May 6, 2003 - QUARTERLY FINANCIAL SUPPLEMENT - 8-K: Current report

Exhibit 99.1

May 6, 2003

Prudential Financial, Inc. (PRU)

Quarterly Financial Supplement

FINANCIAL SERVICES BUSINESSES

FIRST QUARTER 2003

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.

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

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 (Three Months Ended)		6
Combining Balance Sheets by Division		7
Short-Term Debt		8
Long-Term Debt		9

INSURANCE DIVISION
Combined Statements of Operations		10
Combining Statements of Operations (Three Months Ended)		11
Individual Life and Annuities Sales Results and Account Values		12
Individual Life and Annuities Segment Account Value Activity		13
Deferred Policy Acquisition Costs		14
Supplementary Information for Individual Life Insurance		15
Supplementary Information for Group Insurance		16
Supplementary Information for Property and Casualty Insurance		17

INVESTMENT DIVISION
Combined Statements of Operations		18
Combining Statements of Operations (Three Months Ended)		19
Supplementary Revenue Information for Investment Management and Financial Advisory Segments		20
Assets Under Management for Investment Management and Advisory Services Operations		21
Mutual Funds and Wrap-fee Products Sales Results and Assets under Management		22
Retirement Sales Results and Account Values		23

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION
Combined Statements of Operations		24
Combining Statements of Operations		25
Sales Results and Supplementary Information		26-27

INVESTMENT PORTFOLIO
Investment Portfolio Composition		28
Financial Services Businesses Investment Portfolio Composition—Japanese Insurance Operations and Excluding Japanese Insurance Operations		29
Financial Services Businesses Investment Results		30
Financial Services Businesses Investment Results—Japanese Insurance Operations		31
Financial Services Businesses Investment Results—Excluding Japanese Insurance Operations		32

RECLASSIFIED STATEMENTS OF OPERATIONS		33-36

KEY DEFINITIONS AND FORMULAS		37-39

RATINGS AND INVESTOR INFORMATION		40

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

The Quarterly Financial Supplement for the period ended March 31, 2003 reflects the classification of results for the Company’s specialty automobile insurance business, THI Holdings, as discontinued operations for all periods presented.

iii

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date				%			2002								2003
2003		2002		Change			1Q		2Q		3Q		4Q		1Q
						Financial Services Businesses:
						Pre-tax adjusted operating income by division:
172		203		-15	%	Insurance Division	203		165		73		141		172
74		104		-29	%	Investment Division	104		92		52		36		74
175		202		-13	%	International Insurance and Investments Division	202		183		188		174		175
28		20		40	%	Corporate and other operations	20		46		118		8		28

449		529		-15	%	Total pre-tax adjusted operating income	529		486		431		359		449
146		193		-24	%	Income taxes, applicable to adjusted operating income	193		179		128		106		146

303		336		-10	%	Financial Services Businesses after-tax adjusted operating income	336		307		303		253		303

						Items excluded from adjusted operating income:
(113	)	(96	)	-18	%	Realized investment losses, net, and related charges and adjustments	(96	)	(345	)	(142	)	(284	)	(113	)
—		—		—		Sales practices remedies and costs	—		—		—		(20	)	—
(12	)	(8	)	-50	%	Divested businesses	(8	)	10		(14	)	(68	)	(12	)

(125	)	(104	)	-20	%	Total items excluded from adjusted operating income, before income taxes	(104	)	(335	)	(156	)	(372	)	(125	)
(41	)	(35	)	-17	%	Income taxes, applicable to items excluded from adjusted operating income	(35	)	(126	)	(233	)	(126	)	(41	)

(84	)	(69	)	-22	%	Total items excluded from adjusted operating income, after income taxes	(69	)	(209	)	77		(246	)	(84	)

219		267		-18	%	Income from continuing operations (after-tax) of Financial Services Businesses	267		98		380		7		219
(22	)	(4	)	-450	%	Income (loss) from discontinued operations, net of taxes	(4	)	(3	)	12		(78	)	(22	)

197		263		-25	%	Net income (loss) of Financial Services Businesses	263		95		392		(71	)	197

						Earnings per share of Common Stock (diluted):
0.58		0.59				Adjusted operating income	0.59		0.55		0.54		0.47		0.58
0.43		0.47				Income from continuing operations	0.47		0.19		0.67		0.04		0.43
0.39		0.46				Net income (loss)	0.46		0.19		0.70		(0.10	)	0.39

556.5		585.1				Weighted average number of outstanding Common shares (diluted basis)	585.1		585.2		576.8		565.0		556.5

6.98	%	7.25	%			Operating Return on Average Equity	7.25	%	6.73	%	6.56	%	5.70	%	6.98	%

						Reconciliation to Consolidated Net Income of Prudential Financial, Inc:

197		263				Net income (loss) of Financial Services Businesses (above)	263		95		392		(71	)	197
(1	)	(110	)			Net loss of Closed Block Business	(110	)	(163	)	(90	)	(122	)	(1	)

196		153				Consolidated net income (loss)	153		(68	)	302		(193	)	196

18		7				Direct equity adjustments for earnings per share calculations	7		14		9		13		18

Page 1

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL HIGHLIGHTS

(in millions, except per share data)

Year-to-date			2002				2003
2003	2002		1Q	2Q	3Q	4Q	1Q
		Financial Services Businesses Capitalization Data (1):
		Short-term debt	6,515	4,221	3,852	3,469	4,212
		Long-term debt	3,350	3,003	3,077	3,007	2,582
		Equity Security Units (2)	690	690	690	690	690

		Attributed Equity (3):
		Including accumulated other comprehensive income	19,453	20,258	21,039	20,562	21,059
		Excluding unrealized gains and losses on investments	19,034	19,144	18,931	18,394	18,388
		Excluding accumulated other comprehensive income	19,289	19,321	19,153	18,621	18,596

		Total Capitalization:
		Including accumulated other comprehensive income	23,493	23,951	24,806	24,259	24,331
		Excluding unrealized gains and losses on investments	23,074	22,837	22,698	22,091	21,660
		Excluding accumulated other comprehensive income	23,329	23,014	22,920	22,318	21,868

		Book value per share of Common Stock:
		Including accumulated other comprehensive income	33.25	34.72	37.03	36.67	38.12
		Excluding unrealized gains and losses on investments	32.53	32.81	33.32	32.80	33.28
		Excluding accumulated other comprehensive income	32.97	33.12	33.71	33.20	33.66

		Number of diluted shares at end of period	585.1	583.4	568.1	560.8	552.5

		Common Stock Price Range (based on closing price):
33.93	32.09	High	32.09	35.75	32.99	32.10	33.93
27.56	30.05	Low	30.05	31.05	27.35	25.50	27.56
29.25	31.05	Close	31.05	33.36	28.56	31.74	29.25

		Common Stock market capitalization (1)	18,143	19,448	16,235	17,782	16,153

(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
First Quarter 2003

OPERATIONS HIGHLIGHTS

Year-to-date			2002				2003
2003	2002		1Q	2Q	3Q	4Q	1Q
		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	92.3	84.8	77.3	79.9	78.9
		Institutional customers	86.2	83.5	79.8	85.2	84.2
		General account (3)	111.7	116.0	119.5	122.9	123.6

		Total Investment Management and Advisory Services	290.2	284.3	276.6	288.0	286.7
		Non-proprietary wrap-fee and other assets under management	41.9	38.2	32.7	33.0	32.7

		Total managed by Investment Division	332.1	322.5	309.3	321.0	319.4
		Managed by International Insurance and Investments Division (3) (4):	38.0	37.9	46.6	47.9	47.6
		Managed by Insurance Division	8.7	8.0	7.2	8.8	8.5

		Total assets under management	378.8	368.4	363.1	377.7	375.5
		Client assets under administration (4)	201.2	188.4	173.7	177.9	174.4

		Total assets under management and administration	580.0	556.8	536.8	555.6	549.9


		Assets managed or administered for customers outside of the United States at end of period	67.3	70.5	77.9	83.6	83.4

		Distribution Representatives (1):
		Prudential Agents	4,469	4,551	4,478	4,389	4,327
		Financial Advisors (5)	5,656	5,306	4,960	4,731	4,519
		International Life Planners	4,098	4,207	4,353	4,505	4,552
		Gibraltar Life Advisors	5,726	5,525	5,233	5,155	4,993

		Distribution Representative Productivity:
34	34	Prudential Agent productivity ($ thousands)	34	38	36	43	34
390	378	Financial Advisor productivity ($ thousands)	378	372	378	357	390

		Third Party Distribution—Retail Products ($ millions) (6):
21	16	Individual life insurance (7)	16	17	15	24	21
4	9	Corporate-owned life insurance sales	9	76	21	15	4
58	11	Individual annuities	11	24	50	48	58
616	456	Mutual funds and wrap-fee products	456	1,019	970	1,207	616

(1)

As of end of period.

(2)

At fair market value.

(3)

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.

(4)

Reflects inclusion in assets managed by International Insurance and Investments Division of $3.9 billion at September 30, 2002 and $4.3 billion at December 31, 2002, representing amounts relating to recently acquired entities and formerly classified as client assets under administration, to conform to current presentation based on internal management criteria.

