June 18, 2013 - EX-99.2 - 8-K: Current report | Prudential Financial, Inc. (PRU)

June 18, 2013

Prudential Financial, Inc.

Financial Strength Symposium

Exhibit 99.2

Forward-Looking Statements

Financial Strength Symposium 6.18.2013

Certain of the statements included in this presentation constitute forward-looking statements within the meaning of the U. S. Private Securities

Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,”

“intends,” “should,” “will,” “shall,” or variations of such words are generally part of forward-looking statements. Forward-looking statements are

made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential

Financial, Inc. and its subsidiaries. There can be no assurance that future developments affecting Prudential Financial, Inc. and its

subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and

involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from

expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political

conditions, including the performance and fluctuations of fixed income, equity, real estate and other financial markets; (2) the availability and

cost of additional debt or equity capital or external financing for our operations; (3) interest rate fluctuations or prolonged periods of low interest

rates; (4) the degree to which we choose not to hedge risks, or the potential ineffectiveness or insufficiency of hedging or risk management

strategies we do implement, with regard to variable annuity or other product guarantees; (5) any inability to access our credit facilities;

(6) reestimates of our reserves for future policy benefits and claims; (7) differences between actual experience regarding mortality, longevity,

morbidity, persistency, surrender experience, interest rates or market returns and the assumptions we use in pricing our products, establishing

liabilities and reserves or for other purposes; (8) changes in our assumptions related to deferred policy acquisition costs, value of business

acquired or goodwill; (9) changes in assumptions for retirement expense; (10) changes in our financial strength or credit ratings; (11) statutory

reserve requirements associated with term and universal life insurance policies under Regulation XXX and Guideline AXXX; (12) investment

losses, defaults and counterparty non-performance; (13) competition in our product lines and for personnel; (14) difficulties in marketing and

distributing products through current or future distribution channels; (15) changes in tax law; (16) economic, political, currency and other risks

relating to our international operations; (17) fluctuations in foreign currency exchange rates and foreign securities markets; (18) regulatory or

legislative changes, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; (19) inability to protect our intellectual

property rights or claims of infringement of the intellectual property rights of others; (20) adverse determinations in litigation or regulatory

matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (21) domestic or

international military actions, natural or man-made disasters including terrorist activities or pandemic disease, or other events resulting in

catastrophic loss of life; (22) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks;

(23) effects of acquisitions, divestitures and restructurings; (24) interruption in telecommunication, information technology or other operational

systems or failure to maintain the security, confidentiality or privacy of sensitive data on such systems; (25) changes in statutory or U.S. GAAP

accounting principles, practices or policies; (26) Prudential Financial, Inc.’s primary reliance, as a holding company, on dividends or

distributions from its subsidiaries to meet debt payment obligations and the ability of the subsidiaries to pay such dividends or distributions in

light of our ratings objectives and/or applicable regulatory restrictions; and (27) risks due to the lack of legal separation between our Financial

Services Businesses and our Closed Block Business. Prudential Financial, Inc. does not intend, and is under no obligation, to update any

particular forward-looking statement included in this presentation.

See “Risk Factors” included in Prudential Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012 for discussion

of certain risks relating to our businesses and investment in our securities.

Prudential Financial, Inc. of the United States is not affiliated with Prudential PLC which is headquartered in the United Kingdom.

Non–GAAP Measures

Financial Strength Symposium 6.18.2013

This presentation includes references to “adjusted operating income.” Adjusted operating income is a non-GAAP measure of performance of our Financial

Services Businesses. Adjusted operating income excludes “Realized investment gains (losses), net,” as adjusted, and related charges and adjustments. A

significant element of realized investment gains and losses are impairments and credit-related and interest rate-related gains and losses. Impairments and

losses from sales of credit-impaired securities, the timing of which depends largely on market credit cycles, can vary considerably across periods. The timing

of other sales that would result in gains or losses, such as interest rate-related gains or losses, is largely subject to our discretion and influenced by market

opportunities as well as our tax and capital profile.

Realized investment gains (losses) within certain of our businesses for which such gains (losses) are a principal source of earnings, and those associated

with terminating hedges of foreign currency earnings and current period yield adjustments are included in adjusted operating income. Adjusted operating

income excludes realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are

part of a hedging program related to the risk of those products. Adjusted operating income also excludes gains and losses from changes in value of certain

assets and liabilities relating to foreign currency exchange movements that have been economically hedged or considered part of our capital

funding strategies for our international subsidiaries, as well as gains and losses on certain investments that are classified as other trading account assets.

Adjusted operating income also excludes investment gains and losses on trading account assets supporting insurance liabilities and changes in experience-

rated contractholder liabilities due to asset value changes, because these recorded changes in asset and liability values are expected to ultimately accrue to

contractholders. Trends in the underlying profitability of our businesses can be more clearly identified without the fluctuating effects of these transactions. In

addition, adjusted operating income excludes the results of divested businesses, which are not relevant to our ongoing operations. Discontinued operations,

which is presented as a separate component of net income under GAAP, is also excluded from adjusted operating income.

We believe that the presentation of adjusted operating income as we measure it for management purposes enhances understanding of the results of

operations of the Financial Services Businesses by highlighting the results from ongoing operations and the underlying profitability of our businesses.

However, adjusted operating income is not a substitute for income determined in accordance with GAAP, and the adjustments made to derive adjusted

operating income are important to an understanding of our overall results of operations.

Return on equity (“ROE”) based on adjusted operating income is determined by dividing adjusted operating income after-tax (giving effect to the direct equity

adjustment for earnings per share calculation) by average attributed equity for the Financial Services Businesses excluding accumulated other

comprehensive income.

Our expectations of ROE potential are based on after-tax adjusted operating income. Because we do not predict future realized investment gains / losses or

recorded changes in asset and liability values that are expected to ultimately accrue to contractholders, we cannot provide a measure of our ROE

expectations based on income from continuing operations of the Financial Services Businesses, which is the GAAP measure most comparable to adjusted

operating income.

The information referred to above, as well as the risks of our businesses described in our Annual Report on Form 10-K for the year ended December 31,

2012, should be considered by readers when reviewing forward-looking statements contained in this presentation. Additional historical information relating to

our financial performance is located on our Web site at www.investor.prudential.com.

Reconciliation for Individual Annuities Pre-Tax Adjusted

Operating Income excluding Indicated Disclosed Items

Financial Strength Symposium 6.18.2013

2007

2008

2009

2010

2011

2012

Individual Annuities pre-tax adjusted operating income

652

(955)

672

950

662

1,039

Reconciling items:

Unlockings and experience true-ups

(1)

(1,320)

359

336

(222)

Write off of Allstate goodwill

(97)

Reinsurance contract refinement

(2)

Expenses estimated in excess of baseline level

(17)

Impairment of capitalized software

(9)

Sub-total

(1,417)

359

361

(222)

Individual Annuities pre-tax adjusted operating income

excluding disclosed items indicated above

572

462

313

589

884

984

1) included adjustments of amortization of deferred policy acquisition costs and other amortization items, and reserves for

guaranteed minimum death and income benefits

2) represents refinements based on a review and settlement of reinsurance contracts related to acquired business

Reconciliation for International Insurance Pre-Tax Adjusted

Operating Income excluding Indicated Disclosed Items

2008

2009

2010

2011

2012

International Insurance pre-tax adjusted operating income

1,581

1,651

1,887

2,263

2,704

Reconciling items:

China Pacific gains

237

Star / Edison transaction and integration costs

(213)

(138)

Sub-total

(78)

International Insurance pre-tax adjusted operating income excluding

disclosed items indicated above

1,581

1,651

1,821

2,239

2,782

Financial Strength Symposium 6.18.2013

Prudential Financial, Inc.

Robert Falzon

Executive Vice President and

Chief Financial Officer

Prudential Financial, Inc.

Delivering Superior Value

Financial Strength Symposium 6.18.2013

Superior Value

Proposition for

Customers,

Creditors &

Investors

Sustainable

ROE

Strong

Ratings

Financial

Strength

Capital

Redeployment

Organic

Growth

from Superior

Business

Mix

Financial

Strength

Key Drivers of ROE

Financial Strength Symposium 6.18.2013

Talent Imperative

(1) For the Financial Services Businesses (“FSB”). The target is based on after-tax adjusted operating income as well as an average equity

assumption.

ROE Target of

13-14% in 2013

(1)

Financial Strength Founded in Business Approach

Financial Strength

Begins with

Selection of

Businesses

and Risks

•

Quality businesses

•

Market leader

•

Seasoned management

•

Strong fundamentals

•

Credible diversification

through mix of businesses

and risks

•

Superior execution on

acquisitions and capital

redeployment that:

•

Complement established

strategies

•

Leverage capabilities

•

Appropriate and

sustainable ROE

Financial Strength Symposium 6.18.2013

Value Added Business Models

Financial Strength Symposium 6.18.2013

Solutions to

address growing

retirement and

protection needs

in the world’s

largest markets

Actuarial

Skills

Investment

Skills

Risk

Management

Capabilities

Strategic initiatives in targeted growth markets

Competitive position in critical retail and institutional distribution

channels driven by brand, financial strength and product innovation

Diversified Mix of High Quality Businesses and Risks

Financial Strength Symposium 6.18.2013

Pre-tax AOI for Financial Services Businesses excludes Corporate and Other operations.

Insurance

Risk

Market

Risk

International

Insurance

Individual

Life

Group Insurance

Retirement

Individual Annuities

Asset

Management

Superior Execution on Acquisitions and Capital Redeployment

Financial Strength Symposium 6.18.2013

June 2010:

Korean

Asset Mgt.

Operations

Disposition

First half 2012:

Discontinued

Sales of

Long-term

Care Insurance

Dec. 2011:

Afore XXI

(Mexican

Asset Mgt.)

Disposition

Dec. 2011:

Prudential Real

Estate &

Relocation

Services

Disposition

November

2012:

Pension

Risk

Transfer

Transaction

($25 billion)

Domestic Acquisitions

Joint Ventures

Dispositions/

Discontinued Operations

April 2001:

Kyoei Life

(now

Gibraltar)

Japan

($1.2 billion)

May 2003:

American

Skandia

Variable

Annuities

($1.2 billion)

July 2003:

JV of

Prudential

Securities

Retail

Brokerage with

Wachovia Sec.

($1.0 billion)

April 2004

CIGNA

Retirement

Business

May 2006:

Allstate’s

Variable

Annuity

Business

($0.6 billion)

February

2011:

Star/Edison

Japan

($4.2

billion)

August 1999:

Healthcare

Disposition

4Q 2003:

Property &

Casualty

Disposition

Dec. 2009:

Sale of JV Interest to

Wells Fargo

$4.5 billion

July 2011:

Global

Commodities

Disposition

Pension Risk Tranfer

Transactions

December

2012:

Verizon

Pension

Risk

Transfer

Transaction

($8 billion)

January

2013:

Hartford’s

Individual

Life

Business

($0.6 billion)

International Acquisitions

($2.1 billion)

Roadmap to Sustainable and Appropriate ROE

(1)

Financial Strength Symposium 6.18.2013

2011

BASELINE

(2)

11%

2013

TARGET

-14%

CAPITAL DEPLOYMENT

•

PRT

•

Hartford

•

Shareholder Distributions

BUSINESS ROE EXPANSION

•

Higher Margins

•

Business Growth

•

Star/Edison Integration

1) For Financial Services Businesses (FSB). Based on average attributed equity excluding total accumulated other comprehensive income.

