February 11, 2003 - QUARTERLY FINANCIAL SUPPLEMENT FOR PERIOD 12/31/02 - 8-K: Current report

Exhibit 99.1

Prudential Financial, Inc. (PRU)

Quarterly Financial Supplement

FINANCIAL SERVICES BUSINESSES

FOURTH 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.

February 11, 2003

Prudential Financial, Inc.

Quarterly Financial Supplement

LOGO

Fourth 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		36-42

KEY DEFINITIONS AND FORMULAS		43-45

RATINGS AND INVESTOR INFORMATION		46

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

The Quarterly Financial Supplement for the period ended December 31, 2002 reflects the reorganization of the Company’s international securities operations that was announced in November 2002. This reorganization resulted in the following:

The Company’s European retail transaction-oriented stockbrokerage and related activities, formerly reported in the International Securities and Investments segment, were discontinued, and the results of these operations have been classified as discontinued operations for all periods presented herein.

The Latin American branches formerly included in the International Securities and Investments segment are now managed together with the U.S. branches of the Company’s securities operations, and the results of operations associated with these branches are included in adjusted operating income of the Financial Advisory segment for all periods presented herein.

The Company’s international equity group operations, formerly included in the International Securities and Investments segment, are now managed together with the Company’s U.S. equity research and institutional sales and trading operations, and the results of these operations are included in adjusted operating income of the Financial Advisory segment for all periods presented herein.

The former International Securities and Investments segment has been renamed International Investments and reflects the changes mentioned above as well as the integration of the European and Asian Private Client business with the Company’s international asset management business. The futures operations were unchanged and remain a component of the International Investments segment.

In addition, the Company discontinued its international venture comprised of retail broker-dealer operations in Tokyo, formerly reported within Corporate and Other results, and the results of this venture have been classified as discontinued operations for all periods presented herein. Revenues and expenses of Corporate and Other operations as reported herein also reflect certain reclassifications to conform to current reporting practices, which have no impact on adjusted operating income or net income for any period.

This Quarterly Financial Supplement includes restated historical results and measures for each of the quarters of 2002 and 2001 and the year ended December 31, 2000, conforming to current reporting practices, for the Financial Advisory and International Investments segments as well as Corporate and Other operations.

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

iii

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2002

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date				%			2001		2002
2002		2001		Change			4Q		1Q		2Q		3Q		4Q
						Financial Services Businesses:
						Pre-tax adjusted operating income by division:
555		545		2	%	Insurance Division	71		205		167		76		107
284		170		67	%	Investment Division	4		104		92		52		36
747		570		31	%	International Insurance and Investments Division	153		202		183		188		174
194		64		203	%	Corporate and other operations	(12	)	21		47		119		7

1,780		1,349		32	%	Total pre-tax adjusted operating income	216		532		489		435		324
598		523		14	%	Income taxes(1)	80		194		179		129		96

1,182		826		43	%	Financial Services Businesses after-tax adjusted operating income	136		338		310		306		228

						Items excluded from adjusted operating income:
(859	)	(136	)	-532	%	Realized investment losses, net of related adjustments	(132	)	(96	)	(343	)	(142	)	(278	)
(20	)	—		—		Sales practices remedies and costs	—		—		—		—		(20	)
(80	)	(147	)	46	%	Divested businesses	(25	)	(8	)	10		(14	)	(68	)
—		(588	)	100	%	Demutualization costs and expenses(2)	(389	)	—		—		—		—

(959	)	(871	)	-10	%	Total items excluded from adjusted operating income, before income taxes	(546	)	(104	)	(333	)	(156	)	(366	)
(518	)	(394	)	-31	%	Income taxes, including mutual insurance company tax	(23	)	(35	)	(125	)	(233	)	(125	)

(441	)	(477	)	8	%	Total items excluded from adjusted operating income, after income taxes	(523	)	(69	)	(208	)	77		(241	)

741		349		112	%	Income (loss) from continuing operations (after-tax) of Financial Services Businesses	(387	)	269		102		383		(13	)
(62	)	(47	)	-32	%	Income (loss) from discontinued operations, net of taxes	(16	)	(6	)	(7	)	9		(58	)

679		302		125	%	Net income (loss) of Financial Services Businesses	(403	)	263		95		392		(71	)

						Earnings per share of Common Stock (diluted):
2.12		1.42				Adjusted operating income	0.23		0.59		0.55		0.55		0.43
1.36		0.60				Income (loss) from continuing operations	(0.66	)	0.47		0.20		0.68		0.00
1.25		0.52				Net income (loss)	(0.69	)	0.46		0.19		0.70		(0.10	)

578.0		583.6				Weighted average number of outstanding Common shares (diluted basis)	583.7		585.1		585.2		576.8		565.0

6.49	%					Operating Return on Average Equity(3)			7.29	%	6.79	%	6.62	%	5.17	%

						Reconciliation to Consolidated Net Income of Prudential Financial, Inc:
679		302				Net income (loss) of Financial Services Businesses (above)	(403	)	263		95		392		(71	)
(485	)	(456	)			Net loss of Closed Block Business(4)	(103	)	(110	)	(163	)	(90	)	(122	)

194		(154	)			Consolidated net income (loss)	(506	)	153		(68	)	302		(193	)

43						Direct equity adjustments for earnings per share calculations			7		14		9		13

(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 and year 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.

Quarterly Financial Supplement

LOGO

Fourth Quarter 2002

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date			2001	2002
2002	2001		4Q	1Q	2Q	3Q	4Q
		Financial Services Businesses Capitalization Data(1):
		Short-term debt	5,405	6,515	4,221	3,852	3,469
		Long-term debt	3,554	3,350	3,003	3,077	3,007
		Equity Security Units(2)	690	690	690	690	690

		Attributed Equity(3):
		Including accumulated other comprehensive income	19,646	19,453	20,258	21,039	20,562
		Excluding unrealized gains and losses on investments	18,803	19,034	19,144	18,931	18,394
		Excluding accumulated other comprehensive income	19,083	19,289	19,321	19,153	18,621

		Total Capitalization:
		Including accumulated other comprehensive income	23,890	23,493	23,951	24,806	24,259
		Excluding unrealized gains and losses on investments	23,047	23,074	22,837	22,698	22,091
		Excluding accumulated other comprehensive income	23,327	23,329	23,014	22,920	22,318

		Book value per share of Common Stock:
		Including accumulated other comprehensive income	33.59	33.25	34.72	37.03	36.67
		Excluding unrealized gains and losses on investments	32.15	32.53	32.81	33.32	32.80
		Excluding accumulated other comprehensive income	32.63	32.97	33.12	33.71	33.20

		Number of diluted shares at end of period	584.8	585.1	583.4	568.1	560.8

		Common Stock Price Range (based on closing price):
35.75	33.19	High	33.19	32.09	35.75	32.99	32.10
25.50	29.30	Low	29.30	30.05	31.05	27.35	25.50
31.74	33.19	Close	33.19	31.05	33.36	28.56	31.74

		Common Stock market capitalization(1)	19,369	18,143	19,448	16,235	17,782

(1)

As of end of period.

(2)

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

(3)

During the third quarter of 2002, in conjunction with the Company’s review of its allocation of deferred taxes between the Closed Block and Financial Services Businesses, the Company determined that deferred taxes that had been included in the Closed Block Business were more appropriately reflected within the Financial Services Businesses. Accordingly, deferred taxes of $130 million were transferred from the Closed Block Business to the Financial Services Businesses resulting in a $130 million decrease in “Other attributed equity” of the Financial Services Businesses and a corresponding increase in “Other attributed equity” of the Closed Block Business.

Page 2

Prudential Financial, Inc.

Quarterly Financial Supplement

LOGO

Fourth Quarter 2002

OPERATIONS HIGHLIGHTS

Year-to-date			2001	2002
2002	2001		4Q	1Q	2Q	3Q	4Q
		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	96.5	92.3	84.8	77.3	79.9
		Institutional customers	89.1	86.2	83.5	79.8	85.2
		General account(4)	113.8	111.7	116.0	119.5	122.9


		Total Investment Management and Advisory Services	299.4	290.2	284.3	276.6	288.0

		Non-proprietary wrap-fee and other assets under management	41.2	41.9	38.2	32.7	33.0


		Total managed by Investment Division	340.6	332.1	322.5	309.3	321.0
		Managed by International Insurance and Investments Division(4):	39.3	38.0	37.9	42.7	43.6
		Managed by Insurance Division	8.1	8.7	8.0	7.2	8.8


		Total assets under management	388.0	378.8	368.4	359.2	373.4
		Client assets under administration(5)	201.6	201.2	188.4	177.6	182.2


		Total assets under management and administration	589.6	580.0	556.8	536.8	555.6


		Assets managed or administered for customers outside of the United States at end of period(5)	67.1	67.3	70.5	77.9	83.6

		Distribution Representatives(1):
		Prudential Agents	4,387	4,469	4,551	4,478	4,385
		Financial Advisors(6)	5,951	5,656	5,306	4,960	4,731
		International Life Planners	4,104	4,098	4,207	4,353	4,505
		Gibraltar Life Advisors	6,121	5,726	5,525	5,233	5,155

		Distribution Representative Productivity:
40	35	Prudential Agent productivity ($ thousands)	37	34	38	36	43
371	345	Financial Advisor productivity ($ thousands)	335	378	372	378	357

		Third Party Distribution—Retail Products ($ millions)(7):
72	56	Individual life insurance(8)	14	16	17	15	24
121	196	Corporate-owned life insurance sales	17	9	76	21	15
133	17	Individual annuities	9	11	24	50	48
3,652	3,042	Mutual funds and wrap-fee products	537	456	1,019	970	1,207

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

(5)

Amounts reported for periods prior to December 31, 2002 reflect inclusion of certain assets under administration relating to recently acquired entities that were not previously reported in this category, to conform to current presentation.

(6)

All periods exclude financial advisors associated with our discontinued international securities operations.

(7)

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

(8)

Excluding corporate-owned life insurance.

