Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Investor Day (December 2009)
99 slides from Prudential Financial's investor day presentation, Dec 10, 2009
Slide 1: Prudential Financial, Inc. Investor Day 2009
Exhibit 99.1 PRUDENTIAL 1 FINANCIAL, INC. INVESTOR DAY 2009
Slide 2: Eric Durant, Investor Relations
PRUDENTIAL ERIC SENIOR 2 DURANT VICE PRESIDENT, FINANCIAL, INVESTOR INC. INVESTOR RELATIONS DAY 2009
Slide 3: Forward-Looking Statements
Forward-Looking Certain results “projects,” expectations and others: economic been experience for (8) relating response in including assumptions the our conditions. particular Prudential 3 Investor catastrophic other investment ability divestiture Financial there affected may (1) of topurposes; to a
Slide 4: Non-GAAP Measures
Non–GAAP This related across well Realized terminating standing adjusted economically Adjusted value clearly operations. We highlighting GAAP, reconciliation Return calculation), losses Our changes income For Quarterly Company’s The Report 4 Investor believe additional information expectations as pr
Slide 5: Reconciliations
Reconciliations Financial Management International 2,636 related changes before operations Income Businesses attributable Inc. 5 Investor $1,259 Income equity charges taxes, from (850) Services Day attributable attributable toInsurance discontinued 61 in taxes, not Prudential Divested 12.10.09 and b
Slide 6: Reconciliations
Reconciliations Nine Reconciling Realized contractholder before Income Net earnings Earnings Financial 6 income months income Investor from per investment per allocated Services of items: share share ended continuing Financial taxes liabilities between Day calculation Businesses to of(2.57) losses,
Slide 7: Reconciliations
Reconciliations Financial management 2,642 (850) from operating (1) revenues charges 7 Investor Revenues continuing Divested Interest and related for of Services income joint Day income divested adjustments fees, exclude expense ventures 12.10.09 businesses to between operations before realized comm
Slide 8: John Strangfeld, Chairman and CEO
PRUDENTIAL JOHN CHAIRMAN 8 STRANGFELD AND FINANCIAL, CEO INC.
Slide 9: Gaining Ground in the Current Market
Prudential •– GAINING 9 Balanced Strong Growth Diversified Proven Seasoned Leadership Superior Investor capital acquisition engines Day Today value GROUND portfolio management mix distribution positions 12.10.09 and propositions: of in liquidity, high International of and IN in selected team integra
Slide 10: Superior Capital Mix
Superior ATTRIBUTED More Asset Retirement International Group Individual Less 1) investments 10 As Investor Market of Market Management Insurance September Mix Annuities Life 20% Day and Sensitive Investments Insurance Sensitive of10% EQUITY: 12.10.09 High pension 7%7% 30, 20% Quality 31% 2009; and
Slide 11: Superior Value Propositions
Superior Innovative United International “Highest Retirement Insurance-based Fixed F®ANCIAL Security Financial Fundamental Offer Products Protection Insurance Investor 11 annuities States Day Value Daily” Solutions stable STRENGTH Businesses 12.10.09 Businesses Propositions serve annuity retirement
Slide 12: Leadership Positions in Chosen Markets
Leadership As Metric Business Rank Sales 3 6 2Q09 Assets Recordkeeping 9 Managed 1 8 2 In-Force 5 2008 New Sources: 12 3Q09 Investor Variable Term Retirement Defined Universal Group International ofAnnualized Business (Advisor-Sold) Life Day Life Premiums LIMRA, Assets Contribution Benefit Annuities
Slide 13: Gaining Ground: Nine Months Sales and Flows
Prudential Nine Variable Full Individual Group International Annualized $11,315 2009 19,168 268 2008 12,392 $ 390 245 1) 2) on Investor 13997 8,076 954 In Foreign the 515 Service millions. Months amounts Insurance 7,847 1,210 915 6,382 Annuities Day Businesses Life denominated New Retirement Insuran
Slide 14: Making Strong Capital Generation
Making $1.4 2009 $1 $1.5 $500 September Prudential Japan $3.4 Wachovia 2010 INTERNAL 1) 2) Investor 14 Issued billion billion million solvency aDay by Strong long-term joint Insurance 30, Common long-term “net The Prudential CAPITAL exchangeable 12.10.09 2009 venture margins cash” Prudential Company
Slide 15: Summary
