EXHIBIT 99
PRUDENTIAL [LOGO] FINANCIAL
Prudential Financial, Inc. (PRU)
- --------------------------------------------------------------------------------
Quarterly Financial Supplement
FINANCIAL SERVICES BUSINESSES - THIRD QUARTER 2001
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Reference is made to Prudential Financial, Inc.'s filings with the Securities
and Exchange Commission for general information, and consolidated financial
information, regarding Prudential Financial, Inc., including its Closed Block
Business.
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i
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
CONTENTS
Page
-------------
HIGHLIGHTS
Financial Highlights ......................................................................... 1
Operations Highlights ........................................................................ 2
FINANCIAL SERVICES BUSINESSES
Combined Statements of Operations ............................................................ 3
Combined Balance Sheets ...................................................................... 4
Combining Statements of Operations by Division (Quarter Ended September 30, 2001 and 2000) ... 5
Combining Statements of Operations by Division (Nine Months Ended September 30, 2001 and 2000) 6
Combining Balance Sheets by Division ......................................................... 7
U.S. CONSUMER DIVISION
Combined Statements of Operations ............................................................ 8
Combining Statements of Operations (Quarter) ................................................. 9
Combining Statements of Operations (Year-to-Date) ............................................ 10
Life Insurance Sales and Mutual Funds, Wrap-fee Products and Annuity Assets Under Management . 11
Life Insurance, Mutual Funds, Wrap-fee Products and Annuity Sales by Distribution Channel .... 12
Account Value Activity ....................................................................... 13
Deferred Policy Acquisition Costs ............................................................ 14
Supplementary Information for Individual Life Insurance and Private Client Group ............. 15
Supplementary Information for Property and Casualty Insurance ................................ 16
EMPLOYEE BENEFITS DIVISION
Combined Statements of Operations ............................................................ 17
Combining Statements of Operations (Quarter and Year-to-Date) ................................ 18
Sales Results and Assets Under Management .................................................... 19
Supplementary Information .................................................................... 20
INTERNATIONAL DIVISION
Combined Statements of Operations ............................................................ 21
Combining Statements of Operations (Quarter and Year-to-Date) ................................ 22
Sales Results and Supplementary Information .................................................. 23-24
ASSET MANAGEMENT DIVISION
Combined Statements of Operations ............................................................ 25
Combining Statements of Operations (Quarter and Year-to-Date) ................................ 26
Assets Under Management - Investment Management and Advisory Services Segment ................ 27
INVESTMENT PORTFOLIO
Investment Portfolio Composition ............................................................ 28
Investment Results .......................................................................... 29
KEY DEFINITIONS AND FORMULAS ................................................................... 30-31
RATINGS AND INVESTOR INFORMATION ............................................................... 32
ii
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
Year-to-date %
-----------------------------
2001 2000 Change
-------------- -------------
Financial Services Businesses:
Pre-tax adjusted operating income by division:
323 802 -60% U.S. Consumer Division
159 311 -49% Employee Benefits Division
398 262 52% International Division
155 236 -34% Asset Management Division
55 77 -29% Corporate and other operations
------------- ------------
1,090 1,688 -35% Total pre-tax adjusted operating income
431 613 -30% Income taxes (1)
------------- ------------
659 1,075 -39% After-tax adjusted operating income
------------- ------------
Items excluded from adjusted operating income:
(4) (209) -98% Realized investment gains (losses), net of related charges
- - - Sales practices remedies and costs
(122) (69) 77% Divested businesses
(199) (113) 76% Demutualization costs and expenses
------------- ------------
(325) (391) -17% Total items excluded from adjusted operating income, before income taxes
(371) 42 -983% Income taxes
------------- ------------
46 (433) -111% Total items excluded from adjusted operating income, after income taxes
------------- ------------
705 642 10% Income from continuing operations (after tax)
- - - Income (loss) from discontinued operations, net of related taxes
------------- ------------
705 642 10% Net income
============= ============
2000 2001
------------------ -----------------------------
3Q 4Q 1Q 2Q 3Q
------- ------- -----------------------------
Financial Services Businesses:
Pre-tax adjusted operating income by division:
U.S. Consumer Division ..................................................... 166 (62) 194 82 47
Employee Benefits Division ................................................. 130 76 104 52 3
International Division ..................................................... 76 60 98 120 180
Asset Management Division .................................................. 66 40 78 32 45
Corporate and other operations ............................................. (25) (81) (1) 75 (19)
------- ------- ------- ------- -------
Total pre-tax adjusted operating income ................................. 413 33 473 361 256
Income taxes (1) ............................................................ 145 (8) 177 101 153
------- ------- ------- ------- -------
After-tax adjusted operating income .......................................... 268 41 296 260 103
------- ------- ------- ------- -------
Items excluded from adjusted operating income:
Realized investment gains (losses), net of related charges ................ (221) (199) 243 75 (322)
Sales practices remedies and costs ........................................ -- -- -- -- --
Divested businesses ....................................................... (8) (567) (22) (60) (40)
Demutualization costs and expenses ........................................ (36) (30) (45) (117) (37)
------- ------- ------- ------- -------
Total items excluded from adjusted operating income, before income taxes (265) (796) 176 (102) (399)
Income taxes .............................................................. (40) (347) 69 (92) (348)
------- ------- ------- ------- -------
Total items excluded from adjusted operating income, after income taxes (225) (449) 107 (10) (51)
------- ------- ------- ------- -------
Income from continuing operations (after tax) ................................ 43 (408) 403 250 52
Income (loss) from discontinued operations, net of related taxes ............. -- 77 -- -- --
------- ------- ------- ------- -------
Net income ................................................................... 43 (331) 403 250 52
======= ======= ======= ======= =======
Financial Services Businesses Capitalization Data:
Short-term debt ............................................................. 13,331 10,893 11,922 9,440 9,720
Long-term debt .............................................................. 1,810 1,476 2,058 3,047 2,983
Attributed Equity:
Total Attributed Equity .................................................. 14,031 13,741 14,661 14,787 14,683
Excluding unrealized gains and losses on investments ..................... 13,147 13,704 13,822 13,433
Excluding accumulated other comprehensive income ......................... 13,244 13,908 13,960 13,581
Total Capitalization:
Excluding accumulated other comprehensive income ......................... 14,720 15,966 17,007 16,564
Including accumulated other comprehensive income ......................... 15,841 15,217 16,719 17,834 17,666
(1) Income taxes applicable to pre-tax adjusted operating income, which excludes
the equity tax for periods prior to demutualization.
Page 1
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
OPERATIONS HIGHLIGHTS
Year-to-date
- --------------------------
2001 2000
- ------------ ------------
Distribution Representative Productivity:
29 30 Prudential Agent productivity ($ thousands)
338 412 Financial Advisor productivity (domestic; $ thousands)
Third Party Distribution ($ millions):
221 72 Individual Life Insurance sales (6)
2,513 1,038 Retail Investments gross sales (7)
2000 2001
------------------- --------------------------
3Q 4Q 1Q 2Q 3Q
------- ------- ------ ------- -------
Assets Under Management and Administration ($ billions) (1) (2):
Assets Under Management:
Managed by Asset Management Division:
Retail customers (3) ........................................... 111.7 107.4 97.2 99.8 92.8
Institutional customers ........................................ 97.8 95.1 89.5 90.7 84.9
General account ................................................ 108.7 110.0 111.0 109.3 110.1
------- ------- ------- ------- -------
Total proprietary (3) ....................................... 318.2 312.5 297.7 299.8 287.8
Non-proprietary wrap-fee and other domestic assets under management 53.0 50.5 49.8 51.3 45.0
International (4) ................................................. 7.2 8.1 8.9 42.4 40.5
------- ------- ------- ------- -------
Total assets under management .................................. 378.4 371.1 356.4 393.5 373.3
Client assets (5) ................................................... 243.2 221.8 203.5 212.3 190.9
------- ------- ------- ------- -------
Total assets under management and administration .................... 621.6 592.9 559.9 605.8 564.2
======= ======= ======= ======= =======
Distribution Representatives(1):
Prudential Agents .................................................. 7,433 6,086 5,382 5,049 4,928
Financial Advisors (domestic and international) .................... 6,610 6,676 6,628 6,497 6,366
International Life Planners ........................................ 3,368 3,495 3,434 3,690 3,999
Gibraltar Life Advisors ............................................ -- -- -- 7,230 6,596
Distribution Representative Productivity:
Prudential Agent productivity ($ thousands) ........................ 27 32 25 30 28
Financial Advisor productivity (domestic; $ thousands) ............. 373 367 364 338 316
Third Party Distribution ($ millions):
Individual Life Insurance sales (6) ................................ 29 56 55 43 123
Retail Investments gross sales (7) ................................. 286 426 494 1,525 494
(1) As of end of period.
(2) At fair market value.
(3) Includes International retail customer assets.
(4) Includes $30.9B of Gibraltar Life assets at September 30, 2001.
(5) Includes International customer client assets.
(6) Statutory first year premiums and deposits for Individual Life Insurance
segment products by third-party channel.
(7) Gross sales of mutual funds, wrap-fee products, and annuities by third party
channel.
Page 2
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
COMBINED STATEMENTS OF OPERATIONS - FINANCIAL SERVICES BUSINESSES
(in millions)
Year-to-date %
--------------------------
2001 2000 Change
------------ ------------
Revenues (1):
6,013 4,328 39% Premiums
1,298 1,192 9% Policy charges and fee income
3,937 3,908 1% Net investment income
3,264 3,999 -18% Commissions, investment management fees, and other income
------------ ------------
14,512 13,427 8% Total revenues
------------ ------------
Benefits and Expenses (1):
6,042 4,432 36% Insurance and annuity benefits
1,236 1,225 1% Interest credited to policyholder account balances
277 330 -16% Interest expense
(981) (887) 11% Deferral of acquisition costs
709 593 20% Amortization of acquisition costs
2,463 2,565 -4% Securities operations non-interest expenses
3,676 3,481 6% General and administrative expenses
------------ ------------
13,422 11,739 14% Total benefits and expenses
------------ ------------
1,090 1,688 -35% Adjusted operating income before income taxes
------------ ------------
Items excluded from adjusted operating income before income taxes:
3 (216) -101% Realized investment gains, net of losses
(7) 7 -200% Related charges
------------ ------------
(4) (209) -98% Total realized investment gains (losses), net of related charges
- - - Sales practices remedies and costs
(122) (69) 77% Divested businesses
(199) (113) 76% Demutualization costs and expenses
------------ ------------
(325) (391) -17% Total items excluded from adjusted operating income before income taxes
------------ ------------
765 1,297 -41% Income from continuing operations before income taxes
60 655 -91% Income tax expense
------------ ------------
705 642 10% Income from continuing operations, after-tax
============ ============
2000 2001
---------------- --------------------------
3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ ------
Revenues (1):
Premiums .................................................................. 1,445 1,538 1,611 2,100 2,302
Policy charges and fee income ............................................. 398 447 392 450 456
Net investment income ..................................................... 1,312 1,316 1,297 1,352 1,288
Commissions, investment management fees, and other income ................. 1,230 1,197 1,108 1,164 992
------ ------ ------ ------ ------
Total revenues ......................................................... 4,385 4,498 4,408 5,066 5,038
------ ------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits ............................................ 1,447 1,653 1,606 2,120 2,316
Interest credited to policyholder account balances ........................ 414 393 382 421 433
Interest expense .......................................................... 132 118 108 100 69
Deferral of acquisition costs ............................................. (306) (305) (313) (343) (325)
Amortization of acquisition costs ......................................... 206 241 242 212 255
Securities operations non-interest expenses ............................... 824 889 817 875 771
General and administrative expenses ....................................... 1,255 1,476 1,093 1,320 1,263
------ ------ ------ ------ ------
Total benefits and expenses ............................................. 3,972 4,465 3,935 4,705 4,782
------ ------ ------ ------ ------
Adjusted operating income before income taxes ............................... 413 33 473 361 256
------ ------ ------ ------ ------
Items excluded from adjusted operating income before income taxes:
Realized investment gains, net of losses ................................ (219) (163) 247 82 (326)
Related charges ......................................................... (2) (36) (4) (7) 4
------ ------ ------ ------ ------
Total realized investment gains (losses), net of related charges ........ (221) (199) 243 75 (322)
Sales practices remedies and costs ....................................... -- -- -- -- --
Divested businesses ...................................................... (8) (567) (22) (60) (40)
Demutualization costs and expenses ....................................... (36) (30) (45) (117) (37)
------ ------ ------ ------ ------
Total items excluded from adjusted operating income before income taxes (265) (796) 176 (102) (399)
------ ------ ------ ------ ------
Income from continuing operations before income taxes ....................... 148 (763) 649 259 (143)
Income tax expense .......................................................... 105 (355) 246 9 (195)
------ ------ ------ ------ ------
Income from continuing operations, after-tax ................................ 43 (408) 403 250 52
====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses, and revenues of
divested businesses. Benefits and expenses exclude charges related to realized
investment gains net of losses, benefits and expenses of divested businesses,
sales practices remedies and costs, and demutualization costs and expenses.
