Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Investor Day (September 2012)
83 slides from Prudential Financial's investor day presentation, Sep 11, 2012
Slide 1: Prudential Financial, Inc. 2012 Tokyo Investor Day
Exhibit 99.1 Prudential Financial, Inc. 2012 Tokyo Investor Day September 12, 2012
Slide 2: Eric Durant, Investor Relations
2012 Tokyo Investor Day Eric Durant Senior Vice President Investor Relations Prudential Financial, Inc.
Slide 3: 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 4: 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 Services Businesses. Adjusted operating income excludes “Realized investment gains (losses), net,” as adjusted, and related charges
Slide 5: Edward P. Baird, COO International Businesses
2012 Tokyo Investor Day Edward P. Baird Executive Vice President Chief Operating Officer, International Businesses Prudential Financial, Inc.
Slide 6: Prudential's International Strategy
Prudential’s International Strategy Our Historical Strategy and …Is the Foundation for Our Business Model… Evolving Strategy • Concentrate on a limited number of • Concentrate on a limited number of attractive countries attractive countries • Target the affluent and mass- • Expand the breadth and de
Slide 7: Multiple Distribution Channels
Multiple Distribution Channels • Full time college educated professionals • Highly selective recruiting Life • Needs-based selling Planners • Emphasis on death protection and retirement products • Access to business/professional market Life • Life Planner concepts adapted to broad middle market Cons
Slide 8: Solid Business Model Building on a Sustained Track Record of Success
Solid Business Model Building on a Sustained Track Record of Success • High ROE, strong AOI growth, low volatility • Returns and earnings primarily driven by stable mortality and expense margins • Competitive advantages in distribution, coupled with financial strength and reputation, driving growth
Slide 9: Japanese Insurance Operations
Japanese Insurance Operations Mitsuo Kurashige Chief Executive Officer Japan Life Insurance Operations
Slide 10: Japan: Substantial Growth Opportunities in an Attractive Market
Japan: Substantial Growth Opportunities in an Attractive Market • World’s second largest life insurance market: Market Size Life premiums $525 billion (1) Household • Household sector wealth $19.3 trillion, similar to Wealth U.S. on per-capita basis(2) Investable • $10.9 trillion household pool of c
Slide 11: Household Sector Financial Assets – Japan and the United States
Household Sector Financial Assets – Japan and the United States Financial Assets of the Household Sector Japan United States $19.3 Trillion $49.1 Trillion Other Other 4% 4% Insurance Insurance and Pension and Pension Equities Reserves Reserves Currency and 28% 29% Deposits 6% 14% Investments Trusts
Slide 12: Prudential's Japanese Insurance Operations
Prudential’s Japanese Insurance Operations • Key driver of sustained growth and solid returns for Prudential International Insurance • Market leadership position strengthened by Star / Edison acquisition and integration • Expanding, complementary distribution channels • Broad product portfolio meets
Slide 13: Diversified Distribution Serving the Japanese Market
Diversified Distribution Serving the Japanese Market • Mid-affluent to affluent consumers Life Planners • Business and professional market Life • Mass middle market Consultants (1) • Association relationships • Bank clients with investable Bank wealth, under-served Channel protection needs • Busines
Slide 14: Star / Edison Acquisition Impact on Prudential's Presence in Japan
Star / Edison Acquisition Impact on Prudential’s Presence in Japan New Business Face Amount(1) : Share Improvement of 3.1 Percentage Points 4 Years Ago Market Market FY2007 Share FY2011 Share 1. Dai-ichi 13.3% 1. Nippon 12.6% 2. Sumitomo 11.1% 2. Dai-ichi 11.1% 3. Nippon 9.7% 3. Prudential 10.4% 4.