•Summary 15 Weathering Gaining Diversified Bolstered Positioned Investorground: capital Day for portfolio theorganic 12.10.09 storm: strong and of liquidity not business businesses sales justand intact, position growth flows with butand across a stronger superior acquisition the board financial oppo
Slide 16: Mark Grier: Sustainable Financial Strength Supporting Value Propositions and Growth
PRUDENTIAL SUSTAINABLE SUPPORTING MARK VICE CHAIRMAN GRIER PRUDENTIAL’S FINANCIAL, FINANCIALINC. STRENGTH VALUE PROPOSITIONS AND GROWTH
Slide 17: Risk Management and Financial Strength
•Risk 17 Risk Risks Product Enhanced High Bolstered Investor Selection management value-added quality diversified risk capital Day stress mitigation investment and 12.10.09 scenario and across Management business begins liquidity features exposure portfolio risk with models mitigation enhances busin
Slide 18: Risk Begins with Business Selection
Risk Attributed $18.4 Total 32% 16% Percentage 21% 7% 12/31/02 10% International 1) accumulated 2) 18 Attributed Includes Investor 48% Management 11% Billion 15% 9/30/09 of Equity(1) 36% divested Day other Businesses equity 4% $23.9 12.10.09 Begins comprehensive Billion of businesses. Financial Reti
Slide 19: Balanced Attributed Equity and Asset Management Mix
Balanced Attributed $21.5 Asset Individual 17% 36% Retirement 7% 20% Annuities Primary International U.S. Fixed Commercial 1) benefits. 19 As Investor Markets: of Management Billion(1) Income Business September Excludes Mix Equity Life, Day Real Markets: and Mortality, ofGroup 12.10.09 Business Esta
Slide 20: Product Risk Mitigation Features
Product Product-Based Variable Auto-rebalancing, Full Investment Group Experience Value Guaranteed market Principal competitive highly pre-retiree Competitive Investor 20 Service Proposition Insurance: attractive participation, Risk Annuity Day guarantee market experience rated lifetime crediting Re
Slide 21: Managing Hedging and Capital
•Managing 21 Hedging Capital Modeling Contingent Consideration Selective Investor hedge programs Stress exposure for Day sources “tail for of 12.10.09 Scenario “headline annuities risk,” to ofmarket-sensitive liquidity statutory Risk risk” capital investments vulnerability and business activities
Slide 22: Broad Diversification of General Account Investments
Broad 59 Public Fixed Private Commercial 12 Equities 6 Policy FSB Residential/ Government 3% 1) 2) services. 3) 4) 5) 22%As Trading Commercial Includes Based %Corporate Investor General Fixed of Maturities Investment loans, 11 September 2% on% account Maturities state Day CMBS fair Other Loans (4) A
Slide 23: Asset Selection Focus on Quality
Asset (1) FSB $131.7 $81.9 $87.4 1) Selection 12/31/02 Non-investment grade Investment 23 FSB Investor Fixed $121.1 General Focus 12/31/03 Maturity Day$114.6 onatQuality Account 12.10.09 12/31/04 Portfolio $114.8fair 12/31/05 $107.9 value;$104.7 12/31/06 in billions. 12/31/07 12/31/08 9/30/09
Slide 24: Total Public and Private Fixed Maturities Credit Quality
Total Below 54% 12% Investment Prudential’s Corporate 1) 24 FSB Investor 46% $61.3 Investment General 88% Securities(1) Grade Day billion Credit Account; 12.10.09 Below Grade Exposure $7.5 Investment as ofbillion September Grade30, Public 2009;Fixed amortized Maturities cost; Private credit quality
Slide 25: Corporate Credit Exposure vs. Barclays Indices
Prudential’s Prudential Technology Telecommunications Food/Beverage Banking Electric Foreign Transportation Pharmaceuticals Other Integrated Natural Retailers Reits Diversified Independent Note: -12% 8% 4% 0% -4% -8% 12% 1) 25 For Investor Universe Industrial the Gas Agency Local FSB Energy Over Man
Slide 26: Below Investment Grade Corporate Debt Securities
Below C Ratings(2) In B Ba $7.5 Amortized 1) 2) 26 and 26% or For Based Investor 63% $7.0 near lower the Investment on default FSB Cost Day NAIC 7%General Fair 12.10.09 4% Grade designation; Value Account; Corporate Public based as Debt Securities(1) ofon September Private amortized Debt 30, cost. (
Slide 27: Asset-Backed Securities Collateralized by Sub-Prime Mortgages
Asset-Backed Amortized $7.8 $5.4 Fair $3.6 $7.1 12/31/07 Impact 1) 27 For Investor Value $0.7 $4.5 $3.0 the of12/31/08 adoption FSB Cost DaySecurities General 12.10.09 9/30/09 of new Account; Collateralized authoritative as of September by GAAP Sub-Prime accounting 30, Mortgages(1) 2009;guidance in
