Exhibit 99.2
Prudential Financial, Inc. (PRU) | ||||
![]() | ||||
Quarterly Financial Supplement | ||||
Third Quarter 2019 | ||||
Reference is made to Prudential Financial, Inc.'s (PFI) filings with the Securities and | ||||
Exchange Commission for general information, and consolidated financial information. All | ||||
financial information in this document is unaudited. | ||||
November 4, 2019 | ||||
i
Prudential Financial, Inc. | ![]() | ||||
Quarterly Financial Supplement | |||||
Third Quarter 2019 | |||||
TABLE OF CONTENTS | |||||
Page | |||||
ii
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||||
FINANCIAL METRICS SUMMARY | ||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | |||||||||||||||||||||||
Earnings | ||||||||||||||||||||||||||||||
Adjusted operating income (loss) before income taxes: | ||||||||||||||||||||||||||||||
PGIM Division | 230 | 243 | 214 | 264 | 232 | 716 | 710 | -1% | ||||||||||||||||||||||
U.S. Workplace Solutions Division | 298 | 249 | 304 | 548 | 392 | 1,029 | 1,244 | 21% | ||||||||||||||||||||||
U.S. Individual Solutions Division | 624 | 419 | 577 | 327 | 518 | 1,729 | 1,422 | -18% | ||||||||||||||||||||||
International Insurance Division | 890 | 736 | 922 | 849 | 791 | 2,530 | 2,562 | 1% | ||||||||||||||||||||||
Corporate and Other Operations | (374 | ) | (329 | ) | (412 | ) | (335 | ) | (281 | ) | (954 | ) | (1,028 | ) | -8% | |||||||||||||||
Total adjusted operating income before income taxes | 1,668 | 1,318 | 1,605 | 1,653 | 1,652 | 5,050 | 4,910 | -3% | ||||||||||||||||||||||
Income taxes, applicable to adjusted operating income | 322 | 283 | 346 | 346 | 323 | 1,066 | 1,015 | -5% | ||||||||||||||||||||||
After-tax adjusted operating income | 1,346 | 1,035 | 1,259 | 1,307 | 1,329 | 3,984 | 3,895 | -2% | ||||||||||||||||||||||
Income attributable to Prudential Financial, Inc. | 1,672 | 842 | 932 | 708 | 1,418 | 3,232 | 3,058 | -5% | ||||||||||||||||||||||
Return on Equity | ||||||||||||||||||||||||||||||
Operating Return on Average Equity (based on adjusted operating income) (1) | 13.6 | % | 10.3 | % | 12.6 | % | 13.1 | % | 13.3 | % | 13.5 | % | 13.0 | % | ||||||||||||||||
Return on Average Equity (based on net income) | 14.1 | % | 7.1 | % | 7.2 | % | 4.9 | % | 8.9 | % | 8.6 | % | 7.1 | % | ||||||||||||||||
Distributions to Shareholders | ||||||||||||||||||||||||||||||
Dividends Paid | 380 | 377 | 415 | 411 | 412 | 1,149 | 1,238 | 8% | ||||||||||||||||||||||
Share Repurchases | 375 | 375 | 500 | 500 | 1,000 | 1,125 | 2,000 | 78% | ||||||||||||||||||||||
Total Capital Returned | 755 | 752 | 915 | 911 | 1,412 | 2,274 | 3,238 | 42% | ||||||||||||||||||||||
Per Share Data | ||||||||||||||||||||||||||||||
Net Income (diluted) | 3.90 | 1.99 | 2.22 | 1.71 | 3.44 | 7.51 | 7.35 | -2% | ||||||||||||||||||||||
Adjusted Operating Income (diluted) | 3.15 | 2.44 | 3.00 | 3.14 | 3.22 | 9.24 | 9.35 | 1% | ||||||||||||||||||||||
Shareholder Dividends | 0.90 | 0.90 | 1.00 | 1.00 | 1.00 | 2.70 | 3.00 | 11% | ||||||||||||||||||||||
Book Value | 110.78 | 116.34 | 132.83 | 150.04 | 163.19 | |||||||||||||||||||||||||
Book Value excluding AOCI and FX (2) | 95.20 | 96.06 | 96.76 | 97.15 | 99.67 | |||||||||||||||||||||||||
Shares Outstanding | ||||||||||||||||||||||||||||||
Weighted average number of common shares (basic) | 416.2 | 412.7 | 409.2 | 405.3 | 404.1 | 419.2 | 406.2 | -3% | ||||||||||||||||||||||
Weighted average number of common shares (diluted) | 424.7 | 421.2 | 417.6 | 413.9 | 408.5 | 427.8 | 413.2 | -3% | ||||||||||||||||||||||
End of period common shares (basic) | 414.4 | 410.7 | 407.3 | 403.0 | 398.3 | |||||||||||||||||||||||||
End of period common shares (diluted) | 426.3 | 422.2 | 417.9 | 414.3 | 403.2 | |||||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
(1) Operating Return on Average Equity (based on adjusted operating income) is a non-GAAP measure and represents adjusted operating income after-tax, annualized for interim periods, divided by average Prudential Financial, Inc. equity excluding accumulated other comprehensive income and adjusted to remove amounts included for foreign currency exchange rate remeasurement as described on page 3. | ||||||||||||||||||||||||||||||
(2) AOCI represents accumulated other comprehensive income and FX represents the remeasurement of foreign currency. See Page 3 for further details. |
Page 1
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | |||||||||||||||||||||
Earnings per share of Common Stock (diluted): | |||||||||||||||||||||||||||
After-tax adjusted operating income | 3.15 | 2.44 | 3.00 | 3.14 | 3.22 | 9.24 | 9.35 | ||||||||||||||||||||
Reconciling items: | |||||||||||||||||||||||||||
Realized investment gains (losses), net, and related charges and adjustments | 0.42 | (0.51 | ) | (1.53 | ) | (1.52 | ) | 0.71 | 1.21 | (2.37 | ) | ||||||||||||||||
Market experience updates | — | — | — | (0.50 | ) | (0.77 | ) | — | (1.26 | ) | |||||||||||||||||
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | 0.02 | (0.66 | ) | 1.09 | 0.69 | 0.22 | (1.37 | ) | 2.01 | ||||||||||||||||||
Change in experience-rated contractholder liabilities due to asset value changes | (0.05 | ) | 0.54 | (0.97 | ) | (0.76 | ) | (0.39 | ) | 1.13 | (2.12 | ) | |||||||||||||||
Divested and Run-off Businesses: | |||||||||||||||||||||||||||
Closed Block Division | 0.04 | (0.09 | ) | (0.05 | ) | (0.05 | ) | 0.11 | (0.05 | ) | 0.01 | ||||||||||||||||
Other Divested and Run-off Businesses | 0.03 | 0.12 | 0.42 | 0.27 | 0.38 | (3.71 | ) | 1.07 | |||||||||||||||||||
Difference in earnings allocated to participating unvested share-based payment awards | (0.01 | ) | 0.01 | 0.01 | 0.02 | — | 0.02 | 0.02 | |||||||||||||||||||
Total reconciling items, before income taxes | 0.45 | (0.59 | ) | (1.03 | ) | (1.85 | ) | 0.26 | (2.77 | ) | (2.64 | ) | |||||||||||||||
Income taxes, not applicable to adjusted operating income | (0.30 | ) | (0.14 | ) | (0.25 | ) | (0.42 | ) | 0.04 | (1.04 | ) | (0.64 | ) | ||||||||||||||
Total reconciling items, after income taxes | 0.75 | (0.45 | ) | (0.78 | ) | (1.43 | ) | 0.22 | (1.73 | ) | (2.00 | ) | |||||||||||||||
Net income attributable to Prudential Financial, Inc. | 3.90 | 1.99 | 2.22 | 1.71 | 3.44 | 7.51 | 7.35 | ||||||||||||||||||||
Weighted average number of outstanding common shares (basic) | 416.2 | 412.7 | 409.2 | 405.3 | 404.1 | 419.2 | 406.2 | ||||||||||||||||||||
Weighted average number of outstanding common shares (diluted) | 424.7 | 421.2 | 417.6 | 413.9 | 408.5 | 427.8 | 413.2 | ||||||||||||||||||||
For earnings per share of Common Stock calculation: | |||||||||||||||||||||||||||
Net income attributable to Prudential Financial, Inc. | 1,672 | 842 | 932 | 708 | 1,418 | 3,232 | 3,058 | ||||||||||||||||||||
Earnings related to interest, net of tax, on exchangeable surplus notes | 5 | 5 | 5 | 6 | 1 | 16 | 12 | ||||||||||||||||||||
Less: Earnings allocated to participating unvested share-based payment awards | 19 | 10 | 10 | 8 | 15 | 37 | 33 | ||||||||||||||||||||
Net income attributable to Prudential Financial, Inc. for earnings per share of Common Stock calculation | 1,658 | 837 | 927 | 706 | 1,404 | 3,211 | 3,037 | ||||||||||||||||||||
After-tax adjusted operating income | 1,346 | 1,035 | 1,259 | 1,307 | 1,329 | 3,984 | 3,895 | ||||||||||||||||||||
Earnings related to interest, net of tax, on exchangeable surplus notes | 5 | 5 | 5 | 6 | 1 | 16 | 12 | ||||||||||||||||||||
Less: Earnings allocated to participating unvested share-based payment awards | 15 | 13 | 13 | 15 | 14 | 45 | 42 | ||||||||||||||||||||
After-tax adjusted operating income for earnings per share of Common Stock calculation | 1,336 | 1,027 | 1,251 | 1,298 | 1,316 | 3,955 | 3,865 | ||||||||||||||||||||
Page 2
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
OTHER FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
Capitalization Data (1): | ||||||||||||||||||||||||||||
Senior Debt: | ||||||||||||||||||||||||||||
Short-term debt | 2,393 | 2,451 | 2,549 | 2,659 | 1,490 | |||||||||||||||||||||||
Long-term debt | 9,857 | 9,810 | 10,741 | 10,269 | 11,577 | |||||||||||||||||||||||
Junior Subordinated Long-Term Debt | 7,564 | 7,568 | 7,568 | 7,572 | 7,574 | |||||||||||||||||||||||
Prudential Financial Inc. Equity: | ||||||||||||||||||||||||||||
Including accumulated other comprehensive income | 46,725 | 48,617 | 55,010 | 61,660 | 65,798 | |||||||||||||||||||||||
Excluding accumulated other comprehensive income (2) | 37,575 | 37,711 | 37,792 | 37,678 | 38,240 | |||||||||||||||||||||||
Amount included above for remeasurement of foreign currency (3) | (2,509 | ) | (2,344 | ) | (2,142 | ) | (2,070 | ) | (1,946 | ) | ||||||||||||||||||
Excluding accumulated other comprehensive income and adjusted to remove amount | ||||||||||||||||||||||||||||
included for remeasurement of foreign currency (3) | 40,084 | 40,055 | 39,934 | 39,748 | 40,186 | |||||||||||||||||||||||
Book Value per Share of Common Stock: | ||||||||||||||||||||||||||||
Including accumulated other comprehensive income (4) | 110.78 | 116.34 | 132.83 | 150.04 | 163.19 | |||||||||||||||||||||||
Excluding accumulated other comprehensive income (2)(4) | 89.32 | 90.50 | 91.63 | 92.15 | 94.84 | |||||||||||||||||||||||
Amount included above for remeasurement of foreign currency (3) | (5.88 | ) | (5.56 | ) | (5.13 | ) | (5.00 | ) | (4.83 | ) | ||||||||||||||||||
Excluding accumulated other comprehensive income and adjusted to remove amount | ||||||||||||||||||||||||||||
included for remeasurement of foreign currency (3)(4) | 95.20 | 96.06 | 96.76 | 97.15 | 99.67 | |||||||||||||||||||||||
End of period number of common shares (diluted) (5) | 426.3 | 422.2 | 417.9 | 414.3 | 403.2 | |||||||||||||||||||||||
Common Stock Price Range (based on closing price): | ||||||||||||||||||||||||||||
High | 104.68 | 105.99 | 97.25 | 105.71 | 103.27 | 126.02 | 105.71 | |||||||||||||||||||||
Low | 93.99 | 76.83 | 81.27 | 92.38 | 78.29 | 93.22 | 78.29 | |||||||||||||||||||||
Close | 101.32 | 81.55 | 91.88 | 101.00 | 89.95 | 101.32 | 89.95 | |||||||||||||||||||||
Common Stock market capitalization (1) | 41,987 | 33,493 | 37,423 | 40,703 | 35,827 | |||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) As of end of period. | ||||||||||||||||||||||||||||
(2) Foreign currency translation adjustments and the cumulative impact of foreign currency exchange rate remeasurement, except for those items remeasured through net income (loss), are a component of accumulated other comprehensive income. | ||||||||||||||||||||||||||||
(3) Includes the cumulative impact of net gains and losses resulting from foreign currency exchange rate remeasurement and associated realized investment gains and losses included in net income (loss) and currency translation adjustments corresponding to realized investment gains and losses. | ||||||||||||||||||||||||||||
(4) Book value per share of Common Stock (including AOCI, excluding AOCI, and excluding AOCI and remeasurement of foreign currency) as of the second quarter of 2019 includes a $500 million increase in equity and a 6.2 million increase in diluted shares reflecting the dilutive impact of exchangeable surplus notes when book value per share of Common Stock is greater than $80.73. As of first quarter of 2019 and the fourth quarter of 2018, book value per share of Common Stock includes a $500 million increase in equity and 6.1 million increase in diluted shares, reflecting the dilutive impact of exchangeable surplus notes when book value per share of Common Stock is greater than $82.16. As of the third quarter of 2018, book value per share of Common Stock includes a $500 million increase in equity and a 5.9 million increase in diluted shares, reflecting the dilutive impact of exchangeable surplus notes when book value per Common Stock is greater than $85.00. The $500 million of exchangeable surplus notes were converted into 6.2 million shares of Common Stock in the third quarter of 2019. | ||||||||||||||||||||||||||||
(5) The number of diluted shares at the end of prior periods includes the impact of exchangeable surplus notes due to the dilutive impact of conversion. The exchangeable surplus notes were converted to Common Stock in the third quarter of 2019. | ||||||||||||||||||||||||||||
Page 3
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
OPERATIONS HIGHLIGHTS | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
Assets Under Management and Administration ($ billions) (1)(2): | ||||||||||||||||||||||||||||
PGIM Division: | ||||||||||||||||||||||||||||
Institutional customers | 505.7 | 493.5 | 524.0 | 534.9 | 539.8 | |||||||||||||||||||||||
Retail customers | 258.3 | 240.1 | 256.4 | 264.9 | 269.3 | |||||||||||||||||||||||
General account | 410.6 | 427.8 | 441.0 | 459.8 | 474.7 | |||||||||||||||||||||||
Total PGIM Division | 1,174.6 | 1,161.4 | 1,221.4 | 1,259.6 | 1,283.8 | |||||||||||||||||||||||
U.S. Workplace Solutions Division | 88.7 | 86.1 | 89.4 | 90.9 | 90.7 | |||||||||||||||||||||||
U.S. Individual Solutions Division | 117.4 | 100.4 | 113.3 | 115.4 | 113.4 | |||||||||||||||||||||||
International Insurance Division | 29.3 | 29.4 | 31.4 | 31.5 | 30.9 | |||||||||||||||||||||||
Total assets under management | 1,410.0 | 1,377.3 | 1,455.5 | 1,497.4 | 1,518.8 | |||||||||||||||||||||||
Client assets under administration | 238.2 | 233.3 | 250.8 | 273.0 | 273.5 | |||||||||||||||||||||||
Total assets under management and administration | 1,648.2 | 1,610.6 | 1,706.3 | 1,770.4 | 1,792.3 | |||||||||||||||||||||||
Assets managed or administered for customers outside of the United States at end of period | 370.6 | 373.8 | 389.4 | 403.4 | 410.5 | |||||||||||||||||||||||
Distribution Representatives (1): | ||||||||||||||||||||||||||||
Prudential Advisors | 3,071 | 3,005 | 3,075 | 3,132 | 3,161 | |||||||||||||||||||||||
International Life Planners | 7,798 | 7,969 | 8,094 | 8,170 | 8,280 | |||||||||||||||||||||||
Gibraltar Life Consultants | 8,030 | 7,964 | 7,997 | 7,767 | 7,633 | |||||||||||||||||||||||
Prudential Advisor productivity ($ thousands) | 63 | 78 | 53 | 62 | 65 | 59 | 60 | |||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) As of end of period. | ||||||||||||||||||||||||||||
(2) At fair market value. |
Page 4
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||
Premiums | 8,143 | 11,487 | 7,256 | 7,439 | 6,306 | 21,491 | 21,001 | -2% | |||||||||||||||||||
Policy charges and fee income | 1,557 | 1,570 | 1,542 | 1,518 | 1,563 | 4,702 | 4,623 | -2% | |||||||||||||||||||
Net investment income | 3,367 | 3,382 | 3,546 | 3,698 | 3,732 | 10,108 | 10,976 | 9% | |||||||||||||||||||
Asset management fees, commissions and other income | 1,365 | 1,341 | 1,304 | 1,451 | 1,327 | 4,049 | 4,082 | 1% | |||||||||||||||||||
Total revenues | 14,432 | 17,780 | 13,648 | 14,106 | 12,928 | 40,350 | 40,682 | 1% | |||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||
Insurance and annuity benefits | 8,464 | 11,934 | 7,520 | 7,823 | 6,773 | 22,477 | 22,116 | -2% | |||||||||||||||||||
Interest credited to policyholders' account balances | 940 | 937 | 948 | 955 | 984 | 2,783 | 2,887 | 4% | |||||||||||||||||||
Interest expense | 355 | 372 | 386 | 392 | 377 | 1,042 | 1,155 | 11% | |||||||||||||||||||
Deferral of acquisition costs | (708 | ) | (754 | ) | (759 | ) | (712 | ) | (746 | ) | (2,110 | ) | (2,217 | ) | -5% | ||||||||||||
Amortization of acquisition costs | 496 | 533 | 540 | 736 | 529 | 1,581 | 1,805 | 14% | |||||||||||||||||||
General and administrative expenses | 3,217 | 3,440 | 3,408 | 3,259 | 3,359 | 9,527 | 10,026 | 5% | |||||||||||||||||||
Total benefits and expenses | 12,764 | 16,462 | 12,043 | 12,453 | 11,276 | 35,300 | 35,772 | 1% | |||||||||||||||||||
Adjusted operating income before income taxes | 1,668 | 1,318 | 1,605 | 1,653 | 1,652 | 5,050 | 4,910 | -3% | |||||||||||||||||||
Income taxes, applicable to adjusted operating income | 322 | 283 | 346 | 346 | 323 | 1,066 | 1,015 | -5% | |||||||||||||||||||
After-tax adjusted operating income | 1,346 | 1,035 | 1,259 | 1,307 | 1,329 | 3,984 | 3,895 | -2% | |||||||||||||||||||
Reconciling items: | |||||||||||||||||||||||||||
Realized investment gains (losses), net, and related adjustments | 271 | (132 | ) | (663 | ) | (548 | ) | 382 | 751 | (829 | ) | -210% | |||||||||||||||
Related charges | (94 | ) | (83 | ) | 25 | (82 | ) | (92 | ) | (233 | ) | (149 | ) | 36% | |||||||||||||
Total realized investment gains (losses), net, and related charges and adjustments | 177 | (215 | ) | (638 | ) | (630 | ) | 290 | 518 | (978 | ) | -289% | |||||||||||||||
