Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Investor Day (September 2014)
92 slides from Prudential Financial's investor day presentation, Sep 17, 2014
Slide 1: Prudential Financial, Inc. Investor Day
Exhibit 99.1 S EPTEMBER 18, 2014 P RUDENTIAL F INANCIAL, I NC. I NVESTOR D AY
Slide 2: Eric Durant, Investor Relations
E RIC D URANT S ENIOR V ICE P RESIDENT I NVESTOR R ELATIONS P RUDENTIAL F INANCIAL, I NC. I NVESTOR D AY
Slide 3: Forward-looking statements
Tokyo Investor Day 9.18.2014 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: Adjusted operating income non-GAAP measure
Tokyo Investor Day 9.18.2014 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 relat
Slide 5: Reconciliation for International Insurance pre-tax adjusted operating income
Tokyo Investor Day 9.18.2014 R ECONCILIATION FOR I NTERNATIONAL I NSURANCE PRE - TAX ADJUSTED 1) As disclosed in company earnings releases. 2) Includes refinements of reserves and amortization of deferred policy acquisition and other costs. 3) Represents one time gains on a joint venture investment
Slide 6: Prudential International Insurance
C HARLES L OWREY E XECUTIVE V ICE P RESIDENT AND C HIEF O PERATING O FFICER I NTERNATIONAL B USINESSES 2014 T OKYO I NVESTOR D AY P RUDENTIAL I NTERNATIONAL I NSURANCE
Slide 7: Proven, superior business model drives sustainable strong results and returns
Proven, superior business model drives sustainable strong results and returns High ROE (1) and low volatility earnings primarily driven by stable mortality and expense margins • Captive distribution provides sustainable competitive advantage • Emphasis on needs-based sales of protection products • E
Slide 8: Solid prospects driven by strategy and positioning
Solid prospects driven by strategy and positioning • Leading position in highly attractive Japanese insurance market • Captive distribution serving lifetime financial security needs: excellent fit for Japan’s demographic trend • Supplemental third party channels • Optimistic about Prudential’s oppor
Slide 9: Life Planner Model: Foundation of Our Success
• Began in 1988 • Differentiated approach for the Japanese life insurance market • Proprietary distribution through selective, high-quality sales force • Emphasize protection products requiring analysis of client needs • Target the affluent and mass affluent consumer; serve small business and profes
Slide 10: Expansion Through Diversification
Maintain Discipline, Quality, Solid Execution; Guided by Life Planner Business Model Concepts • Life Consultants (1) expand proprietary distribution coverage to middle-market customers, and have strong affinity group relationships • Supplemental distribution through banks and independent agents expa
Slide 11: Successful Track Record of Acquisitions and Business Integrations
Timeline Acquisitions Timeline Acquisitions • Kyoei Life, Japan – acquired in bankruptcy • Predecessor of today’s Gibraltar Life • Aoba Life, Japan • Integrated into Prudential of Japan • Yamato Life, Japan • Integrated into Gibraltar Life • AIG Star Life & AIG Edison Life, Japan • Merged into Gibra
Slide 12: Japan Demographic Change Drives Growth Opportunities for Prudential
21 30 39 48 51 55 Japanese Population and Over (1) J APAN D EMOGRAPHIC C HANGE D RIVES G ROWTH O PPORTUNITIES FOR P RUDENTIAL 1) In millions; population data for 1980, 1990, 2000 and 2010 from Japan Statistics Bureau; estimated population in 2020 and 2030 from National Institute of Population and So
Slide 13: Opportunities and Challenges
O PPORTUNITIES AND C HALLENGES Opportunities Suited to Prudential Strengths • Continued robust death protection market • Japanese demographic trends lead to growing retirement needs • Potentially significant Japanese estate planning market • Persistent low yields on investments available to Japanese
Slide 14: Japanese Insurance Operations
M ITSUO K URASHIGE C HIEF E XECUTIVE O FFICER J APAN L IFE I NSURANCE O PERATIONS J APANESE I NSURANCE O PERATIONS
