![]() 2010 TOKYO INVESTOR DAY 2010 TOKYO INVESTOR DAY PRUDENTIAL FINANCIAL, INC. PRUDENTIAL FINANCIAL, INC. SEPTEMBER 15, 2010 SEPTEMBER 15, 2010 Exhibit 99.0 |
![]() Forward-Looking Statements Forward-Looking Statements 2 2010 Tokyo Investor Day Certain of the statements included in this presentation constitute forward-looking statements within the meaning of the U. S. Private Securities Litigation Reform Act of 1995. It is possible that actual results may differ materially from any expectations or predictions expressed in this presentation. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall,” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. There can be no assurance that future developments affecting Prudential Financial, Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward- looking statements, including, among others: (1) general economic, market and political conditions, including the performance and fluctuations of fixed income, equity, real estate and other financial markets; (2) the availability and cost of external financing for our operations, which has been affected by the stress experienced by the global financial markets; (3) interest rate fluctuations; (4) reestimates of our reserves for future policy benefits and claims; (5) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates or market returns and the assumptions we use in pricing our products, establishing liabilities and reserves or for other purposes; (6) changes in our assumptions related to deferred policy acquisition costs, valuation of business acquired or goodwill; (7) changes in our claims-paying or credit ratings; (8) investment losses, defaults and counterparty non-performance; (9) competition in our product lines and for personnel; (10) changes in tax law; (11) economic, political, currency and other risks relating to our international operations; (12) fluctuations in foreign currency exchange rates and foreign securities markets; (13) regulatory or legislative changes, including the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act; (14) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (15) domestic or international military actions, natural or man-made disasters including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (16) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; (17) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; (18) changes in statutory or U.S. GAAP accounting principles, practices or policies; (19) changes in assumptions for retirement expense; (20) Prudential Financial, Inc.’s primary reliance, as a holding company, on dividends or distributions from its subsidiaries to meet debt payment obligations and the ability of the subsidiaries to pay such dividends or distributions in light of our ratings objectives and/or applicable regulatory restrictions; and (21) risks due to the lack of legal separation between our Financial Services Businesses and our Closed Block Business. The foregoing risks are even more pronounced in severe adverse market and economic conditions such as those that began in the second half of 2007 and continued into 2009. Prudential Financial, Inc. does not intend, and is under no obligation, to update any particular forward-looking statement included in this presentation. _______________________________________________________________________________ Prudential Financial, Inc. of the United States is not affiliated with Prudential PLC which is headquartered in the United Kingdom. |
![]() Non–GAAP Measure Non–GAAP Measure 3 2010 Tokyo Investor Day This presentation includes references to “adjusted operating income.” Adjusted operating income is a non-GAAP measure of performance of our Financial Services Businesses. Adjusted operating income excludes “Realized investment gains (losses), net,” as adjusted, and related charges 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. Realized investment gains and losses from products that are free standing derivatives or contain embedded derivatives, and from associated derivative portfolios that are part of an economic hedging program related to the risk of those products, are included in adjusted operating income. Adjusted operating income excludes gains and losses from changes in value of certain assets and liabilities related to foreign currency exchange movements that have been economically hedged, as well as gains and losses on certain investments that are classified as other trading account assets and debt that is carried at fair value. Adjusted operating income also excludes investment gains and losses on trading account assets supporting insurance liabilities and changes in experience-rated contractholder liabilities due to asset value changes, because these recorded changes in asset and liability values are expected to ultimately accrue to contractholders. Trends in the underlying profitability of our businesses can be more clearly identified without the fluctuating effects of these transactions. In addition, adjusted operating income excludes the results of divested businesses, which are not relevant to our ongoing operations. Discontinued operations, which is presented as a separate component of net income under GAAP, is also excluded from adjusted operating income. We believe that the presentation of adjusted operating income as we measure it for management purposes enhances understanding of the results of operations of the Financial Services Businesses by highlighting the results from ongoing operations and the underlying profitability of our businesses. However, adjusted operating income is not a substitute for income determined in accordance with GAAP, and the adjustments made to derive adjusted operating income are important to an understanding of our overall results of operations. For additional information about adjusted operating income and the comparable GAAP measure please refer to our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 located on the Investor Relations The information referred to above and on the prior page, as well as the risks of our businesses described in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 should be considered by readers when reviewing forward-looking statements contained in this presentation. website at www.investor.prudential.com. Additional historical information relating to the Company’s financial performance, including its second quarter 2010 Quarterly Financial Supplement, is also located on the Investor Relations website. |