Market experience updates | — | — | — | (208 | ) | (314 | ) | — | (522 | ) | - | ||||||||||||||||
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | 10 | (277 | ) | 454 | 287 | 91 | (586 | ) | 832 | 242% | |||||||||||||||||
Change in experience-rated contractholder liabilities due to asset value changes | (21 | ) | 228 | (403 | ) | (313 | ) | (160 | ) | 482 | (876 | ) | -282% | ||||||||||||||
Divested and Run-off Businesses: | |||||||||||||||||||||||||||
Closed Block Division | 18 | (40 | ) | (19 | ) | (21 | ) | 45 | (22 | ) | 5 | 123% | |||||||||||||||
Other Divested and Run-off Businesses | 12 | 51 | 174 | 112 | 155 | (1,586 | ) | 441 | 128% | ||||||||||||||||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | (26 | ) | (12 | ) | (33 | ) | (4 | ) | (34 | ) | (75 | ) | (71 | ) | 5% | ||||||||||||
Total reconciling items, before income taxes | 170 | (265 | ) | (465 | ) | (777 | ) | 73 | (1,269 | ) | (1,169 | ) | 8% | ||||||||||||||
Income taxes, not applicable to adjusted operating income | (138 | ) | (65 | ) | (114 | ) | (184 | ) | 9 | (462 | ) | (289 | ) | 37% | |||||||||||||
Total reconciling items, after income taxes | 308 | (200 | ) | (351 | ) | (593 | ) | 64 | (807 | ) | (880 | ) | -9% | ||||||||||||||
Income before income taxes and equity in earnings of operating joint ventures | 1,838 | 1,053 | 1,140 | 876 | 1,725 | 3,781 | 3,741 | -1% | |||||||||||||||||||
Income tax expense | 184 | 218 | 232 | 162 | 332 | 604 | 726 | 20% | |||||||||||||||||||
Income before equity in earnings of operating joint ventures | 1,654 | 835 | 908 | 714 | 1,393 | 3,177 | 3,015 | -5% | |||||||||||||||||||
Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests | 18 | 7 | 24 | (6 | ) | 25 | 55 | 43 | -22% | ||||||||||||||||||
Income attributable to Prudential Financial, Inc. | 1,672 | 842 | 932 | 708 | 1,418 | 3,232 | 3,058 | -5% | |||||||||||||||||||
Earnings attributable to noncontrolling interests | 3 | 7 | 5 | 30 | 7 | 7 | 42 | 500% | |||||||||||||||||||
Net income | 1,675 | 849 | 937 | 738 | 1,425 | 3,239 | 3,100 | -4% | |||||||||||||||||||
Less: Income attributable to noncontrolling interests | 3 | 7 | 5 | 30 | 7 | 7 | 42 | 500% | |||||||||||||||||||
Net income attributable to Prudential Financial, Inc. | 1,672 | 842 | 932 | 708 | 1,418 | 3,232 | 3,058 | -5% | |||||||||||||||||||
__________ | |||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments; investment gains, net of losses, on assets supporting experience-rated contractholder liabilities; and revenues of Divested and Run-off Businesses, and include revenues representing equity in earnings of operating joint ventures other than those classified as Divested and Run-off Businesses. Benefits and expenses exclude charges related to realized investment gains, net of losses; change in experience-rated contractholder liabilities due to asset value changes; and benefits and expenses of Divested and Run-off Businesses and include charges for income attributable to noncontrolling interests. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. See pages 36 and 37 for reconciliation. |
Page 5
Prudential Financial, Inc. | ![]() | |||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
09/30/2018 | 12/31/2018 | 03/31/2019 | 06/30/2019 | 09/30/2019 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturities, available-for-sale, at fair value | ||||||||||||||||||||
(amortized cost $321,168; $331,745; $333,648; $340,564; $342,567) | 340,970 | 353,656 | 365,928 | 383,390 | 391,657 | |||||||||||||||
Fixed maturities, held-to-maturity, at amortized cost | ||||||||||||||||||||
(fair value $2,287; $2,372; $2,365; $2,410; $2,359) | 1,957 | 2,013 | 1,982 | 2,009 | 1,958 | |||||||||||||||
Fixed maturities, trading, at fair value | ||||||||||||||||||||
(amortized cost $3,162; $3,392; $3,512; $3,807; $3,873) | 3,083 | 3,243 | 3,435 | 3,755 | 3,779 | |||||||||||||||
Assets supporting experience-rated contractholder liabilities, at fair value | 21,083 | 21,254 | 21,668 | 21,843 | 22,267 | |||||||||||||||
Equity securities, at fair value | ||||||||||||||||||||
(cost $5,149; $5,219; $5,230; $5,205; $5,363) | 7,058 | 6,238 | 6,778 | 6,804 | 7,014 | |||||||||||||||
Commercial mortgage and other loans | 59,336 | 59,830 | 60,875 | 61,228 | 61,833 | |||||||||||||||
Policy loans | 11,928 | 12,016 | 11,986 | 12,030 | 12,022 | |||||||||||||||
Other invested assets | 13,790 | 14,526 | 14,840 | 15,081 | 15,654 | |||||||||||||||
Short-term investments | 5,767 | 6,469 | 6,911 | 5,872 | 7,320 | |||||||||||||||
Total investments | 464,972 | 479,245 | 494,403 | 512,012 | 523,504 | |||||||||||||||
Cash and cash equivalents | 12,466 | 15,353 | 14,699 | 15,421 | 18,289 | |||||||||||||||
Accrued investment income | 3,180 | 3,318 | 3,233 | 3,355 | 3,248 | |||||||||||||||
Deferred policy acquisition costs | 19,789 | 20,058 | 19,978 | 19,540 | 19,484 | |||||||||||||||
Value of business acquired | 1,962 | 1,850 | 1,575 | 1,227 | 1,106 | |||||||||||||||
Other assets | 16,938 | 16,118 | 18,192 | 18,690 | 18,761 | |||||||||||||||
Separate account assets | 303,441 | 279,136 | 297,244 | 303,580 | 301,234 | |||||||||||||||
Total assets | 822,748 | 815,078 | 849,324 | 873,825 | 885,626 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Future policy benefits | 260,797 | 273,846 | 277,085 | 285,527 | 291,742 | |||||||||||||||
Policyholders' account balances | 149,130 | 150,338 | 151,224 | 151,428 | 152,527 | |||||||||||||||
Securities sold under agreements to repurchase | 9,176 | 9,950 | 9,873 | 9,741 | 9,241 | |||||||||||||||
Cash collateral for loaned securities | 4,656 | 3,929 | 4,093 | 4,235 | 4,728 | |||||||||||||||
Income taxes | 7,014 | 7,936 | 10,031 | 11,485 | 12,664 | |||||||||||||||
Senior short-term debt | 2,393 | 2,451 | 2,549 | 2,659 | 1,490 | |||||||||||||||
Senior long-term debt | 9,857 | 9,810 | 10,741 | 10,269 | 11,577 | |||||||||||||||
Junior subordinated long-term debt | 7,564 | 7,568 | 7,568 | 7,572 | 7,574 | |||||||||||||||
Other liabilities | 20,708 | 20,128 | 22,241 | 23,930 | 25,302 | |||||||||||||||
Notes issued by consolidated variable interest entities | 930 | 955 | 1,225 | 1,246 | 1,233 | |||||||||||||||
Separate account liabilities | 303,441 | 279,136 | 297,244 | 303,580 | 301,234 | |||||||||||||||
Total liabilities | 775,666 | 766,047 | 793,874 | 811,672 | 819,312 | |||||||||||||||
Equity: | ||||||||||||||||||||
Accumulated other comprehensive income | 9,150 | 10,906 | 17,218 | 23,982 | 27,558 | |||||||||||||||
Other equity | 37,575 | 37,711 | 37,792 | 37,678 | 38,240 | |||||||||||||||
Total Prudential Financial, Inc. equity | 46,725 | 48,617 | 55,010 | 61,660 | 65,798 | |||||||||||||||
Noncontrolling interests | 357 | 414 | 440 | 493 | 516 | |||||||||||||||
Total equity | 47,082 | 49,031 | 55,450 | 62,153 | 66,314 | |||||||||||||||
Total liabilities and equity | 822,748 | 815,078 | 849,324 | 873,825 | 885,626 | |||||||||||||||
Page 6
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
COMBINING BALANCE SHEETS BY DIVISION | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
As of September 30, 2019 | ||||||||||||||||||||||||||||
PFI Excluding | U.S. Workplace | U.S. Individual | International | Corporate | ||||||||||||||||||||||||
Consolidated | Closed Block | Closed Block | PGIM | Solutions | Solutions | Insurance | and Other | |||||||||||||||||||||
PFI | Division | Division | Division | Division | Division | Division | Operations | |||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Total investments | 523,504 | 61,103 | 462,401 | 4,765 | 138,862 | 72,902 | 217,195 | 28,677 | ||||||||||||||||||||
Deferred policy acquisition costs | 19,484 | 242 | 19,242 | — | 298 | 10,549 | 8,728 | (333 | ) | |||||||||||||||||||
Other assets | 41,404 | 993 | 40,411 | 3,320 | 7,282 | 20,385 | 10,658 | (1,234 | ) | |||||||||||||||||||
Separate account assets | 301,234 | — | 301,234 | 38,636 | 86,402 | 177,613 | 3,954 | (5,371 | ) | |||||||||||||||||||
Total assets | 885,626 | 62,338 | 823,288 | 46,721 | 232,844 | 281,449 | 240,535 | 21,739 | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Future policy benefits | 291,742 | 47,726 | 244,016 | — | 69,225 | 36,052 | 129,956 | 8,783 | ||||||||||||||||||||
Policyholders' account balances | 152,527 | 4,988 | 147,539 | — | 58,298 | 37,025 | 51,342 | 874 | ||||||||||||||||||||
Debt | 20,641 | — | 20,641 | 1,638 | 693 | 7,217 | 117 | 10,976 | ||||||||||||||||||||
Other liabilities | 53,168 | 11,296 | 41,872 | 3,565 | 6,141 | 8,333 | 19,439 | 4,394 | ||||||||||||||||||||
Separate account liabilities | 301,234 | — | 301,234 | 38,636 | 86,402 | 177,613 | 3,954 | (5,371 | ) | |||||||||||||||||||
Total liabilities | 819,312 | 64,010 | 755,302 | 43,839 | 220,759 | 266,240 | 204,808 | 19,656 | ||||||||||||||||||||
Equity: | ||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | 27,558 | (3 | ) | 27,561 | (81 | ) | 5,775 | 3,155 | 20,167 | (1,455 | ) | |||||||||||||||||
Other equity | 38,240 | (1,683 | ) | 39,923 | 2,116 | 6,240 | 12,033 | 15,490 | 4,044 | |||||||||||||||||||
Total Prudential Financial, Inc. equity | 65,798 | (1,686 | ) | 67,484 | 2,035 | 12,015 | 15,188 | 35,657 | 2,589 | |||||||||||||||||||
Noncontrolling interests | 516 | 14 | 502 | 847 | 70 | 21 | 70 | (506 | ) | |||||||||||||||||||
Total equity | 66,314 | (1,672 | ) | 67,986 | 2,882 | 12,085 | 15,209 | 35,727 | 2,083 | |||||||||||||||||||
Total liabilities and equity | 885,626 | 62,338 | 823,288 | 46,721 | 232,844 | 281,449 | 240,535 | 21,739 | ||||||||||||||||||||
As of December 31, 2018 | ||||||||||||||||||||||||||||
PFI Excluding | U.S. Workplace | U.S. Individual | International | Corporate | ||||||||||||||||||||||||
Consolidated | Closed Block | Closed Block | PGIM | Solutions | Solutions | Insurance | and Other | |||||||||||||||||||||
PFI | Division | Division | Division | Division | Division | Division | Operations | |||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Total investments | 479,245 | 57,710 | 421,535 | 4,542 | 131,746 | 61,626 | 200,313 | 23,308 | ||||||||||||||||||||
Deferred policy acquisition costs | 20,058 | 264 | 19,794 | — | 311 | 11,087 | 8,715 | (319 | ) | |||||||||||||||||||
Other assets | 36,639 | 1,065 | 35,574 | 2,908 | 6,979 | 17,280 | 9,850 | (1,443 | ) | |||||||||||||||||||
Separate account assets | 279,136 | — | 279,136 | 40,240 | 78,216 | 161,645 | 3,755 | (4,720 | ) | |||||||||||||||||||
Total assets | 815,078 | 59,039 | 756,039 | 47,690 | 217,252 | 251,638 | 222,633 | 16,826 | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Future policy benefits | 273,846 | 48,282 | 225,564 | — | 69,677 | 25,377 | 122,894 | 7,616 | ||||||||||||||||||||
Policyholders' account balances | 150,338 | 5,061 | 145,277 | — | 56,855 | 36,671 | 50,895 | 856 | ||||||||||||||||||||
Debt | 19,829 | — | 19,829 | 1,810 | 810 | 7,335 | 141 | 9,733 | ||||||||||||||||||||
Other liabilities | 42,898 | 7,414 | 35,484 | 3,030 | 5,272 | 7,046 | 17,328 | 2,808 | ||||||||||||||||||||
Separate account liabilities | 279,136 | — | 279,136 | 40,240 | 78,216 | 161,645 | 3,755 | (4,720 | ) | |||||||||||||||||||
Total liabilities | 766,047 | 60,757 | 705,290 | 45,080 | 210,830 | 238,074 | 195,013 | 16,293 | ||||||||||||||||||||
Equity: | ||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | 10,906 | (23 | ) | 10,929 | (83 | ) | 628 | (418 | ) | 13,040 | (2,238 | ) | ||||||||||||||||
Other equity | 37,711 | (1,705 | ) | 39,416 | 2,067 | 5,744 | 13,967 | 14,518 | 3,120 | |||||||||||||||||||
Total Prudential Financial, Inc. equity | 48,617 | (1,728 | ) | 50,345 | 1,984 | 6,372 | 13,549 | 27,558 | 882 | |||||||||||||||||||
Noncontrolling interests | 414 | 10 | 404 | 626 | 50 | 15 | 62 | (349 | ) | |||||||||||||||||||
Total equity | 49,031 | (1,718 | ) | 50,749 | 2,610 | 6,422 | 13,564 | 27,620 | 533 | |||||||||||||||||||
Total liabilities and equity | 815,078 | 59,039 | 756,039 | 47,690 | 217,252 | 251,638 | 222,633 | 16,826 | ||||||||||||||||||||
Page 7
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||
SHORT-TERM AND LONG-TERM DEBT - UNAFFILIATED | ||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
As of September 30, 2019 | As of December 31, 2018 | |||||||||||||||||||||||||
Senior debt | Senior debt | |||||||||||||||||||||||||
Short-term Debt | Long-term Debt | Junior Subordinated Long-term Debt | Total Debt | Short-term Debt | Long-term Debt | Junior Subordinated Long-term Debt | Total Debt | |||||||||||||||||||
Borrowings by use of proceeds: | ||||||||||||||||||||||||||
Capital Debt | — | 7,000 | 7,574 | 14,574 | 1,250 | 4,543 | 7,568 | 13,361 | ||||||||||||||||||
Operating Debt | 1,230 | 3,953 | — | 5,183 | 1,091 | 4,601 | — | 5,692 | ||||||||||||||||||
Limited recourse and non-recourse borrowing | 260 | 624 | — | 884 | 110 | 666 | — | 776 | ||||||||||||||||||
Total debt | 1,490 | 11,577 | 7,574 | 20,641 | 2,451 | 9,810 | 7,568 | 19,829 | ||||||||||||||||||
As of September 30, 2019 | As of December 31, 2018 | |||||||||||||||||||||||||
The Prudential | The Prudential | |||||||||||||||||||||||||
Prudential | Insurance Co. | Other | Prudential | Insurance Co. | Other | |||||||||||||||||||||
Financial, Inc. | of America (1)(2) | Affiliates | Total | Financial, Inc. | of America (1)(2) | Affiliates | Total | |||||||||||||||||||
Borrowings by sources: | ||||||||||||||||||||||||||
Capital Debt | 14,075 | 442 | 58 | 14,575 | 12,363 | 941 | 57 | 13,361 | ||||||||||||||||||
Operating Debt | 4,556 | 626 | — | 5,182 | 4,893 | 799 | — | 5,692 | ||||||||||||||||||
Limited recourse and non-recourse borrowing | — | 577 | 307 | 884 | — | 776 | — | 776 | ||||||||||||||||||
Total debt | 18,631 | 1,645 | 365 | 20,641 | 17,256 | 2,516 | 57 | 19,829 | ||||||||||||||||||
__________ | ||||||||||||||||||||||||||
(1) Includes Prudential Funding, LLC. | ||||||||||||||||||||||||||
(2) Capital debt at Prudential Insurance Co. of America includes $342 million of surplus notes as of September 30, 2019 and $841 million of surplus notes as of December 31, 2018. |
Page 8
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - PGIM DIVISION | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | — | — | — | — | — | — | — | - | |||||||||||||||||||||
Policy charges and fee income | — | — | — | — | — | — | — | - | |||||||||||||||||||||
Net investment income | 28 | (3 | ) | 63 | 33 | 28 | 76 | 124 | 63% | ||||||||||||||||||||
Asset management fees, commissions and other income | 789 | 838 | 807 | 893 | 827 | 2,383 | 2,527 | 6% | |||||||||||||||||||||
Total revenues | 817 | 835 | 870 | 926 | 855 | 2,459 | 2,651 | 8% | |||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | — | — | — | — | — | — | — | - | |||||||||||||||||||||
Interest credited to policyholders' account balances | — | — | — | — | — | — | — | - | |||||||||||||||||||||
Interest expense | 9 | 11 | 12 | 12 | 12 | 29 | 36 | 24% | |||||||||||||||||||||
Deferral of acquisition costs | (2 | ) | (1 | ) | (1 | ) | (2 | ) | (2 | ) | (5 | ) | (5 | ) | —% | ||||||||||||||
Amortization of acquisition costs | 2 | 2 | 2 | 1 | 2 | 6 | 5 | -17% | |||||||||||||||||||||
General and administrative expenses | 578 | 580 | 643 | 651 | 611 | 1,713 | 1,905 | 11% | |||||||||||||||||||||
Total benefits and expenses | 587 | 592 | 656 | 662 | 623 | 1,743 | 1,941 | 11% | |||||||||||||||||||||
Adjusted operating income before income taxes | 230 | 243 | 214 | 264 | 232 | 716 | 710 | -1% | |||||||||||||||||||||
Total revenues | 817 | 835 | 870 | 926 | 855 | 2,459 | 2,651 | 8% | |||||||||||||||||||||
Less: Passthrough distribution revenue | 30 | 28 | 27 | 28 | 28 | 93 | 83 | -11% | |||||||||||||||||||||
Less: Revenue associated with consolidations | 15 | 4 | 34 | 50 | 10 | 33 | 94 | 185% | |||||||||||||||||||||
Total adjusted revenues (2) | 772 | 803 | 809 | 848 | 817 | 2,333 | 2,474 | 6% | |||||||||||||||||||||
Adjusted operating margin (2)(3) | 29.8 | % | 30.3 | % | 26.5 | % | 31.1 | % | 28.4 | % | 30.7 | % | 28.7 | % | |||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses. Benefits and expenses include charges for income attributable to noncontrolling interests. | |||||||||||||||||||||||||||||
(2) Not calculated in accordance with GAAP. Adjusted revenue excludes passthrough distribution revenue and revenue associated with consolidations. Adjusted operating income before income taxes as a percentage of total adjusted revenues. | |||||||||||||||||||||||||||||