Slide 15: Japanese Insurance Market Remains Highly Attractive for Prudential
Market Context J APANESE I NSURANCE M ARKET R EMAINS H IGHLY A TTRACTIVE FOR P RUDENTIAL Market Context Market Size • World’s second largest life insurance market: Life premiums $423 billion (1) Household Wealth • Household sector wealth ¥1,630 trillion ($15.8 trillion) (2) Investable Asset Pool • ¥
Slide 16: Household Sector Financial Assets – Japan and the United States
Currency and deposits 53% Equities 9% Insurance and Pension Reserves 27% Currency and deposits 13% Equities 33% Insurance and Pension Reserves 31% H OUSEHOLD S ECTOR F INANCIAL A SSETS – J APAN AND THE U NITED S TATES Financial Assets of Japanese and U.S. Households (1) Japan $15.8 Trillion (2) Unit
Slide 17: Attractive Market for Prudential
China Korea Taiwan India SE Asia Other • Japan is the second largest market in the world • Southeast Asia is growing fast, but the market size is still small (< 2% of world) 2013 Life Insurance Premiums (1) ($ billions) 1) Source: Swiss Re. Based on 2013 life insurance premium volume, foreign denomi
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Slide 19: Well Positioned to Grow in Evolving Japanese Market
W ELL P OSITIONED TO G ROW IN E VOLVING J APANESE M ARKET
Slide 20: Needs-Based Selling Over Customer's Life Cycle
Client Life Cycle Financial Risk Protection Needs Prudential Solutions N EEDS - B ASED S ELLING OVER C USTOMER ’ S L IFE C YCLE Note: Specific needs and solutions will vary by customer. Young household, early professional career Mid career, pre-retirement Retirement • Premature death income replacem
Slide 21: Product Portfolio: How Customer Needs Are Met
Client Need Product Class Key Features Client Need Product Class Key Features Lower premium premature death protection Term Insurance • Death protection for stated period with level premiums • Optional third-sector protection riders • “Family Income”: protection declines as income earning years elap
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Slide 23: Emphasis on Protection Products
Savings 16% Savings 7% (3) (3) Death Protection 50% Accident & Health 14% Retirement 20% 1) In millions; as of December 31. Annualized premiums in force, including paid-up policies and 10% of single premium. Japan only. 2) Foreign denominated activity translated to U.S. dollars at uniform exchange r
Slide 24: Growing Retirement Opportunity Complements Death Protection Market
Total Population (in millions ) Japanese Population 55 and over 17.7 % 1) Population data for 1980, 1990, 2000, and from Japan Statistics Bureau; estimated population in and from National Institute of Population and Social Security Research. Total Population (in millions ) 23.8 % 30.4 % 37.4 % 41.3
Slide 25: Developing Estate Planning Market in Japan
January 2015 inheritance tax change expected to expand tax reach to approximately 20% of urban population, from current national average of about 5% 45% 50% 55% 30% 35% 40% 45% 50% 55% 60% ¥200m - ¥300m ¥300m - ¥600m Over ¥600m Reduced Basic Exemptions Higher Inheritance Tax Rates January inheritanc
Slide 26: Targeted Distribution Serving the Japanese Market
Life Planners Life Consultants Bank Channel Independent Agency Channel • Affluent and mass affluent consumers • Business and professional market • Mass middle-market • Affinity group relationships • Bank clients with investable wealth, under-served protection needs • Business and professional market
Slide 27: Japan Industry – Number of Captive Agents
291 Industry agent count declined 45% Number of Life Insurance Captive Agents 1) Source: Japan Institute of Life Insurance. Data as of March 31 for each indicated year. Some former captive agents continue their career in the life insurance industry as independent sales agents. • Fewer captive agents
Slide 28: Quality People