![]() 2010 TOKYO INVESTOR DAY 2010 TOKYO INVESTOR DAY EDWARD P. BAIRD EDWARD P. BAIRD EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT CHIEF OPERATING OFFICER, INTERNATIONAL CHIEF OPERATING OFFICER, INTERNATIONAL PRUDENTIAL FINANCIAL, INC. PRUDENTIAL FINANCIAL, INC. |
![]() Life Insurance Market in Japan Total population of Japan is 127 million (1) (#10 in the world) (2) Total GDP is $4.9 trillion (3) (#2) (2) Total life insurance premium is $367 billion (#2) (4) Total life insurance premium is 7.6% of GDP (4) 90% of households have life insurance (5) 5 2010 Tokyo Investor Day 1) As of July 1, 2010; provisional estimate, Statistics Bureau, Ministry of Internal Affairs and Communications. (Japanese government) 2) World Statistics 2010, Statistics Bureau, Ministry of Internal Affairs and Communications. (Japanese Government) 3) For the year ended December 31, 2009; nominal gross domestic product, based on Annual Report on National Accounts, Cabinet Office. (Japanese government) 4) Fiscal year, April 1, 2008 – March 31, 2009; based on Sigma Report No. 3 /2009, World Insurance in 2008, Swiss Reinsurance Company. 5) According to the nationwide survey regarding life insurance conducted from April through May 2009 by Japan Institute of Life Insurance. |
![]() • Continuing need for insurance protection products aligned with income replacement requirements • $7.7 trillion in low yielding bank deposits and postal savings (1) • Rapidly aging population • Strains on government pension programs lead to growing individual responsibility for retirement Japanese Market Offers Sustainable Growth Potential 6 2010 Tokyo Investor Day 1) As of March 31, 2010, based on FY2009 Financial Statements of All Banks, Japan Bankers Association, and Japan Post Bank Annual Report 2010. |
![]() Life Planners Life Planners Focus on strategy fundamentals: Focus on strategy fundamentals: full-time college educated professionals, full-time college educated professionals, highly selective recruiting, highly selective recruiting, needs-based selling, emphasis on needs-based selling, emphasis on protection products. protection products. Life Advisors Life Advisors Life Planner concepts adapted to Life Planner concepts adapted to broad middle market; key Association broad middle market; key Association relationship offers unique access to relationship offers unique access to education market. education market. Bank Channel Bank Channel Growth driven by distribution expertise, Growth driven by distribution expertise, emphasis on protection products, emphasis on protection products, strong brand and reputation. strong brand and reputation. Prudential’s Japanese Insurance Operations Multiple Distribution Channels in an Attractive Market 7 2010 Tokyo Investor Day |
![]() JAPANESE INSURANCE OPERATIONS JAPANESE INSURANCE OPERATIONS KAZUO MAEDA KAZUO MAEDA CO-PRESIDENT CO-PRESIDENT PRUDENTIAL INTERNATIONAL INSURANCE PRUDENTIAL INTERNATIONAL INSURANCE |
![]() • Insurer quality drives market positioning – Greater consumer focus on insurer’s financial strength following market meltdown – Retrenchment of weakened competitors – Regulators strengthening solvency standards for insurance companies • Growing demand for retirement and savings products • Strengthening yen increasing appeal of multi-currency denominated products • Expanding bank distribution of insurance protection products Japanese Life Insurance Industry Developments 9 2010 Tokyo Investor Day |
![]() • Solvency margins exceed “AA” ratings targets • Revised regulatory solvency margin calculations to be implemented 2011-2012 not expected to have significant impact on capital positions relative to ratings targets Prudential of Japan Gibraltar Life 1) As of June 30, 2010; based on Japanese statutory accounting. 1,339% 1,135% 10 2010 Tokyo Investor Day Prudential Positioning Focus on Financial Strength Focus on Financial Strength 700% solvency 700% solvency margin margin consistent consistent with with “AA” ratings standards standards Solvency Solvency Margins Margins (1) (1) |
![]() • Life insurance based retirement income products combine premature death protection, accumulation and income features • Life Planners’ lifetime relationships with clients support retirement product sales after death protection needs are satisfied • Gibraltar’s Association relationships provide strong platform for retirement sales • Fixed annuity products attractive to Life Advisor and Bank Channel clients Prudential Positioning 11 2010 Tokyo Investor Day Growing Growing Demand Demand for for Retirement Retirement and and Savings Savings Products Products |
![]() • U.S. Dollar denominated whole life and retirement income products offer enhanced accumulation opportunities • U.S. Dollar denominated fixed annuities offer attractive alternative to consumers wary of market-sensitive products • Australian Dollar and Euro denominated products supplement U.S. Dollar denominated fixed annuities in Gibraltar Life’s markets Prudential Positioning 12 2010 Tokyo Investor Day Strengthening Yen Increasing Appeal of Strengthening Yen Increasing Appeal of Multi-Currency Denominated Products Multi-Currency Denominated Products |
