Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Investor Day (June 2011)
86 slides from Prudential Financial's investor day presentation, Jun 9, 2011
Slide 1: Prudential Financial, Inc. Investor Day 2011
Hy] _ 4 PRUDENTIAL FINANCIAL, INC. INVESTOR Day 2011 JUNE 9, 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements 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. It is possible that actual results may differ materially from any expe
Slide 3: Non–GAAP Measures
Non–GAAP Measures Non–GAAP Measures This presentation includes references to “adjusted operating income.” Adjusted operating income is a non-GAAP measure of performance of our Financial Service Businesses (“FSB”). Adjusted operating income excludes “Realized investment gains (losses), net,” as adjus
Slide 4: Reconciliation for Individual Annuities pre-tax adjusted operating income excluding disclosed items
Reconciliation for Individual Annuities pre-tax adjusted operating income excluding disclosed items Reconciliation for Individual Annuities pre-tax adjusted operating income excluding disclosed items 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Individual Annuities pre-tax adjusted operating income (loss) (244) (131)
Slide 5: Prudential Financial, Inc. – John Strangfeld, Chairman and CEO
P RUDENTIAL F INANCIAL , I NC . J OHN S TRANGFELD C HAIRMAN AND CEO
Slide 6: Prudential Today
Prudential Today Prudential Today • Attractive return opportunities in high quality businesses, supported by strong balance sheet • Balanced portfolio of selected risks; improving risk profile • Expanding distribution: market leadership across multiple channels • Growth engines in International Insu
Slide 7: Leadership Positions in Chosen Markets
Leadership Positions in Chosen Markets Rank Business Metric As of A set of businesses that are diverse, healthy and competitive in their markets Leadership Positions in Chosen Markets Rank Business Metric As of Variable Annuities Sales (Advisor-sold) 1Q ’11 Stable Value Assets 4Q ’10 Defined Contrib
Slide 8: Equity Deployment to a Superior Mix of High Quality Businesses
Equity Deployment to a Superior Mix of High Quality Businesses Equity Deployment to a Superior Mix of High Quality Businesses $18.4 Billion (1) 12/31/10 12/31/02 $29.2 Billion (1) $30.1 Billion (1) International Insurance Annuities, Retirement & Asset Management Individual Life & Group Insurance Cor
Slide 9: High Quality Mix of Businesses with Superior ROE Prospects
High Quality Mix of Businesses with Superior ROE Prospects (1) Individual Life & Group Ins 2010 Baseline ROE 11% - 12% International Insurance 2010 Baseline ROE 19% - 20% Individual Life & Group Ins 2013 ROE Potential 12% - 13% International Insurance 2013 ROE Potential 17% - 18% Business unit ROE’s
Slide 10: Deployment of Capital for Superior Growth and Return Prospects
Hy] 4 DEPLOYMENT OF CAPITAL FOR SUPERIOR GROWTH AND RETURN PROSPECTS MARK GRIER VICE CHAIRMAN PRUDENTIAL FINANCIAL, INC.