(5)

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

(6)

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.

(7)

Excludes corporate-owned life insurance sales.

Page 3

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINED STATEMENTS OF OPERATIONS—FINANCIAL SERVICES BUSINESSES

(in millions)

Year-to-date				% Change			2002								2003
2003		2002		% Change			1Q		2Q		3Q		4Q		1Q
						Revenues (1):
2,468		2,212		12	%	Premiums	2,212		2,266		2,320		2,448		2,468
416		434		-4	%	Policy charges and fee income	434		412		400		407		416
1,284		1,236		4	%	Net investment income	1,236		1,343		1,312		1,288		1,284
902		1,075		-16	%	Commissions, investment management fees, and other income	1,075		1,036		996		976		902

5,070		4,957		2	%	Total revenues	4,957		5,057		5,028		5,119		5,070

						Benefits and Expenses (1):
2,467		2,156		14	%	Insurance and annuity benefits	2,156		2,267		2,278		2,496		2,467
418		414		1	%	Interest credited to policyholders’ account balances	414		415		434		444		418
37		48		-23	%	Interest expense	48		43		43		36		37
(364	)	(321	)	-13	%	Deferral of acquisition costs	(321	)	(347	)	(360	)	(374	)	(364	)
244		224		9	%	Amortization of acquisition costs	224		260		347		245		244
550		640		-14	%	Securities operations non-interest expenses	640		641		609		599		550
1,269		1,267		0	%	General and administrative expenses	1,267		1,292		1,246		1,314		1,269

4,621		4,428		4	%	Total benefits and expenses	4,428		4,571		4,597		4,760		4,621

449		529		-15	%	Adjusted operating income before income taxes	529		486		431		359		449

						Items excluded from adjusted operating income before income taxes:
(114	)	(101	)	-13	%	Realized investment losses, net, and related adjustments	(101	)	(341	)	(141	)	(290	)	(114	)
1		5		-80	%	Related charges	5		(4	)	(1	)	6		1

(113	)	(96	)	-18	%	Total realized investment losses, net, and related charges and adjustments	(96	)	(345	)	(142	)	(284	)	(113	)

—		—		—		Sales practices remedies and costs	—		—		—		(20	)	—
(12	)	(8	)	-50	%	Divested businesses	(8	)	10		(14	)	(68	)	(12	)

(125	)	(104	)	-20	%	Total items excluded from adjusted operating income before income taxes	(104	)	(335	)	(156	)	(372	)	(125	)

324		425		-24	%	Income (loss) from continuing operations before income taxes	425		151		275		(13	)	324
105		158		-34	%	Income tax expense (benefit)	158		53		(105	)	(20	)	105

219		267		-18	%	Income from continuing operations, after-tax	267		98		380		7		219

(1)

Revenues exclude realized investment gains, net of losses and related adjustments, and revenues of divested businesses and discontinued operations. Benefits and expenses exclude charges related to realized investment gains, net of losses, sales practices remedies and costs, and benefits and expenses of divested businesses and discontinued operations.

Page 4

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINED BALANCE SHEETS—FINANCIAL SERVICES BUSINESSES

(in millions)

	03/31/2002	06/30/2002	09/30/2002	12/31/2002	03/31/2003
Assets:
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost $69,840; $70,745; $72,962; $74,665; $76,766)	70,687	72,700	76,815	79,230	82,311
Fixed maturities, held to maturity, at amortized cost
(fair value $373; $2,293; $2,385; $2,673; $2,859)	354	2,268	2,376	2,612	2,772
Trading account assets, at fair value	6,286	6,038	4,419	3,449	3,359
Equity securities, available for sale, at fair value
(cost $1,620; $1,748; $1,815; $1,313; $1,101)	1,687	1,868	1,714	1,286	1,038
Commercial loans	13,011	12,752	12,649	12,300	12,234
Policy loans	2,854	2,982	3,036	3,146	2,923
Securities purchased under agreements to resell	7,137	5,136	5,256	4,844	5,990
Cash collateral for borrowed securities	5,628	5,530	5,691	4,978	4,429
Other long-term investments	4,253	4,216	4,329	4,333	4,476
Short-term investments	3,095	2,848	2,082	2,840	1,671

Total investments	114,992	116,338	118,367	119,018	121,203
Cash and cash equivalents	10,282	8,344	9,115	7,470	7,339
Accrued investment income	1,027	1,069	1,084	1,021	1,095
Broker-dealer related receivables	7,017	7,091	5,486	5,631	5,126
Deferred policy acquisition costs	5,660	5,859	5,750	5,875	5,926
Other assets	15,692	16,213	14,699	13,730	15,001
Separate account assets	78,515	75,101	69,900	70,555	70,710

Total assets	233,185	230,015	224,401	223,300	226,400

Liabilities:
Future policy benefits	38,403	40,319	41,395	42,213	43,243
Policyholders’ account balances	37,559	38,916	40,325	40,799	41,487
Unpaid claims and claim adjustment expenses	3,353	3,352	3,363	3,428	3,513
Securities sold under agreements to repurchase	11,704	10,557	10,675	10,250	10,907
Cash collateral for loaned securities	8,256	8,959	7,645	7,517	7,300
Income taxes payable	1,102	1,609	1,967	1,910	2,259
Broker-dealer related payables	5,581	6,076	4,498	4,838	4,915
Securities sold but not yet purchased	4,561	3,185	2,417	1,996	2,076
Short-term debt	6,515	4,221	3,852	3,469	4,212
Long-term debt	3,350	3,003	3,077	3,007	2,582
Other liabilities	14,143	13,769	13,558	12,066	11,447
Separate account liabilities	78,515	75,101	69,900	70,555	70,710

Total liabilities	213,042	209,067	202,672	202,048	204,651

Guaranteed beneficial interest in Trust holding solely debentures of Parent	690	690	690	690	690
Attributed Equity:
Accumulated other comprehensive income	164	937	1,886	1,941	2,463
Other attributed equity	19,289	19,321	19,153	18,621	18,596

Total attributed equity	19,453	20,258	21,039	20,562	21,059

Total liabilities and attributed equity	233,185	230,015	224,401	223,300	226,400

Page 5

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS—BY DIVISION

(in millions)

	Three Months Ended March 31, 2003
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations



Revenues (1) :
Premiums	2,468		1,319		14		1,141		(6	)
Policy charges and fee income	416		347		18		54		(3	)
Net investment income	1,284		392		559		193		140
Commissions, investment management fees, and other income	902		57		816		75		(46	)

Total revenues	5,070		2,115		1,407		1,463		85

Benefits and Expenses (1):
Insurance and annuity benefits	2,467		1,316		210		906		35
Interest credited to policyholders’ account balances	418		157		236		25		—
Interest expense	37		(1	)	4		—		34
Deferral of acquisition costs	(364	)	(191	)	(7	)	(177	)	11
Amortization of acquisition costs	244		169		19		74		(18	)
Securities operations non-interest expenses	550		—		541		—		9
General and administrative expenses	1,269		493		330		460		(14	)

Total benefits and expenses	4,621		1,943		1,333		1,288		57

Adjusted operating income before income taxes	449		172		74		175		28


	Three Months Ended March 31, 2002
	Total Financial Services Businesses		Insurance Division		Investment Division		International Insurance & Investments Division		Corporate and Other Operations



Revenues (1):
Premiums	2,212		1,186		8		1,016		2
Policy charges and fee income	434		358		19		57		—
Net investment income	1,236		376		565		158		137
Commissions, investment management fees, and other income	1,075		57		967		98		(47	)

Total revenues	4,957		1,977		1,559		1,329		92

Benefits and Expenses (1):
Insurance and annuity benefits	2,156		1,149		197		783		27
Interest credited to policyholders’ account balances	414		147		243		24		—
Interest expense	48		—		3		—		45
Deferral of acquisition costs	(321	)	(175	)	(14	)	(151	)	19
Amortization of acquisition costs	224		158		21		65		(20	)
Securities operations non-interest expenses	640		—		635		—		5
General and administrative expenses	1,267		495		370		406		(4	)

Total benefits and expenses	4,428		1,774		1,455		1,127		72

Adjusted operating income before income taxes	529		203		104		202		20

(1)

Page 6

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES COMBINING BALANCE SHEETS—BY DIVISION

(in millions)

	As of March 31, 2003
	Total Financial Services Businesses	Insurance Division	Investment Division	International Insurance & Investments Division	Corporate and Other Operations
Assets:
Total investments	121,203	27,839	46,586	37,235	9,543
Broker-dealer related receivables	5,126	—	4,065	412	649
Deferred policy acquisition costs	5,926	3,748	19	2,224	(65	)
Other assets	23,435	4,785	9,323	3,993	5,334
Separate account assets	70,710	31,582	39,501	502	(875	)

Total assets	226,400	67,954	99,494	44,366	14,586

Liabilities:
Future policy benefits	43,243	5,220	12,916	24,543	564
Policyholders' account balances	41,487	15,097	16,477	9,913	—
Debt	6,794	316	3,647	416	2,415
Other liabilities	42,417	8,938	22,557	5,018	5,904
Separate account liabilities	70,710	31,582	39,501	502	(875	)