Page 3
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
COMBINED BALANCE SHEETS - FINANCIAL SERVICES BUSINESSES
(in millions)
12/31/2000 3/31/2001 6/30/2001 9/30/2001
---------- --------- --------- ---------
Assets:
Investments:
Fixed maturity securities available for sale, at fair value
(amortized cost $45,597; $52,549; $67,706; $66,031) ...... 46,172 54,018 68,768 68,018
Fixed maturity securities held to maturity, at amortized cost
(fair value $7,257; $381; $562; $555) .................... 7,172 354 538 532
Trading account assets, at fair value ....................... 7,217 9,103 5,752 5,199
Equity securities available for sale, at fair value
(cost $783; $1,017; $3,462; $2,072) ...................... 855 1,050 3,634 2,026
Commercial loans ............................................ 8,177 8,074 13,977 12,756
Policy loans ................................................ 2,336 2,459 3,033 3,008
Securities purchased under agreements to resell ............. 5,395 4,526 6,169 4,480
Cash collateral for borrowed securities ..................... 3,858 3,541 3,422 3,963
Other long-term investments ................................. 2,562 3,095 4,023 3,811
Short-term investments ...................................... 2,498 782 2,960 2,773
------- ------- ------- -------
Total investments ....................................... 86,242 87,002 112,276 106,566
Cash and cash equivalents ..................................... 5,165 7,297 11,555 13,209
Accrued investment income ..................................... 1,002 930 975 977
Broker-dealer related receivables ............................. 11,860 10,004 8,773 9,119
Deferred policy acquisition costs ............................. 5,389 5,284 5,445 5,525
Other assets .................................................. 10,951 11,654 11,500 13,798
Separate account assets ....................................... 82,217 79,066 79,697 74,523
------- ------- ------- -------
Total assets .............................................. 202,826 201,237 230,221 223,717
======= ======= ======= =======
Liabilities:
Future policy benefits ........................................ 23,274 23,200 41,995 41,932
Policyholders' account balances ............................... 27,320 27,404 38,715 38,206
Unpaid claims and claim adjustment expenses ................... 2,120 2,077 2,060 2,005
Securities sold under agreements to repurchase ................ 11,162 11,169 10,262 9,479
Cash collateral for loaned securities ......................... 9,283 8,611 7,626 6,264
Income taxes payable .......................................... 1,041 1,468 1,006 1,550
Broker-dealer related payables ................................ 5,965 5,130 5,206 6,571
Securities sold but not yet purchased ......................... 4,959 5,186 3,979 3,057
Short term debt ............................................... 10,893 11,922 9,440 9,720
Long term debt ................................................ 1,476 2,058 3,047 2,983
Other liabilities ............................................. 9,375 9,285 12,401 12,744
Separate account liabilities .................................. 82,217 79,066 79,697 74,523
------- ------- ------- -------
Total liabilities ......................................... 189,085 186,576 215,434 209,034
------- ------- ------- -------
Attributed Equity:
Accumulated other comprehensive income (loss) ................. 497 753 827 1,102
Attributed equity ............................................. 13,244 13,908 13,960 13,581
------- ------- ------- -------
Total attributed equity .................................... 13,741 14,661 14,787 14,683
------- ------- ------- -------
Total liabilities and attributed equity ......................... 202,826 201,237 230,221 223,717
======= ======= ======= =======
Page 4
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS - BY DIVISION
(in millions)
Quarter Ended September 30, 2001
----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Revenues(1):
Premiums ................................................ 2,302 561 650 1,081 -- 10
Policy charges and fee income ........................... 456 305 68 84 -- (1)
Net investment income ................................... 1,288 304 671 170 19 124
Commissions, investment management fees, and other income 992 668 110 118 273 (177)
------ ------ ------ ------ ------ ------
Total revenues ....................................... 5,038 1,838 1,499 1,453 292 (44)
------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 2,316 554 919 835 -- 8
Interest credited to policyholder account balances ...... 433 96 307 29 -- 1
Interest expense ........................................ 69 2 3 1 3 60
Deferral of acquisition costs ........................... (325) (202) (7) (133) -- 17
Amortization of acquisition costs ....................... 255 230 2 44 -- (21)
Securities operations non-interest expenses ............. 771 558 -- 125 70 18
General and administrative expenses ..................... 1,263 553 272 372 174 (108)
------ ------ ------ ------ ------ ------
Total benefits and expenses .......................... 4,782 1,791 1,496 1,273 247 (25)
------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 256 47 3 180 45 (19)
====== ====== ====== ====== ====== ======
Quarter Ended September 30, 2000
----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Revenues(1):
Premiums ................................................ 1,445 493 528 423 -- 1
Policy charges and fee income ........................... 398 329 48 23 -- (2)
Net investment income ................................... 1,312 327 686 48 14 237
Commissions, investment management fees, and other income 1,230 775 116 160 310 (131)
------ ------ ------ ------ ------ ------
Total revenues ....................................... 4,385 1,924 1,378 654 324 105
------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 1,447 453 658 329 -- 7
Interest credited to policyholder account balances ...... 414 99 314 1 -- --
Interest expense ........................................ 132 1 11 2 -- 118
Deferral of acquisition costs ........................... (306) (221) (6) (99) -- 20
Amortization of acquisition costs ....................... 206 190 2 32 -- (18)
Securities operations non-interest expenses ............. 824 580 -- 140 73 31
General and administrative expenses ..................... 1,255 656 269 173 185 (28)
------ ------ ------ ------ ------ ------
Total benefits and expenses .......................... 3,972 1,758 1,248 578 258 130
------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 413 166 130 76 66 (25)
====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses, and revenues of
divested businesses. Benefits and expenses exclude charges related to realized
investment gains net of losses, benefits and expenses of divested businesses,
sales practices remedies and costs, and demutualization costs and expenses.
Page 5
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS - BY DIVISION
(in millions)
Nine Months Ended September 30, 2001
----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Revenues (1):
Premiums ......................................... 6,013 1,681 1,882 2,438 -- 12
Policy charges and fee income .................... 1,298 941 176 186 -- (5)
Net investment income ............................ 3,937 940 2,064 349 62 522
Commissions, investment management fees,
and other income ............................... 3,264 2,096 309 396 869 (406)
-------- -------- -------- -------- -------- --------
Total revenues ................................ 14,512 5,658 4,431 3,369 931 123
-------- -------- -------- -------- -------- --------
Benefits and Expenses(1):
Insurance and annuity benefits ................... 6,042 1,531 2,565 1,924 -- 22
Interest credited to policyholder account
balances ........................................ 1,236 298 890 47 -- 1
Interest expense ................................. 277 7 9 5 11 245
Deferral of acquisition costs .................... (981) (637) (20) (390) -- 66
Amortization of acquisition costs ................ 709 645 9 117 -- (62)
Securities operations non-interest expenses ...... 2,463 1,766 -- 383 228 86
General and administrative expenses .............. 3,676 1,725 819 885 537 (290)
-------- -------- -------- -------- -------- --------
Total benefits and expenses ................... 13,422 5,335 4,272 2,971 776 68
-------- -------- -------- -------- -------- --------
Adjusted operating income before income taxes ...... 1,090 323 159 398 155 55
======== ======== ======== ======== ======== ========
Nine Months Ended September 30, 2000
-----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Revenues (1):
Premiums ......................................... 4,328 1,458 1,634 1,235 -- 1
Policy charges and fee income .................... 1,192 981 152 66 -- (7)
Net investment income ............................ 3,908 1,019 2,106 140 30 613
Commissions, investment management fees,
and other income ............................... 3,999 2,581 324 512 975 (393)
-------- -------- -------- -------- -------- --------
Total revenues ................................ 13,427 6,039 4,216 1,953 1,005 214
-------- -------- -------- -------- -------- --------
Benefits and Expenses (1):
Insurance and annuity benefits ................... 4,432 1,324 2,155 938 -- 15
Interest credited to policyholder account
balances ........................................ 1,225 294 932 2 -- (3)
Interest expense ................................. 330 2 36 2 -- 290
Deferral of acquisition costs .................... (887) (656) (19) (295) -- 83
Amortization of acquisition costs ................ 593 536 10 108 -- (61)
Securities operations non-interest expenses ...... 2,565 1,787 -- 439 236 103
General and administrative expenses .............. 3,481 1,950 791 497 533 (290)
-------- -------- -------- -------- -------- --------
Total benefits and expenses ................... 11,739 5,237 3,905 1,691 769 137
-------- -------- -------- -------- -------- --------
Adjusted operating income before income taxes ...... 1,688 802 311 262 236 77
======== ======== ======== ======== ======== ========
(1) Revenues exclude realized investment gains, net of losses, and revenues of
divested businesses. Benefits and expenses exclude charges related to realized
investment gains net of losses, benefits and expenses of divested businesses,
sales practices remedies and costs, and demutualization costs and expenses.
