October 21, 2002 - QUARTERLY FINANCIAL SUPPLEMENT - 8-K: Current report

Prudential Financial, Inc. (PRU)

Financial Supplement

FINANCIAL SERVICES BUSINESSES

SECOND QUARTER 2002

Reference is made to Prudential Financial, Inc.’s filings with the Securities and Exchange Commission for general information, and consolidated financial information, regarding Prudential Financial, Inc., including its Closed Block Business.

October 21, 2002

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

CONTENTS

		Page
HIGHLIGHTS
Financial Highlights		1-2
Operations Highlights		3

FINANCIAL SERVICES BUSINESSES
Combined Statements of Operations		4
Combined Balance Sheets		5
Combining Statements of Operations by Division (Quarter)		6
Combining Statements of Operations by Division (Year-to-Date)		7
Combining Balance Sheets by Division		8
Short-Term Debt		9
Long-Term Debt		10

INSURANCE DIVISION
Combined Statements of Operations		11
Combining Statements of Operations (Quarter)		12
Combining Statements of Operations (Year-to-Date)		13
Individual Life and Annuities Sales Results and Assets Under Management		14
Individual Life and Annuities Segment Account Value Activity		15
Deferred Policy Acquisition Costs		16
Supplementary Information for Individual Life Insurance		17
Supplementary Information for Group Insurance		18
Supplementary Information for Property and Casualty Insurance		19

INVESTMENT DIVISION
Combined Statements of Operations		20
Combining Statements of Operations (Quarter)		21
Combining Statements of Operations (Year-to-Date)		22
Supplementary Revenue Information for Investment Management and Financial Advisory Segments		23
Assets under Management for Investment Management and Advisory Services Operations		24
Mutual Funds and Wrap-fee Products Sales Results and Assets Under Management		25
Retirement Sales Results and Account Values		26

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION
Combined Statements of Operations		27
Combining Statements of Operations		28
Sales Results and Supplementary Information		29-30

INVESTMENT PORTFOLIO
Investment Portfolio Composition		31
Financial Services Businesses Investment Portfolio Composition—Japanese Insurance Operations and Excluding Japanese Insurance Operations		32
Financial Services Businesses Investment Results		33
Financial Services Businesses Investment Results—Japanese Insurance Operations		34
Financial Services Businesses Investment Results—Excluding Japanese Insurance Operations		35

RECLASSIFIED STATEMENTS OF OPERATIONS AND SUPPLEMENTAL INFORMATION		36-47

KEY DEFINITIONS AND FORMULAS		48-50

RATINGS AND INVESTOR INFORMATION		51

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

This Financial Supplement presents historical information for the Financial Services Businesses of Prudential Financial, Inc. on a basis consistent with the Company’s reorganization announced in August, 2002. The realignment of the Company’s divisions and segments as discussed below, had no impact on total adjusted operating income or net income of the Financial Services Businesses.

The Insurance Division consists of the following segments:

The Individual Life Insurance and Annuities segment includes the former Individual Life Insurance segment, previously included in the U.S. Consumer division, and the individual annuity business, formerly reported within the Retail Investments segment of the U.S. Consumer division.

The Group Insurance segment was previously reported within the Employee Benefits division.

The Property and Casualty Insurance segment was previously reported within the U.S. Consumer division.

The Investment Division consists of the following segments:

The Investment Management segment includes the former Investment Management and Advisory Services segment of the Asset Management division, other than proprietary investment and syndication activities (now included in the Other Asset Management segment), and the mutual fund operations formerly reported in the Retail Investment segment of the U.S. Consumer division, net of relationship fees on money market funds now attributed to the Financial Advisory segment.

The Financial Advisory segment includes the former Private Client Group segment, previously reported within the U.S. Consumer division, including certain relationship fees for money market funds formerly reported within the Retail Investments segment of the U.S. Consumer division and the equity securities sales and trading operations formerly reported in the Other Asset Management segment of the Asset Management division.

The Retirement segment includes the former Other Employee Benefits segment of the Employee Benefits division except for the real estate and relocation business (now reported within Corporate and Other operations).

The Other Asset Management segment includes the former Other Asset Management segment of the Asset Management division, except for equity sales and trading operations (now reported within the Financial Advisory segment), and the proprietary investment and syndication activities previously included in the Investment Management and Advisory Services segment of the Asset Management division.

The International Insurance and Investments division is a new name for the former International division, and includes the International Insurance and International Securities and Investments segments.

This Financial Supplement includes historical summaries of reclassified results and supplemental information for each division and for the segments that have been formed or redefined as indicated above, as well as Corporate and Other operations, for each of the six quarters through June 30, 2002 and the two years ended December 31, 2000 and 1999.

If you have any questions or need assistance with regard to this Financial Supplement, please contact the Investor Relations unit.

See following page for summary definitions of segments that have been formed or redefined.

iii

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

Individual Life Insurance and Annuities Segment

Individual Life Insurance

(Former Individual Life Insurance segment)

Individual Annuities

(Individual Annuities business formerly reported within Retail Investments segment)

Investment Management Segment

Investment Management and Advisory Services

(Former Investment Management and Advisory Services segment EXCEPT proprietary investment and syndication activities)

Mutual Funds

(Mutual Funds business formerly reported within Retail Investments segment, net of relationship fees on money market funds now attributed to the Financial Advisory segment)

Financial Advisory Segment

Private Client Group

(Former Private Client Group segment PLUS certain relationship fees for money market funds formerly reported within the Retail Investments segment)

Equity Securities Sales and Trading

(Equity securities sales and trading operations formerly reported within Other Asset Management segment)

Retirement Segment

Retirement

(Former Other Employee Benefits segment EXCEPT for real estate and relocation business)

Other Asset Management Segment

Hedge Portfolios and Commercial Mortgage Securitization

(Former Other Asset Management segment EXCEPT for equity securities sales and trading activities)

Proprietary Investments and Syndications

(formerly reported within Investment Management and Advisory Services segment)

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date				%Change			2001						2002
2002		2001		%Change			2Q		3Q		4Q		1Q		2Q
						Financial Services Businesses:
						Pre-tax adjusted operating income by division:
372		392		-5	%	Insurance Division	171		82		71		205		167
190		159		19	%	Investment Division	(1	)	(1	)	6		100		90
376		218		72	%	International Insurance and Investments Division	120		180		125		200		176
63		65		-3	%	Corporate and other operations	71		(5	)	(29	)	18		45

1,001		834		20	%	Total pre-tax adjusted operating income	361		256		173		523		478
365		278		31	%	Income taxes(1)	101		153		68		191		174

636		556		14	%	Financial Services Businesses after-tax adjusted operating income	260		103		105		332		304


						Items excluded from adjusted operating income:
(439	)	318		-238	%	Realized investment gains (losses), net of related adjustments	75		(322	)	(132	)	(96	)	(343	)
2		(82	)	102	%	Divested businesses	(60	)	(40	)	(25	)	(8	)	10
—		(162	)	100	%	Demutualization costs and expenses(2)	(117	)	(37	)	(389	)	—		—

(437	)	74		-690	%	Total items excluded from adjusted operating income, before income taxes	(102	)	(399	)	(546	)	(104	)	(333	)
(159	)	(23	)	-591	%	Income taxes, including mutual insurance company tax	(92	)	(348	)	(22	)	(35	)	(124	)

(278	)	97		-387	%	Total items excluded from adjusted operating income, after income taxes	(10	)	(51	)	(524	)	(69	)	(209	)

358		653		-45	%	Income (loss) from continuing operations (after-tax) of Financial Services Businesses	250		52		(419	)	263		95
—		—		—		Income from discontinued operations, net of taxes	—		—		16		—		—

358		653		-45	%	Net income (loss) of Financial Services Businesses	250		52		(403	)	263		95


						Earnings per share of Common Stock (diluted):
1.12		0.95				Adjusted operating income	0.45		0.18		0.18		0.58		0.54
0.65		1.12				Income (loss) from continuing operations	0.43		0.09		(0.72	)	0.46		0.19
0.65		1.12				Net income (loss)	0.43		0.09		(0.69	)	0.46		0.19

585.2		583.6				Weighted average number of outstanding Common shares (diluted basis)	583.6		583.6		583.7		585.1		585.2

6.92	%					Operating Return on Average Equity(3)							7.17	%	6.66	%

						Reconciliation to Consolidated Net Income of Prudential Financial, Inc:
358		653				Net income (loss) of Financial Services Businesses (above)	250		52		(403	)	263		95
(273	)	(21	)			Net loss of Closed Block Business(4)	(55	)	(332	)	(103	)	(110	)	(163	)

85		632				Consolidated net income (loss)	195		(280	)	(506	)	153		(68	)


21						Direct equity adjustments for earnings per share calculations							7		14

(1)

Income taxes applicable to pre-tax adjusted operating income, which excludes the mutual insurance company tax for periods prior to demutualization.

(2)

Demutualization costs and expenses for the quarter ended December 31, 2001, include demutualization consideration of $340 million paid to former Canadian branch policyholders.

(3)

As a result of the establishment of the Closed Block Business concurrently with the demutualization on December 18, 2001, attributed equity as of the end of periods prior to December 31, 2001 is not comparable to attributed equity at that date and thereafter and, therefore, Operating Return on Average Equity is not presented for periods prior to 2002.

(4)

Amounts shown for the Closed Block Business represent results of the Traditional Participating Products segment for periods prior to effective date of demutualization.

Page 1

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date			2001			2002
2002	2001		2Q	3Q	4Q	1Q	2Q
		Financial Services Businesses Capitalization Data(1):
		Short-term debt	9,440	9,720	5,405	6,515	4,221
		Long-term debt	3,047	2,983	3,554	3,350	3,003
		Equity Security Units(2)	—	—	690	690	690

		Attributed Equity:
		Including accumulated other comprehensive income	14,787	14,683	19,646	19,453	20,258
		Excluding unrealized gains and losses on investments	13,822	13,433	18,803	19,034	19,144
		Excluding accumulated other comprehensive income	13,960	13,581	19,083	19,289	19,321

		Total Capitalization:
		Including accumulated other comprehensive income	17,834	17,666	23,890	23,493	23,951
		Excluding unrealized gains and losses on investments	16,869	16,416	23,047	23,074	22,837
		Excluding accumulated other comprehensive income	17,007	16,564	23,327	23,329	23,014

		Book value per share of Common Stock:
		Including accumulated other comprehensive income			33.59	33.25	34.72
		Excluding unrealized gains and losses on investments			32.15	32.53	32.81
		Excluding accumulated other comprehensive income			32.63	32.97	33.12

		Number of diluted shares at end of period			584.8	585.1	583.4

		Common Stock Price Range:
35.75		High			33.19	32.09	35.75
30.05		Low			29.30	30.05	31.05
33.36		Close			33.19	31.05	33.36

		Common Stock market capitalization(1)			19,369	18,143	19,448

(1)

As of end of period.

(2)

Guaranteed minority interest in Trust holding solely debentures of Parent, as reported in combined balance sheet.

Page 2

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

OPERATIONS HIGHLIGHTS

Year-to-date			2001			2002
2002	2001		2Q	3Q	4Q	1Q	2Q
		Assets Under Management and Administration ($ billions)(1)(2):
		Assets Under Management :
		Managed by Investment Division(3):
		Investment Management Segment—Investment Management & Advisory Services
		Retail customers	99.8	92.8	96.5	92.3	84.8
		Institutional customers	90.7	84.9	89.1	86.2	83.5
		General account(4)	109.3	110.1	113.8	111.7	116.0

		Total Investment Management and Advisory Services	299.8	287.8	299.4	290.2	284.3

		Non-proprietary wrap-fee and other assets under management	42.8	36.6	41.2	41.9	38.2

		Total managed by Investment Division	342.6	324.4	340.6	332.1	322.5
		Managed by International Insurance and Investments Division(4):	42.4	40.5	39.3	38.0	37.9
		Managed by Insurance Division	8.5	8.4	8.1	8.7	8.0

		Total assets under management	393.5	373.3	388.0	378.8	368.4
		Client assets under administration	212.3	190.9	201.6	201.2	188.4

		Total assets under management and administration	605.8	564.2	589.6	580.0	556.8


		Distribution Representatives(1):
		Prudential Agents	5,049	4,928	4,387	4,469	4,551
		Financial Advisors:
		Domestic	5,765	5,618	5,430	5,131	4,779
		International	732	748	729	728	725

		Total	6,497	6,366	6,159	5,859	5,504
		International Life Planners	3,690	3,999	4,104	4,098	4,207
		Gibraltar Life Advisors	7,230	6,596	6,121	5,726	5,525

		Distribution Representative Productivity:
37	29	Prudential Agent productivity ($ thousands)	30	28	37	34	38
377	361	Financial Advisor productivity (domestic; $ thousands)	348	327	336	379	375

		Third Party Distribution—Retail Products ($ millions)(5):
118	98	Individual life insurance	43	123	31	25	93
35	5	Individual annuities	4	3	9	11	24
1,475	2,014	Mutual funds and wrap-fee products	1,521	491	537	456	1,019

(1)

As of end of period.

(2)

At fair market value.

(3)

Reflects reclassification of amounts by client category as of January 1, 2002, based on internal management criteria, which reduced the amount attributed to retail customers by $3.3 billion and increased the amounts attributed to institutional customers and the general account by $2.8 billion and $0.5 billion, respectively.

(4)

Reflects, as of June 30, 2002, Investment division’s assumption of management of $3.5 billion of assets which were previously reflected in assets under management of the International Insurance and Investments division.

(5)

Represents statutory first year premiums and deposits for Individual Life Insurance and gross sales for Individual Annuities, Mutual Funds and Wrap-fee products.