Total liabilities	204,651	61,153	95,098	40,392	8,008

Guaranteed beneficial interest in Trust holding solely debentures of Parent	690	—	—	—	690
Attributed Equity:
Accumulated other comprehensive income	2,463	718	658	810	277
Other attributed equity	18,596	6,083	3,738	3,164	5,611

Total attributed equity	21,059	6,801	4,396	3,974	5,888

Total liabilities and attributed equity	226,400	67,954	99,494	44,366	14,586


	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	28,101	44,947	36,358	9,612
Broker-dealer related receivables	5,631	—	4,516	399	716
Deferred policy acquisition costs	5,875	3,754	28	2,158	(65	)
Other assets	22,221	4,102	7,898	4,141	6,080
Separate account assets	70,555	31,175	39,715	499	(834	)

Total assets	223,300	67,132	97,104	43,555	15,509

Liabilities:
Future policy benefits	42,213	5,207	12,835	23,624	547
Policyholders' account balances	40,799	14,947	16,252	9,598	2
Debt	6,476	—	3,551	849	2,076
Other liabilities	42,005	8,813	20,873	5,484	6,835
Separate account liabilities	70,555	31,175	39,715	499	(834	)

Total liabilities	202,048	60,142	93,226	40,054	8,626

Guaranteed beneficial interest in Trust holding solely debentures of Parent	690	—	—	—	690
Attributed Equity:
Accumulated other comprehensive income (loss)	1,941	981	587	480	(107	)
Other attributed equity	18,621	6,009	3,291	3,021	6,300

Total attributed equity	20,562	6,990	3,878	3,501	6,193

Total liabilities and attributed equity	223,300	67,132	97,104	43,555	15,509

Page 7

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

SHORT TERM DEBT—FINANCIAL SERVICES BUSINESSES

(in millions)

	As of March 31, 2003				As of December 31, 2002
	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	—	306	—	306
Investment related	—	213	—	213	—	154	—	154
Securities business related	—	1,429	1,236	2,665	—	959	1,256	2,215
Specified other businesses	—	799	228	1,027	—	514	279	793
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	1	1

Total short-term debt	—	2,747	1,465	4,212	—	1,933	1,536	3,469

Borrowings by type:
Long-term debt due within one year	—	459	—	459	—	637	—	637
Commercial paper	—	2,272	—	2,272	—	1,265	—	1,265
Bank borrowings	—	—	893	893	—	—	913	913
Other short-term debt	—	16	571	587	—	31	622	653

Total general obligations	—	2,747	1,464	4,211	—	1,933	1,535	3,468
Limited recourse and non-recourse borrowing	—	—	1	1	—	—	1	1

Total short-term debt	—	2,747	1,465	4,212	—	1,933	1,536	3,469

(a)

Includes Prudential Funding, LLC.

Page 8

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

LONG TERM DEBT

(in millions)

	As of March 31, 2003
							Limited
	General			Securities	Specified	Total	Recourse
	Corporate		Investment	Business	Other	General	and non-	Total
	Purposes		Related	Related	Businesses	Obligations	Recourse	Borrowing
Financial Services Businesses:
Prudential Financial, Inc.:
Long-term fixed and floating rate notes	—		—	—	—	—	—	—
Hybrid notes	—		—	—	—	—	—	—

Total	—		—	—	—	—	—	—

The Prudential Insurance Company of America (a):
Surplus notes	691		—	—	—	691	—	691
Long-term fixed and floating rate notes	599		318	400	—	1,317	—	1,317
Commercial paper backed by long-term credit agreements	—		—	—	—	—	—	—

Total	1,290		318	400	—	2,008	—	2,008

Long-term debt of other affiliated companies	—		—	—	—	—	574	574

Total long-term debt of Financial Services Businesses	1,290		318	400	—	2,008	574	2,582

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

Total	—		—	—	—	—	—	—

The Prudential Insurance Company of America (a):
Surplus notes	690		—	—	—	690	—	690
Long-term fixed and floating rate notes	600		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

(a)

Includes Prudential Funding, LLC.

Page 9

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINED STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

Year-to-date					2002								2003
2003	2002		% Change		1Q		2Q		3Q		4Q		1Q
				Revenues (1):
1,319	1,186		11%	Premiums	1,186		1,241		1,252		1,356		1,319
347	358		-3%	Policy charges and fee income	358		350		342		347		347
392	376		4%	Net investment income	376		383		395		401		392
57	57		0%	Commissions, investment management fees, and other income	57		63		58		55		57

2,115	1,977		7%	Total revenues	1,977		2,037		2,047		2,159		2,115

				Benefits and Expenses (1):
1,316	1,149		15%	Insurance and annuity benefits	1,149		1,206		1,228		1,355		1,316
157	147		7%	Interest credited to policyholders’ account balances	147		153		163		170		157
(1)	—		—	Interest expense	—		(1	)	(2	)	(2	)	(1	)
(191)	(175	)	-9%	Deferral of acquisition costs	(175	)	(207	)	(202	)	(206	)	(191	)
169	158		7%	Amortization of acquisition costs	158		214		282		181		169
493	495		0%	General and administrative expenses	495		507		505		520		493

1,943	1,774		10%	Total benefits and expenses	1,774		1,872		1,974		2,018		1,943

172	203		-15%	Adjusted operating income before income taxes	203		165		73		141		172

(1)

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

Page 10

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINING STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

	Three Months Ended March 31, 2003
	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	1,319		113		753		453		94		19
Policy charges and fee income	347		298		49		—		254		44
Net investment income	392		208		151		33		101		107
Commissions, investment management fees, and other income	57		47		8		2		34		13

Total revenues	2,115		666		961		488		483		183

Benefits and Expenses (1):
Insurance and annuity benefits	1,316		216		740		360		173		43
Interest credited to policyholders’ account balances	157		97		60		—		36		61
Interest expense	(1	)	(1	)	—		—		(1	)	—
Deferral of acquisition costs	(191	)	(104	)	(8	)	(79	)	(77	)	(27	)
Amortization of acquisition costs	169		84		1		84		67		17
General and administrative expenses	493		245		134		114		179		66

Total benefits and expenses	1,943		537		927		479		377		160

Adjusted operating income before income taxes	172		129		34		9		106		23


	Three Months Ended March 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	1,186		65		694		427		56		9
Policy charges and fee income	358		306		52		—		250		56
Net investment income	376		205		136		35		105		100
Commissions, investment management fees, and other income	57		49		8		—		32		17

Total revenues	1,977		625		890		462		443		182

Benefits and Expenses (1):
Insurance and annuity benefits	1,149		157		674		318		129		28
Interest credited to policyholders’ account balances	147		93		54		—		33		60
Interest expense	—		—		—		—		—		—
Deferral of acquisition costs	(175	)	(94	)	(2	)	(79	)	(66	)	(28	)
Amortization of acquisition costs	158		76		(3	)	85		53		23
General and administrative expenses	495		247		130		118		177		70

Total benefits and expenses	1,774		479		853		442		326		153

Adjusted operating income before income taxes	203		146		37		20		117		29

(1)

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

Page 11

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—INDIVIDUAL LIFE AND ANNUITIES SALES RESULTS AND ACCOUNT VALUES

(in millions)

Year-to-date				2002								2003
2003	2002			1Q		2Q		3Q		4Q		1Q
			INDIVIDUAL LIFE INSURANCE SALES (1):
			Excluding corporate-owned life insurance:
25	44		Variable life	44		41		35		33		25
26	11		Universal life	11		16		16		27		26
23	13		Term life	13		15		17		17		23

74	68		Total excluding corporate-owned life insurance	68		72		68		77		74
4	10		Corporate-owned life insurance	10		76		21		15		4

78	78		Total	78		148		89		92		78

			ANNUITY SALES AND ACCOUNT VALUES
			Variable Annuities:
15,338	18,689		Beginning total account value	18,689		18,435		16,802		14,961		15,338
331	374		Sales	374		406		339		276		331
(473)	(597	)	Surrenders and withdrawals	(597	)	(627	)	(546	)	(497	)	(473	)
(231)	(31	)	Change in market value, interest credited, and other activity (2)	(31	)	(1,412	)	(1,634	)	598		(231	)

14,965	18,435		Ending total account value	18,435		16,802		14,961		15,338		14,965

(142)	(223	)	Net redemptions	(223	)	(221	)	(207	)	(221	)	(142	)

			Fixed Annuities:
3,396	2,975		Beginning total account value	2,975		2,909		3,048		3,260		3,396
110	37		Sales	37		181		224		163		110
(49)	(50	)	Surrenders and withdrawals	(50	)	(45	)	(42	)	(47	)	(49	)
16	(53	)	Interest credited and other activity (2)	(53	)	3		30		20		16

3,473	2,909		Ending account value	2,909		3,048		3,260		3,396		3,473

61	(13	)	Net sales (redemptions)	(13	)	136		182		116		61

			SALES BY DISTRIBUTION CHANNEL
			Life Insurance (1):
			Excluding corporate-owned life insurance:
53	52		Prudential Agents	52		55		53		53		53
21	16		Third party distribution	16		17		15		24		21
4	10		Corporate-owned life insurance	10		76		21		15		4

78	78		Total	78		148		89		92		78

			Variable and Fixed Annuities (3):
326	337		Prudential Agents	337		405		392		315		326
57	63		Financial Advisors	63		158		121		76		57
58	11		Third party distributors	11		24		50		48		58

441	411		Total	411		587		563		439		441

(1)

Statutory first year premiums and deposits.