Page 6
Prudential Financial, Inc PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
FINANCIAL SERVICES BUSINESSES COMBINING BALANCE SHEETS - BY DIVISION
(in millions)
As of September 30, 2001
-----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Assets:
Total investments ........................... 106,566 24,118 38,384 31,561 5,588 6,915
Broker-dealer related receivables ........... 9,119 6,693 -- 1,214 553 659
Deferred policy acquisition costs ........... 5,525 3,864 78 1,640 -- (57)
Other assets ................................ 27,984 7,440 5,370 9,138 2,719 3,317
Separate account assets ..................... 74,523 26,521 29,435 437 18,743 (613)
------- ------- ------- ------- ------- -------
Total assets ............................. 223,717 68,636 73,267 43,990 27,603 10,221
======= ======= ======= ======= ======= =======
Liabilities:
Future policy benefits ...................... 41,932 3,098 15,692 22,867 -- 275
Policyholders' account balances ............. 38,206 8,478 19,029 10,666 -- 33
Debt ........................................ 12,703 3,484 1,166 1,054 2,021 4,978
Other liabilities ........................... 41,670 19,709 4,888 6,170 6,067 4,836
Separate account liabilities ................ 74,523 26,521 29,435 437 18,743 (613)
------- ------- ------- ------- ------- -------
Total liabilities ......................... 209,034 61,290 70,210 41,194 26,831 9,509
------- ------- ------- ------- ------- -------
Attributed Equity:
Accumulated other comprehensive income (loss) 1,102 503 688 (48) -- (41)
Attributed equity ........................... 13,581 6,843 2,369 2,844 772 753
------- ------- ------- ------- ------- -------
Total attributed equity .................. 14,683 7,346 3,057 2,796 772 712
------- ------- ------- ------- ------- -------
Total liabilities and attributed equity ....... 223,717 68,636 73,267 43,990 27,603 10,221
======= ======= ======= ======= ======= =======
As of December 31, 2000
-----------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- -------- -------- -------- -------- ----------
Assets:
Total investments ........................... 86,242 22,233 42,112 4,823 8,915 8,159
Broker-dealer related receivables ........... 11,860 8,068 -- 1,022 126 2,644
Deferred policy acquisition costs ........... 5,389 3,909 88 1,425 -- (33)
Other assets ................................ 17,118 6,811 2,570 2,657 2,343 2,737
Separate account assets ..................... 82,217 32,202 31,047 443 19,218 (693)
------- ------- ------- ------- ------- -------
Total assets ............................. 202,826 73,223 75,817 10,370 30,602 12,814
======= ======= ======= ======= ======= =======
Liabilities:
Future policy benefits ...................... 23,274 2,913 15,494 4,536 -- 331
Policyholders' account balances ............. 27,320 8,433 18,733 128 -- 26
Debt ........................................ 12,369 3,485 1,049 806 1,807 5,222
Other liabilities ........................... 43,905 19,893 6,841 3,305 9,120 4,746
Separate account liabilities ................ 82,217 32,202 31,047 443 19,218 (693)
------- ------- ------- ------- ------- -------
Total liabilities ......................... 189,085 66,926 73,164 9,218 30,145 9,632
------- ------- ------- ------- ------- -------
Attributed Equity:
Accumulated other comprehensive income (loss) 497 401 143 (61) (2) 16
Attributed equity ........................... 13,244 5,896 2,510 1,213 459 3,166
------- ------- ------- ------- ------- -------
Total attributed equity .................. 13,741 6,297 2,653 1,152 457 3,182
------- ------- ------- ------- ------- -------
Total liabilities and attributed equity ....... 202,826 73,223 75,817 10,370 30,602 12,814
======= ======= ======= ======= ======= =======
Page 7
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
COMBINED STATEMENTS OF OPERATIONS - U. S. CONSUMER DIVISION
(in millions)
Year-to-date 2000 2001
- ----------------- % ---------------- --------------------------
2001 2000 Change 3Q 4Q 1Q 2Q 3Q
- ------ ------ ------ ------ ------ ------ ------
Revenues(1):
1,681 1,458 15% Premiums ....................................... 493 523 545 575 561
941 981 -4% Policy charges and fee income................... 329 326 315 321 305
940 1,019 -8% Net investment income........................... 327 325 333 303 304
Commissions, investment management fees,
2,096 2,581 -19% and other income.............................. 775 775 734 694 668
----- ----- ----- ----- ----- ----- -----
5,658 6,039 -6% Total revenues................................ 1,924 1,949 1,927 1,893 1,838
----- ----- ----- ----- ----- ----- -----
Benefits and Expenses(1):
1,531 1,324 16% Insurance and annuity benefits.................. 453 501 453 524 554
Interest credited to policyholder
298 294 1% account balances.............................. 99 101 103 99 96
7 2 250% Interest expense................................ 1 9 2 3 2
(637) (656) -3% Deferral of acquisition costs................... (221) (211) (219) (216) (202)
645 536 20% Amortization of acquisition costs............... 190 213 222 193 230
1,766 1,787 -1% Securities operations non-interest expenses..... 580 620 582 626 558
1,725 1,950 -12% General and administrative expenses............. 656 778 590 582 553
----- ----- ----- ----- ----- ----- -----
5,335 5,237 2% Total benefits and expenses..................... 1,758 2,011 1,733 1,811 1,791
----- ----- ----- ----- ----- ----- -----
323 802 -60% Adjusted operating income before income taxes... 166 (62) 194 82 47
===== ===== ===== ===== ===== ===== =====
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of
losses.
Page 8
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
COMBINING STATEMENTS OF OPERATIONS - U.S. CONSUMER DIVISION
(in millions)
Quarter Ended September 30, 2001
--------------------------------------------------------------------
Total Retail Investments
U.S. Individual Private Retail Property & --------------------
Consumer Life Client Invest- Casualty Mutual
Division Insurance Group ments Insurance Funds(2) Annuities
------ -------- ------ ------ --------- ------- -----------
Revenues(1):
Premiums ................................................ 561 71 -- 12 478 -- 12
Policy charges and fee income ........................... 305 248 -- 57 -- -- 57
Net investment income ................................... 304 95 62 108 39 1 107
Commissions, investment management fees, and other income 668 35 446 182 5 163 19
------ ------ ------ ------ ------ ------ ------
Total revenues ....................................... 1,838 449 508 359 522 164 195
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 554 165 -- 28 361 -- 28
Interest credited to policyholder account balances ...... 96 33 -- 63 -- -- 63
Interest expense ........................................ 2 -- -- 2 -- 2 --
Deferral of acquisition costs ........................... (202) (74) -- (33) (95) (9) (24)
Amortization of acquisition costs ....................... 230 60 -- 71 99 20 51
Securities operations non-interest expenses ............. 558 -- 558 -- -- -- --
General and administrative expenses ..................... 553 189 6 206 152 138 68
------ ------ ------ ------ ------ ------ ------
Total benefits and expenses ........................... 1,791 373 564 337 517 151 186
------ ------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 47 76 (56) 22 5 13 9
====== ====== ====== ====== ====== ====== ======
Quarter Ended September 30, 2000
-----------------------------------------------------------------------
Total Retail Investments
U.S. Individual Private Retail Property & --------------------
Consumer Life Client Invest- Casualty Mutual
Division Insurance Group ments Insurance Funds(2) Annuities
-------- ---------- ------ ------ --------- ------- -----------
Revenues(1):
Premiums ................................................ 493 54 -- 16 423 -- 16
Policy charges and fee income ........................... 329 258 -- 71 -- -- 71
Net investment income ................................... 327 93 73 114 47 -- 114
Commissions, investment management fees, and other income 775 33 541 201 -- 179 22
------ ------ ------ ------ ------ ------ ------
Total revenues ....................................... 1,924 438 614 402 470 179 223
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 453 157 -- 35 261 -- 35
Interest credited to policyholder account balances ...... 99 33 -- 66 -- -- 66
Interest expense ........................................ 1 -- -- 1 -- 2 (1)
Deferral of acquisition costs ........................... (221) (70) -- (45) (106) (14) (31)
Amortization of acquisition costs ....................... 190 39 -- 54 97 19 35
Securities operations non-interest expenses ............. 580 -- 580 -- -- -- --
General and administrative expenses ..................... 656 268 6 229 153 146 83
------ ------ ------ ------ ------ ------ ------
Total benefits and expenses ........................... 1,758 427 586 340 405 153 187
------ ------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 166 11 28 62 65 26 36
====== ====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
(2) Includes wrap-fee products and unit investment trusts.
Page 9
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
COMBINING STATEMENTS OF OPERATIONS - U.S. CONSUMER DIVISION
(in millions)
Nine Months Ended September 30, 2001
-----------------------------------------------------------------------
Total Retail Investments
U.S. Individual Private Retail Property & --------------------
Consumer Life Client Invest- Casualty Mutual
Division Insurance Group ments Insurance Funds(2) Annuities
-------- --------- ------ ------ --------- ----- -----------
Revenues(1):
Premiums ................................................ 1,681 254 -- 38 1,389 -- 38
Policy charges and fee income ........................... 941 755 -- 186 -- -- 186
Net investment income ................................... 940 291 189 338 122 3 335
Commissions, investment management fees, and other income 2,096 94 1,441 553 8 494 59
------ ------ ------ ------ ------ ------ ------
Total revenues ....................................... 5,658 1,394 1,630 1,115 1,519 497 618
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 1,531 489 -- 77 965 -- 77
Interest credited to policyholder account balances ...... 298 102 -- 196 -- -- 196
Interest expense ........................................ 7 1 -- 6 -- 4 2
Deferral of acquisition costs ........................... (637) (227) -- (113) (297) (39) (74)
Amortization of acquisition costs ....................... 645 177 -- 171 297 58 113
Securities operations non-interest expenses ............. 1,766 -- 1,766 -- -- -- --
General and administrative expenses ..................... 1,725 610 24 635 456 418 217
------ ------ ------ ------ ------ ------ ------
Total benefits and expenses ........................... 5,335 1,152 1,790 972 1,421 441 531
------ ------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 323 242 (160) 143 98 56 87
====== ====== ====== ====== ====== ====== ======
Nine Months Ended September 30, 2000
-----------------------------------------------------------------------
Total Retail Investments
U.S. Individual Private Retail Property & --------------------
Consumer Life Client Invest- Casualty Mutual
Division Insurance Group ments Insurance Funds(2) Annuities
------- --------- ------- ------- --------- ------- -----------
Revenues(1):
Premiums ................................................ 1,458 200 -- 55 1,203 -- 55
Policy charges and fee income ........................... 981 765 -- 216 -- -- 216
Net investment income ................................... 1,019 287 232 357 143 3 354
Commissions, investment management fees, and other income 2,581 110 1,863 601 7 537 64
------ ------ ------ ------ ------ ------ ------
Total revenues ....................................... 6,039 1,362 2,095 1,229 1,353 540 689
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses(1):
Insurance and annuity benefits .......................... 1,324 452 -- 109 763 -- 109
Interest credited to policyholder account balances ...... 294 98 -- 196 -- -- 196
Interest expense ........................................ 2 -- -- 2 -- 2 --
Deferral of acquisition costs ........................... (656) (202) -- (178) (276) (61) (117)
Amortization of acquisition costs ....................... 536 134 -- 138 264 59 79
Securities operations non-interest expenses ............. 1,787 -- 1,787 -- -- -- --
General and administrative expenses ..................... 1,950 735 30 748 437 465 283
------ ------ ------ ------ ------ ------ ------
Total benefits and expenses .......................... 5,237 1,217 1,817 1,015 1,188 465 550
------ ------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............. 802 145 278 214 165 75 139
====== ====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
(2) Includes wrap-fee products and unit investment trusts.
Page 10
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
U. S. CONSUMER DIVISION-LIFE INSURANCE SALES AND MUTUAL FUNDS, WRAP-FEE
PRODUCTS AND ANNUITY ASSETS UNDER MANAGEMENT
(in millions)
Year-to-date
---------------------
2001 2000
------- -------
INDIVIDUAL LIFE INSURANCE SALES (1):
174 208 Variable and universal life
182 13 COLI
32 42 Term life
------ -------
388 263 Total
====== =======
MUTUAL FUND, WRAP-FEE PRODUCT AND ANNUITY SALES
AND ASSETS UNDER MANAGEMENT:
Mutual Funds:
57,764 55,245 Beginning total mutual funds assets
4,337 4,113 Sales (other than money market)
(3,415) (4,356) Redemptions (other than money market)
(4,038) 2,052 Reinvestment of distributions and change in market value
2,303 700 Net money market sales
------ -------
56,951 57,754 Ending total mutual funds assets
====== =======
922 (243) Net Mutual Funds sales (redemptions) other than money market
====== =======
Wrap-fee Products:
19,621 16,723 Beginning total Wrap-fee product assets
5,889 7,977 Sales
(4,718) (4,353) Redemptions
(4,651) 74 Reinvestment of distributions and change in market value
------ -------
16,141 20,421 Ending total Wrap-fee product assets
1,168 1,840 Unit investment trust assets at end of period
------ -------
17,309 22,261 Total wrap-fee and unit investment trust assets at end of period
====== =======
1,171 3,624 Net wrap-fee product sales (redemptions)
====== =======
Variable Annuities:
21,059 22,614 Beginning total account value
941 1,426 Sales, excluding exchanges
- 476 Exchange sales
(1,808) (2,389) Surrenders, withdrawals and exchange redemptions
(3,002) 102 Change in market value, interest credited, and other activity
------ -------
17,190 22,229 Ending total account value
====== =======
(867) (487) Net sales (redemptions)
====== =======
Fixed Annuities:
2,926 3,020 Beginning total account value
89 191 Sales
(172) (300) Surrenders, withdrawals and exchange redemptions
22 31 Interest credited and other activity
------ -------
2,865 2,942 Ending account value
====== =======
(83) (109) Net sales (redemptions)
====== =======
2000 2001
----------------- ---------------------------
3Q 4Q 1Q 2Q 3Q
------- ------- ------- ------- -------
INDIVIDUAL LIFE INSURANCE SALES (1):
Variable and universal life .................................... 69 78 65 58 51
COLI ........................................................... 7 29 37 28 117
Term life ...................................................... 15 17 10 11 11
------- ------- ------- ------- -------
Total....................................................... 91 124 112 97 179
======= ======= ======= ======= =======
MUTUAL FUND, WRAP-FEE PRODUCT AND ANNUITY SALES
AND ASSETS UNDER MANAGEMENT:
Mutual Funds:
Beginning total mutual funds assets .......................... 55,100 57,754 57,764 58,168 59,618
Sales (other than money market) .............................. 924 1,265 1,324 2,106 907
Redemptions (other than money market) ........................ (1,241) (1,205) (1,202) (1,103) (1,110)
Reinvestment of distributions and change in market value ..... 1,315 (1,326) (1,254) 1,056 (3,840)
Net money market sales ....................................... 1,656 1,276 1,536 (609) 1,376
------- ------- ------- ------- -------
Ending total mutual funds assets ............................. 57,754 57,764 58,168 59,618 56,951
======= ======= ======= ======= =======
Net Mutual Funds sales (redemptions) other than money market ... (317) 60 122 1,003 (203)
======= ======= ======= ======= =======
Wrap-fee Products:
Beginning total Wrap-fee product assets ...................... 19,121 20,421 19,621 17,335 18,714
Sales ........................................................ 2,634 2,526 2,295 1,968 1,626
Redemptions .................................................. (1,249) (1,352) (1,878) (1,378) (1,462)
Reinvestment of distributions and change in market value ..... (85) (1,974) (2,703) 789 (2,737)
------- ------- ------- ------- -------
Ending total Wrap-fee product assets ......................... 20,421 19,621 17,335 18,714 16,141
Unit investment trust assets at end of period .................. 1,840 1,508 1,552 1,420 1,168
------- ------- ------- ------- -------
Total wrap-fee and unit investment trust assets at end of period 22,261 21,129 18,887 20,134 17,309
======= ======= ======= ======= =======
Net wrap-fee product sales (redemptions) ....................... 1,385 1,174 417 590 164
======= ======= ======= ======= =======
Variable Annuities:
Beginning total account value ................................ 22,241 22,229 21,059 19,118 19,523
Sales, excluding exchanges ................................... 403 383 339 328 274
Exchange sales ............................................... 11 5 -- -- --
Surrenders, withdrawals and exchange redemptions ............. (628) (600) (665) (591) (552)
Change in market value, interest credited, and other activity 202 (958) (1,615) 668 (2,055)
------- ------- ------- ------- -------
Ending total account value ................................... 22,229 21,059 19,118 19,523 17,190
======= ======= ======= ======= =======
Net sales (redemptions) ...................................... (214) (212) (326) (263) (278)
======= ======= ======= ======= =======
Fixed Annuities:
Beginning total account value ................................ 2,945 2,942 2,926 2,889 2,872
Sales ........................................................ 49 30 30 27 32
Surrenders, withdrawals and exchange redemptions ............. (65) (61) (69) (55) (48)
Interest credited and other activity ......................... 13 15 2 11 9
------- ------- ------- ------- -------
Ending account value ......................................... 2,942 2,926 2,889 2,872 2,865
======= ======= ======= ======= =======
Net sales (redemptions) ...................................... (16) (31) (39) (28) (16)
======= ======= ======= ======= =======
(1) Statutory first year premiums and deposits.