2) Represents Return on Equity (ROE) for the FSB excluding market driven and discrete items disclosed in the Company’s earnings press releases.

Reflects the adoption of amended accounting guidance for deferred policy acquisition costs effective January 1, 2012, and the discretionary change in

accounting principle related to the Company's pension plans.

Foreign Currency Risk Management

Financial Strength Symposium 6.18.2013

Accounting

Remeasurement

Asset-Liability

Management

Shareholder Value in US$

•

Income and Cash Flow

•

Equity Value

Non-Economic Noise

Well Matched FX

Comprehensive

Hedging Program

Potential Exposure

Risk Management

Japanese Yen Income Hedge

•

Roughly 50% of Japan’s earnings are Yen-based

•

Yen-based

AOI

hedged

over

month

rolling

basis

using

series

forwards

with

laddered maturities

•

The Yen plan rate is derived from the weighted average hedged rate

•

Hedging Yen-based AOI protects the USD value of Japan capital repatriation

Income Hedges

2013

2014

2015

2016

% of Yen AOI Hedged

(1)

100%

~80%

~35%

~5%

Plan Rates (¥/$)

¥80

(1) Percentage of expected yen-based adjusted operating income hedged as of 3/31/13.

Financial Strength Symposium 6.18.2013

Edward Baird

Executive Vice President and

Chief Operating Officer, International

Prudential International Insurance

Financial Strength Symposium 6.18.2013

Key Messages

•

Proven strategy and successful execution

•

High ROE, steady AOI growth, low volatility

•

Core Life Planner model supplemented by multiple channels

•

Leading position in Japan, expanding in other markets

Financial Strength Symposium 6.18.2013

Overview

Financial Strength Symposium 6.18.2013

2012 Snapshot

Market Leader in Japan

2012 Operation Highlights

(1)

Annual Sales

In-force Policies

In-force Face Amount

Captive Agents

Bank Partners

Independent Agencies

Employees

Pre-Tax AOI

AOI

CAGR

(2007

2012)

ROE

$4 billion

12 million

$877 billion

~18,000

70+

~3,400

~28,000

$2.8 billion

15%

17.5%

Broad Channel & Product Diversification

1) Pre-tax Adjusted Operating Income (AOI) excludes Star / Edison integration costs and gains on China Pacific investment. Return on Equity (ROE) is based on

after-tax AOI excluding aforementioned items and overall effective tax rate for the Financial Services Businesses. Foreign denominated activity and face

amount are translated into U.S. dollars at 2013 plan exchange rates including Japanese yen 80 per U.S. dollar, and Korean won 1,160 per U.S. dollar. U.S.

denominated activity is included based on the amounts as transacted in U.S. dollars.

Financial Strength Symposium 6.18.2013

Our Historical Strategy and

Business Model…

…Is the Foundation For Our

Evolving Strategy

Concentrate on a limited number of

attractive countries

Target the affluent and mass-

affluent consumer

Needs-based selling

Proprietary distribution based on

selective recruiting, professional

training, performance-based

variable compensation

Historical focus on death

protection insurance

Concentrate on a limited number of

attractive countries

Expand the breadth and depth of our

capabilities in those countries

Target middle to mass-affluent

consumer and small/medium

business market

Diversify distribution and products to

meet additional customer needs

Maintain our proven discipline,

quality, and execution

in all markets,

channels, products, and customer

relationships

The Evolution of our International Strategy

Financial Strength Symposium 6.18.2013

$538

$525

$65

$210

$175

$114

United

States

Japan

Asia ex-

Japan

Latin

America

United

Kingdom

France

Germany

World Life Insurance Markets

•

Japan is the largest market in the world after the U.S.

•

South East Asia is growing fast, but the market size is still small (<2% of world)

Source: Swiss Re. Based on 2011 life premium volume, foreign denominated activity translated to U.S. dollars at average exchange rates for 2011.

World total life premiums are $2,627 billion. Chart not inclusive of the remainder of Europe, Africa, Oceania and Canada.

2011 Life Insurance Premiums

(1)(2)

($ billions)

$417

China

Korea

Taiwan

India

SE Asia

Other

Financial Strength Symposium 6.18.2013

Growing Sales Throughout Multiple Channels

Annualized New Business Premiums

(1)

$1,389

$1,545

$1,929

$3,157

$4,051

•

Bank

and

Independent

Agency

channels

supplement

tied

agency

channels

($ millions)

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2008

2009

2010

2011

2012

Independent Agency

Bank

Life Consultant

Life Planner

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar; Korean

won 1,160 per U.S. dollar.

Financial Strength Symposium 6.18.2013

2008

2009

2010

2011

2012

All Others

Taiwan

Brazil

Korea

Japan Success Supplemented by Other Markets

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Korean won 1,160 per U.S. dollar.

Annualized New Business Premiums

(1)

Ex Japan

$355

$311

$270

$271

$229

($ millions)

Financial Strength Symposium 6.18.2013

2008

2009

2010

2011

2012

Investment Margin

Mortality, Expense

& Other Margin

Sustained Earnings Growth Through

Challenging Markets and Events

Pre-tax AOI excludes the net of Star / Edison transaction and integration costs and gains on China Pacific investment of $66 million in 2010, $24 million in 2011,

and $(78) million in 2012.

CAGR based on 2007 –

2012 (5 Year).

Pre-Tax Adjusted Operating Income

(1)

($ millions)

$1,581

$1,651

$1,821

$2,239

$2,782

Financial Strength Symposium 6.18.2013

21.2%

15.9%

17.5%

2010

2011

2012

High Return on Equity Driven by Fundamentals

Based on after-tax AOI of our International Insurance operations excluding Star

/ Edison transaction and integration costs and gains on China Pacific investment,

using overall effective tax rate for the Financial Services Businesses and associated attributed equity.

Return on Equity

(1)

•

Star / Edison integration contributes to ROE performance

Financial Strength Symposium 6.18.2013

Life Planner / Prudential of Japan

Financial Strength Symposium 6.18.2013

Beneficial Cycle of Life Planner Model

Superior

Returns &

Steady

Growth

•

Providing financial security over lifetime of customers drives our beneficial cycle

High Income

for Life

Planner

High

Customer

Satisfaction

Quality

Referrals

Data based on 2012 Prudential of Japan (POJ). Annualized new business premiums produced by each Life Planner (LP) in a month; foreign denominated activity

translated to U.S. dollars at uniform exchange rate, Japanese yen 80 per U.S. dollar. Number of new policies sold per LP per month, including medical and cancer

policies.

Total

retention

for

agents

all

service

years.

month

policy

persistency

measured

based

face

amount,

12-month

rolling

average

data.

Productivity

$26,700 AP per LP month

7.5 policies per LP month

(1)

Retention

90.5%

(1)

Persistency

95.0%

(1)

High Policy

Persistency

Quality

People

Quality

Products

Quality

Service

High Life

Planner

Productivity

High Life

Planner

Retention

Financial Strength Symposium 6.18.2013

Quality People

•

Industry leading Million Dollar Round Table memberships

•

Prudential of Japan has the highest number of MDRT members in the Japanese

industry for 16 consecutive years

(1)

MDRT Japan Membership

(1)

29% of POJ Life Planners

are MDRT members –

Highest percentage

in industry

(1)

945

665

445

300

157

115

111

Source: Million Dollar Round Table Association, Japan - membership data as of 4/18/13.

Financial Strength Symposium 6.18.2013

Quality Business

Prudential of Japan

Month

Retention

(1)

Life

Planner

Productivity

(1)

•

Quality focused Life Planner operation drives both the top-line and the bottom-

line growth

Total

Retention

(1)

$17,500

$17,800

$19,900

$22,000

$26,700

83.3%

80.7%

82.1%

88.3%

87.0%

89.9%

90.5%

2008

2009

2010

2011

2012

79.7%

78.7%

Annualized new business premiums produced by each LP in a month. Total LP retention for Life Planners in all service years; percentage of Life

Planners at beginning of year who are still active at end of year. 12th month LP retention based on 12-month rolling average data.

Financial Strength Symposium 6.18.2013

Quality Service

•

According to J.D. Power Asia Pacific, Prudential of Japan is the

highest in

customer satisfaction for three years in a row

•

Satisfied customers, high policy persistency

Customer Satisfaction

(1)

Policy

Persistency

(2)

95%

2011

2012

2013

J.D.

Power

Asia

Pacific

2011

2013

Japan

Life

Insurance

Contract

Satisfaction

Studies

and

2011

2013

Japan

Life

Insurance

Claim

Satisfaction

Studies . Contract Satisfaction Study based on a total of 4,490 life insurance policyholders who purchased or renewed coverage during the past year.

Claim Satisfaction

Study

based

total

3,776

policyholders

who

filed

claims

for

medical

benefits

during

the

past

year.

japan.jdpower.com

13 month policy persistency for 2012.

Financial Strength Symposium 6.18.2013

2008

2009

2010

2011

2012

Retirement

Accident & Health

Death Protection

Current Customers are Excellent Prospects

for Additional Coverage to Meet Needs

Annualized New Business Premiums

(1)

POJ Second Sales to Existing Customers

$107

$118

$123

$147

$192

($ millions)

Data based on Prudential of Japan sales to individual market; foreign denominated activity translated to U.S. dollars at uniform

exchange rates; Japanese yen 80 per U.S. dollar.

Financial Strength Symposium 6.18.2013

Payoff from Quality

•

Superior business drivers of LP model significantly increase the

lifetime

production of agent

Lifetime Sales of Agents

(1)

POJ Life Planners

Traditional Agent

+ LP Retention

+ LP Productivity

Assumptions for traditional agent: AP Productivity = $6,000 per month; Agent Retention (Year 1/ Year 2/ Year 3+) = 55%/ 60%/ 80%

POJ LP: AP Productivity = $26,700 per month; Agent Retention (Year 1/ Year 2/ Year 3+) = 82%/ 80%/ 91%

3,165

3,284

1Q12

1Q13

$0.2 million

$0.6 million

$2.3 million

Cumulative Sales

($ millions)

Service Year

Financial Strength Symposium 6.18.2013

Life Planner Model Growth –

Business Drivers

•

Life Planner growth + productivity improvement results in superior performance

Number of

Life Planners

AP Productivity

Annualized New

Business

Premiums

(1)

6,166

7,058

$16,600

$12,800

$899m

$1,347m

5 Year CAGR (2007 –

2012)

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar; Korean

won 1,160 per U.S. dollar.

Financial Strength Symposium 6.18.2013

Life Planner Model Growth –

Financial Performance

•

Sales growth + high persistency results in strong financial performance

Operating Revenue

Pre-tax Adjusted

Operating Income

$5,407m

$9,002m

$867m

$1,481m

11%

5 Year CAGR (2007 –

2012)

Annualized New

Business Premiums

$899m

$1,347m

(1)

(2)

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar; Korean

won 1,160 per U.S. dollar.

Reported basis – translated based on applicable average exchange rates for respective periods.

Financial Strength Symposium 6.18.2013

Prudential of Japan Sales Trend

($ millions)

Annualized New Business Premiums

(1)

Higher than run-rate due to:

USD product re-pricing

Tax law change

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar.