Page 3

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—FINANCIAL SERVICES BUSINESSES

(in millions)

Year-to-date				%Change			2001						2002
2002		2001		%Change			2Q		3Q		4Q		1Q		2Q
						Revenues(1):
4,612		3,625		27	%	Premiums	2,014		2,241		2,361		2,278		2,334
846		875		-3	%	Policy charges and fee income	483		474		454		434		412
2,605		2,649		-2	%	Net investment income	1,352		1,288		1,302		1,249		1,356
2,152		2,272		-5	%	Commissions, investment management fees, and other income	1,164		992		1,092		1,095		1,057

10,215		9,421		8	%	Total revenues	5,013		4,995		5,209		5,056		5,159


						Benefits and Expenses(1):

4,523		3,684		23	%	Insurance and annuity benefits	2,073		2,279		2,296		2,206		2,317
829		804		3	%	Interest credited to policyholders’ account balances	422		432		434		414		415
106		208		-49	%	Interest expense	100		70		48		56		50
(698	)	(656	)	-6	%	Deferral of acquisition costs	(343	)	(325	)	(344	)	(340	)	(358	)
512		454		13	%	Amortization of acquisition costs	212		255		224		239		273
1,453		1,692		-14	%	Securities operations non-interest expenses	875		771		816		722		731
2,489		2,401		4	%	General and administrative expenses	1,313		1,257		1,562		1,236		1,253

9,214		8,587		7	%	Total benefits and expenses	4,652		4,739		5,036		4,533		4,681


1,001		834		20	%	Adjusted operating income before income taxes	361		256		173		523		478


						Items excluded from adjusted operating income before income taxes:
(440	)	329		-234	%	Realized investment gains (losses), net of related adjustments	82		(326	)	(165	)	(101	)	(339	)
1		(11	)	109	%	Related charges	(7	)	4		33		5		(4	)

(439	)	318		-238	%	Total realized investment gains (losses), net of related adjustments	75		(322	)	(132	)	(96	)	(343	)


2		(82	)	102	%	Divested businesses	(60	)	(40	)	(25	)	(8	)	10
—		(162	)	100	%	Demutualization costs and expenses	(117	)	(37	)	(389	)	—		—

(437	)	74		-690	%	Total items excluded from adjusted operating income before income taxes	(102	)	(399	)	(546	)	(104	)	(333	)


564		908		-38	%	Income (loss) from continuing operations before income taxes	259		(143	)	(373	)	419		145
206		255		-19	%	Income tax expense (benefit)	9		(195	)	46		156		50

358		653		-45	%	Income (loss) from continuing operations, after-tax	250		52		(419	)	263		95

(1)

Revenues exclude realized investment gains, net of losses and related adjustments, and revenues of divested businesses. Benefits and expenses exclude charges related to realized investment gains, net of losses, benefits and expenses of divested businesses, and demutualization costs and expenses.

Page 4

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINED BALANCE SHEETS—FINANCIAL SERVICES BUSINESSES

(in millions)

	06/30/2001	09/30/2001	12/31/2001	03/31/2002	06/30/2002
Assets:
Investments:
Fixed maturities available for sale, at fair value (amortized cost $67,706; $66,031; $67,276; $69,840; $70,745)	68,768	68,018	68,880	70,687	72,700
Fixed maturities held to maturity, at amortized cost (fair value $562; $555; $395; $373; $2,293)	538	532	374	354	2,268
Trading account assets, at fair value	5,752	5,199	5,043	6,286	6,038
Equity securities available for sale, at fair value (cost $3,462; $2,072; $1,671; $1,620; $1,748)	3,634	2,026	1,688	1,687	1,868
Commercial loans	13,977	12,756	13,624	13,011	12,752
Policy loans	3,033	3,008	2,812	2,854	2,982
Securities purchased under agreements to resell	6,169	4,480	4,421	7,137	5,136
Cash collateral for borrowed securities	3,422	3,963	5,210	5,628	5,530
Other long-term investments	4,023	3,811	4,336	4,253	4,216
Short-term investments	2,960	2,773	2,972	3,095	2,848

Total investments	112,276	106,566	109,360	114,992	116,338
Cash and cash equivalents	11,555	13,209	16,900	10,282	8,344
Accrued investment income	975	977	1,059	1,027	1,069
Broker-dealer related receivables	8,773	9,119	7,802	7,017	7,091
Deferred policy acquisition costs	5,445	5,525	5,538	5,660	5,859
Other assets	11,500	13,798	13,488	15,692	16,213
Separate account assets	79,697	74,523	77,158	78,515	75,101

Total assets	230,221	223,717	231,305	233,185	230,015

Liabilities:
Future policy benefits	40,756	40,729	39,752	38,403	40,319
Policyholders’ account balances	38,498	37,936	37,944	37,559	38,916
Unpaid claims and claim adjustment expenses	3,516	3,478	3,408	3,353	3,352
Securities sold under agreements to repurchase	10,262	9,479	9,280	11,704	10,557
Cash collateral for loaned securities	7,626	6,264	7,650	8,256	8,959
Income taxes payable	1,006	1,550	1,085	1,102	1,609
Broker-dealer related payables	5,206	6,571	6,445	5,581	6,076
Securities sold but not yet purchased	3,979	3,057	2,791	4,561	3,185
Short-term debt	9,440	9,720	5,405	6,515	4,221
Long-term debt	3,047	2,983	3,554	3,350	3,003
Other liabilities	12,401	12,744	16,497	14,143	13,769
Separate account liabilities	79,697	74,523	77,158	78,515	75,101

Total liabilities	215,434	209,034	210,969	213,042	209,067


Guaranteed minority interest in Trust holding solely debentures of Parent	—	—	690	690	690

Attributed Equity:
Accumulated other comprehensive income	827	1,102	563	164	937
Other attributed equity	13,960	13,581	19,083	19,289	19,321

Total attributed equity	14,787	14,683	19,646	19,453	20,258

Total liabilities and attributed equity	230,221	223,717	231,305	233,185	230,015

Page 5

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS—BY DIVISION

(in millions)

	Quarter Ended June 30, 2002
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations
Revenues(1):
Premiums	2,334		1,309		21		1,006		(2	)
Policy charges and fee income	412		350		19		49		(6	)
Net investment income	1,356		386		602		185		183
Commissions, investment management fees, and other income	1,057		63		931		142		(79	)

Total revenues	5,159		2,108		1,573		1,382		96


Benefits and Expenses(1):
Insurance and annuity benefits	2,317		1,256		231		799		31
Interest credited to policyholders’ account balances	415		153		238		24		—
Interest expense	50		(1	)	5		—		46
Deferral of acquisition costs	(358	)	(218	)	(14	)	(147	)	21
Amortization of acquisition costs	273		227		27		44		(25	)
Securities operations non-interest expenses	731		—		619		119		(7	)
General and administrative expenses	1,253		524		377		367		(15	)

Total benefits and expenses	4,681		1,941		1,483		1,206		51

Adjusted operating income before income taxes	478		167		90		176		45


	Quarter Ended June 30, 2001
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations
Revenues(1):
Premiums	2,014		1,194		3		817		—
Policy charges and fee income	483		356		20		111		(4	)
Net investment income	1,352		382		627		129		214
Commissions, investment management fees, and other income	1,164		56		970		134		4

Total revenues	5,013		1,988		1,620		1,191		214


Benefits and Expenses(1):
Insurance and annuity benefits	2,073		1,149		213		702		9
Interest credited to policyholders’ account balances	422		152		251		18		1
Interest expense	100		4		7		2		87
Deferral of acquisition costs	(343	)	(207	)	(16	)	(143	)	23
Amortization of acquisition costs	212		175		22		35		(20	)
Securities operations non-interest expenses	875		—		733		131		11
General and administrative expenses	1,313		544		411		326		32

Total benefits and expenses	4,652		1,817		1,621		1,071		143

Adjusted operating income before income taxes	361		171		(1	)	120		71

(1)

Page 6

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS—BY DIVISION

(in millions)

	Six Months Ended June 30, 2002
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations
Revenues(1) :
Premiums	4,612		2,561		29		2,022		—
Policy charges and fee income	846		708		38		106		(6	)
Net investment income	2,605		766		1,165		349		325
Commissions, investment management fees, and other income	2,152		119		1,868		291		(126	)

Total revenues	10,215		4,154		3,100		2,768		193

Benefits and Expenses(1):
Insurance and annuity benefits	4,523		2,455		428		1,582		58
Interest credited to policyholders' account balances	829		300		481		48		—
Interest expense	106		(1	)	8		—		99
Deferral of acquisition costs	(698	)	(412	)	(28	)	(298	)	40
Amortization of acquisition costs	512		400		48		109		(45	)
Securities operations non-interest expenses	1,453		—		1,226		233		(6	)
General and administrative expenses	2,489		1,040		747		718		(16	)

Total benefits and expenses	9,214		3,782		2,910		2,392		130

Adjusted operating income before income taxes	1,001		372		190		376		63

	Six Months Ended June 30, 2001
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations
Revenues(1):
Premiums	3,625		2,331		21		1,271		2
Policy charges and fee income	875		705		39		135		(4	)
Net investment income	2,649		780		1,279		179		411
Commissions, investment management fees, and other income	2,272		112		2,010		278		(128	)

Total revenues	9,421		3,928		3,349		1,863		281

Benefits and Expenses(1):
Insurance and annuity benefits	3,684		2,167		462		1,039		16
Interest credited to policyholders' account balances	804		308		477		19		—
Interest expense	208		2		17		4		185
Deferral of acquisition costs	(656	)	(412	)	(36	)	(257	)	49
Amortization of acquisition costs	454		378		44		73		(41	)
Securities operations non-interest expenses	1,692		—		1,415		258		19
General and administrative expenses	2,401		1,093		811		509		(12	)

Total benefits and expenses	8,587		3,536		3,190		1,645		216

Adjusted operating income before income taxes	834		392		159		218		65

(1)

Page 7

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING BALANCE SHEETS—BY DIVISION

(in millions)

	As of June 30, 2002
	Total Financial Services Businesses	Insurance Division	Investment Division	International Insurance & Investments Division	Corporate and Other Operations
Assets:
Total investments	116,338	25,225	45,489	34,795	10,829
Broker-dealer related receivables	7,091	—	5,651	1,144	296
Deferred policy acquisition costs	5,859	3,923	64	1,948	(76	)
Other assets	25,626	5,201	10,318	3,837	6,270
Separate account assets	75,101	33,625	41,602	501	(627	)

Total assets	230,015	67,974	103,124	42,225	16,692

Liabilities:
Future policy benefits	40,319	4,936	12,205	22,727	451
Policyholders’ account balances	38,916	13,691	15,686	9,519	20
Debt	7,224	56	3,420	954	2,794
Other liabilities	47,507	9,063	26,389	5,589	6,466
Separate account liabilities	75,101	33,625	41,602	501	(627	)

Total liabilities	209,067	61,371	99,302	39,290	9,104

Guaranteed minority interest in Trust holding solely debentures of Parent	690	—	—	—	690
Attributed Equity:
Accumulated other comprehensive income (loss)	937	652	404	46	(165	)
Other attributed equity	19,321	5,951	3,418	2,889	7,063

Total attributed equity	20,258	6,603	3,822	2,935	6,898

Total liabilities and attributed equity	230,015	67,974	103,124	42,225	16,692

	As of December 31, 2001
	Total Financial Services Businesses	Insurance Division	Investment Division	International Insurance & Investments Division		Corporate and Other Operations
Assets:
Total investments	109,360	24,126	45,579	29,841		9,814
Broker-dealer related receivables	7,802	—	6,421	1,069		312
Deferred policy acquisition costs	5,538	3,919	66	1,615		(62	)
Other assets	31,447	4,496	9,215	8,454		9,282
Separate account assets	77,158	36,166	41,217	422		(647	)

Total assets	231,305	68,707	102,498	41,401		18,699

Liabilities:
Future policy benefits	39,752	4,925	12,317	22,041		469
Policyholders’ account balances	37,944	12,739	15,372	9,808		25
Debt	8,959	106	4,527	1,058		3,268
Other liabilities	47,156	8,505	24,980	5,429		8,242
Separate account liabilities	77,158	36,166	41,217	422		(647	)

Total liabilities	210,969	62,441	98,413	38,758		11,357

Guaranteed minority interest in Trust holding solely debentures of Parent	690	—	—	—		690
Attributed Equity:
Accumulated other comprehensive income (loss)	563	529	446	(171	)	(241	)
Other attributed equity	19,083	5,737	3,639	2,814		6,893

Total attributed equity	19,646	6,266	4,085	2,643		6,652

Total liabilities and attributed equity	231,305	68,707	102,498	41,401		18,699

Page 8

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

SHORT TERM DEBT—FINANCIAL SERVICES BUSINESSES

(in millions)

	As of June 30, 2002				As of December 31, 2001
	Prudential Financial, Inc.	The Prudential Insurance Co. of America(a)	Other Affiliates	Total	Prudential Financial, Inc.	The Prudential Insurance Co. of America(a)	Other Affiliates	Total
Borrowings by use of proceeds:
General corporate purposes	—	305	—	305	—	222	—	222
Investment related	—	584	—	584	—	834	—	834
Securities business related	—	1,031	1,337	2,368	—	1,639	1,484	3,123
Specified other businesses	—	853	110	963	—	1,141	14	1,155
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	71	71

Total short-term debt	—	2,773	1,448	4,221	—	3,836	1,569	5,405

Borrowings by type:
Long-term debt due within one year	—	651	—	651	—	753	—	753
Commercial paper	—	2,061	—	2,061	—	3,022	—	3,022
Bank borrowings	—	—	837	837	—	—	1,324	1,324
Other short-term debt	—	61	610	671	—	61	174	235

Total general obligations	—	2,773	1,447	4,220	—	3,836	1,498	5,334
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	71	71

Total short-term debt	—	2,773	1,448	4,221	—	3,836	1,569	5,405

(a)

Includes Prudential Funding, LLC.

