Form: 10-Q

Quarterly report [Sections 13 or 15(d)]

Documents

Exhibit 12.1

 

PRUDENTIAL FINANCIAL, INC.

RATIO OF EARNINGS TO FIXED CHARGES

 

    Nine months
ended
September 30,
2008		     Three months
ended
September 30,
2008		     Year Ended December 31,
        2007   2006   2005   2004   2003
    ($ in millions)

Earnings:

              

Income (loss) from continuing operations before income taxes, extraordinary gain on acquisition and cumulative effect of accounting change

  $ 396     $ (393 )   $ 5,086   $ 4,716   $ 4,488   $ 3,338   $ 1,948

Less:

              

Undistributed income (loss) of investees accounted for under the equity method

     (230 )     (212 )     109     70     281     116     94

Interest capitalized

     4       1       6     —       —       —       —  
                                             

Adjusted earnings

     622       (182 )     4,971     4,646     4,207     3,222     1,854
                                             

Add fixed charges:

              

Interest credited to policyholders’ account balances

     1,878       496       3,222     2,917     2,699     2,359     1,857

Gross interest expense(1)

     999       333       1,435     1,161     775     492     403

Interest component of rental expense

     47       16       60     58     64     66     103
                                             

Total fixed charges

     2,924       845       4,717     4,136     3,538     2,917     2,363
                                             

Total earnings plus fixed charges

   $ 3,546     $ 663     $ 9,688   $ 8,782   $ 7,745   $ 6,139   $ 4,217
                                             

Ratio of earnings to fixed charges(2)

     1.21       —         2.05     2.12     2.19     2.10     1.78
                                             

 

(1) Interest expense on short-term and long-term debt. Includes interest expense of securities businesses reported in “Net investment income” in the Consolidated Statements of Operations, capitalized interest and amortization of debt discounts and premiums. Interest expense does not include interest on liabilities recorded under Financial Accounting Standards Board (“FASB”) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes,” an Interpretation of FASB Statement No. 109. The Company’s policy is to classify such interest in income tax provision in the consolidated statements of operations.
(2) Due to the Company’s loss for the three months ended September 30, 2008, the ratio coverage was less than 1:1 and is therefore not presented. Additional earnings of $182 million would have been required for the three months ended September 30, 2008 to achieve a ratio of 1:1.