Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Investor Day (May 2012)
105 slides from Prudential Financial's investor day presentation, May 22, 2012
Slide 1: Prudential Financial, Inc. Investor Day
May 22, 2012 Exhibit 99.1 May 22, 2012 Prudential Financial, Inc. Investor Day
Slide 2: 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. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,”
Slide 3: Non-GAAP Measures
Non–GAAP Measures The information referred to above and on the prior page, as well as the risks of our businesses described in our Forms 10-K and 10-Q, should be considered by readers when reviewing forward-looking statements contained in this presentation. This presentation includes references to “
Slide 4: John Strangfeld, Chairman and CEO
John Strangfeld Chairman and CEO John Strangfeld Chairman and CEO Prudential Financial, Inc.
Slide 5: ROE Roadmap: 2011 – 2013
11.2% 2011 Baseline 2013 Target 13-14% CAPITAL DEPLOYMENT BUSINESS ROE EXPANSION • Higher margins • Business growth • Star / Edison integration ROE Roadmap: 2011 – (1) Reported (2) 10.7% 11.2% Baseline Unusual/ Non- Recurring Items (3) 0% 2% 4% 6% 8% 10% 12% 14% 16% Target CAPITAL DEPLOYMENT 1) Fina
Slide 6: Business ROE Expansion: 2011 – 2013
2011 Baseline ROE (2) 2013 ROE Potential Business ROE Expansion: 2011 – (1) Highest return businesses are fastest growing 1) Business unit Return on Equity (ROE) are unlevered and are based on Financial Services Businesses effective tax rate applicable to adjusted operating income. 2) Baseline ROE i
Slide 7: Capital Deployment
Invest in Businesses Return Capital to Shareholders Capital Deployment Organic growth M&A based on opportunities Share repurchases Dividends
Slide 8: Prudential's Investor Value Proposition
Prudential’s Investor Value Proposition • Attractive return opportunities in high quality businesses • Balanced portfolio of selected risks • Growth engines in International Insurance, U.S. Retirement and Asset Management • Market leadership across multiple distribution channels • Capital management
Slide 9: Mark Grier: Capital and Business Mix
Mark Grier Vice Chairman Prudential Financial, Inc. Capital and Business Mix
Slide 10: Capital Deployment 'Then' and 'Now'
Circa 2008 - 2009 2012 Capital Deployment “Then” and “Now” • Defense • Offense • Support growth of high return businesses • Return capital to shareholders • Maintain sound capital position consistent with business risks
Slide 11: Strong Capital Position
Strong Capital Position 1) $ in billions. 2) As reported on statutory basis. 3) Reflects targeted statutory ratios in domestic and international regulated entities consistent with ratings objectives. About half readily deployable 12/31/2011 (1) Prudential Insurance Total Adjusted Capital (2) Reporte
Slide 12: Capital Management and Business Approach
Capital Management Begins with Selection of Businesses and Risks Capital Management and Business Approach • High value-added business models • Credible diversification in mix of businesses and risks • Consistent with established strategies • Fit with proven execution and risk management capabilities
Slide 13: Superior Mix of High Quality Businesses
MARCH 31, 2012 ATTRIBUTED EQUITY $28.5 BILLION (1) Superior Mix of High Quality Businesses 1) Attributed equity of Financial Services Businesses as of March 31, 2012, excluding accumulated other comprehensive income; excludes Corporate and Other operations.