CAGR based on 2009 – 2013 (1Q).

Financial Strength Symposium 6.18.2013

Gibraltar Life

Financial Strength Symposium 6.18.2013

Integration Progress by Numbers…

•

Incurred integration costs through 1Q13

•

Total expected pre-tax integration costs

•

Down $100 million from original estimate

•

Targeted annual cost savings

•

~80% realized by 2012, 90% by 2013 on a run-rate basis

•

Continue to “Prudentialize”

sales force

•

De-risked investment portfolio to align with Prudential standards

•

Replaced lower margin product portfolio with higher margin products

•

Enhanced risk management and internal controls

Star/Edison Integration Substantially Complete

$315 million

$400 million

$250 million

Financial Strength Symposium 6.18.2013

Gibraltar Life –

Life Consultant Count and Sales

Historical Life Consultant Count & Sales

•

Acquired Kyoei Life in 2001 –

Life Consultant count reduced while sales grew

Annualized

New Business

Premiums ($m)

(1)

(3)

Count

$132

(2)

First full quarter sales

6,281 LC’s

in Dec. 2010

7,457 LC’s

in April 2001

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar.

Average quarterly annualized new business premiums in 2010.

Life Consultant (LC).

Financial Strength Symposium 6.18.2013

Gibraltar Life –

Post Star/Edison Acquisition

•

Acquired Star and Edison in February 2011, added 7,300 agents upon acquisition

Life Consultant Count & Sales

Annualized

New Business

Premiums ($m)

(1)

LC Count

(2)

(3)

$132

$162

$189

$217

2010

1Q11

1Q12

1Q13

6,281

13,227

12,219

10,252

Gibraltar / Star / Edison

Merge Implemented

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar.

One month of sales activities from Star and Edison included, due to one month lag reporting.

Average quarterly annualized new business premiums in 2010.

Financial Strength Symposium 6.18.2013

Life Consultant Sales Trend

($ millions)

Annualized New Business Premiums

(1)

Higher than run-rate due to:

USD product re-pricing

Tax law change

Post Star/Edison Acquisition

$50

$100

$150

$200

$250

$300

$350

1Q09

1Q10

1Q11

1Q12

1Q13

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar.

CAGR based on 2009 – 2013 (1Q).

Financial Strength Symposium 6.18.2013

Bank Channel

Financial Strength Symposium 6.18.2013

Bank Channel Distribution Brings Growth & Challenges

•

Enhances access to expanded

customer base

and investable

wealth

•

Strong growth potential

through

development of new banking

relationships

•

Competitive product portfolio

meets bank customer needs

•

Strong brand name attracts

security focused customers

•

Leverages infrastructure costs

Advantages

•

Less influence over distribution

•

Sales can be volatile

due to

changes in interest rates and

competitor actions

•

Profitability

can vary with

changes in product mix

Challenges

Financial Strength Symposium 6.18.2013

Bank Channel Distribution –

Prudential’s Response

•

Focused on profitable growth

•

Supplemental to captive channels

•

Actively manage the channel

–

Attractive margins Active in the market

–

Unattractive margins Willing to pull back

•

Recent actions in response to interest rate declines

–

Sales caps

–

Lowered guaranteed interest rate on yen single premium whole life from

1.0% to 0.8%

–

Reduced commission rates

•

Will not compete based on price

Financial Strength Symposium 6.18.2013

2008

2009

2010

2011

2012

1Q12

1Q13

USD Whole Life &

Retirement Income

JPY Single Premium

Whole Life

All Other

Bank Channel Sales Growth

Annualized New Business Premiums

(1)

($ millions)

$56

$138

$341

$600

$1,422

$190

$223

•

Significant sales growth in 2011 and 2012 driven by JPY single premium

whole life

•

Partnering with all mega-banks in Japan. 70+ bank partners in total.

Sales of JPY

single premium

whole life have

declined in 2013

following the

re-pricing

in January

Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 80 per U.S. dollar.

Financial Strength Symposium 6.18.2013

Affluent

Strategic Expansion Framework

Death protection

Customer

Segment

Whole life & Term

Primary

Customer

Needs

Product

Solution

•

Meeting evolving customer needs through product and channel expansion

+ Mass affluent

+ Business owners

+ Retirement

+ Business planning

+ Accident & Health

+ Retirement income

+ USD products

Distribution

Life Planner

Financial Strength Symposium 6.18.2013

Affluent

Strategic Expansion Framework

Death protection

Customer

Segment

Whole life & Term

Primary

Customer

Needs

Product

Solution

+ Middle class

+ Teachers

•

Meeting evolving customer needs through product and channel expansion

+ Mass affluent

+ Business owners

+ Retirement

+ Business planning

+ Accident & Health

+ Retirement income

+ USD products

Distribution

+ Multi-currency fixed

annuity

Death protection

+ Retirement

Whole life & Term

+ Accident & Health

+ Retirement income

+ USD products

Life Planner

Life Consultant

Financial Strength Symposium 6.18.2013

Affluent

Strategic Expansion Framework

Death protection

Customer

Segment

Whole life & Term

Primary

Customer

Needs

Product

Solution

3 Party Channels

Bank / Independent Agency

+ High net worth

+ Savings

+ Single pay insurance

+ Middle class

+ Teachers

•

Meeting evolving customer needs through product and channel expansion

Captive Channels

+ Mass affluent

+ Business owners

+ Retirement

+ Business planning

+ Accident & Health

+ Retirement income

+ USD products

Distribution

+ Multi-currency fixed

annuity

Death protection

+ Retirement

Whole life & Term

+ Accident & Health

+ Retirement income

+ USD products

+ Business owners

Death protection

+ Retirement

+ Business planning

+ Multi-currency fixed

annuity

Whole life & Term

+ Accident & Health

+ Retirement income

+ USD products

Life Planner

Life Consultant

Financial Strength Symposium 6.18.2013

Key Takeaways

•

Solid business model with sustained track record of success

•

High ROE, steady AOI growth, low volatility: returns and earnings primarily the

result of stable drivers

•

Leading position in Japanese market (second largest market in the world),

strengthened by Star / Edison acquisition

•

Competitive advantages in distribution based on core Life Planner model, coupled

with financial strength and reputation, driving growth across multiple channels

•

Strong growth prospects enhanced by product portfolio serving lifetime financial

security needs

Prudential’s U.S. Businesses

Charles Lowrey

Executive Vice President and

Chief Operating Officer, U.S.

•

Executive Summary

•

Overall U.S. Strategy

•

Review of U.S. Businesses

•

Conclusion

Agenda

Financial Strength Symposium 6.18.2013

•

Our U.S. businesses are positioned to benefit from a cyclical recovery, as well as from

favorable secular growth trends, and to achieve appropriate returns

–

Retirement

–

Pension plan de-risking

–

Longevity

–

Individual asset accumulation

•

Our primary focus is on profitable growth rather than on market share

–

Expected returns drive decisions

–

Sales volume is an outcome

•

We have taken steps to reduce volatility

–

Significantly scaled back Asset Management’s strategic investing

–

Modified variable annuity benefits

•

We are pursuing opportunities that capitalize on our combined set of business capabilities

–

Pension Risk Transfer solutions

–

Other platforms for asset management flows

Executive Summary

Financial Strength Symposium 6.18.2013

Agenda

•

Executive Summary

•

Overall U.S. Strategy

•

Review of U.S. Businesses

•

Conclusion

Financial Strength Symposium 6.18.2013

There are Three Elements to our U.S. Strategy

•

Consistently focus on execution

–

Manage profitability through pricing discipline and operational efficiency

–

Carefully manage distribution systems

•

Within each business, identify and pursue additional profitable growth opportunities

–

Focus

secular

growth

trends

within

broader

set

addressable markets

•

Enhance our competitive advantage by leveraging the distinctive combination of

capabilities across our businesses

Financial Strength Symposium 6.18.2013

–

Product capabilities with respect to Insurance, Asset Management, and Retirement and Annuities

–

Capital and Risk Management capabilities

Trends

Opportunities

Prudential Solutions

Retirement Wave

•

10,000 retirees every day through 2030

•

Retirees and near-retirees control vast

majority of investable assets

•

Outcome-oriented products

•

Retirement income

Retirement Savings

Adequacy Gap

•

Generations X and Y need to increase

retirement savings

•

Innovative solutions to drive

higher savings, both in and out of

retirement plans

Changing U.S.

Retirement System

•

Fundamental change in how corporate

defined benefit (DB) plans are managed

•

Increased reliance on defined contribution

(DC) plans

•

Liability-driven investing

•

Pension Risk Transfer

•

Stable Value

•

DB-like outcomes

Longevity

•

A 65 year-old has a 26% chance of living to

90, and an 11% chance of living to 100

•

Retirement income

•

Living benefits

•

Longevity insurance

Investment

Strategies

•

Shift from focus on relative benchmark

returns to solutions that offer guarantees,

risk control, upside participation

•

Institutional and retail outcome-

oriented solutions that leverage

asset management, risk

management, and insurance

capabilities

Collateral Effects of

Healthcare Reform

•

Employers are revisiting overall employee

benefits strategy

•

Group voluntary products

Several Trends are Creating Opportunities

Across our Markets

Financial Strength Symposium 6.18.2013

Our Businesses are Positioned to Capitalize on

Market Opportunities

•

We like our business mix

–

Divested non-core businesses

–

Discontinued sales of non-core products

–

Increased scale and capabilities in insurance through acquisition

–

Expanded our retirement presence through Investment Only Stable Value and

Pension Risk Transfer

•

Our portfolio of businesses provides diversification of risk exposure

–

Equity markets

–

Interest rate levels

–

Mortality and longevity

•

We serve a broad set of institutional and retail customers through multiple

distribution channels

–

Cross-business management of key client, distribution, and consultant relationships

Financial Strength Symposium 6.18.2013

1,500

Asset Management clients

7,900

Retirement DB and DC plans

22,500

Group institutional clients

We have an Extensive Presence across the

Institutional and Retail Marketplace

As of 3/31/13. Other data shown is as of 12/31/12.

Third party financial professionals counted on a product-by-product basis.

3.8 million

DB and DC participants and annuitants

28 million

Individuals covered by group insurance contracts

7 million

Individual Life policyholders

1.3 million

Individual Annuity contract holders

120,000

Third party financial professionals selling our products

2,700

Prudential agents

500

Prudential wholesalers

140 of Fortune 500 companies

78 of largest 100 U.S. retirement plans

Over 6 million retiree and

near-retiree customers

Financial Strength Symposium 6.18.2013

Numbers reflect rounding

(1)

(2)

We Benefit from a Diversified Business Mix

Less market sensitive businesses:

Retirement, Insurance

More market sensitive businesses:

Annuities, Asset Management

2012 Pre-Tax AOI

$2,580 million

1Q13 EOP Attributed Equity

$16.8 billion

Pre-tax Adjusted Operating Income (AOI) of the U.S. Businesses.

Attributed equity of the U.S. Businesses as of 3/31/13, excluding accumulated other comprehensive income.

Represents the U.S. Individual Life and Group Insurance Division.