(3) Reported Operating Margin based on total revenues is 27.1%, 28.5%, 24.6%, 29.1%, and 28.1% for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively and 26.8% and 29.1% for the nine months ended September 30, 2019, and September 30, 2018, respectively. |
Page 9
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
PGIM DIVISION - SUPPLEMENTARY REVENUE AND ASSETS UNDER MANAGEMENT INFORMATION | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Supplementary Revenue Information (in millions): | |||||||||||||||||||||||||||||
Analysis of revenues by type: | |||||||||||||||||||||||||||||
Asset management fees | 641 | 639 | 644 | 671 | 676 | 1,903 | 1,991 | 5% | |||||||||||||||||||||
Other related revenues (1) | 48 | 84 | 100 | 115 | 50 | 186 | 265 | 42% | |||||||||||||||||||||
Service, distribution and other revenues | 128 | 112 | 126 | 140 | 129 | 370 | 395 | 7% | |||||||||||||||||||||
Total PGIM revenues | 817 | 835 | 870 | 926 | 855 | 2,459 | 2,651 | 8% | |||||||||||||||||||||
Analysis of asset management fees by source: | |||||||||||||||||||||||||||||
Institutional customers | 302 | 311 | 312 | 319 | 323 | 893 | 954 | 7% | |||||||||||||||||||||
Retail customers | 221 | 210 | 209 | 220 | 223 | 657 | 652 | -1% | |||||||||||||||||||||
General account | 118 | 118 | 123 | 132 | 130 | 353 | 385 | 9% | |||||||||||||||||||||
Total asset management fees | 641 | 639 | 644 | 671 | 676 | 1,903 | 1,991 | 5% | |||||||||||||||||||||
Supplementary Assets Under Management Information (at fair market value) (in billions): | |||||||||||||||||||||||||||||
September 30, 2019 | |||||||||||||||||||||||||||||
Fixed | Real | ||||||||||||||||||||||||||||
Equity | Income | Estate | Total | ||||||||||||||||||||||||||
Institutional customers | 58.9 | 438.0 | 42.9 | 539.8 | |||||||||||||||||||||||||
Retail customers | 125.0 | 142.4 | 1.9 | 269.3 | |||||||||||||||||||||||||
General account | 5.7 | 467.0 | 2.0 | 474.7 | |||||||||||||||||||||||||
Total | 189.6 | 1,047.4 | 46.8 | 1,283.8 | |||||||||||||||||||||||||
September 30, 2018 | |||||||||||||||||||||||||||||
Fixed | Real | ||||||||||||||||||||||||||||
Equity | Income | Estate | Total | ||||||||||||||||||||||||||
Institutional customers | 64.0 | 398.3 | 43.4 | 505.7 | |||||||||||||||||||||||||
Retail customers | 137.3 | 119.4 | 1.6 | 258.3 | |||||||||||||||||||||||||
General account | 5.6 | 403.1 | 1.9 | 410.6 | |||||||||||||||||||||||||
Total | 206.9 | 920.8 | 46.9 | 1,174.6 | |||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Other related revenues, net of related expenses and charges associated with a joint venture in first quarter 2019 are $39 million, $65 million, $63 million, $57 million, and $31 million for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively and $167 million and $146 million for the nine months ended September 30, 2019, and September 30, 2018, respectively. | |||||||||||||||||||||||||||||
Page 10
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
PGIM DIVISION - SUPPLEMENTARY ASSETS UNDER MANAGEMENT INFORMATION | |||||||||||||||||||||||||||||
(in billions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | |||||||||||||||||||||||
Institutional Customers - Assets Under Management (at fair market value): | |||||||||||||||||||||||||||||
Assets gathered by Investment Management & Advisory Services sales force: | |||||||||||||||||||||||||||||
Beginning assets under management | 439.5 | 453.3 | 443.6 | 471.0 | 479.1 | 437.9 | 443.6 | ||||||||||||||||||||||
Additions | 19.0 | 18.9 | 15.1 | 14.5 | 14.8 | 56.2 | 44.4 | ||||||||||||||||||||||
Withdrawals | (9.7 | ) | (19.4 | ) | (14.1 | ) | (20.5 | ) | (17.0 | ) | (41.6 | ) | (51.6 | ) | |||||||||||||||
Change in market value | 3.9 | (8.1 | ) | 21.0 | 14.5 | 8.8 | (1.2 | ) | 44.3 | ||||||||||||||||||||
Net money market flows | 0.8 | (1.4 | ) | 4.3 | (0.6 | ) | (2.1 | ) | 2.9 | 1.6 | |||||||||||||||||||
Other | (0.2 | ) | 0.3 | 1.1 | 0.2 | (0.4 | ) | (0.9 | ) | 0.9 | |||||||||||||||||||
Ending assets under management | 453.3 | 443.6 | 471.0 | 479.1 | 483.2 | 453.3 | 483.2 | ||||||||||||||||||||||
Affiliated institutional assets under management | 52.4 | 49.9 | 53.0 | 55.8 | 56.6 | 52.4 | 56.6 | ||||||||||||||||||||||
Total assets managed for institutional customers at end of period | 505.7 | 493.5 | 524.0 | 534.9 | 539.8 | 505.7 | 539.8 | ||||||||||||||||||||||
Net institutional additions (withdrawals), excluding money market activity | 9.3 | (0.5 | ) | 1.0 | (6.0 | ) | (2.2 | ) | 14.6 | (7.2 | ) | ||||||||||||||||||
Retail Customers - Assets Under Management (at fair market value): | |||||||||||||||||||||||||||||
Assets gathered by Investment Management & Advisory Services sales force (1): | |||||||||||||||||||||||||||||
Beginning assets under management | 164.7 | 169.2 | 154.2 | 169.0 | 175.6 | 157.3 | 154.2 | ||||||||||||||||||||||
Additions | 10.9 | 14.1 | 14.1 | 13.0 | 14.5 | 38.9 | 41.6 | ||||||||||||||||||||||
Withdrawals | (11.5 | ) | (16.7 | ) | (13.7 | ) | (11.9 | ) | (11.5 | ) | (36.7 | ) | (37.1 | ) | |||||||||||||||
Change in market value | 5.1 | (13.4 | ) | 14.4 | 5.4 | 0.3 | 9.7 | 20.1 | |||||||||||||||||||||
Net money market flows | 0.1 | — | — | 0.1 | 0.3 | 0.1 | 0.4 | ||||||||||||||||||||||
Other | (0.1 | ) | 1.0 | — | — | (0.2 | ) | (0.1 | ) | (0.2 | ) | ||||||||||||||||||
Ending assets under management | 169.2 | 154.2 | 169.0 | 175.6 | 179.0 | 169.2 | 179.0 | ||||||||||||||||||||||
Affiliated retail assets under management (1) | 89.1 | 85.9 | 87.4 | 89.3 | 90.3 | 89.1 | 90.3 | ||||||||||||||||||||||
Total assets managed for retail customers at end of period | 258.3 | 240.1 | 256.4 | 264.9 | 269.3 | 258.3 | 269.3 | ||||||||||||||||||||||
Net retail additions (withdrawals), excluding money market activity | (0.6 | ) | (2.6 | ) | 0.4 | 1.1 | 3.0 | 2.2 | 4.5 | ||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) The amounts for third quarter of 2018 have been revised to correct the previously reported amounts for a reclass between Assets gathered by Investment Management & Advisory Services sales force and Affiliated retail assets under management. |
Page 11
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS - U.S. FINANCIAL WELLNESS BUSINESSES - U.S. WORKPLACE SOLUTIONS DIVISION | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | |||||||||||||||||||||||
Revenues (1): | ||||||||||||||||||||||||||||||
Premiums | 3,928 | 7,273 | 2,345 | 3,208 | 1,870 | 8,455 | 7,423 | -12% | ||||||||||||||||||||||
Policy charges and fee income | 211 | 219 | 229 | 226 | 246 | 628 | 701 | 12% | ||||||||||||||||||||||
Net investment income | 1,241 | 1,243 | 1,292 | 1,362 | 1,360 | 3,750 | 4,014 | 7% | ||||||||||||||||||||||
Asset management fees, commissions and other income | 253 | 225 | 214 | 251 | 223 | 717 | 688 | -4% | ||||||||||||||||||||||
Total revenues | 5,633 | 8,960 | 4,080 | 5,047 | 3,699 | 13,550 | 12,826 | -5% | ||||||||||||||||||||||
Benefits and Expenses (1): | ||||||||||||||||||||||||||||||
Insurance and annuity benefits | 4,388 | 7,731 | 2,791 | 3,526 | 2,349 | 9,725 | 8,666 | -11% | ||||||||||||||||||||||
Interest credited to policyholders' account balances | 435 | 434 | 447 | 443 | 454 | 1,278 | 1,344 | 5% | ||||||||||||||||||||||
Interest expense | 8 | 12 | 14 | 10 | 12 | 25 | 36 | 44% | ||||||||||||||||||||||
Deferral of acquisition costs | (9 | ) | (18 | ) | (13 | ) | (9 | ) | (7 | ) | (26 | ) | (29 | ) | -12% | |||||||||||||||
Amortization of acquisition costs | 9 | 15 | 9 | 10 | 7 | 23 | 26 | 13% | ||||||||||||||||||||||
General and administrative expenses | 504 | 537 | 528 | 519 | 492 | 1,496 | 1,539 | 3% | ||||||||||||||||||||||
Total benefits and expenses | 5,335 | 8,711 | 3,776 | 4,499 | 3,307 | 12,521 | 11,582 | -7% | ||||||||||||||||||||||
Adjusted operating income before income taxes | 298 | 249 | 304 | 548 | 392 | 1,029 | 1,244 | 21% | ||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder liabilities. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes. |
Page 12
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - U.S. FINANCIAL WELLNESS BUSINESSES - U.S. WORKPLACE SOLUTIONS DIVISION - RETIREMENT | |||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||||
Premiums | 2,825 | 6,174 | 1,243 | 2,098 | 794 | 5,157 | 4,135 | -20 | % | ||||||||||||||||||||||
Policy charges and fee income | 60 | 67 | 66 | 63 | 71 | 183 | 200 | 9 | % | ||||||||||||||||||||||
Net investment income | 1,087 | 1,095 | 1,141 | 1,200 | 1,198 | 3,282 | 3,539 | 8 | % | ||||||||||||||||||||||
Asset management fees, commissions and other income | 231 | 209 | 189 | 225 | 198 | 658 | 612 | -7 | % | ||||||||||||||||||||||
Total revenues | 4,203 | 7,545 | 2,639 | 3,586 | 2,261 | 9,280 | 8,486 | -9 | % | ||||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||||
Insurance and annuity benefits | 3,313 | 6,660 | 1,704 | 2,448 | 1,304 | 6,555 | 5,456 | -17 | % | ||||||||||||||||||||||
Interest credited to policyholders' account balances | 366 | 363 | 377 | 370 | 374 | 1,067 | 1,121 | 5 | % | ||||||||||||||||||||||
Interest expense | 8 | 11 | 13 | 10 | 11 | 24 | 34 | 42 | % | ||||||||||||||||||||||
Deferral of acquisition costs | (9 | ) | (18 | ) | (9 | ) | (9 | ) | (7 | ) | (25 | ) | (25 | ) | — | % | |||||||||||||||
Amortization of acquisition costs | 8 | 14 | 8 | 8 | 5 | 19 | 21 | 11 | % | ||||||||||||||||||||||
General and administrative expenses | 278 | 299 | 295 | 292 | 272 | 807 | 859 | 6 | % | ||||||||||||||||||||||
Total benefits and expenses | 3,964 | 7,329 | 2,388 | 3,119 | 1,959 | 8,447 | 7,466 | -12 | % | ||||||||||||||||||||||
Adjusted operating income before income taxes | 239 | 216 | 251 | 467 | 302 | 833 | 1,020 | 22 | % | ||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder liabilities. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes. | |||||||||||||||||||||||||||||||
Page 13
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. WORKPLACE SOLUTIONS DIVISION - RETIREMENT SALES RESULTS AND ACCOUNT VALUES | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
Full Service: | ||||||||||||||||||||||||||||
Beginning total account value | 240,922 | 251,272 | 231,669 | 251,071 | 262,133 | 234,616 | 231,669 | |||||||||||||||||||||
Deposits and sales | 8,843 | 6,639 | 9,567 | 11,047 | 7,458 | 26,477 | 28,072 | |||||||||||||||||||||
Withdrawals and benefits | (5,864 | ) | (5,941 | ) | (9,105 | ) | (7,259 | ) | (10,758 | ) | (20,488 | ) | (27,122 | ) | ||||||||||||||
Change in market value, interest credited, interest income and other activity | 7,371 | (20,301 | ) | 18,940 | 7,274 | 1,113 | 10,667 | 27,327 | ||||||||||||||||||||
Ending total account value | 251,272 | 231,669 | 251,071 | 262,133 | 259,946 | 251,272 | 259,946 | |||||||||||||||||||||
Net additions (withdrawals) | 2,979 | 697 | 462 | 3,788 | (3,300 | ) | 5,989 | 950 | ||||||||||||||||||||
Stable value account values included above | 49,132 | 49,544 | 50,202 | 50,601 | 51,429 | |||||||||||||||||||||||
Institutional Investment Products: | ||||||||||||||||||||||||||||
Beginning total account value | 191,722 | 195,237 | 200,759 | 203,101 | 215,978 | 194,492 | 200,759 | |||||||||||||||||||||
Additions | 6,318 | 8,843 | 2,247 | 15,044 | 5,235 | 12,467 | 22,526 | |||||||||||||||||||||
Withdrawals and benefits | (3,345 | ) | (3,324 | ) | (3,649 | ) | (4,161 | ) | (4,626 | ) | (12,085 | ) | (12,436 | ) | ||||||||||||||
Change in market value, interest credited and interest income | 1,146 | 1,173 | 2,644 | 2,826 | 2,406 | 2,130 | 7,876 | |||||||||||||||||||||
Other (1) | (604 | ) | (1,170 | ) | 1,100 | (832 | ) | (1,413 | ) | (1,767 | ) | (1,145 | ) | |||||||||||||||
Ending total account value | 195,237 | 200,759 | 203,101 | 215,978 | 217,580 | 195,237 | 217,580 | |||||||||||||||||||||
Net additions (withdrawals) | 2,973 | 5,519 | (1,402 | ) | 10,883 | 609 | 382 | 10,090 | ||||||||||||||||||||
Amounts included in ending total account value above: | ||||||||||||||||||||||||||||
Investment-only stable value wraps | 67,598 | 67,934 | 68,922 | 69,674 | 69,977 | 67,598 | 69,977 | |||||||||||||||||||||
Longevity reinsurance (2) | 43,455 | 44,249 | 45,500 | 57,169 | 58,481 | 43,455 | 58,481 | |||||||||||||||||||||
Group annuities and other products | 84,184 | 88,576 | 88,679 | 89,135 | 89,122 | 84,184 | 89,122 | |||||||||||||||||||||
Ending total account value | 195,237 | 200,759 | 203,101 | 215,978 | 217,580 | 195,237 | 217,580 | |||||||||||||||||||||
_________ | ||||||||||||||||||||||||||||
(1) "Other" activity includes the effect of foreign exchange rate changes associated with our United Kingdom longevity reinsurance business; net presentation of receipts and payments related to funding agreements backed commercial paper which typically have maturities of less than 90 days, and changes in asset balances for externally-managed accounts. | ||||||||||||||||||||||||||||
(2) Represents notional amounts based on present value of future benefits under longevity reinsurance contracts which have not been significantly pre-funded. |
Page 14
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - U.S. FINANCIAL WELLNESS BUSINESSES - U.S. WORKPLACE SOLUTIONS DIVISION - GROUP INSURANCE | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | 1,103 | 1,099 | 1,102 | 1,110 | 1,076 | 3,298 | 3,288 | —% | |||||||||||||||||||||
Policy charges and fee income | 151 | 152 | 163 | 163 | 175 | 445 | 501 | 13% | |||||||||||||||||||||
Net investment income | 154 | 148 | 151 | 162 | 162 | 468 | 475 | 1% | |||||||||||||||||||||
Asset management fees, commissions and other income | 22 | 16 | 25 | 26 | 25 | 59 | 76 | 29% | |||||||||||||||||||||
Total revenues | 1,430 | 1,415 | 1,441 | 1,461 | 1,438 | 4,270 | 4,340 | 2% | |||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | 1,075 | 1,071 | 1,087 | 1,078 | 1,045 | 3,170 | 3,210 | 1% | |||||||||||||||||||||
Interest credited to policyholders' account balances | 69 | 71 | 70 | 73 | 80 | 211 | 223 | 6% | |||||||||||||||||||||
Interest expense | — | 1 | 1 | — | 1 | 1 | 2 | 100% | |||||||||||||||||||||
Deferral of acquisition costs | — | — | (4 | ) | — | — | (1 | ) | (4 | ) | -300% | ||||||||||||||||||
Amortization of acquisition costs | 1 | 1 | 1 | 2 | 2 | 4 | 5 | 25% | |||||||||||||||||||||
General and administrative expenses | 226 | 238 | 233 | 227 | 220 | 689 | 680 | -1% | |||||||||||||||||||||
Total benefits and expenses | 1,371 | 1,382 | 1,388 | 1,380 | 1,348 | 4,074 | 4,116 | 1% | |||||||||||||||||||||
Adjusted operating income before income taxes | 59 | 33 | 53 | 81 | 90 | 196 | 224 | 14% | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses. | |||||||||||||||||||||||||||||
Page 15
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES -U.S. WORKPLACE SOLUTIONS DIVISION - GROUP INSURANCE SUPPLEMENTARY INFORMATION | ||||||||||||||||||||||||||||
(dollar amounts in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
GROUP INSURANCE ANNUALIZED NEW BUSINESS PREMIUMS: | ||||||||||||||||||||||||||||
Group life | 63 | 24 | 174 | 17 | 42 | 352 | 233 | |||||||||||||||||||||
Group disability | 16 | 13 | 119 | 16 | 18 | 170 | 153 | |||||||||||||||||||||
Total | 79 | 37 | 293 | 33 | 60 | 522 | 386 | |||||||||||||||||||||
Future Policy Benefits (1)(2): | ||||||||||||||||||||||||||||
Group life | 2,111 | 2,293 | 2,212 | 2,227 | 2,162 | |||||||||||||||||||||||
Group disability | 9 | 2 | 29 | 19 | 10 | |||||||||||||||||||||||
Total | 2,120 | 2,295 | 2,241 | 2,246 | 2,172 | |||||||||||||||||||||||
Policyholders' Account Balances (1): | ||||||||||||||||||||||||||||
Group life | 8,840 | 8,889 | 8,798 | 8,887 | 8,635 | |||||||||||||||||||||||
Group disability | 187 | 200 | 198 | 183 | 190 | |||||||||||||||||||||||
Total | 9,027 | 9,089 | 8,996 | 9,070 | 8,825 | |||||||||||||||||||||||
Separate Account Liabilities (1): | ||||||||||||||||||||||||||||
Group life | 23,881 | 24,044 | 24,809 | 26,048 | 26,361 | |||||||||||||||||||||||
Group disability | — | — | — | — | — | |||||||||||||||||||||||
Total | 23,881 | 24,044 | 24,809 | 26,048 | 26,361 | |||||||||||||||||||||||
Group Life Insurance: | ||||||||||||||||||||||||||||
Gross premiums, policy charges and fee income (3)(4) | 1,101 | 1,094 | 1,068 | 1,075 | 989 | 3,265 | 3,132 | |||||||||||||||||||||
Earned premiums | 870 | 866 | 847 | 842 | 806 | 2,596 | 2,495 | |||||||||||||||||||||
Earned policy charges and fee income | 139 | 140 | 149 | 150 | 162 | 409 | 461 | |||||||||||||||||||||
Benefits ratio (5) | 87.3 | % | 86.7 | % | 89.0 | % | 88.5 | % | 84.7 | % | 87.7 | % | 87.4 | % | ||||||||||||||
Administrative operating expense ratio | 11.5 | % | 13.0 | % | 11.7 | % | 12.2 | % | 13.1 | % | 11.9 | % | 12.3 | % | ||||||||||||||