(2)

The quarter ended March 31, 2002 includes decreases in policyholder account balances of $45 million for variable annuities and $56 million for fixed annuities due to the distribution of policy credits, subsequently paid out in cash, as demutualization consideration in connection with the Company's demutualization.

(3)

Amounts represent gross sales.

Page 12

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—INDIVIDUAL LIFE AND ANNUITIES SEGMENT ACCOUNT VALUE ACTIVITY

(in millions)

Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				INDIVIDUAL LIFE INSURANCE:
				Policyholders’ Account Balances:
4,112		3,826		Beginning balance	3,826		3,924		3,992		4,033		4,112
249		227		Premiums and deposits	227		226		223		226		249
23		20		Interest credited	20		23		25		24		23
(122	)	(135	)	Surrenders and withdrawals	(135	)	(138	)	(157	)	(137	)	(122	)
(7	)	14		Net transfers (to) from separate account	14		14		5		(4	)	(7	)
(25	)	(16	)	Policy charges	(16	)	(22	)	(21	)	(19	)	(25	)
(25	)	(12	)	Benefits and other	(12	)	(35	)	(34	)	(11	)	(25	)

4,205		3,924		Ending balance	3,924		3,992		4,033		4,112		4,205

				Separate Account Liabilities:
11,412		13,010		Beginning balance	13,010		13,129		12,117		10,702		11,412
373		396		Premiums and deposits	396		468		430		563		373
(154	)	111		Change in market value and interest credited	111		(1,097	)	(1,385	)	624		(154	)
(157	)	(124	)	Surrenders and withdrawals	(124	)	(132	)	(209	)	(245	)	(157	)
(29	)	(38	)	Net transfers to general account	(38	)	(37	)	(44	)	(14	)	(29	)
(205	)	(211	)	Policy charges	(211	)	(207	)	(203	)	(209	)	(205	)
(5	)	(15	)	Benefits and other	(15	)	(7	)	(4	)	(9	)	(5	)

11,235		13,129		Ending balance	13,129		12,117		10,702		11,412		11,235

				INDIVIDUAL ANNUITIES:
				Account Values in General Account:
6,795		6,152		Beginning balance	6,152		5,825		6,093		6,533		6,795
441		411		Premiums and deposits	411		587		563		439		441
72		72		Interest credited	72		71		77		80		72
(522	)	(647	)	Surrenders and withdrawals	(647	)	(672	)	(588	)	(544	)	(522	)
322		(7	)	Net transfers (to) from separate account (1)	(7	)	321		414		322		322
(2	)	(1	)	Policy charges	(1	)	(2	)	(2	)	(2	)	(2	)
(33	)	(155	)	Benefits and other (2)	(155	)	(37	)	(24	)	(33	)	(33	)

7,073		5,825		Ending balance	5,825		6,093		6,533		6,795		7,073

				Account Values in Separate Account:
11,939		15,512		Beginning balance	15,512		15,519		13,757		11,688		11,939
171		183		Premiums and deposits	183		215		160		147		171
(213	)	51		Change in market value and interest credited	51		(1,392	)	(1,613	)	614		(213	)
(393	)	(514	)	Surrenders and withdrawals	(514	)	(543	)	(469	)	(417	)	(393	)
(100	)	338		Net transfers (to) from general account (1)	338		7		(105	)	(52	)	(100	)
(39	)	(51	)	Policy charges	(51	)	(49	)	(42	)	(41	)	(39	)
—		—		Benefits and other	—		—		—		—		—

11,365		15,519		Ending balance	15,519		13,757		11,688		11,939		11,365

(1)

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

(2)

The quarter ended March 31, 2002 includes a decrease in policyholder account balances of $101 million due to the distribution of policy credits, subsequently paid out in cash, as demutualization consideration in connection with the Company’s demutualization.

Page 13

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—DEFERRED POLICY ACQUISITION COSTS

(in millions)

Year-to-date				2002								2003
2003	2002			1Q		2Q		3Q		4Q		1Q
			INDIVIDUAL LIFE INSURANCE:
3,110	3,133		Beginning balance	3,133		3,160		3,155		3,111		3,110
77	66		Capitalization	66		80		76		79		77
(67)	(53	)	Amortization—operating results	(53	)	(63	)	(92	)	(71	)	(67	)
—	—		Amortization—realized investment gains and losses	—		—		—		—		—
(16)	14		Impact of unrealized (gains) or losses on AFS securities	14		(22	)	(28	)	(9	)	(16	)

3,104	3,160		Ending balance	3,160		3,155		3,111		3,110		3,104

			INDIVIDUAL ANNUITIES:
473	628		Beginning balance	628		654		598		485		473
27	28		Capitalization	28		35		34		25		27
(17)	(23	)	Amortization—operating results	(23	)	(70	)	(105	)	(23	)	(17	)
(2)	1		Amortization—realized investment gains and losses	1		1		3		10		(2	)
(10)	20		Impact of unrealized (gains) or losses on AFS securities	20		(22	)	(45	)	(24	)	(10	)

471	654		Ending balance	654		598		485		473		471

			GROUP INSURANCE (1):
57	26		Beginning balance	26		31		39		45		57
8	2		Capitalization	2		8		7		12		8
(1)	3		Amortization—operating results	3		—		(1	)	—		(1	)
—	—		Amortization—realized investment gains and losses	—		—		—		—		—
—	—		Impact of unrealized (gains) or losses on AFS securities	—		—		—		—		—

64	31		Ending balance	31		39		45		57		64

			PROPERTY & CASUALTY INSURANCE:
114	113		Beginning balance	113		107		110		111		114
79	79		Capitalization	79		84		85		90		79
(84)	(85	)	Amortization—operating results	(85	)	(81	)	(84	)	(87	)	(84	)
—	—		Amortization—realized investment gains and losses	—		—		—		—		—
—	—		Impact of unrealized (gains) or losses on AFS securities	—		—		—		—		—

109	107		Ending balance	107		110		111		114		109

			TOTAL INSURANCE DIVISION:
3,754	3,900		Beginning balance	3,900		3,952		3,902		3,752		3,754
191	175		Capitalization	175		207		202		206		191
(169)	(158	)	Amortization—operating results	(158	)	(214	)	(282	)	(181	)	(169	)
(2)	1		Amortization—realized investment gains and losses	1		1		3		10		(2	)
(26)	34		Impact of unrealized (gains) or losses on AFS securities	34		(44	)	(73	)	(33	)	(26	)

3,748	3,952		Ending balance	3,952		3,902		3,752		3,754		3,748

(1)

Represents long-term care products.

Page 14

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR INDIVIDUAL LIFE INSURANCE

(dollar amounts in millions)

Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				Individual Life Insurance:
				Policy Surrender Experience:
170		162		Cash value of surrenders	162		148		185		197		170
4.2	%	3.9	%	Cash value of surrenders as a percentage of mean future policy benefits, policyholders’ account balances, and separate account balances	3.9	%	3.6	%	4.7	%	5.0	%	4.2	%

				Death claims per $1,000 of in force (1):
2.13		2.06		Variable and universal life	2.06		2.06		1.85		3.30		2.13
1.36		1.43		Term life	1.43		1.56		1.92		2.12		1.36
1.93		1.87		Total, Individual Life Insurance	1.87		1.94		1.96		2.90		1.93

(1)

Annualized, for interim reporting periods.

Page 15

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR GROUP INSURANCE

(dollar amounts in millions)

Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				GROUP INSURANCE NEW ANNUALIZED PREMIUMS:
88		162		Group life	162		27		36		44		88
67		53		Group disability (1)	53		33		25		49		67

155		215		Total	215		60		61		93		155


				Future Policy Benefits (2):
				Group life	1,617		1,609		1,580		1,742		1,754
				Group disability (1)	137		138		148		151		191

				Total	1,754		1,747		1,728		1,893		1,945


				Policyholders’ Account Balances (2):
				Group life	3,928		4,238		4,512		4,684		4,471
				Group disability (1)	58		63		68		67		61

				Total	3,986		4,301		4,580		4,751		4,532


				Separate Account Liabilities (2):
				Group life	8,097		7,745		7,260		7,824		8,977
				Group disability (1)	—		—		—		—		—

				Total	8,097		7,745		7,260		7,824		8,977


				Group Life Insurance:
691		667		Gross premiums, policy charges and fee income (3)	667		664		654		677		691
638		603		Earned premiums, policy charges and fee income	603		600		578		607		638
91.9	%	91.8	%	Benefits ratio	91.8	%	92.8	%	93.3	%	88.8	%	91.9	%
9.1	%	10.0	%	Administrative operating expense ratio	10.0	%	10.2	%	9.6	%	9.9	%	9.1	%
				Persistency ratio	97.2	%	96.1	%	95.2	%	94.5	%	96.4	%