![]() • Distribution relationships with 27 Japanese banks including mega-bank, Bank of Tokyo Mitsubishi UFJ; 9 banks selling insurance protection products (1) • Approximately 170 “seconded” Life Planners in Bank Channel (1) • Bank Channel sales of insurance protection products more than tripled in the first half of 2010, reaching $105 million in annualized new business premiums (2) Prudential Positioning 13 2010 Tokyo Investor Day 1) As of June 30, 2010. 2) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented. Japanese yen 99 per U.S. dollar. Expanding Bank Distribution of Insurance Protection Products Expanding Bank Distribution of Insurance Protection Products |
![]() Competitive Advantage Distribution • Life Planner profile similar to customer profile Life Planner profile similar to customer profile • • Life Planner maintains contact with client, Life Planner maintains contact with client, as trusted professional as trusted professional • Identify protection needs before discussing products • Protection products purchased as solution to identified need • Variable compensation structure Variable compensation structure • • Rewards productivity and persistency Rewards productivity and persistency Life Planners Life Planners • • Very selective recruiting Very selective recruiting • • Highly trained career professional Highly trained career professional Needs-Based Selling Needs-Based Selling • • Financial planning approach Financial planning approach • • Emphasis on protection Emphasis on protection products products Compensation structure Compensation structure • • Aligns customer/agent/ Aligns customer/agent/ company interest company interest • Life Planner system concepts adapted to Life Planner system concepts adapted to Life Advisor distribution for mid-market and affinity affinity groups groups • • Distribution expertise driving Bank Distribution expertise driving Bank Channel development Gibraltar Life Gibraltar Life • • “Prudentialized” “Prudentialized” distribution distribution 14 2010 Tokyo Investor Day |
![]() Consistent Strategies Drive Sustainable Financial Performance • • Strong persistency drives revenue growth Strong persistency drives revenue growth • • Margins Margins earned earned throughout throughout in-force period • • Business growth increases scale benefits Business growth increases scale benefits and expense margins and expense margins • • Favorable mortality margins drive Favorable mortality margins drive strong returns strong returns • • Retirement products continue protection Retirement products continue protection through client life cycles through client life cycles • • POJ: POJ: Full-time Life Planners Planners serve serve mass mass affluent and affluent markets affluent and affluent markets • • Gibraltar Gibraltar Life Life Advisors Advisors serve serve mid-market and affinity groups and affinity groups • • Gibraltar provides platform for Bank Gibraltar provides platform for Bank Channel, emerging distribution opportunities Channel, emerging distribution opportunities • • Shared management expertise and resources Shared management expertise and resources • • Cost-effective common platform platform enhances enhances scale benefits scale benefits Needs-Based Needs-Based Selling Selling Pursue Synergies Pursue Synergies Across Operations Across Operations Emphasis on Emphasis on Protection Products Protection Products 15 2010 Tokyo Investor Day Maintain Two Maintain Two Distinct Brands Distinct Brands |
![]() Two Distinct Brands Shared Resources and Synergies Shared Resources Shared Resources Gibraltar Life Gibraltar Life Prudential Prudential of Japan of Japan Systems Integration Initiatives Systems Integration Initiatives Developing common platform for: Developing common platform for: Insurance administration Insurance administration Financial reporting Financial reporting Risk management Risk management Compliance & Internal controls Compliance & Internal controls Human Resources Human Resources • • Senior management and Senior management and marketing officers marketing officers • • Access to Prudential Access to Prudential investment portfolio investment portfolio management management • • Selective transfers of Selective transfers of POJ-trained Life Planners to Gibraltar support to Gibraltar support expanding distribution expanding distribution 16 2010 Tokyo Investor Day |
![]() Prudential of Japan Agency Offices 2010 Tokyo Investor Day Face amount in-force, $274 billion (1) (2) $31.7 billion in assets (1) (2) 90 agency offices (1) Ranked #1 in Japan for number of Million Dollar Round Table members in each of the past 13 years Financial Strength Rating: Standard & Poor’s, AA- (3) 1) As of June 30, 2010. 2) Translated based on exchange rate of 99 Japanese yen per U.S. dollar. 3) As of September 1, 2010. 17 |
![]() Business Model • Life Planner – a selective, high quality sales force – Hire about 3 out of 100 candidates – Well trained and professional – Customer focused – Disciplined, and demonstrate “missionary zeal” • Profile of a typical new POJ Life Planner – Age 32 – College graduate – Married with children – Good sales experience outside the life insurance industry – First job change – POJ policyholder – Referred by another POJ Life Planner – Annual income in the previous job was about $50,000 18 2010 Tokyo Investor Day Life Life Planner Planner – – Needs-Based Needs-Based Selling Selling |
![]() Prudential of Japan Emphasis on Protection Products 2010 Tokyo Investor Day 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates. Japanese yen 99 per U.S. dollar. 2) Primarily whole life and term. 3) Primarily whole life and retirement income. 4) Includes minor amounts of products based on other currencies. 5) Cancer, medical, accident and sickness; primarily riders. 19 Yen-based insurance products (2) U.S. dollar based insurance products (3) (4) Third Sector (5) Yen-based savings and retirement income products In-force Annualized Premiums (1) as of June 30, 2010 Annualized New Business Premiums (1) Six months ended June 30, 2010 |