Page 3

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2002

LOGO

COMBINED STATEMENTS OF OPERATIONS—FINANCIAL SERVICES BUSINESSES

(in millions)

Year-to-date				% Change			2001		2002
2002		2001		% Change			4Q		1Q		2Q		3Q		4Q
						Revenues(1):
9,509		8,227		16	%	Premiums	2,361		2,278		2,334		2,386		2,511
1,653		1,803		-8	%	Policy charges and fee income	454		434		412		400		407
5,193		5,226		-1	%	Net investment income	1,299		1,240		1,346		1,316		1,291
4,081		4,263		-4	%	Commissions, investment management fees, and other income	1,069		1,074		1,036		995		976

20,436		19,519		5	%	Total revenues	5,183		5,026		5,128		5,097		5,185


						Benefits and Expenses(1):
9,397		8,259		14	%	Insurance and annuity benefits	2,296		2,206		2,317		2,326		2,548
1,707		1,670		2	%	Interest credited to policyholders’ account balances	434		414		415		434		444
170		326		-48	%	Interest expense	48		48		43		43		36
(1,451	)	(1,325	)	-10	%	Deferral of acquisition costs	(344	)	(340	)	(358	)	(370	)	(383	)
1,126		933		21	%	Amortization of acquisition costs	224		239		273		358		256
2,489		2,889		-14	%	Securities operations non-interest expenses	707		640		641		609		599
5,218		5,418		-4	%	General and administrative expenses	1,602		1,287		1,308		1,262		1,361

18,656		18,170		3	%	Total benefits and expenses	4,967		4,494		4,639		4,662		4,861


1,780		1,349		32	%	Adjusted operating income before income taxes	216		532		489		435		324


						Items excluded from adjusted operating income before income taxes:
(865	)	(162	)	-434	%	Realized investment losses, net of related adjustments	(165	)	(101	)	(339	)	(141	)	(284	)
6		26		-77	%	Related charges	33		5		(4	)	(1	)	6

(859	)	(136	)	-532	%	Total realized investment losses, net of related adjustments	(132	)	(96	)	(343	)	(142	)	(278	)

(20	)	—		—		Sales practices remedies and costs	—		—		—		—		(20	)
(80	)	(147	)	46	%	Divested businesses	(25	)	(8	)	10		(14	)	(68	)
—		(588	)	100	%	Demutualization costs and expenses	(389	)	—		—		—		—

(959	)	(871	)	-10	%	Total items excluded from adjusted operating income before income taxes	(546	)	(104	)	(333	)	(156	)	(366	)


821		478		72	%	Income (loss) from continuing operations before income taxes	(330	)	428		156		279		(42	)
80		129		-38	%	Income tax expense (benefit)	57		159		54		(104	)	(29	)

741		349		112	%	Income (loss) from continuing operations, after-tax	(387	)	269		102		383		(13	)

(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, sales practices remedies and costs, and demutualization costs and expenses.

Page 4

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

COMBINED BALANCE SHEETS—FINANCIAL SERVICES BUSINESSES

(in millions)

	12/31/2001	03/31/2002	06/30/2002	09/30/2002	12/31/2002
Assets:
Investments:
Fixed maturities available for sale, at fair value (amortized cost $67,276; $69,840; $70,745; $72,962; $74,665)	68,880	70,687	72,700	76,815	79,230
Fixed maturities held to maturity, at amortized cost (fair value $395; $373; $2,293; $2,385; $2,673)	374	354	2,268	2,376	2,612
Trading account assets, at fair value	5,043	6,286	6,038	4,419	3,449
Equity securities available for sale, at fair value (cost $1,671; $1,620; $1,748; $1,815; $1,313)	1,688	1,687	1,868	1,714	1,286
Commercial loans	13,624	13,011	12,752	12,649	12,300
Policy loans	2,812	2,854	2,982	3,036	3,146
Securities purchased under agreements to resell	4,421	7,137	5,136	5,256	4,844
Cash collateral for borrowed securities	5,210	5,628	5,530	5,691	4,978
Other long-term investments	4,336	4,253	4,216	4,329	4,333
Short-term investments	2,972	3,095	2,848	2,082	2,840

Total investments	109,360	114,992	116,338	118,367	119,018
Cash and cash equivalents	16,900	10,282	8,344	9,115	7,470
Accrued investment income	1,059	1,027	1,069	1,084	1,021
Broker-dealer related receivables	7,802	7,017	7,091	5,486	5,631
Deferred policy acquisition costs	5,538	5,660	5,859	5,750	5,875
Other assets	13,488	15,692	16,213	14,699	13,730
Separate account assets	77,158	78,515	75,101	69,900	70,555

Total assets	231,305	233,185	230,015	224,401	223,300

Liabilities:
Future policy benefits	39,752	38,403	40,319	41,395	42,213
Policyholders’ account balances	37,944	37,559	38,916	40,325	40,799
Unpaid claims and claim adjustment expenses	3,408	3,353	3,352	3,363	3,428
Securities sold under agreements to repurchase	9,280	11,704	10,557	10,675	10,250
Cash collateral for loaned securities	7,650	8,256	8,959	7,645	7,517
Income taxes payable	1,085	1,102	1,609	1,967	1,910
Broker-dealer related payables	6,445	5,581	6,076	4,498	4,838
Securities sold but not yet purchased	2,791	4,561	3,185	2,417	1,996
Short-term debt	5,405	6,515	4,221	3,852	3,469
Long-term debt	3,554	3,350	3,003	3,077	3,007
Other liabilities	16,497	14,143	13,769	13,558	12,066
Separate account liabilities	77,158	78,515	75,101	69,900	70,555

Total liabilities	210,969	213,042	209,067	202,672	202,048

Guaranteed beneficial interest in Trust holding solely debentures of Parent	690	690	690	690	690

Attributed Equity:
Accumulated other comprehensive income	563	164	937	1,886	1,941
Other attributed equity	19,083	19,289	19,321	19,153	18,621

Total attributed equity	19,646	19,453	20,258	21,039	20,562

Total liabilities and attributed equity	231,305	233,185	230,015	224,401	223,300

Page 5

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS—BY DIVISION

(in millions)

	Quarter Ended December 31, 2002
	Total						International
	Financial						Insurance &		Corporate
	Services		Insurance		Investment		Investments		and Other
	Businesses		Division		Division		Division		Operations
Revenues (1) :
Premiums	2,511		1,419		38		1,054		—
Policy charges and fee income	407		347		18		52		(10	)
Net investment income	1,291		404		571		185		131
Commissions, investment management fees, and other income	976		55		864		80		(23	)

Total revenues	5,185		2,225		1,491		1,371		98

Benefits and Expenses (1):
Insurance and annuity benefits	2,548		1,407		232		866		43
Interest credited to policyholders’ account balances	444		170		250		24		—
Interest expense	36		(2	)	2		1		35
Deferral of acquisition costs	(383	)	(215	)	(8	)	(170	)	10
Amortization of acquisition costs	256		192		23		60		(19	)
Securities operations non-interest expenses	599		—		583		—		16
General and administrative expenses	1,361		566		373		416		6

Total benefits and expenses	4,861		2,118		1,455		1,197		91

Adjusted operating income before income taxes	324		107		36		174		7


	Quarter Ended December 31, 2001
	Total Financial						International Insurance &		Corporate
	Services		Insurance		Investment		Investments		and Other
	Businesses		Division		Division		Division		Operations
Revenues (1):
Premiums	2,361		1,279		7		1,046		29
Policy charges and fee income	454		363		23		70		(2	)
Net investment income	1,299		381		595		156		167
Commissions, investment management fees, and other income	1,069		55		987		90		(63	)

Total revenues	5,183		2,078		1,612		1,362		131

Benefits and Expenses (1):
Insurance and annuity benefits	2,296		1,223		220		841		12
Interest credited to policyholders’ account balances	434		159		250		25		—
Interest expense	48		(1	)	7		(2	)	44
Deferral of acquisition costs	(344	)	(199	)	(12	)	(149	)	16
Amortization of acquisition costs	224		177		20		47		(20	)
Securities operations non-interest expenses	707		—		694		—		13
General and administrative expenses	1,602		648		429		447		78

Total benefits and expenses	4,967		2,007		1,608		1,209		143

Adjusted operating income before income taxes	216		71		4		153		(12	)

(1)

Page 6

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS—BY DIVISION

(in millions)

	Twelve Months Ended December 31, 2002
	Total						International
	Financial						Insurance &		Corporate
	Services		Insurance		Investment		Investments		and Other
	Businesses		Division		Division		Division		Operations
Revenues (1) :
Premiums	9,509		5,298		77		4,137		(3	)
Policy charges and fee income	1,653		1,397		71		204		(19	)
Net investment income	5,193		1,569		2,309		719		596
Commissions, investment management fees, and other income	4,081		231		3,682		340		(172	)

Total revenues	20,436		8,495		6,139		5,400		402

Benefits and Expenses (1):
Insurance and annuity benefits	9,397		5,138		880		3,278		101
Interest credited to policyholders’ account balances	1,707		633		978		96		—
Interest expense	170		(5	)	14		1		160
Deferral of acquisition costs	(1,451	)	(839	)	(44	)	(630	)	62
Amortization of acquisition costs	1,126		885		92		234		(85	)
Securities operations non-interest expenses	2,489		—		2,464		—		25
General and administrative expenses	5,218		2,128		1,471		1,674		(55	)

Total benefits and expenses	18,656		7,940		5,855		4,653		208

Adjusted operating income before income taxes	1,780		555		284		747		194


	Twelve Months Ended December 31, 2001
	Total						International
	Financial						Insurance &		Corporate
	Services		Insurance		Investment		Investments		and Other
	Businesses		Division		Division		Division		Operations
Revenues (1):
Premiums	8,227		4,829		20		3,337		41
Policy charges and fee income	1,803		1,423		80		307		(7	)
Net investment income	5,226		1,536		2,491		483		716
Commissions, investment management fees, and other income	4,263		231		4,016		322		(306	)

Total revenues	19,519		8,019		6,607		4,449		444

Benefits and Expenses (1):
Insurance and annuity benefits	8,259		4,633		913		2,674		39
Interest credited to policyholders’ account balances	1,670		620		977		72		1
Interest expense	326		1		32		4		289
Deferral of acquisition costs	(1,325	)	(808	)	(60	)	(539	)	82
Amortization of acquisition costs	933		765		86		164		(82	)
Securities operations non-interest expenses	2,889		—		2,852		—		37
General and administrative expenses	5,418		2,263		1,637		1,504		14

Total benefits and expenses	18,170		7,474		6,437		3,879		380

Adjusted operating income before income taxes	1,349		545		170		570		64

(1)

Page 7

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES COMBINING BALANCE SHEETS—BY DIVISION

(in millions)

	As of December 31, 2002
	Total Financial Services Businesses	Insurance Division	Investment Division	International Insurance & Investments Division	Corporate and Other Operations
Assets:
Total investments	119,018	28,447	44,934	36,460	9,177
Broker-dealer related receivables	5,631	—	4,516	399	716
Deferred policy acquisition costs	5,875	3,772	28	2,158	(83	)
Other assets	22,221	4,331	7,898	4,141	5,851
Separate account assets	70,555	31,175	39,715	499	(834	)