Page 9

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

LONG TERM DEBT

(in millions)

	As of June 30, 2002
							Limited
	General			Securities	Specified	Total	Recourse
	Corporate		Investment	Business	Other	General	and non-	Total
	Purposes		Related	Related	Businesses	Obligations	Recourse	Borrowing
Financial Services Businesses:
Prudential Financial, Inc.:
Long-term fixed and floating rate notes	—		—	—	—	—	—	—
Hybrid notes	—		—	—	—	—	—	—

Total	—		—	—	—	—	—	—

The Prudential Insurance Company of America(a):
Surplus notes	690		—	—	—	690	—	690
Long-term fixed and floating rate notes	600		768	485	—	1,853	—	1,853
Commercial paper backed by long-term credit agreements	—		—	—	—	—	—	—

Total	1,290		768	485	—	2,543	—	2,543

Long-term debt of other affiliated companies	—		—	—	—	—	460	460

Total long-term debt of Financial Services Businesses	1,290		768	485	—	2,543	460	3,003

Ratio of long-term and short-term corporate debt to capitalization	8.1	%

Closed Block Business:
Limited recourse notes of Prudential Holdings, LLC	—		—	—	—	—	1,750	1,750

	As of December 31, 2001
							Limited
	General			Securities	Specified	Total	Recourse
	Corporate		Investment	Business	Other	General	and non-	Total
	Purposes		Related	Related	Businesses	Obligations	Recourse	Borrowing
Financial Services Businesses:
Prudential Financial, Inc.:
Long-term fixed and floating rate notes	—		—	—	—	—	—	—
Hybrid notes	—		—	—	—	—	—	—

Total	—		—	—	—	—	—	—

The Prudential Insurance Company of America(a):
Surplus notes	989		—	—	—	989	—	989
Long-term fixed and floating rate notes	1,456		586	—	—	2,042	—	2,042
Commercial paper backed by long-term credit agreements	—		—	—	—	—	—	—

Total	2,445		586	—	—	3,031	—	3,031

Long-term debt of other affiliated companies	—		—	—	—	—	523	523

Total long-term debt of Financial Services Businesses	2,445		586	—	—	3,031	523	3,554

Ratio of long-term and short-term corporate debt to capitalization	12.7	%

Closed Block Business:
Limited recourse notes of Prudential Holdings, LLC	—		—	—	—	—	1,750	1,750

(a)

Includes Prudential Funding, LLC.

Page 10

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

Year-to-date				% Change		2001						2002
2002		2001		% Change		2Q		3Q		4Q		1Q		2Q
					Revenues(1):
2,561		2,331		10%	Premiums	1,194		1,219		1,279		1,252		1,309
708		705		0%	Policy charges and fee income	356		355		363		358		350
766		780		-2%	Net investment income	382		375		381		380		386
119		112		6%	Commissions, investment management fees, and other income	56		64		55		56		63

4,154		3,928		6%	Total revenues	1,988		2,013		2,078		2,046		2,108

					Benefits and Expenses(1):
2,455		2,167		13%	Insurance and annuity benefits	1,149		1,243		1,223		1,199		1,256
300		308		-3%	Interest credited to policyholders' account balances	152		153		159		147		153
(1	)	2		-150%	Interest expense	4		—		(1	)	—		(1	)
(412	)	(412	)	0%	Deferral of acquisition costs	(207	)	(197	)	(199	)	(194	)	(218	)
400		378		6%	Amortization of acquisition costs	175		210		177		173		227
1,040		1,093		-5%	General and administrative expenses	544		522		648		516		524

3,782		3,536		7%	Total benefits and expenses	1,817		1,931		2,007		1,841		1,941


372		392		-5%	Adjusted operating income before income taxes	171		82		71		205		167

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 11

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

	Quarter Ended June 30, 2002
	Total		Individual				Property &		Individual Life and Annuities
	Insurance		Life and		Group		Casualty		Individual		Individual
	Division		Annuities		Insurance		Insurance		Life		Annuities
Revenues(1):
Premiums	1,309		86		704		519		65		21
Policy charges and fee income	350		308		42		—		252		56
Net investment income	386		201		147		38		101		100
Commissions, investment management fees, and other income	63		53		6		4		37		16

Total revenues	2,108		648		899		561		455		193

Benefits and Expenses(1):
Insurance and annuity benefits	1,256		165		686		405		128		37
Interest credited to policyholders’ account balances	153		96		57		—		36		60
Interest expense	(1	)	—		(1	)	—		—		—
Deferral of acquisition costs	(218	)	(115	)	(8	)	(95	)	(80	)	(35	)
Amortization of acquisition costs	227		133		—		94		63		70
General and administrative expenses	524		256		129		139		178		78

Total benefits and expenses	1,941		535		863		543		325		210

Adjusted operating income before income taxes	167		113		36		18		130		(17	)

	Quarter Ended June 30, 2001
	Total		Individual				Property &		Individual Life and Annuities
	Insurance		Life and		Group		Casualty		Individual		Individual
	Division		Annuities		Insurance		Insurance		Life		Annuities
Revenues(1):
Premiums	1,194		109		619		466		96		13
Policy charges and fee income	356		321		35		—		256		65
Net investment income	382		205		137		40		97		108
Commissions, investment management fees, and other income	56		49		5		2		29		20

Total revenues	1,988		684		796		508		478		206

Benefits and Expenses(1):
Insurance and annuity benefits	1,149		198		622		329		173		25
Interest credited to policyholders’ account balances	152		99		53		—		34		65
Interest expense	4		2		2		—		1		1
Deferral of acquisition costs	(207	)	(101	)	(4	)	(102	)	(77	)	(24	)
Amortization of acquisition costs	175		76		1		98		55		21
General and administrative expenses	544		281		113		150		205		76

Total benefits and expenses	1,817		555		787		475		391		164

Adjusted operating income before income taxes	171		129		9		33		87		42

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 12

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

	Six Months Ended June 30, 2002
	Total		Individual				Property &		Individual Life and Annuities
	Insurance Division		Life and Annuities		Group Insurance		Casualty Insurance		Individual Life		Individual Annuities
Revenues(1):
Premiums	2,561		151		1,398		1,012		121		30
Policy charges and fee income	708		614		94		—		502		112
Net investment income	766		406		283		77		206		200
Commissions, investment management fees, and other income	119		102		14		3		69		33

Total revenues	4,154		1,273		1,789		1,092		898		375

Benefits and Expenses(1):
Insurance and annuity benefits	2,455		322		1,360		773		257		65
Interest credited to policyholders' account balances	300		189		111		—		69		120
Interest expense	(1	)	—		(1	)	—		—		—
Deferral of acquisition costs	(412	)	(209	)	(10	)	(193	)	(146	)	(63	)
Amortization of acquisition costs	400		209		(3	)	194		116		93
General and administrative expenses	1,040		503		259		278		355		148

Total benefits and expenses	3,782		1,014		1,716		1,052		651		363

Adjusted operating income before income taxes	372		259		73		40		247		12

	Six Months Ended June 30, 2001
	Total		Individual				Property &		Individual Life and Annuities
	Insurance Division		Lifeand Annuities		Group Insurance		Casualty Insurance		Individual Life		Individual Annuities
Revenues(1):
Premiums	2,331		209		1,211		911		183		26
Policy charges and fee income	705		636		69		—		507		129
Net investment income	780		424		273		83		196		228
Commissions, investment management fees, and other income	112		98		11		3		59		39

Total revenues	3,928		1,367		1,564		997		945		422

Benefits and Expenses(1):
Insurance and annuity benefits	2,167		379		1,184		604		330		49
Interest credited to policyholders' account balances	308		202		106		—		69		133
Interest expense	2		3		(1	)	—		1		2
Deferral of acquisition costs	(412	)	(203	)	(7	)	(202	)	(153	)	(50	)
Amortization of acquisition costs	378		179		1		198		117		62
General and administrative expenses	1,093		564		225		304		415		149

Total benefits and expenses	3,536		1,124		1,508		904		779		345

Adjusted operating income before income taxes	392		243		56		93		166		77

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 13

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—INDIVIDUAL LIFE AND ANNUITIES SALES RESULTS AND ASSETS UNDER MANAGEMENT

(in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				INDIVIDUAL LIFE INSURANCE SALES(1):
85		120		Variable life	55		46		50		44		41
27		3		Universal life	3		5		4		11		16
86		65		Corporate-owned life insurance	28		117		17		10		76
28		21		Term life	11		11		11		13		15

226		209		Total	97		179		82		78		148

				ANNUITY SALES AND ACCOUNT VALUES
				Variable Annuities:
18,689		21,059		Beginning total account value	19,118		19,523		17,190		18,689		18,435
780		667		Sales	328		274		330		374		406
(1,224	)	(1,256	)	Surrenders, withdrawals and exchange redemptions	(591	)	(552	)	(548	)	(597	)	(627	)
(1,443	)	(947	)	Change in market value, interest credited, and other activity(2)	668		(2,055	)	1,717		(31	)	(1,412	)

16,802		19,523		Ending total account value	19,523		17,190		18,689		18,435		16,802

(444	)	(589	)	Net redemptions	(263	)	(278	)	(218	)	(223	)	(221	)

				Fixed Annuities:
2,975		2,926		Beginning total account value	2,889		2,872		2,865		2,975		2,909
218		57		Sales	27		32		31		37		181
(95	)	(124	)	Surrenders, withdrawals and exchange redemptions	(55	)	(48	)	(44	)	(50	)	(45	)
(50	)	13		Interest credited and other activity(2)	11		9		123		(53	)	3

3,048		2,872		Ending account value	2,872		2,865		2,975		2,909		3,048

123		(67	)	Net sales (redemptions)	(28	)	(16	)	(13	)	(13	)	136

				SALES BY DISTRIBUTION CHANNEL
				Life Insurance:(1)
108		111		Prudential Agents	54		56		51		53		55
118		98		Third party distribution	43		123		31		25		93

226		209		Total	97		179		82		78		148

				Variable and Fixed Annuities(3):
742		589		Prudential Agents	293		257		298		337		405
221		130		Financial Advisors	58		46		54		63		158
35		5		Third-party distributors	4		3		9		11		24

998		724		Total	355		306		361		411		587

(1)

Statutory first year premiums and deposits.

(2)

The quarter ended March 31, 2002 includes decreases in policyholder account balances of $45 million for variable annuities and $56 million for fixed annuities due to the distribution of policy credits, subsequently paid out in cash, as demutualization consideration in connection with the Company’s demutualization. The quarter ended December 31, 2001 includes increases in policyholder account values of $429 million for variable annuities and $157 million for fixed annuities as a result of policyholder credits issued in connection with the Company’s demutualization, as well as a decrease in policyholder account values of $50 million in fixed annuities transferred to the Closed Block Business upon its establishment.

(3)

Amounts represent gross sales.

Page 14

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—INDIVIDUAL LIFE AND ANNUITIES SEGMENT ACCOUNT VALUE ACTIVITY

(in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				INDIVIDUAL LIFE INSURANCE:
				Policyholders’ Account Balances:
3,826		3,526		Beginning balance	3,578		3,628		3,664		3,826		3,924
453		372		Premiums and deposits	181		194		206		227		226
43		45		Interest credited	21		20		25		20		23
(273	)	(346	)	Surrenders and withdrawals	(174	)	(159	)	(201	)	(135	)	(138	)
28		58		Net transfers from separate account	26		24		7		14		14
(38	)	(28	)	Policy charges	(14	)	(17	)	(14	)	(16	)	(22	)
(47	)	1		Benefits and other	10		(26	)	139		(12	)	(35	)

3,992		3,628		Ending balance	3,628		3,664		3,826		3,924		3,992

				Separate Account Liabilities:
13,010		13,892		Beginning balance	12,849		13,391		12,021		13,010		13,129
864		864		Premiums and deposits	417		491		419		396		468
(986	)	(528	)	Change in market value and interest credited	531		(1,418	)	1,031		111		(1,097	)
(256	)	(351	)	Surrenders and withdrawals	(179	)	(117	)	(209	)	(124	)	(132	)
(75	)	(1	)	Net transfers (to) from general account	19		(96	)	(10	)	(38	)	(37	)
(418	)	(431	)	Policy charges	(215	)	(210	)	(223	)	(211	)	(207	)
(22	)	(54	)	Benefits and other	(31	)	(20	)	(19	)	(15	)	(7	)

12,117		13,391		Ending balance	13,391		12,021		13,010		13,129		12,117

				INDIVIDUAL ANNUITIES:
				Account Values in General Account:
6,152		5,677		Beginning balance	5,624		5,587		5,566		6,152		5,825
998		724		Premiums and deposits	355		306		361		411		587
143		157		Interest credited	79		76		77		72		71
(1,319	)	(1,380	)	Surrenders and withdrawals	(646	)	(600	)	(592	)	(647	)	(672	)
314		518		Net transfers (to) from separate account(1)	235		240		243		(7	)	321
(3	)	(2	)	Policy charges	(1	)	(1	)	(2	)	(1	)	(2	)
(192	)	(107	)	Benefits and other(2)	(59	)	(42	)	499		(155	)	(37	)

6,093		5,587		Ending balance	5,587		5,566		6,152		5,825		6,093

				Account Values in Separate Account:
15,512		18,308		Beginning balance	16,383		16,808		14,489		15,512		15,519
398		511		Premiums and deposits	246		206		188		183		215
(1,341	)	(867	)	Change in market value and interest credited	717		(2,027	)	1,316		51		(1,392	)
(1,057	)	(1,105	)	Surrenders and withdrawals	(536	)	(481	)	(478	)	(514	)	(543	)
345		76		Net transfers from general account(1)	55		35		47		338		7
(100	)	(115	)	Policy charges	(57	)	(52	)	(50	)	(51	)	(49	)
—		—		Benefits and other	—		—		—		—		—

13,757		16,808		Ending balance	16,808		14,489		15,512		15,519		13,757

(1)

The quarter ended March 31, 2002 includes $314 million of policyholder credits, issued in connection with the Company’s demutualization, applied to customer account balances held in the separate account.