Slide 15: Prudential New Business in Japan
Prudential New Business in Japan Steady Growth while Industry Total has been Decreasing New Business Face Amount (In Billion Yen) Industry Prudential Japanese Insurance operations 150,000 8,000 6,935 124,009 7,000 106,581 6,000 98,723 5,018 5,170 100,000 4,984 4,861 4,917 4,826 5,000 4,848 89,375 4,
Slide 16: Ranking in the Life Insurance Industry in Japan
Ranking in the Life Insurance Industry in Japan Metric(1) # Rank Market Share New business face amount 3 10.4% New business annualized premiums 3 9.2% In-force face amount 5 6.8% Premium income 5 7.1% Total assets 6 4.9% 1) Data from financial statements posted in each insurer’s homepage. For fiscal
Slide 17: Japan Insurance Market Overview
Japan Insurance Market Overview • Industry Trends – Insurer quality drives market positioning • Greater consumer focus on insurer’s financial strength following market meltdown • Regulators strengthening solvency standards for insurance companies • Retrenchment of weakened competitors – Growing dema
Slide 18: Japan Insurance Market Overview
Japan Insurance Market Overview • Recent Developments – Earthquake / Tsunami disaster reinforced perceived need for death protection – Pending reduction in assumed interest rate for standard valuation reserves on new business (1.5% to 1.0%) – Opportunity to shift from saving-type products to protect
Slide 19: Prudential's Positioning in Japan: Life Planners
Prudential’s Positioning in Japan: Life Planners • 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
Slide 20: Life Planners: MDRT Japan Membership
Prudential’s Positioning in Japan: Life Planners MDRT Japan Membership (1) 1,102 All Other PRU 811 27% 32% 537 Alico Sony + 400 12% Big 4(2) 291 29% 165 139 107 Japan’s Total MDRT 41 Members: 3,409 (3) POJ Sony Alico Gibraltar Dai - ichi Nippon Meiji Sumitomo Pru Japan Yasuda MDRT % within Company 2
Slide 21: Prudential's Positioning in Japan: Life Consultants
Prudential’s Positioning in Japan: Life Consultants • Broad market coverage reaching substantially all prefectures, with access to nearly all of Japanese population • Prudential training supports emphasis on death protection products and needs-based selling • Teachers Association and other affinity
Slide 22: Prudential's Positioning in Japan: Bancassurance
Prudential’s Positioning in Japan: Bancassurance • Increased our presence in the Japan Bancassurance market by expanding our successful model to mega and regional banks; reaching 100+ distributors, including banks and bank-affiliated insurance agencies • Competitive protection product portfolio meet
Slide 23: Prudential's Positioning in Japan: Independent Agency
Prudential’s Positioning in Japan: Independent Agency • Commenced distribution of selected products in 2010; contributed $435 million(1) to annualized new business premiums for 2011 including $298 million from Star / Edison distribution • Star / Edison acquisition substantially expanded independent
Slide 24: Japan – Track Record of Success: Annualized New Business Premiums
Japan – Track Record of Success Annualized New Business Premiums (1) ($ millions) $2,724 $1,775 $1,600 $1,224 $1,276 +70% +39% +31% 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen 85 per U.S
Slide 25: Japan – Track Record of Success: Pre-Tax Adjusted Operating Income
Japan – Track Record of Success Pre-Tax Adjusted Operating Income (1) ($ millions) $2,321 $1,724 $1,497 +35% $1,262 $1,117 +15% +13% 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Excludes corporate management and development expenses incurred in the U.S. related to Japanese Insurance operations other than Gib
Slide 26: Prudential of Japan, John Hanrahan
Prudential of Japan John Hanrahan President and Chief Executive Officer Prudential of Japan
Slide 27: Life Planner Business Model: Sustainable Competitive Advantage
Life Planner Business Model: Sustainable Competitive Advantage Life Planners: A selective, “Beneficial cycle” high quality sales force Hire about 3 out of 100 Recruiting, developing and candidates retaining high quality people Well trained career professionals Customer focused Strong sales and high
Slide 28: Life Planner Model – Beneficial Cycle
Life Planner Model – Beneficial Cycle High Life Planner Productivity 6.9 policies/LP/Month (1) Prudential of Japan High Strategy Life Quality • Needs-based selling Planner Referrals • Primarily death Income protection products • Upscale/small business/professional market High High Policy Persistency
Slide 29: Quality Focused Distribution
Quality Focused Distribution 3,116 POJ Life Planners(1) Industry-Leading MDRT 811 POJ MDRT members – Qualifications #1 position in Japanese industry for 15 consecutive years(2) 25.6% of POJ Life Planners are MDRT members – Highest percentage in industry(2) Exceptionally Strong POJ Key Drivers(3) Lif
Slide 30: Business Model Built with Discipline
Business Model Built with Discipline Policies In-Force(1) 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2011 1) As of fiscal year-end for indicated years (March 31 of subsequent year); direct business only; includes annuities.