Total assets	223,300	67,725	97,091	43,657	14,827

Liabilities:
Future policy benefits	42,213	5,288	12,835	23,624	466
Policyholders' account balances	40,799	14,947	16,252	9,598	2
Debt	6,476	—	3,551	849	2,076
Other liabilities	42,005	9,137	20,860	5,586	6,422
Separate account liabilities	70,555	31,175	39,715	499	(834	)

Total liabilities	202,048	60,547	93,213	40,156	8,132

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

Attributed Equity:
Accumulated other comprehensive income (loss)	1,941	993	587	480	(119	)
Other attributed equity	18,621	6,185	3,291	3,021	6,124

Total attributed equity	20,562	7,178	3,878	3,501	6,005

Total liabilities and attributed equity	223,300	67,725	97,091	43,657	14,827

	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	45,627	29,681		9,926
Broker-dealer related receivables	7,802	—	6,334	621		847
Deferred policy acquisition costs	5,538	3,919	66	1,615		(62	)
Other assets	31,447	4,496	9,274	7,799		9,878
Separate account assets	77,158	36,166	41,217	422		(647	)

Total assets	231,305	68,707	102,518	40,138		19,942

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	4,573	805		3,475
Other liabilities	47,156	8,505	24,932	4,529		9,190
Separate account liabilities	77,158	36,166	41,217	422		(647	)

Total liabilities	210,969	62,441	98,411	37,605		12,512

Guaranteed beneficial 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	3,661	2,704		6,981

Total attributed equity	19,646	6,266	4,107	2,533		6,740

Total liabilities and attributed equity	231,305	68,707	102,518	40,138		19,942

Page 8

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

SHORT TERM DEBT—FINANCIAL SERVICES BUSINESSES

(in millions)

	As of December 31, 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	—	306	—	306	—	222	—	222
Investment related	—	154	—	154	—	834	—	834
Securities business related	—	959	1,256	2,215	—	1,639	1,484	3,123
Specified other businesses	—	514	279	793	—	1,141	14	1,155
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	71	71

Total short-term debt	—	1,933	1,536	3,469	—	3,836	1,569	5,405

Borrowings by type:
Long-term debt due within one year	—	637	—	637	—	753	—	753
Commercial paper	—	1,265	—	1,265	—	3,022	—	3,022
Bank borrowings	—	—	913	913	—	—	1,324	1,324
Other short-term debt	—	31	622	653	—	61	174	235

Total general obligations	—	1,933	1,535	3,468	—	3,836	1,498	5,334
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	71	71

Total short-term debt	—	1,933	1,536	3,469	—	3,836	1,569	5,405

(a)

Includes Prudential Funding, LLC.

Page 9

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

LONG TERM DEBT

(in millions)

	As of December 31, 2002
	General Corporate Purposes		Investment Related	Securities Business Related	Specified Other Businesses	Total General Obligations	Limited Recourse and non-Recourse	Total 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		745	399	—	1,744	—	1,744
Commercial paper backed by long-term credit agreements	—		—	—	—	—	—	—

Total	1,290		745	399	—	2,434	—	2,434

Long-term debt of other affiliated companies	—		—	—	—	—	573	573

Total long-term debt of Financial Services Businesses	1,290		745	399	—	2,434	573	3,007

Ratio of long-term and short-term corporate debt to capitalization	8.4	%

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

	As of December 31, 2001
	General Corporate Purposes		Investment Related	Securities Business Related	Specified Other Businesses	Total General Obligations	Limited Recourse and non-Recourse	Total 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.
Quarterly Financial Supplement

Fourth Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

Year-to-date							2001		2002
2002		2001		% Change			4Q		1Q		2Q		3Q		4Q
						Revenues (1):
5,298		4,829		10%		Premiums	1,279		1,252		1,309		1,318		1,419
1,397		1,423		-2%		Policy charges and fee income	363		358		350		342		347
1,569		1,536		2%		Net investment income	381		380		386		399		404
231		231		0%		Commissions, investment management fees, and other income	55		56		63		57		55

8,495		8,019		6%		Total revenues	2,078		2,046		2,108		2,116		2,225

						Benefits and Expenses (1):
5,138		4,633		11%		Insurance and annuity benefits	1,223		1,199		1,256		1,276		1,407
633		620		2%		Interest credited to policyholders' account balances	159		147		153		163		170
(5	)	1		-596	%	Interest expense	(1	)	—		(1	)	(2	)	(2	)
(839	)	(808	)	-4%		Deferral of acquisition costs	(199	)	(194	)	(218	)	(212	)	(215	)
885		765		16%		Amortization of acquisition costs	177		173		227		293		192
2,128		2,263		-6%		General and administrative expenses	648		516		524		522		566

7,940		7,474		6%		Total benefits and expenses	2,007		1,841		1,941		2,040		2,118

555		545		2%		Adjusted operating income before income taxes	71		205		167		76		107

(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.
Quarterly Financial Supplement

Fourth Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

	Quarter Ended December 31, 2002
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life and Annuities
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life		Individual Annuities
Revenues (1):
Premiums	1,419		180		719		520		165		15
Policy charges and fee income	347		310		37		—		264		46
Net investment income	404		215		148		41		108		107
Commissions, investment management fees, and other income	55		47		7		1		33		14

Total revenues	2,225		752		911		562		570		182

Benefits and Expenses (1):
Insurance and annuity benefits	1,407		320		669		418		283		37
Interest credited to policyholders' account balances	170		106		64		—		37		69
Interest expense	(2	)	(1	)	(1	)	—		(1	)	—
Deferral of acquisition costs	(215	)	(104	)	(12	)	(99	)	(79	)	(25	)
Amortization of acquisition costs	192		94		—		98		71		23
General and administrative expenses	566		252		139		175		189		63

Total benefits and expenses	2,118		667		859		592		500		167

Adjusted operating income before income taxes	107		85		52		(30	)	70		15

	Quarter Ended December 31, 2001
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life and Annuities
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life		Individual Annuities
Revenues (1):
Premiums	1,279		141		643		495		133		8
Policy charges and fee income	363		318		45		—		262		56
Net investment income	381		205		140		36		100		105
Commissions, investment management fees, and other income	55		46		8		1		30		16

Total revenues	2,078		710		836		532		525		185

Benefits and Expenses (1):
Insurance and annuity benefits	1,223		236		618		369		203		33
Interest credited to policyholders' account balances	159		98		61		—		35		63
Interest expense	(1	)	—		(1	)	—		(1	)	1
Deferral of acquisition costs	(199	)	(99	)	(7	)	(93	)	(74	)	(25	)
Amortization of acquisition costs	177		76		3		98		55		21
General and administrative expenses	648		346		141		161		276		70

Total benefits and expenses	2,007		657		815		535		494		163

Adjusted operating income before income taxes	71		53		21		(3	)	31		22

(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.
Quarterly Financial Supplement

Fourth Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

	Twelve Months Ended December 31, 2002
									Individual Life and Annuities
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life		Individual Annuities
Revenues (1):
Premiums	5,298		454		2,796		2,048		395		59
Policy charges and fee income	1,397		1,220		177		—		1,014		206
Net investment income	1,569		833		578		158		418		415
Commissions, investment management fees, and other income	231		197		31		3		136		61

Total revenues	8,495		2,704		3,582		2,209		1,963		741

Benefits and Expenses (1):
Insurance and annuity benefits	5,138		831		2,703		1,604		692		139
Interest credited to policyholders' account balances	633		398		235		—		143		255
Interest expense	(5	)	(3	)	(2	)	—		(2	)	(1	)
Deferral of acquisition costs	(839	)	(423	)	(29	)	(387	)	(301	)	(122	)
Amortization of acquisition costs	885		500		(2	)	387		279		221
General and administrative expenses	2,128		1,011		522		595		720		291

Total benefits and expenses	7,940		2,314		3,427		2,199		1,531		783

Adjusted operating income before income taxes	555		390		155		10		432		(42	)

	Twelve Months Ended December 31, 2001
									Individual Life and Annuities
	Total Insurance Division		Individual Life and Annuities		Group Insurance		Property & Casualty Insurance		Individual Life		Individual Annuities
Revenues (1):
Premiums	4,829		433		2,512		1,884		387		46
Policy charges and fee income	1,423		1,259		164		—		1,017		242
Net investment income	1,536		831		547		158		391		440
Commissions, investment management fees, and other income	231		197		25		9		124		73

Total revenues	8,019		2,720		3,248		2,051		1,919		801

Benefits and Expenses(1):
Insurance and annuity benefits	4,633		809		2,490		1,334		699		110
Interest credited to policyholders' account balances	620		396		224		—		137		259
Interest expense	1		3		(2	)	—		—		3
Deferral of acquisition costs	(808	)	(400	)	(18	)	(390	)	(301	)	(99	)
Amortization of acquisition costs	765		366		4		395		232		134
General and administrative expenses	2,263		1,166		480		617		879		287

Total benefits and expenses	7,474		2,340		3,178		1,956		1,646		694

Adjusted operating income before income taxes	545		380		70		95		273		107

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

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

(in millions)

Year-to-date				2001		2002
2002	2001			4Q		1Q		2Q		3Q		4Q
			INDIVIDUAL LIFE INSURANCE SALES (1):
			Excluding corporate-owned life insurance:
153	216		Variable life	50		44		41		35		33
70	12		Universal life	4		11		16		16		27
62	43		Term life	11		13		15		17		17

285	271		Total excluding corporate-owned life insurance	65		68		72		68		77
122	199		Corporate-owned life insurance	17		10		76		21		15

407	470		Total	82		78		148		89		92

			ANNUITY SALES AND ACCOUNT VALUES
			Variable Annuities:
18,689	21,059		Beginning total account value	17,190		18,689		18,435		16,802		14,961
1,395	1,271		Sales	330		374		406		339		276
(2,267)	(2,356	)	Surrenders, withdrawals and exchange redemptions	(548	)	(597	)	(627	)	(546	)	(497	)
(2,479)	(1,285	)	Change in market value, interest credited, and other activity (2)	1,717		(31	)	(1,412	)	(1,634	)	598

15,338	18,689		Ending total account value	18,689		18,435		16,802		14,961		15,338

(872)	(1,085	)	Net redemptions	(218	)	(223	)	(221	)	(207	)	(221	)

			Fixed Annuities:
2,975	2,926		Beginning total account value	2,865		2,975		2,909		3,048		3,260
605	120		Sales	31		37		181		224		163
(184)	(216	)	Surrenders, withdrawals and exchange redemptions	(44	)	(50	)	(45	)	(42	)	(47	)
—	145		Interest credited and other activity (2)	123		(53	)	3		30		20

3,396	2,975		Ending account value	2,975		2,909		3,048		3,260		3,396

421	(96	)	Net sales (redemptions)	(13	)	(13	)	136		182		116

			SALES BY DISTRIBUTION CHANNEL
			Life Insurance (1):
			Excluding corporate-owned life insurance:
213	215		Prudential Agents	51		52		55		53		53
72	56		Third party distribution	14		16		17		15		24
122	199		Corporate-owned life insurance	17		10		76		21		15

407	470		Total	82		78		148		89		92

			Variable and Fixed Annuities (3):
1,449	1,144		Prudential Agents	298		337		405		392		315
418	230		Financial Advisors	54		63		158		121		76
133	17		Third-party distributors	9		11		24		50		48

2,000	1,391		Total	361		411		587		563		439

(1)

Statutory first year premiums and deposits.