Slide 11: Capital Deployment “Then” and “Now”
Capital Deployment “Then” and “Now” Circa 2008 - 2009 2011 • Defense • Offense • Offense • Defense Circa 2008 -
Slide 12: Strong Capital Position
Strong Capital Position Pro-forma for Star/Edison acquisition which closed February 1, 2011 and Global Commodities business divestiture expected to close in second quarter 2011; in billions. As reported on statutory basis. Reflects targeted statutory ratios in domestic and international regulated en
Slide 13: Capital Management and Business Approach
Capital Management and Business Approach Capital Management Begins with Selection of Businesses and Risks Capital Management Begins with Selection of Businesses and Risks • High value-added business models • Credible diversification in mix of businesses and risks • Consistent with established strate
Slide 14: Superior Business Mix Drives Growth and Return Prospects
Superior Business Mix Drives Growth and Return Prospects (1) International Insurance Asset Management Individual Annuities Retirement Group Insurance Individual Life ROE Prospects Low Medium High Expected AOI Volatility For illustrative purposes only; not intended to express actual growth or return
Slide 15: Prudential’s Business Mix: Individual Life, Group Insurance, Retirement
Prudential’s Business Mix Individual Life • Focus on returns through capital management, cost effective distribution • Coordinated approach to product and distribution channel management • Quality business; avoid inappropriate financing • Results largely uncorrelated to U.S. equity markets Group Ins
Slide 16: Prudential’s Business Mix: Asset Management
Prudential’s Business Mix Asset Management • Leading third party asset manager • Seasoned skills in multiple asset classes provide competitive advantage for Prudential businesses • Strong net flows drive increasing AUM, growing asset management fees • Improving earnings quality; reduced exposure to
Slide 17: Prudential’s Business Mix: Annuities
Prudential’s Business Mix Annuities • Market leading positions across multiple distribution channels • Proven, superior value proposition based on “highest daily” living benefits • Popularity of auto-rebalancing products drives improving overall risk profile • Growing returns on an increasing base
Slide 18: Prudential’s Business Mix: International Insurance
Prudential’s Business Mix International Insurance • Sustained success in Japan built on foundation of needs-based selling, emphasis on protection products adapted to successful retirement products • Expanding distribution including Life Planners, Life Advisors, banks and independent distributors fue
Slide 19: Prudential International Insurance: Building on Success in Japan
PRUDENTIAL INTERNATIONAL INSURANCE BUILDING ON SUCCESS IN JAPAN EDWARD BAIRD EXECUTIVE VICE PRESIDENT CHIEF OPERATING OFFICER, INTERNATIONAL PRUDENTIAL FINANCIAL, INC. PRUDENTIAL INTERNATIONAL INSURANCE BUILDING ON SUCCESS IN JAPAN EDWARD BAIRD EXECUTIVE VICE PRESIDENT CHIEF OPERATING OFFICER, INTER
Slide 20: International Insurance
International Insurance • Big business • A market leader in Japan • High margins, low volatility • Strong growth International Insurance
Slide 21: International Insurance
International Insurance International Insurance Star/Edison POJ (4) /Gibraltar All Other Operations Annualized New Business Premiums (2) Total Premium Revenue (2)(3) Number of Policies Inforce (1) (thousands) (millions) (millions) Direct business only; includes annuities. Foreign denominated activit
Slide 22: International Insurance Distribution
International Insurance Number of Captive Agents Number of Bank Relationships Number of Independent Agencies International Insurance Star/Edison POJ/Gibraltar All Other Operations 5,148 12/31/10 3/31/11 12/31/10 3/31/11 12,846 19,808 12/31/10 3/31/11
Slide 23: Overall Position – New Business (Face Amount)
6 Years Ago FY 2004 Share Nine Months ended December 31, 2010 Share Overall Position – New Business (Face Amount) (1) 6 Years Ago FY 2004 Share Nine Months ended December 31, 2010 Share 1. Nippon 18.4% 1. Dai-ichi 12.2% 2. Dai-ichi 14.3% 2. Nippon 12.1% 3. Meiji-Yasuda 11.1% 3. T&D Financial 10.9% 4
Slide 24: Stable Sources of Earnings
