Prudential Financial, Inc. Announces 2012 Results

Wed Feb 6, 2013 4:07pm EST

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NEWARK, N.J.--(Business Wire)--
Prudential Financial, Inc. (NYSE:PRU):

 •    After-tax adjusted operating income for the Financial Services Businesses for year 2012 of $2.958 billion, or $6.27 per Common share, compared to $5.83 per Common share for 2011.                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Fourth quarter 2012 after-tax adjusted operating income for the Financial Services Businesses of $798 million, or $1.69 per Common share, compared to $1.78 per Common share in the year-ago quarter.                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Significant items included in current quarter adjusted operating income:                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax net benefit of $48 million in Individual Annuities, including release of     
                                                                                                                                                                                                                                                                                                                                    reserves for guaranteed death and income benefits and reduced amortization of        
                                                                                                                                                                                                                                                                                                                                    deferred policy acquisition and other costs reflecting market performance, and charge 
                                                                                                                                                                                                                                                                                                                                    for impairment of capitalized software costs.                                        
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax benefit of $78 million in Retirement from recovery, under a settlement, of   
                                                                                                                                                                                                                                                                                                                                    previously recorded losses attributed to certain client investment funds managed by a 
                                                                                                                                                                                                                                                                                                                                    third party.                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax net benefit of $32 million in Asset Management, including gain from sale of a 
                                                                                                                                                                                                                                                                                                                                    real estate related investment and charge for impairment of capitalized software     
                                                                                                                                                                                                                                                                                                                                    costs.                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax charge of $15 million in Individual Life for costs incurred related to the   
                                                                                                                                                                                                                                                                                                                                    Company`s acquisition of The Hartford`s individual life insurance business which was 
                                                                                                                                                                                                                                                                                                                                    completed in January 2013.                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax charge of $20 million in Group Insurance to increase legal reserves.         
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax charge of $10 million in International Insurance`s Gibraltar Life operation  
                                                                                                                                                                                                                                                                                                                                    for integration costs relating to the acquisition of AIG Star Life Insurance Co.,    
                                                                                                                                                                                                                                                                                                                                    Ltd. and AIG Edison Life Insurance Company.                                          
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Pre-tax charges totaling $69 million in Corporate and Other operations, including    
                                                                                                                                                                                                                                                                                                                                    increase in recorded employee benefits liabilities reflecting completion of a review 
                                                                                                                                                                                                                                                                                                                                    and writeoff of issuance costs on debt securities redeemed prior to maturity.        
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Several of our U.S. businesses incurred costs in the current quarter, as discussed below, for items such as business process improvements, fund start-up costs, and reserves for costs associated with certain client contracts, which we estimate are in excess of a baseline level relative to current business volume, with an estimated negative impact of approximately $100 million on pre-tax adjusted      
      operating income.                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    An update of the effective tax rate applicable to adjusted operating income based on full year results contributed approximately 7 cents per Common share to current quarter results.                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Net income of Financial Services Businesses attributable to Prudential Financial, Inc. for year 2012 of $428 million, or 94 cents per Common share, compared to $6.99 per Common share for 2011.                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Fourth quarter 2012 net loss of Financial Services Businesses of $214 million, or 48 cents per Common share.                                                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  The current quarter net loss reflects pre-tax charges of approximately $1.5 billion  
                                                                                                                                                                                                                                                                                                                                    from net changes in value relating to foreign currency exchange rates primarily      
                                                                                                                                                                                                                                                                                                                                    resulting from changes in value of the Japanese yen in relation to other currencies. 
                                                                                                                                                                                                                                                                                                                                    These currency-driven value changes were largely offset by corresponding adjustments 
                                                                                                                                                                                                                                                                                                                                    to accumulated other comprehensive income which are not reflected in net income or   
                                                                                                                                                                                                                                                                                                                                    loss.                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                         
 •    Other financial highlights:                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  GAAP book value for Financial Services Businesses, $37.1 billion or $79.19 per Common 
                                                                                                                                                                                                                                                                                                                                    share at December 31, 2012, compared to $32.8 billion or $69.07 per Common share at  
                                                                                                                                                                                                                                                                                                                                    December 31, 2011. Book value per Common share excluding total accumulated other     
                                                                                                                                                                                                                                                                                                                                    comprehensive income, $57.86 at December 31, 2012 compared to $58.39 at December 31, 
                                                                                                                                                                                                                                                                                                                                    2011.                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  Net unrealized gains on general account fixed maturity investments of the Financial  
                                                                                                                                                                                                                                                                                                                                    Services Businesses of $18.6 billion at December 31, 2012 compared to $10.5 billion  
                                                                                                                                                                                                                                                                                                                                    at December 31, 2011; gross unrealized losses of $2.1 billion at December 31, 2012,  
                                                                                                                                                                                                                                                                                                                                    compared to $4.3 billion at December 31, 2011.                                       
                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                --                                                                                                                                                                                                                  During 2012, the Company acquired 11.5 million shares of its Common Stock at a total 
                                                                                                                                                                                                                                                                                                                                    cost of $650 million, for an average price of $56.43 per share. These repurchases    
                                                                                                                                                                                                                                                                                                                                    included 2.7 million Common shares acquired at a total cost of $150 million in the   
                                                                                                                                                                                                                                                                                                                                    third quarter under an authorization in June 2012 by Prudential`s Board of Directors 
                                                                                                                                                                                                                                                                                                                                    to repurchase at management`s discretion up to $1.0 billion of the Company`s         
                                                                                                                                                                                                                                                                                                                                    outstanding Common Stock through June 2013, with the remainder acquired under an     
                                                                                                                                                                                                                                                                                                                                    earlier authorization. From the commencement of share repurchases in July 2011       
                                                                                                                                                                                                                                                                                                                                    through December 31, 2012, the Company has acquired 31.3 million shares of its Common 
                                                                                                                                                                                                                                                                                                                                    Stock under its share repurchase authorizations at a total cost of $1.65 billion, for 
                                                                                                                                                                                                                                                                                                                                    an average price of $52.72 per share.                                                
                                                                                                                                                                                                                                                                                                                                                                                                                         


Prudential Financial, Inc. (NYSE: PRU) today reported after-tax adjusted
operating income for its Financial Services Businesses of $2.958 billion ($6.27
per Common share) for the year ended December 31, 2012, compared to $2.845
billion ($5.83 per Common share) for 2011. Net income for the Financial Services
Businesses attributable to Prudential Financial, Inc. was $428 million (94 cents
per Common share) for 2012, compared to $3.420 billion ($6.99 per Common share)
for 2011. Information regarding adjusted operating income, a non-GAAP measure,
is provided below. 