Page 11
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
U.S. CONSUMER DIVISION - LIFE INSURANCE, MUTUAL FUNDS, WRAP-FEE PRODUCTS,
AND ANNUITY SALES BY DISTRIBUTION CHANNEL
(in millions)
Year-to-date
- -----------------------------
2001 2000
- -------------- -------------
INDIVIDUAL LIFE INSURANCE SALES(1) BY
DISTRIBUTION CHANNEL
167 191 Prudential Agents
221 72 Third party distribution
- -------------- -------------
388 263 Total
============== =============
MUTUAL FUNDS, WRAP-FEE PRODUCTS AND ANNUITY
SALES BY DISTRIBUTION CHANNEL
Mutual funds, excluding wrap-fee products (2):
----------------------------------------------
593 909 Prudential Agents
1,302 2,300 Financial Advisors
2,372 817 Third-party distributors
70 87 Other
- -------------- -------------
4,337 4,113 Total
============== =============
Wrap-fee products:
------------------
323 291 Prudential Agents
5,433 7,467 Financial Advisors
133 219 Third-party distributors
- -------------- -------------
5,889 7,977 Total
============== =============
Variable and Fixed Annuities:
-----------------------------
846 1,769 Prudential Agents
176 322 Financial Advisors
8 2 Third-party distributors
- -------------- -------------
1,030 2,093 Total
============== =============
2000 2001
-------------- ----------------------
3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ ------
INDIVIDUAL LIFE INSURANCE SALES(1) BY
DISTRIBUTION CHANNEL
Prudential Agents ........................... 62 68 57 54 56
Third party distribution .................... 29 56 55 43 123
------ ------ ------ ------ ------
Total ................................. 91 124 112 97 179
====== ====== ====== ====== ======
MUTUAL FUNDS, WRAP-FEE PRODUCTS AND ANNUITY
SALES BY DISTRIBUTION CHANNEL
Mutual funds, excluding wrap-fee products (2):
- ----------------------------------------------
Prudential Agents ........................... 238 214 233 199 161
Financial Advisors .......................... 450 630 575 429 298
Third-party distributors .................... 232 379 445 1,470 457
Other ....................................... 4 42 71 8 (9)
------ ------ ------ ------ ------
Total ................................. 924 1,265 1,324 2,106 907
====== ====== ====== ====== ======
Wrap-fee products:
- ------------------
Prudential Agents ........................... 104 115 109 110 104
Financial Advisors .......................... 2,476 2,366 2,138 1,807 1,488
Third-party distributors .................... 54 45 48 51 34
------ ------ ------ ------ ------
Total ................................. 2,634 2,526 2,295 1,968 1,626
====== ====== ====== ====== ======
Variable and Fixed Annuities:
- -----------------------------
Prudential Agents ........................... 392 317 296 293 257
Financial Advisors .......................... 71 99 72 58 46
Third-party distributors .................... -- 2 1 4 3
------ ------ ------ ------ ------
Total ................................. 463 418 369 355 306
====== ====== ====== ====== ======
(1) Statutory first year premiums and deposits.
(2) Other than money market.
Page 12
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
U.S. CONSUMER DIVISION -- ACCOUNT VALUE ACTIVITY
(in millions)
Year-to-date
--------------------
2001 2000
------ ------
INDIVIDUAL LIFE INSURANCE:
Policyholders' Account Balances:
3,526 3,303 Beginning balance
566 625 Premiums and deposits
65 64 Interest credited
(505) (608) Surrenders and withdrawals
82 116 Net transfers (to) from separate account
(45) (45) Policy charges
(25) 15 Benefits and other
------ ------
3,664 3,470 Ending balance
====== ======
Separate Account Liabilities:
13,892 14,051 Beginning balance
1,355 1,198 Premiums and deposits
(1,946) 250 Change in market value and interest credited
(468) (448) Surrenders and withdrawals
(97) (115) Net transfers (to) from general account
(641) (643) Policy charges
(74) (61) Benefits and other
------ ------
12,021 14,232 Ending balance
====== ======
INDIVIDUAL ANNUITIES:
Account Values in General Account:
5,677 5,842 Beginning balance
1,030 2,093 Premiums and deposits
233 239 Interest credited
(1,980) (2,689) Surrenders and withdrawals
758 377 Net transfers (to) from separate account
(3) (3) Policy charges
(149) (147) Benefits and other
------ ------
5,566 5,712 Ending balance
====== ======
Account Values in Separate Account:
18,308 19,792 Beginning balance
717 1,668 Premiums and deposits
(2,894) 235 Change in market value and interest credited
(1,586) (2,075) Surrenders and withdrawals
111 30 Net transfers (to) from general account
(167) (191) Policy charges
- - Benefits and other
------ ------
14,489 19,459 Ending balance
====== ======
2000 2001
----------------- ---------------------------
3Q 4Q 1Q 2Q 3Q
------- ------- ------- ------- -------
INDIVIDUAL LIFE INSURANCE:
Policyholders' Account Balances:
Beginning balance .......................... 3,427 3,470 3,526 3,578 3,628
Premiums and deposits ...................... 197 187 191 181 194
Interest credited .......................... 21 24 24 21 20
Surrenders and withdrawals ................. (197) (175) (172) (174) (159)
Net transfers (to) from separate account ... 41 33 32 26 24
Policy charges ............................. (14) (15) (14) (14) (17)
Benefits and other ......................... (5) 2 (9) 10 (26)
------- ------- ------- ------- -------
Ending balance ............................. 3,470 3,526 3,578 3,628 3,664
======= ======= ======= ======= =======
Separate Account Liabilities:
Beginning balance .......................... 13,948 14,232 13,892 12,849 13,391
Premiums and deposits ...................... 401 444 447 417 491
Change in market value and interest credited 286 (373) (1,059) 531 (1,418)
Surrenders and withdrawals ................. (127) (142) (172) (179) (117)
Net transfers (to) from general account .... (40) (32) (20) 19 (96)
Policy charges ............................. (215) (215) (216) (215) (210)
Benefits and other ......................... (21) (22) (23) (31) (20)
------- ------- ------- ------- -------
Ending balance ............................. 14,232 13,892 12,849 13,391 12,021
======= ======= ======= ======= =======
INDIVIDUAL ANNUITIES:
Account Values in General Account:
Beginning balance .......................... 5,721 5,712 5,677 5,624 5,587
Premiums and deposits ...................... 463 418 369 355 306
Interest credited .......................... 81 82 78 79 76
Surrenders and withdrawals ................. (693) (661) (734) (646) (600)
Net transfers (to) from separate account ... 187 163 283 235 240
Policy charges ............................. (1) (2) (1) (1) (1)
Benefits and other ......................... (46) (35) (48) (59) (42)
------- ------- ------- ------- -------
Ending balance ............................. 5,712 5,677 5,624 5,587 5,566
======= ======= ======= ======= =======
Account Values in Separate Account:
Beginning balance .......................... 19,465 19,459 18,308 16,383 16,808
Premiums and deposits ...................... 336 449 265 246 206
Change in market value and interest credited 245 (928) (1,584) 717 (2,027)
Surrenders and withdrawals ................. (553) (511) (569) (536) (481)
Net transfers (to) from general account .... 30 (101) 21 55 35
Policy charges ............................. (64) (60) (58) (57) (52)
Benefits and other ......................... -- -- -- -- --
------- ------- ------- ------- -------
Ending balance ............................. 19,459 18,308 16,383 16,808 14,489
======= ======= ======= ======= =======
Page 13
Prudential Financial, Inc. PRUDENTIAL [LOGO] FINANCIAL
Quarterly Financial Supplement
Third Quarter 2001
U.S. CONSUMER DIVISION - DEFERRED POLICY ACQUISITION COSTS
(in millions)
Year-to-date
- -----------------------------
2001 2000
- -------------- -------------
INDIVIDUAL LIFE INSURANCE:
3,090 3,014 Beginning balance
227 202 Capitalization
(177) (134) Amortization - operating results
- - Amortization - realized investment gains and losses
(25) (13) Impact of unrealized (gains) or losses on AFS securities
- - Other
- -------------- -------------
3,115 3,069 Ending balance
============== =============
INDIVIDUAL ANNUITIES:
682 693 Beginning balance
74 117 Capitalization
(113) (79) Amortization - operating results
(1) 3 Amortization - realized investment gains and losses
(30) (10) Impact of unrealized (gains) or losses on AFS securities
- - Other
- -------------- -------------
612 724 Ending balance
============== =============
PROPERTY & CASUALTY INSURANCE:
137 110 Beginning balance
297 276 Capitalization
(297) (264) Amortization - operating results
- - Amortization - realized investment gains and losses
- - Impact of unrealized (gains) or losses on AFS securities
- 21 Other
- -------------- -------------
137 143 Ending balance
============== =============
TOTAL U.S. CONSUMER DIVISION:
3,909 3,817 Beginning balance
598 595 Capitalization
(587) (477) Amortization - operating results
(1) 3 Amortization - realized investment gains and losses
(55) (23) Impact of unrealized (gains) or losses on AFS securities
- 21 Other
- -------------- -------------
3,864 3,936 Ending balance
============== =============
2000 2001
--------------- ------------------------
3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ ------
INDIVIDUAL LIFE INSURANCE:
Beginning balance ...................................... 3,048 3,069 3,090 3,088 3,117
Capitalization ......................................... 70 75 76 77 74
Amortization - operating results ....................... (39) (38) (62) (55) (60)
Amortization - realized investment gains and losses .... -- -- -- -- --
Impact of unrealized (gains) or losses on AFS securities (10) (16) (16) 7 (16)
Other .................................................. -- -- -- -- --
------ ------ ------ ------ ------
Ending balance ......................................... 3,069 3,090 3,088 3,117 3,115
====== ====== ====== ====== ======
INDIVIDUAL ANNUITIES:
Beginning balance ...................................... 739 724 682 648 655
Capitalization ......................................... 31 25 26 24 24
Amortization - operating results ....................... (35) (54) (41) (21) (51)
Amortization - realized investment gains and losses .... (1) 3 (1) (2) 2
Impact of unrealized (gains) or losses on AFS securities (10) (16) (18) 6 (18)
Other .................................................. -- -- -- -- --
------ ------ ------ ------ ------
Ending balance ......................................... 724 682 648 655 612
====== ====== ====== ====== ======
PROPERTY & CASUALTY INSURANCE:
Beginning balance ...................................... 134 143 137 137 141
Capitalization ......................................... 106 95 100 102 95
Amortization - operating results ....................... (97) (101) (100) (98) (99)
Amortization - realized investment gains and losses .... -- -- -- -- --
Impact of unrealized (gains) or losses on AFS securities -- -- -- -- --
Other .................................................. -- -- -- -- --
------ ------ ------ ------ ------
Ending balance ......................................... 143 137 137 141 137
====== ====== ====== ====== ======
TOTAL U.S. CONSUMER DIVISION:
Beginning balance ...................................... 3,921 3,936 3,909 3,873 3,913
Capitalization ......................................... 207 195 202 203 193
Amortization - operating results ....................... (171) (193) (203) (174) (210)
Amortization - realized investment gains and losses .... (1) 3 (1) (2) 2
Impact of unrealized (gains) or losses on AFS securities (20) (32) (34) 13 (34)
Other .................................................. -- -- -- -- --
------ ------ ------ ------ ------
Ending balance ......................................... 3,936 3,909 3,873 3,913 3,864
====== ====== ====== ====== ======
Page 14
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
U.S. CONSUMER DIVISION - SUPPLEMENTARY INFORMATION FOR INDIVIDUAL
LIFE INSURANCE AND PRIVATE CLIENT GROUP
(dollar amounts in millions)
Year-to-date 2000 2001
- ---------------- -------------- -----------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
- ------ -------- ----- ----- ----- ----- -----
Individual Life Insurance:
Policy Surrender Experience:
461 497 Cash value of surrenders ................................... 141 144 180 149 132
Cash value of surrenders as a percentage of mean future
policy benefits, policyholders' account balances,
3.7% 3.8% and separate account balances ........................... 3.2% 3.3% 4.3% 3.5% 3.2%
Death claims per $1,000 of in-force: (1)
2.14 2.01 Variable and universal life ............................... 2.06 2.22 2.22 1.65 2.53
1.71 1.22 Term life ................................................. 2.05 1.10 1.07 1.25 2.78
2.02 1.81 Total, Individual Life Insurance segment .................. 2.10 1.88 1.88 1.55 2.61
Year-to-date 2000 2001
- ---------------- -------------- -----------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
- ------ -------- ----- ----- ----- ----- -----
Private Client Group:
Non-Interest Revenues:
1,014 1,404 Commissions ................................................ 404 385 370 345 299
330 340 Fees ....................................................... 118 124 115 103 112
97 119 Other non-interest revenues ................................ 19 18 30 32 35
- ----- ----- ----- ----- ----- ----- -----
1,441 1,863 Total non-interest revenues ............................. 541 527 515 480 446
===== ===== ===== ===== ===== ===== =====
4,590 6,636 Average customer margin lending balances ...................... 6,532 6,251 5,223 4,376 4,200
(1) Annualized, for interim reporting periods.