(2)

The quarter ended March 31, 2002 includes a decrease in policyholder account balances of $101 million due to the distribution of policy credits, subsequently paid out in cash, as demutualization consideration in connection with the Company’s demutualization. The quarter ended December 31, 2001 includes an increase in policyholder account values of $586 million as a result of policyholder credits issued in connection with the Company’s demutualization, as well as a decrease in policyholder account values of $50 million transferred to the Closed Block Business upon its establishment.

Page 15

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—DEFERRED POLICY ACQUISITION COSTS

(in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				INDIVIDUAL LIFE INSURANCE:
3,133		3,090		Beginning balance	3,088		3,117		3,115		3,133		3,160
146		153		Capitalization	77		74		74		66		80
(116	)	(117	)	Amortization—operating results	(55	)	(60	)	(55	)	(53	)	(63	)
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
(8	)	(9	)	Impact of unrealized (gains) or losses on AFS securities	7		(16	)	(1	)	14		(22	)

3,155		3,117		Ending balance	3,117		3,115		3,133		3,160		3,155

				INDIVIDUAL ANNUITIES:
628		682		Beginning balance	648		655		612		628		654
63		50		Capitalization	24		24		25		28		35
(93	)	(62	)	Amortization—operating results	(21	)	(51	)	(21	)	(23	)	(70	)
2		(3	)	Amortization—realized investment gains and losses	(2	)	2		15		1		1
(2	)	(12	)	Impact of unrealized (gains) or losses on AFS securities	6		(18	)	(3	)	20		(22	)

598		655		Ending balance	655		612		628		654		598

				GROUP INSURANCE(1):
26		12		Beginning balance	15		18		22		26		31
10		7		Capitalization	4		4		7		2		8
3		(1	)	Amortization—operating results	(1	)	—		(3	)	3		—
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
—		—		Impact of unrealized losses on AFS securities	—		—		—		—		—

39		18		Ending balance	18		22		26		31		39

				PROPERTY & CASUALTY INSURANCE:
132		137		Beginning balance	137		141		137		132		130
193		202		Capitalization	102		95		93		98		95
(194	)	(198	)	Amortization—operating results	(98	)	(99	)	(98	)	(100	)	(94	)
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
—		—		Impact of unrealized losses on AFS securities	—		—		—		—		—

131		141		Ending balance	141		137		132		130		131

				TOTAL INSURANCE DIVISION:
3,919		3,921		Beginning balance	3,888		3,931		3,886		3,919		3,975
412		412		Capitalization	207		197		199		194		218
(400	)	(378	)	Amortization—operating results	(175	)	(210	)	(177	)	(173	)	(227	)
2		(3	)	Amortization—realized investment gains and losses	(2	)	2		15		1		1
(10	)	(21	)	Impact of unrealized (gains) or losses on AFS securities	13		(34	)	(4	)	34		(44	)

3,923		3,931		Ending balance	3,931		3,886		3,919		3,975		3,923

(1)

Represents long-term care products.

Page 16

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR INDIVIDUAL LIFE INSURANCE

(dollar amounts in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				Individual Life Insurance:
				Policy Surrender Experience:
310		329		Cash value of surrenders	149		132		176		162		148
3.8	%	3.8	%	Cash value of surrenders as a percentage of mean future policy benefits, policyholders’ account balances, and separate account balances	3.5	%	3.2	%	4.4	%	3.9	%	3.6	%
				Death claims per $1,000 of in-force:(1)
2.06		1.94		Variable and universal life	1.65		2.53		2.01		2.06		2.06
1.49		1.16		Term life	1.25		2.78		0.86		1.43		1.56
1.90		1.72		Total, Individual Life Insurance	1.55		2.61		1.65		1.87		1.94

(1)

Annualized, for interim reporting periods.

Page 17

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR GROUP INSURANCE

(dollar amounts in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				GROUP INSURANCE NEW ANNUALIZED PREMIUMS:
189		321		Group life	33		64		50		162		27
86		89		Group disability(1)	20		33		17		53		33

275		410		Total	53		97		67		215		60

				Future Policy Benefits(2):
				Group life	1,452		1,623		1,664		1,617		1,609
				Group disability(1)	101		98		103		137		138

				Total	1,553		1,721		1,767		1,754		1,747

				Policyholder Account Balances(2):
				Group life	3,664		3,764		3,805		3,928		4,238
				Group disability(1)	41		57		61		58		63

				Total	3,705		3,821		3,866		3,986		4,301

				Separate Account Liabilities(2):
				Group life	7,156		7,246		7,634		8,097		7,745
				Group disability(1)	—		—		—		—		—

				Total	7,156		7,246		7,634		8,097		7,745

				Group Life Insurance:
1,331		1,161		Gross premiums, policy charges and fee income(3)	596		637		641		667		664
1,203		1,030		Earned premiums, policy charges and fee income	529		579		551		603		600
92.3	%	92.4	%	Benefits ratio	94.7	%	96.6	%	88.6	%	91.8	%	92.8	%
10.1	%	10.0	%	Administrative operating expense ratio	9.7	%	8.8	%	11.2	%	10.0	%	10.2	%
				Persistency ratio	98.7	%	97.9	%	97.4	%	97.2	%	96.1	%
				Group Disability Insurance(1):
299		260		Gross premiums, policy charges and fee income(3)	131		141		142		150		149
289		250		Earned premiums, policy charges and fee income	125		129		137		143		146
86.2	%	93.2	%	Benefits ratio	97.8	%	99.2	%	94.9	%	84.6	%	87.7	%
22.7	%	23.5	%	Administrative operating expense ratio	25.2	%	22.0	%	25.4	%	22.7	%	22.8	%
				Persistency ratio	91.3	%	89.4	%	88.8	%	94.7	%	93.0	%

(1)

Group disability amounts include long-term care products.

(2)

As of end of period.

(3)

Before returns of premiums to participating policyholders for favorable claims experience.

Page 18

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR PROPERTY AND CASUALTY INSURANCE

(dollar amounts in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				Earned premium:
766		674		Automobile	346		356		373		372		394
229		221		Homeowners’	112		113		114		113		116
17		16		Other	8		9		8		8		9

1,012		911		Total earned premium	466		478		495		493		519

				Loss ratio(1)(2):
75.4	%	65.8	%	Automobile	74.1	%	69.1	%	81.0	%	75.8	%	75.1	%
80.0	%	69.8	%	Homeowners’	60.2	%	97.3	%	69.0	%	72.1	%	87.8	%
76.6	%	66.3	%	Overall	70.5	%	75.6	%	74.5	%	74.8	%	78.3	%
				Expense ratio(1)(3):
27.9	%	31.6	%	Automobile	31.2	%	30.3	%	29.5	%	28.5	%	27.2	%
33.3	%	38.4	%	Homeowners’	34.8	%	34.3	%	35.9	%	35.3	%	31.7	%
29.0	%	33.1	%	Overall	32.0	%	31.3	%	31.0	%	29.8	%	28.2	%
				Combined ratio(4):
103.3	%	97.4	%	Automobile	105.3	%	99.4	%	110.5	%	104.3	%	102.3	%
113.3	%	108.2	%	Homeowners’	95.0	%	131.6	%	104.9	%	107.4	%	119.5	%
105.6	%	99.4	%	Overall	102.5	%	106.9	%	105.5	%	104.6	%	106.5	%
12.2		25.0		Current accident year catastrophe losses(5)	24.0		12.8		4.2		4.2		8.0
1.2	%	2.7	%	Effect of current accident year catastrophic losses on combined ratio	5.1	%	2.7	%	0.9	%	0.9	%	1.5	%
				Accident year combined ratio(6)	109.1	%	106.9	%	107.0	%	105.0	%	107.1	%

(1)

Based on statutory data.

(2)

Represents ratio of incurred losses and loss adjustment expenses to net earned premium.

(3)

Represents ratio of operating expenses to net written premium.

(4)

Represents the sum of loss ratio and expense ratio above.

(5)

Represents losses and loss adjustment expenses attributable to catastrophes that are included in the combined ratio. We classify catastrophes as those events that are declared catastrophes by Property Claims Services, which is an industry organization that declares and tracks all property-related catastrophes causing insured property damage in the United States.

(6)

Accident year combined ratios for annual periods reflect the combined ratios for accidents that occur in the indicated calendar year, restated to reflect subsequent changes in loss estimates for those claims based on cumulative loss data through the most recent balance sheet date. Accident year combined ratios for interim periods reflect the combined ratios for policies written in those periods, based on cumulative loss data through the respective balance sheet date of the indicated year. These ratios reflect any recoveries from stop-loss reinsurance contracts during the indicated periods.

Page 19

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

Year-to-date				% Change			2001						2002
2002		2001		% Change			2Q		3Q		4Q		1Q		2Q
						Revenues(1):
29		21		38	%	Premiums	3		(8	)	7		8		21
38		39		-3	%	Policy charges and fee income	20		18		23		19		19
1,165		1,279		-9	%	Net investment income	627		611		594		563		602
1,868		2,010		-7	%	Commissions, investment management fees, and other income	970		927		957		937		931

3,100		3,349		-7	%	Total revenues	1,620		1,548		1,581		1,527		1,573

						Benefits and Expenses(1):
428		462		-7	%	Insurance and annuity benefits	213		231		220		197		231
481		477		1	%	Interest credited to policyholders’ account balances	251		250		250		243		238
8		17		-53	%	Interest expense	7		8		7		3		5
(28	)	(36	)	22	%	Deferral of acquisition costs	(16	)	(12	)	(12	)	(14	)	(14	)
48		44		9	%	Amortization of acquisition costs	22		22		20		21		27
1,226		1,415		-13	%	Securities operations non-interest expenses	733		653		661		607		619
747		811		-8	%	General and administrative expenses	411		397		429		370		377

2,910		3,190		-9	%	Total benefits and expenses	1,621		1,549		1,575		1,427		1,483

190		159		19	%	Adjusted operating income before income taxes	(1	)	(1	)	6		100		90

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 20

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

	Quarter Ended June 30, 2002
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues(1):
Premiums	21		—		—		21		—
Policy charges and fee income	19		—		—		19		—
Net investment income	602		7		47		542		6
Commissions, investment management fees, and other income	931		309		572		35		15

Total revenues	1,573		316		619		617		21

Benefits and Expenses(1):
Insurance and annuity benefits	231		—		—		231		—
Interest credited to policyholders’ account balances	238		—		—		238		—
Interest expense	5		3		—		2		—
Deferral of acquisition costs	(14	)	(12	)	—		(2	)	—
Amortization of acquisition costs	27		19		—		8		—
Securities operations non-interest expenses	619		—		619		—		—
General and administrative expenses	377		270		8		90		9

Total benefits and expenses	1,483		280		627		567		9

Adjusted operating income before income taxes	90		36		(8	)	50		12

	Quarter Ended June 30, 2001
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues(1):
Premiums	3		—		—		3		—
Policy charges and fee income	20		—		—		20		—
Net investment income	627		10		59		545		13
Commissions, investment management fees, and other income	970		327		595		39		9

Total revenues	1,620		337		654		607		22

Benefits and Expenses(1):
Insurance and annuity benefits	213		—		—		213		—
Interest credited to policyholders’ account balances	251		—		—		251		—
Interest expense	7		3		—		2		2
Deferral of acquisition costs	(16	)	(13	)	—		(3	)	—
Amortization of acquisition costs	22		19		—		3		—
Securities operations non-interest expenses	733		—		733		—		—
General and administrative expenses	411		298		9		94		10

Total benefits and expenses	1,621		307		742		560		12

Adjusted operating income before income taxes	(1	)	30		(88	)	47		10

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 21

Prudential Financial, Inc.
Financial Supplement
Second Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

	Six Months Ended June 30, 2002
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues(1):
Premiums	29		—		—		29		—
Policy charges and fee income	38		—		—		38		—
Net investment income	1,165		13		93		1,044		15
Commissions, investment management fees, and other income	1,868		620		1,143		70		35

Total revenues	3,100		633		1,236		1,181		50

Benefits and Expenses(1):
Insurance and annuity benefits	428		—		—		428		—
Interest credited to policyholders’ account balances	481		—		—		481		—
Interest expense	8		3		—		3		2
Deferral of acquisition costs	(28	)	(22	)	—		(6	)	—
Amortization of acquisition costs	48		37		—		11		—
Securities operations non-interest expenses	1,226		—		1,226		—		—
General and administrative expenses	747		532		15		180		20

Total benefits and expenses	2,910		550		1,241		1,097		22

Adjusted operating income before income taxes	190		83		(5	)	84		28

	Six Months Ended June 30, 2001
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues(1):
Premiums	21		—		—		21		—
Policy charges and fee income	39		—		—		39		—
Net investment income	1,279		19		130		1,107		23
Commissions, investment management fees, and other income	2,010		664		1,246		77		23

Total revenues	3,349		683		1,376		1,244		46

Benefits and Expenses(1):
Insurance and annuity benefits	462		—		—		462		—
Interest credited to policyholders’ account balances	477		—		—		477		—
Interest expense	17		7		—		7		3
Deferral of acquisition costs	(36	)	(30	)	—		(6	)	—
Amortization of acquisition costs	44		38		—		6		—
Securities operations non-interest expenses	1,415		—		1,415		—		—
General and administrative expenses	811		587		18		189		17

Total benefits and expenses	3,190		602		1,433		1,135		20

Adjusted operating income before income taxes	159		81		(57	)	109		26

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 22

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INVESTMENT DIVISION—SUPPLEMENTARY REVENUE INFORMATION

FOR INVESTMENT MANAGEMENT AND FINANCIAL ADVISORY SEGMENTS

(dollar amounts in millions unless otherwise noted)

Year-to-date		% Change			2001						2002
2002	2001	% Change			2Q		3Q		4Q		1Q		2Q
				Investment Management Segment:
				Analysis of revenues by source:
				Investment Management and Advisory Services:
97	107	-9	%	Retail customers	54		52		51		49		48
171	196	-13	%	Institutional customers	99		91		96		84		87
111	106	5	%	General account	51		59		62		54		57

379	409	-7	%	Subtotal	204		202		209		187		192
254	274	-7	%	Mutual Fund revenues(1)	133		137		126		130		124

633	683	-7	%	Total Investment Management segment revenues	337		339		335		317		316

				Analysis of commissions, investment management fees and other revenues by type:
				Investment Management and Advisory Services:
354	371	-5	%	Asset-based fees	188		186		184		176		178
13	21	-38	%	Transaction-based and other revenues	7		10		9		5		8

367	392	-6	%	Subtotal	195		196		193		181		186
253	272	-7	%	Mutual Fund revenues(1)	132		136		126		130		123

620	664	-7	%	Total Investment Management segment	327		332		319		311		309

				Financial Advisory Segment:
				Non-Interest Revenues:
676	748	-10	%	Commissions	361		311		361		334		342
387	380	2	%	Fees	182		193		171		193		194
80	118	-32	%	Other non-interest revenues	52		46		45		44		36

1,143	1,246	-8	%	Total non-interest revenues	595		550		577		571		572

				Recurring revenue as a percentage of total non-interest revenue(2)	36.3	%	37.4	%	36.7	%	37.4	%	38.5	%
3.18	4.80			Average customer margin lending balances ($ in billions)	4.38		4.20		3.47		3.26		3.10

(1)

Represents mutual fund revenues other than asset management fees, which are included in appropriate categories above.