(2)

The quarter ended March 31, 2002 and the year ended December 31, 2002 include 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 and year ended December 31, 2001 include 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.
Quarterly Financial Supplement
Fourth Quarter 2002

INSURANCE DIVISION—INDIVIDUAL LIFE AND ANNUITIES SEGMENT ACCOUNT VALUE ACTIVITY

(in millions)

Year-to-date				2001		2002
2002	2001			4Q		1Q		2Q		3Q		4Q
			INDIVIDUAL LIFE INSURANCE:
			Policyholders' Account Balances:
3,826	3,526		Beginning balance	3,664		3,826		3,924		3,992		4,033
902	772		Premiums and deposits	206		227		226		223		226
92	90		Interest credited	25		20		23		25		24
(567)	(706	)	Surrenders and withdrawals	(201	)	(135	)	(138	)	(157	)	(137	)
29	89		Net transfers (to) from separate account	7		14		14		5		(4	)
(78)	(59	)	Policy charges	(14	)	(16	)	(22	)	(21	)	(19	)
(92)	114		Benefits and other	139		(12	)	(35	)	(34	)	(11	)

4,112	3,826		Ending balance	3,826		3,924		3,992		4,033		4,112

			Separate Account Liabilities:
13,010	13,892		Beginning balance	12,021		13,010		13,129		12,117		10,702
1,857	1,774		Premiums and deposits	419		396		468		430		563
(1,747)	(915	)	Change in market value and interest credited	1,031		111		(1,097	)	(1,385	)	624
(710)	(677	)	Surrenders and withdrawals	(209	)	(124	)	(132	)	(209	)	(245	)
(133)	(107	)	Net transfers to general account	(10	)	(38	)	(37	)	(44	)	(14	)
(830)	(864	)	Policy charges	(223	)	(211	)	(207	)	(203	)	(209	)
(35)	(93	)	Benefits and other	(19	)	(15	)	(7	)	(4	)	(9	)

11,412	13,010		Ending balance	13,010		13,129		12,117		10,702		11,412

			INDIVIDUAL ANNUITIES:
			Account Values in General Account:
6,152	5,677		Beginning balance	5,566		6,152		5,825		6,093		6,533
2,000	1,391		Premiums and deposits	361		411		587		563		439
300	310		Interest credited	77		72		71		77		80
(2,451)	(2,572	)	Surrenders and withdrawals	(592	)	(647	)	(672	)	(588	)	(544	)
1,050	1,001		Net transfers (to) from separate account (1)	243		(7	)	321		414		322
(7)	(5	)	Policy charges	(2	)	(1	)	(2	)	(2	)	(2	)
(249)	350		Benefits and other (2)	499		(155	)	(37	)	(24	)	(33	)

6,795	6,152		Ending balance	6,152		5,825		6,093		6,533		6,795

			Account Values in Separate Account:
15,512	18,308		Beginning balance	14,489		15,512		15,519		13,757		11,688
705	905		Premiums and deposits	188		183		215		160		147
(2,340)	(1,578	)	Change in market value and interest credited	1,316		51		(1,392	)	(1,613	)	614
(1,943)	(2,064	)	Surrenders and withdrawals	(478	)	(514	)	(543	)	(469	)	(417	)
188	158		Net transfers (to) from general account (1)	47		338		7		(105	)	(52	)
(183)	(217	)	Policy charges	(50	)	(51	)	(49	)	(42	)	(41	)
—	—		Benefits and other	—		—		—		—		—

11,939	15,512		Ending balance	15,512		15,519		13,757		11,688		11,939

(1)

The quarter ended March 31, 2002 and the year ended December 31, 2002 include $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 and the year ended December 31, 2002 include 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 and year ended December 31, 2001 include 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.
Quarterly Financial Supplement
Fourth Quarter 2002

INSURANCE DIVISION—DEFERRED POLICY ACQUISITION COSTS

(in millions)

Year-to-date					2001		2002
2002		2001			4Q		1Q		2Q		3Q		4Q
				INDIVIDUAL LIFE INSURANCE:
3,133		3,090		Beginning balance	3,115		3,133		3,160		3,155		3,111
301		301		Capitalization	74		66		80		76		79
(279	)	(232	)	Amortization—operating results	(55	)	(53	)	(63	)	(92	)	(71	)
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
(45	)	(26	)	Impact of unrealized (gains) or losses on AFS securities	(1	)	14		(22	)	(28	)	(9	)

3,110		3,133		Ending balance	3,133		3,160		3,155		3,111		3,110

				INDIVIDUAL ANNUITIES:
628		682		Beginning balance	612		628		654		598		485
122		99		Capitalization	25		28		35		34		25
(221	)	(134	)	Amortization—operating results	(21	)	(23	)	(70	)	(105	)	(23	)
15		14		Amortization—realized investment gains and losses	15		1		1		3		10
(71	)	(33	)	Impact of unrealized (gains) or losses on AFS securities	(3	)	20		(22	)	(45	)	(24	)

473		628		Ending balance	628		654		598		485		473

				GROUP INSURANCE (1):
26		12		Beginning balance	22		26		31		39		45
29		18		Capitalization	7		2		8		7		12
2		(4	)	Amortization—operating results	(3	)	3		—		(1	)	—
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
—		—		Impact of unrealized losses on AFS securities	—		—		—		—		—

57		26		Ending balance	26		31		39		45		57

				PROPERTY & CASUALTY INSURANCE:
132		137		Beginning balance	137		132		130		131		131
387		390		Capitalization	93		98		95		95		99
(387	)	(395	)	Amortization—operating results	(98	)	(100	)	(94	)	(95	)	(98	)
—		—		Amortization—realized investment gains and losses	—		—		—		—		—
—		—		Impact of unrealized losses on AFS securities	—		—		—		—		—

132		132		Ending balance	132		130		131		131		132

				TOTAL INSURANCE DIVISION:
3,919		3,921		Beginning balance	3,886		3,919		3,975		3,923		3,772
839		808		Capitalization	199		194		218		212		215
(885	)	(765	)	Amortization—operating results	(177	)	(173	)	(227	)	(293	)	(192	)
15		14		Amortization—realized investment gains and losses	15		1		1		3		10
(116	)	(59	)	Impact of unrealized (gains) or losses on AFS securities	(4	)	34		(44	)	(73	)	(33	)

3,772		3,919		Ending balance	3,919		3,975		3,923		3,772		3,772

(1)

Represents long-term care products.

Page 16

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR INDIVIDUAL LIFE INSURANCE

(dollar amounts in millions)

Year-to-date					2001		2002
2002		2001			4Q		1Q		2Q		3Q		4Q
				Individual Life Insurance:
				Policy Surrender Experience:
692		637		Cash value of surrenders	176		162		148		185		197
4.2	%	3.8	%	Cash value of surrenders as a percentage of mean future policy benefits, policyholders' account balances, and separate account balances	4.4	%	3.9	%	3.6	%	4.7	%	5.0	%

				Death claims per $1,000 of in-force (1):
2.31		2.10		Variable and universal life	2.01		2.06		2.06		1.85		3.30
1.76		1.50		Term life	0.86		1.43		1.56		1.92		2.12
2.16		1.93		Total, Individual Life Insurance	1.65		1.87		1.94		1.96		2.90

(1)

Annualized, for interim reporting periods.

Page 17

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR GROUP INSURANCE

(dollar amounts in millions)

Year-to-date			2001	2002
2002	2001		4Q	1Q	2Q	3Q	4Q
		GROUP INSURANCE NEW ANNUALIZED PREMIUMS:
269	435	Group life	50	162	27	36	44
160	139	Group disability (1)	17	53	33	25	49

429	574	Total	67	215	60	61	93


		Future Policy Benefits (2):
		Group life	1,664	1,617	1,609	1,580	1,742
		Group disability (1)	103	137	138	148	151

		Total	1,767	1,754	1,747	1,728	1,893


		Policyholders' Account Balances (2):
		Group life	3,805	3,928	4,238	4,512	4,684
		Group disability (1)	61	58	63	68	67

		Total	3,866	3,986	4,301	4,580	4,751


		Separate Account Liabilities (2):
		Group life	7,634	8,097	7,745	7,260	7,824
		Group disability (1)	—	—	—	—	—

		Total	7,634	8,097	7,745	7,260	7,824


		Group Life Insurance:
2,662	2,439	Gross premiums, policy charges and fee income (3)	641	667	664	654	677
2,388	2,160	Earned premiums, policy charges and fee income	551	603	600	578	607
91.7%	92.6%	Benefits ratio	88.6%	91.8%	92.8%	93.3%	88.8%
10.0%	10.0%	Administrative operating expense ratio	11.2%	10.0%	10.2%	9.6%	9.9%
		Persistency ratio	97.4%	97.2%	96.1%	95.2%	94.5%

		Group Disability Insurance (1):
604	543	Gross premiums, policy charges and fee income (3)	142	150	149	153	152
585	516	Earned premiums, policy charges and fee income	137	143	146	147	149
87.9%	95.2%	Benefits ratio	94.9%	84.6%	87.7%	91.8%	87.3%
22.0%	23.6%	Administrative operating expense ratio	25.4%	22.7%	22.8%	21.6%	21.1%
		Persistency ratio	88.8%	94.7%	93.0%	90.1%	86.8%

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR PROPERTY AND CASUALTY INSURANCE

(dollar amounts in millions)

Year-to-date			2001	2002
2002	2001		4Q	1Q	2Q	3Q	4Q
		Earned premium:
1,547	1,403	Automobile	373	372	394	390	391
467	448	Homeowners’	114	113	116	118	120
34	33	Other	8	8	9	8	9

2,048	1,884	Total earned premium	495	493	519	516	520


		Loss ratio (1) (2):
78.3%	70.6%	Automobile	81.0%	75.8%	75.1%	78.6%	83.4%
80.2%	76.5%	Homeowners’	69.0%	72.1%	87.8%	85.3%	75.7%
78.7%	70.8%	Overall	74.5%	74.8%	78.3%	80.6%	80.8%