Financial Strength Symposium 6.18.2013

(3)

Annuities

40%

Retirement

25%

Asset

Management

19%

Insurance

16%

Annuities

48%

Retirement

23%

Asset

Management

12%

Insurance

17%

(1)

(2)

Our Differentiated Product Capabilities are Wrapped in

Strong Risk and Capital Management Capabilities

Financial Strength Symposium 6.18.2013

Retirement and

Annuities

Insurance

Asset

Management

With these Product Capabilities, We Provide a Diverse

Set of Solutions to Individuals and Institutions

Retail Funds

and Institutional

Solutions

Protection and

Savings Solutions

Asset Accumulation

and Income Solutions

Risk Transfer Solutions

Financial Strength Symposium 6.18.2013

Insurance

Retirement and

Annuities

Asset

Management

Flows

These Solutions Generate a Broad Set of Customer Flows

Retail Funds

and Institutional

Solutions

Protection and

Savings Solutions

Asset Accumulation

and Income Solutions

Risk Transfer Solutions

Financial Strength Symposium 6.18.2013

Insurance

Retirement and

Annuities

Asset

Management

Our Product Capabilities also Create Additional

Asset Management Opportunities

Proprietary

Flows

Proprietary

Flows

Retail Funds

and Institutional

Solutions

Protection and

Savings Solutions

Asset Accumulation

and Income Solutions

Risk Transfer Solutions

Financial Strength Symposium 6.18.2013

Insurance

Retirement and

Annuities

Asset

Management

Our Capabilities are Mutually Supportive and, When Combined,

Address a Broader Set of Customer Needs

•

Pension Risk Transfer

•

Target Date Solutions

•

Income Solutions

•

Outcome-oriented

Investment Solutions

•

Group/Individual Life

Combination Products

Retail Funds

and Institutional

Solutions

Protection and

Savings Solutions

Asset Accumulation

and Income Solutions

Risk Transfer Solutions

Financial Strength Symposium 6.18.2013

Retirement and

Annuities

Insurance

Asset

Management

Solutions leveraging our

combined capabilities:

Significant market opportunities exist for

Pension Risk Transfer

•

Rising need for de-risking solutions for U.S. plan sponsors:

–

Stricter pension funding rules

–

Shift from DB to DC plans

–

Increasing accounting transparency

–

Asset risk and longevity risk awareness

•

Market movements result in funded status volatility that has

significant impacts on:

–

Cash funding requirements

–

Corporate earnings

–

Shareholder equity

•

Management of pension issues crowds out focus on core business

•

In the U.S., increased PBGC premiums and anticipation of new

valuation mortality table provide added incentives to transfer liabilities

•

Catalysts are driving significant market opportunities:

–

U.S.

$2 –

2.4 trillion

–

U.K.

$1.5 trillion

–

Canada

$1.3 trillion

Catalysts

Target

Markets

Plan Sponsor

Perspective

Financial Strength Symposium 6.18.2013

Pension Risk Transfer draws upon

our full set of combined capabilities

Prudential is exceptionally well positioned by virtue of its:

Investment management skills

Risk management skills

Risk diversification: longevity

Actuarial capabilities

Prudential emerged as the U.S. Pension Risk Transfer market

leader with two industry-shaping buy-out transactions in 2012:

General Motors: $25 billion group annuity contract; 110,000 retirees

Verizon: $8 billion group annuity contract; 41,000 retirees

In 2011, Prudential executed the first buy-in transaction in the U.S.:

Hickory Springs Manufacturing Company: $75 million

Prudential

participates

the

U.K.

Pension

Risk

Transfer

market

a longevity reinsurer:

Deutsche Bank, Rolls-Royce Pension Fund: $780 million

Rothesay Life, Paternoster: $723 million

Rothesay Life, Uniq Pic Pension Scheme: $665 million

Rothesay Life, British Airways Pension Fund: $160 million

Unique

Capabilities

Strong balance sheet

Respected brand

Retiree client service platform

Industry-leading talent

World-Class

Counterparties

Financial Strength Symposium 6.18.2013

Agenda

•

Executive Summary

•

Overall U.S. Strategy

•

Review of U.S. Businesses

•

Conclusion

Financial Strength Symposium 6.18.2013

Annuities

•

Market leading position across multiple distribution channels

•

Disciplined approach to managing profitability and exposure

–

Pricing discipline to ensure we meet our hurdle rates

–

Sales discipline to ensure appropriate overall earnings mix

•

Several product changes and introductions within the last year to reduce risk and volatility

•

Source of proprietary investment management opportunities

•

Additional profitable growth opportunities

–

New

products

meet

market

demand

for

broad

set

retirement

income

solutions

Financial Strength Symposium 6.18.2013

Annuities: Sales, Flows, and Account Values

Account Values

($ billions)

Sales and Net Flows

($ billions)

As of end of period.

$21.8

$20.3

$20.0

$13.4

$11.7

$11.8

$10

$15

$20

$25

2010

2011

2012

Gross Sales

Net Flows

$106.2

$113.5

$135.3

$20

$40

$60

$80

$100

$120

$140

$160

2010

2011

2012

Financial Strength Symposium 6.18.2013

(1)

•

Market leader in Institutional Investment Products

–

Pension Risk Transfer

–

Investment Only Stable Value

–

Improves operational efficiency and customer experience

–

Strengthens this platform for stable value and other investment products

•

Balanced earnings mix between these two platforms

–

Institutional

Investment

Products

now

contributes

than

half

segment

earnings

–

Mix of fee and spread income

•

Source of proprietary investment management opportunities

•

Additional profitable growth opportunities:

–

U.S.

and

International

Pension

Risk

Transfer

expansion

–

pace

transactions

will

lumpy

–

Additional markets for Investment Only Stable Value

–

Addressing marketplace gaps in retirement plan coverage, retirement savings adequacy, and

longevity protection

Retirement

Financial Strength Symposium 6.18.2013

Significantly enhancing our recordkeeping capabilities in Full Service, a fully integrated

platform for DB, DC, and non-qualified plans

•

Financial Strength Symposium 6.18.2013

$34.6

$44.6

$71.4

$10

$20

$30

$40

$50

$60

$70

$80

2010

2011

2012

Full Service

Other Institutional Investment Products

Pension Risk Transfer

$10.8

$19.3

$43.7

$10

$15

$20

$25

$30

$35

$40

$45

$50

2010

2011

2012

$205

$230

$290

$50

$100

$150

$200

$250

$300

$350

2010

2011

2012

Full Service

Institutional Investment Products

Sales

($ billions)

Account

Values

(1)

($ billions)

Retirement: Sales, Flows, and Account Values

Net Flows

($ billions)

As of end of period.

Asset Management

•

$827 billion in assets under management as of December 31, 2012

•

Robust organic growth through the financial crisis

–

22 consecutive quarters of positive third party institutional net flows

–

Successful entry to the closed-end fund market

–

Asset Management fees have grown at 12% annually since 2010

•

Strong investment returns

–

74% of assets exceeded benchmarks over the past three years

•

Continuing to reduce volatility from Other Related Revenue

•

Additional profitable growth opportunities:

–

Proprietary target date solutions, and other outcome-oriented solutions

–

Further pension plan de-risking (Pension Risk Transfer, Liability-driven investing)

–

Increased proprietary flows from other business platforms

–

Increasing globalization of asset management

Excluding money market flows.

Financial Strength Symposium 6.18.2013

(1)

$606

$718

$827

2010

2011

2012

$100

$200

$300

$400

$500

$600

$700

$800

$900

Asset Management: AUM and Fees

Asset Management Fees

by Asset Type

($ millions)

AUM by Asset Type

($ billions)

Public Fixed Income

Private Fixed Income

Equity

Real Estate

Commercial

Mortgages

As of end of period.

Includes Commercial Mortgages.

$1,326

$1,541

$1,667

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2010

2011

2012

Fixed Income

Equity

Real Estate

Financial Strength Symposium 6.18.2013

(2)

(1)

Asset Management: Revenue Mix

Excludes Service, Distribution and Other Revenues.

Not restated for International Investments.

Includes CDOs.

2007

(1)(2)

$1.6 billion

2012

(1)

$1.9 billion

Asset Management Fees

Other Related

Revenue

Financial Strength Symposium 6.18.2013

66%

34%

89%

11%

Key developments since 2007:

•

Growth in asset management fees

•

Reduced strategic investing exposure from 2008 peak levels

–

Interim portfolio reduced from $1.9 to $0.3 billion

–

Total strategic investing portfolio reduced from $2.7 to $1.0 billion

–

Strategic investments per fund reduced from $44 to $19 million

•

Exited commercial mortgage securitization conduit

(3)

Asset Management: Flows

Third Party, excluding Money Market activity.

($ billions)

Net Flows

(1)

$28.7

$16.9

$17.2

$7.8

$5.7

$12.8

$36.5

$22.6

$30.0

$10

$15

$20

$25

$30

$35

$40

2010

2011

2012

Institutional

Retail

Financial Strength Symposium 6.18.2013

Asset Management: AUM Growth Attribution

($ billions)

International

Investment

Management

represents

12/31/12

EOP

AUM.

Results

the

majority

the

company's

international

investments

operations,

formerly

included in the International Insurance segment, have been reclassified and included in the Asset Management segment as of 12/31/2012. This reflects the

Company's decision to align the management of these businesses.

Other includes Money Market flows, foreign exchange rate and other activity.

2002 AUM

Net Flows

2007 AUM

Net Flows

Market /

Asset

Appreciation

Other

International

Investment

Management

(1)

Market / Asset

Appreciation

Other

(2)

2012 AUM

Financial Strength Symposium 6.18.2013

Individual Life Insurance

•

Market leader with strong profitability

–

Maintaining pricing discipline

–

Focusing on most profitable distribution partners

•

Inherently stable business and important source of cash flow

•

Product mix limits overall interest rate and equity market sensitivity

•

Additional profitable growth opportunities

–

Integration of Hartford Life acquisition

•

Expands scale

•

Provides complementary distribution

•

Enhances product innovation capabilities

•

Generates appropriate returns over time

–

Underserved markets

Financial Strength Symposium 6.18.2013

Individual Life: New Business Premiums and In-force

Excludes corporate-owned life insurance.

As of end of period, before reinsurance ceded.

Annualized New Business Premiums

(1)

($ millions)

Face Amount In Force

($ billions)

$260

$278

$412

$50

$100

$150

$200

$250

$300

$350

$400

$450

2010

2011

2012

Variable

Universal

Term

$613

$631

$670

$100

$200

$300

$400

$500

$600

$700

$800

2010

2011

2012

Financial Strength Symposium 6.18.2013

(2)

Group Insurance

•

New senior management team

•

Making progress with respect to profitability in Disability

–

One-third of the book has been repriced or lapsed over the past year

–

Investing heavily in claims management

–

Improving benefit ratio

•

Group Life benefiting from strong demand for voluntary products

–

Approximately 70% of sales in 2012

•

Additional

profitable

growth

opportunities

from

new

and

existing

voluntary

products

Disability Benefit Ratio

Life

Benefit

Ratio

Financial Strength Symposium 6.18.2013

92.3%

90.4%

89.3%

86.0%

95.4%

88.6%

90.7%

89.0%

92.2%

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

87.5%

93.0%

94.0%

104.0%

102.2%

97.4%

93.9%

98.7%

94.4%

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

Group Insurance: Premiums

Annualized New Business Premiums

($ millions)

Force

Premiums

(1)

($ millions)

As of end of period; net of reinsurance.