1) Source: Million Dollar Round Table Association, Japan - membership data as of April 14, 2014. Total membership 3,680. MDRT Japan Membership ~ One Third of all MDRT members in Japan are from POJ and Gibraltar (1) • Industry leading Million Dollar Round Table memberships • Prudential of Japan has t
Slide 29: Our Approach to Third Party Distribution
Independent Agency Banks • Supplement core production by captive distribution • Opportunistic generation of profitable business by meeting needs of market segments not fully penetrated by captive distribution • Continue emphasis on protection products, adapting to specialized markets O UR A PPROACH
Slide 30: Third Party Distribution Channels: Advantages and Challenges
Advantages Challenges • Sales can be volatile due to changes in interest rates and competitor actions • Less influence over distribution • Profitability can vary with changes in product mix • Manage to bottom line, not top line • Balance profitability and business mix • Enhances access to expanded c
Slide 31: Third Party Distribution Channels Complement Core Captive Agent Production
T HIRD P ARTY D ISTRIBUTION C HANNELS C OMPLEMENT C ORE C APTIVE A GENT P RODUCTION 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, Japanese yen per U.S. dollar. Japan Annualized New Business Premiums (1) - 1,000 1,500 2,000 2,500 3,000
Slide 32: Prudential of Japan
S HOICHIRO I CHITANI P RESIDENT AND C HIEF E XECUTIVE O FFICER P RUDENTIAL OF J APAN P RUDENTIAL OF J APAN
Slide 33: History of POJ In Force Face Amount
(¥ in billions) 1) Prudential of Japan (POJ). As of March 31; year represents a fiscal year beginning on April of the year and ending on March of the following year. 2) In force face amount in U.S. dollars is translated at spot rate at the end of each fiscal year. (1),(2) H ISTORY OF POJ I N F ORCE
Slide 34: Key Drivers
2009 2010 2011 2012 2013 K EY D RIVERS Annualized Premium Productivity (1) $17,441 $19,494 $21,638 $26,314 $22,636 Policy Count Productivity (2) 7.0 6.9 6.9 7.4 7.3 Life Planner Retention (3) - Initial Year 78.7% 79.7% 80.7% 82.1% 85.2% Policy Persistency (4) 95% 95% 95% 95% 95% 1) Annualized new bu
Slide 35: Prudential of Japan Sales Track Record
P RUDENTIAL OF J APAN S ALES T RACK R ECORD Annualized New Business Premiums (1) 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, Japanese yen per U.S. dollar. ($ millions)
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Slide 38: Quality People – Recruiting and Development
Q UALITY P EOPLE – • Life Planner’s Commitment as Entrepreneur • Life Planner’s Business Vision & Mission • Life Planner’s Development R ECRUITING AND D EVELOPMENT
Slide 39: Quality Service
2011 2012 2013 2014 Customer Satisfaction (1) POJ Policy Persistency (2) Q UALITY S ERVICE 1) Life Support Insurance segment of J.D. Power Asia Pacific - Japan Life Insurance Contract Customer Satisfaction Studies SM . Contract Customer Satisfaction Study based on a total of 4,647 life insurance pol
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Slide 41: Under20 20-29 30-39 40-49 50-59 60+
450,000 | » 300,000 150,000 Under20 20-29 30-39 40-49 50-59 60+ G Prudential
Slide 42: Lifetime Client Relationships Drive Subsequent Sales Opportunities
1) Data based on Prudential of Japan sales to individual market; foreign denominated activity translated to U.S. dollars at uniform exchange rates; Japanese yen per U.S. dollar. L IFETIME C LIENT R ELATIONSHIPS D RIVE S UBSEQUENT S ALES O PPORTUNITIES Annualized New Business Premiums (1) POJ Second
Slide 43: Summary
S UMMARY • High Productivity • High Retention • High Persistency Superior Returns and Steady Growth
Slide 44: Gibraltar Life
K EI S ATO P RESIDENT AND C HIEF E XECUTIVE O FFICER G IBRALTAR L IFE G IBRALTAR L IFE
Slide 45: Gibraltar Life Overview
Consolidated Gibraltar Life Legal Entity Merger, January 2012 Tokyo Investor Day 9.18.2014 Consolidated Gibraltar Life Distribution • Life Consultants • Independent Agencies G IBRALTAR L IFE O VERVIEW Distribution • Bank Channel 1) Prudential Gibraltar Financial Life.