For the fourth quarter of 2012, after-tax adjusted operating income for the
Financial Services Businesses amounted to $798 million ($1.69 per Common share)
compared to $855 million ($1.78 per Common share) for the fourth quarter of
2011. The net loss for the Financial Services Businesses attributed to
Prudential Financial, Inc. for the fourth quarter of 2012 amounted to $214
million (48 cents per Common share) compared to net income of $522 million
($1.08 per Common share) for the fourth quarter of 2011. 

The Company acquired AIG Star Life Insurance Co., Ltd. and AIG Edison Life
Insurance Company on February 1, 2011. Results of the Financial Services
Businesses include the results of these businesses from the date of acquisition.


Reported results for the fourth quarter of 2012 and earlier periods presented
reflect the implementation of a discretionary change in accounting principle
related to the Company`s pension plans, as discussed under "Change in Accounting
Principle" later in this release. 

Results of the majority of the Company`s international investments operations,
formerly included in the International Insurance segment, have been reclassified
and included in the Asset Management segment for all periods presented herein.
This reflects the Company`s decision to align the management of these
businesses. 

"We are pleased with the progress we`ve made over the past year toward
achievement of our longer term objectives. We are continuing to benefit from
strong business momentum, with a growing base of quality business driven by
solid sales and flows. We surpassed significant milestones during the year,
including $1 trillion of assets under management, over $400 billion of account
values in our Retirement and Annuities businesses, and annualized new business
premiums of over $4 billion in International Insurance. We`ve strengthened our
U.S. businesses with the completion of two major ground breaking pension risk
transfer transactions in the fourth quarter, building a leadership position in
an attractive market well suited to our proficiencies. These transactions speak
to our capabilities, our culture of multi-discipline collaboration, and our
financial strength. Our acquisition of The Hartford`s individual life insurance
business, which was completed early this year, is also expected to provide
financial and strategic benefits. Our International Insurance business continues
to perform well, with results benefiting from growth in multiple distribution
channels and our achievement of cost synergies consistent with our goals through
the successful integration of the acquired Star and Edison businesses. Our
unique business mix, the quality of the businesses that make up that mix, and
the talent of our people support our prospects for achievement of strong returns
consistent with our targets as well as continued growth," said Chairman and
Chief Executive Officer John Strangfeld. 

Adjusted operating income is not calculated under generally accepted accounting
principles (GAAP). Information regarding adjusted operating income, a non-GAAP
measure, is discussed later in this press release under "Forward-Looking
Statements and Non-GAAP Measures," and a reconciliation of adjusted operating
income to the most comparable GAAP measure is provided in the tables that
accompany this release. 

Financial Services Businesses

Prudential Financial`s Common Stock (NYSE:PRU) reflects the performance of its
Financial Services Businesses, which consist of its U.S. Retirement Solutions
and Investment Management, U.S. Individual Life and Group Insurance, and
International Insurance divisions and its Corporate and Other operations. 

In the following business-level discussion, adjusted operating income refers to
pre-tax results. 

The U.S. Retirement Solutions and Investment Management division reported
adjusted operating income of $668 million for the fourth quarter of 2012,
compared to $769 million in the year-ago quarter. 

The Individual Annuities segment reported adjusted operating income of $304
million in the current quarter, compared to $373 million in the year-ago
quarter. Current quarter results benefited $57 million from net reductions in
reserves for guaranteed minimum death and income benefits and a net reduction in
amortization of deferred policy acquisition and other costs, reflecting an
updated estimate of profitability for this business. Results for the year-ago
quarter included a net benefit of $176 million from adjustment of these items to
reflect an update of estimated profitability. These benefits to results in both
the current quarter and the year-ago quarter were largely driven by market
performance relative to our assumptions during the respective periods. In
addition, current quarter results include a $9 million charge for impairment of
certain capitalized software costs based on a review of recoverability.
Excluding the effect of the foregoing items, adjusted operating income for the
Individual Annuities segment increased $59 million from the year-ago quarter.
The increase reflected higher asset-based fees due to growth in variable annuity
account values, net of related amortization of deferred policy acquisition and
other costs and distribution expenses. The net benefit from asset-based fees was
partly offset by higher expenses, including approximately $17 million of current
quarter costs for items including business process improvements that we estimate
are in excess of a baseline level relative to current business volume. 

The Retirement segment reported adjusted operating income of $225 million for
the current quarter, compared to $140 million in the year-ago quarter. Current
quarter results include income of $78 million from a recovery, under a
settlement, of prior losses attributed to certain client investment funds
managed by a third party. Excluding this item, adjusted operating income of the
Retirement segment increased $7 million from the year-ago quarter. This increase
reflected a greater net contribution of approximately $40 million from
investment results of the segment`s institutional investment products
activities, driven largely by the initial results from two significant pension
risk transfer transactions consummated during the current quarter, as well as
higher fees associated with growth in account values. These increases were
partly offset by a lower net contribution from investment results of the
segment`s full service activities and higher expenses, including approximately
$16 million of current quarter costs for items including business process
improvements that we estimate are in excess of a baseline level relative to
current business volume. 

The Asset Management segment reported adjusted operating income of $139 million
for the current quarter, compared to $256 million in the year-ago quarter.
Current quarter results include a $9 million charge for impairment of certain
capitalized software costs based on a review of recoverability, while results
for the year-ago quarter include a benefit of $96 million from the sale of the
Company`s stake in Afore XXI, a private pension fund manager in Mexico. The
current quarter contribution to results from the segment`s incentive,
transaction, strategic investing and commercial mortgage activities was $13
million greater than in the year-ago quarter, as income of $41 million from the
sale of a real estate related investment for which we had previously recognized
an impairment charge was largely offset by less favorable results from
coinvestments and lower performance-based fees. Excluding the foregoing items
and the contribution from these segment activities, Asset Management segment
adjusted operating income decreased $25 million from the year-ago quarter.
Higher expenses, including approximately $49 million of current quarter costs
for items including fund start-up costs, reserves for costs associated with
certain client contracts, and business process improvements that we estimate are
in excess of a baseline level relative to current business volume, more than
offset the benefit of higher asset management fees reflecting growth in assets
under management. 

The U.S. Individual Life and GroupInsurance division reported adjusted operating
income of $87 million for the fourth quarter of 2012, compared to $180 million
in the year-ago quarter. 

