Exhibit 99.1
Prudential [LOGO] Financial
Prudential Financial, Inc. (PRU)
- --------------------------------------------------------------------------------
Quarterly Financial Supplement
FINANCIAL SERVICES BUSINESSES
FOURTH QUARTER 2001
- --------------------------------------------------------------------------------
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.
February 12, 2002
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i
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
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) 5
Combining Statements of Operations by Division (Year-to-Date) 6
Combining Balance Sheets by Division 7
Short-Term Debt 8
Long-Term Debt 9
U.S. CONSUMER DIVISION
Combined Statements of Operations 10
Combining Statements of Operations (Quarter) 11
Combining Statements of Operations (Year-to-Date) 12
Life Insurance Sales and Retail Investments Segment Mutual Funds, Wrap-fee Products and Annuity Sales
and Assets Under Management 13
Life Insurance, Mutual Funds, Wrap-fee Products and Annuity Sales by Distribution Channel 14
Account Value Activity 15
Deferred Policy Acquisition Costs 16
Supplementary Information for Individual Life Insurance and Private Client Group 17
Supplementary Information for Property and Casualty Insurance 18
EMPLOYEE BENEFITS DIVISION
Combined Statements of Operations 19
Combining Statements of Operations 20
Sales Results and Assets Under Management 21
Supplementary Information 22
INTERNATIONAL DIVISION
Combined Statements of Operations 23
Combining Statements of Operations 24
Sales Results and Supplementary Information 25-26
ASSET MANAGEMENT DIVISION
Combined Statements of Operations 27
Combining Statements of Operations 28
Assets Under Management - Investment Management and Advisory Services Segment 29
INVESTMENT PORTFOLIO
Consolidated Investment Portfolio Composition 30
Investment Portfolio Composition - Japanese Insurance Operations and Excluding Japanese Insurance
Operations 31
Consolidated Investment Results 32
Investment Results - Japanese Insurance Operations 33
Investment Results - Excluding Japanese Insurance Operations 34
RECLASSIFIED STATEMENTS OF OPERATIONS 35-39
KEY DEFINITIONS AND FORMULAS 40-41
RATINGS AND INVESTOR INFORMATION 42
ii
Prudential [LOGO] Financial
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001
The Quarterly Financial Supplement for the period ended December 31, 2001
reflects certain reclassifications of historical revenues, expenses and
liabilities to conform to the Company's current presentation. These
reclassifications have no impact on adjusted operating income of the Financial
Services Businesses or any of its divisions or segments. The primary purposes of
the reclassifications are to revise the treatment of certain transactions
between segments, so that all such transactions are eliminated within Corporate
and Other results rather than at the division level, to present certain
recurring revenues of the Private Client Group segment, formerly classified
within commission revenues, as fee revenues and to conform the treatment of
certain revenue and expense items in our Gibraltar Life operations to current
reporting policies. This Quarterly Financial Supplement includes historical
summaries of reclassified results for the Individual Life Insurance and Private
Client Group segments, the U.S. Consumer Division, Gibraltar Life, and Corporate
and Other operations. Additionally, revenues and expenses of the Property and
Casualty Insurance segment for the fourth quarter of 2000, expenses of the
International Insurance and Retail Investments segments for periods prior to the
fourth quarter of 2001, and balance sheet information presented for periods
prior to December 31, 2001, reflect reclassifications to conform to current
reporting policies. If you have any questions or need assistance with regard to
this reclassification, please contact the Investor Relations Unit.