		Expense ratio (1) (3):
28.0%	30.8%	Automobile	29.5%	28.5%	27.2%	28.3%	28.1%
32.2%	36.6%	Homeowners’	35.9%	35.3%	31.7%	30.0%	33.0%
29.0%	32.1%	Overall	31.0%	29.8%	28.2%	28.7%	29.3%

		Combined ratio (4):
106.3%	101.4%	Automobile	110.5%	104.3%	102.3%	106.9%	111.5%
112.4%	113.1%	Homeowners’	104.9%	107.4%	119.5%	115.3%	108.7%
107.7%	102.9%	Overall	105.5%	104.6%	106.5%	109.3%	110.1%

31.3	42.0	Current accident year catastrophe losses (5)	4.2	4.2	8.0	8.5	10.6
1.5%	2.2%	Effect of current accident year catastrophic losses on combined ratio	0.9%	0.9%	1.5%	1.7%	2.0%

		Accident year combined ratio (6)	110.2%	105.0%	107.1%	106.9%	107.4%

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

Year-to-date				% Change			2001		2002
2002		2001		% Change			4Q		1Q		2Q		3Q		4Q
						Revenues (1):
77		20		285	%	Premiums	7		8		21		10		38
71		80		-11	%	Policy charges and fee income	23		19		19		15		18
2,309		2,491		-7	%	Net investment income	595		565		603		570		571
3,682		4,016		-8	%	Commissions, investment management fees, and other income	987		967		958		893		864

6,139		6,607		-7	%	Total revenues	1,612		1,559		1,601		1,488		1,491


						Benefits and Expenses (1):
880		913		-4	%	Insurance and annuity benefits	220		197		231		220		232
978		977		0	%	Interest credited to policyholders' account balances	250		243		238		247		250
14		32		-56	%	Interest expense	7		3		5		4		2
(44	)	(60	)	27	%	Deferral of acquisition costs	(12	)	(14	)	(14	)	(8	)	(8	)
92		86		7	%	Amortization of acquisition costs	20		21		27		21		23
2,464		2,852		-14	%	Securities operations non-interest expenses	694		635		645		601		583
1,471		1,637		-10	%	General and administrative expenses	429		370		377		351		373

5,855		6,437		-9	%	Total benefits and expenses	1,608		1,455		1,509		1,436		1,455


284		170		67	%	Adjusted operating income before income taxes	4		104		92		52		36

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

	Quarter Ended December 31, 2002
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	38		—		—		38		—
Policy charges and fee income	18		—		—		18		—
Net investment income	571		10		41		515		5
Commissions, investment management fees, and other income	864		299		522		32		11

Total revenues	1,491		309		563		603		16

Benefits and Expenses (1):
Insurance and annuity benefits	232		—		—		232		—
Interest credited to policyholders' account balances	250		—		—		250		—
Interest expense	2		—		—		(1	)	3
Deferral of acquisition costs	(8	)	(5	)	—		(3	)	—
Amortization of acquisition costs	23		16		—		7		—
Securities operations non-interest expenses	583		—		583		—		—
General and administrative expenses	373		271		8		85		9

Total benefits and expenses	1,455		282		591		570		12

Adjusted operating income before income taxes	36		27		(28	)	33		4


	Quarter Ended December 31, 2001
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	7		—		—		7		—
Policy charges and fee income	23		—		—		23		—
Net investment income	595		16		57		512		10
Commissions, investment management fees, and other income	987		319		607		33		28

Total revenues	1,612		335		664		575		38

Benefits and Expenses (1):
Insurance and annuity benefits	220		—		—		220		—
Interest credited to policyholders' account balances	250		—		—		250		—
Interest expense	7		1		—		3		3
Deferral of acquisition costs	(12	)	(9	)	—		(3	)	—
Amortization of acquisition costs	20		18		—		2		—
Securities operations non-interest expenses	694		—		694		—		—
General and administrative expenses	429		306		9		98		16

Total benefits and expenses	1,608		316		703		570		19

Adjusted operating income before income taxes	4		19		(39	)	5		19

(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.
Quarterly Financial Supplement

Fourth Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

	Twelve Months Ended December 31, 2002
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	77		—		—		77		—
Policy charges and fee income	71		—		—		71		—
Net investment income	2,309		30		175		2,074		30
Commissions, investment management fees, and other income	3,682		1,205		2,280		137		60

Total revenues	6,139		1,235		2,455		2,359		90

Benefits and Expenses (1):
Insurance and annuity benefits	880		—		—		880		—
Interest credited to policyholders' account balances	978		—		—		978		—
Interest expense	14		4		—		2		8
Deferral of acquisition costs	(44	)	(32	)	—		(12	)	—
Amortization of acquisition costs	92		72		—		20		—
Securities operations non-interest expenses	2,464		—		2,464		—		—
General and administrative expenses	1,471		1,052		32		350		37

Total benefits and expenses	5,855		1,096		2,496		2,218		45

Adjusted operating income before income taxes	284		139		(41	)	141		45

	Twelve Months Ended December 31, 2001
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	20		—		—		20		—
Policy charges and fee income	80		—		—		80		—
Net investment income	2,491		42		256		2,148		45
Commissions, investment management fees, and other income	4,016		1,315		2,495		146		60

Total revenues	6,607		1,357		2,751		2,394		105

Benefits and Expenses (1):
Insurance and annuity benefits	913		—		—		913		—
Interest credited to policyholders' account balances	977		—		—		977		—
Interest expense	32		11		—		13		8
Deferral of acquisition costs	(60	)	(48	)	—		(12	)	—
Amortization of acquisition costs	86		76		—		10		—
Securities operations non-interest expenses	2,852		—		2,852		—		—
General and administrative expenses	1,637		1,177		35		383		42

Total benefits and expenses	6,437		1,216		2,887		2,284		50

Adjusted operating income before income taxes	170		141		(136	)	110		55

(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.
Quarterly Financial Supplement

Fourth 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		4Q	1Q	2Q	3Q	4Q
			Investment Management Segment:
			Analysis of revenues by source:
			Investment Management and Advisory Services:
184	210	-12%	Retail customers	51	49	48	43	44
335	383	-13%	Institutional customers	96	84	87	79	85
221	227	-3%	General account	62	54	57	51	59

740	820	-10%	Subtotal	209	187	192	173	188
495	537	-8%	Mutual Fund revenues (1)	126	130	124	120	121

1,235	1,357	-9%	Total Investment Management segment revenues	335	317	316	293	309

			Analysis of commissions, investment management fees and other revenues by type:
			Investment Management and Advisory Services:
681	741	-8%	Asset-based fees	184	176	178	160	167
31	40	-23%	Transaction-based and other revenues	9	5	8	7	11

712	781	-9%	Subtotal	193	181	186	167	178
493	534	-8%	Mutual Fund revenues (1)	126	130	123	119	121

1,205	1,315	-8%	Total	319	311	309	286	299

			Financial Advisory Segment:
			Non-Interest Revenues:
1,383	1,525	-9%	Commissions	387	358	364	335	326
750	758	-1%	Fees	175	197	199	189	165
147	212	-31%	Other non-interest revenues	45	46	36	34	31

2,280	2,495	-9%	Total non-interest revenues	607	601	599	558	522

			Recurring revenue as a percentage of total non-interest revenue (2)	36.3%	37.0%	38.1%	38.2%	39.2%
2.9	4.4		Average customer margin lending balances ($ in billions)	3.6	3.4	3.1	2.6	2.4

(1)

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

(2)

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

Page 23

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

INVESTMENT DIVISION—ASSETS UNDER MANAGEMENT FOR INVESTMENT MANAGEMENT AND ADVISORY SERVICES OPERATIONS

(in billions)

	December 31, 2002
	Equity	Fixed Income	Real Estate	Total
Retail customers (1)	33.2	46.5	0.2	79.9
Institutional customers (1)	24.4	47.2	13.6	85.2
General account (1)	2.7	118.8	1.4	122.9

Total	60.3	212.5	15.2	288.0


	December 31, 2001
	Equity	Fixed Income	Real Estate	Total
Retail customers	44.2	52.3	—	96.5
Institutional customers	39.6	39.5	10.0	89.1
General account	1.9	110.5	1.4	113.8

Total	85.7	202.3	11.4	299.4

Year-to-date					2001		2002
2002		2001			4Q		1Q		2Q		3Q		4Q
				Institutional Assets Under Management (1):
				Assets gathered by Investment Management & Advisory Services sales force (2):
67.9		74.5		Beginning assets under management	65.3		67.9		62.6		60.2		56.9
16.0		13.7		Additions to managed portfolio	4.2		3.0		2.9		2.9		7.2
(18.3	)	(17.8	)	Withdrawals	(5.6	)	(8.4	)	(2.5	)	(3.1	)	(4.3	)
(2.6	)	(2.6	)	Change in market value	3.9		0.1		(2.4	)	(2.0	)	1.7
3.0		0.1		Net money market flows	0.1		4.0		(0.4	)	(1.1	)	0.5
(4.0	)	—		Other (2)	—		(4.0	)	—		—		—

62.0		67.9		Ending assets under management	67.9		62.6		60.2		56.9		62.0
23.2		21.2		Other institutional assets under management (2)	21.2		23.6		23.3		22.9		23.2

85.2		89.1		Total assets managed for institutional customers at end of period	89.1		86.2		83.5		79.8		85.2

(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.
Quarterly Financial Supplement
Fourth 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			4Q		1Q		2Q		3Q		4Q
				MUTUAL FUNDS AND WRAP-FEE PRODUCTS SALES AND ASSETS UNDER MANAGEMENT
				Mutual Funds:
57,809		57,764		Beginning total mutual funds assets	56,951		57,809		56,743		52,459		48,639
4,876		5,273		Sales (other than money market)	936		914		1,460		1,146		1,356
(5,135	)	(4,697	)	Redemptions (other than money market)	(1,282	)	(1,116	)	(1,339	)	(1,259	)	(1,421	)
(3,850	)	(1,894	)	Reinvestment of distributions and change in market value	2,144		32		(2,450	)	(2,620	)	1,188
(3,944	)	1,363		Net money market sales	(940	)	(896	)	(1,955	)	(1,087	)	(6	)

49,756		57,809		Ending total mutual funds assets	57,809		56,743		52,459		48,639		49,756

(259	)	576		Net Mutual Funds sales (redemptions) other than money market	(346	)	(202	)	121		(113	)	(65	)