The Individual Life segment reported adjusted operating income of $99 million
for the current quarter, compared to $138 million in the year-ago quarter.
Current quarter results include a charge of $15 million, primarily representing
transaction costs, related to the Company`s acquisition of The Hartford`s
individual life insurance business which was completed in January 2013.
Excluding this charge, adjusted operating income decreased $24 million from the
year-ago quarter. This decrease reflected higher expenses in the current
quarter, including certain non-deferred policy acquisition costs due to higher
sales, and a benefit to year-ago quarter results of approximately $10 million
from adjustments of amortization of deferred policy acquisition and other costs
as a result of separate account performance more favorable than our assumptions.


The Group Insurance segment reported a loss, on an adjusted operating income
basis, of $12 million in the current quarter, compared to adjusted operating
income of $42 million in the year-ago quarter. Current quarter results include a
charge of $20 million to increase legal reserves. Excluding this charge,
adjusted operating income decreased $34 million from the year-ago quarter. This
decrease reflected less favorable group life claims experience and a higher
level of expenses, including approximately $18 million of current quarter costs
for items including business process improvements that we estimate are in excess
of a baseline level relative to current business volume. 

The International Insurance segment reported adjusted operating income of $647
million for the fourth quarter of 2012, compared to $502 million in the year-ago
quarter. 

Adjusted operating income of the segment`s Life Planner insurance operations was
$332 million for the current quarter, compared to $300 million in the year-ago
quarter. The $32 million increase in adjusted operating income reflected
continued business growth, partly offset by higher current quarter expenses
including costs associated with technology enhancements. In addition, current
quarter results reflect a favorable impact of $13 million in comparison to the
year-ago quarter from foreign currency exchange rates including the impact of
the Company`s currency hedging programs. 

The segment`s Gibraltar Life and Other operations reported adjusted operating
income of $315 million for the current quarter, compared to $202 million in the
year-ago quarter. Results for the current quarter reflect absorption of
approximately $10 million of integration costs related to the Star and Edison
businesses acquired on February 1, 2011, while results for the year-ago quarter
include $94 million of such costs. Excluding these integration costs, adjusted
operating income increased $29 million from the year-ago quarter. This increase
reflected approximately $50 million of cost savings resulting from business
integration synergies compared to approximately $10 million in the year-ago
quarter. The benefit to results from continued business growth was more than
offset by a less favorable level of policy benefits and higher current quarter
expenses including costs associated with technology enhancements. Current
quarter results also benefited $16 million in comparison to the year-ago quarter
from foreign currency exchange rates including the impact of the Company`s
currency hedging programs. 

Corporate and Other operations resulted in a loss, on an adjusted operating
income basis, of $371 million in the fourth quarter of 2012, compared to a loss
of $285 million in the year-ago quarter. Current quarter results include a
charge of $54 million to increase recorded liabilities for certain employee
benefits, reflecting the completion of a review, and a charge of $15 million to
write off bond issuance costs on debt securities redeemed prior to maturity.
Excluding these charges, the loss from Corporate and Other operations increased
$17 million from the year-ago quarter. This increase was primarily driven by
higher interest expense, net of investment income, reflecting a greater level of
capital debt in the current quarter. 

Assets under management amounted to $1.060 trillion at December 31, 2012,
compared to $901 billion at December 31, 2011. 

The net loss of the Financial Services Businesses attributable to Prudential
Financial, Inc. amounted to $214 million for the fourth quarter of 2012,
compared to net income of $522 million in the year-ago quarter. 

The current quarter net loss includes $1.698 billion of pre-tax net realized
investment losses and related charges and adjustments. The forgoing net loss
includes pre-tax losses of $1.527 billion representing net changes in value
relating to foreign currency exchange rates primarily resulting from changes in
value of the Japanese yen in relation to other currencies. These currency-driven
value changes were largely offset by corresponding adjustments to accumulated
other comprehensive income which are not reflected in net income or loss. Net
realized investment losses for the current quarter also include net losses of
$134 million from products that contain embedded derivatives and associated
derivative portfolios that are part of a hedging program related to the risks of
these products as well as mark to market of derivatives under a capital hedge
program. Net realized investment losses also reflect losses from impairments and
sales of credit-impaired investments amounting to $59 million. These losses were
partly offset by net gains from general portfolio activities. 

At December 31, 2012, gross unrealized losses on general account fixed maturity
investments of the Financial Services Businesses amounted to $2.146 billion,
including $1.693 billion on high and highest quality securities based on NAIC or
equivalent ratings. Gross unrealized losses include $390 million related to
asset-backed securities collateralized by sub-prime mortgages. Gross unrealized
losses on general account fixed maturity investments of the Financial Services
Businesses at December 31, 2012 include $749 million of declines in value of 20%
or more of amortized cost. Gross unrealized losses on general account fixed
maturity investments of the Financial Services Businesses amounted to $4.256
billion at December 31, 2011. Net unrealized gains on general account fixed
maturity investments of the Financial Services Businesses amounted to $18.606
billion at December 31, 2012, compared to $10.493 billion at December 31, 2011. 

The net loss for the current quarter reflects pre-tax increases of $108 million
in recorded asset values and $94 million in recorded liabilities representing
changes in value which are expected to ultimately accrue to contractholders.
These changes primarily represent interest rate related mark-to-market
adjustments. The net loss for the current quarter also reflects pre-tax income
of $60 million from divested businesses, primarily from reserve refinements
related to long term care insurance. 

Net income of the Financial Services Businesses for the year-ago quarter
included $596 million of pre-tax net realized investment losses and related
charges and adjustments, and increases of $53 million in recorded assets and $47
million in recorded liabilities for which changes in value are expected to
ultimately accrue to contractholders, in each case before income taxes. Net
income for the year-ago quarter also included $52 million of pre-tax income from
divested businesses. 

Closed Block Business

Prudential`s Class B Stock, which is not traded on any exchange, reflects the
performance of its Closed Block Business. 

The Closed Block Business includes our in-force participating life insurance and
annuity policies, and assets that are being used for the payment of benefits and
policyholder dividends on these policies, as well as other assets and equity
that support these policies. We have ceased offering these participating
policies. 

The Closed Block Business reported a loss from continuing operations before
income taxes of $33 million for the fourth quarter of 2012, compared to income
from continuing operations before income taxes of $123 million for the year-ago
quarter. 

The Closed Block Business reported a net loss attributable to Prudential
Financial, Inc. of $18 million for the fourth quarterof 2012, compared to net
income of $82 million for the year-ago quarter. 

For the year ended December 31, 2012, the Closed Block Business reported income
from continuing operations before income taxes of $64 million, compared to $214
million for 2011. The Closed Block Business reported net income attributable to
Prudential Financial, Inc. of $41 million for 2012, compared to $146 million for
2011. 