iii
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
Year-to-date % 2000 2001
- ----------------- -------- -------------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
- -------- -------- -------- -------- -------- -------- --------
Financial Services Businesses:
Pre-tax adjusted operating income by division:
310 740 -58% U. S. Consumer Division (62) 194 82 47 (13)
183 387 -53% Employee Benefits Division 76 104 52 3 24
523 322 62% International Division 60 98 120 180 125
219 276 -21% Asset Management Division 40 78 32 45 64
28 (4) 800% Corporate and other operations (81) (1) 75 (19) (27)
- ------- ------- -------- -------- -------- -------- --------
1,263 1,721 -27% Total pre-tax adjusted operating income 33 473 361 256 173
499 605 -18% Income taxes (1) (8) 177 101 153 68
- ------- ------- -------- -------- -------- -------- --------
Financial Services Businesses after-tax adjusted
764 1,116 -32% operating income 41 296 260 103 105
- ------- ------- -------- -------- -------- -------- --------
Items excluded from adjusted operating income:
Realized investment gains (losses), net of
(136) (408) 67% related charges (199) 243 75 (322) (132)
- - - Sales practices remedies and costs - - - - -
(147) (636) 77% Divested businesses (567) (22) (60) (40) (25)
(588) (143) -311% Demutualization costs and expenses (2) (30) (45) (117) (37) (389)
- ------- ------- -------- -------- -------- -------- --------
Total items excluded from adjusted operating
(871) (1,187) 27% income, before income taxes (796) 176 (102) (399) (546)
Income taxes, including mutual insurance company
(393) (305) -29% tax (347) 69 (92) (348) (22)
- ------- -------- -------- -------- -------- -------- --------
Total items excluded from adjusted operating
(478) (882) 46% income, after income taxes (449) 107 (10) (51) (524)
- ------- ------- -------- -------- -------- -------- --------
Income (loss) from continuing operations (after-tax)
286 234 22% of Financial Services Businesses (408) 403 250 52 (419)
Income (loss) from discontinued operations, net of
16 77 -79% related taxes 77 - - - 16
- ------- ------- -------- -------- -------- -------- --------
302 311 -3% Net income (loss) of Financial Services Businesses (331) 403 250 52 (403)
======= ======= ======== ======== ======== ======== ========
Per share of Common Stock, equivalent share basis -
diluted (3):
1.31 1.91 Adjusted operating income 0.07 0.51 0.45 0.18 0.18
0.49 0.40 Income (loss) from continuing operations (0.70) 0.69 0.43 0.09 (0.72)
0.52 0.53 Net income (loss) (0.57) 0.69 0.43 0.09 (0.69)
583.6 583.6 Diluted shares (equivalent share basis) (4) 583.6 583.6 583.6 583.6 583.7
Financial Services Businesses Capitalization Data (5):
Short-term debt 10,893 11,922 9,440 9,720 5,405
Long-term debt 1,476 2,058 3,047 2,983 3,554
Equity Security Units (6) - - - - 690
Attributed Equity:
Total Attributed Equity 13,741 14,661 14,787 14,683 19,646
Excluding unrealized gains and losses on investments 13,147 13,704 13,822 13,433 18,803
Excluding accumulated other comprehensive income 13,244 13,908 13,960 13,581 19,083
Total Capitalization:
Excluding accumulated other comprehensive income 14,720 15,966 17,007 16,564 23,327
Including accumulated other comprehensive income 15,217 16,719 17,834 17,666 23,890
Book value per share of Common Stock:
Excluding unrealized gains and losses on investments 32.15
Excluding accumulated other comprehensive income 32.63
Including accumulated other comprehensive income 33.59
Number of diluted shares at end of period 584.8
Reconciliation to Consolidated Net Income of Prudential
Financial, Inc:
302 311 Net Income (loss) of Financial Services Businesses (above) (331) 403 250 52 (403)
(456) 87 Net Income (loss) of Closed Block Business (7) 63 34 (55) (332) (103)
- -------- -------- -------- -------- -------- -------- --------
(154) 398 Consolidated net income (loss) (268) 437 195 (280) (506)
======== ======== ======== ======== ======== ======== ========
(1) Income taxes applicable to pre-tax adjusted operating income, which
excludes the mutual insurance company tax for periods prior to
demutualization.