Persistency ratio | 94.6 | % | 94.5 | % | 93.5 | % | 92.7 | % | 92.2 | % | ||||||||||||||||||
Group Disability Insurance: | ||||||||||||||||||||||||||||
Gross premiums, policy charges and fee income (3) | 259 | 259 | 285 | 290 | 296 | 771 | 871 | |||||||||||||||||||||
Earned premiums | 233 | 233 | 255 | 268 | 270 | 702 | 793 | |||||||||||||||||||||
Earned policy charges and fee income | 12 | 12 | 14 | 13 | 13 | 36 | 40 | |||||||||||||||||||||
Benefits ratio (5) | 78.9 | % | 81.5 | % | 74.6 | % | 74.5 | % | 79.4 | % | 76.5 | % | 76.2 | % | ||||||||||||||
Administrative operating expense ratio | 26.8 | % | 28.0 | % | 26.9 | % | 24.2 | % | 22.0 | % | 26.8 | % | 24.3 | % | ||||||||||||||
Persistency ratio | 94.2 | % | 93.9 | % | 94.5 | % | 94.4 | % | 93.9 | % | ||||||||||||||||||
Total Group Insurance: | ||||||||||||||||||||||||||||
Benefits ratio (5) | 85.7 | % | 85.7 | % | 85.9 | % | 85.5 | % | 83.5 | % | 85.5 | % | 85.0 | % | ||||||||||||||
Administrative operating expense ratio | 14.5 | % | 15.9 | % | 14.9 | % | 14.8 | % | 15.2 | % | 14.8 | % | 14.9 | % | ||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) As of end of period. | ||||||||||||||||||||||||||||
(2) The amounts shown exclude liabilities for unpaid claims and claim adjustment expenses. | ||||||||||||||||||||||||||||
(3) Before returns of premiums to participating policyholders for favorable claims experience. | ||||||||||||||||||||||||||||
(4) The amounts for third and fourth quarters of 2018 have been reclassified to conform to current period presentation. | ||||||||||||||||||||||||||||
(5) Benefit ratios excluding the impact of the annual assumption updates and other refinements in the second quarter. Benefit ratios including these impacts for Group Life, Group Disability, and Total Group Insurance are 90.2%, 65.3% and 84.7% for the three months ended June 30, 2019, respectively.Benefit ratios including these impacts for Group Life, Group Disability, and Total Group Insurance are 88.0%, 73.1%, 84.7% and 87.3%, 73.9%, 84.7% for the nine months ended September 30, 2019 and September 30, 2018, respectively. |
Page 16
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS - U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | 271 | 306 | 332 | 328 | 288 | 800 | 948 | 19% | |||||||||||||||||||||
Policy charges and fee income | 1,230 | 1,231 | 1,200 | 1,190 | 1,204 | 3,711 | 3,594 | -3% | |||||||||||||||||||||
Net investment income | 684 | 700 | 726 | 779 | 792 | 2,027 | 2,297 | 13% | |||||||||||||||||||||
Asset management fees, commissions and other income | 493 | 488 | 459 | 499 | 496 | 1,534 | 1,454 | -5% | |||||||||||||||||||||
Total revenues | 2,678 | 2,725 | 2,717 | 2,796 | 2,780 | 8,072 | 8,293 | 3% | |||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | 635 | 789 | 767 | 892 | 784 | 2,107 | 2,443 | 16% | |||||||||||||||||||||
Interest credited to policyholders' account balances | 278 | 283 | 265 | 288 | 297 | 818 | 850 | 4% | |||||||||||||||||||||
Interest expense | 199 | 201 | 212 | 220 | 238 | 580 | 670 | 16% | |||||||||||||||||||||
Deferral of acquisition costs | (294 | ) | (333 | ) | (296 | ) | (321 | ) | (328 | ) | (813 | ) | (945 | ) | -16% | ||||||||||||||
Amortization of acquisition costs | 210 | 216 | 206 | 459 | 215 | 663 | 880 | 33% | |||||||||||||||||||||
General and administrative expenses | 1,026 | 1,150 | 986 | 931 | 1,056 | 2,988 | 2,973 | -1% | |||||||||||||||||||||
Total benefits and expenses | 2,054 | 2,306 | 2,140 | 2,469 | 2,262 | 6,343 | 6,871 | 8% | |||||||||||||||||||||
Adjusted operating income before income taxes | 624 | 419 | 577 | 327 | 518 | 1,729 | 1,422 | -18% | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. |
Page 17
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | |||||||||||||||||||||||
Revenues (1): | ||||||||||||||||||||||||||||||
Premiums | 37 | 71 | 99 | 88 | 51 | 108 | 238 | 120% | ||||||||||||||||||||||
Policy charges and fee income | 719 | 679 | 669 | 687 | 677 | 2,167 | 2,033 | -6% | ||||||||||||||||||||||
Net investment income | 174 | 177 | 191 | 211 | 225 | 517 | 627 | 21% | ||||||||||||||||||||||
Asset management fees, commissions and other income | 294 | 297 | 276 | 302 | 298 | 950 | 876 | -8% | ||||||||||||||||||||||
Total revenues | 1,224 | 1,224 | 1,235 | 1,288 | 1,251 | 3,742 | 3,774 | 1% | ||||||||||||||||||||||
Benefits and Expenses (1): | ||||||||||||||||||||||||||||||
Insurance and annuity benefits | 85 | 128 | 119 | 134 | 100 | 242 | 353 | 46% | ||||||||||||||||||||||
Interest credited to policyholders' account balances | 85 | 84 | 78 | 87 | 84 | 251 | 249 | -1% | ||||||||||||||||||||||
Interest expense | 17 | 16 | 18 | 28 | 43 | 51 | 89 | 75% | ||||||||||||||||||||||
Deferral of acquisition costs | (110 | ) | (113 | ) | (110 | ) | (127 | ) | (127 | ) | (307 | ) | (364 | ) | -19% | |||||||||||||||
Amortization of acquisition costs | 139 | 115 | 116 | 140 | 128 | 396 | 384 | -3% | ||||||||||||||||||||||
General and administrative expenses | 554 | 549 | 542 | 564 | 564 | 1,629 | 1,670 | 3% | ||||||||||||||||||||||
Total benefits and expenses | 770 | 779 | 763 | 826 | 792 | 2,262 | 2,381 | 5% | ||||||||||||||||||||||
Adjusted operating income before income taxes | 454 | 445 | 472 | 462 | 459 | 1,480 | 1,393 | -6% | ||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. | ||||||||||||||||||||||||||||||
Page 18
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES SALES RESULTS AND ACCOUNT VALUES | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
SALES AND ACCOUNT VALUES: | ||||||||||||||||||||||||||||
Variable Annuities: | ||||||||||||||||||||||||||||
Beginning total account value | 160,143 | 162,369 | 147,339 | 157,896 | 161,017 | 165,153 | 147,339 | |||||||||||||||||||||
Sales: Highest Daily Suite (1) | 1,116 | 1,048 | 950 | 1,034 | 1,037 | 3,253 | 3,021 | |||||||||||||||||||||
Other variable annuities (2) | 997 | 1,001 | 1,059 | 1,301 | 1,301 | 2,561 | 3,661 | |||||||||||||||||||||
Total sales | 2,113 | 2,049 | 2,009 | 2,335 | 2,338 | 5,814 | 6,682 | |||||||||||||||||||||
Full surrenders and death benefits (3) | (2,271 | ) | (2,034 | ) | (1,914 | ) | (2,370 | ) | (2,539 | ) | (6,817 | ) | (6,823 | ) | ||||||||||||||
Sales, net of full surrenders and death benefits | (158 | ) | 15 | 95 | (35 | ) | (201 | ) | (1,003 | ) | (141 | ) | ||||||||||||||||
Partial withdrawals and other benefit payments (3) | (1,037 | ) | (1,264 | ) | (1,142 | ) | (1,139 | ) | (1,141 | ) | (3,209 | ) | (3,422 | ) | ||||||||||||||
Net flows | (1,195 | ) | (1,249 | ) | (1,047 | ) | (1,174 | ) | (1,342 | ) | (4,212 | ) | (3,563 | ) | ||||||||||||||
Change in market value, interest credited, and other | 4,360 | (12,884 | ) | 12,498 | 5,210 | 1,378 | 4,234 | 19,086 | ||||||||||||||||||||
Policy charges | (939 | ) | (897 | ) | (894 | ) | (915 | ) | (923 | ) | (2,806 | ) | (2,732 | ) | ||||||||||||||
Ending total account value | 162,369 | 147,339 | 157,896 | 161,017 | 160,130 | 162,369 | 160,130 | |||||||||||||||||||||
Variable Annuities Account Value by Product: (4) | ||||||||||||||||||||||||||||
Highest Daily Suite - risk retained by Prudential (1) | 118,618 | 106,878 | 114,164 | 115,584 | 114,059 | 118,618 | 114,059 | |||||||||||||||||||||
Highest Daily Suite - externally reinsured living benefits | 3,184 | 2,873 | 3,059 | 3,095 | 3,055 | 3,184 | 3,055 | |||||||||||||||||||||
Other variable annuities (2) | 40,567 | 37,588 | 40,673 | 42,338 | 43,016 | 40,567 | 43,016 | |||||||||||||||||||||
Ending total account value | 162,369 | 147,339 | 157,896 | 161,017 | 160,130 | 162,369 | 160,130 | |||||||||||||||||||||
Fixed Annuities and other products: | ||||||||||||||||||||||||||||
Beginning total account value | 3,502 | 3,593 | 3,741 | 3,994 | 4,296 | 3,473 | 3,741 | |||||||||||||||||||||
Sales | 128 | 189 | 298 | 340 | 319 | 218 | 957 | |||||||||||||||||||||
Full surrenders and death benefits (3) | (25 | ) | (23 | ) | (26 | ) | (27 | ) | (29 | ) | (84 | ) | (82 | ) | ||||||||||||||
Sales, net of full surrenders and death benefits | 103 | 166 | 272 | 313 | 290 | 134 | 875 | |||||||||||||||||||||
Partial withdrawals and other benefit payments (3) | (83 | ) | (90 | ) | (94 | ) | (90 | ) | (88 | ) | (251 | ) | (272 | ) | ||||||||||||||
Net flows | 20 | 76 | 178 | 223 | 202 | (117 | ) | 603 | ||||||||||||||||||||
Interest credited and other | 71 | 72 | 75 | 79 | 70 | 237 | 224 | |||||||||||||||||||||
Policy charges | — | — | — | — | — | — | — | |||||||||||||||||||||
Ending total account value | 3,593 | 3,741 | 3,994 | 4,296 | 4,568 | 3,593 | 4,568 | |||||||||||||||||||||
SALES BY DISTRIBUTION CHANNEL: | ||||||||||||||||||||||||||||
Variable and Fixed Annuities (5): | ||||||||||||||||||||||||||||
Insurance Agents | 640 | 684 | 680 | 735 | 724 | 1,784 | 2,139 | |||||||||||||||||||||
Wirehouses | 433 | 430 | 452 | 533 | 465 | 1,111 | 1,450 | |||||||||||||||||||||
Independent Financial Planners | 999 | 974 | 1,001 | 1,212 | 1,269 | 2,708 | 3,482 | |||||||||||||||||||||
Bank Distribution | 169 | 150 | 174 | 195 | 199 | 429 | 568 | |||||||||||||||||||||
Total | 2,241 | 2,238 | 2,307 | 2,675 | 2,657 | 6,032 | 7,639 | |||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) Includes variable annuities with "Highest Daily" optional living benefits retained by Prudential and predecessor "Lifetime Five" feature. | ||||||||||||||||||||||||||||
(2) Includes Prudential Defined Income (PDI), Legacy Protection Plus (LPP) death benefit and products without guaranteed minimum income and withdrawal benefits. | ||||||||||||||||||||||||||||
(3) The amounts for third and fourth quarters of 2018 and first quarter of 2019 have been reclassified to conform to current period presentation. | ||||||||||||||||||||||||||||
(4) The amounts for fourth quarter of 2018 have been revised to correct the previously reported amounts for a reclass between Highest Daily Suite - risk retained by Prudential and Other variable annuities products. | ||||||||||||||||||||||||||||
(5) Amounts represent gross sales. | ||||||||||||||||||||||||||||
Page 19
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES ACCOUNT VALUE ACTIVITY | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
Account Values in General Account (1): | ||||||||||||||||||||||||||||
Beginning balance | 9,932 | 10,006 | 10,298 | 10,429 | 10,696 | 9,892 | 10,298 | |||||||||||||||||||||
Premiums and deposits | 318 | 373 | 466 | 522 | 507 | 785 | 1,495 | |||||||||||||||||||||
Full surrenders and death benefits (2) | (95 | ) | (99 | ) | (96 | ) | (108 | ) | (90 | ) | (317 | ) | (294 | ) | ||||||||||||||
Premiums and deposits net of full surrenders and death benefits | 223 | 274 | 370 | 414 | 417 | 468 | 1,201 | |||||||||||||||||||||
Partial withdrawals and other benefit payments (2) | (141 | ) | (168 | ) | (163 | ) | (153 | ) | (151 | ) | (443 | ) | (467 | ) | ||||||||||||||
Net flows | 82 | 106 | 207 | 261 | 266 | 25 | 734 | |||||||||||||||||||||
Interest credited and other | 69 | 69 | 57 | 41 | 68 | 199 | 166 | |||||||||||||||||||||
Net transfers (to) from separate account | (76 | ) | 117 | (133 | ) | (35 | ) | (59 | ) | (109 | ) | (227 | ) | |||||||||||||||
Policy charges | (1 | ) | — | — | — | — | (1 | ) | — | |||||||||||||||||||
Ending balance | 10,006 | 10,298 | 10,429 | 10,696 | 10,971 | 10,006 | 10,971 | |||||||||||||||||||||
Account Values in Separate Account (1): | ||||||||||||||||||||||||||||
Beginning balance | 153,713 | 155,956 | 140,782 | 151,461 | 154,617 | 158,734 | 140,782 | |||||||||||||||||||||
Premiums and deposits | 1,923 | 1,865 | 1,841 | 2,153 | 2,150 | 5,247 | 6,144 | |||||||||||||||||||||
Full surrenders and death benefits (2) | (2,201 | ) | (1,958 | ) | (1,844 | ) | (2,289 | ) | (2,478 | ) | (6,584 | ) | (6,611 | ) | ||||||||||||||
Premiums and deposits net of full surrenders and death benefits | (278 | ) | (93 | ) | (3 | ) | (136 | ) | (328 | ) | (1,337 | ) | (467 | ) | ||||||||||||||
Partial withdrawals and other benefit payments (2) | (979 | ) | (1,186 | ) | (1,073 | ) | (1,076 | ) | (1,078 | ) | (3,017 | ) | (3,227 | ) | ||||||||||||||
Net flows | (1,257 | ) | (1,279 | ) | (1,076 | ) | (1,212 | ) | (1,406 | ) | (4,354 | ) | (3,694 | ) | ||||||||||||||
Change in market value, interest credited and other | 4,362 | (12,881 | ) | 12,516 | 5,248 | 1,380 | 4,272 | 19,144 | ||||||||||||||||||||
Net transfers (to) from general account | 76 | (117 | ) | 133 | 35 | 59 | 109 | 227 | ||||||||||||||||||||
Policy charges | (938 | ) | (897 | ) | (894 | ) | (915 | ) | (923 | ) | (2,805 | ) | (2,732 | ) | ||||||||||||||
Ending balance | 155,956 | 140,782 | 151,461 | 154,617 | 153,727 | 155,956 | 153,727 | |||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) Premiums and deposits, and surrenders and withdrawals, are classified within the general account and separate account for purposes of this presentation based on the allocation of customer funds. For example, premiums allocated by customers to separate account investments at the time of sale, while remitted through the company's general account, are shown as separate account premium in this display, rather than as general account premium and transfers to the separate account. | ||||||||||||||||||||||||||||
(2) The amounts for third and fourth quarters of 2018 and first quarter of 2019 have been reclassified to conform to current period presentation. | ||||||||||||||||||||||||||||
Page 20
Prudential Financial, Inc. | ![]() | |||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES LIVING BENEFIT FEATURES | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
2018 | 2019 | |||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | ||||||||||||||||
LIVING BENEFIT FEATURES ACCOUNT VALUE AND NET AMOUNT AT RISK (1): | ||||||||||||||||||||
Variable Annuity Account Values with Living Benefit Features | ||||||||||||||||||||
Guaranteed minimum accumulation benefits | 2,818 | 2,578 | 2,582 | 2,498 | 2,382 | |||||||||||||||
Guaranteed minimum withdrawal benefits | 428 | 364 | 381 | 370 | 350 | |||||||||||||||
Guaranteed minimum income benefits | 2,661 | 2,306 | 2,474 | 2,475 | 2,395 | |||||||||||||||
Guaranteed minimum withdrawal & income benefits - risk retained by Prudential | 129,431 | 118,115 | 126,813 | 129,832 | 129,683 | |||||||||||||||
Guaranteed minimum withdrawal & income benefits - externally reinsured | 3,184 | 2,873 | 3,059 | 3,096 | 3,055 | |||||||||||||||
Total | 138,522 | 126,236 | 135,309 | 138,271 | 137,865 | |||||||||||||||
Living Benefit Features Account Values by Product Design Type | ||||||||||||||||||||
Account Values with Auto-Rebalancing Feature - risk retained by Prudential | 113,257 | 102,300 | 109,191 | 110,597 | 109,204 | |||||||||||||||
Account Values with Auto-Rebalancing Feature - externally reinsured | 3,184 | 2,873 | 3,059 | 3,096 | 3,055 | |||||||||||||||
Account Values without Auto-Rebalancing Feature | 22,081 | 21,063 | 23,059 | 24,578 | 25,606 | |||||||||||||||
Total | 138,522 | 126,236 | 135,309 | 138,271 | 137,865 | |||||||||||||||
Living Benefit Features Net Amount at Risk by Product Design Type | ||||||||||||||||||||
Net Amount at Risk with Auto-Rebalancing Feature - risk retained by Prudential | 3,634 | 6,714 | 4,551 | 4,188 | 4,503 | |||||||||||||||
Net Amount at Risk with Auto-Rebalancing Feature - externally reinsured | — | — | — | — | — | |||||||||||||||
Net Amount at Risk without Auto-Rebalancing Feature | 757 | 1,226 | 799 | 702 | 709 | |||||||||||||||
Total | 4,391 | 7,940 | 5,350 | 4,890 | 5,212 | |||||||||||||||
__________ | ||||||||||||||||||||
(1) At end of period. |
Page 21
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES DEATH BENEFIT FEATURES | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
2018 | 2019 | |||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | ||||||||||||||||||||
DEATH BENEFIT FEATURES ACCOUNT VALUE AND NET AMOUNT AT RISK (1): | ||||||||||||||||||||||||
Variable Annuity Account Values by Death Benefit Features | ||||||||||||||||||||||||
Return of net deposits: | ||||||||||||||||||||||||
Account value | 126,693 | 115,489 | 124,019 | 126,897 | 126,642 | |||||||||||||||||||
Net amount at risk | 404 | 917 | 316 | 254 | 258 | |||||||||||||||||||
Minimum return, anniversary contract value, or maximum contract value: | ||||||||||||||||||||||||
Account value | 31,057 | 27,673 | 29,334 | 29,453 | 28,799 | |||||||||||||||||||
Net amount at risk | 2,916 | 5,071 | 3,374 | 3,022 | 3,117 | |||||||||||||||||||