(2)

Calculated on a trailing 12 month basis excluding Consumer Banking and Equity Securities sales and trading revenue.

Page 23

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INVESTMENT DIVISION—ASSETS UNDER MANAGEMENT

FOR INVESTMENT MANAGEMENT AND ADVISORY SERVICES OPERATIONS

(in billions)

	June 30, 2002
	Equity	Fixed Income	Real Estate	Total
Retail customers(1)	38.0	46.7	0.1	84.8
Institutional customers(1)	28.5	44.9	10.1	83.5
General account(1)	2.2	112.4	1.4	116.0

Total	68.7	204.0	11.6	284.3

	June 30, 2001
	Equity	Fixed Income	Real Estate	Total
Retail customers	48.4	51.4	—	99.8
Institutional customers	42.4	38.1	10.2	90.7
General account	2.5	105.4	1.4	109.3

Total	93.3	194.9	11.6	299.8

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				Institutional Assets Under Management:(1)
				Assets gathered by Investment Management & Advisory Services sales force:(2)
67.9		74.5		Beginning assets under management	70.5		70.4		65.3		67.9		62.6
5.9		7.1		Additions to managed portfolio	3.2		2.4		4.2		3.0		2.9
(10.9	)	(8.0	)	Withdrawals	(5.0	)	(4.2	)	(5.6	)	(8.4	)	(2.5	)
(2.3	)	(3.2	)	Change in market value	1.7		(3.3	)	3.9		0.1		(2.4	)
3.6		—		Net money market flows	—		—		0.1		4.0		(0.4	)
(4.0	)	—		Other(2)	—		—		—		(4.0	)	—

60.2		70.4		Ending assets under management	70.4		65.3		67.9		62.6		60.2
23.3		20.3		Other institutional assets under management(2)	20.3		19.6		21.2		23.6		23.3

83.5		90.7		Total assets managed for institutional customers at end of period	90.7		84.9		89.1		86.2		83.5

(1)

(2)

Reflects reclassification of amounts by asset gatherer category as of January 1, 2002, based on internal management criteria, which reduced the amount attributed to assets gathered by Investment Management & Advisory Services sales force and increased the amount attributed to other institutional assets under management by $4.0 billion.

Page 24

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INVESTMENT DIVISION—MUTUAL FUNDS AND WRAP-FEE

PRODUCTS SALES RESULTS AND ASSETS UNDER MANAGEMENT

(in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				MUTUAL FUNDS AND WRAP-FEE PRODUCTS SALES AND ASSETS UNDER MANAGEMENT
				Mutual Funds:
57,809		57,764		Beginning total mutual funds assets	58,168		59,618		56,951		57,809		56,743
2,374		3,430		Sales (other than money market)	2,106		907		936		914		1,460
(2,455	)	(2,305	)	Redemptions (other than money market)	(1,103	)	(1,110	)	(1,282	)	(1,116	)	(1,339	)
(2,418	)	(198	)	Reinvestment of distributions and change in market value	1,056		(3,840	)	2,144		32		(2,450	)
(2,851	)	927		Net money market sales	(609	)	1,376		(940	)	(896	)	(1,955	)

52,459		59,618		Ending total mutual funds assets	59,618		56,951		57,809		56,743		52,459

(81	)	1,125		Net Mutual Funds sales (redemptions) other than money market	1,003		(203	)	(346	)	(202	)	121

				Wrap-fee Products:(1)
17,955		19,621		Beginning total wrap-fee product assets	17,335		18,714		16,141		17,955		18,192
3,543		4,263		Sales	1,968		1,626		1,563		1,667		1,876
(2,979	)	(3,256	)	Redemptions	(1,378	)	(1,462	)	(1,342	)	(1,361	)	(1,618	)
(1,843	)	(1,914	)	Reinvestment of distributions and change in market value	789		(2,737	)	1,593		(69	)	(1,774	)

16,676		18,714		Ending total wrap-fee product assets	18,714		16,141		17,955		18,192		16,676
16,827		17,037		Other managed accounts at end of period(2)	17,037		15,366		17,575		18,006		16,827

33,503		35,751		Total wrap-fee product and other managed account assets at end of period	35,751		31,507		35,530		36,198		33,503

564		1,007		Net wrap-fee product sales(1)	590		164		221		306		258


				MUTUAL FUNDS AND WRAP-FEE PRODUCTS GROSS SALES BY DISTRIBUTION CHANNEL
				Mutual funds, excluding wrap-fee products(3):
314		432		Prudential Agents	199		161		150		156		158
746		1,004		Financial Advisors	429		298		300		339		407
1,277		1,915		Third-party distributors	1,470		457		479		387		890
37		79		Other	8		(9	)	7		32		5

2,374		3,430		Total	2,106		907		936		914		1,460

				Wrap-fee products:(1)
247		219		Prudential Agents	110		104		101		115		132
3,098		3,945		Financial Advisors	1,807		1,488		1,404		1,483		1,615
198		99		Third-party distributors	51		34		58		69		129

3,543		4,263		Total	1,968		1,626		1,563		1,667		1,876

(1)

Excludes other managed accounts.

(2)

Includes amounts under both management and administration for certain Prudential Securities programs and unit investment trusts.

(3)

Other than money market.

Page 25

Prudential Financial, Inc.
Financial Supplement
Second Quarter 2002

INVESTMENT DIVISION—RETIREMENT SALES RESULTS AND ACCOUNT VALUES

(in millions)

Year-to-date					2001						2002
2002		2001			2Q		3Q		4Q		1Q		2Q
				RETIREMENT SALES AND ACCOUNT VALUES
				Defined Contribution:
24,640		26,046		Beginning total account value	24,473		25,319		22,710		24,640		25,337
1,914		2,178		Sales	923		729		782		1,010		904
(1,572	)	(2,056	)	Withdrawals	(1,021	)	(728	)	(638	)	(817	)	(755	)
(946	)	(849	)	Change in market value and interest credited(1)	944		(2,610	)	1,786		504		(1,450	)

24,036		25,319		Ending total account value	25,319		22,710		24,640		25,337		24,036

342		122		Net sales (withdrawals)	(98	)	1		144		193		149

				Asset management of ending total account value:
				Proprietary	18,287		16,501		17,665		18,107		17,075
				Non-proprietary	7,032		6,209		6,975		7,230		6,961

				Total	25,319		22,710		24,640		25,337		24,036

				Guaranteed Products:
39,825		41,577		Beginning total account value	40,461		39,920		39,008		39,825		39,400
765		1,581		Sales	1,181		285		433		259		506
(1,857	)	(2,446	)	Withdrawals and benefits	(877	)	(1,123	)	(803	)	(864	)	(993	)
750		972		Change in market value and interest income	646		388		838		355		395
(311	)	(1,764	)	Other(2)	(1,491	)	(462	)	349		(175	)	(136	)

39,172		39,920		Ending total account value	39,920		39,008		39,825		39,400		39,172

(1,092	)	(865	)	Net sales (withdrawals)	304		(838	)	(370	)	(605	)	(487	)

				Product composition of ending total account value:
				Spread-lending products	19,020		18,841		18,887		18,915		18,869
				Fee-based products	20,900		20,167		20,938		20,485		20,303

				Total	39,920		39,008		39,825		39,400		39,172

(1)

Includes increases to account values of $348 million in the six months ended June 30, 2002, $247 million in the quarter ended June 30, 2002 and $101 million in the quarter ended March 31, 2002, added to customer accounts due to common stock received as demutualization consideration. The quarter ended March 31, 2002 also includes $448 million added to customer accounts from inclusion of amounts not previously reflected in this segment. The quarter ended December 31, 2001 includes an increase in account values of $433 million as a result of policyholder credits issued in connection with the Company’s demutualization.

(2)

Represents changes in asset balances for externally managed accounts. In addition, the quarter ended December 31, 2001 includes an increase in account values of $181 million representing cumulative conversions of client account balances to products currently included in this division as well as $2 million of policyholder credits issued in connection with the Company’s demutualization.

Page 26

Prudential Financial, Inc.
Financial Supplement
Second Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

Year-to-date				%			2001						2002
2002		2001		Change			2Q		3Q		4Q		1Q		2Q
						Revenues(1):
2,022		1,271		59	%	Premiums	817		1,020		1,046		1,016		1,006
106		135		-21	%	Policy charges and fee income	111		102		70		57		49
349		179		95	%	Net investment income	129		170		162		164		185
291		278		5	%	Commissions, investment management fees, and other income	134		118		143		149		142

2,768		1,863		49	%	Total revenues	1,191		1,410		1,421		1,386		1,382

						Benefits and Expenses(1):
1,582		1,039		52	%	Insurance and annuity benefits	702		794		841		783		799
48		19		153	%	Interest credited to policyholders’ account balances	18		28		25		24		24
—		4		-100	%	Interest expense	2		2		(2	)	—		—
(298	)	(257	)	-16	%	Deferral of acquisition costs	(143	)	(133	)	(149	)	(151	)	(147	)
109		73		49	%	Amortization of acquisition costs	35		44		47		65		44
233		258		-10	%	Securities operations non-interest expenses	131		125		147		114		119
718		509		41	%	General and administrative expenses	326		370		387		351		367

2,392		1,645		45	%	Total benefits and expenses	1,071		1,230		1,296		1,186		1,206

376		218		72	%	Adjusted operating income before income taxes	120		180		125		200		176

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 27

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

	Six Months Ended June 30, 2002								Quarter Ended June 30, 2002
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance- Gibraltar Life(2)		International Securities and Investments		Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance- Gibraltar Life(2)		International Securities and Investments
Revenues(1):
Premiums	2,022		981		1,041		—		1,006		495		511		—
Policy charges and fee income	106		50		56		—		49		21		28		—
Net investment income	349		86		235		28		185		45		126		14
Commissions, investment management fees, and other income	291		14		34		243		142		4		18		120

Total revenues	2,768		1,131		1,366		271		1,382		565		683		134

Benefits and Expenses(1):
Insurance and annuity benefits	1,582		730		852		—		799		374		425		—
Interest credited to policyholders’ account balances	48		3		45		—		24		2		22		—
Interest expense	—		2		(2	)	—		—		1		(1	)	—
Deferral of acquisition costs	(298	)	(224	)	(74	)	—		(147	)	(111	)	(36	)	—
Amortization of acquisition costs	109		100		9		—		44		48		(4	)	—
Securities operations non-interest expenses	233		—		—		233		119		—		—		119
General and administrative expenses	718		334		331		53		367		165		176		26

Total benefits and expenses	2,392		945		1,161		286		1,206		479		582		145

Adjusted operating income before income taxes	376		186		205		(15	)	176		86		101		(11	)

	Six Months Ended June 30, 2001								Quarter Ended June 30, 2001
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance- Gibraltar Life (2)		International Securities and Investments		Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance- Gibraltar Life (2)		International Securities and Investments
Revenues (1):
Premiums	1,271		893		378		—		817		439		378		—
Policy charges and fee income	135		46		89		—		111		22		89		—
Net investment income	179		68		80		31		129		34		80		15
Commissions, investment management fees, and other income	278		20		1		257		134		11		1		122

Total revenues	1,863		1,027		548		288		1,191		506		548		137

Benefits and Expenses (1):
Insurance and annuity benefits	1,039		674		365		—		702		337		365		—
Interest credited to policyholders’ account balances	19		2		17		—		18		1		17		—
Interest expense	4		4		—		—		2		2		—		—
Deferral of acquisition costs	(257	)	(233	)	(24	)	—		(143	)	(119	)	(24	)	—
Amortization of acquisition costs	73		73		—		—		35		35		—		—
Securities operations non-interest expenses	258		—		—		258		131		—		—		131
General and administrative expenses	509		329		131		49		326		167		131		28

Total benefits and expenses	1,645		849		489		307		1,071		423		489		159

Adjusted operating income before income taxes	218		178		59		(19	)	120		83		59		(22	)

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

(2)

Results of Gibraltar Life are included from April 2, 2001, the date of reorganization, through May 31, 2002.