				Wrap-fee Products (1):
17,955		19,621		Beginning total wrap-fee product assets	16,141		17,955		18,192		16,676		14,383
6,127		7,452		Sales	1,563		1,667		1,876		1,223		1,361
(5,694	)	(6,060	)	Redemptions	(1,342	)	(1,361	)	(1,618	)	(1,440	)	(1,275	)
(3,235	)	(3,058	)	Reinvestment of distributions and change in market value	1,593		(69	)	(1,774	)	(2,076	)	684

15,153		17,955		Ending total wrap-fee product assets	17,955		18,192		16,676		14,383		15,153
16,394		17,575		Other managed accounts at end of period (2)	17,575		18,006		16,827		15,424		16,394

31,547		35,530		Total wrap-fee products and other managed accounts at end of period	35,530		36,198		33,503		29,807		31,547

433		1,392		Net wrap-fee product sales (redemptions) (1)	221		306		258		(217	)	86

				MUTUAL FUNDS AND WRAP-FEE PRODUCTS GROSS SALES BY DISTRIBUTION CHANNEL
				Mutual funds, excluding wrap-fee products (3):
519		743		Prudential Agents	150		156		158		107		98
1,076		1,602		Financial Advisors	300		339		407		168		162
3,233		2,851		Third-party distributors	479		387		890		866		1,090
48		77		Other	7		32		5		5		6

4,876		5,273		Total	936		914		1,460		1,146		1,356

				Wrap-fee products (1):
441		424		Prudential Agents	101		115		132		104		90
5,267		6,837		Financial Advisors	1,404		1,483		1,615		1,015		1,154
419		191		Third-party distributors	58		69		129		104		117

6,127		7,452		Total	1,563		1,667		1,876		1,223		1,361

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

INVESTMENT DIVISION—RETIREMENT SALES RESULTS AND ACCOUNT VALUES

(in millions)

Year-to-date					2001		2002
2002		2001			4Q		1Q		2Q		3Q		4Q
				RETIREMENT SALES AND ACCOUNT VALUES
				Defined Contribution:
24,640		26,046		Beginning total account value	22,710		24,640		25,337		24,036		21,911
3,858		3,689		Sales	782		1,010		904		859		1,085
(3,248	)	(3,422	)	Withdrawals	(638	)	(817	)	(755	)	(770	)	(906	)
(2,336	)	(1,673	)	Change in market value and interest credited (1)	1,786		504		(1,450	)	(2,214	)	824

22,914		24,640		Ending total account value	24,640		25,337		24,036		21,911		22,914

610		267		Net sales	144		193		149		89		179

				Asset management of ending total account value:
				Proprietary	17,665		18,107		17,075		15,752		16,152
				Non-proprietary	6,975		7,230		6,961		6,159		6,762

				Total	24,640		25,337		24,036		21,911		22,914

				Guaranteed Products:
39,825		41,577		Beginning total account value	39,008		39,825		39,400		39,172		38,647
1,467		2,299		Sales	433		259		506		291		411
(3,590	)	(4,372	)	Withdrawals and benefits	(803	)	(864	)	(993	)	(775	)	(958	)
2,166		2,198		Change in market value and interest income	838		355		395		553		863
(810	)	(1,877	)	Other (2)	349		(175	)	(136	)	(594	)	95

39,058		39,825		Ending total account value	39,825		39,400		39,172		38,647		39,058

(2,123	)	(2,073	)	Net withdrawals	(370	)	(605	)	(487	)	(484	)	(547	)

				Product composition of ending total account value:
				Spread-based products	18,887		18,915		18,869		18,702		18,729
				Fee-based products	20,938		20,485		20,303		19,945		20,329

				Total	39,825		39,400		39,172		38,647		39,058

(1)

Includes increases to account values of $360 million in the year ended December 31, 2002, $8 million in the quarter ended December 31, 2002, $4 million in the quarter ended September 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 and the year ended December 31, 2002 also include $448 million added to customer accounts from inclusion of amounts now reflected in this segment. The quarter and year ended December 31, 2001 include 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 and year ended December 31, 2001 include 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.
Quarterly Financial Supplement
Fourth Quarter 2002

COMBINED STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

Year-to-date				% Change		2001		2002
2002		2001		% Change		4Q		1Q		2Q		3Q		4Q
					Revenues (1):
4,137		3,337		24%	Premiums	1,046		1,016		1,006		1,061		1,054
204		307		-34%	Policy charges and fee income	70		57		49		46		52
719		483		49%	Net investment income	156		158		181		195		185
340		322		6%	Commissions, investment management fees, and other income	90		98		94		68		80

5,400		4,449		21%	Total revenues	1,362		1,329		1,330		1,370		1,371

					Benefits and Expenses (1):
3,278		2,674		23%	Insurance and annuity benefits	841		783		799		830		866
96		72		33%	Interest credited to policyholders' account balances	25		24		24		24		24
1		4		-75%	Interest expense	(2	)	—		—		—		1
(630	)	(539	)	-17%	Deferral of acquisition costs	(149	)	(151	)	(147	)	(162	)	(170	)
234		164		43%	Amortization of acquisition costs	47		65		44		65		60
1,674		1,504		11%	General and administrative expenses	447		406		427		425		416

4,653		3,879		20%	Total benefits and expenses	1,209		1,127		1,147		1,182		1,197

747		570		31%	Adjusted operating income before income taxes	153		202		183		188		174

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

COMBINING STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

	Twelve Months Ended December 31, 2002								Quarter Ended December 31, 2002
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life (2)		International Investments		Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life (2)		International Investments
Revenues (1):
Premiums	4,137		2,083		2,054		—		1,054		551		503		—
Policy charges and fee income	204		108		96		—		52		30		22		—
Net investment income	719		182		500		37		185		48		127		10
Commissions, investment management fees, and other income	340		6		44		290		80		(3	)	11		72

Total revenues	5,400		2,379		2,694		327		1,371		626		663		82

Benefits and Expenses (1):
Insurance and annuity benefits	3,278		1,548		1,730		—		866		410		456		—
Interest credited to policyholders' account balances	96		7		89		—		24		2		22		—
Interest expense	1		4		(3	)	—		1		1		—		—
Deferral of acquisition costs	(630	)	(468	)	(162	)	—		(170	)	(129	)	(41	)	—
Amortization of acquisition costs	234		210		23		1		60		52		8		—
General and administrative expenses	1,674		699		639		336		416		181		147		88

Total benefits and expenses	4,653		2,000		2,316		337		1,197		517		592		88

Adjusted operating income before income taxes	747		379		378		(10	)	174		109		71		(6	)


	Twelve Months Ended December 31, 2001								Quarter Ended December 31, 2001
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life (2)		International Investments		Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life (2)		International Investments
Revenues (1):
Premiums	3,337		1,832		1,505		—		1,046		481		565		—
Policy charges and fee income	307		102		205		—		70		31		39		—
Net investment income	483		146		304		33		156		41		107		8
Commissions, investment management fees, and other income	322		40		12		270		90		12		10		68

Total revenues	4,449		2,120		2,026		303		1,362		565		721		76

Benefits and Expenses (1):
Insurance and annuity benefits	2,674		1,383		1,291		—		841		364		477		—
Interest credited to policyholders' account balances	72		5		67		—		25		2		23		—
Interest expense	4		5		(1	)	—		(2	)	—		(2	)	—
Deferral of acquisition costs	(539	)	(458	)	(81	)	—		(149	)	(112	)	(37	)	—
Amortization of acquisition costs	164		154		9		1		47		41		6		—
General and administrative expenses	1,504		682		479		343		447		175		177		95

Total benefits and expenses	3,879		1,771		1,764		344		1,209		470		644		95

Adjusted operating income before income taxes	570		349		262		(41	)	153		95		77		(19	)

(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, which has adopted a November 30 fiscal year end, are included from April 2, 2001, the date of its reorganization, through November 30, 2001 and December 1, 2001 through November 30, 2002.

Page 28

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth 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		4Q	1Q	2Q	3Q	4Q
		INTERNATIONAL INSURANCE OPERATING DATA:
		Actual exchange rate basis (1):
		Net premiums, policy charges and fee income:
1,606	1,526	Japan, excluding Gibraltar Life	395	395	374	424	413
2,150	1,710	Gibraltar Life (2)	604	558	539	528	525
585	408	All other countries	117	120	142	155	168

4,341	3,644	Total	1,116	1,073	1,055	1,107	1,106

		Annualized new business premiums:
307	370	Japan, excluding Gibraltar Life	87	77	67	79	84
233	110	Gibraltar Life (2)	56	49	59	62	63
203	212	All other countries	53	53	51	44	55

743	692	Total	196	179	177	185	202

		Constant exchange rate basis (3):
		Net premiums, policy charges and fee income:
1,606	1,482	Japan, excluding Gibraltar Life	389	419	378	405	404
2,163	1,670	Gibraltar Life (2)	585	586	558	506	513
585	415	All other countries	121	125	144	150	166

4,354	3,567	Total	1,095	1,130	1,080	1,061	1,083

		Annualized new business premiums:
307	360	Japan, excluding Gibraltar Life	87	82	67	75	83
234	107	Gibraltar Life (2)	54	51	61	60	62
203	212	All other countries	53	54	53	43	53

744	679	Total	194	187	181	178	198

		Face amount of individual policies in force at end of period (in billions):
		Japan, excluding Gibraltar Life	130	133	136	138	141
		Gibraltar Life (2)	237	229	222	217	213
		All other countries	38	42	45	47	49

		Total	405	404	403	402	403

		Number of individual policies in force at end of period (in thousands):
		Japan, excluding Gibraltar Life	946	973	990	1,011	1,037
		Gibraltar Life (2)	4,911	4,787	4,666	4,602	4,537
		All other countries	536	571	609	643	682

		Total	6,393	6,331	6,265	6,256	6,256

(1)

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

(2)

(3)

Translated based on average exchange rates for the year ended December 31, 2002, except for face amount of individual policies in force which are translated at the rate as of December 31, 2002.

Page 29

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION—SALES RESULTS AND SUPPLEMENTARY INFORMATION

(dollar amounts in millions unless otherwise noted)

	2001		2002
	4Q		1Q		2Q		3Q		4Q
International insurance policy persistency (1):
13 months	93.2	%	93.4	%	93.8	%	93.2	%	93.0	%
25 months	88.1	%	87.8	%	86.9	%	86.4	%	86.3	%
Number of Life Planners at end of period (2):
Japan	1,992		1,994		1,985		2,055		2,119
All other countries	2,112		2,104		2,222		2,298		2,386

Total	4,104		4,098		4,207		4,353		4,505

(1)

Excluding Gibraltar Life.

(2)

Excluding Gibraltar Life Advisors.