(2) Demutualization costs and expenses for the quarter and year ended December
31, 2001, include demutualization consideration of $340 million paid to
former Canadian branch policyholders.
(3) Prudential Financial Inc.'s initial public offering and the demutualization
of The Prudential Insurance Company of America became effective on December
18, 2001. Equivalent share earnings reflects a pro forma presentation for
shares outstanding, whereby shares issued in the initial public offering,
including those issued as a result of the subsequent exercise by
underwriters of options to acquire additional shares, and shares
distributed as demutualization consideration to policyholders, were assumed
to be outstanding for all periods presented. Earnings used in per-share
calculations have not been retroactively adjusted to reflect the
demutualization or related transactions, including the establishment of the
Closed Block Business.
(4) Diluted shares reflect the impact of stock options issued on the date of
demutualization, weighted for the portion of the period for which they were
outstanding.
(5) As of end of period.
(6) Guaranteed minority interest in Trust holding solely debentures of parent,
as reported in combined balance sheet.
(7) Amounts shown for the Closed Block Business represent results of the
Traditional Participating Products segment for periods prior to effective
date of demutualization.
Page 1
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
OPERATIONS HIGHLIGHTS
Year-to-date 2000 2001
- ----------------------- ------ --------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ---------- ----------- ------ ------ ------- ------ -------
Common Stock Price Range:
33.19 High 33.19
29.30 Low 29.30
33.19 Close 33.19
Common Stock market capitalization ($ millions) (1) 19,369
Assets Under Management and Administration ($ billions) (1)(2):
Assets Under Management:
Managed by Asset Management Division:
Retail customers(3) 107.4 97.2 99.8 92.8 96.5
Institutional customers 95.1 89.5 90.7 84.9 89.1
General account 110.0 111.0 109.3 110.1 113.8
------ ------ ------- ------ -------
Total proprietary (3) 312.5 297.7 299.8 287.8 299.4
Managed by Retail Investments or Private Client Group segments:
Non-proprietary wrap-fee and other domestic assets under
management 50.5 49.8 51.3 45.0 49.3
International (4) 8.1 8.9 42.4 40.5 39.3
------ ------ ------- ------ -------
Total assets under management 371.1 356.4 393.5 373.3 388.0
Client assets under administration (5) 221.8 203.5 212.3 190.9 201.6
------ ------ ------- ------ -------
Total assets under management and administration 592.9 559.9 605.8 564.2 589.6
====== ====== ======= ====== =======
Distribution Representatives(1):
Prudential Agents 6,086 5,382 5,049 4,928 4,387
Financial Advisors (domestic and international) 6,676 6,628 6,497 6,366 6,159
International Life Planners 3,495 3,434 3,690 3,999 4,104
Gibraltar Life Advisors - - 7,230 6,596 6,121
Distribution Representative Productivity:
35 35 Prudential Agent productivity ($ thousands) 32 25 30 28 37
336 401 Financial Advisor Productivity (domestic; $ thousands) 367 364 338 316 327
Third Party Distribution ($ millions):
252 128 Individual Life Insurance sales (6) 56 55 43 123 31
3,059 1,464 Retail Investments gross sales (7) 426 494 1,525 494 546
(1) As of end of period.
(2) At fair market value.
(3) Includes International retail customer assets.