Slide 46: Life Consultant Distribution Complemented by Third Party Channels
45% 88% L IFE C ONSULTANT D ISTRIBUTION C OMPLEMENTED BY T HIRD P ARTY C HANNELS 2013 Sales (1),(2) $1.9 billion 2013 Number of Policies In Force (3) 7.3 million 1) Annualized new business premiums. 2) Foreign denominated activity translated to U.S. dollars at uniform exchange rate; Japanese yen 82
Slide 47: Product Portfolio: How Customer Needs Are Met
Life Consultant Channel Third Party Channels Independent Agency Bank P RODUCT P ORTFOLIO H OW C USTOMER N EEDS ARE M ET Customer Segment Primary Customer Needs Product Solution Distribution Middle-market Affinity groups Life Consultant Channel Death protection Retirement Whole life & Term Retirement
Slide 48: Gibraltar Key Business Philosophies
G IBRALTAR K EY B USINESS P HILOSOPHIES • Stay focused on death protection products for customers with needs- based approach • Differentiate based on “Three Qualities” – Quality People – Quality Products – Quality Services • Maintain “C = C” principle – “Contribution = Compensation”
Slide 49: Major Business Integration Initiatives
M AJOR B USINESS I NTEGRATION I NITIATIVES • Active management of the sales force, by introducing proven training and compensation approaches • Integration of systems • Integration of product lineups • Integration of investment portfolios • Strengthening of risk management and internal controls
Slide 50: Life Consultant Distribution: Number and Productivity
6,700 6,400 Life Consultant productivity has returned to pre-Star/Edison acquisition levels 7,400 7,400 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Life Consultant Count Life Consultant AP Productivity L IFE C ONSULTANT D ISTRIBUTION N UMBE
Slide 51: Productivity of New Life Consultants
New Life Consultants: Productivity has also Increased 4,300 4,700 $3,800 $4,000 $4,200 $4,400 $4,600 $4,800 $5,000 $5,200 L IFE C ONSULTANT D ISTRIBUTION P RODUCTIVITY OF N EW L IFE C ONSULTANTS 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods pres
Slide 52: Profile of a Successful Life Consultant
Recruiting based on our experiences – High-educational background, Sales experience, etc. P ROFILE OF A S UCCESSFUL L IFE C ONSULTANT • Proven training and compensation approaches • Steady and continuous activity in our major affinity group markets • Networking among customers/community Recruiting b
Slide 53: Branch offices supporting Life Consultants
83 branch offices supporting Life Consultants (1) • Branch offices established in substantially all prefectures • Prudential training supports emphasis on death protection products and needs-based selling • Serving expanding need for retirement income security products • Teachers Association and oth
Slide 54: Life Consultant Channel Key Driver – Teachers Market
• Teachers market remains a primary and stable source of business for Gibraltar • Approximately one-quarter of Life Consultant channel new business is derived from this market • Perennial source of sales through teacher career spans – Protection products to entering and active teachers – Retirement
Slide 55: Broad Coverage of Teachers Market
Japanese Educational Mutual Aid Association of Welfare Foundation B ROAD C OVERAGE OF T EACHERS M ARKET Approximately Life Consultants (1) Approximately Public schools nationwide (2) 1) As of May 1, 2014. 2) As of May 1, 2013, Source: Japan Ministry of Education, Culture, Sports, Science and Technol
Slide 56: Teachers Association: Perennial Sales Opportunities
Active Market Retiree Market T EACHERS A SSOCIATION: P ERENNIAL S ALES O PPORTUNITIES 1) As of May 1, 2013, Source: Japan Ministry of Education, Culture, Sports, Science and Technology, and Japanese Educational Mutual Aid Association of Welfare Foundation. Includes support employees of public school
Slide 57: Independent Agency Channel: A Differentiated Strategy
I NDEPENDENT A GENCY C HANNEL A D IFFERENTIATED S TRATEGY 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 subs
Slide 58: Independent Agency Channel: Growing Productivity
3,419 3,393 3,352 3,248 2,882 2,646 2,685 2,687 37 52 47 55 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 1,000 1,500 2,000 2,500 3,000 3,500 4,000 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 Number of Agency Relationships Annualized New Business Premiums I NDEPENDENT A GENCY C HANNEL G