Slide 31: Strong Sales Growth
Strong Sales Growth POJ Annualized New Business Premiums(1) ($ millions) $900 $800 $781 $703 $700 $612 $601 $600 $500 $389 $400 $300 $200 $100 $- 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates; Japanese yen 85 per U.S. dollar. To
Slide 32: Increasing Protection Opportunity
Increasing Protection Opportunity(1) Population Life Insurance per Agent Agents (000) 600 400 354,000 530 350 500 300 400 241,000 357 250 300 200 150 200 100 100 50 0 0 1998 2011 Population Population 126 million Population per Agent 128 million Number of Life Insurance Agents in Japan 1) Population
Slide 33: Lifetime Client Relationships Provide Significant Opportunity for Retirement Oriented Sales
Lifetime Client Relationships Provide Significant Opportunity for Retirement Oriented Sales Insured Clients(1) Future Retirement Sales Opportunity 450,000 300,000 150,000 0 Age Group Under 20 20-29 30-39 40-49 50-59 60+ Primary Client Focus Death Protection Retirement Income Security 1) As of August
Slide 34: Lifetime Relationships and Innovative Products Drive Second Sale Opportunities
Lifetime Relationships and Innovative Products Drive Second Sale Opportunities Prudential of Japan Second Sales to Existing Customers(1) Annualized New Business Premiums ($ millions) 6 7 3 1 84 Annuity 69 68 Retirement 57 58 Accident & Health 5 4 Death Protection 3 4 4 48 55 41 43 44 2007 2008 2009
Slide 35: Life Planner Model Serving an Expanding Market
Life Planner Model Serving an Expanding Market High Net Worth Market Sophisticated Business Insurance Market Estate Planning Individual Insurance Market Business Succession Employee Benefit Program Funding Owner Family Distribution of Inheritances Planning for post-Retirement Nursing, Death Protecti
Slide 36: Product Portfolio Meets Client Needs Over a Lifetime
Product Portfolio Meets Client Needs Over a Lifetime Client Need Product Class Key Features Lower premium • Death protection for stated period with level premiums premature death Term Insurance protection • May add third-sector protection riders • Death protection • Embedded savings fund Death prote
Slide 37: Protection-Focused Product Portfolio Drives Sustainable Returns
Protection-Focused Product Portfolio Drives Sustainable Returns Product Drivers of Returns Term Insurance • Robust mortality margins on • Expense margins high average face amounts driven by scale, • Serves basic death back-office protection needs • Potential for add-on and efficiencies replacement s
Slide 38: Gibraltar Life, Kei Sato
Gibraltar Life Kei Sato President and Chief Executive Officer Gibraltar Life
Slide 39: Gibraltar Life Key Business Philosophies
Gibraltar Life Key Business Philosophies Gibraltar AIG Star AIG Edison “BIG” Life Life Life GIBRALTAR Legal entity merger, January 2012 LIFE • Stay focused on death protection products for customers with needs-based approach • Differentiate based on “Three Qualities” – Quality People – Quality Servi
Slide 40: Star / Edison Integration on Track
Star / Edison Integration on Track “Prudentializing” sales force Business integration proceeding on schedule; systems integration well underway Integrated product portfolio Migrated acquired investment portfolio to Prudential standards Enhanced risk management and internal controls Now Now expect ex
Slide 41: Star / Edison Integration: Distribution
Star / Edison Integration Distribution Life Consultant (1) Channel Independent Agency Channel Channe • Field office consolidation (660 to 461) • Reorganization of agency network focused on productivity: • Transition to Prudential’s – terminated ~700 agencies compensation systems in the first half of
Slide 42: Star / Edison Integration: Operations
Star / Edison Integration Operations IT & Operations Others • Exit from AIG’s service • Migrated to Prudential risk management and asset-liability • Completed system integration in key management standards areas, such as new business, call- center and accounting, etc. • Integrated product portfolios
Slide 43: Star / Edison Integration Impact on Prudential's Presence in Japan
Star / Edison Integration Impact on Prudential’s Presence in Japan Number of Number of Number of Policies In-force (1) Life Consultants Independent Agencies 7,477 7,417 12,791 4,150 12,031 3,434 3,903 6,281 238 12/31/10 12/31/11 6/30/12 12/31/10 12/31/11 06/30/12 12/31/10 12/31/11 06/30/12 Gibraltar
Slide 44: "Big" Gibraltar – Post Merger
“Big” Gibraltar – Post Merger Enhanced Capabilities and Growth Prospects Driven by Business Integration • Market reach with continued focus on death protection and retirement products, bolstered by enhanced Life Consultant force driven by ‘Prudentialized’ compensation and training • Expanded resourc
Slide 45: New Business Acquired by Gibraltar
New Business Acquired by Gibraltar Building Prudential’s Presence in Japan Annualized New Business Premiums (1) (in millions) Life Consultants Bank Channel Independent Agency 1,943 1,174 897 887 612 509 422 2007 2008 2009 2010 2011 2Q11 YTD 2Q12 YTD 1) Foreign denominated activity translated to U.S.