(4) Includes $29.2 billion of Gibraltar Life assets at
November 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.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINED STATEMENTS OF OPERATIONS - FINANCIAL SERVICES BUSINESSES
(in millions)
Year-to-date % 2000 2001
- ------------------ ------- ---------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
- -------- -------- ------- -------- -------- ------- -------
Revenues (1):
8,227 5,826 41% Premiums 1,498 1,611 2,014 2,241 2,361
1,803 1,639 10% Policy charges and fee income 447 392 483 474 454
5,239 5,224 0% Net investment income 1,316 1,297 1,352 1,288 1,302
4,356 5,196 -16% Commissions, investment management fees, and other income 1,197 1,108 1,164 992 1,092
- -------- -------- ------- -------- -------- ------- -------
19,625 17,885 10% Total revenues 4,458 4,408 5,013 4,995 5,209
- -------- -------- ------- -------- -------- ------- -------
Benefits and Expenses (1):
8,259 6,103 35% Insurance and annuity benefits 1,658 1,611 2,073 2,279 2,296
1,670 1,618 3% Interest credited to policyholder account balances 393 382 422 432 434
326 448 -27% Interest expense 118 108 100 70 48
(1,325) (1,192) -11% Deferral of acquisition costs (305) (313) (343) (325) (344)
933 834 12% Amortization of acquisition costs 241 242 212 255 224
3,279 3,454 -5% Securities operations non-interest expenses 889 817 875 771 816
5,220 4,899 7% General and administrative expenses 1,431 1,088 1,313 1,257 1,562
- -------- -------- ------- -------- -------- ------- -------
18,362 16,164 14% Total benefits and expenses 4,425 3,935 4,652 4,739 5,036
- -------- -------- ------- -------- -------- ------- -------
1,263 1,721 -27% Adjusted operating income before income taxes 33 473 361 256 173
- -------- -------- ------- -------- -------- ------- -------
Items excluded from adjusted operating income before
income taxes:
(162) (379) 57% Realized investment gains (losses) (163) 247 82 (326) (165)
26 (29) 190% Related charges (36) (4) (7) 4 33
- -------- -------- ------- -------- -------- ------- -------
Total realized investment gains (losses), net of
(136) (408) 67% related charges (199) 243 75 (322) (132)
- -------- -------- ------- -------- -------- ------- -------
- - - Sales practices remedies and costs - - - - -
(147) (636) 77% Divested businesses (567) (22) (60) (40) (25)
(588) (143) -311% Demutualization costs and expenses (30) (45) (117) (37) (389)
- -------- -------- ------- -------- -----------------------
Total items excluded from adjusted operating
(871) (1,187) 27% income before income taxes (796) 176 (102) (399) (546)
- -------- -------- ------- -------- -------- ------- -------
392 534 -27% Income (loss) from continuing operations before income taxes (763) 649 259 (143) (373)
106 300 -65% Income tax expense (355) 246 9 (195) 46
- -------- -------- ------- -------- -------- ------- -------
286 234 22% Income (loss) from continuing operations, after-tax (408) 403 250 52 (419)
======== ======== ======= ======== ======== ======= =======
(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
Fourth Quarter 2001
COMBINED BALANCE SHEETS - FINANCIAL SERVICES BUSINESSES
(in millions)
12/31/2000 03/31/2001 06/30/2001 09/30/2001 12/31/2001
---------- ---------- ---------- ---------- ----------
Assets:
Investments:
Fixed maturity securities available for sale, at fair value
(amortized cost $45,597; $52,549; $67,706; $66,031; $67,276) 46,172 54,018 68,768 68,018 68,880
Fixed maturity held to maturity, at amortized cost
(fair value $7,257; $381; $562; $555; $395) 7,172 354 538 532 374
Trading account assets, at fair value 7,217 9,103 5,752 5,199 5,043
Equity securities available for sale, at fair value
(cost $783; $1,017; $3,462; $2,072; $1,671) 855 1,050 3,634 2,026 1,688
Commercial loans 8,177 8,074 13,977 12,756 13,624
Policy loans 2,336 2,459 3,033 3,008 2,812
Securities purchased under agreements to resell 5,395 4,526 6,169 4,480 4,421