Slide 14: Superior Business Mix Drives Growth and Return Prospects
Superior Business Mix Drives Growth and Return Prospects (1) 1) For illustrative purposes only; not intended to express actual growth or return expectations for any particular periods. Amounts shown (in billions) represent attributed equity as of March 31, 2012. 2) Adjusted operating income. Interna
Slide 15: Individual Life and Group Insurance
Individual Life + Focus on returns through capital management, cost effective distribution = Product mix limits overall interest rate and equity market sensitivity « Historically solid cash flows, capital generation and ROE Group Insurance Emphasis on group life insurance = “Voluntary” busines workp
Slide 16: Asset Management, Retirement and Annuities
Asset Management Retirement * Leading third party asset manager * Seasoned skillsin multiple asset classes provide competitive advantage for Prudential businesses = Growing base of AUM driven revenues + Limited capital requirements; sustainable high ROE = Strong growth in investment-only products fo
Slide 17: International Insurance
International + Sustained success in Japan built on foundation of Insurance proprietary distribution, needs-based selling, emphasis on death protection insurance = Concentrate on limited number of attractive countries + Expanding breadth and depth of capabilities: diversified distribution, retiremen
Slide 18: Charles Lowrey: Prudential's U.S. Businesses
Charles Lowrey Executive Vice President and Chief Operating Officer, U.S. Prudential’s U.S. Businesses
Slide 19: Prudential's U.S. Businesses
Prudential Retirement Asset Management Individual Annuities Individual Life Group Insurance Prudential’s U.S. Businesses U.S. Retirement Solutions and Investment Management Division Attributed Equity $12.6 billion (1) 1) As of March 31, 2012, excluding total accumulated other comprehensive income. U
Slide 20: Prudential's U.S. Businesses
U.S. Retirement Solutions and Investment Management Division U.S. Individual Life and Group Insurance Division Prudential’s U.S. Businesses • Strong growth prospects in U.S. retirement market • Stable value products, wrap guarantees and pension risk transfer solutions address retirement plan needs •
Slide 21: 2011 Earnings: $2.6 billion
2011 Earnings: $2.6 billion (1) U.S. Businesses Broad Earnings Diversification by Product and Risk Individual Life $482 Group Insurance $205 Asset Management $659 Retirement $594 Individual Annuities $662 1) Pre-tax adjusted operating income for U.S. Retirement Solutions and Investment Management Di
Slide 22: Positioned for Market Developments – Retirement Market
Market Developments Prudential Positioning U.S. Businesses: Annuities, Retirement and Asset Management Positioned for Market Developments – Retirement Market Market Developments Prudential Positioning • Retirement income security goals challenged by financial market volatility, interest rate environ
Slide 23: Positioned for Market Developments – Protection Market
Market Developments Prudential Positioning U.S. Businesses: Individual Life and Group Insurance Positioned for Market Developments – Protection Market Market Developments Prudential Positioning • Under-insured individuals seek convenient access for life insurance protection needs • Life insurance pr
Slide 24: Prudential Annuities
• • • • • Prudential Annuities Consistent approach to product design and demonstrated commitment to advisor-sold market provide strong competitive advantage Proven, superior value proposition based on “Highest Daily” living benefits coupled with auto- rebalancing tailored to each customer’s account
Slide 25: Individual Annuities Account Values, Sales and Flows
$84.0 $106.2 $113.5 $0 $20 $40 $60 $80 $100 $120 Individual Annuities Account Values, Sales and Flows Account Values Sales and Flows ($ billions) ($ billions) 1) As of end of period. $16.3 $21.8 $20.3 $9.1 $13.4 $11.7 $0 $5 $10 $15 $20 $25 Gross Sales Net Flows (1)
Slide 26: Prudential Retirement
Prudential Retirement • Full Service Stable Value products: solid value proposition for pre-retirees; experience rating limits risks; low contractual interest rate floors • Strong growth in Investment Only Stable Value risk management/asset management solutions for pension plan sponsors • Emerging D
Slide 27: Prudential Retirement Account Values, Sales and Flows
$178.3 $205.5 $229.5 $0 $50 $100 $150 $200 $250 Prudential Retirement Account Values, Sales and Flows Account Values Sales and Flows ($ billions) ($ billions) 1) As of end of period. $31.0 $34.6 $44.6 $8.7 $10.8 $19.3 $0 $10 $20 $30 $40 $50 Gross Deposits and Sales Net Flows (1)
Slide 28: Prudential Retirement Sales and Flows
Prudential Retirement Sales and Flows Full Service Institutional Investment Products ($ billions) ($ billions) $23.2 $19.3 $16.8 $8.8 $2.5 -$2.3 -$5 $0 $5 $10 $15 $20 $25 $7.8 $15.3 $27.8 $0.0 $8.3 $21.6 $0 $10 $20 $30 Gross Deposits and Sales Net Flows