![]() Gibraltar Life Sub-branch Offices 2010 Tokyo Investor Day Face amount in-force, $196 billion (1) (2) $41.7 billion in assets (1) (2) 501 sub-branch offices (1) Strong affinity group relationships Growing bancassurance business Financial Strength Ratings: Standard & Poor’s, AA- (3) Moody’s, A2 (3) 1) As of June 30, 2010. 2) Translated based on exchange rate of 99 Japanese yen per U.S. dollar. 3) As of September 1, 2010. 20 |
![]() • Life Advisors focus on mid-market clientele • Life Advisor distribution leverages Life Planner system concepts to improve key drivers • Wider geographical coverage than Prudential of Japan • Teachers Association market generates consistent mortality margins; substantial retirement market opportunity • Expanding bank channel fueled by distribution expertise, emphasis on protection products Business Model 21 2010 Tokyo Investor Day Life Advisor Strong Affinity Group Relationships Platform for Expanding Distribution |
![]() Life Advisor Distribution • Selection criteria designed for sales in affinity group market • Candidates often introduced by successful Life Advisors Selective Recruiting Standards Selective Recruiting Standards Training: Adapted From Life Planner System Training: Adapted From Life Planner System • Basic training concepts adapted from Prudential of Japan • Specialized training for affinity group marketing and service Assignment to Affinity Groups Assignment to Affinity Groups 22 2010 Tokyo Investor Day • Affinity group provides access; Life Advisor provides continuing service and consultation to client |
![]() • Teachers Association – Relationship commenced 1952 – Approximately 600,000 members – Access to approximately 950,000 teachers and 37,000 schools throughout Japan • Other Associations include: – Shoko (small business owners) – Japanese Social Welfare Foundation – Self-Defense Force • Commenced bank distribution in 2005 • Disciplined development of bancassurance • U.S. Dollar denominated fixed annuity products provided foundation for bank relationships • 27 bank relationships including mega-bank, Bank of Tokyo Mitsubishi UFJ (1) • POJ Life Planner expertise driving expansion of protection product distribution 23 2010 Tokyo Investor Day Affinity Group Relationships Affinity Group Relationships Bank Channel Bank Channel Two Distinct Distribution Opportunities 1) As of June 30, 2010. |
![]() Gibraltar Life Emphasis on Protection Products 2010 Tokyo Investor Day 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates. Japanese yen 99 per U.S. dollar. 2) Includes third sector products. 24 Yen-based insurance products (2) U.S. dollar based insurance products Other than Yen-based fixed annuities Yen-based savings and retirement income products In-force Annualized Premiums (1) as of June 30, 2010 Annualized New Business Premiums (1) Six months ended June 30, 2010 |
![]() Japanese Insurance Operations Annualized New Business Premiums (1) 25 2010 Tokyo Investor Day Gibraltar – Bank Channel Gibraltar – Life Advisors Prudential of Japan – Life Planners (millions) 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented. Japanese yen 99 per U.S. dollar. $0 $200 $400 $600 $800 $1,000 $1,200 2007 2008 2009 YTD 2Q09 2Q10 |
![]() Overall Position – New Business (Face Amount) (1) 2010 Tokyo Investor Day FY 2009 New Business Amount FY 2009 New Business Amount Billion Billion Yen Yen Share Share 5 Years Ago - FY 2004 Share Share 1. Dai-ichi 7,643 12.6% 1. Nippon 18.4% 2. Nippon 7,603 12.5% 2. Dai-ichi 14.3% 3. T&D Group 6,330 10.4% 3. Meiji-Yasuda 11.1% 4. Sumitomo 5,618 9.2% 4. Sumitomo 10.8% 5. Prudential 4,917 8.1% 5. T&D Group 7.7% (POJ) 2,802 (Gibraltar) 2,115 6. Sony 4,057 6.7% 6. AIG Group 5.6% 7. AIG Group 3,665 6.0% 7. Prudential 4.9% 8. Meiji-Yasuda 3,290 5.4% 8. Sony 3.8% 9. Tokio Marine 3,011 5.0% 9. Fukoku 3.4% 10. Sompo Japan 2,197 3.6% 10. Mitsui 2.9% 26 1) Industry data from Life Insurance Association of Japan. Data shown are based on companies’ Japanese statutory results for fiscal years ended March 31, 2010 and March 31, 2005, respectively. New business amounts are individual life and annuity contracts including net increase by conversion. Excludes Japan Post Insurance. |
![]() Prudential Japanese Insurance Operations vs. Japan Life Insurance Industry 27 2010 Tokyo Investor Day $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $0 $200 $400 $600 $800 $1,000 $1,200 Industry Prudential Japanese Insurance Operations 2003 2004 2005 2006 2007 2008 2009 (billions) New Business Face Amount New Business Face Amount (1) (1) 1) On fiscal year basis; Industry data from Life Insurance Association of Japan. Data shown are based on companies’ Japanese statutory results translated to U.S. dollars at uniform exchange rates for all periods presented (Japanese yen 99 per U.S. dollar). |
![]() Japanese Insurance Operations Driver of Prudential’s International Insurance Financial Performance 1) Results include corporate management and development expenses incurred in the U.S. related to Japanese Insurance operations excluding Gibraltar Life. 2) Based on after-tax adjusted operating income for the year ended December 31, 2009. 28 2010 Tokyo Investor Day Six months ended June 30, (millions) 2008 2009 2009 2010 Pre-tax adjusted operating income Prudential of Japan Prudential of Japan $ 943 $ 943 $ 974 $ 974 $ 494 $ 494 $ 510 $ 510 Gibraltar Life Gibraltar Life 622 622 622 622 281 281 325 325 Total Japanese Insurance Operations Total Japanese Insurance Operations 1,565 1,565 1,596 1,596 775 775 835 835 All Other Countries (1) 182 182 247 247 115 115 108 108 Total Prudential International Insurance $ 1,747 $ 1,747 $ 1,843 $ 1,843 $ 890 $ 890 $ 943 $ 943 22.8% ROE (2) |
![]() PROTECTING FINANCIAL SECURITY OVER A PROTECTING FINANCIAL SECURITY OVER A LIFETIME LIFETIME JOHN HANRAHAN JOHN HANRAHAN PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF EXECUTIVE OFFICER PRUDENTIAL OF JAPAN PRUDENTIAL OF JAPAN |