Consolidated Results

There is no legal separation of the Financial Services Businesses and the Closed
Block Business, and holders of the Common Stock and the Class B Stock are both
common stockholders of Prudential Financial, Inc. 

On a consolidated basis, which includes the results of both the Financial
Services Businesses and the Closed Block Business, Prudential Financial, Inc.
reported a net loss attributable to Prudential Financial, Inc. of $232 million
for the fourth quarter of 2012 compared to net income of $604 million for the
year-ago quarter, and reported net income attributable to Prudential Financial,
Inc. of $469 million for 2012 and $3.566 billion for 2011. 

Change in Accounting Principle

During the fourth quarter of 2012, with retrospective application for earlier
periods, the Company implemented a discretionary change in accounting principle
related to its pension plans. Under the revised accounting principle, the market
related value of a plan`s fixed income assets used to calculate periodic benefit
cost is now reflected annually at fair value. The prior method calculated the
market related value by recognizing changes in the fair value of a plan`s fixed
income assets in a systematic and rational manner over five years. For the year
ended December 31, 2011, the retrospective application of the revised accounting
principle resulted in increases of $37 million and $24 million to pre-tax
adjusted operating income and net income of the Financial Services Businesses
attributable to Prudential Financial, Inc. respectively; had no impact on
results of the Closed Block Business; and resulted in an increase of $24 million
to net income attributable to Prudential Financial, Inc. on a consolidated
basis. For the fourth quarter of 2011, the retrospective application of the
revised accounting principle resulted in increases of $9 million and $6 million
to pre-tax adjusted operating income and net income of the Financial Services
Businesses attributable to Prudential Financial, Inc. respectively; had no
impact on results of the Closed Block Business; and resulted in an increase of
$6 million to net income attributable to Prudential Financial, Inc. on a
consolidated basis. As a result of the retrospective application of the revised
accounting principle, attributed equity excluding accumulated other
comprehensive income as of December 31, 2011 for the Financial Services
Businesses was increased by $173 million, or 37 cents per Common share, and
there was no impact on attributed equity including accumulated other
comprehensive income as of that date. 

Forward-Looking Statements and Non-GAAP Measures

Certain of the statements included in this release 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," "projects," "intends," "should," "will,"
"shall," or variations of such words are generally part of forward-looking
statements. Forward-looking statements are made based on management`s current
expectations and beliefs concerning future developments and their potential
effects upon Prudential Financial, Inc. and its subsidiaries. There can be no
assurance that future developments affecting Prudential Financial, Inc. and its
subsidiaries will be those anticipated by management. These forward-looking
statements are not a guarantee of future performance and involve risks and
uncertainties, and there are certain important factors that could cause actual
results to differ, possibly materially, from expectations or estimates reflected
in such forward-looking statements, including, among others: (1) general
economic, market and political conditions, including the performance and
fluctuations of fixed income, equity, real estate and other financial markets;
(2) the availability and cost of additional debt or equity capital or external
financing for our operations; (3) interest rate fluctuations or prolonged
periods of low interest rates; (4) the degree to which we choose not to hedge
risks, or the potential ineffectiveness or insufficiency of hedging or risk
management strategies we do implement, with regard to variable annuity or other
product guarantees; (5) any inability to access our credit facilities; (6)
reestimates of our reserves for future policy benefits and claims; (7)
differences between actual experience regarding mortality, longevity, morbidity,
persistency, surrender experience, interest rates or market returns and the
assumptions we use in pricing our products, establishing liabilities and
reserves or for other purposes; (8) changes in our assumptions related to
deferred policy acquisition costs, value of business acquired or goodwill; (9)
changes in assumptions for retirement expense; (10) changes in our financial
strength or credit ratings; (11) statutory reserve requirements associated with
term and universal life insurance policies under Regulation XXX and Guideline
AXXX; (12) investment losses, defaults and counterparty non-performance; (13)
competition in our product lines and for personnel; (14) difficulties in
marketing and distributing products through current or future distribution
channels; (15) changes in tax law; (16) economic, political, currency and other
risks relating to our international operations; (17) fluctuations in foreign
currency exchange rates and foreign securities markets; (18) regulatory or
legislative changes, including the Dodd-Frank Wall Street Reform and Consumer
Protection Act; (19) inability to protect our intellectual property rights or
claims of infringement of the intellectual property rights of others; (20)
adverse determinations in litigation or regulatory matters and our exposure to
contingent liabilities, including in connection with our divestiture or winding
down of businesses; (21) domestic or international military actions, natural or
man-made disasters including terrorist activities or pandemic disease, or other
events resulting in catastrophic loss of life; (22) ineffectiveness of risk
management policies and procedures in identifying, monitoring and managing
risks; (23) effects of acquisitions, divestitures and restructurings; (24)
interruption in telecommunication, information technology or other operational
systems or failure to maintain the security, confidentiality or privacy of
sensitive data on such systems; (25) changes in statutory or U.S. GAAP
accounting principles, practices or policies; (26) Prudential Financial, Inc.`s
primary reliance, as a holding company, on dividends or distributions from its
subsidiaries to meet debt payment obligations and the ability of the
subsidiaries to pay such dividends or distributions in light of our ratings
objectives and/or applicable regulatory restrictions; and (27) risks due to the
lack of legal separation between our Financial Services Businesses and our
Closed Block Business. Prudential Financial, Inc. does not intend, and is under
no obligation, to update any particular forward-looking statement included in
this document. 

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 and adjustments. A
significant element of realized investment gains and losses are impairments and
credit-related and interest rate-related gains and losses. Impairments and
losses from sales of credit-impaired securities, the timing of which depends
largely on market credit cycles, can vary considerably across periods. The
timing of other sales that would result in gains or losses, such as interest
rate-related gains or losses, is largely subject to our discretion and
influenced by market opportunities as well as our tax and capital profile. 

Realized investment gains (losses) within certain of our businesses for which
such gains (losses) are a principal source of earnings, and those associated
with terminating hedges of foreign currency earnings and current period yield
adjustments are included in adjusted operating income. Adjusted operating income
excludes realized investment gains and losses from products that contain
embedded derivatives, and from associated derivative portfolios that are part of
a hedging program related to the risk of those products. Adjusted operating
income also excludes gains and losses from changes in value of certain assets
and liabilities relating to foreign currency exchange movements that have been
economically hedged or considered part of our capital funding strategies for our
international subsidiaries, as well as gains and losses on certain investments
that are classified as other trading account assets. 