Cash collateral for borrowed securities 3,858 3,541 3,422 3,963 5,210
Other long-term investments 2,562 3,095 4,023 3,811 4,336
Short-term investments 2,498 782 2,960 2,773 2,972
------- ------- ------- ------- -------
Total investments 86,242 87,002 112,276 106,566 109,360
Cash and cash equivalents 5,165 7,297 11,555 13,209 16,900
Accrued investment income 1,002 930 975 977 1,059
Broker-dealer related receivables 11,860 10,004 8,773 9,119 7,802
Deferred policy acquisition costs 5,389 5,284 5,445 5,525 5,538
Other assets 10,951 11,654 11,500 13,798 13,488
Separate account assets 82,217 79,066 79,697 74,523 77,158
------- ------- ------- ------- -------
Total assets 202,826 201,237 230,221 223,717 231,305
======= ======= ======= ======= =======
Liabilities:
Future policy benefits 21,845 21,758 40,756 40,729 39,752
Policyholders' account balances 27,320 27,404 38,498 37,936 37,944
Unpaid claims and claim adjustment expenses 3,549 3,519 3,516 3,478 3,408
Securities sold under agreements to repurchase 11,162 11,169 10,262 9,479 9,280
Cash collateral for loaned securities 9,283 8,611 7,626 6,264 7,650
Income taxes payable 1,041 1,468 1,006 1,550 1,085
Broker-dealer related payables 5,965 5,130 5,206 6,571 6,445
Securities sold but not yet purchased 4,959 5,186 3,979 3,057 2,791
Short-term debt 10,893 11,922 9,440 9,720 5,405
Long-term debt 1,476 2,058 3,047 2,983 3,554
Other liabilities 9,375 9,285 12,401 12,744 16,497
Separate account liabilities 82,217 79,066 79,697 74,523 77,158
------- ------- ------- ------- -------
Total liabilities 189,085 186,576 215,434 209,034 210,969
------- ------- ------- ------- -------
Guaranteed minority interest in Trust holding solely
debentures of Parent - - - - 690
Attributed Equity:
Accumulated other comprehensive income (loss) 497 753 827 1,102 563
Other attributed equity 13,244 13,908 13,960 13,581 19,083
------- ------- ------- ------- -------
Total attributed equity 13,741 14,661 14,787 14,683 19,646
------- ------- ------- ------- -------
Total liabilities and attributed equity 202,826 201,237 230,221 223,717 231,305
======= ======= ======= ======= =======
Page 4
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS - BY DIVISION
(in millions)
Quarter Ended December 31, 2001
---------------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- ---------- -------- ------------- ---------- -----------
Revenues (1):
Premiums 2,361 636 650 1,046 -- 29
Policy charges and fee income 454 318 68 70 -- (2)
Net investment income 1,302 295 664 162 28 153
Commissions, investment management
fees, and other income 1,092 676 99 143 313 (139)
---------- ---------- -------- ------------- ---------- ----------
Total revenues 5,209 1,925 1,481 1,421 341 41
---------- ---------- -------- ------------- ---------- ----------
Benefits and Expenses(1):
Insurance and annuity benefits 2,296 605 838 841 -- 12
Interest credited to policyholder
account balances 434 98 311 25 -- --
Interest expense 48 -- 2 (2) 4 44
Deferral of acquisition costs (344) (201) (10) (149) -- 16
Amortization of acquisition costs 224 192 5 47 -- (20)
Securities operations non-interest expenses 816 595 -- 147 64 10
General and administrative expenses 1,562 649 311 387 209 6
---------- ---------- -------- ------------- ---------- ----------
Total benefits and expenses 5,036 1,938 1,457 1,296 277 68
---------- ---------- -------- ------------- ---------- ----------
Adjusted operating income before income taxes 173 (13) 24 125 64 (27)
========== ========== ======== ============= ========== ==========
Quarter Ended December 31, 2000
--------------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- ---------- -------- ------------- ---------- ----------
Revenues (1):
Premiums 1,498 483 556 445 -- 14
Policy charges and fee income 447 326 98 26 -- (3)
Net investment income 1,316 325 711 55 22 203
Commissions, investment management