![]() 23% 19% 27% 21% 27% 29% 23% 31% 0% 50% 100% 2010 2030 Age 0-24 Age 25-44 Age 45-64 Age 65+ Evolving Protection Needs in Prudential’s Largest International Market (1) Japan Japan Population 127 million Population 127 million • Substantial mass affluent/affluent premature death protection market • Rapidly growing pre-retirement/retirement market 30 2010 Tokyo Investor Day 1) Source: United Nations Secretariat estimates, World Population Prospects, the 2008 Revision. |
![]() Needs-Based Selling Over a Lifetime Client Age 20 30 40 50 60+ Client Focus Death Retirement Protection Income Needs Needs Prudential Solutions Term Insurance Term Insurance Whole Life Whole Life U.S. Dollar Retirement Income Fixed Annuity Products • Lifetime client relationships • Needs-based selling through client life cycles • Innovative products serve evolving needs 31 2010 Tokyo Investor Day |
![]() Prudential Life Planners Selected and Trained for Lifetime Protection Focus 32 2010 Tokyo Investor Day Selection Selection • • College education College education • • Successful track record, Successful track record, but no prior life insurance but no prior life insurance sales experience sales experience • • Values and beliefs of a Values and beliefs of a “trusted advisor” “trusted advisor” • • Only 3 out of 100 candidates Only 3 out of 100 candidates are hired are hired Training Training • • Structured training program Structured training program • • First month: First month: Dedicated to intensive training Dedicated to intensive training • • Weeks 5-50: Weeks 5-50: Basic training program Basic training program complemented by complemented by on-the-job activity on-the-job activity • • Weeks 51 and thereafter: Weeks 51 and thereafter: Continuing on-the-job training Continuing on-the-job training |
![]() Primary Market Primary Market Typical Client Typical Client Profile Profile Typical Life Planner Typical Life Planner Profile Profile Primary Death Protection Market • Young professional, Age 35-45 • Annual income, approximately $60 thousand • College graduate, age similar to clients • 5 years experience as Life Planner • Established clients serve as potential referral sources Primary Pre-Retirement Market • Rising and seasoned professionals • Building retirement funds include low- yielding savings deposits • Achieved professional designations, recognition (e.g. MDRT); age similar to clients • Building on relationship with clients Life Planner Perspective Aligned with the Client 33 2010 Tokyo Investor Day |
![]() Financial Security Value Proposition 34 2010 Tokyo Investor Day Family Financial Security Over a Lifetime Family Financial Security Over a Lifetime Prudential Life Planner: Trusted Advisor Products Selected Based on Professional Evaluation of Needs Promises Backed by a Strong Company |
![]() Client Need Client Need Product Class Product Class Key Features Key Features Low cost premature death protection Term Insurance • Death protection for stated period with level premiums • May add third-sector protection riders Death protection with savings feature Whole Life • Death protection • Savings fund • Guaranteed crediting rate • May add third sector protection riders Retirement accumulation and income Retirement • Death protection in working years • Retirement accumulation fund • Policy paid-up at retirement age • Annuitization options • May add third-sector protection riders Product Portfolio Meets Client Needs Over a Lifetime 35 2010 Tokyo Investor Day |
![]() Protecting Financial Security For a Lifetime 36 2010 Tokyo Investor Day Client Age Client Age 25-34 25-34 35-44 35-44 45-54 45-54 55-64 55-64 Annual Premium per client (1) $3,000 $3,800 $4,900 $5,500 Product Mix (1) 1) Based on annual premium for new Prudential of Japan insureds in 2009 (male, married insured, individual policies); foreign-denominated activity translated to U.S. dollars at uniform exchange rate, Japanese yen 99 per U.S. dollar. 68% 25% 7% 65% 28% 7% 65% 28% 7% 72% 21% 7% Whole Life and Retirement Term Medical |
![]() Protection-Focused Product Portfolio Drives Sustainable Returns 37 2010 Tokyo Investor Day PRODUCT PRODUCT DRIVERS OF RETURNS DRIVERS OF RETURNS Term Insurance • Serves basic death protection needs • Robust mortality margins on high average face amounts • Potential for add-on and replacement sales through client life cycle Whole Life Insurance • Death protection with savings elements • Robust mortality margins on protection element • Potential for investment spread earnings over policy term Retirement Products • Savings and protection for financial security in mature phase of life cycle • Robust mortality margins on protection element during working years • Potential for investment spread earnings over policy term • Potential for extended margins over annuitization period • Expense margins driven by scale, back-office efficiencies • Margins earned over in-force period extended by superior persistency • Third-sector riders enhance overall margins |
![]() U.S. Dollar U.S. Dollar Denominated Denominated Whole Life Whole Life U.S. Dollar U.S. Dollar Denominated Denominated Retirement Income Retirement Income U.S. Dollar U.S. Dollar Denominated Denominated Fixed Annuities Fixed Annuities Death Protection Death Protection Benefits Benefits Retirement Retirement Accumulation Accumulation Retirement Retirement Income Income Attractive Yields Attractive Yields for Japanese for Japanese Market Market Rates offered reflect yields on U.S. Dollar denominated investments; compare favorably to Japanese yen-based products U.S. Dollar Denominated Products Attractive Value Proposition for Japanese Clients 38 2010 Tokyo Investor Day |
![]() Lifetime Relationships and Innovative Products Drive Second-Sale Opportunities 39 2010 Tokyo Investor Day Annualized New Business Premiums (millions) Prudential of Japan Prudential of Japan Second Sales to Existing Customers Second Sales to Existing Customers (1)(2) (1)(2) 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented. Japanese yen 99 per U.S. dollar. 2) Individual market only. $86 $94 $98 $109 $0 $20 $40 $60 $80 $100 $120 2006 2007 2008 2009 |