Slide 29: Full Service Stable Value Products
Account Values: $41 billion (1) Full Service Stable Value Products • Principal guarantee feature attractive to pre-retirees • Value proposition strengthened by low available interest rates on alternatives for security-minded clients • Low risk profile: substantially all balances experience-rated, wi
Slide 30: Investment Only Stable Value Products
Account Values: $45 billion (1) Investment Only Stable Value Products • Prudential recordkeeping relationship not required; asset management mandate required for at least 50% of each account • Prudential sets investment guidelines • Wrap guarantee of book value based on zero-percent crediting rate f
Slide 31: Defined Benefit Risk Transfer
Defined Benefit Risk Transfer An Emerging Opportunity • Large potential market: $2.2 trillion private sector defined benefit plan assets (1) ; few companies equipped to offer solutions • Actuarially-driven long-term risks; relatively limited exposure to financial markets volatility • Products draw o
Slide 32: Flexible, Innovative Risk Transfer Strategies
Traditional Pension Plan “Buy-Out” Portfolio Protected “Buy-In” Portfolio Protected “Buy-Out” Longevity Reinsurance Prudential Retirement Flexible, Innovative Risk Transfer Strategies 2011 Gross Sales Over $2 billion, including U.S. market’s first pension plan “Buy-In” and several longevity reinsura
Slide 33: Asset Management
Asset Management • Leading third party asset manager • Robust institutional and retail businesses attract and retain talented investment professionals • Growing base of AUM driven revenues • Limited capital requirements; sustainable high ROE • Competitive advantage for Prudential businesses; seasone
Slide 34: Prudential Asset Management Competitive Advantages
Third Party Clients $320 billion third party AUM (1) 12% AUM CAGR (2006 – 2011) Manager Continuity (2) 219 portfolio managers Average tenure 14 years Experience and Track Record Breadth and Depth of Capabilities Access to Capital and Co-investing Brand and Reputation Scale Prudential Asset Managemen
Slide 35: Total AUM $637 billion
Total AUM $637 billion (1) Asset Management An Integral Business AUM by Asset Type AUM by Client Type 1) As of March 31, 2012.
Slide 36: Strong Asset Management Net Flows
Strong Asset Management Net Flows (1) 1) Third party, excluding money market activity. ($ billions)
Slide 37: AUM Growth Driving Asset Management Fees
$0 $100 $200 $300 $400 $500 $600 $700 Fixed Income Equity Real Estate $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 AUM Growth Driving Asset Management Fees 1) As of end of period. ($ billions) ($ millions) $1,049 $1,273 $1,467 $457 $537 $619 Assets Under Management by Asset Class Asset Managem
Slide 38: Building Sustainable Asset Management Revenues
2007 $1.6 billion (2) 2011 $1.8 billion Building Sustainable Asset Management Revenues (1) Asset Management Fees ITSICM 1) Asset management fees and incentive, transaction, strategic investing and commercial mortgage (ITSICM) revenues. 2) As originally reported. • Growth in asset management fees • R
Slide 39: Group Insurance
Group Insurance • Emphasis on group life insurance: approximately 75% of business in force (1) • Experience-rated larger-case business: pricing reflects experience over time • Relatively short pricing cycle for smaller cases not subject to retrospective experience rating • Focus on appropriate retur
Slide 40: Annualized New Business Premiums
Annualized New Business Premiums $0 $100 $200 $300 $400 $500 $600 $700 Voluntary Group Life Basic Group Life Group Disability Group Insurance ($ millions) $577 $607 $690
Slide 41: Individual Life
Individual Life • Focus on returns through capital management, cost effective distribution • Complementary products and distribution channels • Quality business: pricing and underwriting discipline • Product mix limits overall interest rate and equity market sensitivity • Historically solid cash flo
Slide 42: Building Quality Business
$0 $100 $200 $300 $400 $500 $600 $700 $0 $50 $100 $150 $200 $250 $300 $350 $400 Term Life Universal Life Variable Life Individual Life Building Quality Business ($ millions) ($ billions) Annualized New Business Premiums (1) Face Amount In Force (2) 1) Excludes corporate-owned life insurance. 2) As o
Slide 43: Key Takeaways
Key Takeaways • Strong growth prospects in U.S. retirement market • Popular “Highest Daily” variable annuity products offer superior value proposition supported by proven product-based risk management • Investment Only Stable Value products offer compelling risk management / asset management solutio
Slide 44: Robert O'Donnell: Prudential Annuities
Robert O’Donnell President Prudential Annuities Prudential Annuities
Slide 45: Strong Position in an Attractive Market
Strong Position in an Attractive Market • Superior value proposition for retirement income security • Consistency of approach, demonstrated commitment to market, brand and reputation are competitive advantages • Risk management by design: contract level auto-rebalancing proven over track record of m