				Group Disability Insurance (1):
171		150		Gross premiums, policy charges and fee income (3)	150		149		153		152		171
164		143		Earned premiums, policy charges and fee income	143		146		147		149		164
93.9	%	84.6	%	Benefits ratio	84.6	%	87.7	%	91.8	%	87.3	%	93.9	%
20.5	%	22.7	%	Administrative operating expense ratio	22.7	%	22.8	%	21.6	%	21.1	%	20.5	%
				Persistency ratio	94.7	%	93.0	%	90.1	%	86.8	%	92.1	%

(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 16

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INSURANCE DIVISION—SUPPLEMENTARY INFORMATION FOR PROPERTY AND CASUALTY INSURANCE

(dollar amounts in millions)

Year-to-date				2002								2003
2003	2002			1Q		2Q		3Q		4Q		1Q
			Earned premium:
325	306		Automobile	306		327		323		329		325
119	113		Homeowners’	113		116		118		119		119
9	8		Other	8		8		9		9		9

453	427		Total earned premium	427		451		450		457		453


			Loss ratio (1) (2):
78.7%	75.8	%	Automobile	75.8	%	77.2	%	78.1	%	86.7	%	78.7	%
79.5%	72.1	%	Homeowners’	72.1	%	76.4	%	96.7	%	75.7	%	79.5	%
79.6%	74.7	%	Overall	74.7	%	77.4	%	83.4	%	82.8	%	79.6	%

			Expense ratio (1) (3):
25.6%	27.6	%	Automobile	27.6	%	25.6	%	26.6	%	27.7	%	25.6	%
31.2%	35.3	%	Homeowners’	35.3	%	31.4	%	30.3	%	33.0	%	31.2	%
26.9%	29.4	%	Overall	29.4	%	27.2	%	27.7	%	29.2	%	26.9	%

			Combined ratio (4):
104.3%	103.4	%	Automobile	103.4	%	102.8	%	104.7	%	114.4	%	104.3	%
110.7%	107.4	%	Homeowners’	107.4	%	107.8	%	127.0	%	108.7	%	110.7	%
106.5%	104.1	%	Overall	104.1	%	104.6	%	111.1	%	112.0	%	106.5	%

15.0	4.2		Current accident year catastrophe losses (5)	4.2		8.0		8.5		10.6		15.0
3.3%	1.0	%	Effect of current accident year catastrophic losses on combined ratio	1.0	%	1.8	%	1.9	%	2.3	%	3.3	%

			Accident year combined ratio (6)	104.6	%	106.1	%	106.8	%	108.8	%	107.0	%

(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 17

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINED STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

Year-to-date				%			2002								2003
2003		2002		Change			1Q		2Q		3Q		4Q		1Q
						Revenues (1):
14		8		75	%	Premiums	8		21		10		38		14
18		19		-5	%	Policy charges and fee income	19		19		15		18		18
559		565		-1	%	Net investment income	565		603		570		571		559
816		967		-16	%	Commissions, investment management fees, and other income	967		958		893		864		816

1,407		1,559		-10	%	Total revenues	1,559		1,601		1,488		1,491		1,407


						Benefits and Expenses (1):
210		197		7	%	Insurance and annuity benefits	197		231		220		232		210
236		243		-3	%	Interest credited to policyholders’ account balances	243		238		247		250		236
4		3		33	%	Interest expense	3		5		4		2		4
(7	)	(14	)	50	%	Deferral of acquisition costs	(14	)	(14	)	(8	)	(8	)	(7	)
19		21		-9	%	Amortization of acquisition costs	21		27		21		23		19
541		635		-15	%	Securities operations non-interest expenses	635		645		601		583		541
330		370		-11	%	General and administrative expenses	370		377		351		373		330

1,333		1,455		-8	%	Total benefits and expenses	1,455		1,509		1,436		1,455		1,333


74		104		-29	%	Adjusted operating income before income taxes	104		92		52		36		74

(1)

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

Page 18

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINING STATEMENTS OF OPERATIONS—INVESTMENT DIVISION

(in millions)

	Three Months Ended March 31, 2003
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	14		—		—		14		—
Policy charges and fee income	18		—		—		18		—
Net investment income	559		7		34		513		5
Commissions, investment management fees, and other income	816		278		491		32		15

Total revenues	1,407		285		525		577		20

Benefits and Expenses (1):
Insurance and annuity benefits	210		—		—		210		—
Interest credited to policyholders’ account balances	236		—		—		236		—
Interest expense	4		1		—		1		2
Deferral of acquisition costs	(7	)	(5	)	—		(2	)	—
Amortization of acquisition costs	19		16		—		3		—
Securities operations non-interest expenses	541		—		541		—		—
General and administrative expenses	330		237		8		76		9

Total benefits and expenses	1,333		249		549		524		11

Adjusted operating income before income taxes	74		36		(24	)	53		9


	Three Months Ended March 31, 2002
	Total Investment Division		Investment Management		Financial Advisory		Retirement		Other Asset Management
Revenues (1):
Premiums	8		—		—		8		—
Policy charges and fee income	19		—		—		19		—
Net investment income	565		6		48		502		9
Commissions, investment management fees, and other income	967		311		601		35		20

Total revenues	1,559		317		649		564		29

Benefits and Expenses (1):
Insurance and annuity benefits	197		—		—		197		—
Interest credited to policyholders’ account balances	243		—		—		243		—
Interest expense	3		—		—		1		2
Deferral of acquisition costs	(14	)	(10	)	—		(4	)	—
Amortization of acquisition costs	21		18		—		3		—
Securities operations non-interest expenses	635		—		635		—		—
General and administrative expenses	370		262		7		90		11

Total benefits and expenses	1,455		270		642		530		13

Adjusted operating income before income taxes	104		47		7		34		16

(1)

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

Page 19

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INVESTMENT DIVISION—SUPPLEMENTARY REVENUE INFORMATION

FOR INVESTMENT MANAGEMENT AND FINANCIAL ADVISORY SEGMENTS

(dollar amounts in millions unless otherwise noted)

Year-to-date		%			2002								2003
2003	2002	Change			1Q		2Q		3Q		4Q		1Q
				Investment Management Segment:
				Analysis of revenues by source:
				Investment Management and Advisory Services:
43	49	-12	%	Retail customers	49		48		43		44		43
79	84	-6	%	Institutional customers	84		87		79		85		79
55	54	2	%	General account	54		57		51		59		55

177	187	-5	%	Subtotal	187		192		173		188		177
108	130	-17	%	Mutual Fund revenues (1)	130		124		120		121		108

285	317	-10	%	Total Investment Management segment revenues	317		316		293		309		285

				Analysis of commissions, investment management fees and other revenues by type:
				Investment Management and Advisory Services:
165	176	-6	%	Asset-based fees	176		178		160		167		165
5	5	0	%	Transaction-based and other revenues	5		8		7		11		5

170	181	-6	%	Subtotal	181		186		167		178		170
108	130	-17	%	Mutual Fund revenues (1)	130		123		119		121		108

278	311	-11	%	Total	311		309		286		299		278

				Financial Advisory Segment:
				Non-Interest Revenues:
288	358	-20	%	Commissions	358		364		335		326		288
166	197	-16	%	Fees	197		199		189		165		166
37	46	-20	%	Other non-interest revenues	46		36		34		31		37

491	601	-18	%	Total non-interest revenues	601		599		558		522		491

				Recurring revenue as a percentage of total non-interest revenue (2)	37.0	%	38.1	%	38.2	%	39.2	%	39.5	%

2.3	3.4			Average customer margin lending balances ($ in billions)	3.4		3.1		2.6		2.4		2.3

(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 20

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

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

(in billions)

					March 31, 2003
					Equity		Fixed Income		Real Estate		Total
				Retail customers	31.7		46.2		1.0		78.9
				Institutional customers	23.5		48.1		12.6		84.2
				General account	2.5		119.7		1.4		123.6

				Total	57.7		214.0		15.0		286.7


					March 31, 2002
					Equity		Fixed Income		Real Estate		Total
				Retail customers	44.5		47.7		0.1		92.3
				Institutional customers	33.0		43.3		9.9		86.2
				General account	2.3		108.0		1.4		111.7

				Total	79.8		199.0		11.4		290.2


Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				Institutional Assets Under Management (1):
				Assets gathered by Investment Management & Advisory Services sales force (2):
62.0		67.9		Beginning assets under management	67.9		62.6		60.2		56.9		62.0
2.6		3.0		Additions to managed portfolio	3.0		2.9		2.9		7.2		2.6
(3.1	)	(8.4	)	Withdrawals	(8.4	)	(2.5	)	(3.1	)	(4.3	)	(3.1	)
—		0.1		Change in market value	0.1		(2.4	)	(2.0	)	1.7		—
(0.7	)	4.0		Net money market flows	4.0		(0.4	)	(1.1	)	0.5		(0.7	)
—		(4.0	)	Other (2)	(4.0	)	—		—		—		—

60.8		62.6		Ending assets under management	62.6		60.2		56.9		62.0		60.8
23.4		23.6		Other institutional assets under management (2)	23.6		23.3		22.9		23.2		23.4

84.2		86.2		Total assets managed for institutional customers at end of period	86.2		83.5		79.8		85.2		84.2

(1)

Reflects reclassification of amounts by client category as of January 1, 2002, based on internal management criteria which increased the amounts attributable to institutional customers by $2.8 billion.