Death Benefit Features Account Values by Product Design Type | ||||||||||||||||||||||||
Account Values with Auto-Rebalancing Feature | 116,441 | 105,172 | 112,250 | 113,693 | 112,259 | |||||||||||||||||||
Account Values without Auto-Rebalancing Feature | 41,309 | 37,990 | 41,103 | 42,657 | 43,182 | |||||||||||||||||||
Total | 157,750 | 143,162 | 153,353 | 156,350 | 155,441 | |||||||||||||||||||
Death Benefit Features Net Amount at Risk by Product Design Type | ||||||||||||||||||||||||
Net Amount at Risk with Auto-Rebalancing Feature | 1,379 | 3,115 | 1,755 | 1,482 | 1,557 | |||||||||||||||||||
Net Amount at Risk without Auto-Rebalancing Feature | 1,941 | 2,873 | 1,935 | 1,794 | 1,818 | |||||||||||||||||||
Total | 3,320 | 5,988 | 3,690 | 3,276 | 3,375 | |||||||||||||||||||
__________ | ||||||||||||||||||||||||
(1) At end of period. |
Page 22
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - STATEMENTS OF OPERATIONS - INDIVIDUAL LIFE | |||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||||
Premiums | 234 | 235 | 233 | 240 | 237 | 692 | 710 | 3 | % | ||||||||||||||||||||||
Policy charges and fee income | 511 | 552 | 531 | 503 | 527 | 1,544 | 1,561 | 1 | % | ||||||||||||||||||||||
Net investment income | 510 | 523 | 535 | 568 | 567 | 1,510 | 1,670 | 11 | % | ||||||||||||||||||||||
Asset management fees, commissions and other income | 199 | 191 | 183 | 197 | 198 | 584 | 578 | -1 | % | ||||||||||||||||||||||
Total revenues | 1,454 | 1,501 | 1,482 | 1,508 | 1,529 | 4,330 | 4,519 | 4 | % | ||||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||||
Insurance and annuity benefits | 550 | 661 | 648 | 758 | 684 | 1,865 | 2,090 | 12 | % | ||||||||||||||||||||||
Interest credited to policyholders' account balances | 193 | 199 | 187 | 201 | 213 | 567 | 601 | 6 | % | ||||||||||||||||||||||
Interest expense | 182 | 185 | 194 | 192 | 195 | 529 | 581 | 10 | % | ||||||||||||||||||||||
Deferral of acquisition costs | (184 | ) | (220 | ) | (186 | ) | (194 | ) | (201 | ) | (506 | ) | (581 | ) | -15 | % | |||||||||||||||
Amortization of acquisition costs | 71 | 101 | 90 | 319 | 87 | 267 | 496 | 86 | % | ||||||||||||||||||||||
General and administrative expenses | 472 | 601 | 444 | 367 | 492 | 1,359 | 1,303 | -4 | % | ||||||||||||||||||||||
Total benefits and expenses | 1,284 | 1,527 | 1,377 | 1,643 | 1,470 | 4,081 | 4,490 | 10 | % | ||||||||||||||||||||||
Adjusted operating income (loss) before income taxes | 170 | (26 | ) | 105 | (135 | ) | 59 | 249 | 29 | -88 | % | ||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. | |||||||||||||||||||||||||||||||
Page 23
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
U.S. FINANCIAL WELLNESS BUSINESSES - U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL LIFE SUPPLEMENTARY INFORMATION | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
ANNUALIZED NEW BUSINESS PREMIUMS (1): | ||||||||||||||||||||||||||||
Term life | 55 | 55 | 51 | 53 | 49 | 158 | 153 | |||||||||||||||||||||
Guaranteed Universal life | 23 | 29 | 21 | 24 | 24 | 68 | 69 | |||||||||||||||||||||
Other Universal life | 44 | 51 | 30 | 48 | 35 | 99 | 113 | |||||||||||||||||||||
Variable life | 41 | 58 | 61 | 56 | 67 | 105 | 184 | |||||||||||||||||||||
Total | 163 | 193 | 163 | 181 | 175 | 430 | 519 | |||||||||||||||||||||
ANNUALIZED NEW BUSINESS PREMIUMS BY DISTRIBUTION CHANNEL (1): | ||||||||||||||||||||||||||||
Prudential Advisors | 35 | 37 | 34 | 39 | 38 | 98 | 111 | |||||||||||||||||||||
Third party distribution | 128 | 156 | 129 | 142 | 137 | 332 | 408 | |||||||||||||||||||||
Total | 163 | 193 | 163 | 181 | 175 | 430 | 519 | |||||||||||||||||||||
ACCOUNT VALUE ACTIVITY: | ||||||||||||||||||||||||||||
Policyholders' Account Balances (2): | ||||||||||||||||||||||||||||
Beginning balance | 27,942 | 28,347 | 28,728 | 28,737 | 28,321 | 26,861 | 28,728 | |||||||||||||||||||||
Premiums and deposits | 790 | 1,072 | 783 | 866 | 855 | 2,262 | 2,504 | |||||||||||||||||||||
Surrenders and withdrawals | (280 | ) | (459 | ) | (291 | ) | (345 | ) | (340 | ) | (822 | ) | (976 | ) | ||||||||||||||
Net sales | 510 | 613 | 492 | 521 | 515 | 1,440 | 1,528 | |||||||||||||||||||||
Benefit payments | (132 | ) | 61 | (103 | ) | (114 | ) | (120 | ) | (432 | ) | (337 | ) | |||||||||||||||
Net flows | 378 | 674 | 389 | 407 | 395 | 1,008 | 1,191 | |||||||||||||||||||||
Interest credited and other | 304 | 229 | (24 | ) | (455 | ) | 168 | 1,355 | (311 | ) | ||||||||||||||||||
Net transfers (to) from separate account | 136 | (80 | ) | 76 | 67 | 102 | 374 | 245 | ||||||||||||||||||||
Policy charges | (413 | ) | (442 | ) | (432 | ) | (435 | ) | (440 | ) | (1,251 | ) | (1,307 | ) | ||||||||||||||
Ending balance | 28,347 | 28,728 | 28,737 | 28,321 | 28,546 | 28,347 | 28,546 | |||||||||||||||||||||
Separate Account Liabilities: | ||||||||||||||||||||||||||||
Beginning balance | 32,430 | 33,562 | 29,796 | 32,851 | 33,651 | 32,085 | 29,796 | |||||||||||||||||||||
Premiums and deposits | 365 | 438 | 494 | 411 | 424 | 1,163 | 1,329 | |||||||||||||||||||||
Surrenders and withdrawals | (272 | ) | (262 | ) | (260 | ) | (258 | ) | (272 | ) | (837 | ) | (790 | ) | ||||||||||||||
Net sales | 93 | 176 | 234 | 153 | 152 | 326 | 539 | |||||||||||||||||||||
Benefit payments | (41 | ) | (246 | ) | (95 | ) | (188 | ) | (16 | ) | (142 | ) | (299 | ) | ||||||||||||||
Net flows | 52 | (70 | ) | 139 | (35 | ) | 136 | 184 | 240 | |||||||||||||||||||
Change in market value, interest credited and other | 1,450 | (3,535 | ) | 3,232 | 1,139 | 192 | 2,362 | 4,563 | ||||||||||||||||||||
Net transfers (to) from general account | (136 | ) | 80 | (76 | ) | (67 | ) | (102 | ) | (374 | ) | (245 | ) | |||||||||||||||
Policy charges | (234 | ) | (241 | ) | (239 | ) | (242 | ) | (249 | ) | (695 | ) | (730 | ) | ||||||||||||||
Ending balance | 33,562 | 29,796 | 32,852 | 33,646 | 33,628 | 33,562 | 33,624 | |||||||||||||||||||||
FACE AMOUNT IN FORCE (3): | ||||||||||||||||||||||||||||
Term life | 779,181 | 788,013 | 795,539 | 803,327 | 808,979 | |||||||||||||||||||||||
Guaranteed Universal life | 144,831 | 145,861 | 146,751 | 147,885 | 148,777 | |||||||||||||||||||||||
Other Universal life | 49,552 | 50,650 | 51,100 | 52,140 | 52,839 | |||||||||||||||||||||||
Variable life | 162,881 | 160,747 | 164,118 | 165,215 | 166,405 | |||||||||||||||||||||||
Total | 1,136,445 | 1,145,272 | 1,157,509 | 1,168,567 | 1,177,000 | |||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) Excludes corporate-owned life insurance. | ||||||||||||||||||||||||||||
(2) Includes fixed rate funds, alliance deposits, supplementary contracts and deferred revenues on variable products. | ||||||||||||||||||||||||||||
(3) At end of period; before reinsurance ceded. |
Page 24
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | 3,950 | 3,913 | 4,585 | 3,906 | 4,150 | 12,258 | 12,641 | 3% | |||||||||||||||||||||
Policy charges and fee income | 129 | 133 | 127 | 114 | 127 | 401 | 368 | -8% | |||||||||||||||||||||
Net investment income | 1,313 | 1,311 | 1,333 | 1,377 | 1,396 | 3,934 | 4,106 | 4% | |||||||||||||||||||||
Asset management fees, commissions and other income | 98 | 59 | 107 | 104 | 98 | 225 | 309 | 37% | |||||||||||||||||||||
Total revenues | 5,490 | 5,416 | 6,152 | 5,501 | 5,771 | 16,818 | 17,424 | 4% | |||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | 3,435 | 3,421 | 3,950 | 3,400 | 3,637 | 10,650 | 10,987 | 3% | |||||||||||||||||||||
Interest credited to policyholders' account balances | 227 | 220 | 236 | 224 | 233 | 687 | 693 | 1% | |||||||||||||||||||||
Interest expense | 6 | 6 | 6 | 8 | 7 | 15 | 21 | 40% | |||||||||||||||||||||
Deferral of acquisition costs | (415 | ) | (414 | ) | (463 | ) | (394 | ) | (421 | ) | (1,303 | ) | (1,278 | ) | 2% | ||||||||||||||
Amortization of acquisition costs | 286 | 310 | 334 | 278 | 317 | 923 | 929 | 1% | |||||||||||||||||||||
General and administrative expenses | 1,061 | 1,137 | 1,167 | 1,136 | 1,207 | 3,316 | 3,510 | 6% | |||||||||||||||||||||
Total benefits and expenses | 4,600 | 4,680 | 5,230 | 4,652 | 4,980 | 14,288 | 14,862 | 4% | |||||||||||||||||||||
Adjusted operating income before income taxes | 890 | 736 | 922 | 849 | 791 | 2,530 | 2,562 | 1% | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder liabilities and include revenues representing equity in earnings of operating joint ventures. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to noncontrolling interests. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. |
Page 25
Prudential Financial, Inc. | �� | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION - LIFE PLANNER OPERATIONS | ||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | |||||||||||||||||||||||
Revenues (1): | ||||||||||||||||||||||||||||||
Premiums | 1,975 | 2,035 | 2,446 | 2,123 | 2,131 | 6,329 | 6,700 | 6% | ||||||||||||||||||||||
Policy charges and fee income | 95 | 99 | 94 | 75 | 95 | 295 | 264 | -11% | ||||||||||||||||||||||
Net investment income | 571 | 548 | 581 | 596 | 615 | 1,695 | 1,792 | 6% | ||||||||||||||||||||||
Asset management fees, commissions and other income | 55 | 33 | 54 | 58 | 50 | 142 | 162 | 14% | ||||||||||||||||||||||
Total revenues | 2,696 | 2,715 | 3,175 | 2,852 | 2,891 | 8,461 | 8,918 | 5% | ||||||||||||||||||||||
Benefits and Expenses (1): | ||||||||||||||||||||||||||||||
Insurance and annuity benefits | 1,770 | 1,831 | 2,146 | 1,896 | 1,926 | 5,668 | 5,968 | 5% | ||||||||||||||||||||||
Interest credited to policyholders' account balances | 62 | 55 | 68 | 56 | 66 | 188 | 190 | 1% | ||||||||||||||||||||||
Interest expense | 3 | 3 | 3 | 4 | 4 | 8 | 11 | 38% | ||||||||||||||||||||||
Deferral of acquisition costs | (209 | ) | (220 | ) | (260 | ) | (220 | ) | (231 | ) | (666 | ) | (711 | ) | -7% | |||||||||||||||
Amortization of acquisition costs | 135 | 161 | 171 | 136 | 158 | 472 | 465 | -1% | ||||||||||||||||||||||
General and administrative expenses | 486 | 536 | 566 | 542 | 601 | 1,550 | 1,709 | 10% | ||||||||||||||||||||||
Total benefits and expenses | 2,247 | 2,366 | 2,694 | 2,414 | 2,524 | 7,220 | 7,632 | 6% | ||||||||||||||||||||||
Adjusted operating income before income taxes | 449 | 349 | 481 | 438 | 367 | 1,241 | 1,286 | 4% | ||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder liabilities and include revenues representing equity in earnings of operating joint ventures. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to noncontrolling interests. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. |
Page 26
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION - GIBRALTAR LIFE & OTHER OPERATIONS | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | 1,975 | 1,878 | 2,139 | 1,783 | 2,019 | 5,929 | 5,941 | —% | |||||||||||||||||||||
Policy charges and fee income | 34 | 34 | 33 | 39 | 32 | 106 | 104 | -2% | |||||||||||||||||||||
Net investment income | 742 | 763 | 752 | 781 | 781 | 2,239 | 2,314 | 3% | |||||||||||||||||||||
Asset management fees, commissions and other income | 43 | 26 | 53 | 46 | 48 | 83 | 147 | 77% | |||||||||||||||||||||
Total revenues | 2,794 | 2,701 | 2,977 | 2,649 | 2,880 | 8,357 | 8,506 | 2% | |||||||||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | 1,665 | 1,590 | 1,804 | 1,504 | 1,711 | 4,982 | 5,019 | 1% | |||||||||||||||||||||
Interest credited to policyholders' account balances | 165 | 165 | 168 | 168 | 167 | 499 | 503 | 1% | |||||||||||||||||||||
Interest expense | 3 | 3 | 3 | 4 | 3 | 7 | 10 | 43% | |||||||||||||||||||||
Deferral of acquisition costs | (206 | ) | (194 | ) | (203 | ) | (174 | ) | (190 | ) | (637 | ) | (567 | ) | 11% | ||||||||||||||
Amortization of acquisition costs | 151 | 149 | 163 | 142 | 159 | 451 | 464 | 3% | |||||||||||||||||||||
General and administrative expenses | 575 | 601 | 601 | 594 | 606 | 1,766 | 1,801 | 2% | |||||||||||||||||||||
Total benefits and expenses | 2,353 | 2,314 | 2,536 | 2,238 | 2,456 | 7,068 | 7,230 | 2% | |||||||||||||||||||||
Adjusted operating income before income taxes | 441 | 387 | 441 | 411 | 424 | 1,289 | 1,276 | -1% | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder liabilities and include revenues representing equity in earnings of operating joint ventures. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to noncontrolling interests. Beginning with the second quarter of 2019, revenues and expenses exclude market experience updates. |
Page 27
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||
INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | ||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | ||||||||||||||||||||||
Actual exchange rate basis (1): | ||||||||||||||||||||||||||||
Net premiums, policy charges and fee income: | ||||||||||||||||||||||||||||
Japan, excluding Gibraltar Life | 1,537 | 1,542 | 1,966 | 1,599 | 1,656 | 4,954 | 5,221 | |||||||||||||||||||||
Gibraltar Life | 2,009 | 1,912 | 2,172 | 1,822 | 2,051 | 6,035 | 6,045 | |||||||||||||||||||||
All other countries | 533 | 592 | 574 | 599 | 570 | 1,670 | 1,743 | |||||||||||||||||||||
Total | 4,079 | 4,046 | 4,712 | 4,020 | 4,277 | 12,659 | 13,009 | |||||||||||||||||||||
Annualized new business premiums (2): | ||||||||||||||||||||||||||||
Japan, excluding Gibraltar Life | 189 | 206 | 292 | 186 | 186 | 613 | 664 | |||||||||||||||||||||
Gibraltar Life | 351 | 326 | 323 | 296 | 312 | 1,157 | 931 | |||||||||||||||||||||
All other countries | 105 | 110 | 112 | 116 | 131 | 328 | 359 | |||||||||||||||||||||
Total | 645 | 642 | 727 | 598 | 629 | 2,098 | 1,954 | |||||||||||||||||||||
Annualized new business premiums by distribution channel (2): | ||||||||||||||||||||||||||||
Life Planner Operations | 294 | 316 | 404 | 302 | 317 | 941 | 1,023 | |||||||||||||||||||||
Gibraltar Life Consultants | 178 | 175 | 164 | 167 | 152 | 608 | 483 | |||||||||||||||||||||
Banks | 123 | 95 | 108 | 85 | 119 | 385 | 312 | |||||||||||||||||||||
Independent Agency | 50 | 56 | 51 | 44 | 41 | 164 | 136 | |||||||||||||||||||||
Total | 645 | 642 | 727 | 598 | 629 | 2,098 | 1,954 | |||||||||||||||||||||
Constant exchange rate basis (3): | ||||||||||||||||||||||||||||
Net premiums, policy charges and fee income: | ||||||||||||||||||||||||||||
Japan, excluding Gibraltar Life | 1,598 | 1,611 | 2,029 | 1,643 | 1,677 | 5,087 | 5,349 | |||||||||||||||||||||
Gibraltar Life | 2,076 | 1,989 | 2,235 | 1,866 | 2,076 | 6,181 | 6,177 | |||||||||||||||||||||
All other countries | 565 | 609 | 587 | 625 | 614 | 1,651 | 1,826 | |||||||||||||||||||||
Total | 4,239 | 4,209 | 4,851 | 4,134 | 4,367 | 12,919 | 13,352 | |||||||||||||||||||||
Annualized new business premiums: | ||||||||||||||||||||||||||||
Japan, excluding Gibraltar Life | 193 | 210 | 296 | 189 | 187 | 621 | 672 | |||||||||||||||||||||
Gibraltar Life | 353 | 328 | 325 | 297 | 314 | 1,162 | 936 | |||||||||||||||||||||
All other countries | 107 | 113 | 113 | 120 | 136 | 318 | 369 | |||||||||||||||||||||
Total | 653 | 651 | 734 | 606 | 637 | 2,101 | 1,977 | |||||||||||||||||||||
Annualized new business premiums by distribution channel: | ||||||||||||||||||||||||||||
Life Planner Operations | 300 | 323 | 409 | 309 | 323 | 939 | 1,041 | |||||||||||||||||||||
Gibraltar Life Consultants | 180 | 177 | 166 | 168 | 152 | 612 | 486 | |||||||||||||||||||||
Banks | 123 | 95 | 108 | 85 | 119 | 385 | 312 | |||||||||||||||||||||
Independent Agency | 50 | 56 | 51 | 44 | 43 | 165 | 138 | |||||||||||||||||||||
Total | 653 | 651 | 734 | 606 | 637 | 2,101 | 1,977 | |||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||
(1) Translated based on applicable average exchange rates for the period shown. | ||||||||||||||||||||||||||||
(2) The amounts for the second quarter of 2019 have been revised to correct the previously reported amounts. | ||||||||||||||||||||||||||||
(3) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 105 per U.S. dollar and Korean won 1,110 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars. | ||||||||||||||||||||||||||||
Page 28
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||
INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION | |||||||||||||||||||||
2018 | 2019 | ||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | |||||||||||||||||
Face amount of individual policies in force at end of period (in billions) (1)(2): | |||||||||||||||||||||
(Constant exchange rate basis) | |||||||||||||||||||||
Japan, excluding Gibraltar Life | 367 | 371 | 378 | 380 | 382 | ||||||||||||||||
Gibraltar Life | 360 | 361 | 362 | 364 | 365 | ||||||||||||||||
All other countries | 128 | 131 | 133 | 135 | 137 | ||||||||||||||||