Page 28

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION—SALES RESULTS AND SUPPLEMENTARY INFORMATION

(dollar amounts in millions unless otherwise noted)

Year-to-date			2001			2002
2002	2001		2Q	3Q	4Q	1Q	2Q
		INTERNATIONAL INSURANCE OPERATING DATA:
		Actual exchange rate basis(1):
		Net premiums, policy charges and fee income:
769	755	Japan, excluding Gibraltar Life	361	376	395	395	374
1,097	467	Gibraltar Life(2)	467	639	604	558	539
262	184	All other countries	100	107	117	120	142

2,128	1,406	Total	928	1,122	1,116	1,073	1,055

		Annualized new business premiums:
144	206	Japan, excluding Gibraltar Life	92	77	87	77	67
108	10	Gibraltar Life(2)	10	44	56	49	59
104	108	All other countries	60	51	53	53	51

356	324	Total	162	172	196	179	177

		Constant exchange rate basis(3):
		Net premiums, policy charges and fee income:
820	749	Japan, excluding Gibraltar Life	365	376	401	431	389
1,178	472	Gibraltar Life(2)	472	645	602	603	575
267	183	All other countries	102	106	119	124	143

2,265	1,404	Total	939	1,127	1,122	1,158	1,107

		Annualized new business premiums:
153	204	Japan, excluding Gibraltar Life	93	77	89	84	69
116	10	Gibraltar Life(2)	10	44	56	53	63
104	108	All other countries	61	51	53	55	49

373	322	Total	164	172	198	192	181

		Face amount of individual policies in force at end of period (in billions):
		Japan, excluding Gibraltar Life	120	124	127	130	133
		Gibraltar Life(2)	265	244	232	224	217
		All other countries	32	34	38	41	42

		Total	417	402	397	395	392

		Number of individual policies in force at end of period (in thousands):
		Japan, excluding Gibraltar Life	892	918	946	973	990
		Gibraltar Life(2)	5,322	5,047	4,911	4,787	4,666
		All other countries	452	492	536	571	609

		Total	6,666	6,457	6,393	6,331	6,265

(1)

Translated based on applicable average exchange rate for the period shown.

(2)

Results of Gibraltar Life are included from April 2, 2001, the date of reorganization, through May 31, 2002.

(3)

Translated based on average exchange rates for the year ended December 31, 2001.

Page 29

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION—SALES RESULTS AND SUPPLEMENTARY INFORMATION

(dollar amounts in millions unless otherwise noted)

	2001						2002
	2Q		3Q		4Q		1Q		2Q
International insurance policy persistency(1):
13 months	93.1	%	93.1	%	93.2	%	93.4	%	93.8	%
25 months	88.9	%	88.9	%	88.1	%	87.8	%	86.9	%
Number of Life Planners at end of period(2):
Japan	1,853		1,944		1,992		1,994		1,985
All other countries	1,837		2,055		2,112		2,104		2,222

Total	3,690		3,999		4,104		4,098		4,207

Number of International Retail Financial Advisors at end of period	632		646		633		632		634
Assets managed or administered for customers outside of the United States at end of period	66,388		62,642		64,280		63,595		66,921

(1)

Excluding Gibraltar Life.

(2)

Excluding Gibraltar Life Advisors.

Page 30

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	June 30, 2002					December 31, 2001
	Consolidated Portfolio(1)	Closed Block Business	Financial Services Businesses			Consolidated Portfolio(1)	Closed Block Business	Financial Services Businesses
	Consolidated Portfolio(1)	Closed Block Business	Amount	% of Total		Consolidated Portfolio(1)	Closed Block Business	Amount	% of Total
Fixed maturities:
Public available for sale, at fair value	85,125	29,367	55,758	56.4	%	77,807	26,634	51,173	54.5	%
Public held to maturity, at amortized cost	2,218	—	2,218	2.2	%	318	—	318	0.3	%
Private available for sale, at fair value	31,604	14,715	16,889	17.1	%	32,040	14,428	17,612	18.8	%
Private held to maturity, at amortized cost	47	—	47	0.0	%	53	—	53	0.1	%
Trading account assets, at fair value	148	—	148	0.1	%	112	—	112	0.1	%
Equity securities, at fair value	3,179	1,328	1,851	1.9	%	2,259	584	1,675	1.8	%
Commercial loans	18,924	6,772	12,152	12.3	%	19,176	6,106	13,070	13.9	%
Cash collateral for borrowed securities	213	—	213	0.2	%	—	—	—	0.0	%
Other long-term investments(2)	4,861	1,037	3,824	3.9	%	5,095	1,082	4,013	4.3	%
Policy loans, at outstanding balance	8,707	5,725	2,982	3.0	%	8,570	5,758	2,812	3.0	%
Short term investments, at amortized cost	5,214	2,366	2,848	2.9	%	4,854	1,882	2,972	3.2	%

Subtotal	160,240	61,310	98,930	100.0	%	150,284	56,474	93,810	100.0	%

Invested assets of other entities and operations(3)	17,408	—	17,408			15,550	—	15,550

Total invested assets	177,648	61,310	116,338			165,834	56,474	109,360

Fixed Maturities by Credit Quality(1):
		June 30, 2002				December 31, 2001
		Financial Services Businesses				Financial Services Businesses
		Amortized Cost	% of Total		Estimated Fair Value	Amortized Cost	% of Total		Estimated Fair Value
Public Fixed Maturities:
NAIC Rating	Rating Agency Equivalent
1	Aaa, Aa, A	42,463	74.8	%	43,591	36,706	72.6	%	37,502
2	Baa	11,507	20.2	%	11,650	11,286	22.3	%	11,484
3	Ba	1,833	3.2	%	1,820	1,501	3.0	%	1,518
4	B	679	1.2	%	661	683	1.4	%	646
5	C and lower	63	0.1	%	57	112	0.2	%	116
6	In or near default	269	0.5	%	263	246	0.5	%	241

Total		56,814	100.0	%	58,042	50,534	100.0	%	51,507

Private Fixed Maturities:
NAIC Rating	Rating Agency Equivalent
1	Aaa, Aa, A	5,314	32.8	%	5,693	5,982	35.1	%	6,337
2	Baa	7,718	47.7	%	8,070	8,148	47.8	%	8,399
3	Ba	1,633	10.1	%	1,668	1,487	8.7	%	1,529
4	B	831	5.1	%	798	917	5.4	%	883
5	C and lower	369	2.3	%	369	390	2.3	%	401
6	In or near default	330	2.0	%	351	112	0.7	%	121

Total		16,195	100.0	%	16,949	17,036	100.0	%	17,670

(1)

Excludes investments of securities brokerage, securities trading, banking operations, assets of our asset management operations managed for third parties, and separate account assets for which the customer assumes risks of ownership.

(2)

Other long-term investments consist of real estate and non-real estate related investments in joint ventures and partnerships, investment real estate held through direct ownership, our interest in separate account investments and other miscellaneous investments.

(3)

Includes invested assets of securities brokerage, securities trading, and banking operations. Excludes assets of our asset management operations managed for third parties, and separate account assets for which the customer assumes risks of ownership.

Page 31

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	June 30, 2002			December 31, 2001
	Amount	% of Total		Amount	% of Total
Japanese Insurance Operations:
Fixed maturities:
Public available for sale, at fair value	23,684	71.6	%	20,883	73.8	%
Public held to maturity, at amortized cost	2,218	6.7	%	318	1.1	%
Private available for sale, at fair value	307	0.9	%	98	0.4	%
Private held to maturity, at amortized cost	47	0.2	%	53	0.2	%
Trading account assets, at fair value	95	0.3	%	74	0.3	%
Equity securities, at fair value	1,156	3.5	%	1,032	3.6	%
Commercial loans	3,505	10.6	%	4,255	15.0	%
Cash collateral for borrowed securities	213	0.6	%	—	0.0	%
Other long-term investments(2)	1,129	3.4	%	1,001	3.5	%
Policy loans, at outstanding balance	636	1.9	%	605	2.1	%
Short term investments, at amortized cost	100	0.3	%	2	0.0	%

Total	33,090	100.0	%	28,321	100.0	%


	June 30, 2002			December 31, 2001
	Amount	% of Total		Amount	% of Total
Financial Services Businesses excluding Japanese Insurance Operations(1):
Fixed maturities:
Public available for sale, at fair value	32,074	48.7	%	30,290	46.2	%
Public held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Private available for sale, at fair value	16,582	25.2	%	17,514	26.7	%
Private held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Trading account assets, at fair value	53	0.1	%	38	0.1	%
Equity securities, at fair value	695	1.1	%	643	1.0	%
Commercial loans	8,647	13.1	%	8,815	13.5	%
Cash collateral for borrowed securities	—	0.0	%	—	0.0	%
Other long-term investments(2)	2,695	4.0	%	3,012	4.6	%
Policy loans, at outstanding balance	2,346	3.6	%	2,207	3.4	%
Short term investments, at amortized cost	2,748	4.2	%	2,970	4.5	%

Total	65,840	100.0	%	65,489	100.0	%

(1)

(2)

Page 32

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS

(in millions)

	Quarter Ended June 30
	2002						2001
	Investment Income				Realized Gains /(Losses)		Investment Income				Realized Gains /(Losses)
	Yield(3)		Amount		Realized Gains /(Losses)		Yield(3)		Amount		Realized Gains /(Losses)
Financial Services Businesses(1):
Fixed maturities	5.19	%	922		(86	)	5.85	%	952		(29	)
Equity securities	1.60	%	7		9		0.66	%	3		22
Commercial loans	7.95	%	251		17		7.66	%	202		10
Policy loans	5.68	%	41		—		5.46	%	39		—
Short-term investments and cash equivalents	2.36	%	58		(10	)	4.11	%	85		(8	)
Other investments	8.02	%	82		(243	)	8.79	%	74		94

Gross investment income before investment expenses	5.32	%	1,361		(313	)	5.87	%	1,355		89
Investment expenses	-0.20	%	(50	)	—		-0.34	%	(79	)	—

Subtotal	5.12	%	1,311		(313	)	5.53	%	1,276		89

Investment results of other entities and operations(2)			63		—				77		—
Less amount relating to divested businesses			(18	)	—				(1	)	—

Total			1,356		(313	)			1,352		89

	Six Months Ended June 30
	2002						2001
	Investment Income				Realized Gains / (Losses)		Investment Income				Realized Gains / (Losses)
	Yield(3)		Amount		Realized Gains / (Losses)		Yield(3)		Amount		Realized Gains / (Losses)
Financial Services Businesses(1):
Fixed maturities	5.26	%	1,823		(194	)	5.80	%	1,971		83
Equity securities	1.52	%	13		(53	)	0.54	%	6		68
Commercial loans	7.37	%	467		18		6.25	%	357		11
Policy loans	5.63	%	80		—		5.51	%	78		—
Short-term investments and cash equivalents	1.97	%	116		7		3.16	%	141		(3	)
Other investments	5.68	%	117		(160	)	7.87	%	127		181

Gross investment income before investment expenses	5.10	%	2,616		(382	)	5.53	%	2,680		340
Investment expenses	-0.23	%	(118	)	—		-0.40	%	(192	)	—

Subtotal	4.87	%	2,498		(382	)	5.13	%	2,488		340

Investment results of other entities and operations(2)			127		(1	)			169		—
Less amount relating to divested businesses			(20	)	—				(8	)	—

Total			2,605		(383	)			2,649		340

(1)

(2)

Investment income of securities brokerage, securities trading, and banking operations.

(3)

Yields are annualized and based on quarterly average carrying values except for fixed maturities, equity securities and commercial loans. Yields for fixed maturities are based on amortized cost. Yields for equity securities are based on cost. Yields for commercial loans are calculated gross of any allowance for losses on commercial loans. Reflects Gibraltar Life investments from acquisition in April 2001.