Slide 28: Commercial Mortgage Loan Portfolio
Commercial •Gross 1) 28 Weighted Underwritten Debt Underweighted Maturing For Investor Carrying the service FSB in average Day Mortgage 2010: coverage by General Value: 12.10.09 inPrudential loan-to-value offices $1.2 $19.6 Portfolio(1) Account; ratio billion and Billion 1.8x retail (weighted as rat
Slide 29: Commercial Mortgage Delinquency Rates
Commercial 1 % 3/1/1998 9/1/2008 Source: 290 Investor 9 8 7ACLI 63/1/2009 9/1/1998 5Day 4Real 3Mortgage 212.10.09 1Estate 3/1/1999 9/1/2009 0 Delinquency Delinquencies Loan 9/1/1999 Life Portfolio insurance 3/1/2000 Rates Profile companies 9/1/2000 and Citi(60+) Investment 3/1/2001 Banks9/1/2001 & R
Slide 30: Bolstered Financial Strength and Flexibility
Bolstered June, Issued September, Favorable Market Supports Additional 1) 2) 30 Issued Investor 2009 $1.4 $1.5 validation business by Financial terms buffer 2009 Day billion The Prudential 12.10.09 Prudential Issued for of growth common debt Strength investment stress Financial, securities $500 oppo
Slide 31: Summary
•Sustainable 31 Balanced Product Enhanced High Recent Investor quality, securities risk portfolio Day management Financial mitigation diversified 12.10.09 issues ofStrength businesses features of bolstered investment stresssupport scenario and financial portfolio risks attractive risks strengthvalue
Slide 32: Edward Baird, International Businesses
PRUDENTIAL’S EDWARD EXECUTIVE CHIEF OPERATING P. BAIRD VICE INTERNATIONAL PRESIDENT OFFICER, INTERNATIONAL ANDBUSINESSES
Slide 33: Key Elements of International Strategy
Key •Our 33 Target Concentrate Continue Historical Needs-based Growth Increasing Investor International Elements the through building Day focus affluent emphasis on of selling 12.10.09 aStrategy on complementary limited proprietary and life onmass insurance meeting number affluent distribution: reti
Slide 34: International Pre-Tax Adjusted Operating Income
International Pre-Tax 1,747 $2,000 $1,000 2002 $0 $500 Gibraltar Life 34 Investor Planner 2003 1,598 917 Adjusted Life 2004 819 Day $1,500 Operations Insurance millions 12.10.09 2005 Operating 1,428 2006 757 1,326 2007 Income $ 1,390 20081,321 3Q08 3Q09 YTD
Slide 35: Drivers of Sustainable Returns
Drivers Emphasis Margins Needs-Based Business Investment •Capital 35 Stable Strong Duration U.S. High Capital Investor dollar ROE Management of mortality persistency earned management growth on Sustainable lengthening Portfolio Day products investing: Protection Selling throughout 12.10.09 increases
Slide 36: Life Planner Business Model
Identify Protection Life Investor 36 Planner protection Day lifemaintains Business 12.10.09 insurance needs Model contact purchased before Needs-Based with discussing as client, solution as Selling products trusted to identified professional need
Slide 37: International Insurance Sales Steady
International Steady Annualized ($ $1,183 YTD 2006 •Bank 1) activity 37 Sales millions) Foreign Investor 2007 Channels were Sales $1,185 is included denominated 2008 Day New relatively Throughout Insurance $1,236 Life 12.10.09 3Q08 Business based Advisors $954 steady 3Q09 activity Financial on Premi
Slide 38: International Life Insurance In-Force Growth
International 9,736 4,826 4,910 2003 Life POJ’s 303 Banks Gibraltar 1) Investor 38 Transfers LPs(1) Advisors 2004 10,286 4,970 5,316 Life Day Life PGA 2005 Planners 5,436 5,627 from Insurance 12.10.09 11,063 Advisors Life 2006 January 5,944 5,828 Planners 11,772 2007 Sales 6,264 6,166 1,2008 12,430
Slide 39: Proven Needs-Based Selling Cycle
TheInvestor Proven Needs High Satisfy Life-Long 39 Beneficial Policy Life Planner Based High Execution Planner Customer Day Persistency Customers Selling Retention Cycle 12.10.09 Track Productivity Relationships Customer Record Needs Satisfaction
Slide 40: Gibraltar Life Strategy
•Gibraltar 40 Life Needs-based Maintain Developing Investor Planner Life: and Day bank training selling “Prudentialized” cultivate 12.10.09 channel of principles strong protection distribution affinity Traditional adapted and group retirement to Model traditional relationships products; Japanese fie