Stable Sources of Earnings Pre-Tax AOI International Insurance Operation (1) Includes margin on multi-currency annuity products. Earnings are primarily the result of stable drivers. (2) $ in millions $1,598 $1,747 $1,843 $2,057 Mortality Margin and Expense & Other Margin Investment Margin Pre-tax ad
Slide 25: Japan: Substantial Growth Opportunities in an Attractive Market
Japan: Substantial Growth Opportunities in an Attractive Market Japan: Substantial Growth Opportunities in an Attractive Market • World’s second largest life insurance market: Life premiums $399 billion (1) • Household sector wealth $18.3 trillion, similar to U.S. on per-capita basis (2) • Expanding
Slide 26: World’s Largest Life Insurance Markets
World’s Largest Life Insurance Markets Country Rank Life Premiums ($ billions) 2009 United Kingdom 3 218 France 4 194 Italy 5 115 Germany 6 112 China 7 109 South Korea 8 57 India 9 57 Taiwan 10 52 World’s Largest Life Insurance Markets Country Rank Life Premiums ($ billions) United States United Sta
Slide 27: Growing Retirement Market Complements Premature Death Protection Market
Growing Retirement Market Complements Substantial Premature Death Protection Market Japan Demographics Growing Retirement Market Complements Substantial Premature Death Protection Market Source: National Institute of Population and Social Security Research, Japanese Journal of Population Population
Slide 28: Financial Assets in the Household Sector of Select Major Economies
Financial Assets in the Household Sector of Select Major Economies Household Sector Financial Assets Financial Assets in the Household Sector of Select Major Economies Household Sector Financial Assets Note: Data for Japan, USA, and UK is as of December 31, 2010; China is as of September 30, 2009; o
Slide 29: Portfolio of Financial Assets – Japan
Portfolio of Financial Assets – Japan Financial Assets in the Household Sector December 31, 2010 Portfolio of Financial Assets – Japan Source: Bank of Japan, Federal Reserve, Oanda $10.1T Financial Assets in the Household Sector December 31, 2010 Currency and Deposits 55.1% Bonds 2.7% Investment Tru
Slide 30: Household Sector Pool of Currency and Deposits
Household Sector Pool of Currency and Deposits Household Sector Financial Assets in Currency and Deposits Household Sector Pool of Currency and Deposits Japan has the largest pool of household assets in currency and deposits • ~50% higher than that of the U.S. despite a population that is ~ 60% smal
Slide 31: Needs-Based Selling Over a Lifetime
Needs-Based Selling Over a Lifetime Accident and Health (A&H) primarily includes daily hospitalization indemnity, cancer insurance, and accident and sickness riders. Client Age 30 40 50 60+ Client Focus Death Retirement Protection Income Needs Needs Prudential Solutions Term Insurance Term Insurance
Slide 32: Protecting Financial Security For a Lifetime
Protecting Financial Security For a Lifetime Based on annual premium for new Prudential of Japan insureds in 2009 (male, married insured, individual policies); foreign-denominated activity translated to U.S. dollars at uniform exchange rates, Japanese yen 99 per U.S. dollar. Aging population leads t
Slide 33: Japan Average Premium
Japan Average Premium (1) Based on annualized new business premiums for the year ended December 31, 2010 sold by Life Planners and Life Advisors. Foreign denominated activity translated to U.S. dollars at uniform exchange rates; Japanese yen 92 per U.S. dollar. 4,500 2,000 1,500 1,000 3,000 3,500 4,
Slide 34: International Insurance
International Insurance Meeting customer needs through… – Strong and diverse product portfolio – Complementary distribution capabilities – Strong relationships
Slide 35: No. 1 in Customer Satisfaction
No. 1 in Customer Satisfaction J.D. Power Asia Pacific 2011 Japan Life Insurance Contract Customer Satisfaction Study SM Customer Satisfaction Index Ranking (Based on a 1,000-point scale) Life Support Insurance Segment The Prudential Life Insurance Sony Life Insurance Tokio Marine & Nichido Life Ins
Slide 36: Product Portfolio Serving Financial Security Needs Over a Lifetime
Product Portfolio Serving Financial Security Needs Over a Lifetime Annualized New Business Premiums (1) Year ended December 31, 2010 Annualized New Business Premiums (1) (2) Pro Forma Year ended December 31, 2010 Annualized New Business Premiums (1) Year ended December 31, 2010 For Prudential’s Japa