Slide 46: Life Consultant Channel: Proven Approach in Teachers Association Market
Life Consultant Channel Proven Approach in Attractive Teachers Association Market • Association relationship provides Gibraltar Life Consultants with access to school sites and teachers’ offices • One-on-one sales on site by Life Consultants • Specialized training program for Life Consultants workin
Slide 47: Life Consultant Channel: Key Driver - Teachers Market
Life Consultant Channel Key Driver - Teachers Market • Teachers market remains a primary stable source of business for “Big” Gibraltar • Approximately one-quarter of Life Consultant channel new business is derived from this market New Policy Count Annualized New Business Premiums (1) Acquired in 2Q1
Slide 48: Life Consultant Channel - Teachers Market
Life Consultant Channel - Teachers Market • Relationship since 1952 Member eligibility: School teachers and personnel • Approximately 600,000 members(1) • Access to approximately 950,000 Approved by: teachers and school personnel The Prime Minister of Japan through 47 prefectural (local) association
Slide 49: Life Consultant Channel - Teachers Market
Life Consultant Channel - Teachers Market Approximately Approximately Life Consultants Public schools nationwide 1) Data as of June 30, 2012. Tokyo Investor Day 9.12.2012 49
Slide 50: Teachers Association: Perennial Sales Opportunities
Teachers Association: Perennial Sales Opportunities (1) Active Market Retiree Market 1) Numbers approximate as of June 30, 2012. Tokyo Investor Day 9.12.2012 50
Slide 51: Life Consultant Channel - Teachers Market
Life Consultant Channel - Teachers Market Number of Public School Teachers Retirement Sales – Second Sale Opportunity Gibraltar Retiring teachers who policyholders among purchased Gibraltar teachers retiring in policies in 2Q:12 March, 2012 2,717 11,541 Total Premiums: $24 million (1) 1) Annualized
Slide 52: Independent Agency Channel: A Differentiated Strategy
Independent Agency Channel A Differentiated Strategy Key strategies • Focus on “Quality” not just top-line growth • Price competition is not our key to winning sales • Strong partnership with high performing agencies Key success factors • Develop highly-motivated agencies and producers who subscribe
Slide 53: Independent Agency Channel: Targeted Market Coverage
Independent Agency Channel Targeted Market Coverage Sales offices/marketing representatives strategically located near targeted metropolitan area markets Over 8,300 independent agency locations supervised by field offices 59 field offices Osaka area Fukuoka area Tokyo area Tokyo Investor Day 9.12.20
Slide 54: Independent Agency Channel: Market Opportunity
Independent Agency Channel Market Opportunity • The channel focuses on individual market in addition to the business market – Complements individual market coverage of Life Consultant channel – Serves customers who seek independent advice for their purchase of insurance – Access to solid customer ba
Slide 55: Gibraltar Life: Drivers of Continued Strong Growth and Returns
Gibraltar Life Drivers of Continued Strong Growth and Returns • Life Consultant and Independent Agency channels substantially enhanced by Star / Edison acquisition • Business integration synergies being realized as planned • Stable and diversified business model; main focus on death protection produ
Slide 56: Bank Channel Distribution, Takeshi Tanigawa
Bank Channel Distribution Takeshi Tanigawa President and Chief Executive Officer Prudential Gibraltar Financial Life
Slide 57: Bancassurance Powered by Prudential
Bancassurance Powered by Prudential Typical Bank Channel Approach Prudential’s Distinctive in the Japanese Market Bank Channel Strategy • Foreign carriers drove high bank • Built bancassurance model focused channel sales through aggressive on protection products following late variable annuity strat
Slide 58: Competitive Advantages Drive Bank Channel Success
Competitive Advantages Drive Bank Channel Success • Prudential distribution strengths leveraged to bank channel, providing effective access to world’s largest pool of household wealth held in currency and deposits • Competitive portfolio focused on protection products meets life insurance needs of b