Page 15
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
U.S. CONSUMER DIVISION - SUPPLEMENTARY INFORMATION FOR
PROPERTY AND CASUALTY INSURANCE
(dollar amounts in millions)
Year-to-date 2000 2001
- ------------------- -------------- -----------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
- ------ -------- ----- ----- ----- ----- -----
Earned premium:
1,030 863 Automobile ................................................... 319 330 328 346 356
334 316 Homeowners' .................................................. 96 97 109 112 113
25 24 Other ........................................................ 8 9 8 8 9
------- ------- ----- ----- ----- ----- -----
1,389 1,203 Total earned premium ........................................ 423 436 445 466 478
======= ======= ===== ===== ===== ===== =====
Loss ratio(1)(2):
66.9% 63.3% Automobile .................................................. 61.1% 58.3% 56.9% 74.1% 65.6%
79.1% 69.2% Homeowners' ................................................. 71.9% 82.9% 79.5% 60.2% 108.1%
69.5% 64.2% Overall ................................................... 61.6% 64.7% 61.8% 70.5% 75.6%
Expense ratio(1)(3):
31.2% 33.0% Automobile .................................................. 37.7% 37.9% 32.0% 31.2% 30.3%
36.8% 40.7% Homeowners' ................................................. 42.8% 62.6% 43.3% 34.8% 34.3%
32.5% 35.0% Overall ................................................... 39.0% 43.5% 34.3% 32.0% 31.3%
Combined ratio(4):
98.1% 96.3% Automobile .................................................. 98.8% 96.2% 88.9% 105.3% 95.9%
115.9% 109.9% Homeowners' ................................................. 114.7% 145.5% 122.8% 95.0% 142.4%
102.0% 99.2% Overall ................................................... 100.6% 108.2% 96.1% 102.5% 106.9%
44.1 35.1 Catastrophe losses (5) ...................................... 7.4 10.0 3.3 26.6 14.2
3.2% 2.7% Effect of catastrophic losses on combined ratio.............. 1.8% 2.3% 0.7% 5.7% 3.0%
Accident year combined ratio (6) ............................ 110.0% 113.0% 106.1% 106.0% 106.9%
(1) Based on statutory data.
(2) Represents ratio of incurred losses and loss adjustment expenses to net
earned premium.
(3) Represents ratio of operating expenses to net written premium.
(4) Represents the sum of loss ratio and expense ratio above.
(5) Represents losses and loss adjustment expenses attributable to catastrophes
that are included in the combined ratio. We classify catastrophes as those
events that are declared catastrophes by Property Claims Services, which is
an industry organization that declares and tracks all property-related
catastrophes causing insured property damage in the United States.
(6) Accident year combined ratios for annual periods reflect the combined ratios
for accidents that occur in the indicated calendar year, restated to reflect
subsequent changes in loss estimates for those claims based on cumulative
loss data through the most recent balance sheet date. Accident year combined
ratios for interim periods reflect the combined ratios for policies written
in those periods, based on cumulative loss data through the respective
balance sheet date of the indicated year. These ratios reflect any
recoveries from stop-loss reinsurance contracts during the indicated
periods.
Page 16
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
COMBINED STATEMENTS OF OPERATIONS - EMPLOYEE BENEFITS DIVISION
(in millions)
Year-to-date 2000 2001
----------------- % -------------- --------------------------
2001 2000 Change 3Q 4Q 1Q 2Q 3Q
------ ------- ----- ----- ------ ------ ------
Revenues (1):
1,882 1,634 15% Premiums ............................................ 528 556 610 622 650
176 152 16% Policy charges and fee income ....................... 48 98 53 55 68
2,064 2,106 -2% Net investment income ............................... 686 711 705 688 671
Commissions, investment management fees, and
309 324 -5% other income ...................................... 116 105 93 106 110
- ------ ------ ------ ------ ------ ------ ------
4,431 4,216 5% Total revenues ................................... 1,378 1,470 1,461 1,471 1,499
- ------ ------ ------ ------ ------ ------ ------
Benefits and Expenses (1):
2,565 2,155 19% Insurance and annuity benefits ...................... 658 817 811 835 919
890 932 -5% Interest credited to policyholder account balances .. 314 292 279 304 307
9 36 -75% Interest expense .................................... 11 7 2 4 3
(20) (19) 5% Deferral of acquisition costs ....................... (6) (7) (6) (7) (7)
9 10 -10% Amortization of acquisition costs ................... 2 13 3 4 2
819 791 4% General and administrative expenses ................. 269 272 268 279 272
- ------ ------ ------ ------ ------ ------ ------
4,272 3,905 9% Total benefits and expenses ....................... 1,248 1,394 1,357 1,419 1,496
- ------ ------ ------ ------ ------ ------ ------
159 311 -49% Adjusted operating income before income taxes ......... 130 76 104 52 3
====== ====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 17
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
COMBINING STATEMENTS OF OPERATIONS - EMPLOYEE BENEFITS DIVISION
(in millions)
Nine Months Ended September 30, 2001 Quarter Ended September 30, 2001
------------------------------------ ---------------------------------
Total Total
Employee Other Employee Other
Benefits Group Employee Benefits Group Employee
Division Insurance Benefits Division Insurance Benefits
---------- --------- --------- --------- --------- ---------
Revenues (1):
Premiums .................................................. 1,882 1,869 13 650 658 (8)
Policy charges and fee income ............................. 176 119 57 68 50 18
Net investment income ..................................... 2,064 407 1,657 671 134 537
Commissions, investment management fees,
and other income ........................................ 309 17 292 110 6 104
------ ------ ------ ------ ------ ------
Total revenues ......................................... 4,431 2,412 2,019 1,499 848 651
------ ------ ------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits ............................ 2,565 1,872 693 919 688 231
Interest credited to policyholder account balances ........ 890 163 727 307 57 250
Interest expense .......................................... 9 (1) 10 3 -- 3
Deferral of acquisition costs ............................. (20) (11) (9) (7) (4) (3)
Amortization of acquisition costs ......................... 9 1 8 2 -- 2
General and administrative expenses ....................... 819 339 480 272 114 158
------ ------ ------ ------ ------ ------
Total benefits and expenses ............................. 4,272 2,363 1,909 1,496 855 641
------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............... 159 49 110 3 (7) 10
====== ====== ====== ====== ====== ======
Nine Months Ended September 30, 2000 Quarter Ended September 30, 2000
------------------------------------ ---------------------------------
Total Total
Employee Other Employee Other
Benefits Group Employee Benefits Group Employee
Division Insurance Benefits Division Insurance Benefits
---------- --------- --------- --------- --------- ---------
Revenues (1):
Premiums .................................................. 1,634 1,574 60 528 500 28
Policy charges and fee income ............................. 152 93 59 48 31 17
Net investment income ..................................... 2,106 354 1,752 686 118 568
Commissions, investment management fees,
and other income ........................................ 324 18 306 116 6 110
------ ------ ------ ------ ------ ------
Total revenues ........................................... 4,216 2,039 2,177 1,378 655 723
------ ------ ------ ------ ------ -----
Benefits and Expenses (1):
Insurance and annuity benefits ............................ 2,155 1,504 651 658 443 215
Interest credited to policyholder account balances ........ 932 145 787 314 51 263
Interest expense .......................................... 36 -- 36 11 -- 11
Deferral of acquisition costs ............................. (19) (8) (11) (6) (3) (3)
Amortization of acquisition costs ......................... 10 -- 10 2 -- 2
General and administrative expenses ....................... 791 308 483 269 107 162
------ ------ ------ ------ ------ ------
Total benefits and expenses ............................. 3,905 1,949 1,956 1,248 598 650
------ ------ ------ ------ ------ ------
Adjusted operating income before income taxes ............... 311 90 221 130 57 73
====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 18
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
EMPLOYEE BENEFITS DIVISION - SALES RESULTS AND ASSETS UNDER MANAGEMENT
(in millions)
Year-to-date 2000 2001
- ------------------ ------------------ -----------------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
- ------- ------- ------- ------- ------- ------- -------
GROUP INSURANCE NEW ANNUALIZED PREMIUMS:
368 274 Group life (1) ................................... 58 47 274 30 64
116 137 Group disability (2) ............................. 29 25 64 18 34
- ------- ------- ------- ------- ------- ------- -------
484 411 Total ...................................... 87 72 338 48 98
======= ======= ======= ======= ======= ======= =======
OTHER EMPLOYEE BENEFITS - SALES AND
ASSETS UNDER MANAGEMENT:
Defined Contribution:
26,046 25,788 Beginning total account value .................... 26,609 27,129 26,046 24,473 25,319
2,907 4,032 Sales ............................................ 1,399 1,407 1,255 923 729
(2,784) (2,896) Withdrawals ...................................... (975) (1,041) (1,035) (1,021) (728)
(3,459) 205 Change in market value and interest credited ..... 96 (1,449) (1,793) 944 (2,610)
- ------- ------- ------- ------- ------- ------- -------
22,710 27,129 Ending total account value ....................... 27,129 26,046 24,473 25,319 22,710
======= ======= ======= ======= ======= ======= =======
123 1,136 Net sales ........................................ 424 366 220 (98) 1
======= ======= ======= ======= ======= ======= =======
Asset management of ending total account value:
Proprietary ................................... 20,008 19,132 17,941 18,287 16,501
Non-proprietary ............................... 7,121 6,914 6,532 7,032 6,209
------- ------- ------- ------- -------
Total ....................................... 27,129 26,046 24,473 25,319 22,710
======= ======= ======= ======= =======
Guaranteed Products:
41,577 41,757 Beginning total account value .................... 41,377 41,751 41,577 40,461 39,920
1,866 1,604 Sales ............................................ 392 420 400 1,181 285
(3,569) (4,026) Withdrawals and benefits ......................... (1,072) (1,253) (1,569) (877) (1,123)
1,360 2,175 Change in market value and interest income ....... 851 822 326 646 388
(2,226) 241 Other (3) ........................................ 203 (163) (273) (1,491) (462)
- ------- ------- ------- ------- ------- ------- -------
39,008 41,751 Ending total account value ....................... 41,751 41,577 40,461 39,920 39,008
======= ======= ======= ======= ======= ======= =======
(1,703) (2,422) Net sales ........................................ (680) (833) (1,169) 304 (838)
======= ======= ======= ======= ======= ======= =======
Product composition of ending total account value:
Spread-lending products ....................... 19,351 19,184 19,069 19,020 18,841
Fee-based products ............................ 22,400 22,393 21,392 20,900 20,167
------- ------- ------- ------- -------
Total ....................................... 41,751 41,577 40,461 39,920 39,008
======= ======= ======= ======= =======
(1) Amounts do not include excess premiums, which are group universal life
insurance premiums that build cash value but do not purchase face amounts.