Slide 46: Market Developments – Client Perspective
Today’s Variable Annuity Market Prudential Positioning Market Developments – Client Perspective Today’s Variable Annuity Market Prudential Positioning • Reduced availability of defined benefit retirement plans and increasing retirement lifespans strengthen client demand for income clients can’t outl
Slide 47: Market Developments – Distributor Perspective
Today’s Variable Annuity Market Prudential Positioning Market Developments – Distributor Perspective Today’s Variable Annuity Market Prudential Positioning • Market entries, exits and re-entries by variable annuity writers create challenges for distributors and raise questions on market commitment •
Slide 48: 2011 Asset and Sales Rankings
FY 2011 Variable Annuity Assets Under Management FY 2011 Advisor-Sold Variable Annuity Sales 1 1 ($ millions ) 1) Source: VARDS Q4’11. Advisor-sold, excludes group/retirement plan contracts. Assets under management as of year end. Prudential Annuities 2011 Asset and Sales Rankings $43,362 $48,123 $5
Slide 49: Building Multi-Channel Distribution Strength
Prudential Individual Annuity Gross Sales (1) 2008 $10,329 2011 $20,293 2010 $21,754 Building Multi-Channel Distribution Strength 1) In millions; includes variable and fixed annuities. $10,329 $20,293 $21,754 Independent 57% Wirehouse 12% Bank 7% Insurance Agents 24% Independent 49% Wirehouse 21% Ba
Slide 50: The Highest Daily Lock-In
Hypothetical for illustrative purposes only . 5 Hypothetical for illustrative purposes only . Protected Withdrawal Value – notional amount for calculation of lifetime annual withdrawals What are the chances of an annual lock-in capturing the best day? 1% What are the chances of a daily lock-in captu
Slide 51: Contract Level Auto-Rebalancing
Recent Market Approaches for Client Risk Sharing Prudential Auto-Rebalancing Differentiated Value Proposition Contract Level Auto-Rebalancing Recent Market Approaches for Client Risk Sharing Prudential Auto-Rebalancing • Fund-based approaches typically limit investment choices to designated funds •
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Slide 53: Preserving Account Values to Fund Retirement Income
Market Downturn Scenario (1) Income Without Auto-Rebalancing Income With Auto-Rebalancing Auto-Rebalancing Preserving Account Values to Fund Retirement Income Market Downturn Scenario (1) = Payments Funded by Customer Account Value = Payments Funded by Prudential guarantee Account Value 82+ 82+ AGE
Slide 54: Auto-Rebalancing Proven Through Financial Market Crisis
Auto-Rebalancing Proven Through Financial Market Crisis… and Beyond 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 election on February 23, 2009 of the 90% limit on bond fund alloc
Slide 55: Protecting from Market Downturns – Returning Funds for Growth
Accounts with Auto-Rebalancing (1) 1,258 1,326 1,321 1,131 1,258 1,408 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Auto-Rebalancing Fixed Income Investments Client-Selected Investments S&P 500 Auto-Rebalancing Protecting from Market Downturns – Re
Slide 56: Balanced Market Exposure Mitigates Risk
December 31, 2010 $102 billion December 31, 2011 $110 billion Variable Annuity Account Values Balanced Market Exposure Mitigates Risk Equity Funds – Client selected Bond Funds and Fixed Income Investments – Client selected Auto-rebalancing Fixed Income Investments Other – Client selected Average Dur
Slide 57: Retirement Income Security: A Continuing Market Opportunity
Profile of a Typical Prudential “HD” Variable Annuity Purchaser (1) 77 million baby boomers born 1946 – 1964 (3) Over 12,500 Americans turn 50 every day (3) Adults 50 and older own 65% of the aggregate net worth of all U.S. households (3) Retirement Income Security A Continuing Market Opportunity •
Slide 58: Innovation Culture Captures Market Opportunities
O NGOING EVALUATION OF OPPORTUNITIES TO EXPAND RETIREMENT INCOME SECURITY Innovation Culture Captures Market Opportunities • Partnered with Edward Jones to create the O Share variable annuity • O share evolves the A share business model and complements our HD living benefit (1) • Levelized recovery
Slide 59: Value Proposition, Distribution Strength and Market Commitment Drive Sales
$9.7 $11.8 $10.3 $16.3 $21.8 $20.3 $0.6 $0.6 $0.8 $9.1 $13.4 $11.7 $0 $5 $10 $15 $20 $25 Gross Sales Net Flows Value Proposition, Distribution Strength and Market Commitment Drive Sales and Flows $78.3 $83.8 $63.3 $84.0 $106.2 $113.5 $0 $20 $40 $60 $80 $100 $120 ($ billions) Account Values (1) 1) As
Slide 60: Improving Risk Profile
14 The accelerated growth in our overall block has increased the percentage of account values with auto-rebalancing, which will continue to improve the level and volatility of returns. Improving Risk Profile 1) As of end of period.