![]() Prudential of Japan Prudential of Japan Gibraltar Life Gibraltar Life Productivity (2) 6.9 3.8 Policy Persistency (face amount) 13-month 25-month 94.5% 88.6% 92.2% 83.8% Distribution Representative Retention 12-month 24-month 81.8% 64.4% 64.1% 30.6% Average size policy (3) $274 $196 Superior Performance Measures Driven by Needs-Based Protection Focus (1) 40 2010 Tokyo Investor Day 1) Measured as of or for the twelve months ended June 30, 2010. 2) Policies sold by sales representative per month; includes medical and cancer policies. 3) Face amount, in thousands. |
![]() Protecting Financial Security Over a Lifetime Drives Our Beneficial Cycle 41 2010 Tokyo Investor Day Satisfy Satisfy Customers Customers Needs Needs High High Customer Customer Satisfaction Satisfaction Proven Execution Track Record Proven Execution Track Record Life-Long Customer Relationships Life-Long Customer Relationships |
![]() THE POWER OF ASSOCIATIONS THE POWER OF ASSOCIATIONS DISTRIBUTION ADVANTAGE BASED ON DISTRIBUTION ADVANTAGE BASED ON RELATIONSHIPS RELATIONSHIPS MITSUO KURASHIGE MITSUO KURASHIGE PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF EXECUTIVE OFFICER GIBRALTAR LIFE GIBRALTAR LIFE |
![]() Association Relationships Key Contributor to Gibraltar Business Associations Other Life Advisor Business Banks 1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates. Japanese yen 99 per U.S. dollar. 43 2010 Tokyo Investor Day In-Force Annualized Premiums as of June 30, 2010 (1) Annualized New Business Premiums Six months ended June 30, 2010 (1) |
![]() Teachers Association Core Relationship for More Than Half a Century • Relationship since 1952 • Approximately 600,000 members (1) • Access to approximately 950,000 teachers and school personnel through 47 prefectural (local) associations and 37,000 schools (1) Member eligibility: School teachers and personnel Supervised by: Ministry of Education, Culture, Sports, Science and Technology Japanese Educational Mutual Aid Japanese Educational Mutual Aid Association of Welfare Foundation Association of Welfare Foundation (Teachers Association) (Teachers Association) 44 2010 Tokyo Investor Day 1) As of June 30, 2010. |
![]() Working Together to Support The Educational Community Teachers Association Teachers Association Mainly support for Teachers Mainly support for Teachers • • Scholarships Scholarships Interest-free college tuition loans for teachers’ children • • Research Grants Research Grants Support research achievements Support research achievements of teachers and schools of teachers and schools • • Educational & Cultural Educational & Cultural Promote lectures and other Promote lectures and other educational activities including educational activities including international exchanges international exchanges • • Welfare Welfare Support general welfare of teaching Support general welfare of teaching community through financial community through financial assistance and subsidies assistance and subsidies Mainly support for Students Mainly support for Students • • Overseas Education Overseas Education • • Cultivation of skills Cultivation of skills and interests and interests • • Volunteer programs Volunteer programs • • Athletic programs Athletic programs 45 2010 Tokyo Investor Day |
![]() Prudential’s Spirit of Community •AFS Program - American Field Service International Exchange program • Volunteer Award for teenagers •International Math Olympiad • Coaching by professional basketball players of “bj league” to elementary school students (bj league: Japan professional basketball league) • Dodge-ball tournament for elementary and junior high school students Gibraltar Life Enriching the Japanese Student Experience 46 2010 Tokyo Investor Day “Let’s Play Basketball” “Dome Dodge in Nagoya” |
![]() Teachers Market Size Size (1) (1) # of public school teachers # of public school teachers 950,000 950,000 # of annual retirees/new hires # of annual retirees/new hires 20,000 20,000 30,000/yr 30,000/yr Average annual salary Average annual salary 7.5 million yen 7.5 million yen ($85 thousand) ($85 thousand) Typical retirement allowance Typical retirement allowance 25-30 million yen 25-30 million yen ($285 – ($285 – $340 thousand) $340 thousand) Characteristics Characteristics High social status High social status (Local dignitaries) (Local dignitaries) Comfortable, steady income Comfortable, steady income Well-managed healthcare Well-managed healthcare Limited expertise for Limited expertise for financial security financial security Teachers desire Life Advisor Teachers desire Life Advisor product explanation product explanation and advice and advice 47 2010 Tokyo Investor Day 1) All numbers approximated; U.S. dollar equivalents based on exchange rate as of June 30, 2010 (88 Japanese yen per U.S. dollar). |
![]() Distribution Advantage Drives High Quality Business Favorable mortality Favorable mortality experience driven by superior experience driven by superior underwriting characteristics underwriting characteristics • • Educational employees a naturally Educational employees a naturally “select” group • • Annual health examinations, Annual health examinations, medical screenings required for medical screenings required for school personnel school personnel Strong persistency driven Strong persistency driven by link to employment by link to employment • • School personnel are government School personnel are government employees with reliable employees with reliable steady income steady income • • Monthly premiums through payroll Monthly premiums through payroll deduction or similar arrangements deduction or similar arrangements Customer loyalty reinforced Customer loyalty reinforced by co-branding by co-branding • • Teachers Association branding Teachers Association branding respected among respected among education community education community • • Gibraltar Life products include Gibraltar Life products include Association in product name Association in product name 48 2010 Tokyo Investor Day |