(2) Includes long-term care products.
(3) Changes in asset balances for externally managed accounts.
Page 19
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
EMPLOYEE BENEFITS DIVISION - SUPPLEMENTARY INFORMATION
(dollar amounts in millions)
2000 2001
---------------- ---------------------------
3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ ------
Future Policy Benefits (1):
Group life ........................................ 1,178 1,416 1,414 1,452 1,623
Group disability (2) .............................. 1,472 1,496 1,538 1,557 1,571
Other employee benefits ........................... 12,472 12,582 12,595 12,446 12,498
------ ------ ------ ------ ------
Total ....................................... 15,122 15,494 15,547 15,455 15,692
====== ====== ====== ====== ======
Policyholder Account Balances (1):
Group life ........................................ 3,133 3,344 3,424 3,664 3,764
Group disability (2) .............................. 27 51 45 41 57
Other employee benefits ........................... 15,471 15,338 15,288 15,305 15,208
------ ------ ------ ------ ------
Total ....................................... 18,631 18,733 18,757 19,010 19,029
====== ====== ====== ====== ======
Separate Account Liabilities (1):
Group life ........................................ 7,036 7,130 6,897 7,156 7,246
Group disability (2) .............................. -- -- -- -- --
Other employee benefits ........................... 24,883 23,917 23,591 22,808 22,189
------ ------ ------ ------ ------
Total separate account ...................... 31,919 31,047 30,488 29,964 29,435
====== ====== ====== ====== ======
Group Life Insurance:
Gross premiums, policy charges and fee income (3).. 513 561 565 596 637
Earned premiums, policy charges and fee income .... 411 492 501 529 579
Benefits ratio .................................... 79.3% 82.3% 90.0% 94.7% 96.6%
Administrative operating expense ratio ............ 10.9% 11.6% 10.4% 9.7% 8.8%
Persistency ratio ................................. 95.4% 95.2% 98.8% 98.7% 97.9%
Group Disability Insurance(2):
Gross premiums, policy charges and fee income (3).. 122 125 129 131 141
Earned premiums, policy charges and fee income .... 120 132 125 125 129
Benefits ratio .................................... 97.6% 100.6% 88.5% 97.8% 99.2%
Administrative operating expense ratio ............ 19.9% 14.6% 23.3% 25.2% 22.0%
Persistency ratio ................................. 91.1% 90.6% 92.4% 91.3% 89.4%
(1) As of end of period.
(2) Group disability amounts include long-term care products.
(3) Before returns of premiums to participating policyholders for favorable
claims experience.
Page 20
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL DIVISION
(in millions)
Year-to date 2000 2001
- -------------- % --------------- -----------------------
2001 2000 Change 3Q 4Q 1Q 2Q 3Q
- ------ ------ ------ ------ ------ ------ ------
Revenues (1):
2,438 1,235 97% Premiums ................................................... 423 445 454 903 1,081
186 66 182% Policy charges and fee income .............................. 23 26 24 78 84
349 140 149% Net investment income ...................................... 48 55 50 129 170
396 512 -23% Commissions, investment management fees, and other income... 160 145 144 134 118
- ------ ------ ------ ------ ------ ------ ------
3,369 1,953 73% Total revenues .......................................... 654 671 672 1,244 1,453
- ------ ------ ------ ------ ------ ------ ------
Benefits and Expenses (1):
1,924 938 105% Insurance and annuity benefits ............................ 329 327 337 752 835
47 2 2250% Interest credited to policyholder account balances ........ 1 -- 1 17 29
5 2 150% Interest expense .......................................... 2 2 2 2 1
(390) (295) 32% Deferral of acquisition costs ............................. (99) (109) (114) (143) (133)
117 108 8% Amortization of acquisition costs ......................... 32 38 38 35 44
383 439 -13% Securities operations non-interest expenses ............... 140 147 127 131 125
885 497 78% General and administrative expenses ....................... 173 206 183 330 372
- ------ ------ ------ ------ ------ ------ ------
2,971 1,691 76% Total benefits and expenses ............................. 578 611 574 1,124 1,273
- ------ ------ ------ ------ ------ ------ ------
398 262 52% Adjusted operating income before income taxes ............... 76 60 98 120 180
====== ====== ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 21
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
COMBINING STATEMENTS OF OPERATIONS - INTERNATIONAL DIVISION
(in millions)
Nine Months Ended September 30, 2001
-----------------------------------------------------------------
International
Total International International Securities
International Insurance excl. Insurance - and
Division Gibraltar Life Gibraltar Life (2) Investments
------------- --------------- ------------------ -------------
Revenues (1):
Premiums .................................... 2,438 1,351 1,087 --
Policy charges and fee income ............... 186 71 115 --
Net investment income ....................... 349 105 197 47
Commissions, investment management fees,
and other income .......................... 396 28 2 366
------ ------ ------ ------
Total revenues ............................ 3,369 1,555 1,401 413
------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits .............. 1,924 1,019 905 --
Interest credited to policyholder
account balances .......................... 47 3 44 --
Interest expense ............................ 5 5 -- --
Deferral of acquisition costs ............... (390) (346) (44) --
Amortization of acquisition costs ........... 117 113 3 1
Securities operations non-interest expenses.. 383 -- -- 383
General and administrative expenses ......... 885 507 308 70
------ ------ ------ ------
Total benefits and expenses ............... 2,971 1,301 1,216 454
------ ------ ------ ------
Adjusted operating income before income taxes.. 398 254 185 (41)
====== ====== ====== ======
Nine Months Ended September 30, 2000
-----------------------------------------------------------------
International
Total International International Securities
International Insurance excl. Insurance - and
Division Gibraltar Life Gibraltar Life (2) Investments
------------- --------------- ------------------ -------------
Revenues (1):
Premiums .................................... 1,235 1,235 -- --
Policy charges and fee income ............... 66 66 -- --
Net investment income ....................... 140 94 -- 46
Commissions, investment management fees,
and other income .......................... 512 13 -- 499
------ ------ ------ ------
Total revenues ........................... 1,953 1,408 -- 545
------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits .............. 938 938 -- --
Interest credited to policyholder
account balances ......................... 2 2 -- --
Interest expense ............................ 2 2 -- --
Deferral of acquisition costs ............... (295) (294) -- (1)
Amortization of acquisition costs ........... 108 107 -- 1
Securities operations non-interest expenses.. 439 -- -- 439
General and administrative expenses ......... 497 442 -- 55
------ ------ ------ ------
Total benefits and expenses ................ 1,691 1,197 -- 494
------ ------ ------ ------
Adjusted operating income before income taxes.. 262 211 -- 51
====== ====== ====== ======
Quarter Ended September 30, 2001
--------------------------------------------------------------------
International
Total International International Securities
International Insurance excl. Insurance - and
Division Gibraltar Life Gibraltar Life (2) Investments
--------------- ---------------- ------------------ -----------
Revenues (1):
Premiums .................................... 1,081 458 623 --
Policy charges and fee income ............... 84 25 59 --
Net investment income ....................... 170 37 117 16
Commissions, investment management fees,
and other income .......................... 118 8 1 109
------ ------ ------ ------
Total revenues ............................ 1,453 528 800 125
------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits .............. 835 345 490 --
Interest credited to policyholder
account balances .......................... 29 1 28 --
Interest expense ............................ 1 1 -- --
Deferral of acquisition costs ............... (133) (113) (20) --
Amortization of acquisition costs ........... 44 40 3 1
Securities operations non-interest expenses.. 125 -- -- 125
General and administrative expenses ......... 372 178 173 21
------ ------ ------ ------
Total benefits and expenses ............... 1,273 452 674 147
------ ------ ------ ------
Adjusted operating income before income taxes.. 180 76 126 (22)
====== ====== ====== ======
Quarter Ended September 30, 2000
---------------------------------------------------------------------
International
Total International International Securities
International Insurance excl. Insurance - and
Division Gibraltar Life Gibraltar Life (2) Investments
------------- --------------- ------------------ ------------
Revenues (1):
Premiums .................................... 423 423 -- --
Policy charges and fee income ............... 23 23 -- --
Net investment income ....................... 48 34 -- 14
Commissions, investment management fees,
and other income .......................... 160 4 -- 156
------ ------ ------ ------
Total revenues ........................... 654 484 -- 170
------ ------ ------ ------
Benefits and Expenses (1):
Insurance and annuity benefits .............. 329 329 -- --
Interest credited to policyholder
account balances ......................... 1 1 -- --
Interest expense ............................ 2 2 -- --
Deferral of acquisition costs ............... (99) (99) -- --
Amortization of acquisition costs ........... 32 32 -- --
Securities operations non-interest expenses.. 140 -- -- 140
General and administrative expenses ......... 173 153 -- 20
------ ------ ------ ------
Total benefits and expenses ................ 578 418 -- 160
------ ------ ------ ------
Adjusted operating income before income taxes.. 76 66 -- 10
====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
(2) Results of Gibraltar Life are included from April 2, 2001, the date of
reorganization, through August 31, 2001.
Page 22
PRUDENTIAL [LOGO] FINANCIAL
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
INTERNATIONAL DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION
(dollar amounts in millions unless otherwise noted)
Year-to date 2000 2001
- --------------------------- ---------------- --------------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
- ------------ ------------- ------ ------- ------ ------- -------
INTERNATIONAL INSURANCE OPERATING DATA:
GAAP exchange rate basis (1):
Net premiums, policy charges and fee income:
1,131 1,097 Japan, excluding Gibraltar Life ............ 372 388 394 361 376
1,202 - Gibraltar Life (2) ........................ - - - 520 682
291 204 All other countries ........................ 74 83 84 100 107
- ------------ ------------- ------ ------ ------ ------ ------
2,624 1,301 Total .................................. 446 471 478 981 1,165
============ ============= ====== ====== ====== ====== ======
Annualized new business premiums:
283 244 Japan, excluding Gibraltar Life ........... 83 115 114 92 77
54 - Gibraltar Life (2) ........................ - - - 10 44
159 103 All other countries ........................ 37 47 48 60 51
- ------------ ------------- ------ ------ ------ ------ ------
496 347 Total 120 162 162 162 172
============ ============= ====== ====== ====== ====== ======
Constant exchange rate basis (3):
Net premiums, policy charges and fee income:
1,268 1,091 Japan, excluding Gibraltar Life ............ 372 394 433 412 423
1,368 - Gibraltar Life (2) ........................ - - - 592 776
325 202 All other countries ........................ 74 85 90 114 121
- ------------ ------------- ------ ------ ------ ------ ------
2,961 1,293 Total .................................. 446 479 523 1,118 1,320
============ ============= ====== ====== ====== ====== ======
Annualized new business premiums:
317 243 Japan, excluding Gibraltar Life ............ 84 116 125 105 87
62 - Gibraltar Life (2) ........................ - - - 11 51
179 101 All other countries ........................ 35 49 53 69 57
- ------------ ------------- ------ ------ ------ ------ ------
558 344 Total ................................. 119 165 178 185 195
============ ============= ====== ====== ====== ====== ======
Face amount of individual policies inforce at
end of period (in billions):
Japan, excluding Gibraltar Life ........... 121 126 131 136 140
Gibraltar Life (2) ........................ - - - 299 275
All other countries ........................ 25 28 31 35 38
------ ------ ------ ------ ------
Total ................................. 146 154 162 470 453
====== ====== ====== ====== ======
Number of individual policies in force at end
of period (in thousands):
Japan, excluding Gibraltar Life ............. 772 805 858 892 918
Gibraltar Life (2) ......................... - - - 5,322 5,047
All other countries ......................... 337 376 410 452 492
------ ------ ------ ------ ------
Total .................................. 1,109 1,181 1,268 6,666 6,457
====== ====== ====== ====== ======
(1) Translated based on applicable average exchange rate for the period shown.