Adjusted operating income also excludes investment gains and losses on trading
account assets supporting insurance liabilities and changes in experience-rated
contractholder liabilities due to asset value changes, because these recorded
changes in asset and liability values are expected to ultimately accrue to
contractholders. Trends in the underlying profitability of our businesses can be
more clearly identified without the fluctuating effects of these transactions.
In addition, adjusted operating income excludes the results of divested
businesses, which are not relevant to our ongoing operations. Discontinued
operations, which is presented as a separate component of net income under GAAP,
is also excluded from adjusted operating income. 

We believe that the presentation of adjusted operating income as we measure it
for management purposes enhances understanding of the results of operations of
the Financial Services Businesses by highlighting the results from ongoing
operations and the underlying profitability of our businesses. However, adjusted
operating income is not a substitute for income determined in accordance with
GAAP, and the adjustments made to derive adjusted operating income are important
to an understanding of our overall results of operations. The schedules
accompanying this release provide a reconciliation of adjusted operating income
for the Financial Services Businesses to income from continuing operations in
accordance with GAAP. 

The information referred to above, as well as the risks of our businesses
described in our Annual Report on Form 10-K for the year ended December 31,
2011, should be considered by readers when reviewing forward-looking statements
contained in this release. Additional historical information relating to our
financial performance is located on our Web site at www.investor.prudential.com.


Earnings Conference Call

Members of Prudential`s senior management will host a conference call on
Thursday, February 7, 2013 at 11 a.m. ET, to discuss with the investment
community the Company`s fourth quarter results. The conference call will be
broadcast live over the Company`s Investor Relations Web site at
www.investor.prudential.com. Please log on fifteen minutes early in the event
necessary software needs to be downloaded. The call will remain on the Investor
Relations Web site for replay through February 22. Institutional investors,
analysts, and other members of the professional financial community are invited
to listen to the call and participate in Q&A by dialing (877) 777-1971 (domestic
callers) or (612) 332-0226 (international callers). All others are encouraged to
dial into the conference call in listen-only mode, using the same numbers. To
listen to a replay of the conference call starting at 2:00 p.m. on February 7,
through February 14, dial (800) 475-6701 (domestic callers) or (320) 365-3844
(international callers). The access code for the replay is 272217. 

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with
approximately $1.060 trillion of assets under management as of December 31,
2012, has operations in the United States, Asia, Europe, and Latin America.
Prudential`s diverse and talented employees are committed to helping individual
and institutional customers grow and protect their wealth through a variety of
products and services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. In the U.S., Prudential`s
iconic Rock symbol has stood for strength, stability, expertise and innovation
for more than a century. For more information, please visit
www.news.prudential.com.

                                                                                                                                                                                                                   
 Financial Highlights                                                                                                                                                                                              
 (in millions, except per share data, unaudited)                                                                                                                                                                   
                                                                                                                                                                                                                   
                                                                                                                         Three Months Ended                                Year Ended                              
                                                                                                                         December 31                                       December 31                             
                                                                                                                              2012                        2011                 2012                    2011        
                                                                                                                                                                                                                   
 Financial Services Businesses Income Statement Data:                                                                                                                                                              
 Adjusted Operating Income (1):                                                                                                                                                                                    
 Revenues:                                                                                                                                                                                                         
 Premiums                                                                                                                $    41,145                 $    5,546            $   62,083              $   21,038      
 Policy charges and fee income                                                                                                1,183                       1,033                4,597                   4,032       
 Net investment income                                                                                                        2,713                       2,522                10,370                  9,803       
 Asset management fees, commissions and other income                                                                          1,098                       1,034                4,083                   4,060       
 Total revenues                                                                                                               46,139                      10,135               81,133                  38,933      
 Benefits and expenses:                                                                                                                                                                                            
 Insurance and annuity benefits                                                                                               40,783                      4,946                60,900                  19,919      
 Interest credited to policyholders' account balances                                                                         944                         953                  3,804                   3,756       
 Interest expense                                                                                                             313                         299                  1,243                   1,163       
 Other expenses                                                                                                               3,068                       2,771                11,237                  10,259      
 Total benefits and expenses                                                                                                  45,108                      8,969                77,184                  35,097      
 Adjusted operating income before income taxes                                                                                1,031                       1,166                3,949                   3,836       
 Income taxes, applicable to adjusted operating income                                                                        233                         311                  991                     991         
 Financial Services Businesses after-tax adjusted operating income (1)                                                        798                         855                  2,958                   2,845       
 Reconciling Items:                                                                                                                                                                                                
 Realized investment gains (losses), net, and related charges and adjustments                                                 (1,698  )                   (596    )            (2,809  )               847         
 Investment gains on trading account assets supporting insurance liabilities, net                                             108                         53                   610                     223         
 Change in experience-rated contractholder liabilities due to asset value changes                                             (94     )                   (47     )            (540    )               (123    )   
 Divested businesses                                                                                                          60                          52                   (597    )               101         
 Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests                         26                          12                   (1      )               (189    )   
 Total reconciling items, before income taxes                                                                                 (1,598  )                   (526    )            (3,337  )               859         
 Income taxes, not applicable to adjusted operating income                                                                    (608    )                   (186    )            (808    )               429         
 Total reconciling items, after income taxes                                                                                  (990    )                   (340    )            (2,529  )               430         
 Income (loss) from continuing operations (after-tax) of Financial Services Businesses                                                                                                                             
 before equity in earnings of operating joint ventures                                                                        (192    )                   515                  429                     3,275       
 Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests           (25     )                   (7      )            (18     )               110         
 Income (loss) from continuing operations attributable to Prudential Financial, Inc.                                          (217    )                   508                  411                     3,385       
 Earnings attributable to noncontrolling interests                                                                            27                          8                    78                      72          
 Income (loss) from continuing operations (after-tax) of Financial Services Businesses                                        (190    )                   516                  489                     3,457       
 Income from discontinued operations, net of taxes                                                                            3                           14                   17                      35          
 Net income (loss) of Financial Services Businesses                                                                           (187    )                   530                  506                     3,492       
 Less: Income attributable to noncontrolling interests                                                                        27                          8                    78                      72          
 Net income (loss) of Financial Services Businesses attributable to Prudential Financial, Inc.                           $    (214    )              $    522              $   428                 $   3,420       
                                                                                                                                                                                                                   
 See footnotes on last page.                                                                                                                                                                                       
                                                                                                                                                                                                                   


 Financial Highlights                                                                                                                                                                                
 (in millions, except per share data, unaudited)                                                                                                                                                     
                                                                                                                                                                                                     
                                                                                                           Three Months Ended                                Year Ended                              
                                                                                                           December 31                                       December 31                             
                                                                                                                2012                        2011                 2012                    2011        
                                                                                                                                                                                                     
 Earnings per share of Common Stock (diluted) (2) (3) (4):                                                                                                                                           
                                                                                                                                                                                                     