Slide 37: Diverse Annualized New Business Premiums in Japan
Diverse Annualized New Business Premiums in Japan Annualized New Business Premiums (1) For Prudential’s Japanese businesses; foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 92 per U.S. dollar. Annualized New Business Premiums
Slide 38: Distribution Channels in Japan
Distribution Channels in Japan Annualized New Business Premiums (1) Year ended December 31, 2010 Annualized New Business Premiums (1)(2) Pro Forma Year ended December 31, 2010 For Prudential’s Japanese businesses; foreign denominated activity translated to U.S. dollars at uniform exchange rates; Jap
Slide 39: Complementary Distribution Channels Drive Sales Growth in Japan
Complementary Distribution Channels Drive Sales Growth in Japan Annualized New Business Premiums (1) For Prudential’s Japanese businesses; foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented. Japanese yen 92 per U.S. dollar. Annualized New Busi
Slide 40: Complementary Distribution Channels Drive Sales Growth in Japan
Complementary Distribution Channels Drive Sales Growth in Japan Annualized New Business Premiums (1) ($ in millions) For Prudential’s Japanese businesses; foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented. Japanese yen 92 per U.S. dollar. Ann
Slide 41: Bank Channel Sales Growth Driven by Protection Products
Bank Channel Sales Growth Driven by Protection Products Annualized New Business Premiums (1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar. ($ in millions) $21 $25 $40 $48 $56 $78 $90 $104 $128 1Q09 2Q09 3Q09
Slide 42: Prudential’s Key International Strategies
Prudential’s Key International Strategies: Suited to Japanese Market Opportunities • Target the affluent and mass affluent consumer • Needs-based selling: historical focus on life insurance; increasing emphasis on meeting retirement needs • Proprietary distribution model built on recruiting, selecti
Slide 43: Life Planner Distribution
Life Planner Distribution • Life Planner – a selective, high quality sales force – Hire about 3 out of 100 candidates – Well trained and professional – Customer focused – Disciplined, and demonstrate “missionary zeal” • Emphasize protection products requiring analysis of client needs • Significant s
Slide 44: Teachers Association: Perennial Sales Opportunities
Teachers Association: Perennial Sales Opportunities Active Market Retirement Market 120,000 Retired Teachers Association members (1) 20,000 – 30,000 teachers retire each year Numbers approximate as of March 31, 2011. Active Market Retirement Market 48% Gibraltar Policyholders 87% Gibraltar Policyhol
Slide 45: Teachers Association Core Relationship Contributes to Life Advisor Distribution
Teachers Association Core Relationship Contributes to Life Advisor Distribution Japanese Educational Mutual Aid Association of Welfare Foundation (Teachers Association) • Relationship since 1952 • Approximately 600,000 members (1) • Access to approximately 950,000 teachers and school personnel throu
Slide 46: Bancassurance Powered by Prudential
Bancassurance Powered by Prudential Prudential Support • Insurance education and training backed by proven distribution model • Competitive products focused on protection • Highly regarded brand, promises backed by a strong company • Access to expertise of “seconded” former Prudential of Japan Life
Slide 47: International Insurance Sustained Growth Reflects Success in Japanese Market
International Insurance Sustained Growth Reflects Success in Japanese Market Pre-Tax Adjusted Operating Income (1) $917 $1,321 $1,428 $1,598 $1,747 $1,843 $2,057 Japan All Other Operations $ in millions Pre-Tax Adjusted Operating Income (1) $0 $500 $1,000 $1,500 $2,000 $2,500 Pre-tax adjusted operat
Slide 48: Key Takeaways
Key Takeaways • Prudential’s largest business • A market leader in Japan • High margins, low volatility • Strong growth
Slide 49: Asset Management at Prudential
ASSET MANAGEMENT AT PRUDENTIAL BROAD ASSET CLASS CAPABILITIES HIGH QUALITY EARNINGS GROWTH CHARLES LOWREY EXECUTIVE VICE PRESIDENT CHIEF OPERATING OFFICER, U.S. BUSINESSES PRUDENTIAL FINANCIAL, INC.