Total | 855 | 863 | 873 | 879 | 884 | ||||||||||||||||
Number of individual policies in force at end of period (in thousands) (2): | |||||||||||||||||||||
Japan, excluding Gibraltar Life | 3,860 | 3,907 | 3,975 | 4,015 | 4,060 | ||||||||||||||||
Gibraltar Life | 7,224 | 7,218 | 7,214 | 7,198 | 7,189 | ||||||||||||||||
All other countries | 2,116 | 2,134 | 2,152 | 2,194 | 2,200 | ||||||||||||||||
Total | 13,200 | 13,259 | 13,341 | 13,407 | 13,449 | ||||||||||||||||
International life insurance policy persistency: | |||||||||||||||||||||
Life Planner Operations: | |||||||||||||||||||||
13 months | 93.1 | % | 92.7 | % | 92.5 | % | 91.6 | % | 91.9 | % | |||||||||||
25 months | 86.9 | % | 86.6 | % | 86.4 | % | 86.8 | % | 86.1 | % | |||||||||||
Gibraltar Life (3): | |||||||||||||||||||||
13 months | 93.7 | % | 93.9 | % | 94.1 | % | 94.2 | % | 94.4 | % | |||||||||||
25 months | 87.1 | % | 87.1 | % | 87.1 | % | 87.3 | % | 87.5 | % | |||||||||||
Number of Life Planners at end of period: | |||||||||||||||||||||
Japan | 4,130 | 4,183 | 4,337 | 4,287 | 4,366 | ||||||||||||||||
All other countries | 3,668 | 3,786 | 3,757 | 3,883 | 3,914 | ||||||||||||||||
Total Life Planners | 7,798 | 7,969 | 8,094 | 8,170 | 8,280 | ||||||||||||||||
Gibraltar Life Consultants | 8,030 | 7,964 | 7,997 | 7,767 | 7,633 | ||||||||||||||||
__________ | |||||||||||||||||||||
(1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 105 per U.S. dollar and Korean won 1,110 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars. | |||||||||||||||||||||
(2) Direct business only; policy count includes annuities. | |||||||||||||||||||||
(3) Reflects business sold by Life Consultants and Independent Agents. |
Page 29
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||
STATEMENTS OF OPERATIONS - CORPORATE AND OTHER OPERATIONS | |||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2018 | 2019 | Year-to-date | |||||||||||||||||||||||||||
3Q | 4Q | 1Q | 2Q | 3Q | 2018 | 2019 | % change | ||||||||||||||||||||||
Revenues (1): | |||||||||||||||||||||||||||||
Premiums | (6 | ) | (5 | ) | (6 | ) | (3 | ) | (2 | ) | (22 | ) | (11 | ) | 50% | ||||||||||||||
Policy charges and fee income | (13 | ) | (13 | ) | (14 | ) | (12 | ) | (14 | ) | (38 | ) | (40 | ) | -5% | ||||||||||||||
Net investment income | 101 | 131 | 132 | 147 | 156 | 321 | 435 | 36% | |||||||||||||||||||||
Asset management fees, commissions and other income | (268 | ) | (269 | ) | (283 | ) | (296 | ) | (317 | ) | (810 | ) | (896 | ) | -11% | ||||||||||||||
Total revenues | (186 | ) | (156 | ) | (171 | ) | (164 | ) | (177 | ) | (549 | ) | (512 | ) | 7% | ||||||||||||||
Benefits and Expenses (1): | |||||||||||||||||||||||||||||
Insurance and annuity benefits | 6 | (7 | ) | 12 | 5 | 3 | (5 | ) | 20 | 500% | |||||||||||||||||||
Interest credited to policyholders' account balances | — | — | — | — | — | — | — | - | |||||||||||||||||||||
Interest expense | 133 | 142 | 142 | 142 | 108 | 393 | 392 | —% | |||||||||||||||||||||
Deferral of acquisition costs | 12 | 12 | 14 | 14 | 12 | 37 | 40 | 8% | |||||||||||||||||||||
Amortization of acquisition costs | (11 | ) | (10 | ) | (11 | ) | (12 | ) | (12 | ) | (34 | ) | (35 | ) | -3% | ||||||||||||||
General and administrative expenses | 48 | 36 | 84 | 22 | (7 | ) | 14 | 99 | 607% | ||||||||||||||||||||
Total benefits and expenses | 188 | 173 | 241 | 171 | 104 | 405 | 516 | 27% | |||||||||||||||||||||
Adjusted operating loss before income taxes | (374 | ) | (329 | ) | (412 | ) | (335 | ) | (281 | ) | (954 | ) | (1,028 | ) | -8% | ||||||||||||||
Adjusted operating loss before income taxes comprised as follows: | |||||||||||||||||||||||||||||
Interest income | 7 | 43 | 44 | 42 | 48 | 43 | 134 | 212% | |||||||||||||||||||||
Interest expense | (178 | ) | (194 | ) | (199 | ) | (200 | ) | (189 | ) | (531 | ) | (588 | ) | -11% | ||||||||||||||
Financial Wellness initiative - implementation costs | — | — | — | (19 | ) | (18 | ) | — | (37 | ) | - | ||||||||||||||||||
Long-term and deferred compensation expense | (37 | ) | 53 | (107 | ) | (30 | ) | 7 | (62 | ) | (130 | ) | -110% | ||||||||||||||||
Other (2) | (166 | ) | (231 | ) | (150 | ) | (128 | ) | (129 | ) | (404 | ) | (407 | ) | -1% | ||||||||||||||
Adjusted operating loss before income taxes | (374 | ) | (329 | ) | (412 | ) | (335 | ) | (281 | ) | (954 | ) | (1,028 | ) | -8% | ||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses. | |||||||||||||||||||||||||||||
(2) Includes pension and employee benefits and other corporate activities, including consolidating adjustments. |
Page 30
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||||||
INVESTMENT PORTFOLIO COMPOSITION | |||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||
September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||||
Closed | PFI Excluding | Closed | PFI Excluding | ||||||||||||||||||||||||||||||
Total | Block | Closed Block Division | Total | Block | Closed Block Division | ||||||||||||||||||||||||||||
Portfolio | Division | Amount | % of Total | Portfolio | Division | Amount | % of Total | ||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||||||
Public, available-for-sale, at fair value | 327,741 | 29,920 | 297,821 | 65.2 | % | 295,312 | 26,203 | 269,109 | 64.8 | % | |||||||||||||||||||||||
Public, held-to-maturity, at amortized cost | 1,724 | — | 1,724 | 0.4 | % | 1,745 | — | 1,745 | 0.4 | % | |||||||||||||||||||||||
Private, available-for-sale, at fair value | 63,417 | 12,400 | 51,017 | 11.2 | % | 57,870 | 12,542 | 45,328 | 10.9 | % | |||||||||||||||||||||||
Private, held-to-maturity, at amortized cost | 234 | — | 234 | 0.1 | % | 268 | — | 268 | 0.1 | % | |||||||||||||||||||||||
Fixed maturities, trading, at fair value | 2,596 | 243 | 2,353 | 0.5 | % | 2,088 | 195 | 1,893 | 0.5 | % | |||||||||||||||||||||||
Assets supporting experience-rated contractholder liabilities, at fair value | 22,267 | — | 22,267 | 4.9 | % | 21,254 | — | 21,254 | 5.1 | % | |||||||||||||||||||||||
Equity securities, at fair value | 6,340 | 2,064 | 4,276 | 0.9 | % | 5,633 | 1,784 | 3,849 | 0.9 | % | |||||||||||||||||||||||
Commercial mortgage and other loans, at book value | 61,251 | 8,484 | 52,767 | 11.6 | % | 59,033 | 8,782 | 50,251 | 12.1 | % | |||||||||||||||||||||||
Policy loans, at outstanding balance | 12,022 | 4,302 | 7,720 | 1.7 | % | 12,016 | 4,410 | 7,606 | 1.8 | % | |||||||||||||||||||||||
Other invested assets (1) | 12,291 | 3,367 | 8,924 | 2.0 | % | 11,723 | 3,316 | 8,407 | 2.0 | % | |||||||||||||||||||||||
Short-term investments | 7,302 | 323 | 6,979 | 1.5 | % | 6,426 | 478 | 5,948 | 1.4 | % | |||||||||||||||||||||||
Subtotal (2) | 517,185 | 61,103 | 456,082 | 100.0 | % | 473,368 | 57,710 | 415,658 | 100.0 | % | |||||||||||||||||||||||
Invested assets of other entities and operations (3) | 6,319 | — | 6,319 | 5,877 | — | 5,877 | |||||||||||||||||||||||||||
Total investments | 523,504 | 61,103 | 462,401 | 479,245 | 57,710 | 421,535 | |||||||||||||||||||||||||||
Fixed Maturities by Credit Quality (2)(4): | September 30, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||
PFI Excluding Closed Block Division | PFI Excluding Closed Block Division | ||||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Amortized | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||||
Cost | Gains | Losses | Value | % of Total | Cost | Gains | Losses | Value | % of Total | ||||||||||||||||||||||||
Public Fixed Maturities: | |||||||||||||||||||||||||||||||||
NAIC Rating (5) | |||||||||||||||||||||||||||||||||
1 | 218,165 | 39,744 | 79 | 257,830 | 86.0 | % | 210,578 | 23,776 | 2,307 | 232,047 | 85.5 | % | |||||||||||||||||||||
2 | 28,117 | 3,576 | 93 | 31,600 | 10.4 | % | 28,246 | 1,453 | 1,195 | 28,504 | 10.5 | % | |||||||||||||||||||||
Subtotal - High or Highest Quality Securities | 246,282 | 43,320 | 172 | 289,430 | 96.4 | % | 238,824 | 25,229 | 3,502 | 260,551 | 96.0 | % | |||||||||||||||||||||
3 | 5,643 | 600 | 85 | 6,158 | 2.1 | % | 5,973 | 280 | 240 | 6,013 | 2.2 | % | |||||||||||||||||||||
4 | 3,074 | 277 | 109 | 3,242 | 1.1 | % | 3,709 | 275 | 287 | 3,697 | 1.4 | % | |||||||||||||||||||||
5 | 930 | 71 | 101 | 900 | 0.3 | % | 725 | 85 | 57 | 753 | 0.3 | % | |||||||||||||||||||||
6 | 188 | 22 | 10 | 200 | 0.1 | % | 181 | 8 | 7 | 182 | 0.1 | % | |||||||||||||||||||||
Subtotal - Other Securities | 9,835 | 970 | 305 | 10,500 | 3.6 | % | 10,588 | 648 | 591 | 10,645 | 4.0 | % | |||||||||||||||||||||
Total | 256,117 | 44,290 | 477 | 299,930 | 100.0 | % | 249,412 | 25,877 | 4,093 | 271,196 | 100.0 | % | |||||||||||||||||||||
Private Fixed Maturities: | |||||||||||||||||||||||||||||||||
NAIC Rating (5) | |||||||||||||||||||||||||||||||||
1 | 12,399 | 862 | 75 | 13,186 | 25.6 | % | 11,712 | 362 | 261 | 11,813 | 25.9 | % | |||||||||||||||||||||
2 | 29,520 | 1,733 | 437 | 30,816 | 60.1 | % | 27,522 | 814 | 804 | 27,532 | 60.4 | % | |||||||||||||||||||||
Subtotal - High or Highest Quality Securities | 41,919 | 2,595 | 512 | 44,002 | 85.7 | % | 39,234 | 1,176 | 1,065 | 39,345 | 86.3 | % | |||||||||||||||||||||
3 | 4,583 | 156 | 46 | 4,693 | 9.2 | % | 4,176 | 50 | 168 | 4,058 | 8.9 | % | |||||||||||||||||||||
4 | 2,066 | 40 | 75 | 2,031 | 4.0 | % | 1,545 | 16 | 81 | 1,480 | 3.2 | % | |||||||||||||||||||||
5 | 496 | 17 | 19 | 494 | 1.0 | % | 670 | 14 | 20 | 664 | 1.5 | % | |||||||||||||||||||||
6 | 46 | 4 | 3 | 47 | 0.1 | % | 72 | 5 | 11 | 66 | 0.1 | % | |||||||||||||||||||||
Subtotal - Other Securities | 7,191 | 217 | 143 | 7,265 | 14.3 | % | 6,463 | 85 | 280 | 6,268 | 13.7 | % | |||||||||||||||||||||
Total | 49,110 | 2,812 | 655 | 51,267 | 100.0 | % | 45,697 | 1,261 | 1,345 | 45,613 | 100.0 | % | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||
(1) Other invested assets consist of investments in limited partnerships and limited liability companies (“LPs/LLCs”), investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. | |||||||||||||||||||||||||||||||||
(2) Excludes (i) assets of our investment management operations, including assets managed for third parties, (ii) derivative operations and (iii) those assets classified as "Separate account assets" on our balance sheet. | |||||||||||||||||||||||||||||||||
(3) Includes invested assets of our investment management and derivative operations. Excludes assets of our investment management operations that are managed for third parties and those assets classified as "Separate account assets" on our balance sheet. | |||||||||||||||||||||||||||||||||
(4) Excludes fixed maturity securities classified as trading. | |||||||||||||||||||||||||||||||||
(5) Reflects equivalent ratings for investments of the international insurance operations. Includes, as of September 30, 2019 and December 31, 2018, 1,043 securities with amortized cost of $4,697 million (fair value $4,950 million) and 1,744 securities with amortized cost of $9,079 million (fair value $9,135 million), respectively, that have been categorized based on expected NAIC designations pending receipt of SVO ratings. |
Page 31
Prudential Financial, Inc. | ![]() | ||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||
Third Quarter 2019 | |||||||||||||||||
INVESTMENT PORTFOLIO COMPOSITION - JAPANESE INSURANCE OPERATIONS AND EXCLUDING JAPANESE INSURANCE OPERATIONS (1) | |||||||||||||||||
(in millions) | |||||||||||||||||
September 30, 2019 | December 31, 2018 | ||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||
Japanese Insurance Operations (2): | |||||||||||||||||
Fixed maturities: | |||||||||||||||||
Public, available-for-sale, at fair value | 144,332 | 74.2 | % | 133,084 | 74.6 | % | |||||||||||
Public, held-to-maturity, at amortized cost | 1,724 | 0.9 | % | 1,745 | 1.0 | % | |||||||||||
Private, available-for-sale, at fair value | 18,678 | 9.6 | % | 16,222 | 9.1 | % | |||||||||||
Private, held-to-maturity, at amortized cost | 234 | 0.1 | % | 268 | 0.1 | % | |||||||||||
Fixed maturities, trading, at fair value | 481 | 0.2 | % | 328 | 0.2 | % | |||||||||||
Assets supporting experience-rated contractholder liabilities, at fair value | 2,685 | 1.4 | % | 2,441 | 1.4 | % | |||||||||||
Equity securities, at fair value | 2,109 | 1.1 | % | 1,972 | 1.1 | % | |||||||||||
Commercial mortgage and other loans, at book value | 18,852 | 9.7 | % | 17,228 | 9.6 | % | |||||||||||
Policy loans, at outstanding balance | 2,845 | 1.5 | % | 2,715 | 1.5 | % | |||||||||||
Other invested assets (3) | 2,317 | 1.2 | % | 1,957 | 1.1 | % | |||||||||||
Short-term investments | 269 | 0.1 | % | 451 | 0.3 | % | |||||||||||
Total | 194,526 | 100.0 | % | 178,411 | 100.0 | % | |||||||||||
September 30, 2019 | December 31, 2018 | ||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||
Excluding Japanese Insurance Operations (2): | |||||||||||||||||
Fixed maturities: | |||||||||||||||||
Public, available-for-sale, at fair value | 153,489 | 58.6 | % | 136,025 | 57.3 | % | |||||||||||
Public, held-to-maturity, at amortized cost | — | 0.0 | % | — | 0.0 | % | |||||||||||
Private, available-for-sale, at fair value | 32,339 | 12.4 | % | 29,106 | 12.3 | % | |||||||||||
Private, held-to-maturity, at amortized cost | — | 0.0 | % | — | 0.0 | % | |||||||||||
Fixed maturities, trading, at fair value | 1,872 | 0.7 | % | 1,565 | 0.7 | % | |||||||||||
Assets supporting experience-rated contractholder liabilities, at fair value | 19,582 | 7.5 | % | 18,813 | 7.9 | % | |||||||||||
Equity securities, at fair value | 2,167 | 0.8 | % | 1,877 | 0.8 | % | |||||||||||
Commercial mortgage and other loans, at book value | 33,915 | 13.0 | % | 33,023 | 13.9 | % | |||||||||||
Policy loans, at outstanding balance | 4,875 | 1.9 | % | 4,891 | 2.1 | % | |||||||||||
Other invested assets (3) | 6,607 | 2.5 | % | 6,450 | 2.7 | % | |||||||||||
Short-term investments | 6,710 | 2.6 | % | 5,497 | 2.3 | % | |||||||||||
Total | 261,556 | 100.0 | % | 237,247 | 100.0 | % | |||||||||||
__________ | |||||||||||||||||
(1) Excludes Closed Block Division. | |||||||||||||||||
(2) Excludes assets classified as "Separate account assets" on our balance sheet. | |||||||||||||||||
(3) Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. |
Page 32
Prudential Financial, Inc. | ![]() | |||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||
INVESTMENT RESULTS (1) | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Quarter Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (5) | Amount | (Losses) | Yield (5) | Amount | (Losses) | |||||||||||||||
General Account (2) | ||||||||||||||||||||
Fixed maturities (3) | 3.83 | % | 2,882 | 192 | 3.83 | % | 2,671 | 89 | ||||||||||||
Equity securities | 2.56 | % | 27 | — | 3.09 | % | 33 | — | ||||||||||||
Commercial mortgage and other loans | 4.10 | % | 479 | 6 | 3.92 | % | 429 | (1 | ) | |||||||||||
Policy loans | 4.88 | % | 94 | — | 4.84 | % | 89 | — | ||||||||||||
Short-term investments and cash equivalents | 2.61 | % | 107 | — | 2.56 | % | 77 | (3 | ) | |||||||||||
Gross investment income before investment expenses | 3.82 | % | 3,589 | 198 | 3.81 | % | 3,299 | 85 | ||||||||||||
Investment expenses | -0.14 | % | (173 | ) | — | -0.15 | % | (161 | ) | — | ||||||||||
Subtotal | 3.68 | % | 3,416 | 198 | 3.66 | % | 3,138 | 85 | ||||||||||||
Other investments (3) | 161 | 261 | 86 | 63 | ||||||||||||||||
Investment results of other entities and operations (4) | 271 | 44 | 262 | 7 | ||||||||||||||||
Less, investment income related to adjusted operating income reconciling items | (116 | ) | (119 | ) | ||||||||||||||||
Total | 3,732 | 503 | 3,367 | 155 | ||||||||||||||||
Nine Months Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (5) | Amount | (Losses) | Yield (5) | Amount | (Losses) | |||||||||||||||
General Account (2) | ||||||||||||||||||||
Fixed maturities (3) | 3.85 | % | 8,509 | 505 | 3.87 | % | 7,965 | 336 | ||||||||||||
Equity securities | 2.72 | % | 83 | — | 2.79 | % | 90 | — | ||||||||||||
Commercial mortgage and other loans | 4.09 | % | 1,398 | (6 | ) | 4.01 | % | 1,272 | (4 | ) | ||||||||||
Policy loans | 4.81 | % | 272 | — | 4.86 | % | 267 | — | ||||||||||||
Short-term investments and cash equivalents | 2.77 | % | 310 | 1 | 2.06 | % | 209 | (1 | ) | |||||||||||
Gross investment income before investment expenses | 3.84 | % | 10,572 | 500 | 3.83 | % | 9,803 | 331 | ||||||||||||
Investment expenses | -0.14 | % | (521 | ) | — | -0.15 | % | (459 | ) | — | ||||||||||
Subtotal | 3.70 | % | 10,051 | 500 | 3.68 | % | 9,344 | 331 | ||||||||||||
Other investments (3) | 434 | (1,203 | ) | 266 | 762 | |||||||||||||||