 Financial Services Businesses after-tax adjusted operating income                                         $    1.69                   $    1.78             $   6.27                $   5.83        
 Reconciling Items:                                                                                                                                                                                  
 Realized investment gains (losses), net, and related charges and adjustments                                   (3.61   )                   (1.25   )            (5.94   )               1.73        
 Investment gains on trading account assets supporting insurance liabilities, net                               0.23                        0.11                 1.29                    0.46        
 Change in experience-rated contractholder liabilities due to asset value changes                               (0.20   )                   (0.10   )            (1.14   )               (0.25   )   
 Divested businesses                                                                                            0.13                        0.11                 (1.26   )               0.21        
 Difference in earnings allocated to participating unvested share-based payment awards                          -                           -                    0.05                    (0.01   )   
 Total reconciling items, before income taxes                                                                   (3.45   )                   (1.13   )            (7.00   )               2.14        
 Income taxes, not applicable to adjusted operating income                                                      (1.28   )                   (0.40   )            (1.64   )               1.05        
 Total reconciling items, after income taxes                                                                    (2.17   )                   (0.73   )            (5.36   )               1.09        
 Income (loss) from continuing operations (after-tax) of Financial Services Businesses                                                                                                               
 attributable to Prudential Financial, Inc.                                                                     (0.48   )                   1.05                 0.91                    6.92        
 Income from discontinued operations, net of taxes                                                              -                           0.03                 0.03                    0.07        
 Net income (loss) of Financial Services Businesses attributable to Prudential Financial, Inc.             $    (0.48   )              $    1.08             $   0.94                $   6.99        
                                                                                                                                                                                                     
 Weighted average number of outstanding Common shares (basic)                                                   462.6                       469.2                465.6                   480.2       
 Weighted average number of outstanding Common shares (diluted) (4)                                             469.9                       477.0                473.2                   488.7       
                                                                                                                                                                                                     
 Direct equity adjustment for earnings per share calculation (2)                                           $    -                      $    (1      )        $   20                  $   24          
 Earnings related to interest, net of tax, on exchangeable surplus notes (4)                               $    4                      $    4                $   17                  $   17          
                                                                                                                                                                                                     
 Earnings allocated to participating unvested share-based payment awards                                                                                                                             
 for earnings per share calculation                                                                                                                                                                  
 Financial Services Businesses after-tax adjusted operating income                                         $    7                      $    11               $   29                  $   38          
 Income from continuing operations (after-tax) of Financial Services Businesses                            $    7                      $    9                $   7                   $   45          
                                                                                                                                                                                                     
 Financial Services Businesses Attributed Equity (as of end of period):                                                                                                                              
                                                                                                                                                                                                     
 Total attributed equity                                                                                   $    37,078                 $    32,817                                                   
 Per share of Common Stock - diluted                                                                            79.19                       69.07                                                    
                                                                                                                                                                                                     
 Attributed equity excluding accumulated other comprehensive income                                        $    27,088                 $    27,740                                                   
 Per share of Common Stock - diluted                                                                            57.86                       58.39                                                    
                                                                                                                                                                                                     
 Number of diluted shares at end of period                                                                      468.2                       475.1                                                    
                                                                                                                                                                                                     
                                                                                                                                                                                                     
 Adjusted operating income before income taxes, by Segment (1):                                                                                                                                      
 Individual Annuities                                                                                      $    304                    $    373              $   1,039               $   662         
 Retirement                                                                                                     225                         140                  638                     594         
 Asset Management                                                                                               139                         256                  503                     782         
 Total U.S. Retirement Solutions and Investment Management Division                                             668                         769                  2,180                   2,038       
 Individual Life                                                                                                99                          138                  384                     482         
 Group Insurance                                                                                                (12     )                   42                   16                      163         
 Total U.S. Individual Life and Group Insurance Division                                                        87                          180                  400                     645         
 International Insurance                                                                                        647                         502                  2,704                   2,263       
 Total International Insurance Division                                                                         647                         502                  2,704                   2,263       
 Corporate and Other operations                                                                                 (371    )                   (285    )            (1,335  )               (1,110  )   
 Financial Services Businesses adjusted operating income before income taxes                                    1,031                       1,166                3,949                   3,836       
 Reconciling Items:                                                                                                                                                                                  
 Realized investment gains (losses), net, and related charges and adjustments                                   (1,698  )                   (596    )            (2,809  )               847         
 Investment gains on trading account assets supporting insurance liabilities, net                               108                         53                   610                     223         
 Change in experience-rated contractholder liabilities due to asset value changes                               (94     )                   (47     )            (540    )               (123    )   
 Divested businesses                                                                                            60                          52                   (597    )               101         
 Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests           26                          12                   (1      )               (189    )   
 Total reconciling items, before income taxes                                                                   (1,598  )                   (526    )            (3,337  )               859         
 Income (loss) from continuing operations before income taxes and equity in earnings of operating                                                                                                    
 joint ventures - Financial Services Businesses                                                            $    (567    )              $    640              $   612                 $   4,695       
                                                                                                                                                                                                     
 See footnotes on last page.                                                                                                                                                                         
                                                                                                                                                                                                     


                                                                                                                                                                              
 Financial Highlights                                                                                                                                                         
 (in millions, except per share data or as otherwise noted, unaudited)                                                                                                        
                                                                                                                                                                              
                                                                                  Three Months Ended                                  Year Ended                              
                                                                                  December 31                                         December 31                             
                                                                                       2012                         2011                  2012                    2011        
                                                                                                                                                                              
 U.S. Retirement Solutions and Investment Management Division:                                                                                                                
                                                                                                                                                                              
 Fixed and Variable Annuity Sales and Account Values:                                                                                                                         
 Gross sales                                                                      $    3,789                   $    4,422             $   20,032              $   20,293      
                                                                                                                                                                              
 Net sales                                                                        $    1,976                   $    2,852             $   13,226              $   13,061      
                                                                                                                                                                              
 Total account value at end of period                                             $    135,342                 $    113,535                                                   
                                                                                                                                                                              
 Retirement Segment:                                                                                                                                                          
                                                                                                                                                                              
 Full Service:                                                                                                                                                                
                                                                                                                                                                              
 Deposits and sales                                                               $    3,903                   $    3,879             $   16,390              $   16,821      
                                                                                                                                                                              
 Net withdrawals                                                                  $    (483     )              $    (2,014   )        $   (2,833  )           $   (2,339  )   
                                                                                                                                                                              
 Total account value at end of period                                             $    148,405                 $    139,430                                                   
                                                                                                                                                                              