Slide 50: Asset Management
Asset Management Leading Third Party Asset Manager Competitive Advantage for Prudential Businesses • Robust institutional and retail businesses attract and retain talented investment professionals • Substantial fee-based earnings that benefit from operating leverage • Limited capital requirements; s
Slide 51: Prudential Investment Management Key Strategies
Prudential Investment Management Key Strategies • Utilize significant talent base across multiple asset classes; established track records, and broad and deep client relationships to increase AUM (1) base • Grow high-quality earnings driven primarily by asset management fees • Manage business risks
Slide 52: Asset Management’s Competitive Strengths
Asset Management’s Competitive Strengths Appeal to Clients as well as Investment Professionals Experience and Track Record Breadth and Depth of Capabilities Access to Capital and Co-investing Brand and Reputation Scale Third Party Clients $275 billion third party AUM (1) 13% AUM CAGR Manager Continu
Slide 53: Asset Management has Three Major Client Types
Asset Management has Three Major Client Types Total AUM: $569 billion (1) General Account $214 billion Institutional $246 billion Retail $109 billion Total AUM: $569 billion (1) As of March 31, 2011. • Public Pension Plans (DB/DC) • Corporate Pension Plans (DB/DC) • Union Pension Plans • Endowments
Slide 54: AUM and Revenues are Well Diversified by Client Type
AUM and Revenues are Well Diversified by Client Type Assets Under Management $569 billion (1) Asset Management Fees $1.3 billion (2) As of March 31, 2011. For the year ended December 31, 2010. $246 B $214 B $109 B $353 M $626 M $294 M Retail 19% General Account 38% Institutional 43% General Account
Slide 55: AUM and Revenues are also Diversified by Asset Class
AUM and Revenues are also Diversified by Asset Class Assets Under Management $569 billion (1) Asset Management Fees $1.3 billion (2) As of March 31, 2011. For the year ended December 31, 2010. Public Fixed Income 56% Public Equity 24% Real Estate 5% Commercial Mortgages 6% Private Fixed Income 9% Pu
Slide 56: AUM Spans Six Distinct Investment Disciplines
AUM Spans Six Distinct Investment Disciplines Investment Manager Investment Discipline Public/Private 3/31/11 AUM (1) Investment Manager Investment Discipline Public/Private 3/31/11 AUM (1) Jennison Associates Fundamental Equity Public $ 86 Quantitative Management Associates (QMA) Quantitative Equit
Slide 57: Public Fixed Income
Public Fixed Income Prudential Fixed Income Jennison Fixed Income Prudential Fixed Income Jennison Fixed Income • $273 billion AUM (1) • $47 billion in fixed income AUM (1) • Operations in U.S., Europe, and Asia • Operations in U.S. • Comprehensive product line • Focused product line – Broad market
Slide 58: Public Equity
Public Equity Jennison Associates Quantitative Management Associates • $86 billion in equity AUM (1) • $47 billion in equity AUM (1) • Fundamental • Quantitative • Growth • Blend • Value • Multi-Cap • Equity income • Midcap growth • Small Cap • Sector strategies • Global • Core • Value • All Cap • M
Slide 59: Private Fixed Income
Private Fixed Income Prudential Capital Group Prudential Mortgage Capital Company As of March 31, 2011. Prudential Capital Group Prudential Mortgage Capital Company • $54 billion AUM (1) in private debt • $34 billion AUM (1) in commercial mortgages • Operations in U.S. and Europe • Operations in U.S
Slide 60: Prudential Real Estate Investors
Prudential Real Estate Investors Prudential Real Estate Investors As of March 31, 2011. Prudential Real Estate Investors • $28 billion AUM (1) • Operations in U.S., Europe, Asia, and Latin America • One of few global real estate investment managers • 21 offices worldwide (1) • 490 Institutional clie
Slide 61: Our Investment Performance Track Record is Strong
Our Investment Performance Track Record is Strong % of Total Third Party Assets Under Management Exceeding Benchmark 66% 84% 84% 68% 85% 74% 1 Year 3 Year 5 Year As of 3/31/10 As of 3/31/11 % of Total Third Party Assets Under Management Exceeding Benchmark 70% ($247 billion) of Retail and Institutio