Slide 41: Life Planner Product Emphasis
Life Emphasis Prudential In-force 16% Yen-based 48% 14% New 15% Third 1) 2) 3) 4) 5) 41 Primarily Includes Cancer, Investor Planner 22% 39% Business Sector(5) Annualized on 14% of medical, insurance single minor Day whole Business Protection Japan Annualized 32% Yen-based 12.10.09 amounts premium li
Slide 42: Gibraltar Life Product Emphasis
Emphasis Gibraltar In-force 6% Yen-based 71% New 23% Other 44% 1) 2) 42 Includes Investor 11% 28% Business than Annualized 12% Life on 5% insurance Yen- single third Day Protection Annualized Yen-based 12.10.09 sector premium Premium U.S. products. Products dollar Premium savings business Mixproduct
Slide 43: Japan New Business vs. Industry
Japan New $1,200 2003 $35 POJ Prudential Industry Gibraltar 1) 43 In Investor $30 & Business $2004 Businesses billions; Gibraltar $1,000 $25 Life of 2005 Day $20 Japan Face $800 on 12.10.09 2006 $15 vs. fiscal Amount(1) $600 Japan $10 2007 year $400 $5Life 2008 $0 basis; $200 Insurance Industry $0 I
Slide 44: International Positioned for Market Developments
International Positioned Market Variable Well-publicized Yamato Prudential’s Gibraltar Prudential 44 Investor Development Life annuities Life Positioning of selected for Day retirement-focused bankruptcy Insurance Japan expanding Market financial 12.10.09 fail by andto Developments Japanese Gibralta
Slide 45: International Positioned for Mass Affluent Market
International Positioned Mass Affluent Yamato Gibraltar POJ Bank Whole Retirement U.S. Endowment 45 Investor Dollar Affluent Channel Lifefor Income Day Denominated Insurance Market and 12.10.09 Affinity Developments Fixed groups Annuity
Slide 46: Expanding Bank Channel Distribution
Expanding Added Assigned Commenced Introduced 2005 1) 46 For Investor 2006 the distribution experienced nine 2007 life U.S. Bank Day distribution insurance months dollar 12.10.09 2008 Channel agreements 2009 Life denominated ended relationship protection Distribution Planners September with products
Slide 47: Bank Channel Growth Opportunity
$355 1% $384 Total $245 3Q08 2% $287 3Q09 Life 1) Bank dollar). 2) 47 Represents Primarily Investor Advisors Sales 11% 8% 98% 18% Sales LA -Channel YTD Annuity Life U.S. 13% Only(1)(2) 88% 82% by Day whole denominated annualized Channel(1) 79% Growth 12.10.09 life,Opportunity retirement new activity
Slide 48: Bank Channel Growth Opportunity
Bank Growth Annualized $ Year Nine Life Savings 1) based 4883 55 21 In Investor Insurance $Ended millions; Months Channel on 43Opportunity Products, theDay New 12/31/2007 12/31/2008 amounts Ended foreign Protection 12.10.09 Business Primarily 9/30/2008 9/30/2009 as denominated transacted Products Pr
Slide 49: Financial Strength and Solvency Margins
Financial Solvency 1,048% 1,184% Prudential 1) 49 Based Investor 700% on Strength Margins(1) ofDay Japanese Japan solvency 12.10.09 Competitive Gibraltar statutory margin Life accounting, Advantage consistent with first“AA” half ofratings fiscal standards year 2009 (April 1, 2009 to September 30, 20
Slide 50: Investment Portfolio of Japanese Insurance Operations
Investment $65.8 Japanese 0.7% U.S. Other Gibraltar 1) 2) 50 As Excludes Investor Dollar of Billion(1)(2) Currencies September Yen Insurance Life, Portfolio Day business, cash 21.7% about 12.10.09 and 77.6% Operations 30, Yen 9cash about years 2009; portfolio equivalents. 15includes years; duration:
Slide 51: Japanese Investment Portfolio Composition
Japanese High $65.8 1% 3% 2% Government/Government 22% 52% 6% Investment Commercial Below Real Equity Short-Term Policy U.S. Other Yen 1) 2) 3) 51 As Excludes “Other” Investor 1% 2% portfolio Treasury Estate Quality of Billion(1)(2) (3) Loans Investment Securities 3% September Insurance category Gra
Slide 52: Financial Performance
Financial Nine ($ Adjusted Life Gibraltar 23% International 1) 52 millions) Based Investor Planner ROE(1) Months on Life operating Performance Day 2006 annualized Business Insurance Investments Division ended 490 12.10.09 2007 578 income September $Total 622 2008 1,428 after-tax 938 142 471 pre-tax:
Slide 53: Bernard Winograd, U.S. Businesses
PRUDENTIAL’S BERNARD EXECUTIVE WINOGRAD VICE U.S. PRESIDENT BUSINESSES AND CHIEF OPERATING OFFICER, U. S.