(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 21

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

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

(in millions)

Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				MUTUAL FUNDS AND WRAP-FEE PRODUCTS SALES AND
				ASSETS UNDER MANAGEMENT
				Mutual Funds:
49,756		57,809		Beginning total mutual funds assets	57,809		56,743		52,459		48,639		49,756
1,086		914		Sales (other than money market)	914		1,460		1,146		1,356		1,086
(962	)	(1,116	)	Redemptions (other than money market)	(1,116	)	(1,339	)	(1,259	)	(1,421	)	(962	)
103		32		Reinvestment of distributions and change in market value	32		(2,450	)	(2,620	)	1,188		103
(1,813	)	(896	)	Net money market sales	(896	)	(1,955	)	(1,087	)	(6	)	(1,813	)

48,170		56,743		Ending total mutual funds assets	56,743		52,459		48,639		49,756		48,170

124		(202	)	Net Mutual Funds sales (redemptions) other than money market	(202	)	121		(113	)	(65	)	124

				Wrap-fee Products (1):
15,153		17,955		Beginning total wrap-fee product assets	17,955		18,192		16,676		14,383		15,153
1,287		1,667		Sales	1,667		1,876		1,223		1,361		1,287
(1,178	)	(1,361	)	Redemptions	(1,361	)	(1,618	)	(1,440	)	(1,275	)	(1,178	)
(402	)	(69	)	Reinvestment of distributions and change in market value	(69	)	(1,774	)	(2,076	)	684		(402	)

14,860		18,192		Ending total wrap-fee product assets	18,192		16,676		14,383		15,153		14,860
16,712		18,006		Other managed accounts at end of period (2)	18,006		16,827		15,424		16,394		16,712

31,572		36,198		Total wrap-fee products and other managed accounts at end of period	36,198		33,503		29,807		31,547		31,572

109		306		Net wrap-fee product sales (redemptions) (1)	306		258		(217	)	86		109

				MUTUAL FUNDS AND WRAP-FEE PRODUCTS GROSS SALES BY
				DISTRIBUTION CHANNEL
				Mutual funds, excluding wrap-fee products (3):
99		156		Prudential Agents	156		158		107		98		99
469		339		Financial Advisors	339		407		168		162		469
501		387		Third party distributors	387		890		866		1,090		501
17		32		Other	32		5		5		6		17

1,086		914		Total	914		1,460		1,146		1,356		1,086

				Wrap-fee products (1):
118		115		Prudential Agents	115		132		104		90		118
1,054		1,483		Financial Advisors	1,483		1,615		1,015		1,154		1,054
115		69		Third party distributors	69		129		104		117		115

1,287		1,667		Total	1,667		1,876		1,223		1,361		1,287

(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 22

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INVESTMENT DIVISION—RETIREMENT SALES RESULTS AND ACCOUNT VALUES

(in millions)

Year-to-date					2002								2003
2003		2002			1Q		2Q		3Q		4Q		1Q
				RETIREMENT SALES AND ACCOUNT VALUES
				Defined Contribution:
22,914		24,640		Beginning total account value	24,640		25,337		24,036		21,911		22,914
1,028		1,010		Sales	1,010		904		859		1,085		1,028
(638	)	(817	)	Withdrawals	(817	)	(755	)	(770	)	(906	)	(638	)
(547	)	504		Change in market value and interest credited (1)	504		(1,450	)	(2,214	)	824		(547	)

22,757		25,337		Ending total account value	25,337		24,036		21,911		22,914		22,757

390		193		Net sales	193		149		89		179		390

				Asset management of ending total account value:
				Proprietary	18,107		17,075		15,752		16,152		15,927
				Non-proprietary	7,230		6,961		6,159		6,762		6,830

				Total	25,337		24,036		21,911		22,914		22,757

				Guaranteed Products:
39,058		39,825		Beginning total account value	39,825		39,400		39,172		38,647		39,058
554		259		Sales	259		506		291		411		554
(1,045	)	(864	)	Withdrawals and benefits	(864	)	(993	)	(775	)	(958	)	(1,045	)
481		355		Change in market value and interest income	355		395		553		863		481
(123	)	(175	)	Other (2)	(175	)	(136	)	(594	)	95		(123	)

38,925		39,400		Ending total account value	39,400		39,172		38,647		39,058		38,925

(491	)	(605	)	Net withdrawals	(605	)	(487	)	(484	)	(547	)	(491	)

				Product composition of ending total account value:
				Spread-based products	18,915		18,869		18,702		18,729		18,791
				Fee-based products	20,485		20,303		19,945		20,329		20,134

				Total	39,400		39,172		38,647		39,058		38,925

(1)

Includes increases to account values of $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 also includes $448 million added to customer accounts from inclusion of amounts not previously reflected in this segment.

(2)

Represents changes in asset balances for externally managed accounts.

Page 23

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINED STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

Year-to-date				%			2002								2003
2003		2002		Change			1Q		2Q		3Q		4Q		1Q
						Revenues (1):
1,141		1,016		12	%	Premiums	1,016		1,006		1,061		1,054		1,141
54		57		-5	%	Policy charges and fee income	57		49		46		52		54
193		158		22	%	Net investment income	158		181		195		185		193
75		98		-23	%	Commissions, investment management fees, and other income	98		94		68		80		75

1,463		1,329		10	%	Total revenues	1,329		1,330		1,370		1,371		1,463

						Benefits and Expenses (1):
906		783		16	%	Insurance and annuity benefits	783		799		830		866		906
25		24		4	%	Interest credited to policyholders’ account balances	24		24		24		24		25
—		—		—		Interest expense	—		—		—		1		—
(177	)	(151	)	-17	%	Deferral of acquisition costs	(151	)	(147	)	(162	)	(170	)	(177	)
74		65		14	%	Amortization of acquisition costs	65		44		65		60		74
460		406		13	%	General and administrative expenses	406		427		425		416		460

1,288		1,127		14	%	Total benefits and expenses	1,127		1,147		1,182		1,197		1,288

175		202		-13	%	Adjusted operating income before income taxes	202		183		188		174		175

(1)

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

Page 24

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

COMBINING STATEMENTS OF OPERATIONS—INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION

(in millions)

	Three Months Ended March 31, 2003
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life		International Investments
Revenues (1):
Premiums	1,141		626		515		—
Policy charges and fee income	54		33		21		—
Net investment income	193		49		132		12
Commissions, investment management fees, and other income	75		(1	)	(2	)	78

Total revenues	1,463		707		666		90

Benefits and Expenses (1):
Insurance and annuity benefits	906		474		432		—
Interest credited to policyholders’ account balances	25		3		22		—
Interest expense	—		3		(3	)	—
Deferral of acquisition costs	(177	)	(130	)	(47	)	—
Amortization of acquisition costs	74		64		10		—
General and administrative expenses	460		193		177		90

Total benefits and expenses	1,288		607		591		90

Adjusted operating income before income taxes	175		100		75		—


	Three Months Ended March 31, 2002
	Total International Insurance & Investments Division		International Insurance excl. Gibraltar Life		International Insurance— Gibraltar Life		International Investments
Revenues (1):
Premiums	1,016		486		530		—
Policy charges and fee income	57		29		28		—
Net investment income	158		41		109		8
Commissions, investment management fees, and other income	98		10		16		72

Total revenues	1,329		566		683		80

Benefits and Expenses (1):
Insurance and annuity benefits	783		356		427		—
Interest credited to policyholders’ account balances	24		1		23		—
Interest expense	—		1		(1	)	—
Deferral of acquisition costs	(151	)	(113	)	(38	)	—
Amortization of acquisition costs	65		52		13		—
General and administrative expenses	406		169		155		82

Total benefits and expenses	1,127		466		579		82

Adjusted operating income before income taxes	202		100		104		(2	)

(1)

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

Page 25

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION—SALES RESULTS AND SUPPLEMENTARY INFORMATION

(dollar amounts in millions unless otherwise noted)

Year-to-date			2002				2003
2003	2002		1Q	2Q	3Q	4Q	1Q
		INTERNATIONAL INSURANCE OPERATING DATA:
		Actual exchange rate basis (1):
		Net premiums, policy charges and fee income:
484	395	Japan, excluding Gibraltar Life	395	374	424	413	484
536	558	Gibraltar Life	558	539	528	525	536
175	120	All other countries	120	142	155	168	175

1,195	1,073	Total	1,073	1,055	1,107	1,106	1,195

		Annualized new business premiums:
106	77	Japan, excluding Gibraltar Life	77	67	79	84	106
64	49	Gibraltar Life	49	59	62	63	64
50	53	All other countries	53	51	44	55	50

220	179	Total	179	177	185	202	220

		Constant exchange rate basis (2):
		Net premiums, policy charges and fee income:
462	419	Japan, excluding Gibraltar Life	419	378	405	404	462
512	586	Gibraltar Life	586	558	506	513	512
171	125	All other countries	125	144	150	166	171

1,145	1,130	Total	1,130	1,080	1,061	1,083	1,145

		Annualized new business premiums:
101	82	Japan, excluding Gibraltar Life	82	67	75	83	101
62	51	Gibraltar Life	51	61	60	62	62
49	54	All other countries	54	53	43	53	49

212	187	Total	187	181	178	198	212

(1)

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

(2)

Translated based on average exchange rates for the year ended December 31, 2002.