$4,612

$5,071

$5,172

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2010

2011

2012

Life

Disability

$568

$635

$439

$100

$200

$300

$400

$500

$600

$700

2010

2011

2012

Voluntary Life

Basic Life

Disability

Financial Strength Symposium 6.18.2013

Agenda

Financial Strength Symposium 6.18.2013

•

Executive Summary

•

Overall U.S. Strategy

•

Review of U.S. Businesses

•

Conclusion

Conclusion

•

We have an extensive presence across the institutional and retail marketplace

•

We are poised to continue to benefit from a cyclical recovery in

the economy

and capital markets

•

We are favorably leveraged to longer-term secular growth trends

•

Each respective business is focused on achieving profitable growth

–

Sustaining strong execution and discipline in our current markets

–

Identifying and pursuing additional growth opportunities

•

Across our businesses, we are pursuing additional opportunities where we are

competitively advantaged by our distinctive combination of capabilities

Financial Strength Symposium 6.18.2013

–

Retirement

–

Pension plan de-risking

–

Longevity

–

Individual asset accumulation

Prudential Annuities

Robert O’Donnell

President

Prudential Annuities

Variable Annuities is a Core Prudential Business

In Force Valuation

•

Our in force portfolio has significant value and will produce positive cash

flows over the remaining life in diverse scenarios

Risk Management

•

Our risk management efforts focus on reducing capital markets risk and

maintaining a strong capital position

New Business

•

Our new business produces positive cash flows and offers favorable returns

in the current interest rate environment

Financial Strength Symposium 6.18.2013

Company

Perspective

Customer and Distributor

Perspective

Lifetime retirement income

security

Equity Market participation

Flexible access to account value

Account value protection in

down markets

Demonstrated commitment

to business

Innovative product offerings

Contributes to Prudential’s

business and risk diversification

Solid returns and growth

over time

Strong track record in product-

based risk management

Capital market protection

through hedging program

Value Proposition

Financial Strength Symposium 6.18.2013

Improving Risk Profile of

In Force Variable Annuity Block

Variable annuity account values were composed of 52% of equity funds and 48% of fixed income at end of 2009 and 57% of equity funds and 43% of fixed

income at end of 2012.

Improved Risk

Profile

Living Benefit with

Auto-Rebalancing

Living Benefit without

Auto-Rebalancing

No Living Benefits

Year End 2009

(1)

$81 billion

Year End 2012

(1)

$132 billion

70%

12%

18%

43%

22%

35%

Financial Strength Symposium 6.18.2013

Key Risks and Risk Management

Risks

Mitigants

•

Hedging mitigates capital market risk of living

benefit features

•

Auto-rebalancing at contract level

•

Account value is first source of funding for

lifetime income

•

Rigorous management of asset allocation options

•

Assumptions based on industry standards

•

Best estimates refreshed annually

•

Assumptions based on historical data

•

Best estimates refreshed annually

Capital

Markets

Investment

Performance

Mortality/

Longevity

Policyholder

Behavior

Financial Strength Symposium 6.18.2013

In Force Valuation

Financial Strength Symposium 6.18.2013

Profile of Baseline Assumptions for In Force Contracts

Based on GAAP best estimates as of 12/31/12.

Long term expected equity market return. Expected return in four

year look forward period is 9.1%.

Long term expected fixed income return. Expected return in four

year look forward period is 1.4%.

Policyholder behavior assumptions for guaranteed lifetime withdrawal benefit products only.

Lapse rates prior to the dynamic lapse adjustment.

After shock lapses.

Capital

Markets

Policyholder

Behavior

(4)

Baseline Assumptions

(1)

Equity Market Return

(2)

6.0% appreciation plus

2.0% dividend yield

Fixed Income Return

(3)

3.6%

Blended Return

~6.0% annually

Living Benefit Liability is Hedged

Base Annual Lapse Assumptions

Inside Surrender Charge Period

1.0%

(5)

Outside Surrender Charge Period

(6)

9.0%

(5)

Dynamic Lapse Assumption

5.4%

Benefit Utilization

95% take lifetime withdrawals

Benefit Efficiency

85% of guaranteed amount

Financial Strength Symposium 6.18.2013

In Force is Expected to Produce Positive

Future Cash Flows

Baseline

Scenario

Cash

Flows

(1)(2)

$16.6

$27.5

$1.6

($2.0)

($10.5)

Fees, net of Expenses

Benefits, net of

Hedging Recoveries

Investment Income

Hedging Costs

PV of Contract Cash

Flows

Financial Strength Symposium 6.18.2013

Reflects total remaining contract cash flows based upon the in force book of business as of 12/31/12.

Cash flows are shown on a present value basis, are discounted at the forward curve, and reflect the results of hedging activity.

In a Range of Capital Market Scenarios, the In Force Book

Produces Positive Cash Flows, Including the Impact of Hedging

PV of Total

Contract Cash

Flows

(1)(2)

Financial Strength Symposium 6.18.2013

$0.0

21.1

$18.4

$16.6

$5.0

+30%

+10%

Positive Markets

(3)

Baseline

Negative Markets

(4)

Break Even

(5)

Equity Markets

Immediate Shock

+10% / +30%

n/a

-30%

n/a

Post-shock Annual Equity Returns

Baseline

-9% annually

Fixed Income

Long Term

Assumption + 100bps

Baseline

Flat

Baseline

Reflects total contract cash flows based upon the in force book of business as of 12/31/12.

Cash flows are shown on a present value basis, are discounted at the forward curve, and reflect the results of hedging activity.

The positive market scenarios reflects an immediate up shock of 10% & 30% on 12/31/12 followed by baseline equity market returns thereafter with fixed

income returns 100bps above the expected long term rate. Assumes baseline policyholder behavior assumptions.

The negative scenario reflects an immediate down shock of 30% on 12/31/12, followed by baseline equity returns, coupled with a flat 10-year treasury rate

of 1.78%. Assumes baseline policyholder behavior.

The break-even scenario reflects annual equity return of -9% (including dividend yield). Fixed income returns and policyholder behavior reflect our baseline

assumptions.

Rate approaches 1%

as AV/PWV

20%

9% -

Baseline lapse rate

5.4% -

Current dynamic lapse

assumption

Lapse Rates Linked to “In-the-Moneyness”

Lapse Rates

(1)

by “In-the-Moneyness”

(2)

10%

12%

14%

16%

20%

40%

60%

80%

100%

Account Value (AV) / Protected Withdrawal Value (PWV)

Current GLWB Assumption

Financial Strength Symposium 6.18.2013

Lapse rates are post surrender charge period, post “shock“ lapses experienced immediately after the surrender charge period and reflect GLWB

product assumptions only.

“In-the-Moneyness” (Protected Withdrawal Value less Account Value) is used to develop the percentage of the protected withdrawal value that is

covered by the account value.

Lifetime Withdrawal Benefit Utilization

and Efficiency Assumptions

•

We assume 95% of policyholders exercise their lifetime withdrawal benefit

•

For policyholders that do exercise their lifetime withdrawal benefit we

assume greater efficiency than observed

% of AIA

(1)

82%

% of AIA

(1)

85%

Actual

Assumption

% of AIA (Annual Income Amount) represents the weighted average withdrawal rate as a percentage of maximum benefit withdrawal allowed without affecting

future policyholder benefit payments for policyholders with a lifetime withdrawal benefit.

Financial Strength Symposium 6.18.2013

Strong, Positive Cash Flows Even if Future Policyholder

Behavior Deviates from Expectations

Reflects total contract cash flows based upon the in force book of business as of 12/31/12.

The lower lapse scenario reflects a 20% reduction to baseline lapse rates across all periods. Capital market and benefit utilization assumptions are unchanged

relative to the baseline scenario.

The higher benefit efficiency scenario reflects a 10% increase in benefit efficiency (from 85% to 95%) across all periods. Capital market and benefit utilization

assumptions are unchanged relative to the baseline scenario.

PV of Total

Contract

Cash

Flows

(1)(2)

Financial Strength Symposium 6.18.2013

$17.6

$16.6

$13.6

Lower Lapses

(3)

Baseline

Higher Benefit

Efficiency

(4)

Lapses

All periods reduced by

20%

Baseline

Benefit Efficiency

Baseline

95% of guaranteed

amount

Cash flows are shown on a present value basis, are discounted at the forward curve, and reflect the results of hedging activity.

Resilient Cash Flows Despite Severely Adverse Market and

Policyholder Behavior Scenarios

Reflects total contract cash flows based upon the in force book of business as of 12/31/12.

Cash

flows

are

shown

present

value

basis,

are

discounted

the

forward

curve,

and

reflect

the

results

hedging

activity.

The lower lapse scenario reflects a 20% reduction to baseline lapse rates across all periods. Equity Markets reflect an immediate 30% down shock followed by

baseline

annual

growth

coupled

with

flat

10-year

treasury

rate

1.78%.

Benefit

utilization

assumptions

are

unchanged

relative

the

baseline

scenario.

The higher benefit efficiency scenario reflects a 10% increase in benefit efficiency (from 85% to 95%) across all periods. Equity Markets reflect an immediate 30%

down

shock

followed

baseline

annual

growth

coupled

with

flat

10-year

treasury

rate

1.78%.

Benefit

utilization

assumptions

are

unchanged

relative

the

baseline scenario.

PV of Total

Contract

Cash

Flows

(1)(2)

Financial Strength Symposium 6.18.2013

$3.4

$16.6

$1.0

Lower Lapses and Negative

Markets

(3)

Baseline

Higher Benefit Efficiency and

Negative Markets

(4)

Lapses

All periods reduced by 20%

Baseline

Benefit Efficiency

Baseline

95% of guaranteed amount

Equity Markets

Immediate -30% equity shock

Baseline markets after

Baseline

Immediate -30% equity shock

Baseline markets after

Fixed Income

Flat

Baseline

Flat

Notional amount –

cannot be accessed

by contract holder

Represents

products

with

guaranteed

lifetime

withdrawal

benefits

(GLWB)

12/31/12.

Represents our living benefit exposure, as of 12/31/12, based upon policyholder's guaranteed lifetime annual income amount on that date.

Our True Exposure is Significantly Less Than

the

Notional

“In-the-Moneyness”

(1)

Protected

Withdrawal

Value

$109 billion

Notional

“In-the-

Moneyness”

$14 billion

Account Value

$95 billion

$2 billion

Cost,

excess

account

value,

buy

immediate

annuity,

defease

the

living

benefit

liability,

which

fully

hedged

Economic

“In-the-Moneyness”

(2)

Financial Strength Symposium 6.18.2013

Risk Management

Financial Strength Symposium 6.18.2013

Account Value by Year of Issue

(1)

Total

Account

Value

$132

billion

12/31/12

Account value represents the variable annuity inforce account value as of 12/31/12 for policies sold in each cohort year and include subsequent premiums in the

year the original policy was sold.