Investment results of other entities and operations (4) | 832 | (1 | ) | 786 | 64 | |||||||||||||||
Less, investment income related to adjusted operating income reconciling items | (341 | ) | (288 | ) | ||||||||||||||||
Total | 10,976 | (704 | ) | 10,108 | 1,157 | |||||||||||||||
__________ | ||||||||||||||||||||
(1) Excludes Closed Block Division. | ||||||||||||||||||||
(2) Excludes commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and assets of our investment management operations, including assets that are managed for third parties, and those assets classified as "Separate account assets" on our balance sheet. | ||||||||||||||||||||
(3) Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in "Other investments." Realized gains / (losses) for "Other investments" includes changes in fair value of product-related and other derivatives and embedded derivatives. | ||||||||||||||||||||
(4) Includes invested income of commercial loans, assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and our investment management operations. | ||||||||||||||||||||
(5) Yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in realized investment gains and losses and included in adjusted operating income. For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for security lending liabilities). A yield is not presented for other investments as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and investment income and assets related to other investments. |
Page 33
Prudential Financial, Inc. | ![]() | |||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||
INVESTMENT RESULTS - JAPANESE INSURANCE OPERATIONS | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Quarter Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (1) | Amount | (Losses) | Yield (1) | Amount | (Losses) | |||||||||||||||
Japanese Insurance Operations: | ||||||||||||||||||||
Fixed maturities (2) | 2.87 | % | 983 | 174 | 2.90 | % | 925 | 123 | ||||||||||||
Equity securities | 1.25 | % | 7 | — | 2.13 | % | 12 | — | ||||||||||||
Commercial mortgage and other loans | 4.11 | % | 190 | (1 | ) | 3.84 | % | 158 | 1 | |||||||||||
Policy loans | 3.94 | % | 28 | — | 3.92 | % | 25 | — | ||||||||||||
Short-term investments and cash equivalents | 4.82 | % | 7 | — | 3.47 | % | 9 | — | ||||||||||||
Gross investment income before investment expenses | 3.02 | % | 1,215 | 173 | 3.01 | % | 1,129 | 124 | ||||||||||||
Investment expenses | -0.14 | % | (72 | ) | — | -0.13 | % | (61 | ) | — | ||||||||||
Subtotal | 2.88 | % | 1,143 | 173 | 2.88 | % | 1,068 | 124 | ||||||||||||
Other investments (2) | 34 | 238 | 26 | (95 | ) | |||||||||||||||
Total | 1,177 | 411 | 1,094 | 29 | ||||||||||||||||
Nine Months Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (1) | Amount | (Losses) | Yield (1) | Amount | (Losses) | |||||||||||||||
Japanese Insurance Operations: | ||||||||||||||||||||
Fixed maturities (2) | 2.86 | % | 2,875 | 500 | 2.93 | % | 2,770 | 471 | ||||||||||||
Equity securities | 2.72 | % | 41 | — | 3.09 | % | 50 | — | ||||||||||||
Commercial mortgage and other loans | 3.97 | % | 529 | 1 | 3.92 | % | 457 | (1 | ) | |||||||||||
Policy loans | 3.91 | % | 80 | — | 3.91 | % | 75 | — | ||||||||||||
Short-term investments and cash equivalents | 4.23 | % | 21 | — | 2.41 | % | 26 | — | ||||||||||||
Gross investment income before investment expenses | 3.01 | % | 3,546 | 501 | 3.05 | % | 3,378 | 470 | ||||||||||||
Investment expenses | -0.14 | % | (211 | ) | — | -0.13 | % | (174 | ) | — | ||||||||||
Subtotal | 2.87 | % | 3,335 | 501 | 2.92 | % | 3,204 | 470 | ||||||||||||
Other investments (2) | 137 | 607 | 86 | (89 | ) | |||||||||||||||
Total | 3,472 | 1,108 | 3,290 | 381 | ||||||||||||||||
__________ | ||||||||||||||||||||
(1) Yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in realized investment gains and losses and included in adjusted operating income. For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for security lending liabilities). A yield is not presented for other investments as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and investment income and assets related to other investments. | ||||||||||||||||||||
(2) Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in "Other investments." Realized gains / (losses) for "Other investments" includes changes in fair value of product-related and other derivatives and embedded derivatives. |
Page 34
Prudential Financial, Inc. | ![]() | |||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||
INVESTMENT RESULTS - EXCLUDING JAPANESE INSURANCE OPERATIONS (1) | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Quarter Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (4) | Amount | (Losses) | Yield (4) | Amount | (Losses) | |||||||||||||||
Excluding Japanese Insurance Operations (2): | ||||||||||||||||||||
Fixed maturities (3) | 4.63 | % | 1,899 | 18 | 4.63 | % | 1,746 | (34 | ) | |||||||||||
Equity securities | 3.83 | % | 20 | — | 4.05 | % | 21 | — | ||||||||||||
Commercial mortgage and other loans | 4.09 | % | 289 | 7 | 3.96 | % | 271 | (2 | ) | |||||||||||
Policy loans | 5.43 | % | 66 | — | 5.33 | % | 64 | — | ||||||||||||
Short-term investments and cash equivalents | 2.53 | % | 100 | — | 2.50 | % | 68 | (3 | ) | |||||||||||
Gross investment income before investment expenses | 4.41 | % | 2,374 | 25 | 4.43 | % | 2,170 | (39 | ) | |||||||||||
Investment expenses | -0.14 | % | (101 | ) | — | -0.16 | % | (100 | ) | — | ||||||||||
Subtotal | 4.27 | % | 2,273 | 25 | 4.27 | % | 2,070 | (39 | ) | |||||||||||
Other investments (3) | 127 | 23 | 60 | 158 | ||||||||||||||||
Total | 2,400 | 48 | 2,130 | 119 | ||||||||||||||||
Nine Months Ended September 30 | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Realized | Realized | |||||||||||||||||||
Investment Income | Gains / | Investment Income | Gains / | |||||||||||||||||
Yield (4) | Amount | (Losses) | Yield (4) | Amount | (Losses) | |||||||||||||||
Excluding Japanese Insurance Operations (2): | ||||||||||||||||||||
Fixed maturities (3) | 4.67 | % | 5,634 | 5 | 4.67 | % | 5,195 | (135 | ) | |||||||||||
Equity securities | 2.72 | % | 42 | — | 2.49 | % | 40 | — | ||||||||||||
Commercial mortgage and other loans | 4.17 | % | 869 | (7 | ) | 4.05 | % | 815 | (3 | ) | ||||||||||
Policy loans | 5.33 | % | 192 | — | 5.38 | % | 192 | — | ||||||||||||
Short-term investments and cash equivalents | 2.71 | % | 289 | 1 | 2.03 | % | 183 | (1 | ) | |||||||||||
Gross investment income before investment expenses | 4.47 | % | 7,026 | (1 | ) | 4.43 | % | 6,425 | (139 | ) | ||||||||||
Investment expenses | -0.14 | % | (310 | ) | — | -0.17 | % | (285 | ) | — | ||||||||||
Subtotal | 4.33 | % | 6,716 | (1 | ) | 4.26 | % | 6,140 | (139 | ) | ||||||||||
Other investments (3) | 297 | (1,810 | ) | 180 | 851 | |||||||||||||||
Total | 7,013 | (1,811 | ) | 6,320 | 712 | |||||||||||||||
__________ | ||||||||||||||||||||
(1) Excludes Closed Block Division. | ||||||||||||||||||||
(2) Excludes commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and assets of our investment management operations, including assets that are managed for third parties, and those assets classified as "Separate account assets" on our balance sheet. | ||||||||||||||||||||
(3) Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading, which are included in "Other investments." Realized gains / (losses) for "Other investments" includes changes in fair value of product-related and other derivatives and embedded derivatives. | ||||||||||||||||||||
(4) Yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in realized investment gains and losses and included in adjusted operating income. For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for security lending liabilities). A yield is not presented for other investments as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and investment income and assets related to other investments. |
Page 35
Prudential Financial, Inc. | ![]() | |||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Supplement | ||||||||||||||||||||||||||||||||||||||||||
Third Quarter 2019 | ||||||||||||||||||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS - AOI TO U.S. GAAP RECONCILIATION OF REVENUES AND BENEFITS AND EXPENSES | ||||||||||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Reconciling Items | Reconciling Items | |||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Market experience updates | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | ||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||
Premiums | 6,306 | — | — | — | — | 510 | 121 | — | 6,937 | 8,143 | — | — | — | 529 | 138 | — | 8,810 | |||||||||||||||||||||||||
Policy charges and fee income | 1,563 | (62) | 18 | — | — | — | — | — | 1,519 | 1,557 | (60) | — | — | — | 1 | — | 1,498 | |||||||||||||||||||||||||
Net investment income | 3,732 | (8) | — | — | — | 590 | 124 | — | 4,438 | 3,367 | (10) | — | — | 560 | 129 | — | 4,046 | |||||||||||||||||||||||||
Realized investment gains (losses), net | 128 | 329 | (83) | — | — | 350 | 129 | — | 853 | 63 | 120 | — | — | (4) | (28) | — | 151 | |||||||||||||||||||||||||
Asset management fees, commissions and other income | 1,199 | 61 | — | 91 | — | 32 | 15 | (40) | 1,358 | 1,302 | 161 | 10 | — | 164 | 36 | (30) | 1,643 | |||||||||||||||||||||||||
Total revenues | 12,928 | 320 | (65) | 91 | — | 1,482 | 389 | (40) | 15,105 | 14,432 | 211 | 10 | — | 1,249 | 276 | (30) | 16,148 | |||||||||||||||||||||||||
Benefits and Expenses: | ||||||||||||||||||||||||||||||||||||||||||
Insurance and annuity benefits | 6,773 | (46) | 150 | — | — | 1,309 | 203 | — | 8,389 | 8,464 | (31) | — | — | 1,099 | 225 | — | 9,757 | |||||||||||||||||||||||||
Interest credited to policyholders' account balances | 984 | (83) | 7 | — | 160 | 33 | 5 | — | 1,106 | 940 | 31 | — | 21 | 33 | 5 | — | 1,030 | |||||||||||||||||||||||||
Interest expense | 377 | — | — | — | — | 3 | 1 | — | 381 | 355 | — | — | — | 1 | 1 | — | 357 | |||||||||||||||||||||||||
Deferral of acquisition costs | (746) | — | — | — | — | — | (2) | — | (748) | (708) | — | — | — | — | (2) | — | (710) | |||||||||||||||||||||||||
Amortization of acquisition costs | 529 | (19) | 72 | — | — | 7 | 2 | — | 591 | 496 | 57 | — | — | 8 | 2 | — | 563 | |||||||||||||||||||||||||
General and administrative expenses | 3,359 | 178 | 20 | — | — | 85 | 25 | (6) | 3,661 | 3,217 | (23) | — | — | 90 | 33 | (4) | 3,313 | |||||||||||||||||||||||||
Total benefits and expenses | 11,276 | 30 | 249 | — | 160 | 1,437 | 234 | (6) | 13,380 | 12,764 | 34 | — | 21 | 1,231 | 264 | (4) | 14,310 | |||||||||||||||||||||||||
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Reconciling Items | Reconciling Items | |||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Market experience updates | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | ||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||
Premiums | 21,001 | — | — | — | — | 1,618 | 353 | — | 22,972 | 21,491 | — | — | — | 1,680 | 388 | — | 23,559 | |||||||||||||||||||||||||
Policy charges and fee income | 4,623 | (188) | 26 | — | — | — | 2 | — | 4,463 | 4,702 | (223) | — | — | — | 3 | — | 4,482 | |||||||||||||||||||||||||
Net investment income | 10,976 | (27) | — | — | — | 1,727 | 368 | — | 13,044 | 10,108 | (30) | — | — | 1,744 | 318 | — | 12,140 | |||||||||||||||||||||||||
Realized investment gains (losses), net | 249 | (1,145) | (98) | — | — | 455 | 290 | — | (249) | 277 | 987 | — | — | 104 | (107) | — | 1,261 | |||||||||||||||||||||||||
Asset management fees, commissions and other income | 3,833 | 343 | — | 832 | — | 357 | 100 | (111) | 5,354 | 3,772 | (206) | (586) | — | 272 | (51) | (83) | 3,118 | |||||||||||||||||||||||||
Total revenues | 40,682 | (1,017) | (72) | 832 | — | 4,157 | 1,113 | (111) | 45,584 | 40,350 | 528 | (586) | — | 3,800 | 551 | (83) | 44,560 | |||||||||||||||||||||||||
Benefits and Expenses: | ||||||||||||||||||||||||||||||||||||||||||
Insurance and annuity benefits | 22,116 | — | 262 | — | — | 3,765 | 575 | — | 26,718 | 22,477 | (117) | — | — | 3,422 | 2,030 | — | 27,812 | |||||||||||||||||||||||||
Interest credited to policyholders' account balances | 2,887 | (153) | 7 | — | 876 | 97 | 15 | — | 3,729 | 2,783 | 65 | — | (482) | 99 | 9 | — | 2,474 | |||||||||||||||||||||||||
Interest expense | 1,155 | — | — | — | — | 6 | 3 | — | 1,164 | 1,042 | — | — | — | 1 | 3 | — | 1,046 | |||||||||||||||||||||||||
Deferral of acquisition costs | (2,217) | — | — | — | — | — | (5) | — | (2,222) | (2,110) | — | — | — | — | (5) | — | (2,115) | |||||||||||||||||||||||||
Amortization of acquisition costs | 1,805 | (180) | 155 | — | — | 23 | 5 | — | 1,808 | 1,581 | 152 | — | — | 26 | 5 | — | 1,764 | |||||||||||||||||||||||||
General and administrative expenses | 10,026 | 294 | 26 | — | — | 261 | 79 | (40) | 10,646 | 9,527 | (90) | — | — | 274 | 95 | (8) | 9,798 | |||||||||||||||||||||||||
Total benefits and expenses | 35,772 | (39) | 450 | — | 876 | 4,152 | 672 | (40) | 41,843 | 35,300 | 10 | — | (482) | 3,822 | 2,137 | (8) | 40,779 | |||||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||||||||||||||
(1) See page 38 for a definition of adjusted operating income. | ||||||||||||||||||||||||||||||||||||||||||
(2) U.S. generally accepted accounting principles. |
Page 36
Prudential Financial, Inc. | ![]() | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Supplement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Third Quarter 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMBINED STATEMENTS OF OPERATIONS - AOI TO U.S. GAAP RECONCILIATION OF REVENUES AND BENEFITS AND EXPENSES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended December 31, 2018 | Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciling Items | Reconciling Items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Market experience updates | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | |||||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 11,487 | — | — | — | — | 621 | 112 | — | 12,220 | 7,256 | — | — | — | 526 | 118 | — | 7,900 | ||||||||||||||||||||||||||||||||||||||||||
Policy charges and fee income | 1,570 | (51 | ) | — | — | — | — | 1 | — | 1,520 | 1,542 | (72 | ) | — | — | — | 1 | — | 1,471 | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 3,382 | (11 | ) | — | — | — | 544 | 121 | — | 4,036 | 3,546 | (10 | ) | — | — | 563 | 117 | — | 4,216 | ||||||||||||||||||||||||||||||||||||||||
Realized investment gains (losses), net | 249 | 379 | — | — | — | 26 | 62 | — | 716 | 20 | (910 | ) | — | — | 56 | 68 | — | (766 | ) | ||||||||||||||||||||||||||||||||||||||||
Asset management fees, commissions and other income | 1,092 | (500 | ) | — | (277 | ) | — | (313 | ) | (42 | ) | (20 | ) | (60 | ) | 1,284 | 257 | 454 | — | 229 | 84 | (38 | ) | 2,270 | |||||||||||||||||||||||||||||||||||
Total revenues | 17,780 | (183 | ) | — | (277 | ) | — | 878 | 254 | (20 | ) | 18,432 | 13,648 | (735 | ) | 454 | — | 1,374 | 388 | (38 | ) | 15,091 | |||||||||||||||||||||||||||||||||||||
Benefits and Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance and annuity benefits | 11,934 | 42 | — | — | — | 786 | 166 | — | 12,928 | 7,520 | 53 | — | — | 1,262 | 180 | — | 9,015 | ||||||||||||||||||||||||||||||||||||||||||
Interest credited to policyholders' account balances | 937 | (25 | ) | — | — | (228 | ) | 33 | 5 | — | 722 | 948 | (43 | ) | — | 403 | 32 | 5 | — | 1,345 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 372 | — | — | — | — | 1 | 1 | — | 374 | 386 | — | — | — | 1 | 1 | — | 388 | ||||||||||||||||||||||||||||||||||||||||||
Deferral of acquisition costs | (754 | ) | — | — | — | — | — | (2 | ) | — | (756 | ) | (759 | ) | — | — | — | — | (2 | ) | — | (761 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of acquisition costs | 533 | (34 | ) | — | — | — | 9 | 1 | — | 509 | 540 | (116 | ) | — | — | 9 | 2 | — | 435 | ||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 3,440 | 49 | — | — | — | 89 | 32 | (8 | ) | 3,602 | 3,408 | 9 | — | — | 89 | 28 | (5 | ) | 3,529 | ||||||||||||||||||||||||||||||||||||||||