(2) Results of Gibraltar Life are included from April 2, 2001, the date of
reorganization, through August 31, 2001.
(3) Translated based on average exchange rates for the year ended December 31,
2000.
Page 23
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
INTERNATIONAL DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION
(dollar amounts in millions unless otherwise noted)
2000 2001
------------------ -------------------------------
3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ -------
International insurance policy persistency (1):
13 months ........................................................ 94.2% 94.0% 93.6% 93.1% 93.1%
25 months ........................................................ 88.0% 88.4% 88.2% 88.9% 88.9%
Number of Life Planners at end of period (2):
Japan .............................................................. 1,770 1,811 1,802 1,853 1,944
All other countries ................................................ 1,598 1,684 1,632 1,837 2,055
------ ------ ------ ------ ------
Total .......................................................... 3,368 3,495 3,434 3,690 3,999
====== ====== ====== ====== ======
Number of International Retail Financial Advisors
at end of period ..................................................... 608 620 643 632 646
Assets managed or administered for customers outside of the
United States at end of period ....................................... 35,587 34,061 32,802 66,388 62,642
(1) Excluding Gibraltar Life.
(2) Excluding Gibraltar Life Advisors.
Page 24
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
COMBINED STATEMENTS OF OPERATIONS - ASSET MANAGEMENT DIVISION
(in millions)
Year-to-date 2000 2001
- ------------- % ----------- --------------------
2001 2000 Change 3Q 4Q 1Q 2Q 3Q
- ----- ----- ---- --- --- --- ---
Revenues (1):
62 30 107% Net investment income ..................................... 14 22 19 24 19
869 975 -11% Commissions, investment management fees, and other income.. 310 317 310 286 273
- ----- ----- ---- --- --- --- ---
931 1,005 -7% Total revenues ......................................... 324 339 329 310 292
- ----- ----- ---- --- --- --- ---
Benefits and Expenses:
11 -- -- Interest expense .......................................... -- 5 4 4 3
228 236 -3% Securities operations non-interest expenses ............... 73 88 73 85 70
537 533 1% General and administrative expenses ....................... 185 206 174 189 174
- ----- ----- ---- --- --- --- ---
776 769 1% Total benefits and expenses ........................... 258 299 251 278 247
- ----- ----- ---- --- --- --- ---
155 236 -34% Adjusted operating income before income taxes ............... 66 40 78 32 45
===== ===== ==== === === === ===
Analysis of revenues by source:
Investment Management and Advisory Services segment:
159 186 -15% Retail customers ....................................... 53 58 53 54 52
294 297 -1% Institutional customers ................................ 127 112 97 104 93
165 164 1% General account ........................................ 48 57 55 51 59
- ----- ----- ---- --- --- --- ---
618 647 -4% Subtotal ........................................ 228 227 205 209 204
313 358 -13% Other Asset Management segment revenues ................... 96 112 124 101 88
- ----- ----- ---- --- --- --- ---
931 1,005 -7% Total revenues ......................................... 324 339 329 310 292
===== ===== ==== === === === ===
Analysis of commissions, investment management fees and
other revenues by type:
Investment Management and Advisory Services segment:
557 598 -7% Asset-based fee ......................................... 196 189 183 188 186
36 38 -5% Transaction-based and other revenues .................... 24 28 14 10 12
- ----- ----- ---- --- --- --- ---
593 636 -7% Subtotal ........................................ 220 217 197 198 198
276 339 -19% Other Asset Management ...................................... 90 100 113 88 75
- ----- ----- ---- --- --- --- ---
869 975 -11% Total ................................................... 310 317 310 286 273
===== ===== ==== === === === ===
(1) Revenues exclude realized investment gains, net of losses.
Page 25
Prudential [LOGO] Financial
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
COMBINING STATEMENTS OF OPERATIONS - ASSET MANAGEMENT DIVISION
(in millions)
Nine Months Ended September 30, 2001 Quarter Ended September 30, 2001
---------------------------------------- ----------------------------------
Total Investment Total Investment
Asset Management Other Asset Management Other
Management & Advisory Asset Management & Advisory Asset
Division Services Management Division Services Management
------------ ------------- ---------- ---------- ---------- ----------
Revenues (1):
Net investment income ..................... 62 25 37 19 6 13
Commissions, investment management
fees, and other income .................. 869 593 276 273 198 75
--- --- --- --- --- ---
Total revenues ......................... 931 618 313 292 204 88
--- --- --- --- --- ---
Benefits and Expenses:
Interest expense .......................... 11 11 -- 3 3 --
Securities operations non-interest expenses 228 -- 228 70 -- 70
General and administrative expenses ....... 537 516 21 174 167 7
--- --- --- --- --- ---
Total benefits and expenses ............. 776 527 249 247 170 77
--- --- --- --- --- ---
Adjusted operating income before income taxes 155 91 64 45 34 11
=== === === === === ===
Nine Months Ended September 30, 2000 Quarter Ended September 30, 2000
---------------------------------------- ----------------------------------
Total Investment Total Investment
Asset Management Other Asset Management Other
Management & Advisory Asset Management & Advisory Asset
Division Services Management Division Services Management
------------ ------------- ---------- ---------- ---------- ----------
Revenues (1):
Net investment income .................. 30 11 19 14 8 6
Commissions, investment management fees,
and other income ..................... 975 636 339 310 220 90
----- ----- ----- ----- ----- -----
Total revenues ...................... 1,005 647 358 324 228 96
----- ----- ----- ----- ----- -----
Benefits and Expenses:
Interest expense ....................... -- -- -- -- -- --
Securities operations non-interest
expenses ............................. 236 -- 236 73 -- 73
General and administrative expenses .... 533 519 14 185 179 6
----- ----- ----- ----- ----- -----
Total benefits and expenses .......... 769 519 250 258 179 79
----- ----- ----- ----- ----- -----
Adjusted operating income before
income taxes ........................... 236 128 108 66 49 17
===== ===== ===== ===== ===== =====
(1) Revenues exclude realized investment gains, net of losses.
Page 26
Prudential [LOGO] Financial
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
ASSETS UNDER MANAGEMENT - INVESTMENT MANAGEMENT AND ADVISORY SERVICES SEGMENT
(in billions)
September 30, 2001
--------------------------------------------------
Fixed Real
Equity Income Estate Total
----------- ------------ ------------ ------------
Retail customers 39.7 53.1 0.0 92.8
Institutional customers 35.2 39.6 10.1 84.9
General account 2.2 106.4 1.5 110.1
----------- ------------ ------------ ------------
Total 77.1 199.1 11.6 287.8
=========== ============ ============ ============
September 30, 2000
--------------------------------------------------
Fixed Real
Equity Income Estate Total
----------- ------------ ------------ ------------
Retail customers 64.0 47.7 0.0 111.7
Institutional customers 51.1 37.4 9.3 97.8
General account 2.9 103.9 1.9 108.7
----------- ------------ ------------ ------------
Total 118.0 189.0 11.2 318.2
=========== ============ ============ ============
Year-to-date 2000 2001
-------------------------- ---------------------- ----------------------------------
2001 2000 3Q 4Q 1Q 2Q 3Q
------------ ------------ --------- ----------- ----------- --------- --------
Institutional Assets Under Management:
Assets gathered by Asset Management
division sales force:
74.5 76.0 Beginning assets under management 76.6 77.4 74.5 70.5 70.4
9.5 13.7 Additions to managed portfolio 5.1 4.8 3.9 3.2 2.4
(12.2) (12.6) Withdrawals (3.0) (4.6) (3.0) (5.0) (4.2)
(6.5) 0.3 Change in market value (1.3) (3.1) (4.9) 1.7 (3.3)
------------ ------------ --------- ----------- ----------- --------- --------
65.3 77.4 Ending assets under management 77.4 74.5 70.5 70.4 65.3
Other institutional assets under
19.6 20.4 management 20.4 20.6 19.0 20.3 19.6
------------ ------------ --------- ----------- ----------- --------- --------
Total assets managed for institutional
84.9 97.8 customers at end of period 97.8 95.1 89.5 90.7 84.9
============ ============ ========= =========== =========== ========= ========
Page 27
PRUDENTIAL [LOGO] FINANCIAL
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
CONSOLIDATED INVESTMENT PORTFOLIO COMPOSITION
(in millions)
September 30, 2001
------------------------
Amount % of Total
------- ----------
General Account (1):
Fixed maturities:
Public available for sale, at fair value........................ 61,832 47.9%
Public held to maturity, at amortized cost...................... 336 0.3%
Private available for sale, at fair value....................... 32,874 25.5%
Private held to maturity, at amortized cost..................... 60 0.0%
Trading account assets, at fair value............................... 8 0.0%
Equity securities, at fair value.................................... 1,911 1.5%
Mortgage loans on real estate, at book value........................ 15,046 11.6%
Other long-term investments (2)..................................... 4,335 3.4%
Policy loans, at outstanding balance................................ 8,337 6.5%
Short term investments, at amortized cost........................... 4,304 3.3%
------- ------
Total general account investments................................ 129,043 100.0%
======
Gibraltar Life........................................................ 25,627
Invested assets of other entities and operations (3).................. 14,581
-------
Consolidated invested assets.......................................... 169,251
Invested assets of Traditional Participating Products segment......... 62,685
-------
Invested assets of Financial Services Businesses...................... 106,566
=======
December 31, 2000
------------------------
Amount % of Total
------- ----------
General Account (1):
Fixed maturities:
Public available for sale, at fair value........................ 62,454 47.6%
Public held to maturity, at amortized cost...................... 757 0.6%
Private available for sale, at fair value....................... 21,294 16.2%
Private held to maturity, at amortized cost..................... 11,686 8.9%
Trading account assets, at fair value............................... 3 0.0%
Equity securities, at fair value.................................... 2,315 1.8%
Mortgage loans on real estate, at book value........................ 15,418 11.8%
Other long-term investments (2)..................................... 4,259 3.2%
Policy loans, at outstanding balance................................ 8,046 6.1%
Short term investments, at amortized cost........................... 4,963 3.8%
------- ------
Total general account investments................................ 131,195 100.0%
======
Gibraltar Life........................................................ -
Invested assets of other entities and operations (3).................. 17,320
-------
Consolidated invested assets.......................................... 148,515
Invested assets of Traditional Participating Products segment......... 62,273
-------
Invested assets of Financial Services Businesses...................... 86,242
=======
Fixed Maturities by Credit Quality(1):
September 30, 2001
-----------------------------------------
Amortized Estimated
Cost % of Total Fair Value
Public Fixed Maturities: ---------- ---------- ----------
NAIC Rating Rating Agency Equivalent
----------- ------------------------
1 Aaa, Aa, A ....................................... 40,492 67.5% 42,346
2 Baa .............................................. 14,606 24.3% 15,033
3 Ba................................................ 2,701 4.5% 2,683
4 B................................................. 1,822 3.0% 1,700
5 C and lower....................................... 298 0.5% 292
6 In or near default................................ 131 0.2% 133
------ ------ ------
Total 60,050 100.0% 62,187
====== ====== ======
Private Fixed Maturities:
NAIC Rating Rating Agency Equivalent
----------- -------------------------
1 Aaa, Aa, A ...................................... 10,351 32.8% 10,950
2 Baa ............................................. 16,013 50.8% 16,761
3 Ba............................................... 3,119 9.9% 3,176
4 B................................................ 1,476 4.7% 1,412
5 C and lower...................................... 479 1.5% 521
6 In or near default............................... 107 0.3% 119
------ ------ ------
Total 31,545 100.0% 32,939
====== ====== ======
December 31, 2000
-------------------------------------
Amortized Estimated
Public Fixed Maturities: Cost % of Total Fair Value
---------- ---------- ---------
NAIC Rating Rating Agency Equivalent
----------- ------------------------
1 Aaa, Aa, A ....................................... 42,311 67.6% 43,208
2 Baa .............................................. 15,346 24.5% 15,273
3 Ba................................................ 2,427 3.9% 2,401
4 B................................................. 2,125 3.4% 2,004
5 C and lower....................................... 369 0.6% 331
6 In or near default................................ 12 0.0% 11
------ ------ ------
Total 62,590 100.0% 63,228
====== ====== ======
Private Fixed Maturities:
NAIC Rating Rating Agency Equivalent
----------- ------------------------
1 Aaa, Aa, A ....................................... 11,379 34.6% 11,631
2 Baa .............................................. 16,122 49.0% 16,253
3 Ba................................................ 2,897 8.8% 2,843
4 B................................................. 1,893 5.8% 1,792
5 C and lower....................................... 405 1.2% 382
6 In or near default................................ 192 0.6% 228
------ ------ ------
Total 32,888 100.0% 33,129
====== ====== ======
(1) Excludes investments of Gibraltar Life, securities brokerage, commercial
and mortgage banking operations, assets of our asset management operations
managed for third parties, and separate account assets for which the
customer assumes risks of ownership.