Slide 59: Bancassurance in Japan
T AKESHI T ANIGAWA P RESIDENT AND C HIEF E XECUTIVE O FFICER P RUDENTIAL G IBRALTAR F INANCIAL L IFE B ANCASSURANCE IN J APAN
Slide 60: Bancassurance Market in Japan
Demographic Structure of Japan (1) (Total population: 127 million) Household Wealth (2) ($15.8 trillion) • Japanese household wealth is concentrated among older households with substantial bank balances • Continuing flow of funds through proceeds of investments (e.g. Japanese government bonds) and m
Slide 61: Emerging Opportunity for the Bancassurance Market
As of 2012 (1) After tax law revision (2) (January, 2015) E MERGING O PPORTUNITY FOR THE B ANCASSURANCE M ARKET • Tax system revision effective January 1, 2015 – More people will be subject to inheritance tax payment • People place high confidence in banks for estate planning consultation – Highly p
Slide 62: Prudential's Bank Channel Business Strategy
Product Class (Customer needs) Market Characteristics Prudential Bank Channel Strategies Emphasis on protection products with differentiated approach supports high quality sales at attractive margins P RUDENTIAL ’ S B ANK C HANNEL B USINESS S TRATEGY Product Class (Customer needs) Market Characteris
Slide 63: Business Base of Bank Channel Relationships
Prudential Distribution Partners (1),(2) Deposits, etc (3) ( Trillion USD ) B USINESS B ASE OF B ANK C HANNEL R ELATIONSHIPS • Partner relationships with all of the Mega Banks and Major Trust Banks (7 banks in total) 1) As of August 1, 2014. 2) Number of banks/institutions in which Prudential produc
Slide 64: Business Base of Bank Channel: Product Line-Up
B USINESS B ASE OF B ANK C HANNEL P RODUCT L INE - U P (1) • Offering a comprehensive product line-up in Bancassurance with emphasis on protection products Annuity Single pay annuities USD, EUR, AUD, Yen Variable individual annuities (2) USD Whole Life Single pay whole life insurance USD, EUR, AUD,
Slide 65: Bank Channel Sales Support: Prudential's Differentiated Approach
With more than 7 years since Japan’s full deregulation of Bancassurance in 2007, Prudential has developed substantial marketing expertise and skilled employees to serve the Bank Channel Sales personnel Role Headcount (1) B ANK C HANNEL S ALES S UPPORT P RUDENTIAL ’ S D IFFERENTIATED A PPROACH With m
Slide 66: Prudential's Insurance Consultant Secondment Model
P RUDENTIAL ’ S I NSURANCE C ONSULTANT “S ECONDMENT ” M ODEL • Experienced Life Planners “seconded” as Insurance Consultants to partner with banks, directly bringing strength of Prudential’s distribution model to bank channel (1) – Insurance Consultants bring accumulated expertise in insurance sales
Slide 67: Bank Channel Sales Track Record
B ANK C HANNEL S ALES T RACK R ECORD 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented; Japanese yen per U.S. dollar. Annualized New Business Premiums (1) ($ millions) Yen-based bank channel single premium whole life (limited death benefit
Slide 68: In Conclusion
Bancassurance = Investment (Savings Products) Bancassurance = Insurance (Protection Products) We created a unique business model for the bank channel, taking advantage of our differentiated capabilities I N C ONCLUSION … Our goal is to realize the full potential for bancassurance distribution of lif
Slide 69: International Insurance Financial Overview
J OHN H ANRAHAN S ENIOR V ICE P RESIDENT AND C HIEF F INANCIAL O FFICER I NTERNATIONAL P RUDENTIAL I NTERNATIONAL I NSURANCE F INANCIAL O VERVIEW
Slide 70: Drivers of Sustainable Financial Performance
Quality Focused Distribution Sound Capital Management Well Managed Investment Portfolio Risks Servicing Client’s Protection and Retirement Needs D RIVERS OF S USTAINABLE F INANCIAL P ERFORMANCE • Core captive agent and supplemental third party • High productivity and persistency • Scale • Needs-base
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Slide 72: Sustained Earnings Growth
AOI FX Rate (2) $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Gibraltar Life and Other Operations Life Planner Operations 1) Pre-tax AOI excludes market driven and discrete items as disclosed in company earnings releases. 2) Hedged foreign currency exchange rate for Japanese yen per U.S. dollar.