% of 12/31/12

Account Value

20.8%

5.2%

6.1%

7.3%

15.7%

17.1%

14.4%

13.4%

Total $107.3 billion

Total $24.3 billion

Account Value w/Living Benefit

Account Value w/o Living Benefit

Average S&P 500 Level

Financial Strength Symposium 6.18.2013

Reducing Risk Through Product Design and Pricing

•

Increased living

benefit rider fee

•

Reduced roll-up rate

•

Increased living benefit rider fee

•

Reduced roll-up rate

•

Account doubling period

lengthened

De-risking

(2)

•

Increased

living benefit

rider fee

•

Increased

minimum issue

age

•

Increased age

for 5% income

payout

•

Eliminated

subsequent

premiums

•

Stopped sales

of X-share

Total $131.6 billion

(1)

27.4

6.8

8.0

9.6

20.7

22.5

19.0

17.6

0.0%

2.0%

4.0%

6.0%

$10

$15

$20

$25

$30

Pre-2006

2006

2007

2008

2009

2010

2011

2012

Account Values

Average 10-year Treasury Rate

Financial Strength Symposium 6.18.2013

Account value represents the variable annuity in force account value as of 12/31/12 for policies sold in each cohort year and include subsequent

premiums in the year the original policy was sold.

Additional detailed product changes can be found in the appendix on slide 30.

Hedge Program Overview

•

Objectives

–

Severe scenario

protection

–

Maximize capital

efficiency

–

Minimize earnings

volatility

•

Strong performance

through full economic

cycles

Capital Markets Hedging

Overview

Capital Markets Hedging

Approach

•

Aims to replicate the market

sensitivities of our living

benefits

•

Uses derivatives to ensure

protection in any economic

scenario

Financial Strength Symposium 6.18.2013

Historical Hedge Program Results

(1)(2)

Excludes differential related to the assumption unlocks because they are not hedged.

We hedge to our economic view of the liability. The hedge target

is grounded in a GAAP/Capital markets valuation framework that incorporates modifications to

GAAP including alteration to the risk-free return assumption to account for customer selected funds invested in risk bearing assets.

(2)

(3)

0.0

0.1

$(4.5)

$(3.5)

$(2.5)

$(1.5)

$(0.5)

$0.5

2005

2006

2007

2008

2009

2011

2012

Yearly Net Gain/(Loss) vs. Hedge Target

Yearly Net Gain/(Loss) on Interest Rate Underhedge

Cumulative Net Gain/(Loss) vs. Hedge Target

Cumulative

Hedge

Differential

= ($0.5B)

2010

Financial Strength Symposium 6.18.2013

Prudential did not hedge 100% of the hedge target, but holds capital against a portion of the interest rate exposure rather than fully hedging the risk.

The underhedge mitigates enterprise exposure to rising interest rates.

GAAP Balance Sheet -

VA Footprint

(1)

Includes Fixed Annuities.

Deferred Acquisition Costs (DAC) and Deferred Sales Inducements (DSI).

Accumulated Other Comprehensive Income.

Includes ~$4 billion of equity attributable to PrucoRe.

Assets

Liabilities

Separate Account

$117.9

Separate Account

$117.9

Invested Assets

$ 16.2

General Account

$ 10.6

Hedge Assets

$ 3.9

Hedge Target Liability

$ 5.8

Other

$ 3.7

Other

$ 3.1

DAC & DSI

(2)

$ 5.2

SOP 03-1 (DB/IB Reserve)

$ 0.7

Total Assets

$146.9

Total Liabilities

$138.2

AOCI

(3)

$0.5

Other Attributed Equity

(4)

$8.2

Total Equity

$8.7

Balance Sheet

12/31/2012 ($ billions)

$20 billion of

liquid assets

$20 billion of

long term liabilities

Financial Strength Symposium 6.18.2013

Accounting Framework Captures the Fair Value of our

Living Benefit Liabilities

Prudential’s mark to market accounting framework, FAS 133/157, applies a

valuation methodology that results in increased volatility in earnings and equity

Under FAS 133/157 accounting we are required to incorporate the market-perceived risk of our own non-performance (NPR) in the valuation of the embedded

derivatives associated with our optional living benefit features.

Accounting

Framework

Reserve

Valuation

NPR

(1)

Earnings &

Equity

Volatility

Path Dependent

Required

Equity

Reserve

Impact

Path Dependent

FAS

133/157

Option

Fair Value

Included

SOP 03-1

Insurance

Best

Estimate

Excluded

Financial Strength Symposium 6.18.2013

Impact of Assumption Updates

Reflects Accounting Framework

•

The impact of a change to baseline lapse assumptions measured under each construct

•

The negative impact of a reduction to our lapse assumption is magnified under FAS 133/157

Assumption Update Impact of Lapse Reduction

The arrows above represent a proxy for SOP 03-1 & FAS 133/157 (excl. NPR) accounting frameworks. SOP 03-1 accounting utilizes management’s best

estimates of capital markets performance to value liabilities while FAS 133/157 (fair value) accounting assumes a risk neutral environment.

SOP 03-1

(1)

FAS 133/157

(1)

Positive GAAP Net

Income Impact

Negative GAAP Net

Income Impact

Financial Strength Symposium 6.18.2013

Capital Protection Framework Provides

Sufficient Coverage in Tail Scenarios

Assumes shock occurs on 12/31/12 for overall block of business in force; represents gross change in statutory capital requirements, inclusive of capital

requirements in reinsurance captive, immediately following shock.

Equity Shock Impacts

(1)

$ billions

Interest Rate Shock Impacts

(1)

$ billions

Combined Equity & Interest Rate Shock Impacts

(1)

$ billions

•

Capital

Requirements

Increase

Decrease

Down 30%

Down 10%

Up 10%

Up 30%

$(0.4)

$(0.7)

$2.7

$0.4

Capital

Requirements

Increase

Decrease

Down 100 bps

Down 10 bps

Up 10 bps

Up 100 bps

$(0.2)

$(0.7)

$1.2

$0.0

Increase

Decrease

-30% Equity & -

100bps Interest

-30% Equity &

-10bps Interest

$2.3

$0.5

$5.1

Capital

Requirements

-10% Equity &

-100bps Interest

-10% Equity &

-10bps Interest

Financial Strength Symposium 6.18.2013

Capital

Protection

Framework:

On-balance

Sheet

Capital

Derivatives

Reinsurance

Contingent

Sources

Capital

$2.9

New Business

Financial Strength Symposium 6.18.2013

Financial Strength Symposium 6.18.2013

•

HDI 2.1 launched in February 2013, includes further de-risking

measures

Rollup rate for protected value: 5% on highest daily value, limited

to earlier of 10 years or first lifetime withdrawal

Earliest age to receive 5% income payment rate is 70 (from 65)

Income payment rate reduced to 3.5% at ages 55-59

1/2

(from 4%)

and 4.5% at ages 65-69 (from 5%)

200% protected value guarantee at 12 years no longer available

Reduced compensation rates

Produces expected returns that meet or exceed targets even in an

environment of continued low interest rates

New

Business

Offerings

Increase

Shareholder

Value

New Business Produces Positive Cash Flows

Reflects total contract cash flows based upon the HDI 2.1 product design.

Cash

flows

are

shown

present

value

basis,

are

discounted

the

forward

curve,

and

reflect

the

results

hedging

activity.

Each bar represents a discrete year.

PV of Cash

Flows

(2)(3)

$146 million

PV of Fees

$380 million

PV of Expenses and

Benefits

($234) million

The present value of baseline new business cash flows equals $146 million per

$1 billion of sales

(1)

$(80)

$(60)

$(40)

$(20)

$20

$40

$60

$80

Financial Strength Symposium 6.18.2013

Variable Annuities is a Core Prudential Business

In Force Valuation

•

Our in force portfolio has significant value and will produce positive cash

flows over the remaining life in diverse scenarios

Risk Management

•

Our risk management efforts focus on reducing capital markets risk and

maintaining a strong capital position

New Business

•

Our new business produces positive cash flows and offers favorable returns

in the current interest rate environment

Financial Strength Symposium 6.18.2013

Appendix

Financial Strength Symposium 6.18.2013

$(1.5)

$(1.0)

$(0.5)

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

In Force Produces Positive Cash Flows

under Baseline Assumptions

The

present

value

remaining

force

baseline

cash

flows

equals

$16.6

billion

(1)

PV of Fees

$27.8 billion

PV of Cash Flows

$16.6

billion

(2)(3)

PV of Expenses and Benefits

($11.2) billion

Financial Strength Symposium 6.18.2013

Reflects total contract cash flows based upon the in force book of business as of 12/31/12 with each bar representing a discrete year.

Cash flows are shown on a present value basis, are discounted at the forward curve, and reflect the results of hedging activity.

Reflects the baseline capital market and policyholder behavior assumptions found on slide 7.

Adapting to Changing Markets

Prudential

Rider

HD Lifetime

Five

HD Lifetime

Seven

HD Lifetime

Seven +

HD Lifetime

Six +

HDI

2.0

HDI

v2.1

Introduced

November

2006

January

2008

February

2009

August

2009

January

2011

August

2012

February

2013

Basis Point

Charge

(1)

(2)

100

Age for

5% Payout

(1)

1/2

200%

Protected

Value

Guarantee

10 yrs

12 yrs

N/A

Minimum

Issue Age

(1)

Average

S&P 500

(3)

1,467

1,195

863

1,118

1,298

1,430

1,532

(4)

Average 10 yr

TSY

(3)

4.63%

3.58%

3.21%

3.29%

2.45%

1.74%

1.97%

(4)

Single life contract.

HD Lifetime Five basis point charge based on account value, all other products based on protected withdrawal value.

Represents the average S&P 500 level and 10yr treasury rate until the introduction of the next product change.

Average as of 3/31/13.

Financial Strength Symposium 6.18.2013

$572

$462

$313

$589

$884

$984

$652

$(955)

$672

$950

$662

$1,039

$(1,500)

$(1,000)

$(500)

$500

$1,000

$1,500

2007

2008

2009

2010

2011

2012

Adjusted operating income

($ millions)

Reported

$503

Six Year

Average

Excluding

indicated

items

$634

Growing Baseline Operating Results

Excluding impact of:

•

Changes in the estimated profitability on reserves for GMDB/GMIB

•

Amortization of DAC and other costs

•

Other discrete items

Reported

(1)

Inclusive of expenses estimated in excess of baseline level for 2012.

Financial Strength Symposium 6.18.2013

47%

51%

53%

56%

59%

61%

63%

64%

65%

67%

69%

70%

21%

19%

18%

17%

16%

15%

14%

13%

12%

32%

30%

29%

27%

25%

24%

23%

22%

21%

20%

19%

18%

$85

$84

$93

$102

$110

$112

$103

$110

$120

$129

$132

$20

$40

$60

$80

$100

$120

$140

With living benefits,

With automatic rebalancing

With living benefits,

Without automatic rebalancing

Without living benefits

Improving Risk Profile

Variable Annuity

Account

Value

Risk

Profile

(1)

As of end of period.

Financial Strength Symposium 6.18.2013

Investment Portfolio

Scott Sleyster

Chief Investment Officer

High Yield exposure weighted towards higher quality and asset-rich sectors; emphasis on allocations to

Private Placements with strong covenant packages and ability to restructure.

Well Positioned Investment Portfolio

Financial Strength Symposium 6.18.2013

Investment Management is a core competency for Prudential.

•

Portfolio is managed by the CIO Organization, with investment limit structures and guidelines controlled

by the Enterprise Risk Management Organization.

•

Risk

limits

and

exposure

ranges

are

approved

annually

the

Investment

Committee

the

Board

Directors.

Our General Account investment portfolio is well diversified across asset classes, industry sectors, geographic

regions and issuers.

We underwrite much of our own credit risk through direct originations of Commercial Mortgages and Private

Placements.

•

Exposure to Commercial Mortgages is very well diversified with strong overall debt service coverage and

modest loan-to-value ratios.