(2) Other long-term investments consist of real estate related interests,
largely through joint ventures and partnerships, oil and gas investments,
venture capital and private equity funds, and investment real estate held
through direct ownership.
(3) Includes invested assets of securities brokerage, commercial and mortgage
banking operations. Excludes assets of our asset management operations
managed for third parties, and separate account assets for which the
customer assumes risks of ownership.
Page 28
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
PRUDENTIAL [LOGO] FINANCIAL
CONSOLIDATED INVESTMENT RESULTS
(in millions)
Quarter Ended September 30, 2001
-----------------------------------------
Investment Income Realized
---------------------------- Gains /
Yield (3) Amount (Losses)
------------- ------------ ------------
General Account (1):
Fixed maturities.................................................... 7.04% 1,619 (318)
Equity securities................................................... 2.43% 13 (19)
Mortgage loans on real estate....................................... 7.94% 301 (5)
Policy loans........................................................ 6.31% 130 -
Short-term investments and cash equivalents......................... 3.28% 100 2
Other investments................................................... 5.92% 63 (198)
------------- ------------ ------------
Gross investment income before investment expenses............. 6.65% 2,226 (538)
Investment expenses............................................ -0.53% (175) -
------------- ------------ ------------
Total for General Account.................................... 6.12% 2,051 (538)
=============
Gibraltar Life......................................................... 117 (33)
Investment results of other entities and operations (2)................ 74 (3)
Less amount relating to discontinued operations and divested business.. 1 -
------------ ------------
Consolidated amount.................................................... 2,243 (574)
Traditional Participating Products segment............................. 955 (248)
------------ ------------
Financial Services Businesses.......................................... 1,288 (326)
============ ============
Quarter Ended September 30, 2000
-------------------------------------------
Investment Income Realized
---------------------------- Gains /
Yield (3) Amount (Losses)
------------- ------------- -------------
General Account (1):
Fixed maturities.................................................... 7.44% 1,769 (302)
Equity securities................................................... 3.04% 22 51
Mortgage loans on real estate....................................... 7.92% 311 (9)
Policy loans........................................................ 6.24% 121 -
Short-term investments and cash equivalents......................... 6.68% 157 1
Other investments................................................... 7.04% 84 87
------------- ------------- -------------
Gross investment income before investment expenses............. 7.28% 2,464 (172)
Investment expenses............................................ -0.68% (226) -
------------- ------------- -------------
Total for General Account.................................... 6.60% 2,238 (172)
=============
Gibraltar Life......................................................... - -
Investment results of other entities and operations (2)................ 127 -
Less amount relating to discontinued operations and divested business.. (25) -
------------- -------------
Consolidated amount.................................................... 2,340 (172)
Traditional Participating Products segment............................. 1,028 47
------------- -------------
Financial Services Businesses.......................................... 1,312 (219)
============= =============
Nine Months Ended September 30, 2001
-------------------------------------------
Investment Income Realized
---------------------------- Gains /
Yield (3) Amount (Losses)
------------- ------------ ------------
General Account (1):
Fixed maturities.................................................... 7.43% 5,112 (325)
Equity securities................................................... 1.96% 32 (40)
Mortgage loans on real estate....................................... 8.21% 922 15
Policy loans........................................................ 6.42% 386 -
Short-term investments and cash equivalents......................... 4.49% 357 (2)
Other investments................................................... 7.47% 231 60
------------- ------------ ------------
Gross investment income before investment expenses............. 7.13% 7,040 (292)
Investment expenses............................................ -0.61% (585) -
------------ ------------ ------------
Total for General Account.................................... 6.52% 6,455 (292)
=============
Gibraltar Life......................................................... 197 25
Investment results of other entities and operations (2)................ 243 (3)
Less amount relating to discontinued operations and divested business.. (7) -
------------ ------------
Consolidated amount.................................................... 6,888 (270)
Traditional Participating Products segment............................. 2,951 (273)
------------ ------------
Financial Services Businesses.......................................... 3,937 3
============ ============
Nine Months Ended September 30, 2000
--------------------------------------------
Investment Income Realized
---------------------------- Gains /
Yield (3) Amount (Losses)
------------- ------------- -------------
General Account (1):
Fixed maturities.................................................... 7.51% 5,245 (846)
Equity securities................................................... 2.60% 53 382
Mortgage loans on real estate....................................... 8.12% 941 3
Policy loans........................................................ 6.29% 355 -
Short-term investments and cash equivalents......................... 6.15% 413 5
Other investments................................................... 8.24% 282 305
------------- ------------- -------------
Gross investment income before investment expenses............. 7.33% 7,289 (151)
Investment expenses............................................ -0.64% (621) -
------------- ------------- -------------
Total for General Account.................................... 6.69% 6,668 (151)
=============
Gibraltar Life......................................................... - -
Investment results of other entities and operations (2)................ 389 -
Less amount relating to discontinued operations and divested business.. (87) -
------------- -------------
Consolidated amount.................................................... 6,970 (151)
Traditional Participating Products segment............................. 3,062 65
------------- -------------
Financial Services Businesses.......................................... 3,908 (216)
============= =============
(1) Excludes investments of Gibraltar Life, securities brokerage,
commercial and mortgage banking operations, assets of our asset
management operations managed for third parties, and separate account
assets for which the customer assumes risks of ownership.
(2) Investment income of securities brokerage, and mortgage and commercial
banking operations.
(3) Yields are annualized and based on quarterly average carrying values
except for fixed maturities, equity securities and mortgage loans.
Yields for fixed maturities are based on amortized cost. Yields for
equity securities are based on cost. Yields for mortgage loans are
calculated gross of any allowance for losses on mortgage loans.
Page 29
Prudential [LOGO] Financial
Prudential Financial, Inc.
Quarterly Financial Supplement
Third Quarter 2001
KEY DEFINITIONS AND FORMULAS
1. Attributed 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. Attributed equity for the Financial Services Businesses represents all
of the Company's equity that is not included in the Traditional Participating
Products segment.
2. Adjusted operating income before income taxes:
- -------------------------------------------------
Income from continuing operations before income taxes, adjusted to exclude
realized investment gains, net of losses and related charges; sales practices
remedies and costs; and the results of divested businesses that we have sold
but do not qualify for discontinued operations accounting treatment under
generally accepted accounting principles.
3. 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.
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. Client Assets:
- -----------------
Fair market value of assets in client accounts of Prudential Securities and
Prudential Bank, and trust client accounts, 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.
6. 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.
7. Financial Advisors (Domestic and International):
- ---------------------------------------------------
Financial advisors and securities brokers in our securities operations.
8. Financial Advisor Productivity (Domestic):
- ---------------------------------------------
Private Client Group total non-interest revenues, excluding revenues generated
by the consumer bank and by the segment's retail trading operation divided by
the average number of domestic Financial Advisors for the period. For interim
reporting periods, the productivity measures are annualized.
9. 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.
10. Gibraltar Life Advisors:
- ----------------------------
Insurance representatives for Gibraltar Life.
11. 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.
12. Group Life Insurance and Group Disability Insurance Benefits Ratios:
- ------------------------------------------------------------------------
Ratio of policyholder benefits to earned premiums, policy charges and fee
income.
13. Insurance and Annuity Benefits
- -----------------------------------
Total death benefits, annuity benefits, disability benefits, losses and loss
adjustment expenses paid or incurred, under insurance and annuity contracts,
plus the change in reserves for future policy benefits, losses and loss
adjustment expenses.
14. International Life Planners:
- ---------------------------------
Insurance agents in our insurance operations outside the United States,
excluding Gibraltar Life Advisors.
15. New annualized premiums:
- -----------------------------
Premiums from new sales that are expected to be collected over a one year
period; does not include excess premiums, which are premiums that build cash
value but do not purchase face amounts of insurance in force.
Page 30
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Third Quarter 2001
KEY DEFINITIONS AND FORMULAS
16. Policy Persistency - Group Insurance:
- ------------------------------------------
Percentage of prior year premiums that remain in force in the current period
(excluding Serviceman's Group Life Insurance and Prudential Employee Benefit
Plan).
17. 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.
18. Prudential Agents:
- -----------------------
Insurance agents in our insurance operations in the United States.
19. Prudential Agent productivity:
- -----------------------------------
Commissions on new sales of all products by Prudential Agents under contract for
the entire period, divided by the number of those Prudential Agents. Excludes
commissions on new sales by Prudential Agents hired or departed during the
period. For interim reporting periods, the productivity measures are
annualized.
20. 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.
21. 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 31
Prudential Financial, Inc.
Quarterly Financial Supplement PRUDENTIAL [LOGO] FINANCIAL
Third Quarter 2001
RATINGS AND INVESTOR INFORMATION
INSURANCE CLAIMS PAYING RATINGS
(as of December 31, 2001):
A.M. Standard &
Best Poor's Moody's Fitch
----- ---------- -------- -------
The Prudential Insurance Company of America ............................ A A+ A1 AA-
PRUCO Life Insurance Company ........................................... A A+ A1 NR*
PRUCO Life Insurance Company of New Jersey ............................. A A+ A1 NR
Prudential Property and Casualty Insurance Company ..................... A- A A1 NR
The Prudential Property & Casualty Insurance Company of New Jersey ..... A- NR A1 NR
The Prudential Life Insurance Co., Ltd. (Prudential of Japan) .......... NR AA- NR NR
Gibraltar Life Insurance Company, Ltd. ................................. NR A A2 NR
CREDIT RATINGS:
(as of December 31, 2001):
Prudential Financial, Inc.:
Commercial Paper ..................................................... NR A2 P2 F1
Long-Term Senior Debt ................................................ NR A- A3 A
The Prudential Insurance Company of America:
Capital and surplus notes, due 2001-2005 ............................. NR A- A3 NR
Prudential Funding, LLC:
Commercial Paper ..................................................... NR A1 P1 NR
Long-Term Senior Debt ................................................ NR A+ A2 NR
Prudential Securities Group, Inc. ...................................... NR BBB NR NR
* NR indicates not rated.
INVESTOR INFORMATION:
Corporate Offices: Investor Information Hotline:
Prudential Financial, Inc. Dial 877-998-ROCK for additional printed information
751 Broad Street or inquiries.
Newark, New Jersey 07102
Web Site:
www.prudential.com
Page 32