![]() Association Sales Proven Approach in an Attractive Market • Association relationship provides Gibraltar Life Advisors with access to school sites and teachers’ offices • One-on-one sales on site by Gibraltar Life Advisors • Specialized training program for Life Advisors working in education market • Co-promotion by Association employees and Life Advisors • Marketing approaches adapted to characteristics of 47 local prefecture Association membership bases • Specialized products tailored to Association membership status; favorable underwriting and persistency support competitive pricing 49 2010 Tokyo Investor Day |
![]() Approximately Public schools nationwide Specially Trained Life Advisors Cover Nationwide Public School Network (1) 50 2010 Tokyo Investor Day Approximately Life Advisors 1) Data as of June 30, 2010. |
![]() Participation (1) Association members Association members 480,000 480,000 (50%) (50%) Active Teachers Active Teachers 950,000 950,000 Policyholders Policyholders (Active) (Active) 450,000 450,000 (47%) (47%) 1) Numbers represent headcount and are approximate as of June 30, 2010. 51 2010 Tokyo Investor Day Retired Teachers Retired Teachers Retired Teachers Policyholders Policyholders 100,000 100,000 |
![]() Perennial Sales Opportunities 1) Numbers approximate as of June 30, 2010. 52 2010 Tokyo Investor Day 120,000 120,000 Retired Retired Teachers Teachers Association Association members members (1) (1) 950,000 950,000 Active Active Teachers Teachers (1) (1) Active Market Retirement Market 20,000 20,000 – – 30,000 new 30,000 new teachers teachers hired hired each year each year 20,000 20,000 – – 30,000 30,000 teachers teachers retire retire each year each year |
![]() Specialized Products Tailored to Education Market Active Market Active Market • • Primary Products: Primary Products: – – Teachers Term Teachers Term – – Teachers Medical Teachers Medical – – Teachers Whole Life Teachers Whole Life – – Teachers Nursing Care Teachers Nursing Care • • Supplemented by other Supplemented by other individual products individual products Retirement Market Retirement Market • • Single premium whole life Single premium whole life • • Endowment Endowment • • U.S. dollar and alternative currency U.S. dollar and alternative currency denominated annuities denominated annuities • Competitive pricing enhances attractiveness of education market products • Annual survey identifies market needs for product development 53 2010 Tokyo Investor Day |
![]() Teachers Term Product Affordable Basic Protection with Broad Appeal • Favorable actuarial experience of group enables attractive premium rates • Access to Teachers Term product perceived as key benefit of Association membership; many teachers join Association and purchase product simultaneously • Second sale opportunity: 50%-60% of Association clients purchase multiple Gibraltar Life products 54 2010 Tokyo Investor Day |
![]() Japanese Teachers Association Retirement Market Opportunity • Teachers receive lump sum payment at retirement, average about $300,000 • Trusted brand and attractive single premium retirement oriented products form solid value proposition at retirement • Products compare favorably to low-rate bank deposits 55 2010 Tokyo Investor Day |
![]() 2009 (Single pay) Foreign Foreign currency currency fixed fixed annuity annuity / / Whole Whole life life / / Endowment Endowment (Recurring Pay) Whole Whole life life / / Term Term / / US$ US$ Retirement Retirement income income / / Endowment Endowment / / Medical/Nursing Medical/Nursing care care Specially trained Life Advisors / Seminars / Exclusive Website Specially trained Life Advisors / Seminars / Exclusive Website Teachers Association Market Key Driver of Teachers Association Market Key Driver of Gibraltar’s Retirement Sales Gibraltar’s Retirement Sales 2007 2008 (millions) (millions) $145 $145 $172 $172 $175 $175 88 88 87 87 87 87 87 87 85 85 58 58 Single Pay Single Pay Recurring Pay Recurring Pay Special Approach Special Approach Products Products Communication Communication 56 2010 Tokyo Investor Day Total Gibraltar Life Annualized New Business Premiums (1) 10,000 20,000 30,000 40,000 Age 30 40 50 60 65 Number of Public School Teachers Active Active Retired 1) Represents total Gibraltar Life sales to “Retirement Red Zone” clients (age 50-65); foreign-denominated activity translated to U.S. dollars at uniform exchange rate for all periods presented, Japanese yen 99 per U.S. dollar. |
![]() Annualized New Business Premiums Year ended December 31, 2009 (1) In-Force Annualized Premiums as of June 30, 2010 (1) Retirement Products Complement Protection-Focused Business 1) Teachers Association business; foreign denominated activity translated to U.S. dollars at uniform exchange rates, Japanese yen 99 per U.S. dollar. 2) Primarily Teachers Term; includes third sector products (e.g., medical, nursing care). 3) Includes products based on other currencies. 4) Primarily fixed annuities and endowment contracts. 57 2010 Tokyo Investor Day Yen-based insurance products (2) U.S. dollar based insurance products (3) Savings products (4) $1.5 billion $145 million |
![]() Gibraltar Life – Japanese Teachers Association A Sustainable Partnership • Exclusive partnership in serving educators, for more than 55 years • Attractive products encourage Association membership • Joint ownership of Association’s membership management system, which processes recurring premium data • Favorable pricing reflects “collective term” business in force; insurance contract terms preclude transfer of existing policies to other carriers without Gibraltar’s approval 58 2010 Tokyo Investor Day |
