Form: 10-K

Annual report [Section 13 and 15(d), not S-K Item 405]

Documents

Exhibit 12.1

PRUDENTIAL FINANCIAL, INC.

RATIO OF EARNINGS TO FIXED CHARGES

 

     Year Ended December 31,
     2008     2007    2006    2005    2004
                ($ in millions)          

Earnings:

              

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

    $ (1,736 )   $ 5,086    $ 4,716    $ 4,488    $ 3,338

Less:

              

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

      (1,026 )     109      70      281      116

Interest capitalized

      5       6      —        —        —  
                                   

Adjusted earnings

      (715 )     4,971      4,646      4,207      3,222
                                   

Add fixed charges:

              

Interest credited to policyholders’ account balances

      2,335       3,222      2,917      2,699      2,359

Gross interest expense(1)

      1,340       1,435      1,161      775      492

Interest component of rental expense

      64       60      58      64      66
                                   

Total fixed charges

      3,739       4,717      4,136      3,538      2,917
                                   

Total earnings plus fixed charges

    $ 3,024     $ 9,688    $ 8,782    $ 7,745    $ 6,139
                                   

Ratio of earnings to fixed charges (2)

      —         2.05      2.12      2.19      2.10
                                   

 

(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 year ended December 31, 2008, the ratio coverage was less than 1:1 and is therefore not presented. Additional earnings of $715 million would have been required for the year ended December 31, 2008 to achieve a ratio of 1:1.