Slide 54: Prudential's U.S. Businesses
Prudential’s U.S. Asset Market Underwriting 54 Investor Retirement Individual Prudential Sensitivity Day U.S. Sensitivity Life 12.10.09 Solutions Individual Businesses and Group and Group Investment Insurance Annuities Division Management Management Division Retirement Life Insurance
Slide 55: Attributed Equity of U.S. Businesses
Attributed $13.8 11% 1) U.S. Individual 55 As Investor Retirement Individual 15% of billion September 31% Annuities Equity Life Day11% $2.0 Life 12.10.09 Solutions of30, 32% billion and U.S. $4.32009. Group Businesses(1) billion and Group Investment Insurance Retirement Insurance Division Management
Slide 56: Fundamentals Remained Strong
Fundamentals Net $ $12 Retirement Annuities Asset Annualized $0.6 Individual Group 2006 56billions Investor Flows $10 $0.5 2007 Management Insurance $8 $0.4 Life 2008 Full-Service $6 Day NewRemained $412.10.09 $0.3 3Q Business $2$0.2 2009 $0 $0.1 Strong YTD Premiums $0.0 Some Dramatically Improved
Slide 57: Fundamentals Remained Strong
Fundamentals Account $ Annuities Full Face $1,800 Individual $0 2006 Insurance 1) 57billions As Investor Service Amount 2007 of$1,600 period Values $500 Retirement Life 2008 Day Management In-Force(1) Remained $1,400 $450 Group end; /12.10.09 3Q Assets 2009 face $400 Asset $1,200 Under amount Strong
Slide 58: U.S. Market Opportunities
U.S. •Legacy 58 Greater Increased Severe Retrenchment Growth Investor Markets ofmarket client opportunities The client DayMeltdown focus of conditions 12.10.09 and weakened on adviser for retirement the differentiated competitors emphasis strongest income on companies providers “trusted securitypart
Slide 59: Driving Business Growth
Unique Attractive Driving Market Supporting 59 Investor Opportunities Opportunity Strong Value Quality DayBrand 12.10.09 Propositions Business toBuilding Business Build Growth Franchise Franchise Growth Value Diversification Value Innovative Balance and Financial Product Sheet Management Flexibility
Slide 60: Serving Customers with Attractive Value Propositions
Serving Prudential Attractions Product Individual 9% No-lapse Group 43% Protection Variable 41% Living Retirement 40% Account 1) 4% gross 60 For Investor sales; the Life benefits: the Annuities value guarantees nine Sales(1) at Life: Full Insurance Day Security-Focused Retirement affordable guarante
Slide 61: Driving Business Growth
•Attractive INNOVATIVE 1) 2) 61 Annuities Asset Retirement Individual Group For Source: Investor the Management Insurance second Value LIMRA, –Day Life –record market SOLUTIONS 12.10.09 Propositions –and –strong VARDS, results strong –third share significant sales, sales quarters ingains Plan Drivin
Slide 62: Domestic Protection Marketplace
Domestic Protection Mature, opportunity Client Insurance 1) 62 Based Investor focus low-growth on Protection Cultivate Marketplace Day Life A.M. on stretching 12.10.09 Quality Best optional industry Business ranking Prudential business: Maintain life Focus ofsales statutory Strategies avoid market o
Slide 63: U.S. Individual Life and Group Insurance
U.S. Individual ($ $ 2007 2008 9/30/08 9/30/09 (2) 634,045 millions) Individual $2007 Division 1) 2) 3) true-ups, Face 4,227 Group $9/30/08 Includes Based Investor 3,431 Life ($ amount ROE and on Insurance billions) $In-Force(1) Life policy Day Premiums 480andreinsurance annualized compensation 17%(
Slide 64: Retirement Key Constituents
Retirement Constituents Key 1) Market Prudential’s •Prudential GUARANTEES 64 SUBSIDIARIES Advice-driven Top Distributors Retirement Financial Products Commitment Middle 85 Over $172 Innovative $76 Market As Investor years billion 10 of4,900 billion Focus September defined leader market experience An
Slide 65: Retirement Account Values
Prudential Emphasis $132 $150 Account 12/31/04 Institutional 1) 65 Includes Investor $136 $100Values 12/31/05 on Retirement $148 $50 acquired Day Investment Full $0 ($ 12.10.09 $164 Service 12/31/06 billions)(1) businesses $150 Products Retirement $172 12/31/07 from Fulldates 12/31/08 Service of acq
Slide 66: Full Service Deposits and Sales
Full ($ $16.2 2006 $12.4 Nine 96.6% Deposits Net 1) 66 billions) For Flows Service Investor months the Plan 2007 $0.2 $1.2 and nine Persistency(1) Retirement ended Sales Day $14.7 2008 $19.2 months 12.10.09 9/30/08 9/30/09 $0.9 $7.8 ended AssetSeptember $18.9 Flows $3.930, 2009.