Page 30

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	December 31, 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	92,966	30,991	61,975	59.0	%	77,807	26,634	51,173	54.5	%
Public held to maturity, at amortized cost	2,563	—	2,563	2.5	%	318	—	318	0.3	%
Private available for sale, at fair value	32,490	15,242	17,248	16.4	%	32,040	14,428	17,612	18.8	%
Private held to maturity, at amortized cost	46	—	46	0.0	%	53	—	53	0.1	%
Trading account assets, at fair value	96	—	96	0.1	%	112	—	112	0.1	%
Equity securities, at fair value	2,788	1,521	1,267	1.2	%	2,259	584	1,675	1.8	%
Commercial loans	18,593	6,987	11,606	11.1	%	19,176	6,106	13,070	13.9	%
Cash collateral for borrowed securities	323	—	323	0.3	%	—	—	—	0.0.	%
Other long-term investments (2)	4,951	1,075	3,876	3.7	%	5,095	1,082	4,013	4.3	%
Policy loans, at outstanding balance	8,827	5,681	3,146	3.0	%	8,570	5,758	2,812	3.0	%
Short term investments, at amortized cost	5,420	2,579	2,841	2.7	%	4,854	1,882	2,972	3.2	%

Subtotal	169,063	64,076	104,987	100.0	%	150,284	56,474	93,810	100.0	%

Invested assets of other entities and operations (3)	14,031	—	14,031			15,550	—	15,550

Total invested assets	183,094	64,076	119,018			165,834	56,474	109,360

Fixed Maturities by Credit Quality (1):

		December 31, 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 (4)	Rating Agency Equivalent
1	Aaa, Aa, A	47,430	77.6	%	50,363	36,868	73.0	%	37,662
2	Baa	11,281	18.5	%	11,842	11,286	22.3	%	11,484
3	Ba	1,730	2.8	%	1,742	1,518	3.0	%	1,534
4	B	519	0.8	%	516	683	1.4	%	646
5	C and lower	94	0.2	%	82	112	0.2	%	116
6	In or near default	50	0.1	%	52	67	0.1	%	65

	Total	61,104	100.0	%	64,597	50,534	100.0	%	51,507

Private Fixed Maturities:
NAIC Rating (4)	Rating Agency Equivalent
1	Aaa, Aa, A	4,945	30.6	%	5,397	5,990	35.2	%	6,345
2	Baa	7,519	46.5	%	8,128	8,148	47.8	%	8,399
3	Ba	2,275	14.1	%	2,333	1,493	8.8	%	1,536
4	B	597	3.7	%	605	918	5.4	%	884
5	C and lower	700	4.3	%	696	390	2.3	%	401
6	In or near default	135	0.8	%	136	97	0.5	%	105

	Total	16,171	100.0	%	17,295	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.

(4)

Reflects equivalent ratings for investments of international insurance operations that are not rated by United States insurance regulatory authorities. Balances as of December 31, 2001 have been reclassified to conform to this presentation.

Page 31

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	December 31, 2002			December 31, 2001
	Amount	% of Total		Amount	% of Total
Japanese Insurance Operations:
Fixed maturities:
Public available for sale, at fair value	25,288	73.2	%	20,883	73.8	%
Public held to maturity, at amortized cost	2,563	7.4	%	318	1.1	%
Private available for sale, at fair value	387	1.1	%	98	0.4	%
Private held to maturity, at amortized cost	46	0.1	%	53	0.2	%
Trading account assets, at fair value	75	0.2	%	74	0.3	%
Equity securities, at fair value	901	2.6	%	1,032	3.6	%
Commercial loans	3,158	9.1	%	4,255	15.0	%
Cash collateral for borrowed securities	318	1.0	%	—	0.0	%
Other long-term investments (2)	1,125	3.3	%	1,001	3.5	%
Policy loans, at outstanding balance	685	2.0	%	605	2.1	%
Short term investments, at amortized cost	6	0.0	%	2	0.0	%

Total	34,552	100.0	%	28,321	100.0	%


	December 31, 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	36,687	52.1	%	30,290	46.2	%
Public held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Private available for sale, at fair value	16,861	24.0	%	17,514	26.7	%
Private held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Trading account assets, at fair value	21	0.0	%	38	0.1	%
Equity securities, at fair value	366	0.5	%	643	1.0	%
Commercial loans	8,448	12.0	%	8,815	13.5	%
Cash collateral for borrowed securities	5	0.0	%	—	0.0	%
Other long-term investments (2)	2,751	3.9	%	3,012	4.6	%
Policy loans, at outstanding balance	2,461	3.5	%	2,207	3.4	%
Short term investments, at amortized cost	2,835	4.0	%	2,970	4.5	%

Total	70,435	100.0	%	65,489	100.0	%

(1)

(2)

Page 32

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS

(in millions)

	Quarter Ended December 31
	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	4.75	%	883		(187	)	5.37	%	908		(173	)
Equity securities	2.35	%	9		(84	)	1.50	%	8		(14	)
Commercial loans	6.97	%	204		9		6.18	%	194		(17	)
Policy loans	5.82	%	45		—		6.11	%	44		—
Short-term investments and cash equivalents	2.22	%	37		—		1.45	%	53		—
Other investments	11.17	%	116		(8	)	8.70	%	91		50

Gross investment income before investment expenses	5.15	%	1,294		(270	)	5.09	%	1,298		(154	)
Investment expenses	-0.20	%	(68	)	—		-0.16	%	(60	)	—

Subtotal	4.95	%	1,226		(270	)	4.93	%	1,238		(154	)

Investment results of other entities and operations (2)			65		—				69		2
Less amount relating to divested businesses			—		—				(8	)	—

Total			1,291		(270	)			1,299		(152	)


	Twelve Months Ended December 31
	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	5.21	%	3,612		(500	)	5.64	%	3,805		(342	)
Equity securities	2.54	%	42		(149	)	0.77	%	19		(59	)
Commercial loans	7.45	%	880		44		6.55	%	761		2
Policy loans	5.85	%	169		—		5.81	%	164		—
Short-term investments and cash equivalents	2.03	%	200		10		1.88	%	248		(4	)
Other investments	7.01	%	310		(176	)	6.55	%	275		275

Gross investment income before investment expenses	5.29	%	5,213		(771	)	5.34	%	5,272		(128	)
Investment expenses	-0.18	%	(250	)	—		-0.17	%	(329	)	—

Subtotal	5.11	%	4,963		(771	)	5.17	%	4,943		(128	)

Investment results of other entities and operations (2)			251		—				298		—
Less amount relating to divested businesses			(21	)	—				(15	)	—

Total			5,193		(771	)			5,226		(128	)

(1)

(2)

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

(3)

Yields are annualized, for interim periods, and based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity. Yields for fixed maturities are based on amortized cost. Yields for equity securities are based on cost. Yields for securities lending activity are calculated net of corresponding liabilities and rebate expenses. Yields for periods prior to the fourth quarter of 2002 are presented on a basis consistent with our current reporting practices, including reclassification of investment income among certain investment categories. Results of Gibraltar Life, which has adopted a November 30 fiscal year end, are included from April 2, 2001, the date of its reorganization, through November 30, 2001 and December 1, 2001 through November 30, 2002.

Page 33

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—JAPANESE INSURANCE OPERATIONS

(in millions)

	Quarter Ended December 31
	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	1.65	%	112		7		1.33	%	71		(44	)
Equity securities	0.44	%	1		(50	)	1.02	%	3		(16	)
Commercial loans	4.53	%	37		7		3.90	%	45		(2	)
Policy loans	2.46	%	4		—		1.67	%	2		—
Short-term investments and cash equivalents	0.29	%	—		—		0.08	%	—		(1	)
Other investments	5.64	%	19		15		8.09	%	23		(43	)

Gross investment income before investment expenses	2.05	%	173		(21	)	1.75	%	144		(106	)
Investment expenses	-0.17	%	(14	)	—		-0.11	%	(9	)	—

Total	1.88	%	159		(21	)	1.64	%	135		(106	)


	Twelve Months Ended December 31
	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	1.62	%	402		(1	)	1.17	%	209		(26	)
Equity securities	0.80	%	8		(165	)	0.41	%	6		(113	)
Commercial loans	4.62	%	163		25		4.29	%	162		9
Policy loans	2.67	%	17		—		1.38	%	9		—
Short-term investments and cash equivalents	0.47	%	6		10		0.08	%	2		—
Other investments	6.04	%	73		(27	)	6.35	%	47		46

Gross investment income before investment expenses	2.06	%	669		(158	)	1.63	%	435		(84	)
Investment expenses	-0.14	%	(46	)	—		-0.10	%	(25	)	—

Total	1.92	%	623		(158	)	1.53	%	410		(84	)

(1)

Page 34

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—EXCLUDING JAPANESE INSURANCE OPERATIONS

(in millions)

	Quarter Ended December 31
	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	6.58	%	771		(194	)	7.42	%	837		(129	)
Equity securities	5.80	%	8		(34	)	2.17	%	5		2
Commercial loans	7.94	%	167		2		7.52	%	149		(15	)
Policy loans	6.77	%	41		—		7.33	%	42		—
Short-term investments and cash equivalents	2.38	%	37		—		2.22	%	53		1
Other investments	13.18	%	97		(23	)	8.94	%	68		93

Gross investment income before investment expenses	6.77	%	1,121		(249	)	6.83	%	1,154		(48	)
Investment expenses	-0.23	%	(54	)	—		-0.18	%	(51	)	—

Total	6.54	%	1,067		(249	)	6.65	%	1,103		(48	)


	Twelve Months Ended December 31
	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	7.23	%	3,210		(499	)	7.87	%	3,596		(316	)
Equity securities	5.50	%	34		16		1.44	%	13		54
Commercial loans	8.66	%	717		19		8.09	%	599		(7	)
Policy loans	6.74	%	152		—		7.07	%	155		—
Short-term investments and cash equivalents	2.35	%	194		—		3.41	%	246		(4	)
Other investments	7.29	%	237		(149	)	6.62	%	228		229

Gross investment income before investment expenses	6.91	%	4,544		(613	)	7.38	%	4,837		(44	)
Investment expenses	-0.19	%	(204	)	—		-0.21	%	(304	)	—

Total	6.72	%	4,340		(613	)	7.17	%	4,533		(44	)

(1)

(2)

Page 35

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—FINANCIAL SERVICES BUSINESSES

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q
		Revenues (1):
5,826		Premiums	1,611		2,014		2,241		2,361		2,278		2,334		2,386
1,639		Policy charges and fee income	392		483		474		454		434		412		400
5,206		Net investment income	1,294		1,349		1,284		1,299		1,240		1,346		1,316
5,042		Commissions, investment management fees, and other income	1,081		1,140		973		1,069		1,074		1,036		995