![]() BANK CHANNEL DISTRIBUTION BANK CHANNEL DISTRIBUTION A PLATFORM FOR GROWTH A PLATFORM FOR GROWTH TAKESHI TANIGAWA TAKESHI TANIGAWA EVP, GIBRALTAR LIFE / CEO, PRUDENTIAL GIBRALTAR FINANCIAL LIFE EVP, GIBRALTAR LIFE / CEO, PRUDENTIAL GIBRALTAR FINANCIAL LIFE |
![]() Competitive Advantages Support a Strong Bancassurance Model • Fixed annuity products attractive to bank clientele, form basis for initial distribution relationships • Competitive protection product portfolio meets life insurance needs of bank customer base • Prudential/Gibraltar brands appeal to security-focused customers; especially attractive to “large ticket” clients • Prudential-trained former Life Planners bring expertise in protection product sales and support 60 2010 Tokyo Investor Day |
![]() Expanding Bank Channel Distribution Introduced U.S. dollar denominated fixed annuity product for Bank Channel distribution Commenced distribution relationship with Japanese mega-bank, Bank of Tokyo Mitsubishi UFJ Assigned Assigned experienced experienced Life Life Planners Planners to to Gibraltar Gibraltar Life Life for for Bank Bank Channel Channel development development Introduced life insurance Introduced life insurance protection products protection products In 2010, In 2010, distribution distribution agreements grow to agreements grow to include 27 banks and include 27 banks and 6 affiliated agencies 6 affiliated agencies (1) (1) 2005 2006 2007 2008 2009 1) As of June 30, 2010. 2010 61 2010 Tokyo Investor Day |
![]() Nearly 3,000 Potential Points of Sale 62 2010 Tokyo Investor Day Bank of Tokyo Mitsubishi UFJ (Mega-bank) Over $1 trillion deposits (1)(2) 772 branches (1) Mitsubishi UFJ Trust and Banking (Trust-bank) Over $143 billion deposits (1)(2) 66 branches (1) Fukuoka Bank (Regional bank) Over $79 billion deposits (1)(2) 167 branches (1) Shinsei Bank (Other-bank) Over $70 billion deposits (1)(2) 42 branches (1) Hiroshima Bank (Regional bank) Over $61 billion deposits (1)(2) 167 branches (1) Total of 27 Bank Relationships (3) Over $2.4 trillion deposits (1)(2) Gibraltar products sold at 1,773 (3) of nearly 3,000 branches in total (1) 1) As of March 31, 2010 based on bank fiscal year end disclosures. 2) U.S. dollar equivalents based on exchange rate as of June 30, 2010 (88 Japanese yen per U.S. dollar). 3) As of or through June 30, 2010. |
![]() Bancassurance Powered by Prudential 63 2010 Tokyo Investor Day Prudential Prudential Support Support • • Insurance education and training Insurance education and training backed by proven distribution model backed by proven distribution model • • Competitive products focused Competitive products focused on protection on protection • • Highly regarded brand, promises Highly regarded brand, promises backed by a strong company backed by a strong company • • Access to expertise of “seconded” Access to expertise of “seconded” former Prudential of Japan former Prudential of Japan Life Planners Life Planners (1) (1) 1) At certain banks. Bank Employee Bank Employee Life Insurance Sales Life Insurance Sales |
![]() On-Site Access to Attractive Bank Customer Base 64 2010 Tokyo Investor Day Prudential Prudential Support Support • • Bank customers traditionally not Bank customers traditionally not served by trained life insurance served by trained life insurance professional at bank branch professional at bank branch • • Growing market for protection Growing market for protection products at banks following products at banks following regulation changes regulation changes • • Prudential-trained bank employees Prudential-trained bank employees refer clients to “seconded” refer clients to “seconded” former Prudential former Prudential of Japan of Japan Life Planners Life Planners Prudential-Trained On-Site Prudential-Trained On-Site Representative Sales Representative Sales |
![]() 84% 16% A Successful Partnership 65 2010 Tokyo Investor Day Bank Channel Bank Channel Annualized New Business Premiums Annualized New Business Premiums $131 million $131 million (1) (1) 1) For the six months ended June 30, 2010; foreign denominated activity translated to U.S. dollars at uniform exchange rates, Japanese yen 99 per U.S. dollar. Sales by other bank employees Sales by former Prudential of Japan Life Planners “seconded” to bank channel |
![]() Bank Channel Emphasis on Protection Products 66 2010 Tokyo Investor Day Bank Channel Bank Channel Annualized New Business Premiums Annualized New Business Premiums $131 million $131 million (1) (1) 1) For the six months ended June 30, 2010; foreign denominated activity translated to U.S. dollars at uniform exchange rates, Japanese yen 99 per U.S. dollar. 80% 20% Life Insurance protection products Other products (primarily U.S. dollar fixed annuities) |
![]() $0 $20 $40 $60 $80 $100 $120 $140 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 2Q10 Life Insurance protection products Other products (primarily fixed annuities) Bank Channel Growth 67 2010 Tokyo Investor Day 1) Foreign denominated activity translated to U.S. dollar at uniform exchange rates for all periods presented. Japanese yen 99 per U.S. dollar. Annualized New Business Premiums Annualized New Business Premiums (1) (1) $21 $25 $39 $47 $55 $76 $46 $131 YTD (millions) (millions) |
![]() Bank Channel Prospects for Continued Growth • Growing bank focus on protection life insurance sales following recent regulation changes • Continued Prudential training of bank employees promotes product awareness and sales skills; expanding count of employees qualified to sell life insurance • Expanding coverage of bank branches within existing relationship networks; potential to develop new relationships • Large expected volume of maturing bank-sold fixed and variable annuities provides opportunities to review client’s product portfolio • Opportunity to expand life insurance protection market coverage through regional banks 68 2010 Tokyo Investor Day |