fees, and other income 1,197 796 105 145 317 (166)
---------- ---------- -------- ------------- ---------- ----------
Total revenues 4,458 1,930 1,470 671 339 48
---------- ---------- -------- ------------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 1,658 505 817 327 -- 9
Interest credited to policyholder
account balances 393 101 292 -- -- --
Interest expense 118 9 7 2 5 95
Deferral of acquisition costs (305) (211) (7) (109) -- 22
Amortization of acquisition costs 241 213 13 38 -- (23)
Securities operations non-interest expenses 889 641 -- 147 88 13
General and administrative expenses 1,431 734 272 206 206 13
---------- ---------- -------- ------------- ---------- ----------
Total benefits and expenses 4,425 1,992 1,394 611 299 129
---------- ---------- -------- ------------- ---------- ----------
Adjusted operating income before income taxes 33 (62) 76 60 40 (81)
========== ========== ======== ============= ========== ==========
(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.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
FINANCIAL SERVICES BUSINESSES COMBINING STATEMENTS OF OPERATIONS - BY DIVISION
(in millions)
Twelve Months Ended December 31, 2001
---------------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- --------- -------- ------------- ---------- ----------
Revenues (1):
Premiums 8,227 2,317 2,532 3,337 - 41
Policy charges and fee income 1,803 1,259 244 307 - (7)
Net investment income 5,239 1,235 2,728 511 90 675
Commissions, investment management
fees, and other income 4,356 2,833 408 539 1,182 (606)
---------- --------- -------- ------------- ---------- ----------
Total revenues 19,625 7,644 5,912 4,694 1,272 103
---------- --------- -------- ------------- ---------- ----------
Benefits and Expenses(1):
Insurance and annuity benefits 8,259 2,143 3,403 2,674 - 39
Interest credited to policyholder
account balances 1,670 396 1,201 72 - 1
Interest expense 326 7 11 4 15 289
Deferral of acquisition costs (1,325) (838) (30) (539) - 82
Amortization of acquisition costs 933 837 14 164 - (82)
Securities operations non-interest expenses 3,279 2,420 - 530 292 37
General and administrative expenses 5,220 2,369 1,130 1,266 746 (291)
---------- --------- -------- ------------- ---------- ----------
Total benefits and expenses 18,362 7,334 5,729 4,171 1,053 75
---------- --------- -------- ------------- ---------- ----------
Adjusted operating income before income taxes 1,263 310 183 523 219 28
========== ========= ======== ============= ========== ==========
Twelve Months Ended December 31, 2000
---------------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
---------- --------- -------- ------------- ---------- ----------
Revenues (1):
Premiums 5,826 1,941 2,190 1,680 - 15
Policy charges and fee income 1,639 1,307 250 92 - (10)
Net investment income 5,224 1,344 2,817 195 52 816
Commissions, investment management
fees, and other income 5,196 3,434 429 657 1,292 (616)
---------- --------- -------- ------------- ---------- ----------
Total revenues 17,885 8,026 5,686 2,624 1,344 205
---------- --------- -------- ------------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 6,103 1,838 2,972 1,266 - 27
Interest credited to policyholder
account balances 1,618 395 1,224 2 - (3)
Interest expense 448 11 43 4 5 385
Deferral of acquisition costs (1,192) (867) (26) (404) - 105
Amortization of acquisition costs 834 749 23 146 - (84)
Securities operations non-interest expenses 3,454 2,485 - 586 324 59
General and administrative expenses 4,899 2,675 1,063 702 739 (280)
---------- --------- -------- ------------- ---------- ----------
Total benefits and expenses 16,164 7,286 5,299 2,302 1,068 209
---------- --------- -------- ------------- ---------- ----------
Adjusted operating income before income taxes 1,721 740 387 322 276 (4)
========== ========= ======== ============= ========== ==========