 Institutional Investment Products:                                                                                                                                           
                                                                                                                                                                              
 Gross additions                                                                  $    39,192                  $    10,825            $   55,005              $   27,773      
                                                                                                                                                                              
 Net additions                                                                    $    36,606                  $    8,741             $   46,510              $   21,623      
                                                                                                                                                                              
 Total account value at end of period                                             $    141,435                 $    90,089                                                    
                                                                                                                                                                              
 Asset Management Segment:                                                                                                                                                    
 Assets managed by Investment Management and Advisory Services (in billions,                                                                                                  
 as of end of period):                                                                                                                                                        
 Institutional customers                                                          $    313.7                   $    271.8                                                     
 Retail customers                                                                      138.7                        119.3                                                     
 General account                                                                       374.6                        326.7                                                     
 Total Investment Management and Advisory Services                                $    827.0                   $    717.8                                                     
                                                                                                                                                                              
                                                                                                                                                                              
 Institutional Assets Under Management (in billions):                                                                                                                         
 Gross additions, other than money market                                         $    20.8                    $    14.3              $   58.8                $   49.4        
                                                                                                                                                                              
 Net additions, other than money market                                           $    8.4                     $    3.6               $   17.2                $   16.9        
                                                                                                                                                                              
                                                                                                                                                                              
 Retail Assets Under Management (in billions):                                                                                                                                
 Gross additions, other than money market                                         $    10.1                    $    8.2               $   37.0                $   29.9        
                                                                                                                                                                              
 Net additions, other than money market                                           $    3.4                     $    2.2               $   12.8                $   5.7         
                                                                                                                                                                              
 U.S. Individual Life and Group Insurance Division:                                                                                                                           
                                                                                                                                                                              
 Individual Life Insurance Annualized New Business Premiums (5):                                                                                                              
 Variable life                                                                    $    8                       $    4                 $   21                  $   25          
 Universal life                                                                        90                           29                    218                     95          
 Term life                                                                             46                           42                    173                     158         
 Total                                                                            $    144                     $    75                $   412                 $   278         
                                                                                                                                                                              
 Group Insurance Annualized New Business Premiums (5):                                                                                                                        
 Group life                                                                       $    51                      $    49                $   304                 $   486         
 Group disability                                                                      7                            20                    135                     149         
 Total                                                                            $    58                      $    69                $   439                 $   635         
                                                                                                                                                                              
 International Insurance Division:                                                                                                                                            
                                                                                                                                                                              
 International Insurance Annualized New Business Premiums (5) (6):                                                                                                            
                                                                                                                                                                              
 Actual exchange rate basis                                                       $    1,097                   $    849               $   4,078               $   3,192       
                                                                                                                                                                              
 Constant exchange rate basis                                                     $    1,089                   $    829               $   4,051               $   3,157       
                                                                                                                                                                              
 See footnotes on last page.                                                                                                                                                  
                                                                                                                                                                              


                                                                                                                                                                                                            
 Financial Highlights                                                                                                                                                                                       
 (in millions, except per share data or as otherwise noted, unaudited)                                                                                                                                      
                                                                                                                                                                                                            
                                                                                                                      Three Months Ended                            Year Ended                              
                                                                                                                      December 31                                   December 31                             
                                                                                                                           2012                         2011            2012                    2011        
                                                                                                                                                                                                            
 Closed Block Business Data:                                                                                                                                                                                
                                                                                                                                                                                                            
 Income Statement Data:                                                                                                                                                                                     
 Revenues                                                                                                             $    1,600                   $    1,969       $   6,257               $   7,015       
 Benefits and expenses                                                                                                     1,633                        1,846           6,193                   6,801       
 Income (loss) from continuing operations before income taxes                                                              (33      )                   123             64                      214         
 Income taxes                                                                                                              (15      )                   41              21                      68          
 Closed Block Business income (loss) from continuing operations                                                            (18      )                   82              43                      146         
 Income (loss) from discontinued operations, net of taxes                                                                  -                            -               (2      )               -           
 Closed Block Business net income (loss)                                                                                   (18      )                   82              41                      146         
 Less: Income attributable to noncontrolling interests                                                                     -                            -               -                       -           
 Closed Block Business net income (loss) attributable to Prudential Financial, Inc.                                   $    (18      )              $    82          $   41                  $   146         
                                                                                                                                                                                                            
 Direct equity adjustment for earnings per share calculation (2)                                                           -                            1               (20     )               (24     )   
                                                                                                                                                                                                            
 Earnings available to holders of Class B Stock after direct equity adjustment - based on net income (loss)           $    (18      )              $    83          $   21                  $   122         
                                                                                                                                                                                                            
 Income (loss) from continuing operations per share of Class B Stock                                                  $    (9.00    )              $    41.50       $   11.50               $   61.00       
 Income (loss) from discontinued operations, net of taxes per share of Class B Stock                                       -                            -               (1.00   )               -           
 Net income (loss) per share of Class B Stock                                                                         $    (9.00    )              $    41.50       $   10.50               $   61.00       
                                                                                                                                                                                                            
 Weighted average diluted shares outstanding during period                                                                 2.0                          2.0             2.0                     2.0         
                                                                                                                                                                                                            
 Closed Block Business Attributed Equity (as of end of period):                                                                                                                                             
                                                                                                                                                                                                            
 Total attributed equity                                                                                              $    1,497                   $    1,436                                               
 Per Share of Class B Stock                                                                                                748.50                       718.00                                              
                                                                                                                                                                                                            
 Attributed equity excluding accumulated other comprehensive income                                                   $    1,273                   $    1,268                                               
 Per Share of Class B Stock                                                                                                636.50                       634.00                                              
                                                                                                                                                                                                            
 Number of Class B Shares at end of period                                                                                 2.0                          2.0                                                 
                                                                                                                                                                                                            
                                                                                                                                                                                                            
                                                                                                                                                                                                            
 Consolidated Data:                                                                                                                                                                                         
                                                                                                                                                                                                            
 Consolidated Income Statement Data:                                                                                                                                                                        
 Revenues                                                                                                                  45,912                       11,685          84,815                  49,030      
 Benefits and expenses                                                                                                     46,512                       10,922          84,139                  44,121      
 Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures           (600     )                   763             676                     4,909       
 Income tax expense (benefit)                                                                                              (390     )                   166             204                     1,488       
 Income (loss) from continuing operations before equity in earnings of operating joint ventures                            (210     )                   597             472                     3,421       
 Equity in earnings of operating joint ventures, net of taxes                                                              2                            1               60                      182         
 Income (loss) from continuing operations                                                                                  (208     )                   598             532                     3,603       
 Income from discontinued operations, net of taxes                                                                         3                            14              15                      35          
 Consolidated net income (loss)                                                                                            (205     )                   612             547                     3,638       
 Less: Income attributable to noncontrolling interests                                                                     27                           8               78                      72          
 Net income (loss) attributable to Prudential Financial, Inc.                                                              (232     )                   604             469                     3,566       
                                                                                                                                                                                                            