Slide 61: Well Positioned to Retain Auto-Rebalancing Business In-Force
Surrender Charge Less Than 1% 1% to 3% Over 3% Living Benefits With Auto-Rebalancing $71 B Living Benefits Without Auto-Rebalancing $15 B No Living Benefits $24 B Total $110 B Surrender Charges Applicable to Account Values (1) Well Positioned to Retain Auto-Rebalancing Business In-Force 8% 2% 90% 47
Slide 62: Growing Base of Profitable Business Drives Underlying Earnings Growth
Individual Annuities 2009 2010 2011 Growing Base of Profitable Business Drives Underlying Earnings Growth End of period account values $83,971 $106,185 $113,535 Pre-tax adjusted operating income $672 $950 $662 Market performance unlocking (1) (280) Assumption unlocking (1) (48) Actual experience tru
Slide 63: Key Takeaways
Key Takeaways • Market leadership driven by superior value proposition • Consistent approach and market commitment drive competitive advantage in distribution • Product-based risk management based on auto-rebalancing proven over track record of more than five years • Growing base of business with fa
Slide 64: Edward Baird: Prudential International Insurance
Edward Baird Executive Vice President and Chief Operating Officer, International Prudential International Insurance
Slide 65: Our Historical Strategy and Business Model Is the Foundation For Our Evolving Strategy
Our Historical Strategy and Business Model… …Is the Foundation For Our Evolving Strategy The Evolution of our International Strat egy • Concentrate on a limited number of attractive countries • Target the affluent and mass- affluent consumer • Needs-based selling • Proprietary distribution based on
Slide 66: Sustained Earnings Growth Through Challenging Markets and Events
Pre-Tax Adjusted Operating Income (1) Earnings are primarily the result of stable drivers Investment Margin Mortality Margin and Expense & Other Margin Sustained Earnings Growth Through Challenging Markets and Events Pre-Tax Adjusted Operating Income (1) ($ millions) $1,581 $1,651 $1,887 $2,263 1) P
Slide 67: High Return on Equity Driven by Fundamentals
Return on Equity (1) Reflects Star / Edison before expense synergies High Return on Equity Driven by Fundamentals 22.2% 17.5% Return on Equity (1) 1) Based on after-tax adjusted operating income of our International Insurance operations excluding the results of our International Investments business
Slide 68: Sustained Business Momentum Through Financial Crisis and Beyond
Annualized New Business Premiums (1) Star / Edison Excluding Star / Edison Sustained Business Momentum Through Financial Crisis and Beyond 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar; Korean won 1,180 pe
Slide 69: Japan: Track Record of Success
Japan: Track Record of Success 1) Excludes corporate management and development expenses incurred in the U.S. related to Japanese Insurance operations other than Gibraltar Life. Excludes results of International Investments businesses previously included in International Investments segment and tran
Slide 70: Japan: Substantial Growth Opportunities in an Attractive Market
Japan: Substantial Growth Opportunities in an Attractive Market Source: Swiss Re – statistical appendix, January 2012; based on 2010 life insurance premiums. Based on December 31, 2011 data; Sources: Federal Reserve, Bank of Japan, U.S. Census Bureau, Oanda. Investable Asset Pool Market Size Househo
Slide 71: World's Largest Life Insurance Markets
2010 Life Insurance Premiums (1) World’s Largest Life Insurance Markets 2010 Life Insurance Premiums (1) ($ billions) United States Japan Overall Asian Market excluding Japan United Kingdom France Italy 1) Source: Swiss Re – statistical appendix, January 2012.