Slide 62: Third Party Net Institutional Flows Reached Record Levels in 2010
Third Party Net Institutional Flows Reached Record Levels in 2010 Net flows exclude money market flows, one-time transfers, and acquisition/disposition events $ billions Percent of beginning of year AUM $(5) $ $5 $10 $15 $20 $25 $30 $35 Equity Real Estate Fixed Income Total
Slide 63: Third Party Retail Client Flows Also Reached Record Levels in 2010
Third Party Retail Client Flows Also Reached Record Levels in 2010 $(2) $- $2 $4 $6 $8 $ billions Net flows exclude money market flows, one-time transfers, and acquisition/disposition events - Percent of beginning of year AUM Equity Real Estate Fixed Income Total
Slide 64: Growth in AUM has Driven Growth in Asset Management Fees
Growth in AUM has Driven Growth in Asset Management Fees $414 $420 $430 $438 $434 $439 $422 $395 $386 $409 $444 $457 $472 $484 $518 $537 $569 $0 $100 $200 $300 $400 $500 $600 Assets Under Management by Asset Class At end of period. $ billions $ millions (1) Fixed Income Real Estate Equity $262 $271
Slide 65: Quality of Revenues Increasing
Quality of Revenues Increasing $1.1 billion $1.3 billion 2007 Asset Management Fees + “ITPICM” = $1.6 billion (1)(2) 2010 Asset Management Fees + “ITPICM” = $1.5 billion (1) Asset management fees and incentive, transaction, principal investing and commercial mortgage (ITPICM) revenues. As originally
Slide 66: Building Sustainable Earnings Power
Building Sustainable Earnings Power Pre-Tax Adjusted Operating Income $550 $701 $232 $55 $487 Asset Management segment pre-tax adjusted operating income Asset Management segment pre-tax adjusted operating income, excluding contribution of Incentive, Transaction, Principal Investing and Commercial Mo
Slide 67: Key Takeaways
Key Takeaways • Robust institutional and retail businesses attract and retain talented investment professionals • Strong investment performance has contributed to significant third party flows and growth in AUM • Asset management fees have been a stable percentage of AUM historically and are expecte
Slide 68: Prudential Annuities: Market-Leading Value Proposition
PRUDENTIAL ANNUITIES MARKET-LEADING VALUE PROPOSITION DRIVES GROWING RETURNS AND IMPROVING RISK PROFILE STEVE PELLETIER PRESIDENT PRUDENTIAL ANNUITIES PRUDENTIAL ANNUITIES MARKET-LEADING VALUE PROPOSITION DRIVES GROWING RETURNS AND IMPROVING RISK PROFILE STEVE PELLETIER PRESIDENT PRUDENTIAL ANNUITIE
Slide 69: Prudential Annuities Superior Value Proposition and Business Prospects
Prudential Annuities Superior Value Proposition and Business Prospects Proven Value Proposition Market Leadership Strong Business Prospects • Highly differentiated and sustainable strategy • #1 in advisor-sold variable annuity sales (1) • Leading positions in independent financial planner, wirehouse
Slide 70: Drivers of Market Leadership
Drivers of Market Leadership • Innovative retirement income guarantee features • Proven product-based risk management protecting account values • Sophisticated hedging capabilities • Broad multi-channel distribution • Scale supporting efficient cost structure • Brand, reputation and demonstrated com
Slide 71: Prudential Annuities 1Q11 Asset and Sales Rankings
($ millions) Variable Annuity Assets Under Management (1) Advisor-Sold Variable Annuity Sales (1) Prudential Annuities 1Q11 Asset and Sales Rankings Variable Annuity Assets Under Management (1 ) Variable Annuity Sales (1) Source: VARDS 1Q’11 report. Advisor-sold, excludes group/retirement plan contr
Slide 72: Building Multi-Channel Distribution Strength
Building Multi-Channel Distribution Strength Prudential Individual Annuity Gross Sales (1) 2008 $10,329 2010 $21,754 Prudential Individual Annuity Gross Sales (1) In millions; includes variable and fixed annuities. $10,329 $21,754 Insurance Agents 24% Bank 7% Independent 57% Insurance Agents 13% Ban
Slide 73: Product Design: The Highest Daily Lock-In