Slide 67: Full Service Stable Value Products
Full •Attractive factor Account 1) 67Principal Rate Future Low As Investor Service of in resets risk interest crediting September rate Values: Value profile guarantee Day Stable semi-annually setting rate 12.10.09 Proposition $35.9 rates –floors; Value 30, substantially feature billion(1) typically
Slide 68: Impact of Market-Driven and Discrete Items
Impact Discrete Year Nine Adjusted Market-driven $992 $(546) 615 (1,077) $377 $531 “Pro-forma” ROE(3) $362 $(1,506) 366 (1,551) $(4) $45 1) $630 $960 Total 249 474 Annuities 6% $381 $486 Retirement 10% 2) 3) 68 Annualized Pretax; Includes Investor Ended Months ofItems operating Market-Driven inand s
Slide 69: Prudential Investment Management Experience and Breadth
Prudential Experience Breadth Access Brand Institutional Scale $143 13% Manager 189 Average 1) 69 Asinvestment AUM billion Investor of and toand September tenure Continuity(1) Capital Investment Reputation CAGR and Clients Depth third Day 14 professionals Track and party years (2002 12.10.09 of 30,C
Slide 70: Significant Non-Proprietary AUM
Prudential Significant Total Non-Proprietary Fixed Real Equity AUM Non-proprietary Institutional International General Retail 12% Asset 1) 70 AsInvestor Estate AUM of Management Income by Customers 16% Account September Asset Client Financial’s Scale 4% $641 Customers 12% Day 49% Type Type insurance
Slide 71: Broad Asset Management Capabilities
Broad Assets $444 5% Asset $1.7 (3) Public 71 7% Equity 9% Billion(2) Billion(1) Management Asset Fixed Under Real Commercial 1) 2) 3) As For Includes Investor Public of the FixedClass Estate Income Management September year 44% revenue Day Capabilities Revenue Mortgages 24% ended Fixed 48% 12.10.09
Slide 72: Asset Management Adjusted Operating Results
Asset Adjusted ($ Nine Public Prudential Subtotal Net Proprietary Commercial TOTAL 72 in Investor Investment millions, months Management Equity Fixed $550 $415 Operating Investments Real Capital Mortgage Investing Day Mortgage Income ended $701 $$535 pre-tax) Results Estate 74 12.10.09 Group $$232 S
Slide 73: Asset Management Revenues
Asset Service Incentive, -$500 ($ $1,419 2004 Nine 73 millions) Investor months Months 2005 Management $0 $1,645 Distribution $500 Transaction, 2006 Day ended ended $1,991 $1,000 12.10.09 2007 Revenues Fees 9/30/08 9/30/09 and $2,319 2008 $1,500 Principal Other$1,686 $2,000 Revenue Investing $1,457
Slide 74: Asset Management Revenues by Quarter
Asset $400 $500 $600 ($200 1Q08 -$200 -$100 74 Investor $2Q08 Management $100 millions) Day $0 3Q0812.10.09 $300 4Q08 Revenues Fees 1Q09 Service, 2Q09 Incentive, 3Q09 Transaction, Distribution and Principal Investing and Other Revenue Commercial Mortgage Revenue
Slide 75: U.S. Businesses Financial Performance
($ millions) Adjusted Asset Retirement Individual Group U.S. 2006 2007 2008 Nine 75 Investor Businesses months $586 $722 $(1,077) Management Insurance operating Annuities Life 510 482 Day ended 531 550 701 Total Financial 12.10.09 232 income 545 622 September 446 229 286 Performance pre-tax: 340 $2,
Slide 76: Steve Pelletier, Individual Annuities
INDIVIDUAL STEVE PRUDENTIAL PRESIDENT, PELLETIER ANNUITIES ANNUITIES FINANCIAL, INC.