Page 26

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INTERNATIONAL INSURANCE AND INVESTMENTS DIVISION—SALES RESULTS AND SUPPLEMENTARY INFORMATION

	2002								2003
	1Q		2Q		3Q		4Q		1Q
Face amount of individual policies in force at end of period (in billions) (1):
(Constant exchange rate basis)
Japan, excluding Gibraltar Life	133		136		138		141		145
Gibraltar Life	229		222		217		213		208
All other countries	42		45		47		49		52

Total	404		403		402		403		405

Number of individual policies in force at end of period (in thousands):
Japan, excluding Gibraltar Life	973		990		1,011		1,037		1,069
Gibraltar Life	4,787		4,666		4,602		4,537		4,461
All other countries	571		609		643		682		716

Total	6,331		6,265		6,256		6,256		6,246

International insurance policy persistency (2):
13 months	93.4	%	93.8	%	93.2	%	93.0	%	93.3	%
25 months	87.8	%	86.9	%	86.4	%	86.3	%	86.9	%
Number of Life Planners at end of period (3):
Japan	1,994		1,985		2,055		2,119		2,159
All other countries	2,104		2,222		2,298		2,386		2,393

Total	4,098		4,207		4,353		4,505		4,552

(1)

Translated based on exchange rates as of December 31, 2002.

(2)

Excluding Gibraltar Life.

(3)

Excluding Gibraltar Life Advisors.

Page 27

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	March 31, 2003					December 31, 2002
	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	97,103	31,847	65,256	61.3	%	92,966	30,991	61,975	59.0	%
Public, held to maturity, at amortized cost	2,731	—	2,731	2.6	%	2,563	—	2,563	2.5	%
Private, available for sale, at fair value	32,538	15,487	17,051	16.1	%	32,490	15,242	17,248	16.4	%
Private, held to maturity, at amortized cost	39	—	39	0.0	%	46	—	46	0.0	%
Trading account assets, at fair value	131	—	131	0.1	%	96	—	96	0.1	%
Equity securities, available for sale, at fair value	2,606	1,586	1,020	1.0	%	2,788	1,521	1,267	1.2	%
Commercial loans	18,565	7,050	11,515	10.8	%	18,593	6,987	11,606	11.1	%
Policy loans	8,549	5,627	2,922	2.8	%	8,827	5,681	3,146	3.0	%
Cash collateral for borrowed securities	—	—	—	0.0	%	323	—	323	0.3	%
Other long-term investments (2)	4,950	1,075	3,875	3.7	%	4,951	1,075	3,876	3.7	%
Short-term investments	2,985	1,314	1,671	1.6	%	5,420	2,579	2,841	2.7	%

Subtotal	170,197	63,986	106,211	100.0	%	169,063	64,076	104,987	100.0	%

Invested assets of other entities and operations (3)	14,992	—	14,992			14,031	—	14,031

Total investments	185,189	63,986	121,203			183,094	64,076	119,018

Fixed Maturities by Credit Quality (1):

		March 31, 2003						December 31, 2002
		Financial Services Businesses						Financial Services Businesses
		Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	% of Total		Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	% of Total
Public Fixed Maturities:
NAIC Rating (4)	Rating Agency Equivalent
1	Aaa, Aa, A	49,552	3,605	37	53,120	78.0	%	47,430	2,968	35	50,363	78.0	%
2	Baa	11,817	785	90	12,512	18.4	%	11,281	671	110	11,842	18.3	%
3	Ba	1,633	88	36	1,685	2.5	%	1,730	68	56	1,742	2.7	%
4	B	608	31	18	621	0.9	%	519	20	23	516	0.8	%
5	C and lower	68	6	2	72	0.1	%	94	5	17	82	0.1	%
6	In or near default	61	2	—	63	0.1	%	50	3	1	52	0.1	%

	Total	63,739	4,517	183	68,073	100.0	%	61,104	3,735	242	64,597	100.0	%

Private Fixed Maturities:
NAIC Rating (4)	Rating Agency Equivalent
1	Aaa, Aa, A	4,830	508	4	5,334	31.2	%	4,945	457	5	5,397	31.2	%
2	Baa	7,438	667	14	8,091	47.3	%	7,519	632	23	8,128	47.0	%
3	Ba	2,161	118	22	2,257	13.2	%	2,275	99	41	2,333	13.5	%
4	B	592	27	8	611	3.6	%	597	21	13	605	3.5	%
5	C and lower	636	25	14	647	3.8	%	700	20	24	696	4.0	%
6	In or near default	135	18	2	151	0.9	%	135	4	3	136	0.8	%

	Total	15,792	1,363	64	17,091	100.0	%	16,171	1,233	109	17,295	100.0	%

(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.

Page 28

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES INVESTMENT PORTFOLIO COMPOSITION

(in millions)

	March 31, 2003			December 31, 2002
	Amount	% of Total		Amount	% of Total
Japanese Insurance Operations:
Fixed maturities:
Public, available for sale, at fair value	26,461	75.0	%	25,288	73.2	%
Public, held to maturity, at amortized cost	2,731	7.7	%	2,563	7.4	%
Private, available for sale, at fair value	191	0.5	%	387	1.1	%
Private, held to maturity, at amortized cost	39	0.1	%	46	0.1	%
Trading account assets, at fair value	72	0.2	%	75	0.2	%
Equity securities, available for sale, at fair value	830	2.3	%	901	2.6	%
Commercial loans	3,158	8.9	%	3,158	9.1	%
Policy loans	725	2.1	%	685	2.0	%
Cash collateral for borrowed securities	—	0.0	%	318	1.0	%
Other long-term investments (2)	1,126	3.2	%	1,125	3.3	%
Short-term investments	—	0.0	%	6	0.0	%

Total	35,333	100.0	%	34,552	100.0	%


	March 31, 2003			December 31, 2002
	Amount	% of Total		Amount	% of Total
Financial Services Businesses excluding Japanese Insurance Operations (1):
Fixed maturities:
Public, available for sale, at fair value	38,795	54.6	%	36,687	52.1	%
Public, held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Private, available for sale, at fair value	16,860	23.8	%	16,861	24.0	%
Private, held to maturity, at amortized cost	—	0.0	%	—	0.0	%
Trading account assets, at fair value	59	0.1	%	21	0.0	%
Equity securities, available for sale, at fair value	190	0.3	%	366	0.5	%
Commercial loans	8,357	11.8	%	8,448	12.0	%
Policy loans	2,197	3.1	%	2,461	3.5	%
Cash collateral for borrowed securities	—	0.0	%	5	0.0	%
Other long-term investments (2)	2,749	3.9	%	2,751	3.9	%
Short-term investments	1,671	2.4	%	2,835	4.0	%

Total	70,878	100.0	%	70,435	100.0	%

(1)

(2)

Page 29

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS

(in millions)

	Three Months Ended March 31
	2003						2002
	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	4.88	%	927		(80	)	5.30	%	885		(108	)
Equity securities	0.98	%	3		(44	)	1.50	%	6		(62	)
Commercial loans	6.94	%	199		6		6.83	%	216		1
Policy loans	5.83	%	44		—		5.53	%	39		—
Short-term investments and cash equivalents	1.91	%	28		—		1.71	%	58		17
Other investments	8.92	%	94		10		2.16	%	38		82

Gross investment income before investment expenses	5.15	%	1,295		(108	)	4.92	%	1,242		(70	)
Investment expenses	-0.18	%	(62	)	—		-0.19	%	(68	)	—

Subtotal	4.97	%	1,233		(108	)	4.73	%	1,174		(70	)

Investment results of other entities and operations (2)			51		—				64		—
Less amount relating to divested businesses			—		—				(2	)	—

Total			1,284		(108	)			1,236		(70	)

(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.