Page 33

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—JAPANESE INSURANCE OPERATIONS

(in millions)

	Quarter Ended June 30
	2002						2001
	Investment Income				Realized Gains / (Losses)		Investment Income				Realized Gains /(Losses)
	Yield(1)		Amount		Realized Gains / (Losses)		Yield(1)		Amount		Realized Gains /(Losses)
Japanese Insurance Operations:
Fixed maturities	1.77	%	112		(24	)	1.29	%	46		(5	)
Equity securities	0.23	%	—		(17	)	0.57	%	1		19
Commercial loans	4.29	%	42		12		7.39	%	54		—
Policy loans	2.79	%	4		—		1.22	%	2		—
Short-term investments and cash equivalents	1.06	%	1		(10	)	0.03	%	—		1
Other investments	0.34	%	2		21		6.45	%	8		24

Gross investment income before investment expenses	1.98	%	161		(18	)	2.29	%	111		39
Investment expenses	-0.12	%	(9	)	—		-0.14	%	(6	)	—

Total	1.86	%	152		(18	)	2.15	%	105		39

	Six Months Ended June 30
	2002						2001
	Investment Income				Realized Gains / (Losses)		Investment Income				Realized Gains / (Losses)
	Yield(1)		Amount		Realized Gains / (Losses)		Yield(1)		Amount		Realized Gains / (Losses)
Japanese Insurance Operations:
Fixed maturities	1.80	%	210		(4	)	0.86	%	68		17
Equity securities	0.62	%	3		(73	)	0.36	%	2		18
Commercial loans	4.31	%	86		14		3.82	%	54		—
Policy loans	2.66	%	8		—		1.43	%	5		—
Short-term investments and cash equivalents	0.59	%	5		8		0.02	%	—		1
Other investments	-0.20	%	(1	)	(54	)	3.69	%	9		12

Gross investment income before investment expenses	1.95	%	311		(109	)	1.31	%	138		48
Investment expenses	-0.11	%	(17	)	—		-0.07	%	(7	)	—

Total	1.84	%	294		(109	)	1.24	%	131		48

(1)

Page 34

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—EXCLUDING JAPANESE INSURANCE OPERATIONS

(in millions)

	Quarter Ended June 30
	2002						2001
	Investment Income				Realized Gains / (Losses)		Investment Income				Realized Gains / (Losses)
	Yield(2)		Amount		Realized Gains / (Losses)		Yield(2)		Amount		Realized Gains / (Losses)
Financial Services Businesses excluding Japanese Insurance Operations(1):
Fixed maturities	6.98	%	810		(62	)	7.90	%	906		(24	)
Equity securities	3.64	%	7		26		0.83	%	2		3
Commercial loans	9.58	%	209		5		7.86	%	148		10
Policy loans	6.45	%	37		—		6.64	%	37		—
Short-term investments and cash equivalents	2.46	%	57		—		7.09	%	85		(9	)
Other investments	11.31	%	80		(264	)	9.57	%	66		70

Gross investment income before investment expenses	6.84	%	1,200		(295	)	7.74	%	1,244		50
Investment expenses	-0.24	%	(41	)	—		-0.45	%	(73	)	—

Total	6.60	%	1,159		(295	)	7.29	%	1,171		50

	Six Months Ended June 30
	2002						2001
	Investment Income				Realized Gains / (Losses)		Investment Income				Realized Gains / (Losses)
	Yield(2)		Amount		Realized Gains / (Losses)		Yield(2)		Amount		Realized Gains / (Losses)
Financial Services Businesses excluding Japanese Insurance Operations(1):
Fixed maturities	7.02	%	1,613		(190	)	8.00	%	1,903		66
Equity securities	2.97	%	10		20		0.94	%	4		50
Commercial loans	8.78	%	381		4		8.06	%	303		11
Policy loans	6.43	%	72		—		6.67	%	73		—
Short-term investments and cash equivalents	2.21	%	111		(1	)	5.27	%	141		(4	)
Other investments	8.07	%	118		(106	)	9.33	%	118		169

Gross investment income before investment expenses	6.54	%	2,305		(273	)	7.69	%	2,542		292
Investment expenses	-0.30	%	(101	)	—		-0.57	%	(185	)	—

Total	6.24	%	2,204		(273	)	7.12	%	2,357		292

(1)

(2)

Page 35

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
3,703		4,060		Premiums	1,137		1,194		1,219		1,279		1,252		1,309
1,360		1,479		Policy charges and fee income	349		356		355		363		358		350
1,460		1,523		Net investment income	398		382		375		381		380		386
229		280		Commissions, investment management fees, and other income	56		56		64		55		56		63

6,752		7,342		Total revenues	1,940		1,988		2,013		2,078		2,046		2,108

				Benefits and Expenses(1):
3,492		3,880		Insurance and annuity benefits	1,018		1,149		1,243		1,223		1,199		1,256
584		595		Interest credited to policyholders’ account balances	156		152		153		159		147		153
8		7		Interest expense	(2	)	4		—		(1	)	—		(1	)
(824	)	(801	)	Deferral of acquisition costs	(205	)	(207	)	(197	)	(199	)	(194	)	(218	)
688		671		Amortization of acquisition costs	203		175		210		177		173		227
2,307		2,421		General and administrative expenses	549		544		522		648		516		524

6,255		6,773		Total benefits and expenses	1,719		1,817		1,931		2,007		1,841		1,941

497		569		Adjusted operating income before income taxes	221		171		82		71		205		167

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 36

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INDIVIDUAL LIFE AND ANNUITIES SEGMENT

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
295		342		Premiums	100		109		83		141		65		86
1,293		1,307		Policy charges and fee income	315		321		305		318		306		308
793		845		Net investment income	219		205		202		205		205		201
196		247		Commissions, investment management fees, and other income	49		49		53		46		49		53

2,577		2,741		Total revenues	683		684		643		710		625		648

				Benefits and Expenses(1):
633		793		Insurance and annuity benefits	181		198		194		236		157		165
397		395		Interest credited to policyholders’ account balances	103		99		96		98		93		96
8		8		Interest expense	1		2		—		—		—		—
(469	)	(419	)	Deferral of acquisition costs	(102	)	(101	)	(98	)	(99	)	(94	)	(115	)
338		305		Amortization of acquisition costs	103		76		111		76		76		133
1,453		1,398		General and administrative expenses	283		281		256		346		247		256

2,360		2,480		Total benefits and expenses	569		555		559		657		479		535

217		261		Adjusted operating income before income taxes	114		129		84		53		146		113

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 37

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—ANNUITIES

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
53		72		Premiums	13		13		12		8		9		21
263		284		Policy charges and fee income	64		65		57		56		56		56
477		471		Net investment income	120		108		107		105		100		100
81		86		Commissions, investment management fees, and other income	19		20		18		16		17		16

874		913		Total revenues	216		206		194		185		182		193

				Benefits and Expenses(1):
118		153		Insurance and annuity benefits	24		25		28		33		28		37
271		264		Interest credited to policyholders’ account balances	68		65		63		63		60		60
4		(2	)	Interest expense	1		1		—		1		—		—
(177	)	(142	)	Deferral of acquisition costs	(26	)	(24	)	(24	)	(25	)	(28	)	(35	)
153		133		Amortization of acquisition costs	41		21		51		21		23		70
405		360		General and administrative expenses	73		76		68		70		70		78

774		766		Total benefits and expenses	181		164		186		163		153		210

100		147		Adjusted operating income before income taxes	35		42		8		22		29		(17	)

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 38

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
80		71		Premiums	18		3		(8	)	7		8		21
83		78		Policy charges and fee income	19		20		18		23		19		19
2,741		2,665		Net investment income	652		627		611		594		563		602
4,182		4,576		Commissions, investment management fees, and other income	1,040		970		927		957		937		931

7,086		7,390		Total revenues	1,729		1,620		1,548		1,581		1,527		1,573

				Benefits and Expenses(1):
997		930		Insurance and annuity benefits	249		213		231		220		197		231
1,086		1,024		Interest credited to policyholders’ account balances	226		251		250		250		243		238
46		52		Interest expense	10		7		8		7		3		5
(93	)	(92	)	Deferral of acquisition costs	(20	)	(16	)	(12	)	(12	)	(14	)	(14	)
87		101		Amortization of acquisition costs	22		22		22		20		21		27
2,536		2,830		Securities operations non-interest expenses	682		733		653		661		607		619
1,653		1,753		General and administrative expenses	400		411		397		429		370		377

6,312		6,598		Total benefits and expenses	1,569		1,621		1,549		1,575		1,427		1,483

774		792		Adjusted operating income before income taxes	160		(1	)	(1	)	6		100		90

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 39

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INVESTMENT MANAGEMENT SEGMENT

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
—		—		Premiums	—		—		—		—		—		—
—		—		Policy charges and fee income	—		—		—		—		—		—
17		28		Net investment income	9		10		7		16		6		7
1,309		1,439		Commissions, investment management fees, and other income	337		327		332		319		311		309

1,326		1,467		Total revenues	346		337		339		335		317		316

				Benefits and Expenses(1):
—		—		Insurance and annuity benefits	—		—		—		—		—		—
—		—		Interest credited to policyholders’ account balances	—		—		—		—		—		—
1		8		Interest expense	4		3		3		1		—		3
(74	)	(77	)	Deferral of acquisition costs	(17	)	(13	)	(9	)	(9	)	(10	)	(12	)
77		79		Amortization of acquisition costs	19		19		20		18		18		19
—		—		Securities operations non-interest expenses	—		—		—		—		—		—
1,134		1,252		General and administrative expenses	289		298		284		306		262		270

1,138		1,262		Total benefits and expenses	295		307		298		316		270		280

188		205		Adjusted operating income before income taxes	51		30		41		19		47		36

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 40

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—FINANCIAL ADVISORY SEGMENT

(in millions)

Year ended December 31			2001							2002
1999	2000		1Q	2Q		3Q		4Q		1Q	2Q
		Revenues(1):
—	—	Premiums	—	—		—		—		—	—
—	—	Policy charges and fee income	—	—		—		—		—	—
279	300	Net investment income	71	59		63		56		46	47
2,645	2,933	Commissions, investment management fees, and other income	651	595		550		577		571	572

2,924	3,233	Total revenues	722	654		613		633		617	619

		Benefits and Expenses(1):
—	—	Insurance and annuity benefits	—	—		—		—		—	—
—	—	Interest credited to policyholders’ account balances	—	—		—		—		—	—
—	—	Interest expense	—	—		—		—		—	—
—	—	Deferral of acquisition costs	—	—		—		—		—	—
—	—	Amortization of acquisition costs	—	—		—		—		—	—
2,536	2,830	Securities operations non-interest expenses	682	733		653		661		607	619
69	45	General and administrative expenses	9	9		8		9		7	8

2,605	2,875	Total benefits and expenses	691	742		661		670		614	627

319	358	Adjusted operating income before income taxes	31	(88	)	(48	)	(37	)	3	(8	)

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 41

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—RETIREMENT SEGMENT

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
80		71		Premiums	18		3		(8	)	7		8		21
83		78		Policy charges and fee income	19		20		18		23		19		19
2,426		2,307		Net investment income	562		545		529		512		502		542
176		168		Commissions, investment management fees, and other income	38		39		36		33		35		35

2,765		2,624		Total revenues	637		607		575		575		564		617


				Benefits and Expenses(1):
997		930		Insurance and annuity benefits	249		213		231		220		197		231
1,086		1,024		Interest credited to policyholders’ account balances	226		251		250		250		243		238
45		44		Interest expense	5		2		3		3		1		2
(19	)	(15	)	Deferral of acquisition costs	(3	)	(3	)	(3	)	(3	)	(4	)	(2	)
10		22		Amortization of acquisition costs	3		3		2		2		3		8
—		—		Securities operations non-interest expenses	—		—		—		—		—		—
422		432		General and administrative expenses	95		94		96		98		90		90

2,541		2,437		Total benefits and expenses	575		560		579		570		530		567


224		187		Adjusted operating income before income taxes	62		47		(4	)	5		34		50

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 42

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—OTHER ASSET MANAGEMENT SEGMENT

(in millions)

Year ended December 31			2001				2002
1999	2000		1Q	2Q	3Q	4Q	1Q	2Q
		Revenues(1):
—	—	Premiums	—	—	—	—	—	—
—	—	Policy charges and fee income	—	—	—	—	—	—
19	30	Net investment income	10	13	12	10	9	6
52	36	Commissions, investment management fees, and other income	14	9	9	28	20	15

71	66	Total revenues	24	22	21	38	29	21

		Benefits and Expenses(1):
—	—	Insurance and annuity benefits	—	—	—	—	—	—
—	—	Interest credited to policyholders’ account balances	—	—	—	—	—	—
—	—	Interest expense	1	2	2	3	2	—
—	—	Deferral of acquisition costs	—	—	—	—	—	—
—	—	Amortization of acquisition costs	—	—	—	—	—	—
—	—	Securities operations non-interest expenses	—	—	—	—	—	—
28	24	General and administrative expenses	7	10	9	16	11	9

28	24	Total benefits and expenses	8	12	11	19	13	9

43	42	Adjusted operating income before income taxes	16	10	10	19	16	12

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 43

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—CORPORATE AND OTHER OPERATIONS

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Revenues(1):
11		15		Premiums	2		—		10		29		2		(2	)
(4	)	(10	)	Policy charges and fee income	—		(4	)	(1	)	(2	)	—		(6	)
960		841		Net investment income	197		214		132		165		142		183
(150	)	(317	)	Commissions, investment management fees, and other income	(132	)	4		(117	)	(63	)	(47	)	(79	)

817		529		Total revenues	67		214		24		129		97		96

				Benefits and Expenses(1):
85		27		Insurance and annuity benefits	7		9		11		12		27		31
—		(3	)	Interest credited to policyholders’ account balances	(1	)	1		1		—		—		—
426		385		Interest expense	98		87		60		44		53		46
79		105		Deferral of acquisition costs	26		23		17		16		19		21
(32	)	(84	)	Amortization of acquisition costs	(21	)	(20	)	(21	)	(20	)	(20	)	(25	)
27		38		Securities operations non-interest expenses	8		11		(7	)	8		1		(7	)
47		23		General and administrative expenses	(44	)	32		(32	)	98		(1	)	(15	)

632		491		Total benefits and expenses	73		143		29		158		79		51

185		38		Adjusted operating income before income taxes	(6	)	71		(5	)	(29	)	18		45

(1)

Revenues exclude realized investment gains, net of losses. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 44

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED—OPERATIONS HIGHLIGHTS

(in millions)

Year ended December 31			2001				2002
1999	2000		1Q	2Q	3Q	4Q	1Q	2Q
		Assets Under Management and Administration ($ billions)(1)(2):
		Assets Under Management :
		Managed by Investment Division(3):
		Investment Management Segment—Investment Management & Advisory Services
108.5	107.4	Retail customers	97.2	99.8	92.8	96.5	92.3	84.8
96.8	95.1	Institutional customers	89.5	90.7	84.9	89.1	86.2	83.5
107.9	110.0	General account(4)	111.0	109.3	110.1	113.8	111.7	116.0

313.2	312.5	Total Investment Management and Advisory Services	297.7	299.8	287.8	299.4	290.2	284.3
40.6	45.4	Non-proprietary wrap-fee and other assets under management	41.7	42.8	36.6	41.2	41.9	38.2

353.8	357.9	Total managed by Investment Division	339.4	342.6	324.4	340.6	332.1	322.5
5.8	8.1	Managed by International Insurance and Investments Division(4)	8.9	42.4	40.5	39.3	38.0	37.9
3.7	5.1	Managed by Insurance Division	8.1	8.5	8.4	8.1	8.7	8.0

363.3	371.1	Total assets under management	356.4	393.5	373.3	388.0	378.8	368.4
232.9	221.8	Client assets under administration	203.5	212.3	190.9	201.6	201.2	188.4

596.2	592.9	Total assets under management and administration	559.9	605.8	564.2	589.6	580.0	556.8


		Distribution Representative Productivity
378	412	Financial Advisor productivity (domestic; $ thousands)	375	348	327	336	379	375

(1)

As of end of period.