•

Typical

Private

Placement

offers

strong

covenant

package

and

the

ability

restructure.

•

Very

strong

originations

higher

spread

Private

Placements

and

Commercial

Mortgages

have

helped

moderate yield loss in the current low interest rate environment.

Recent acquisitions have added over $40 billion to the U.S. Financial Services Businesses (FSB) portfolio:

•

Two

Pension

Risk

Transfer

(PRT)

deals,

General

Motors

and

Verizon,

closed in the fourth quarter of 2012

and added approximately $33 billion

•

Hartford Life was added in the first quarter of 2013, increasing the portfolio by approximately $8 billion.

Broad Investment Expertise Supports Risk Diversification

Public Fixed Maturities

68%

Private Fixed Maturities

10%

Commercial Loans

(2)

Equities, 2%

Other Long-term

(4)

, 2%

Short Term & Other, 2%

Policy Loans, 2%

TAASIL

(3)

FSB General Account

Investment Portfolio

$331 Billion

(1)

FSB General Account

Fixed Maturities

$258 Billion

(5)

(6)

(7)

78%

Financial Strength Symposium 6.18.2013

Corporate Securities

Japanese Government Bonds

Other Foreign Government Bonds

U.S. Government

Commercial Mortgage Backed

Securities

Residential Mortgage Backed

Securities

Asset Backed Securities

40%

21%

(1)

March

31,

2013

balance

sheet

carrying

amount.

Financial

Services

Businesses

(“FSB”)

excludes

invested

assets

trading

operations

and

asset

management

operations.

(2)

Commercial

Mortgage

and

other

loans.

(3)

Trading

Account

Assets

Supporting

Insurance

Liabilities

(investment

results

expected

ultimately

accrue

contract

holders).

Other

Long-term

Investments

consist

real

estate

and

non-

real

estate

investments

joint

ventures

and

partnerships,

investment

real

estate

held

through

direct

ownership

and

other

miscellaneous

investments.

(5)

Percent

Investment

Portfolio,

based

Fair

Value.

(6)

Includes

state,

and

municipal

securities,

and

securities

the

Build

America

Bonds

program.

(7)

Includes

securities

collateralized

sub-prime

mortgages.

Limited Exposure to NAIC 3 –

$6,112m

$1,864m

$618m

$146m

As of March 31, 2013 at Amortized Cost. Reflects equivalent ratings for investments of the International Insurance operations.

Financial Strength Symposium 6.18.2013

Highest and High

(NAIC 1,2)

96.3%

Other

(NAIC 3 -

$8,740 million

Total FSB GA Fixed Maturity Portfolio

100% = $236 Billion

(1)

3.7%

Highest and High (NAIC 1,2) rated securities comprise over 96%

of the FSB General Account Fixed Maturity Portfolio.

High Yield exposure weighted towards higher quality (NAIC 3).

Emphasis on allocations to Private Placements with strong

covenant packages and ability to restructure.

37%

39%

49%

58%

42%

NAIC 6

NAIC 5

NAIC 4

NAIC 3

61%

63%

51%

Private Fixed Maturities: $3,450 million

Public Fixed Maturities: $5,290 million

(1)

5.7%

7.7%

5.3%

5.1%

5.0%

4.9%

4.2%

4.0%

3.3%

5.7%

4.8%

Represents Statutory data for the domestic insurance companies General Accounts only. Percent of invested assets less policy loans.

NAIC 3 & Below as a Percentage of Invested Assets

December 31, 2012

Statutory Asset Allocation

(1)

Financial Strength Symposium 6.18.2013

NAIC 5 & 6

NAIC 3

2.7%

0.7%

4.3%

0.6%

1.7%

3.3%

3.6%

3.1%

4.0%

2.8%

3.0%

2.0%

2.6%

1.9%

0.9%

1.0%

1.3%

1.2%

1.4%

0.8%

1.4%

1.1%

1.7%

0.7%

0.6%

0.3%

0.6%

0.9%

0.4%

0.5%

MET

(ex. ALICO)

Public Co.

Composite

PRU

CBB

PFG

PRU

GNW

AIG

PRU

FSB

MFC

LNC

HIG

0.6%

NAIC 4

(1)

FSB General Account

(1)

The

long

duration

nature

the

liabilities

the

Japanese

portfolio

creates

natural

appetite

for

government/agency

bonds,

limiting

the

allocation

primarily

Public

and

Private

Fixed

Maturities

and

Commercial

Mortgage

Loans.

Financial Strength Symposium 6.18.2013

(2)

(3)

55%

45%

29%

13%

12%

10%

11%

Governments

Public Fixed

Maturities

Private Fixed

Maturities

Commercial

Loans

Equities

Other

Long-term

Short-term

& Other

Policy

Loans

TAASIL

FSB General Account, ex. Japanese Operations: $185 Billion

FSB General Account, Japanese Operations: $146 Billion

(1)

As of March 31, 2013 at balance sheet carrying amount. Excludes invested assets of trading operations and asset management operations.

(2)

Commercial Mortgage and other loans.

(3)

Trading Account Assets Supporting Insurance Liabilities (investment results expected to ultimately accrue to contract holders).

Asset Selection Focus on Quality

FSB General Account

Fixed Maturity Portfolio

(1)

($ in billions)

Amortized Cost. Reflects equivalent ratings for investments of the International Insurance operations.

(2)

(3)

Financial Strength Symposium 6.18.2013

96%

$104.4

$111.9

$113.5

$127.7

$134.8

$147.4

$200.9

$240.5

$235.9

$88.9

$95.1

$82.8

$54.4

$46.1

$36.8

$30.8

$28.0

$28.1

27%

25%

27%

29%

34%

37%

41%

40%

38%

$138.3

$136.5

$108.8

$84.3

$79.2

$81.9

$75.2

$76.8

$70.3

67%

69%

66%

64%

59%

57%

54%

56%

58%

$6.0 6%

$7.1 6%

$7.5 7%

$9.0 7%

$9.5 7%

$8.7 6%

$9.3 5%

$8.9 4%

$8.7 4%

1Q 2013

2012

2011

2010

2009

2008

2007

2006

2005

High or Highest Quality: Governments

Other Securities

NAIC 1-2

NAIC 3-6

(1)

(2)

(3)

High

Highest

Quality:

Non-Governments

(2)

Defensively Positioned Corporate Bond Portfolio

Corporate

Bond

Holdings

Sector

(1)

Financial Services Businesses vs. Barclays U.S. Corporate Index Index

March 31, 2013

FSB Data includes Public and Private holdings. Based on Market Value.

Financial Strength Symposium 6.18.2013

Financial Services Businesses Exposure

Over / Under Weight Barclays U.S. Corporate Index

25%

20%

15%

10%

-5%

-10%

-15%

-20%

Finance

Consumer

Noncyclical

Utility

Capital

Goods

Consumer

Cyclical

Energy

Communi-

cation

Basic

Industry

Trans-

portation

Technology

Other

Industrial

(1)

Strong and Well Diversified Commercial Loan Portfolio

As of March 31, 2013 at balance sheet carrying amount.

As of March 31, 2013 at gross carrying value.

Excludes Agricultural loans (Commercial only). ACLI data as of 12/31/12 (latest available).

Other consists of golf courses, ski resorts, parking garages, self-storage, hospital and ground leases.

Financial Strength Symposium 6.18.2013

Commercial Mortgage and

Other Loans

$27,926 million

(2)

Weighted

Average

Debt

Service

Coverage

Ratio

(DSCR)

2.14x

Weighted Average Loan to Value Ratio (LTV)

57%

Agricultural and Commercial Loans at a Fixed Rate

97%

Over 30 Days Past Due

0.5%

FSB General Account Portfolio

100% = $331 Billion

(1)

(4)

(3)

8.4%

25%

17%

23%

26%

21%

33%

18%

16%

Hospitality

Senior Living

& Other

Multi-

Family

Office

Retail

Industrial

Prudential

ACLI ex. Prudential

Pacific

31%

South Atlantic

20%

Middle Atlantic

14%

East

North

Central

West South

Central

10%

Asia

East South

Central

West North

Central

New England

Mountain

Other

(3)

(1)

(2)

(3)

(4)

Commercial & Agricultural Mortgage Loan Portfolio

FSB General Account

(1)

($ in millions)

As of March 31, 2013, the valuation allowance for the FSB GA commercial mortgage and other loan portfolio was

$187 million, a decrease of $56 million from the year ago quarter.

We annually revalue the portfolio using conservative up-to-date cap rates. Watchlist and closely monitored loans

are re-evaluated quarterly.

(1)

As of March 31, 2013 at gross carrying value.

Financial Strength Symposium 6.18.2013

Quality of the Loan portfolio has

rebounded from the crisis.

Greater

than 2.0x

1.8x

to 2.0x

1.5x

to < 1.8x

1.2x

to < 1.5x

1.0x

to < 1.2x

Less

than 1.0x

Totals

0%-49.99%

4,122

1,009

919

882

220

7,249

50%-59.99%

2,396

493

1,269

1,005

283

5,504

60%-69.99%

3,226

726

1,612

1,617

511

167

7,859

70%-79.99%

1,145

271

746

1,094

526

3,869

80%-89.99%

335

165

575

90%-100%

149

340

Greater than 100%

100

112

Totals

10,901

2,499

4,626

4,742

1,917

823

25,508

1Q 2013

249

0.98%

4Q 2012

297

1.23%

4Q 2011

627

2.85%

4Q 2010

1,130

5.71%

4Q 2009

1,141

5.91%

Debt Service Coverage Ratio (DSCR)

Dollar amount

and portion of

higher LTV,

lower DSCR

(Shaded area):

Commercial Mortgage Market Delinquencies

Financial Strength Symposium 6.18.2013

Commercial / Multifamily Mortgage Delinquency Rates

Among Major Investors -

4Q 2012

0.08%

0.24%

0.19%

2.62%

Source:

Mortgage

Bankers

Association

–

2012

Mortgage

Delinquency

Rates

For

Major

Investor

Groups

(March

2013).

Life Insurance

Fannie Mae

Freddie Mac

Banks & Thrifts

Q4-01

Q4-02

Q4-03

Q4-04

Q4-05

Q4-06

Q4-07

Q4-08

Q4-09

Q4-10

Q4-11

Q4-12

Commercial Mortgage-Backed Securities

(1)

FSB General Account

Amortized Cost at Lowest Rating Agency Rating

($ in millions)

As of March 31, 2013.

Percentage of Super Senior AAA securities which are shorter duration tranches.

99.5% rated A or better; 89.2% rated AAA.

Focus on Super Senior AAA rated tranches.

No Mezzanine AAA holdings.