17,713		Total revenues	4,378		4,986		4,972		5,183		5,026		5,128		5,097

		Benefits and Expenses (1):
6,103		Insurance and annuity benefits	1,611		2,073		2,279		2,296		2,206		2,317		2,326
1,618		Interest credited to policyholders' account balances	382		422		432		434		414		415		434
448		Interest expense	108		100		70		48		48		43		43
(1,192	)	Deferral of acquisition costs	(313	)	(343	)	(325	)	(344	)	(340	)	(358	)	(370	)
834		Amortization of acquisition costs	242		212		255		224		239		273		358
3,010		Securities operations non-interest expenses	726		778		678		707		640		641		609
5,175		General and administrative expenses	1,140		1,366		1,310		1,602		1,287		1,308		1,262

15,996		Total benefits and expenses	3,896		4,608		4,699		4,967		4,494		4,639		4,662

1,717		Adjusted operating income before income taxes	482		378		273		216		532		489		435

		Items excluded from adjusted operating income before income taxes:
(379	)	Realized investment gains (losses), net of related adjustments	247		82		(326	)	(165	)	(101	)	(339	)	(141	)
(29	)	Related charges	(4	)	(7	)	4		33		5		(4	)	(1	)

(408	)	Total realized investment gains (losses), net of related adjustments	243		75		(322	)	(132	)	(96	)	(343	)	(142	)

(636	)	Divested businesses	(22	)	(60	)	(40	)	(25	)	(8	)	10		(14	)
(143	)	Demutualization costs and expenses	(45	)	(117	)	(37	)	(389	)	—		—		—

(1,187	)	Total items excluded from adjusted operating income before income taxes	176		(102	)	(399	)	(546	)	(104	)	(333	)	(156	)

530		Income (loss) from continuing operations before income taxes	658		276		(126	)	(330	)	428		156		279
292		Income tax expense (benefit)	248		14		(190	)	57		159		54		(104	)

238		Income (loss) from continuing operations, after-tax	410		262		64		(387	)	269		102		383

(1)

Page 36

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q
		Revenues (1):
71		Premiums	18		3		(8	)	7		8		21		10
78		Policy charges and fee income	19		20		18		23		19		19		15
2,675		Net investment income	654		629		613		595		565		603		570
4,733		Commissions, investment management fees, and other income	1,074		1,001		954		987		967		958		893

7,557		Total revenues	1,765		1,653		1,577		1,612		1,559		1,601		1,488

		Benefits and Expenses (1):
930		Insurance and annuity benefits	249		213		231		220		197		231		220
1,024		Interest credited to policyholders' account balances	226		251		250		250		243		238		247
52		Interest expense	10		7		8		7		3		5		4
(92	)	Deferral of acquisition costs	(20	)	(16	)	(12	)	(12	)	(14	)	(14	)	(8	)
101		Amortization of acquisition costs	22		22		22		20		21		27		21
2,956		Securities operations non-interest expenses	714		763		681		694		635		645		601
1,753		General and administrative expenses	400		411		397		429		370		377		351

6,724		Total benefits and expenses	1,601		1,651		1,577		1,608		1,455		1,509		1,436

833		Adjusted operating income before income taxes	164		2		—		4		104		92		52

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—FINANCIAL ADVISORY SEGMENT

(in millions)

Year ended December 31		2001							2002
2000		1Q	2Q		3Q		4Q		1Q	2Q		3Q
	Revenues (1):
—	Premiums	—	—		—		—		—	—		—
—	Policy charges and fee income	—	—		—		—		—	—		—
310	Net investment income	73	61		65		57		48	48		38
3,090	Commissions, investment management fees, and other income	685	626		577		607		601	599		558

3,400	Total revenues	758	687		642		664		649	647		596

	Benefits and Expenses (1):
—	Insurance and annuity benefits	—	—		—		—		—	—		—
—	Interest credited to policyholders' account balances	—	—		—		—		—	—		—
—	Interest expense	—	—		—		—		—	—		—
—	Deferral of acquisition costs	—	—		—		—		—	—		—
—	Amortization of acquisition costs	—	—		—		—		—	—		—
2,956	Securities operations non-interest expenses	714	763		681		694		635	645		601
45	General and administrative expenses	9	9		8		9		7	8		9

3,001	Total benefits and expenses	723	772		689		703		642	653		610

399	Adjusted operating income before income taxes	35	(85	)	(47	)	(39	)	7	(6	)	(14	)

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

Year ended December 31		2001				2002
2000		1Q	2Q	3Q	4Q	1Q	2Q	3Q
	Revenues (1):

1,680	Premiums	454	817	1,020	1,046	1,016	1,006	1,061
92	Policy charges and fee income	24	111	102	70	57	49	46
161	Net investment income	42	122	163	156	158	181	195
342	Commissions, investment management fees, and other income	82	79	71	90	98	94	68

2,275	Total revenues	602	1,129	1,356	1,362	1,329	1,330	1,370

	Benefits and Expenses (1):

1,266	Insurance and annuity benefits	337	702	794	841	783	799	830
2	Interest credited to policyholders' account balances	1	18	28	25	24	24	24
4	Interest expense	2	2	2	(2)	—	—	—
(404)	Deferral of acquisition costs	(114)	(143)	(133)	(149)	(151)	(147)	(162)
146	Amortization of acquisition costs	38	35	44	47	65	44	65
989	General and administrative expenses	241	386	430	447	406	427	425

2,003	Total benefits and expenses	505	1,000	1,165	1,209	1,127	1,147	1,182

272	Adjusted operating income before income taxes	97	129	191	153	202	183	188

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—INTERNATIONAL INVESTMENTS SEGMENT

(in millions)

Year ended December 31			2001							2002
2000			1Q	2Q		3Q		4Q		1Q		2Q		3Q
		Revenues (1):
—		Premiums	—	—		—		—		—		—		—
—		Policy charges and fee income	—	—		—		—		—		—		—
32		Net investment income	8	8		9		8		8		10		9
323		Commissions, investment management fees, and other income	73	67		62		68		72		72		74

355		Total revenues	81	75		71		76		80		82		83

		Benefits and Expenses (1):

—		Insurance and annuity benefits	—	—		—		—		—		—		—
—		Interest credited to policyholders' account balances	—	—		—		—		—		—		—
—		Interest expense	—	—		—		—		—		—		—
(1	)	Deferral of acquisition costs	—	—		—		—		—		—		—
1		Amortization of acquisition costs	—	—		1		—		—		—		1
379		General and administrative expenses	79	88		81		95		82		86		80

379		Total benefits and expenses	79	88		82		95		82		86		81

(24	)	Adjusted operating income before income taxes	2	(13	)	(11	)	(19	)	(2	)	(4	)	2

(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.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED STATEMENTS OF OPERATIONS—CORPORATE AND OTHER OPERATIONS

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q
		Revenues (1):
15		Premiums	2		—		10		29		2		(2	)	(3	)
(10	)	Policy charges and fee income	—		(4	)	(1	)	(2	)	—		(6	)	(3	)
847		Net investment income	200		216		133		167		137		176		152
(313	)	Commissions, investment management fees, and other income	(131	)	4		(116	)	(63	)	(47	)	(79	)	(23	)

539		Total revenues	71		216		26		131		92		89		123

		Benefits and Expenses (1):
27		Insurance and annuity benefits	7		9		11		12		27		31		—
(3	)	Interest credited to policyholders' account balances	(1	)	1		1		—		—		—		—
385		Interest expense	98		87		60		44		45		39		41
105		Deferral of acquisition costs	26		23		17		16		19		21		12
(84	)	Amortization of acquisition costs	(21	)	(20	)	(21	)	(20	)	(20	)	(25	)	(21	)
54		Securities operations non-interest expenses	12		15		(3	)	13		5		(4	)	8
12		General and administrative expenses	(50	)	25		(39	)	78		(5	)	(20	)	(36	)

496		Total benefits and expenses	71		140		26		143		71		42		4

43		Adjusted operating income before income taxes	—		76		—		(12	)	21		47		119

(1)

Page 41

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

RECLASSIFIED OPERATIONS HIGHLIGHTS AND SUPPLEMENTARY INFORMATION FOR FINANCIAL ADVISORY SEGMENT

(dollar amounts in millions unless otherwise noted)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q
		Distribution Representatives (1):
6,475		Financial Advisors (2)	6,420		6,288		6,153		5,951		5,656		5,306		4,960
		Distribution Representative Productivity:
412		Financial Advisor productivity ($ thousands)	373		347		326		335		378		372		378
		Financial Advisory Segment:
		Non-Interest Revenues:
1,985		Commissions	417		388		333		387		358		364		335
825		Fees	201		186		196		175		197		199		189
280		Other non-interest revenues	67		52		48		45		46		36		34

3,090		Total non-interest revenues	685		626		577		607		601		599		558

32.2	%	Recurring revenue as a percentage of total non-interest revenue (3)	35.8	%	36.3	%	37.4	%	36.3	%	37.0	%	38.1	%	38.2	%
6.6		Average customer margin lending balances ($ in billions)	5.3		4.5		4.3		3.6		3.4		3.1		2.6

(1)

As of end of period.

(2)

All periods exclude financial advisors associated with our discontinued international securities operations.

(3)

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

Page 42

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth 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 discontinued operations; sales practices remedies and costs; 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 43

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth 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 period 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 the allocation of such expenses. For periods subsequent to the date of demutualization, cash flows between the Financial Services Businesses and the Closed Block Business related to administrative expenses are determined by a policy servicing fee arrangement that is based upon insurance and policies in force and statutory cash premiums. To the extent reported administrative expenses vary from these cash flow amounts, the differences are recorded, on an after-tax basis, as direct equity adjustments to the equity balances of each business. The direct equity adjustments modify earnings available to holders of Common Stock and Class B Stock for earnings per share purposes. Earnings per share of Common Stock based on adjusted operating income of the Financial Services Businesses reflects these adjustments as well.

13. Financial Advisors:

Financial advisors and securities brokers in our Financial Advisory and International Investments segments.

14. Financial Advisor Productivity:

Financial Advisory segment total non-interest revenues, excluding revenues generated by the consumer bank and by the segment's retail fixed income and equity sales and trading operations, divided by the average number of retail 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 44

Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth 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.

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Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2002

RATINGS AND INVESTOR INFORMATION

INSURANCE CLAIMS PAYING RATINGS

as of February 11, 2003

	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-	BBB+	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 February 11, 2003
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	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 NewYork 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 46

Form: 8-K

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