Slide 59: Solid Product Portfolio Backed by Proven Prudential Resources and Support
Solid Product Portfolio Backed by Proven Prudential Resources and Support Product Portfolio Resources and Support • Products tailored to bank client • Sales supported by “seconded” needs, with main focus on former Prudential of Japan Life death protection Planners with strong background as life insu
Slide 60: Bancassurance Enhances Access to Substantial Japanese Household Investable Wealth
Bancassurance Enhances Access to Substantial Japanese Household Investable Wealth Japanese household wealth $10.9 Trillion held in currency and deposits(1) Prudential policies typically attractive to bank channel • Whole life customers with significant investable wealth • U.S. dollar and other non-y
Slide 61: Bank Channel Product Suite
Bank Channel Product Suite Well-diversified Product Lineup Focused on Protection Products Offering one of the largest product line-ups in Bancassurance with emphasis on protection products Product Lineup (1) Annuity Whole Life Retirement Term Cancer Currency- Single pay Family designated- type whole
Slide 62: Bank Channel: Building Relationships for Continued Growth
Bank Channel Building Relationships for Continued Growth 2009 (1) 2012 (2) • Sales through 25 banks • Over 60 bank sales relationships established, including three of Japan’s four largest banks • Expanding relationships with large regional banks(3); 23 of these banks selling Prudential products • Ov
Slide 63: Bank Channel Sales Growth Driven By Protection Products
Bank Channel Sales Growth Driven By Protection Products Annualized New Business Premiums (1) ($ millions) $580 $433 $336 Annuity $271 Retirement Accident & Health $137 Death Protection $56 $22 2007 2008 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Foreign denominated activity translated to U.S. dollars at un
Slide 64: Bank Channel Sales Growth Driven by Focus on Banks with Strongest Sales Potential
Bank Channel Sales Growth Driven by Focus on Banks with Strongest Sales Potential Annualized New Business Premiums $433 million (1) Other Bank sales 19% Sales through mega-banks and large regional banks with deposits of 81% 3 trillion yen or more 1) For the six months ended June 30, 2012. Foreign de
Slide 65: Bank Channel: Prospects for Continued Growth
Bank Channel Prospects for Continued Growth • Continue to grow sales with main focus on death protection products, complemented by diverse product line meeting lifetime financial security needs • Expand bank channel support by “seconded” former Life Planners; increase number of bank associates train
Slide 66: Prudential International Insurance Financial Overview, Ken Tanji
Prudential International Insurance Financial Overview Ken Tanji Chief Financial Officer, International Businesses Prudential Financial, Inc.
Slide 67: Drivers of Sustainable Financial Performance
Drivers of Sustainable Financial Performance Quality Focused Multi Channel Distribution Servicing Client’s Protection and Retirement Needs Well Managed Investment Portfolio Risks Capital Management Tokyo Investor Day 9.12.2012 67
Slide 68: Stable Earnings Growth
Stable Earnings Growth Pre-Tax Adjusted Operating Income (1) ($ millions) $2,263 $1,887 $1,581 $1,651 $1,275 $1,109 Gibraltar Life and Other operations Life Planner 2008 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Pre-tax adjusted operating income for International Insurance operations as presented above ex
Slide 69: Quality Focused Distribution
Quality Focused Distribution POJ Life Planners Gibraltar Life Consultants 2008 2011 2008 2011(2) 3,071 3,137 6,330 6,241 6.8 6.9 3.7 3.8 $3,000 $3,600 $1,700 $1,900 95% 95% 91% 93% 83% 81% 58% 67% 1) Number of agents at the end of respective periods. Agent productivity is the average number of new p
Slide 70: Scale Enhanced by Star / Edison Acquisition
Scale Enhanced by Star / Edison Acquisition Number of In-force Policies(1) (millions) 11.7 11.8 7.8 8.0 7.3 7.5 Life Planner, excluding POJ Gibraltar Life Prudential of Japan (POJ) 2007 2008 2009 2010 2011 2Q12 1) At period end; direct business only; policy count includes annuities. Tokyo Investor D
Slide 71: Balanced Product and Currency Mix