Product Design: The Highest Daily Lock-In Hypothetical for illustrative purposes only . 5 Prudential’s unique Highest Daily Product is a powerful feature that continues to drive strong sales. Prudential’s unique Highest Daily Product is a powerful feature that continues to drive strong sales Account
Slide 74: Product Embedded Risk Management Protects Account Values at Contract Level
Product Embedded Risk Management Protects Account Values at Contract Level 6 Powerful algorithmic risk mitigation tool protects client account values in market downturns and improves our risk profile. Note: For illustrative purposes, not representative of actual results. Powerful algorithmic risk mi
Slide 75: Slide 75
Slide 76: Protected Value Established
$250,000 $200,000 $150,000 $100,000 $50,000 PROTECTED VALUE ESTABLISHED AT PAYMENT AMOUNT $10,000 PER YEAR LE Q a ra @ Prudential
Slide 77: Auto-Rebalancing Proven Through Financial Market Crisis… and Beyond
Auto-Rebalancing Proven Through Financial Market Crisis… and Beyond % of HD Account Value Invested in Customer-Selected Funds This illustration analysis for HD Lifetime Seven assumes a $500,000 initial investment into the AST Capital Growth Portfolio & AST Investment Grade Bond Portfolio and electio
Slide 78: Comparison of a VA with Auto-Rebalancing to a VA without Auto-Rebalancing
Comparison of a VA with Auto-Rebalancing to a VA without Auto-Rebalancing Probability that a client’s account value suffers a 20% or 33% loss over a hypothetical ten-year period (1) 7.2% 0.1% 18.0% 6.0% -1% 1% 3% 5% 7% 9% 11% 13% 15% 17% 19% 20% loss of account value 33% loss of account value Variab
Slide 79: Improving Risk Profile
Improving Risk Profile 14 The accelerated growth in our overall block has also increased the percentage of algorithmic mechanism based account values, which will continue to improve the level and volatility of returns. Variable Annuity Account Values with Living Benefits with auto-rebalancing featur
Slide 80: Strong Net Sales Contribute to Growing Account Value Base
Strong Net Sales Contribute to Growing Account Value Base (1) $63.3 $84.0 $106.2 Account values as of end of period; includes variable and fixed annuities. In billions. $63.3 $10.3 $10.4 $84.0 $14.6 $7.6 $106.2 Account values Net sales Market appreciation and other activity
Slide 81: Well Positioned to Retain Auto-Rebalancing Business In-Force
Well Positioned to Retain Auto-Rebalancing Business In-Force Less Than 1% 1% to 3% Over 3% Surrender Charges Applicable to Account Values (1) Auto-Rebalancing $65 B Non-Auto-Rebalancing $45 B Total $110 B Less Than 1% 1% to 3% Over 3% 6% 2% 92% 54% 10% 36% 25% 5% 70% Surrender Charges Applicable to
Slide 82: Growing Returns on an Increasing Base
Growing Returns on an Increasing Base Adjusted Operating Income – Excluding Disclosed Items Excludes market driven and other discrete items disclosed by the company including unlockings of deferred policy acquisition and other costs and reserves for guaranteed minimum death and income benefits. See
Slide 83: Improving Product Mix and Market Performance Drive Growing Returns
Improving Product Mix and Market Performance Drive Growing Returns Net revenues (1) as percentage of average account values (2) Operating expenses (1) as percentage of average account values (2) “ROA”: Pretax adjusted operating income excluding disclosed items as percentage of average account values
Slide 84: Key Takeaways
Key Takeaways • Market leadership driven by superior value proposition • Expanding distribution strength across multiple channels • Popularity of auto-rebalancing products driving improving risk profile • Product structure, strong net sales and market performance producing increasing returns on a gr
Slide 85: Prudential Financial, Inc. – John Strangfeld, Chairman and CEO
P RUDENTIAL F INANCIAL , I NC . J OHN S TRANGFELD C HAIRMAN AND CEO
Slide 86: Key Takeaways
Key Takeaways Key Takeaways • Attractive return opportunities in high quality businesses, supported by strong balance sheet • Balanced portfolio of selected risks; improving risk profile • Expanding distribution: market leadership across multiple channels • Growth engines in International Insurance,