Slide 77: A New Perspective on Retirement
A New “We “Obviously (1) “The 1) 2) 77 Ben Kerry Investor have most Stein, Perspective Pechter, tosustainable Day there’s apologize “The 12.10.09 Retirement Economic been on formula the toretrenching, the VAinsurance Income Slump: Industry for GLWB but Journal, What companies… there products We’ve M
Slide 78: Variable Annuity Rankings
($ Source: Variable MetLife 3Q09 Prudential Ameriprise 1) 78 millions) Investor Asset Advisor-Sold $86,115 Annuity $74,554 $5,828 VARDS $1,426 Day and Sales 12.10.09 Hartford Assets MetLife SunLife AXA 3Q’09 Variable Rankings Under $56,586 $83,324 report. $3,231 $1,083 Annuity Management(1) Advisor-
Slide 79: Variable Annuity Market Positioning
Prudential Challenging TODAY’S Client retirement Distributor insurer’s business Distribution Competitors PRUDENTIAL “Highest Trusted Gaining Product 79 Investor focus: brand, embedded shelf and commitment Daily” Annuities income VARIABLE focus: Day channels Market scaling financial space bolstered P
Slide 80: A Distinctive Value Proposition
A Distinctive PRUDENTIAL THE 80 Investor HIGHESTDay Value ANNUITIES 12.10.09 DAILY Proposition COMPANY SMfor Retirement-Focused SM Clients
Slide 81: Serving Today's Client Needs
Serving 2005 Awarded Boomer First Place 1st 81 Investor place 2006 Today’s Market “Best award 2007 DayLiving Advisor 12.10.09 Client 2008 for service 2009 Benefits” Needs Magazine and Award by support forWinning record to advisors fifth Benefits consecutive and Service year
Slide 82: Highest Daily Differentiated Approach
Prudential •– Range 1) 2) 82As Current HD Automatic New For Based Investor ofelection illustrative of Highest September on (1) HD Annuities Day eligible rebalancing Outcomes Living rate Daily 12.10.09 purposes; is 30,initial 95% A Benefit 62009, Differentiated Plus With narrows for premiums. not 63%
Slide 83: Benefit of Auto-Rebalancing Illustration
Benefit Account HD7 $0 Jan-08 Customer-Selected This February 83 100 Investor illustration Account Feb-08 100 ofValues 23, Auto-Rebalancing 98 Day 2009 Value Mar-08 98S&P analysis 12.10.09 100 of Funds +7% 500 the 80 Apr-08 for 90% 66 $600,000 $500,000 HD 65 tolimit May-08 31 the Lifetime 0Investor
Slide 84: Living Benefit Net Amount at Risk Without Auto-Rebalancing
Benefit Living S&P $25.0 $30.0 $35.0 $40.0 $45.0 $20.0 $10.0 $15.0 $14.1 Account 84 Investor =$5.9 $18.7 $17.4 Benefits 1,166 ofValue Auto-Rebalancing $5.0 Day S&P Net WITHOUT $2.5 12.10.09 =Amount 798 $2.9S&P $0.0 at Auto-Rebalancing to=Risk 3Q08 Prudential 1,0571Q09 $ billions “Living 3Q09$50.0 Be
Slide 85: Living Benefit Net Amount at Risk With Auto-Rebalancing
Benefit Living S&P $20.0 $19.1 $25.0 $30.0 $30.1 $35.0 $40.0 $45.0 $10.0 $15.0 Account 85 Investor =$5.0 $16.4 Benefits 1,166 ofValue Auto-Rebalancing $1.1 Day S&P Net WITH $1.5 12.10.09 =Amount 798 $1.1 Auto-Rebalancing S&P $0.0 atto=Risk 3Q08 Prudential 1,0571Q09 $ billions “Living 3Q09$50.0 Benef
Slide 86: Death Benefit Net Amount at Risk Without Auto-Rebalancing
Benefit Death S&P $45.0 $40.0 $20.0 $25.0 $30.0 $35.0 $15.0 $10.0 3Q08 Account 86 Investor =1Q09 $41.6 $35.4 $16.1 $8.8 $5.0 Benefits 1,166 ofValue Auto-Rebalancing $8.5 $0.0 Day 3Q09 S&P Net WITHOUT 12.10.09 =Amount 798 S&P Auto-Rebalancing atto=Risk Prudential 1,057 $ billions “Death$50.0 Benefits
Slide 87: Death Benefit Net Amount at Risk With Auto-Rebalancing
Benefit Death S&P $20.0 $19.1 $25.0 $30.0 $30.1 $35.0 $40.0 $45.0 $10.0 $15.0 Account 87 Investor =$5.0 $16.4 Benefits 1,166 ofValue Auto-Rebalancing $1.5 Day S&P Net WITH $1.8 12.10.09 =Amount 798 $0.9 Auto-Rebalancing S&P $0.0 atto=Risk 3Q08 Prudential 1,0571Q09 $ billions “Death 3Q09$50.0 Benefit
Slide 88: Customer-Selected Accounts with Automatic Rebalancing
Accounts $ Customer-Selected $20 1,468 $25 $15 $3.9 $4.4 $10 $13.3 $10.3 $11.4 $5 $4.0 $0 798 4Q07 88billions 919 $0.5 Investor 1,323 $5.0 $11.3 $4.6 903 1Q08 $13.8 $9.1 1,166 with 1,057 $21.0 Day 2Q08 $14.7 Automatic 12.10.09 1,280 3Q08 $11.8 Investments $11.1 4Q08 Rebalancing 1Q09 Auto-Rebalanced
