract designs within the Account that had contractholder units outstanding during the respective periods were considered when determining the ranges, which exclude Prudential’s position in the Account. The summary may not reflect the minimum and maximum contract charges as contractholders may not have selected all available options offered by Prudential.

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Note 7: Financial Highlights (continued)

Note 8: Charges and Expenses

The following represents the various charges and expenses of the Account which are paid to Prudential.

Administrative Charge - The administrative charge is applied daily against the net assets of the subaccount at an effective annual rate of 0.375%, which consists solely of the mortality and expense risk charges. This charge is assessed through a reduction in unit values.

Annual Account Charge - An annual account charge is deducted from the account of each participant, if applicable, at the time of withdrawal of the value of all of the participant’s account or at the end of the accounting year by reducing the number of units held. The charge will first be made against a participant’s account under a fixed dollar annuity companion contract or fixed rate option of the nonqualified combination contract. If the participant has no account under a fixed contract, or if the amount under a fixed contract is too small to pay the charge, the charge will be made against the participant’s account in VCA-2. The annual account charge will not exceed $30 and is paid to Prudential.

Please see the prospectus for further information.

Note 9: Other

Accumulation units are the basic valuation units used to calculate a contractholder’s interest allocated to the variable account before the annuitization date.

Annuity payments represent periods payments distributed under the terms of the contracts.

Contractholder net payments represent contractholder contributions, net of applicable deductions, charges, and state premium taxes, including transfers from the general account as a remittance of remediation credits to contractholders.

Participant loan repayments and interest represent payments made by contractholders to reduce the total outstanding participant loan principal plus accrued interest. Participant loan initiations are not permitted within the Account however, the repayments of loans initiated from other accounts for which the contractholder(s) can direct the repayment into this Account.

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Note 9: Other (continued)

Surrenders, withdrawals and death benefits are payments to contractholders and beneficiaries made under the terms of the contract, including amounts that contractholders have requested to be withdrawn or paid to them. In addition, the balance includes timing related adjustments on contractholder transactions, which are funded by the general account in order to maintain appropriate contractholder account balances.

Net transfers are amounts related to permitted transfers to and from the fixed account.

Other charges are contract level charges assessed through the redemption of units as described in Note 8, Charges and Expenses.

Receivable from (Payable to) The Prudential Insurance Company of America represents the amount Prudential may owe to or expect to receive from the Account primarily related to processing contractholder payments, surrenders, withdrawals and death benefits, and/or fees. This amount is reflected in the Account’s Statement of Net Assets as either a receivable from or (payable to) Prudential. The receivable/(payable) has no effect on the contractholder’s account or the related unit value.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors of The Prudential Insurance Company of America and the Contractholders of The Prudential Variable Contract Account-2

Opinion on the Financial Statements

We have audited the accompanying statement of net assets of Fidelity VIP Index 500 Portfolio (Initial Class) of The Prudential Variable Contract Account-2 as of December 31, 2023, the related statement of operations and the statement of changes in net assets for the period January 6, 2023 (commencement of operations) to December 31, 2023, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Fidelity VIP Index 500 Portfolio (Initial Class) of The Prudential Variable Contract Account-2 as of December 31, 2023, the results of its operations and the changes in its net assets for the period January 6, 2023 (commencement of operations) to December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of The Prudential Insurance Company of America management. Our responsibility is to express an opinion on the financial statements of the subaccount of The Prudential Variable Contract Account-2 based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the subaccount of The Prudential Variable Contract Account-2 in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of investment owned as of December 31, 2023 by correspondence with the transfer agent of the investee mutual fund. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York

April 29, 2024

We have served as the auditor of the subaccount of The Prudential Variable Contract Account-2 since 2023.

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