Financial Strength Symposium 6.18.2013

(1)

(2)

Fixed Maturities

94,479

64.6%

31,000

(1,889)

123,590

69.1%

6,900

(2,170)

128,320

69.2%

Commercial Loans

20,165

13.8%

302

20,467

11.4%

700

363

21,530

11.6%

Equities

2,778

1.9%

127

2,905

1.6%

2,995

1.6%

Short Term & Other

4,356

3.0%

681

5,037

2.8%

(279)

4,758

2.6%

Other Long-term Investments

(1)

2,494

1.7%

2,000

(44)

4,450

2.5%

(73)

4,377

2.3%

Policy Loans

3,694

2.5%

3,790

2.1%

600

4,400

2.4%

TAASIL

18,299

12.5%

453

18,752

10.5%

269

19,021

10.3%

Totals

146,265

100.0%

33,000

(274)

178,991

100.0%

8,200

(1,790)

185,401

100.0%

FSB ex. Japanese

Operations

September 30, 2012

December 31, 2012

March 31, 2013

Pension Risk

Transfer $

Activity

Hartford $

FSB ex. Japanese

Operations

FSB ex. Japanese

Operations

Growth in General Account Portfolio

Financial Strength Symposium 6.18.2013

Investment Portfolio

FSB ex. Japanese Operations General Account

($ in millions)

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 and other miscellaneous investments.

Data for quarter-ends and PRT and Hartford acquisitions from 4Q 2012 10K and 1Q 2013 10Q, respectively, and is stated at balance sheet carrying value. Activity denotes asset purchases, dispositions, and valuation activities during

the quarter, outside of the PRT and Hartford acquisitions.

Since

the

quarter

2012,

Prudential

recorded

approximately

$41

billion

assets

two

significant

pension

risk

transfer

deals,

and

the

acquisition

the

life

insurance

business

from

Hartford.

Transferred

assets

consisted

approximately

$38

billion

Public

Bonds

and

billion

Private

Equity.

•

The

addition

these

assets

our

portfolio

increased

PFI’s

investments

Fixed

Maturity

Securities

and

Other

Long-term

Investments

approximately

14%,

and

30%,

respectively.

Transferred

fixed

maturity

assets

have

similar

credit

risk

our

existing

portfolio

–

the

deals

did

not

weaken

the

quality

our

portfolio.

Privates

Mortgages

were

included

the

pension

risk

transfer,

which

lowered

our

overall

allocation

these

asset

classes.

(1)

Low Rate Environment

Strong Private Placement and Commercial Mortgage production by our investment staff over the past few years

has

helped

lessen

the

decline

portfolio

yield

due

lower

reinvestment

rates.

•

Our investment staff has originated the majority of our private placement originations through direct

borrower relationships.

o

Opportunity for better terms, including covenants and call protection, and to take advantage of

innovative deal structures.

Financial Strength Symposium 6.18.2013

Key Challenge: Declining Spreads and Treasury Yields

700

600

100

200

300

400

500

4.5

4.0

0.5

1.0

1.5

2.0

2.5

3.5

3.0

Public Corporate BBB 10yr

Public Corporate AA 10yr

Commercial Mortgage A-

10yr

U.S. Treasury 10yr

U.S. Treasury 5yr

0.0

Many of our competitors supplement their Private Placement originations using the secondary 144A market.

Fixed Maturities and Commercial Mortgage Yields

(1)

Commercial Mortgage Yields

Fixed Maturity Yields

Excludes realized investment gains (losses) and non-hedge accounting derivative results. Yields are annualized for interim periods. Yields for commercial mortgage and other loans and are based on quarterly average

carrying

values

and

include

investment

income

commercial

loans

that

support

insurance

liabilities,

for

which

the

investment

results

generally

accrue

contract

holders.

Yields

for

fixed

maturities

are

based

amortized cost and are calculated net of liabilities and rebate expenses corresponding to securities lending activity. Yields exclude investment income on assets other than those included in invested assets. Prior period’s

yields

are

presented

basis

consistent

with

the

current

period

presentation.

Shown

Treasury

yields

are

quarterly

averages.

Financial Strength Symposium 6.18.2013

Decline largely attributable to the addition

of assets from the PRT and Hartford

transactions at current market yields.

5.68%

5.46%

5.38%

5.24%

4.61%

3.32%

3.49%

3.20%

1.83%

1.95%

3.32%

3.49%

3.20%

1.83%

1.95%

5.77%

5.95%

6.16%

5.69%

5.29%

FSB GA, ex. Japan

10 Year U.S. Treasury

FSB GA, ex. Japan

10 Year U.S. Treasury

1Q 2009

1Q 2010

1Q 2011

1Q 2012

1Q 2013

1Q 2009

1Q 2010

1Q 2011

1Q 2012

1Q 2013

(1)

Key Takeaways

High quality, well diversified portfolio.

Recent PRT deals and the Hartford Life acquisition have significantly increased the size of the FSB

investment portfolio.

Continue to prefer to underwrite and manage our credit risk directly.

•

High priority on private asset classes, both Corporates and Mortgages.

•

Disciplined approach to Commercial Mortgage Loan underwriting and diversification.

Current High Yield asset mix is based on:

•

Experience in private sector.

•

Commitment to managing credit risk directly.

Our CMBS portfolio is well constructed.

While low reinvestment rates have put downward pressure on our portfolio yield, strong Private

Placement and Commercial Mortgage production by our investment staff over the past several

years has helped to lessen the decline.

Financial Strength Symposium 6.18.2013

Capital and Liquidity Management

Ken Tanji

Senior Vice President

Treasurer

Prudential Financial, Inc.

Financial Strength Symposium 6.18.2013

Superior Value

Proposition for

Customers,

Creditors &

Investors

Delivering Superior Value

Financial

Strength

Strong

Ratings

Sustainable

ROE

Capital Management Philosophy

Protect

Downside

•

Adequate capital and

liquidity

•

Appropriate financial

leverage

Deploy Capital

for Growth

•

Organic Growth

•

Opportunistic

Business Expansion

/ M&A

Distribute to

Shareholders

•

Stable dividend

payout ratio

•

Share repurchases

Financial Strength Symposium 6.18.2013

Approach to Capital and Liquidity Management

Capital Protection

Framework

Liquidity

Diverse sources provide

significant financial flexibility

Competitive levels of capital

under stress

Financial Strength

AA standards for capital,

leverage and liquidity

Financial Strength Symposium 6.18.2013

On Balance Sheet Capital

Financial Services Businesses (“FSB”)

($ in Billions)

12/31/12

Required Capital

(1)

~$34.2 -

$34.7

Attributed Equity

(2)

$27.1

Capital Debt and Hybrids

$10.6

Total Capital Outstanding

$37.7

Total Available On Balance Sheet Capital

(3)

~$3.0 -

$3.5

Estimated

“Readily

Deployable”

Capital

~$1.5 -

$2.0

Required

Capital

represents

the

amount

GAAP

capital

necessary

support

business

risk

based

Financial

Strength

rating

targets

the

insurance

operating

entities.

Excludes total accumulated other comprehensive income.

Based on targeted Risk Based Capital (“RBC”) ratio of 400% for Prudential Insurance and equivalent levels of capital at other insurance operating entities.

Financial Strength Symposium 6.18.2013

71%

73%

12%

25%

15%

27.7%

24.4%

December 31, 2011

December 31, 2012

Capital Debt

Hybrids

GAAP Equity

Financial Leverage Ratio

Reducing Leverage and Strengthening

FSB Capital Structure

Composition of Outstanding Capital and

Financial Leverage Ratio

Financial Strength Symposium 6.18.2013

Excludes the impact of FX remeasurement to GAAP Equity of $1.0 billion and ($0.2) billion as of December 31, 2011 and 2012, respectively.

Excludes

accumulated

other

comprehensive

income

unrealized

gains

and

losses

investments

and

pension/postretirement

benefits.

Assumes 25% equity credit for Hybrids.

Reflects the retrospective adoption of amended accounting guidance for deferred policy acquisition costs effective January 1, 2012, which reduced equity by $2.8

billion. Also reflects a discretionary change in accounting principle related to the Company's pension plans.

(1)(2)

(4)

100%

(1)(2)(3)

Regulatory Capital Ratios

Risk Based Capital Ratio (“RBC”)

(1)

Target

December 31, 2012

Prudential Insurance

400%

456%

The

inclusion

RBC

measures

intended

solely

for

the

information

investors

and

not

intended

for

the

purpose

ranking

any

insurance

company

for

use

connection

with any marketing, advertising or promotional activities.

Based on Japanese statutory accounting and risk measurement standards applicable to regulatory filings as of March 31, 2013.

Gibraltar consolidated basis.

Solvency Margin Ratio

Target

March 31, 2013

Prudential

Japan

(2)

600 -

700%

749%

Gibraltar Life

(2)(3)

600 -

700%

896%

Financial Strength Symposium 6.18.2013

Liquidity Management Philosophy

Financial Strength Symposium 6.18.2013

Liquidity is managed for each legal entity separately with a robust

asset/liability management discipline

We manage holding company cash to a Board-approved minimum balance of

$1.3 billion

•

We maintain access to significant alternative liquidity sources

•

We issue only a modest amount of commercial paper

We opportunistically pre-fund our debt maturities

Financial Strength Symposium 6.18.2013

Reflects dividends and returns of capital to PFI.

Cash

Flows

from

Subsidiaries

(1)

2007

2008

2009

2010

2011

2012

Prudential Insurance

International

Asset Management

Prudential Annuities

Other

$ in BIllions

$3.2

$1.3

$4.0

$3.2

$2.9

$3.3

Holding Company Liquidity

Financial Strength Symposium 6.18.2013

PFI cash, cash equivalents and short-term investments, less short-term intercompany borrowings and commercial paper.

Includes $1.75 billion shared with Prudential Funding, LLC (“PFLLC”) / Prudential Insurance.

Primarily includes Enterprise Liquidity Account.

Based

estimated

incremental

market

capacity.

$233

million

Prudential

Financial,

Inc.

commercial

paper

was

outstanding

March

31,

2013.

(1)

(2)

(3)

(4)

Cash Cushion

$1.3

Cash Cushion

$1.3

$3.3

$9.1

$3.8

$1.0

Net Cash

Committed Credit Lines

Internal Sources

Commercial Paper Capacity

Total Liquidity Resources

PFI Alternate Sources of Liquidity

As of March 31, 2013

($ in Billions)

$4.6

$10.4

Prudential Insurance Liquidity

Represents

cash,

cash

equivalents

and

short-term

investments

the

Financial

Services

Businesses

and

Closed

Block

Business

March

31,

2013.

$2.3 billion of capacity from the Federal Home Loan Bank of New York was used as of March 31, 2013 in the form of advances and funding agreements. Borrowings are subject to

the availability of qualifying assets at Prudential Insurance.

Credit facility shared between PFI and Prudential Funding, LLC (“PFLLC”), a subsidiary of PICA.

Based

estimated

incremental

market

capacity.

$731

million

PFLLC

commercial

paper

was

outstanding

March

31,

2013.

•

In addition, PICA has substantial available liquid assets for securities lending

Financial Strength Symposium 6.18.2013

(1)

(2)

(3)

(4)

$4.8

$14.0

$4.4

$1.8

$3.0

Cash

Additional FHLBNY Capacity

Committed Credit Lines

Commercial Paper Capacity

Total Liquidity Resources

PICA Alternate Sources of Liquidity

As of March 31, 2013

($ in Billions)

Capital Protection Framework

Financial Strength Symposium 6.18.2013

Summary

•

Our value proposition is built on the foundation of:

–

Financial strength

–

Strong ratings

–

Attractive returns

•

Our capital management philosophy provides protection in times of stress and

preserves our ability to deploy capital for growth opportunities

or through

shareholder distributions.

•

Our strong liquidity position and access to diverse sources of liquidity provide

financial flexibility in times of stress.

Financial Strength Symposium 6.18.2013

Form: 8-K

Documents