Slide 89: Our Strategy Has Created Market Opportunities
OurSource: Variable March Nov. Jan. Feb Aug HD7 0.0% 8.7% 7.1% 1Q’05 1Q’06 1Q’07 1Q’08 1Q’09 1) 89 Investor 2009 HD 2008 2009 2006 2.0% 6.8% 7.5% 2Q’05 2Q’06 2Q’07 2Q’08 2Q’09 2005 Strategy Annuity HD HD VARDS HD 4.0% 8.1% 7.5% Day Lifetime 3Q’05 3Q’06 3Q’07 3Q’08 3Q’09 Lifetime Lifetime Lifetime 12
Slide 90: Highest Daily Product Features
Highest Protected Feature Automatic Maximum Current Minimum Annual Account New 6% 85 None Former 7% 5 4% 45 60% 80% Yes Return 75 9065Investor -76on basis 591/2 HD 86 highest of Withdrawals: HD Average Daily points Value Lifetime Withdrawal premium Issue 60 Equity Rebalancing Day Lifetime -Lifetime
Slide 91: Market Downturn Scenario
Market $250,000 Year “PWV”: Account Protected Total Bond 1) through 91 HD Investor 0Account Fund Lifetime 5Downturn end 10 Value notional value $200,000 Withdrawal Value Day ofValue available year and 612.10.09 amount Plus Scenario(1) “Protected $150,000 10.Value –All to Sub for customer quoted Acco
Slide 92: Guaranteed Lifetime Withdrawal in Market Downturn
Guaranteed Client’s Market Accumulation $250,000 Protected Account PROTECTED Retirement Annual PAYMENT Client Year = 1) commence The 92Customer Prudential HD Investor fee 0 Age Lifetime 10Downturn Payments for Account Value $200,000 Withdrawal 2560 at HD6 Period Day AMOUNT Lifetime account Funds end
Slide 93: Early Income Commencement Scenario
Guaranteed Market Retirement Accumulation $0 Client Year PROTECTED Protected Account Annual 5% PAYMENT = 1) commence The 93Customer Prudential HD $20,000 Investor xfee 0Protected Age Lifetime 10 Downturn Payments for Value Withdrawal 2560 after HD6 Period $40,000 Day AMOUNT Lifetime account Funds 70
Slide 94: Volatile Markets Scenario
Guaranteed Volatile Accumulation Retirement Client Year $0 Protected Account PROTECTED Annual 5% PAYMENT = 1) policy quarterly 94Customer Prudential HD $50,000 Investor x0Protected Age charges. Lifetime 10Payments Markets Market Value basis. Withdrawal 25 60 Period $100,000 Day AMOUNT Lifetime accou
Slide 95: Improving Variable Annuity Risk Profile
Improving Variable $70 $80 $90 $50 $60 $30 4Q06 $0 12% $10 $20 26% Account 95 Investor 62% billions 40% 1Q07 Annuity Values 37% Risk Day 2Q07 23%with Profile 12.10.09 Account $3Q07 $40 Living 4Q07 Values Benefits 1Q08 by Product 2Q08 with Auto-Rebalancing 3Q08 Type4Q08 1Q09 feature 2Q09 3Q09 Account
Slide 96: Living Benefits Account Values by Product Type
Prudential Living Daily (1) ($22.1 “GRO” (5) (1)(3) 96 $50 1Q07 Run-off 1) 2) 3) 4) 5) Auto- Benefit Benefits Rebalancing $4.6Annuities –GMIB Election Includes2% Investor $45 2Q07 $40Day Product 3Q07 $35Account and election rates HD6 “GRO” LT5, Prudential Retain 12.10.09 based SLT5, Plus $30 4Q07 Pr
Slide 97: Innovative Products Drive Variable Annuity Sales
Prudential Innovative Gross $6,000 $0 Net ($ $4,500 1Q08 For 1) 97 millions) Based Investor 3Q09, Variable 2Q08 Variable $5,000 $4,000 onAnnuities 95% Products Day 3Q08 eligible Annuity $4,000 $3,500 Annuity election 12.10.09 4Q08 initial Drive Sales $3,000 Sales rate 1Q09 Sales premiums. for $2,000
Slide 98: Breadth and Depth of Distribution
Breadth 3Q09 Total ($ Wire/ Sales 1)Source: 98 Channel IBD Bank Wire/Regional Agency Overall millions) Investor 1$3,374 sales $643 Rank 10 Variable Regional 1Sales 6and YTD 14VARDS of by Day Agency Depth $5.8 Rank (1) Channel Annuity 7$1,359 12.10.09 33Q08 billion(2) 3Q’08 of 5$452 1Our Sales Rank r
Slide 99: Summary
•Summary 99 Trusted “Highest HD Expanding Investor product brand, Daily” Day distribution design financial 12.10.09 positioning includes and strength market auto-rebalancing offers and ashare distinctive flexibility, whiletoimproving and and mitigate sustainable commitment Prudential’s risk profile