Total benefits and expenses | 16,462 | 32 | — | — | (228 | ) | 918 | 203 | (8 | ) | 17,379 | 12,043 | (97 | ) | — | 403 | 1,393 | 214 | (5 | ) | 13,951 | ||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciling Items | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income basis (1) | Total realized investment gains (losses), net, and related charges and adjustments | Market experience updates | Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Closed Block Division | Other Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | U.S. GAAP (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums | 7,439 | — | — | — | — | 582 | 114 | — | 8,135 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Policy charges and fee income | 1,518 | (54 | ) | 8 | — | — | — | 1 | — | 1,473 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 3,698 | (9 | ) | — | — | — | 574 | 127 | — | 4,390 | |||||||||||||||||||||||||||||||||||||||||||||||||
Realized investment gains (losses), net | 101 | (564 | ) | (15 | ) | — | — | 49 | 93 | — | (336 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Asset management fees, commissions and other income | 1,350 | 25 | — | 287 | — | 96 | 1 | (33 | ) | 1,726 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | 14,106 | (602 | ) | (7 | ) | 287 | — | 1,301 | 336 | (33 | ) | 15,388 | |||||||||||||||||||||||||||||||||||||||||||||||
Benefits and Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance and annuity benefits | 7,823 | (7 | ) | 112 | — | — | 1,194 | 192 | — | 9,314 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest credited to policyholders' account balances | 955 | (27 | ) | — | — | 313 | 32 | 5 | — | 1,278 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 392 | — | — | — | — | 2 | 1 | — | 395 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Deferral of acquisition costs | (712 | ) | — | — | — | — | — | (1 | ) | — | (713 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquisition costs | 736 | (45 | ) | 83 | — | — | 7 | 1 | — | 782 | |||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 3,259 | 107 | 6 | — | — | 87 | 26 | (29 | ) | 3,456 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total benefits and expenses | 12,453 | 28 | 201 | — | 313 | 1,322 | 224 | (29 | ) | 14,512 | |||||||||||||||||||||||||||||||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) See page 38 for a definition of adjusted operating income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) U.S. generally accepted accounting principles. |
Page 37
Prudential Financial, Inc. | ![]() | |||||||
Quarterly Financial Supplement | ||||||||
Third Quarter 2019 | ||||||||
KEY DEFINITIONS AND FORMULAS | ||||||||
1. Adjusted operating income before income taxes: | ||||||||
Adjusted operating income is a non-GAAP measure of performance that 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 generally excludes realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are part of an asset-liability management program related to the risk of those products. However, the effectiveness of our hedging program will ultimately be reflected in adjusted operating income over time. 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. Additionally, market experience updates, reflecting the immediate impacts in current period results from changes in current market conditions on estimates of profitability, are excluded from adjusted operating income beginning with the second quarter of 2019, which we believe enhances the understanding of underlying performance trends. | ||||||||
Adjusted operating income also excludes investment gains and losses on assets supporting experience-rated contractholder 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. In addition, adjusted operating income excludes the results of Divested and Run-off Businesses, which are not relevant to our ongoing operations. Earnings attributable to noncontrolling interests is presented as a separate component of net income under GAAP and excluded from adjusted operating income. | ||||||||
Adjusted operating income does not equate to "Net income" as determined in accordance with U.S. 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 U.S. 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 of our businesses. Trends in the underlying profitability of our businesses can be more clearly identified without the fluctuating effects of the items described above. | ||||||||
2. After-tax adjusted operating income: | ||||||||
Adjusted operating income before taxes, as defined above, less the income tax effect applicable to adjusted operating income before taxes. The tax effect associated with pre-tax adjusted operating income is based on applicable IRS and foreign tax regulations inclusive of pertinent adjustments. | ||||||||
3. Annualized New Business Premiums: | ||||||||
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. Amounts ascribed to Gibraltar Life Consultants include production by captive agents associated with consolidated joint venture of Gibraltar Life and Other Operations. | ||||||||
4. Assets Under Management: | ||||||||
Fair market value or account value of assets which Prudential manages directly in proprietary products, such as mutual funds and variable annuities, in separate accounts, wrap-fee products and the general account, and assets invested in investment options included in the Company's products that are managed by third party sub-managers (i.e., the non-proprietary investment options in the Company's products). | ||||||||
5. Prudential Financial, Inc. Equity: | ||||||||
Amount of capital assigned to each of the Company's segments for purposes of measuring segment adjusted operating income before income taxes, established at a level which management considers necessary to support the segment's risks. Equity represents all of Prudential Financial, Inc. equity that is not attributable to noncontrolling interests. | ||||||||
6. Book value per share of Common Stock: | ||||||||
Equity attributed to Prudential Financial, Inc. divided by the number of Common shares outstanding at end of period, on a diluted basis. Book value per share excluding Accumulated Other Comprehensive Income (Loss) (“AOCI”) and adjusted to remove amount included for remeasurement of foreign currency exchange rate is a non-GAAP measure. These items are excluded in order to highlight the book value attributable to our core business operations. This non-GAAP measure augments the understanding of our financial position by providing a measure of net worth that is primarily attributable to our business operations separate from the portion that is affected by capital and currency market conditions and by isolating the accounting impact associated with insurance liabilities that are generally not marked to market and the supporting investments that are marked to market through AOCI under GAAP. However, book value per share excluding both AOCI and adjusted to remove amount included for foreign currency exchange rate remeasurement is not a substitute for book value per share including AOCI determined in accordance with GAAP, and the adjustments made to derive the measure are important to an understanding of our overall financial position. |
Page 38
Prudential Financial, Inc. | ![]() | |||||||
Quarterly Financial Supplement | ||||||||
Third Quarter 2019 | ||||||||
KEY DEFINITIONS AND FORMULAS | ||||||||
7. Borrowings - Capital Debt: | ||||||||
Borrowings that are or will be used for capital requirements at Prudential Financial, Inc as well as borrowings invested in equity or debt securities of direct or indirect subsidiaries of Prudential Financial, Inc., and subsidiary borrowings, utilized for capital requirements. | ||||||||
8. Borrowings - Operating Debt: | ||||||||
Debt issued to finance the operating needs of the businesses. | ||||||||
9. Client Assets: | ||||||||
Fair market value of assets in client accounts of International brokerage operations, Prudential Bank and mortgage loan servicing business, that are not included in Assets Under Management. Prudential does not receive a management or administrative fee on these assets, but may receive a fee for executing trades, custody or recordkeeping services. | ||||||||
10. Divested and Run-off Businesses: | ||||||||
Businesses that have been or will be sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. | ||||||||
11. Earned Premiums: | ||||||||
The portion of a premium, net of any amount ceded, that represents coverage already provided or that belongs to the insurer based on the part of the policy period that has passed. | ||||||||
12. Full Service Retirement: | ||||||||
The Full Service Retirement line of business provides retirement plan products and services to public, private and not-for-profit organizations. This business provides recordkeeping, plan administration, actuarial advisory services, participant education and communication services, trustee services and institutional and retail investment funds. This business mainly services defined contribution and defined benefit plans; non-qualified plans are also serviced. For clients with both defined contribution and defined benefit plans, integrated recordkeeping services are available. | ||||||||
13. Full Service Stable Value: | ||||||||
Our Full Service Stable Value products represent fixed rate options on investment funds offered to Retirement customers. These products contain an obligation to pay interest at a specified rate for a specific period of time. Upon termination these products repay account balances at market value immediately or may be liquidated at book value over time. Substantially all of these products are either fully or partially participating, with annual or semi-annual resets giving effect to previous investment experience. These products are issued through the general account, separate accounts or client-owned trusts. Profits from partially participating general account products result from the spread between the rate of return on investment assets and the interest rates credited to the customer, less expenses. For fully participating products, generally subject to a minimum interest rate guarantee, we earn fee income. | ||||||||
14. General Account: | ||||||||
Invested assets and policyholder liabilities and reserves for which the Company bears the investment risk. Excludes assets recognized for statutory purposes that are specifically allocated to a separate account. General account assets also include assets of the parent company, Prudential Financial, Inc. | ||||||||
15. Gibraltar Life: | ||||||||
Includes results from consolidated joint venture operation of Gibraltar Life and Other Operations. | ||||||||
16. Gibraltar Life Consultants: | ||||||||
Captive insurance agents for Gibraltar Life. Count and policy persistency do not include captive agents associated with consolidated joint venture of Gibraltar Life and Other Operations. | ||||||||
17. Group Life Insurance and Group Disability Insurance Administrative Operating Expense Ratios: | ||||||||
Ratio of administrative operating expenses (excluding commissions) to gross premiums, policy charges and fee income. | ||||||||
18. Group Insurance Benefits Ratios: | ||||||||
Ratio of policyholder benefits to earned premiums, policy charges and fee income. | ||||||||
19. Individual Annuity Account Values in General Account and Separate Account: | ||||||||
Amounts represent the breakdown of invested customer funds in annuities either written or reinsured by the Company. | ||||||||
20. Individual Annuities - Net Amounts at Risk: | ||||||||
Living Benefit Features - For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. | ||||||||
Death Benefit Features - Net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. |
Page 39
Prudential Financial, Inc. | ![]() | |||||||
Quarterly Financial Supplement | ||||||||
Third Quarter 2019 | ||||||||
KEY DEFINITIONS AND FORMULAS | ||||||||
21. Insurance and Annuity Benefits: | ||||||||
Total death benefits, annuity benefits, disability benefits, other policy benefits, and losses paid or incurred, under insurance and annuity contracts, plus the change in reserves for future policy benefits, losses and loss adjustment expenses. | ||||||||
22. International Life Planners: | ||||||||
Captive insurance Advisors in our Life Planner Operations. | ||||||||
23. Non-recourse and Limited-recourse Debt: | ||||||||
Limited and non-recourse borrowing is where the holder is entitled to collect only against the assets pledged to the debt as collateral or has only very limited rights to collect against other assets. | ||||||||
24. Other Related Revenues: | ||||||||
Other related revenues include incentive fees, transaction fees, strategic investing results, and commercial mortgage revenues. | ||||||||
25. Policy Persistency - Group Insurance: | ||||||||
Percentage of the premiums in force at the end of the prior year that are still in force at the end of the period (excluding Servicemembers' Group Life Insurance and Prudential Employee Benefit Plan). | ||||||||
26. Policy Persistency - International Insurance: | ||||||||
13 month persistency represents the percentage of policies issued that are still in force at the beginning of their second policy year. 25 month persistency represents the percentage of policies issued that are still in force at the beginning of their third policy year. | ||||||||
27. Prudential Advisors: | ||||||||
Captive financial professionals and field managers in our insurance operations in the United States. | ||||||||
28. Prudential Advisor productivity: | ||||||||
Commissions on new sales of all products by Prudential Advisors under contract for the entire period, divided by the number of those Prudential Advisors. Excludes commissions on new sales by Prudential Advisors hired or departed during the period. For interim reporting periods, the productivity measures are annualized. | ||||||||
29. Separate Accounts: | ||||||||
Assets of our insurance companies allocated under certain policies and contracts that are segregated from the general account and other separate accounts. The policyholder or contractholder predominantly bears the risk of investments held in a separate account. | ||||||||
30. Variable Investment Income: | ||||||||
Consists of income from equity and alternative investments along with prepayment fee income. | ||||||||
31. Wrap-Fee Products: | ||||||||
Investment products generating asset-based fees in which the funds of the customer are generally invested in other investment products such as mutual funds. |
Page 40
Prudential Financial, Inc. | ![]() | |||||||||
Quarterly Financial Supplement | ||||||||||
Third Quarter 2019 | ||||||||||
RATINGS AND INVESTOR INFORMATION | ||||||||||
FINANCIAL STRENGTH RATINGS | ||||||||||
as of November 4, 2019 | ||||||||||
Standard & | Fitch | |||||||||
A.M. Best* | Poor's | Moody's* | Ratings* | |||||||
The Prudential Insurance Company of America | A+ | AA- | Aa3 | AA- | ||||||
PRUCO Life Insurance Company | A+ | AA- | Aa3 | AA- | ||||||
PRUCO Life Insurance Company of New Jersey | A+ | AA- | NR | AA- | ||||||
Prudential Annuities Life Assurance Corporation | A+ | AA- | NR | AA- | ||||||
Prudential Retirement Insurance and Annuity Company | A+ | AA- | Aa3 | AA- | ||||||
The Prudential Life Insurance Co., Ltd. (Prudential of Japan) | NR | A+ | NR | NR | ||||||
Gibraltar Life Insurance Company, Ltd. | NR | A+ | NR | NR | ||||||
The Prudential Gibraltar Financial Life Insurance Co. Ltd. | NR | A+ | NR | NR | ||||||
Prudential Life Insurance Co. of Taiwan, Inc. (1) | NR | twAAA | NR | NR | ||||||
CREDIT RATINGS: | ||||||||||
as of November 4, 2019 | ||||||||||
Prudential Financial, Inc.: | ||||||||||
Short-Term Borrowings | AMB-1 | A-1 | P-2 | F1 | ||||||
Long-Term Senior Debt | a- | A | A3 | A- | ||||||
Junior Subordinated Long-Term Debt | bbb | BBB+ | Baa1 | BBB | ||||||
The Prudential Insurance Company of America: | ||||||||||
Capital and surplus notes | a | A | A2 | A | ||||||
Prudential Funding, LLC: | ||||||||||
Short-Term Debt | AMB-1 | A-1+ | P-1 | F1+ | ||||||
Long-Term Senior Debt | a+ | AA- | A1 | A+ | ||||||
PRICOA Global Funding I: | ||||||||||
Long-Term Senior Debt | aa- | AA- | Aa3 | AA- | ||||||
* NR indicates not rated. | ||||||||||
(1) Prudential Life Insurance Co. of Taiwan was assigned a financial strength rating by Taiwan Ratings Corporation, an S&P Global Company. | ||||||||||
INVESTOR INFORMATION: | ||||||||||
Corporate Offices: | Investor Information Hotline: | |||||||||
Prudential Financial, Inc. | Dial 877-998-ROCK for additional printed information or inquiries. | |||||||||
751 Broad Street | ||||||||||
Newark, New Jersey 07102 | Web Site: | |||||||||
www.prudential.com | ||||||||||
Common Stock: | ||||||||||
Common Stock of Prudential Financial, Inc. is traded on the New York Stock Exchange under the symbol PRU. |
Page 41