 Net income (loss) attributable to Prudential Financial, Inc.:                                                                                                                                              
 Financial Services Businesses                                                                                             (214     )                   522             428                     3,420       
 Closed Block Business                                                                                                     (18      )                   82              41                      146         
 Consolidated net income (loss) attributable to Prudential Financial, Inc.                                                 (232     )                   604             469                     3,566       
                                                                                                                                                                                                            
 Assets and Asset Management Information (in billions, as of end of period)                                                                                                                                 
                                                                                                                                                                                                            
 Total assets                                                                                                         $    709.3                   $    620.2                                               
                                                                                                                                                                                                            
 Assets under management (at fair market value):                                                                                                                                                            
 Managed by U.S. Retirement Solutions and Investment Management Division:                                                                                                                                   
 Asset Management Segment - Investment Management and                                                                                                                                                       
 Advisory Services                                                                                                    $    827.0                   $    717.8                                               
 Non-proprietary assets under management                                                                                   196.8                        152.2                                               
 Total managed by U.S. Retirement Solutions and Investment Management Division                                             1,023.8                      870.0                                               
 Managed by U.S. Individual Life and Group Insurance Division                                                              16.4                         13.8                                                
 Managed by International Insurance Division                                                                               20.1                         16.9                                                
 Total assets under management                                                                                             1,060.3                      900.7                                               
 Client assets under administration                                                                                        91.9                         85.7                                                
 Total assets under management and administration                                                                     $    1,152.2                 $    986.4                                               
                                                                                                                                                                                                            
 See footnotes on last page.                                                                                                                                                                                
                                                                                                                                                                                                            


                                                                                                                                                                                  
 (1)    Adjusted operating income is a non-GAAP measure of performance of our Financial Services Businesses that excludes "Realized investment gains (losses), net", as adjusted, 
        and related charges and adjustments; net investment gains and losses on trading account assets supporting insurance liabilities; change in experience-rated contractholder 
        liabilities due to asset value changes; results of divested businesses and discontinued operations; earnings attributable to noncontrolling interests; and the related tax 
        effects thereof. Adjusted operating income includes equity in earnings of operating joint ventures and the related tax effects thereof. Revenues and benefits and expenses 
        shown as components of adjusted operating income, are presented on the same basis as pre-tax adjusted operating income and are adjusted for the items above as well.      
                                                                                                                                                                                  
        Realized investment gains (losses) within certain of our businesses for which such gains (losses) are a principal source of earnings, and those associated with           
        terminating hedges of foreign currency earnings and current period yield adjustments are included in adjusted operating income. Adjusted operating income excludes        
        realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are part of a hedging program related 
        to the risk of those products. Adjusted operating income also excludes gains and losses from changes in value of certain assets and liabilities relating to foreign       
        currency exchange movements that have been economically hedged or considered part of our capital funding strategies for our international subsidiaries, as well as gains  
        and losses on certain investments that are classified as other trading account assets.                                                                                    
                                                                                                                                                                                  
        Adjusted operating income does not equate to "Income from continuing operations" as determined in accordance with GAAP but is the measure of profit or loss we use to     
        evaluate segment performance. Adjusted operating income is not a substitute for income determined in accordance with GAAP, and our definition of adjusted operating income 
        may differ from that used by other companies. The items above are important to an understanding of our overall results of operations. However, we believe that the        
        presentation of adjusted operating income as we measure it for management purposes enhances the understanding of our results of operations by highlighting the results    
        from ongoing operations and the underlying profitability factors of our businesses.                                                                                       
                                                                                                                                                                                  
 (2)    Net income for the Financial Services Businesses and the Closed Block Business is determined in accordance with GAAP and includes general and administrative expenses     
        charged to each of the businesses based on the Company's methodology for allocation of such expenses. Cash flows between the Financial Services Businesses and the Closed 
        Block Business related to administrative expenses are determined by a policy servicing fee arrangement that is based upon insurance and policies in force and statutory   
        cash premiums. To the extent reported administrative expenses vary from these cash flow amounts, the differences are recorded, on an after-tax basis, as direct equity    
        adjustments to the equity balances of each business. The direct equity adjustments modify earnings available to holders of Common Stock and Class B Stock for earnings per 
        share purposes. Earnings per share of Common Stock based on adjusted operating income of the Financial Services Businesses reflects these adjustments as well.            
                                                                                                                                                                                  
 (3)    Diluted share count used in the diluted earnings per share calculation for GAAP measures is equal to weighted average basic common shares for the three months ended      
        December 31, 2012 as all potential common shares are anti-dilutive due to the loss from continuing operations available to holders of common stock after direct equity    
        adjustment.                                                                                                                                                               
                                                                                                                                                                                  
 (4)    In calculating diluted earnings per share under the if-converted method, the potential shares that would be issued related to the exchangeable surplus notes assuming a   
        hypothetical exchange, weighted for the period the notes are outstanding, is added to the denominator, and interest expense, net of tax, is added to the numerator, if the 
        overall effect is dilutive. For the year ended December 31, 2012, the hypothetical impact of these shares was antidilutive and therefore excluded from the diluted        
        earnings per share calculation for GAAP measures. The weighted average number of outstanding common shares used in the diluted earnings per share calculation for the year 
        ended December 31, 2012 for GAAP measures is 468.1 million.                                                                                                               
                                                                                                                                                                                  
 (5)    Premiums from new sales that are expected to be collected over a one year period. Group insurance annualized new business premiums exclude new premiums resulting from    
        rate changes on existing policies, from additional coverage issued under our Servicemembers' Group Life Insurance contract, and from excess premiums on group universal   
        life insurance that build cash value but do not purchase face amounts. Group insurance annualized new business premiums include premiums from the takeover of claim       
        liabilities. Excess (unscheduled) and single premium business for the company's domestic individual life and international insurance operations are included in annualized 
        new business premiums based on a 10% credit.                                                                                                                              
                                                                                                                                                                                  
 (6)    Actual amounts reflect the impact of currency fluctuations. Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented,  
        including Japanese yen 80 per U.S. dollar; Korean won 1160 per U.S. dollar. U.S. denominated activity is included based on the amounts as transacted in U.S. dollars.     


Prudential Financial, Inc.
Scot Hoffman, 973-802-2824 



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