(2)

At fair market value.

(3)

(4)

Page 45

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED—INVESTMENT DIVISION—SUPPLEMENTARY REVENUE INFORMATION FOR INVESTMENT MANAGEMENT AND FINANCIAL ADVISORY SEGMENTS

(dollar amounts in millions unless otherwise noted)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				Investment Management Segment:
				Analysis of revenues by source:
				Investment Management and Advisory Services:
225		244		Retail customers	53		54		52		51		49		48
322		409		Institutional customers	97		99		91		96		84		87
221		221		General account	55		51		59		62		54		57

768		874		Subtotal	205		204		202		209		187		192
558		593		Mutual Fund revenues(1)	141		133		137		126		130		124

1,326		1,467		Total Investment Management segment revenues	346		337		339		335		317		316

				Analysis of commissions, investment management fees and other revenues by type:
				Investment Management and Advisory Services:
		794		Asset-based fees	183		188		186		184		176		178
		59		Transaction-based and other revenues	14		7		10		9		5		8

		853		Subtotal	197		195		196		193		181		186
		586		Mutual Fund revenues(1)	140		132		136		126		130		123

		1,439		Total Investment Management segment	337		327		332		319		311		309

				Financial Advisory Segment:
				Non-Interest Revenues:
1,775		1,845		Commissions	387		361		311		361		334		342
631		811		Fees	198		182		193		171		193		194
239		277		Other non-interest revenues	66		52		46		45		44		36

2,645		2,933		Total non-interest revenues	651		595		550		577		571		572

27.3	%	32.6	%	Recurring revenue as a percentage of total non-interest revenue(2)	35.8	%	36.3	%	37.4	%	36.7	%	37.4	%	38.5	%

(1)

Represents mutual fund revenues other than asset management fees, which are included in appropriate categories above.

(2)

Calculated on a trailing 12 month basis excluding Consumer Banking and Equity Securities sales and trading revenue.

Page 46

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RECLASSIFIED—INVESTMENT DIVISION—MUTUAL FUNDS AND WRAP-FEE PRODUCTS ASSETS UNDER MANAGEMENT

(in millions)

Year ended December 31					2001								2002
1999		2000			1Q		2Q		3Q		4Q		1Q		2Q
				MUTUAL FUNDS AND WRAP-FEE PRODUCTS ASSETS UNDER MANAGEMENT
				Mutual Funds and Wrap-fee Products:
				Mutual fund assets, excluding wrap-fee products:
53,412		55,245		Beginning total mutual funds assets	57,764		58,168		59,618		56,951		57,809		56,743
3,773		5,378		Sales (other than money market)	1,324		2,106		907		936		914		1,460
(4,872	)	(5,561	)	Redemptions (other than money market)	(1,202	)	(1,103	)	(1,110	)	(1,282	)	(1,116	)	(1,339	)
3,744		726		Reinvestment of distributions and change in market value	(1,254	)	1,056		(3,840	)	2,144		32		(2,450	)
(812	)	1,976		Net money market sales	1,536		(609	)	1,376		(940	)	(896	)	(1,955	)

55,245		57,764		Ending total mutual funds assets	58,168		59,618		56,951		57,809		56,743		52,459
16,723		19,621		Wrap-fee product assets at end of period(1)	17,335		18,714		16,141		17,955		18,192		16,676
17,092		17,410		Other managed accounts at end of period(2)	15,911		17,037		15,366		17,575		18,006		16,827

89,060		94,795		Total mutual fund, wrap-fee product and other managed account assets at end of period	91,414		95,369		88,458		93,339		92,941		85,962

(1)

Excludes other managed accounts.

(2)

Includes amounts under both management and administration for certain Prudential Securities programs and unit investment trusts.

Page 47

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

KEY DEFINITIONS AND FORMULAS

1. Attributed Equity:

Amount of capital assigned to each of the Company’s segments for purposes of measuring segment adjusted operating income before income taxes, established at a level which management considers necessary to support the segment’s risks. Attributed equity for the Financial Services Businesses represents all of the Company’s equity that is not included in the Closed Block Business.

2. Adjusted operating income before income taxes:

Adjusted operating income is a non-GAAP measure that excludes realized investment gains, net of losses and related adjustments; results of divested businesses; and demutualization costs and expenses. Revenues and benefits and expenses shown as components of adjusted operating income, and for the divisions of the Financial Services Businesses, are presented on the same basis as pre-tax adjusted operating income and exclude these items as well. Adjusted operating income should not be viewed as a substitute for net income determined in accordance with GAAP, and our definition of adjusted operating income may differ from that used by other companies. The excluded items are important to an understanding of our overall results of operations. However, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances the understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability factors of our businesses.

3. After-tax adjusted operating income:

Adjusted operating income before taxes, as defined above, less the income tax effect applicable to adjusted operating income before taxes.

4. Assets Under Management:

Fair market value or account value of assets which Prudential manages directly in proprietary products, such as mutual funds and variable annuities, in separate accounts, wrap-fee products and the general account, and assets invested in investment options included in the Company’s products that are managed by third party sub-managers (i.e., the non-proprietary investment options in the Company’s products).

5. Book value per share of Common Stock:

Equity attributed to Financial Services Businesses divided by number of Common shares outstanding at end of period, on a diluted basis.

6. Borrowings—General Corporate Purposes:

Amounts used for corporate purposes including uses for cash flow timing mismatches, and investments in equity and debt securities of subsidiaries including amounts needed for regulatory capital purposes.

7. Borrowings—Investment Related:

Debt issued to finance specific investment assets or portfolios of investment assets, including real estate, real estate related assets held in consolidated joint ventures, and institutional spread lending portfolios.

8. Borrowings—Securities Business Related:

Debt issued to finance primarily the liquidity of our broker-dealers, and our capital markets and other securities business related operations.

9. Borrowings—Specified Other Businesses:

Borrowings associated with consumer banking activities, real estate franchises, and relocation services.

10. Client Assets:

Fair market value of assets in client accounts of Prudential Securities and Prudential Bank, and trust client accounts, that are not included in Assets Under Management. Prudential does not receive a management or administrative fee on these assets, but may receive a fee for executing trades, custody or recordkeeping services.

Page 48

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

KEY DEFINITIONS AND FORMULAS

11. Earned Premiums:

The portion of a premium, net of any amount ceded, that represents coverage already provided or that belongs to the insurer based on the part of the policy period that has passed.

12. Earnings Per Share of Common Stock:

Prudential Financial, Inc.’s initial public offering and the demutualization of The Prudential Insurance Company of America became effective on December 18, 2001. For the 2001 periods, earnings per share data are presented on a pro forma basis that assumes that shares issued in the initial public offering, including those issued as a result of the subsequent exercise by underwriters of options to acquire additional shares, and shares distributed as demutualization consideration to policyholders, were outstanding for all such periods. Earnings used in per-share calculations for the 2001 periods have not been adjusted to reflect the demutualization or related transactions, including the establishment of the Closed Block Business. For periods subsequent to 2001, earnings per share is based on the weighted average number of diluted shares outstanding. Stock options are included in the number of diluted shares for the periods they are outstanding based on the treasury stock method. Net income for the Financial Services Businesses and the Closed Block Business is determined in accordance with GAAP and includes general and administrative expenses charged to each of the businesses based on the Company’s methodology for allocation of such expenses. For periods subsequent to the date of demutualization, the net income of each business is modified for cash flows between the Financial Services Businesses and the Closed Block Business related to administrative expenses, which are determined by a policy servicing fee arrangement that is based upon insurance in force and statutory cash premiums. To the extent actual administrative expenses vary from these cash flow amounts, these differences are recorded, on an after-tax basis, as direct equity adjustments to the equity balances of each business. The direct equity adjustments are used to adjust net income to determine the earnings available to the Common Stock and the Class B Stock for earnings per share purposes.

13. Financial Advisors (Domestic and International):

Financial advisors and securities brokers in our securities operations.

14. Financial Advisor Productivity (Domestic):

Financial Advisory segment total non-interest revenues, excluding revenues generated by the consumer bank and by the segment’s retail fixed income and equity securities trading operations, divided by the average number of domestic Financial Advisors for the period. For interim reporting periods, the productivity measures are annualized.

15. General Account:

Invested assets and policyholder liabilities and reserves for which the Company bears the investment risk. Excludes assets recognized for statutory purposes that are specifically allocated to a separate account. General account assets also include assets of the parent company, Prudential Financial, Inc.

16. Gibraltar Life Advisors:

Insurance representatives for Gibraltar Life.

17. Group Life Insurance and Group Disability Insurance Administrative Operating Expense Ratios:

Ratio of administrative operating expenses (excluding commissions) to gross premiums, policy charges and fee income.

18. Group Life Insurance and Group Disability Insurance Benefits Ratios:

Ratio of policyholder benefits to earned premiums, policy charges and fee income.

19. Insurance and Annuity Benefits:

Total death benefits, annuity benefits, disability benefits, other policy benefits, losses and loss adjustment expenses paid or incurred, under insurance and annuity contracts, plus the change in reserves for future policy benefits, losses and loss adjustment expenses.

20. International Life Planners:

Insurance agents in our insurance operations outside the United States, excluding Gibraltar Life Advisors.

Page 49

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

KEY DEFINITIONS AND FORMULAS

21. New annualized premiums:

Premiums from new sales that are expected to be collected over a one year period. Group insurance new annualized premiums exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract, and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.

22. Non-recourse and Limited-recourse Debt:

Limited and non-recourse borrowing is where the holder is entitled to collect only against the assets pledged to the debt as collateral or has only very limited rights to collect against other assets.

23. Operating return on average equity:

Adjusted operating income after tax (giving effect to the direct equity adjustment for earnings per share calculation), annualized for interim periods, divided by average attributed equity for the Financial Services Businesses excluding unrealized gains and losses on investments.

24. Policy Persistency—Group Insurance:

Percentage of the premiums in force at the end of the prior year that are still in force at the end of the period (excluding Servicemembers’ Group Life Insurance and Prudential Employee Benefit Plan).

25. Policy Persistency—International Insurance:

13 month persistency represents the percentage of policies issued that are still in force at the beginning of their second policy year. 25 month persistency represents the percentage of policies issued that are still in force at the beginning of their third policy year.

26. Prudential Agents:

Insurance agents in our insurance operations in the United States.

27. Prudential Agent productivity:

Commissions on new sales of all products by Prudential Agents under contract for the entire period, divided by the number of those Prudential Agents. Excludes commissions on new sales by Prudential Agents hired or departed during the period. For interim reporting periods, the productivity measures are annualized.

28. Ratio of corporate debt to total capitalization:

For purposes of this ratio, we measure “debt” as the sum of borrowings for general corporate purposes and 20% of the stated aggregate liquidation amount of the Equity Security Units, and we measure “total capitalization” as the sum of equity excluding unrealized gains and losses on available-for-sale securities, corporate debt and the stated aggregate liquidation amount of the Equity Security Units. The ratio is calculated by dividing debt by total capitalization.

29. Redeemable Capital Securities:

Capital Trust Certificates of Prudential Financial Capital Trust I (element of Equity Security Units).

30. Separate Accounts:

Assets of our insurance companies allocated under certain policies and contracts that are segregated from the general account and other separate accounts. The policyholder or contractholder predominantly bears the risk of investments held in a separate account.

31. Wrap-Fee Products:

Investment products generating asset-based fees in which the funds of the customer are generally invested in other investment products such as mutual funds.

Page 50

Prudential Financial, Inc.

Financial Supplement

Second Quarter 2002

RATINGS AND INVESTOR INFORMATION

INSURANCE CLAIMS PAYING RATINGS
as of October 21, 2002
	A.M.Best	Standard & Poor’s	Moody’s	Fitch Ratings
The Prudential Insurance Company of America	A	A+	A1	AA-
PRUCO Life Insurance Company	A	A+	A1	NR*
PRUCO Life Insurance Company of New Jersey	A	A+	A1	NR
Prudential Property and Casualty Insurance Company	A-	A-	A2	NR
The Prudential Property & Casualty Insurance Company of New Jersey	A-	NR	NR	NR
The Prudential Life Insurance Co., Ltd. (Prudential of Japan)	A+	AA-	NR	NR
Gibraltar Life Insurance Company, Ltd.	NR	A	A2	NR
CREDIT RATINGS:
as of October 21, 2002
Prudential Financial, Inc.:
Short-Term Borrowings	AMB-1	A2	P2	F1
Long-Term Senior Debt	a-	A-	A3	A
Redeemable Capital Securities	a-	A-	A3	A
The Prudential Insurance Company of America :
Capital and surplus notes, due 2003-2025	a-	A-	A3	NR
Prudential Funding, LLC:
Commercial Paper	AMB-1	A1	P1	NR
Long-Term Senior Debt	a	A+	A2	NR
Prudential Securities Group, Inc	NR	BBB	NR	NR

NR indicates not rated.

INVESTOR INFORMATION:

Corporate Offices:				Investor Information Hotline:
Prudential Financial, Inc. 751 Broad Street Newark, New Jersey 07102				Dial 877-998-ROCK for additional printed information or inquiries.
				Web Site:
				www.prudential.com
Publicly Traded Securities:
Common Stock of Prudential Financial, Inc. is traded on the New York Stock Exchange under the symbol PRU.
Equity Security Units of Prudential Financial, Inc. are traded on the New York Stock Exchange under the symbol PFA.

Page 51

Form: 8-K

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