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,
2009		     Three Months
Ended
September 30,
2009		   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)

   $ 931      $ 944   $ (1,793 )    $ 5,020   $ 4,659   $ 4,479   $ 3,338

Less:

              

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

     (153 )      25     (1,026 )      109     70     281     116

Interest capitalized

     —          —       5        6     —       —       —  
                                             

Adjusted earnings

     1,084        919     (772 )      4,905     4,589     4,198     3,222
                                             

Add fixed charges:

              

Interest credited to policyholders’ account balances

     3,585        1,317     2,335        3,222     2,917     2,699     2,359

Gross interest expense(2)

     875        283     1,401        1,502     1,217     785     492

Interest component of rental expense

     55        19     64        60     58     64     66
                                             

Total fixed charges

     4,515        1,619     3,800        4,784     4,192     3,548     2,917
                                             

Total earnings plus fixed charges

   $ 5,599      $ 2,538   $ 3,028      $ 9,689   $ 8,781   $ 7,746   $ 6,139
                                             

Ratio of earnings to fixed charges(3)

     1.24        1.57     —          2.03     2.09     2.18     2.10
                                             

 

(1) Excludes earnings attributable to noncontrolling interests.
(2) 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 the authoritative guidance on accounting for uncertainty in income taxes. The Company’s policy is to classify such interest in income tax provision in the consolidated statements of operations.
(3) 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 $772 million would have been required for the year ended December 31, 2008 to achieve a ratio of 1:1.