Slide 72: Japan has the Largest Pool of Household Assets in Currency and Deposits
Financial Assets in Household Sector 0.8 7.1 10.9 6.7 6.7 6.0 5.5 Financial Assets in Currency & Deposits Japan has the Largest Pool of Household Assets in Currency and Deposits Source: Federal Reserve, Bank of Japan, Eurostat, Central Bureau of Statistics of China, OECD, U.S. Census Bureau, Oanda.
Slide 73: Household Sector Financial Assets – Japan and the United States
Financial Assets of the Household Sector Currency and Deposits 57% Insurance and Pension Reserves 28% Bonds 10% Shares and Equities 31% Insurance and Pension Reserves 29% Household Sector Financial Assets – Japan and the United States Japan $19.3 Trillion United States $49.1 Trillion Source: Bank of
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Slide 76: Star / Edison Acquisition
Star / Edison Acquisition Enhances Client Base and Distribution in Japan Acquisition adds 3.5 million in-force policies, bringing the total to more than 10 million Enhances distribution through captive agents, bank relationships, and independent agencies Strengthens capital generation and cash flow
Slide 77: Star / Edison Integration On Track
• Expect approximately $500 million pre-tax integration costs over 5 year period, including approximately $175 million incurred in 2011 and roughly $200 million expected in 2012 • Targeting annual cost savings of $250 million, with about 65% realized by 2012, 80% by 2013 Star / Edison Integration On
Slide 78: Market Share Improvement of 3.1 Percentage Points
Market Share Improvement of 3.1 Percentage Points 4 Years Ago FY 2007 Share Nine Months ended December 31, 2011 Share 1. Dai-ichi 13.3% 1. Nippon 12.7% 2. Sumitomo 11.1% 2. Dai-ichi 10.9% 3. Nippon 9.7% 3. Prudential 10.4% 4. T&D Financial 9.3% 4. T&D Financial 10.3% 5. AIG Group 7.8% 5. Meiji-Yasud
Slide 79: Prudential Sales in Japan Compared to U.S. Life Insurance Companies
2011 Annualized New Business Premiums (1) Prudential Sales in Japan Compared to U.S. Life Insurance Companies 1) Source: LIMRA U.S. individual life insurance sales except Prudential International Insurance (“PII”) data; life sales only, annuities excluded; Prudential foreign denominated activity tra
Slide 80: Solvency Margins Position Prudential's Japanese Companies
as of March 31, 2012 (1) “New Method” Estimated Solvency Margins Solvency Margins Position Prudential’s Japanese Companies As Well Capitalized and Financially Secure 1) Based on Japanese statutory accounting and risk measurement standards applicable to regulatory filings for fiscal year ended March
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Slide 84: New Business Product Trend Driven by Evolving Financial Security Needs
Annualized New Business Premiums (1) New Business Product Trend Driven by Evolving Financial Security Needs 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar; 1,180 Korean won per U.S. dollar. ($ millions) Ann
Slide 85: Needs-Based Selling over a Lifetime
Client Life Cycle Financial Risk Protection Needs Prudential Solutions Needs-Based Selling over a Lifetime Client Life Cycle Financial Risk Protection Needs Prudential Solutions Young household, early professional career Mid career, pre-retirement Retirement Premature death income replacement Income
Slide 86: Current Customers are Excellent Prospects for Additional Coverages
41 43 44 48 55 3 4 4 4 5 Annualized New Business Premiums (1) Second Sales to Existing Customers Annuity Retirement Accident & Health Death Protection Current Customers are Excellent Prospects for Additional Coverages to Meet Needs Annualized New Business Premiums (1) Second Sales to Existing Custom
Slide 87: Protecting Financial Security For a Lifetime
Aging population leads to demand for larger policy size Protecting Financial Security For a Lifetime Aging population leads to demand for larger policy size 1) Based on average annual premium for Prudential of Japan individual life and annuity policies newly issued during 2011; foreign-denominated a
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Slide 89: Growing Retirement Market Complements Substantial Premature Death Protection Market