(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.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
FINANCIAL SERVICES BUSINESSES COMBINING BALANCE SHEETS - BY DIVISION
(in millions)
As of December 31, 2001
-----------------------------------------------------------------------------
Total
Financial U.S. Employee Asset Corporate
Services Consumer Benefits International Management and Other
Businesses Division Division Division Division Operations
------------ ---------- ---------- ------------- ---------- ----------
Assets:
Total investments 109,360 26,065 38,279 29,841 5,462 9,713
Broker-dealer related receivables 7,802 6,103 - 1,069 318 312
Deferred policy acquisition costs 5,538 3,893 93 1,615 - (63)
Other assets 31,447 6,638 5,223 8,454 2,898 8,234
Separate account assets 77,158 28,532 29,172 422 19,679 (647)
------------ ---------- ---------- ------------- ---------- ----------
Total assets 231,305 71,231 72,767 41,401 28,357 17,549
============ ========== ========== ============= ========== ==========
Liabilities:
Future policy benefits 39,752 3,158 14,084 22,041 - 469
Policyholders' account balances 37,944 8,873 19,238 9,808 - 25
Debt 8,959 2,888 779 1,058 1,767 2,467
Other liabilities 47,156 20,910 6,732 5,429 5,966 8,119
Separate account liabilities 77,158 28,532 29,172 422 19,679 (647)
------------ ---------- ---------- ------------- ---------- ----------
Total liabilities 210,969 64,361 70,005 38,758 27,412 10,433
------------ ---------- ---------- ------------- ---------- ----------
Guaranteed minority interest in Trust holding
solely debentures of Parent 690 - - - - 690
Attributed Equity:
Accumulated other comprehensive income (loss) 563 453 518 (171) 2 (239)
Other attributed equity 19,083 6,417 2,244 2,814 943 6,665
------------ ---------- ---------- ------------- ---------- ----------
Total attributed equity 19,646 6,870 2,762 2,643 945 6,426
------------ ---------- ---------- ------------- ---------- ----------
Total liabilities and attributed equity 231,305 71,231 72,767 41,401 28,357 17,549
============ ========== ========== ============= ========== ==========
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 21,845 2,913 14,065 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 45,334 19,893 8,270 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
------------ ---------- ---------- ------------- ---------- ----------
Guaranteed minority interest in Trust holding
solely debentures of Parent - - - - - -
Attributed Equity:
Accumulated other comprehensive income (loss) 497 401 143 (61) (2) 16
Other 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
Fourth Quarter 2001
SHORT TERM DEBT - FINANCIAL SERVICES BUSINESSES
(in millions)
December 31, 2001
-----------------------------------------------------------------
The Prudential
Prudential Insurance Co.
Financial, Inc. of America(a) Other Affiliates Total
--------------- --------------- ---------------- -------------
Borrowings by use of proceeds:
General corporate purposes - 222 - 222
Investment related - 834 - 834
Securities business related - 1,639 1,484 3,123
Specified other businesses - 1,141 14 1,155
Limited recourse and non-recourse borrowing - - 71 71
-------------- --------------- --------------- --------------
Total short-term debt - 3,836 1,569 5,405
============== =============== =============== ==============
Borrowings by type:
Long-term debt due within one year - 753 - 753
Commercial paper - 3,022 - 3,022
Bank borrowings - - 1,324 1,324
Other short-term debt - 61 174 235
-------------- --------------- --------------- --------------
Total general obligations - 3,836 1,498 5,334
Limited recourse and non-recourse borrowing - - 71 71
-------------- --------------- --------------- --------------
Total short-term debt - 3,836 1,569 5,405
============== =============== =============== ==============
(a) Includes Prudential Funding, LLC.