Slide 73: International Insurance AOI
Reported AOI (3) I NTERNATIONAL I NSURANCE AOI 1) Excludes market driven and discrete items as disclosed in company earnings releases. 2) Star/Edison results included from date of acquisition, February, 2011. 3) Reflects yen translation at hedged foreign currency exchange rates of 106, 99, 92, 85, f
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Slide 77: Interest Rate Environment
I NTEREST R ATE E NVIRONMENT 10 Year Government Bond Yield • 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 for most of the legacy business of Gibraltar, S
Slide 78: Impact of Changing Interest Rate Environment
1) Pre-tax AOI excludes market driven and discrete items as disclosed in company earnings releases. The analysis represents assumed investment of renewal premiums and reinvestment of investment income and proceeds from maturing investments at market interest rates bps higher or lower than actual rat
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Slide 83: Japanese Yen Earnings Hedge
J APANESE Y EN E ARNINGS H EDGE Historical Yen Spot Rates vs. Hedging Rates (¥) ¥99 ¥92 ¥85 ¥80 ¥82 • Expected yen-based AOI is hedged over a 36 month rolling period using a series of FX forwards with laddered maturities – 2014 expected yen earnings were first hedged in 1Q11, and entirely hedged by
Slide 84: Earnings and ROE Protection Strategy
E ARNINGS AND ROE P ROTECTION S TRATEGY Percentage of Expected Yen Earnings Hedged (1) 100% 93% 54% • Yen depreciation lowers the USD value of yen earnings; causes earnings and ROE dilution • Hedging of expected yen earnings protects USD value of near-term earnings, ROE and potential capital repatri
Slide 85: Foreign Currency Matching – Japanese Insurance Operations
USD Other (4) JPY USD Other (4) JPY F OREIGN C URRENCY M ATCHING – J APANESE I NSURANCE O PERATIONS 1) As of June 30, 2014. 2) Investment portfolio is presented on a U.S. GAAP carrying value basis. Includes cash and cash equivalents of approximately $4 billion, and net unrealized gains of $11 billio
Slide 86: Hedging Sensitivity
Hypothetical Hedging Rates ¥ 90 90 ¥ 100 100 ¥ 110 110 Pro Forma AOI at indicated rates AOI H EDGING S ENSITIVITY International Insurance 2013 AOI at Different Hedging Rates for Yen (1),(2) ($ billions) Hypothetical Hedging Rates ¥90 ¥100 ¥110 Difference from 2013 Actual Hedging Rate 13% 25% 38% Pro
Slide 87: High Quality Investment Portfolio
27% 3% 5% 4% H IGH Q UALITY I NVESTMENT P ORTFOLIO 1) As of June 30, 2014. Presented on a U.S. GAAP carrying value basis. Excludes cash and cash equivalents of approximately $4 billion. 2) Includes commercial/residential mortgage-backed securities and asset-backed securities. 3) Includes commercial/
Slide 88: Strong Management of Solvency Margin Ratio: Sensitivity to Market Movement
S TRONG M ANAGEMENT OF S OLVENCY M ARGIN R ATIO (SMR) S ENSITIVITY TO M ARKET M OVEMENT • ~70% of the Japan portfolio is classified as either held-for-reserve (HFR) or held- to-maturity (HTM) – HFR/HTM bonds are not marked to market for interest rate changes in Solvency Margin results – Less than 25
Slide 89: Solvency Margin Ratio
Stressed Scenario Stressed Scenario (2) March 31, 2014 Prudential of Japan Gibraltar Life (1) S OLVENCY M ARGIN R ATIO • Solvency margin position of Prudential’s Japanese insurance companies – well capitalized and financially secure • We are above our target SMR of 600% - 700% Stressed Scenario ~680
Slide 90: Capital Management Opportunities
Redeployment Method Description C APITAL M ANAGEMENT O PPORTUNITIES 1) As of June 30, 2014. Includes amounts relating to preferred stock issues. Redeployment Method Description Dividends • In accordance with regulatory and solvency standards Affiliated Debt Repayment • Approximately $2.5 billion out
Slide 91: Historical Capital Redeployment
H ISTORICAL C APITAL R EDEPLOYMENT Historical Capital Redeployment ($ billions) • International Insurance operations have redeployed excess capital of more than 60% of after-tax AOI since 2009 (1) 1) Through 2013. Forms of Cumulative Redeployment Over 60% of after-tax AOI
Slide 92: Key Takeaways
K EY T AKEAWAYS • Focus on quality distribution drives sustainable high margins and ROE • Emphasis on protection products combined with scale provides stable sources of earnings predominantly driven by mortality and expense margins • High quality investment portfolio is well matched with our insuran