55% 43% 33% 23% 18% 14% 17% 13% 12% 10% 6% 8% 12% 15% 15% Population (millions) Japan Demographic Trend Growing Retirement Market Complements Substantial Premature Death Protection Market Source: National Institute of Population and Social Security Research, Japanese Journal of Population. 11% 15% 1
Slide 90: Well Diversified Products Meeting Evolving Client Needs
19% 41% 12% 28% 100% Japanese Life Planner/Life Consultant Sales Well Diversified Products Meeting Evolving Client Needs 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates; Japanese yen 85 per U.S. dollar. $1,725 $1,939 $3,547 $4,503 Accident & Health Death Protecti
Slide 91: Growing Sales Throughout Multiple Channels
Annualized New Business Premiums (1) International Insurance Growing Sales Throughout Multiple Channels 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar; Korean won 1,180 per U.S. dollar. ($ millions) $ 1,293
Slide 92: 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 93: Teachers Association: Core Relationship Contributes to Life Consultant Distribution
Japanese Educational Mutual Aid Association of Welfare Foundation (Teachers Association) Teachers Association Core Relationship Contributes to Life Consultant Distribution • Relationship since 1952 • Approximately 600,000 members (1) • Access to approximately 950,000 teachers and school personnel th
Slide 94: Teachers Association: Perennial Sales Opportunities
Active Market Retiree Market Teachers Association: Perennial Sales Opportunities 1) Numbers approximate as of March 31, 2012. Active Market Retiree Market Gibraltar Policyholders
Slide 95: Bancassurance Powered by Prudential
Bancassurance Powered by Prudential Typical Bank Channel Approach in Japanese Market Prudential’s Distinctive Bank Channel Strategy 1) At certain banks. • Foreign carriers drove high bank channel sales through aggressive variable annuity strategies • Value propositions dependent on market performanc
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Slide 99: Bank Channel Sales Growth Driven By Protection Products
Annualized New Business Premiums (1) Bank Channel Sales Growth Driven By Protection Products 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar. ($ millions) $56 $22 $137 $336 $580 Annuity Retirement Accident &
Slide 100: Bancassurance Enhances Access to Substantial Japanese Household Investable Wealth
Bancassurance Enhances Access to Substantial Japanese Household Investable Wealth Prudential policies typically purchased in bank channel • Limited-pay whole life (2) • Retirement income • U.S. dollar and other non-yen fixed annuities Average premium per policy from bank channel sales (3) $8,500 For
Slide 101: Building Relationships for Continued Growth
2009 (1) 2012 (2) Bank Channel Building Relationships for Continued Growth • Total of 58 bank sales relationships established, including three of Japan’s four largest banks • Active relationships offer approximately 6,000+ potential points of sale (3) covering the majority of the Japanese prefecture
Slide 102: Independent Agency Channel
Independent Agency Channel • Commenced distribution of selected products in 2010; contributed $435 million (1) to annualized new business premiums for 2011 including $298 million from Star / Edison distribution • Star / Edison acquisition provided over 4,000 independent agent relationships (2) • Bro
Slide 103: Key Takeaways
Key Takeaways • Solid business model with sustained track record of success • High ROE, strong AOI growth, low volatility: returns and earnings primarily the result of stable drivers • Leading position in attractive Japanese market, strengthened by Star / Edison acquisition • Competitive advantages
Slide 104: John Strangfeld, Chairman and CEO
John Strangfeld Chairman and CEO John Strangfeld Chairman and CEO Prudential Financial, Inc.
Slide 105: Prudential's Investor Value Proposition
Prudential’s Investor Value Proposition • Attractive return opportunities in high quality businesses • Balanced portfolio of selected risks • Growth engines in International Insurance, U.S. Retirement and Asset Management • Market leadership across multiple distribution channels • Capital management