Balanced Product and Currency Mix Japan Annualized New Business Premium (1) $1.8 billion By Product Type By Currency Denomination Other (2) Death Protection 7% Retirement 26% 42% USD 35% Annuity 9% 58% JPY 23% Accident & Health 1) For the six months ended June 30, 2012. Foreign denominated activity
Slide 72: Product Profitability Characteristics
Product Profitability Characteristics (1) Source of Earnings Investment Margin Mortality, Expense & Other Margin Accident & Recurring Pay Retirement Single Pay Term Life Fixed Annuity Health Whole Life Income Whole Life Protection Oriented Retirement / Savings Oriented 1) Conceptual illustration bas
Slide 73: Stable Sources of Earnings
Stable Sources of Earnings Pre-Tax Adjusted Operating Income (1) ($ millions) $2,263 $1,887 $1,651 $1,581 $1,275 Investment $1,109 Margin Mortality, Expense & Other Margin 2008 2009 2010 2011 2Q11 2Q12 YTD YTD 1) Pre-tax adjusted operating income for International Insurance operations as presented a
Slide 74: High Quality Investment Portfolio
High Quality Investment Portfolio Japan Investment Portfolio (1) Structured Securities(2) 5% Commercial Loans(3) Corporate 4% Bonds 28% Other(4) (Investment 5% Grade) 4% Risk Assets 2% Corporate Bonds (Below Investment Grade) 1% Equities 1% Real Estate 54% Government (JGB & UST) 1) As of June 30, 20
Slide 75: Well Managed Investment Portfolio
Well Managed Investment Portfolio Prudential Japanese Domestic Big 4(2) Insurance Operations(1) Risk Assets (3) (3) 4% 18% Risk Assets 96% 82% 1) As of June 30, 2012. Includes Prudential of Japan and Gibraltar. 2) As of March 31, 2012. Domestic Big 4: Nippon, Dai-ichi, Meiji-Yasuda and Sumitomo. 3)
Slide 76: Interest Rate Environment
Interest Rate Environment • Interest rates have been low in Japan for more than fifteen years – Majority of POJ’s in-force business was written in a low rate environment – Rehabilitation measures lowered crediting rates of legacy business of Gibraltar • High quality long duration investment portfoli
Slide 77: Foreign Currency Matching - Japan
Foreign Currency Matching - Japan Investment Portfolio (1)(2) Reserves(1)(3) Other (4) Other (4) $8 $8 USD $25 USD $36 $106 JPY $103 JPY $150 billion $136 billion 1) As of June 30, 2012. 2) Investment portfolio is presented on a U.S. GAAP carrying value basis. Includes cash and cash equivalents of a
Slide 78: Foreign Currency Risk Management
Foreign Currency Risk Management Potential Exposure Risk Management Asset-Liability Well Matched FX Management Shareholder Value in $USD Income Comprehensive Book Value Hedging Program Cash Flow Accounting Non-Economic Noise Remeasurement Tokyo Investor Day 9.12.2012 78
Slide 79: Solvency Capital
Solvency Capital Solvency Margin Ratios(1) 800% 400% (2) POJ Gibraltar(2) Nippon Dai-ichi(2) Meiji-Yasuda Sumitomo MetLife Alico Aflac 1) As of March 31, 2012. 2) Consolidated basis. Tokyo Investor Day 9.12.2012 79
Slide 80: Solvency Margin Ratio
Solvency Margin Ratio March 31, 2012 Stressed Scenario Prudential of Japan 721% ~675% Gibraltar(1) 810% ~690% Stressed Scenario (2) • Japan Equity -38% • Real Estate -36% • Yen FX -20% • Interest Rates +100 bps 1) Gibraltar consolidated basis. 2) Represents indicated change applied to asset valuatio
Slide 81: Capital Management Opportunities
Capital Management Opportunities • Dividends – In accordance with regulatory and solvency standards • Affiliated Debt Repayment – approximately $4 billion outstanding on books of Prudential’s Japanese Insurance companies(1) • Affiliated Lending – In accordance with regulatory and credit standards •
Slide 82: 2013 ROE Potential
Superior Return Prospects Maintained as Growth Strategy has Broadened Prudential International Insurance Return on Equity(1) Reflects 22.2% Star / 2013 ROE 17.5% Edison Potential before expense synergies ~ 18% - 19% 2010 2011 1) Business unit Return on Equity (ROE) is unlevered and is based on overa
Slide 83: Key Takeaways
Key Takeaways • Focus on quality distribution drives margins and ROE • Third party distribution leverages scale and enhances growth • Emphasis on protection products combined with scale provides stable source of mortality and expense earnings • High quality investment portfolio is well matched with