Page 30

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—JAPANESE INSURANCE OPERATIONS

(in millions)

	Three Months Ended March 31
	2003						2002
	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	1.69	%	116		8		1.47	%	77		20
Equity securities	0.82	%	2		(42	)	1.01	%	3		(56	)
Commercial loans	4.74	%	37		8		4.49	%	44		2
Policy loans	2.89	%	5		—		2.57	%	4		—
Short-term investments and cash equivalents	0.54	%	—		—		0.55	%	4		18
Other investments	6.65	%	23		(2	)	7.00	%	18		(75	)

Gross investment income before investment expenses	2.16	%	183		(28	)	1.96	%	150		(91	)
Investment expenses	-0.27	%	(23	)	—		-0.11	%	(8	)	—

Total	1.89	%	160		(28	)	1.85	%	142		(91	)

(1)

Page 31

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

FINANCIAL SERVICES BUSINESSES INVESTMENT RESULTS—EXCLUDING JAPANESE INSURANCE OPERATIONS

(in millions)

	Three Months Ended March 31
	2003						2002
	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	6.72	%	811		(88	)	7.24	%	808		(128	)
Equity securities	1.51	%	1		(2	)	2.42	%	3		(6	)
Commercial loans	7.77	%	162		(2	)	7.89	%	172		(1	)
Policy loans	6.72	%	39		—		6.32	%	35		—
Short-term investments and cash equivalents	2.00	%	28		—		2.07	%	54		(1	)
Other investments	10.03	%	71		12		0.53	%	20		157

Gross investment income before investment expenses	6.71	%	1,112		(80	)	6.31	%	1,092		21
Investment expenses	-0.13	%	(39	)	—		-0.23	%	(60	)	—

Total	6.58	%	1,073		(80	)	6.08	%	1,032		21

(1)

(2)

Page 32

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

RECLASSIFIED STATEMENTS OF OPERATIONS—FINANCIAL SERVICES BUSINESSES

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q
		Revenues (1):
5,658		Premiums	1,549		1,948		2,176		2,297		2,212		2,266		2,320		2,448
1,639		Policy charges and fee income	392		483		474		454		434		412		400		407
5,195		Net investment income	1,290		1,344		1,280		1,295		1,236		1,343		1,312		1,288
5,043		Commissions, investment management fees, and other income	1,082		1,140		974		1,067		1,075		1,036		996		976

17,535		Total revenues	4,313		4,915		4,904		5,113		4,957		5,057		5,028		5,119

		Benefits and Expenses (1):
5,979		Insurance and annuity benefits	1,563		2,025		2,229		2,246		2,156		2,267		2,278		2,496
1,618		Interest credited to policyholders’ account balances	382		422		432		434		414		415		434		444
448		Interest expense	108		100		70		48		48		43		43		36
(1,161	)	Deferral of acquisition costs	(296	)	(333	)	(313	)	(333	)	(321	)	(347	)	(360	)	(374	)
800		Amortization of acquisition costs	229		201		244		211		224		260		347		245
3,010		Securities operations non-interest expenses	726		778		678		707		640		641		609		599
5,131		General and administrative expenses	1,121		1,349		1,293		1,585		1,267		1,292		1,246		1,314

15,825		Total benefits and expenses	3,833		4,542		4,633		4,898		4,428		4,571		4,597		4,760

1,710		Adjusted operating income before income taxes	480		373		271		215		529		486		431		359

		Items excluded from adjusted operating income before income taxes:
(378	)	Realized investment gains (losses), net, and related adjustments	246		82		(327	)	(166	)	(101	)	(341	)	(141	)	(290	)
(29	)	Related charges	(4	)	(7	)	4		33		5		(4	)	(1	)	6

(407	)	Total realized investment gains (losses), net, and related charges and adjustments	242		75		(323	)	(133	)	(96	)	(345	)	(142	)	(284	)

—		Sales practices remedies and costs	—		—		—		—		—		—		—		(20	)
(636	)	Divested businesses	(22	)	(60	)	(40	)	(25	)	(8	)	10		(14	)	(68	)
(143	)	Demutualization costs and expenses	(45	)	(117	)	(37	)	(389	)	—		—		—		—

(1,186	)	Total items excluded from adjusted operating income before income taxes	175		(102	)	(400	)	(547	)	(104	)	(335	)	(156	)	(372	)

524		Income (loss) from continuing operations before income taxes	655		271		(129	)	(332	)	425		151		275		(13	)
290		Income tax expense (benefit)	247		13		(191	)	56		158		53		(105	)	(20	)

234		Income (loss) from continuing operations, after-tax	408		258		62		(388	)	267		98		380		7

(1)

Page 33

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

RECLASSIFIED STATEMENTS OF OPERATIONS—INSURANCE DIVISION

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q
		Revenues (1):
3,892		Premiums	1,075		1,128		1,154		1,215		1,186		1,241		1,252		1,356
1,479		Policy charges and fee income	349		356		355		363		358		350		342		347
1,512		Net investment income	394		377		371		377		376		383		395		401
281		Commissions, investment management fees, and other income	57		56		65		53		57		63		58		55

7,164		Total revenues	1,875		1,917		1,945		2,008		1,977		2,037		2,047		2,159

		Benefits and Expenses (1):
3,756		Insurance and annuity benefits	970		1,101		1,193		1,173		1,149		1,206		1,228		1,355
595		Interest credited to policyholders’ account balances	156		152		153		159		147		153		163		170
7		Interest expense	(2	)	4		—		(1	)	—		(1	)	(2	)	(2	)
(770	)	Deferral of acquisition costs	(188	)	(197	)	(185	)	(188	)	(175	)	(207	)	(202	)	(206	)
637		Amortization of acquisition costs	190		164		199		164		158		214		282		181
2,377		General and administrative expenses	529		527		504		631		495		507		505		520

6,602		Total benefits and expenses	1,655		1,751		1,864		1,938		1,774		1,872		1,974		2,018

562		Adjusted operating income before income taxes	220		166		81		70		203		165		73		141

(1)

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

Page 34

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

RECLASSIFIED STATEMENTS OF OPERATIONS—PROPERTY & CASUALTY INSURANCE

(in millions)

Year ended December 31			2001								2002
2000			1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q
		Revenues (1):
1,431		Premiums	383		400		413		431		427		451		450		457
—		Policy charges and fee income	—		—		—		—		—		—		—		—
182		Net investment income	39		35		35		32		35		35		36		38
9		Commissions, investment management fees, and other income	2		2		6		(1	)	—		4		—		1

1,622		Total revenues	424		437		454		462		462		490		486		496

		Benefits and Expenses (1):
921		Insurance and annuity benefits	227		281		311		319		318		355		365		366
—		Interest credited to policyholders’ account balances	—		—		—		—		—		—		—		—
—		Interest expense	—		—		—		—		—		—		—		—
(340	)	Deferral of acquisition costs	(83	)	(92	)	(83	)	(82	)	(79	)	(84	)	(85	)	(90	)
331		Amortization of acquisition costs	87		87		88		85		85		81		84		87
567		General and administrative expenses	134		133		134		144		118		122		125		129

1,479		Total benefits and expenses	365		409		450		466		442		474		489		492

143		Adjusted operating income before income taxes	59		28		4		(4	)	20		16		(3	)	4

(1)

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

Page 35

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2003

RECLASSIFIED STATEMENTS OF OPERATIONS—CORPORATE AND OTHER OPERATIONS

(in millions)

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

539		Total revenues	71		216		26		131		92		89		123		98

		Benefits and Expenses (1):
27		Insurance and annuity benefits	7		9		11		12		27		31		—		43
(3	)	Interest credited to policyholders’ account balances	(1	)	1		1		—		—		—		—		—
385		Interest expense	98		87		60		44		45		39		41		35
105		Deferral of acquisition costs	26		23		17		16		19		21		12		10
(84	)	Amortization of acquisition costs	(21	)	(20	)	(21	)	(20	)	(20	)	(25	)	(21	)	(19	)
54		Securities operations non-interest expenses	12		15		(3	)	13		5		(4	)	8		16
12		General and administrative expenses	(49	)	25		(38	)	78		(4	)	(19	)	(35	)	5

496		Total benefits and expenses	72		140		27		143		72		43		5		90

43		Adjusted operating income before income taxes	(1	)	76		(1	)	(12	)	20		46		118		8

(1)

Page 36

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

KEY DEFINITIONS AND FORMULAS

1. Adjusted operating income before income taxes:

Adjusted operating income is a non-GAAP measure that excludes realized investment gains, net of losses, and related charges and adjustments; results of divested businesses and discontinued operations and sales practices remedies and costs. 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 business.

2. 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.

3. 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).

4. 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.

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 include those used for cash flow timing mismatches at Prudential Financial and investments in equity and debt securities of subsidiaries including amounts utilized for regulatory capital purposes.

7. Borrowings—Investment Related:

Debt issued to finance specific investment assets or portfolios of investment assets, including institutional spread lending investment portfolios, real estate, and real estate related investments held in consolidated joint ventures, as well as institutional and insurance company portfolio cash flow timing differences.

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 37

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

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:

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. 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 38

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

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 investments, corporate debt and the stated aggregate liquidation amount of the Equity Security Units. The ratio is calculated by dividing debt by total capitalization.

29. Redeemable Capital Securities:

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

30. Separate Accounts:

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

31. Wrap-Fee Products:

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

Page 39

Prudential Financial, Inc.
Quarterly Financial Supplement
First Quarter 2003

RATINGS AND INVESTOR INFORMATION

INSURANCE CLAIMS PAYING RATINGS

as of May 6, 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+	NR	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
American Skandia Life Assurance Corporation (1)	A-	A	NR	A+

CREDIT RATINGS:
as of May 6, 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

American Skandia Life Assurance Corporation (1)	NR	A	NR	NR

* NR indicates not rated.
(1) Acquired on May 1, 2003. Results of American Skandia Life Assurance Corporation will be included in the results of the Company commencing with the date of acquisition.

INVESTOR INFORMATION:

Corporate Offices:		Investor Information Hotline:

Prudential Financial, Inc. 751 Broad Street		Dial 877-998-ROCK for additional printed information or inquiries.
Newark, New Jersey 07102
		Web Site:
		www.prudential.com

Publicly Traded Securities:

Common Stock of Prudential Financial, Inc. is traded on the New York Stock Exchange under the symbol PRU.
Equity Security Units of Prudential Financial, Inc. are traded on the New York Stock Exchange under the symbol PFA.

Page 40

Form: 8-K

Documents