Page 8
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Fourth Quarter 2001
LONG TERM DEBT
(in millions)
December 31, 2001
------------------------------------------------------------------------------------
Limited
General Securities Specified Recourse
Corporate Investment Business Other Total General and non- Total
Purposes Related Related Businesses Obligations Recourse Borrowings
--------- ---------- ---------- ---------- ------------- -------- ----------
Financial Services Businesses:
Prudential Financial, Inc.:
Long-term fixed and floating rate notes - - - - - - -
Hybrid notes - - - - - - -
--------- ---------- ---------- ---------- ------------- -------- ----------
Total - - - - - - -
--------- ---------- ---------- ---------- ------------- -------- ----------
The Prudential Insurance Company of
America (a):
Surplus notes 989 - - - 989 - 989
Long-term fixed and floating rate notes 1,456 586 - - 2,042 - 2,042
Commercial paper backed by long-term
credit agreements - - - - - - -
--------- ---------- ---------- ---------- ------------- -------- ----------
Total 2,445 586 - - 3,031 - 3,031
--------- ---------- ---------- ---------- ------------- -------- ----------
Long-term debt of other affiliated companies - - - - - 523 523
--------- ---------- ---------- ---------- ------------- -------- ----------
Total long-term debt of Financial Services
Businesses 2,445 586 - - 3,031 523 3,554
========= ========== ========== ========== ============= ======== ==========
Ratio of long-term and short-term corporate
debt to capitalization 12.7%
=========
Closed Block Business:
Limited recourse notes of Prudential
Holdings, LLC - - - - - 1,750 1,750
========= ========== ========== ========== ============= ======== ==========
(a) Includes Prudential Funding, LLC.
Page 9
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINED STATEMENTS OF OPERATIONS - U. S. CONSUMER DIVISION
(in millions)
Year-to-date % 2000 2001
- ---------------- ------ --------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
- ------ ------- ------ ------ ------ ------- ------
Revenues (1):
2,317 1,941 19% Premiums 483 545 575 561 636
1,259 1,307 -4% Policy charges and fee income 326 315 321 305 318
1,235 1,344 -8% Net investment income 325 333 303 304 295
2,833 3,434 -18% Commissions, investment management fees, and other income 796 755 713 689 676
- ------ ------- ------ ------ ------ ------ ------
7,644 8,026 -5% Total revenues 1,930 1,948 1,912 1,859 1,925
- ------ ------- ------ ------ ------ ------ ------
Benefits and Expenses (1):
2,143 1,838 17% Insurance and annuity benefits 505 456 527 555 605
396 395 0% Interest credited to policyholder account balances 101 103 99 96 98
7 11 -36% Interest expense 9 2 3 2 --
(838) (867) 3% Deferral of acquisition costs (211) (219) (216) (202) (201)
837 749 12% Amortization of acquisition costs 213 222 193 230 192
2,420 2,485 -3% Securities operations non-interest expenses 641 603 645 577 595
2,369 2,675 -11% General and administrative expenses 734 587 579 554 649
- ------ ------- ------ ------ ------ ------ ------
7,334 7,286 1% Total benefits and expenses 1,992 1,754 1,830 1,812 1,938
- ------ ------- ------ ------ ------ ------ ------
310 740 -58% Adjusted operating income before income taxes (62) 194 82 47 (13)
====== ======= ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
Page 10
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINING STATEMENTS OF OPERATIONS - U. S. CONSUMER DIVISION
(in millions)
Quarter Ended December 31, 2001
-------------------------------------------------------------------------------------
Retail Investments
Total U.S. Individual Property & -------------------
Consumer Life Private Retail Casualty Mutual
Division Insurance Client Group Investments Insurance Funds(2) Annuities
---------- ---------- ------------ ----------- --------- -------- ---------
Revenues (1):
Premiums 636 133 - 8 495 - 8
Policy charges and fee income 318 262 - 56 - - 56
Net investment income 295 100 54 105 36 - 105
Commissions, investment management
fees, and other income 676 30 471 174 1 157 17
---------- ---------- ------------ ----------- --------- -------- ---------
Total revenues 1,925 525 525 343 532 157 186
---------- ---------- ------------ ----------- --------- -------- ---------
Benefits and Expenses (1):
Insurance and annuity benefits 605 203 - 33 369 - 33
Interest credited to policyholder
account balances 98 35 - 63 - - 63
Interest expense - (1) - 1 - - 1
Deferral of acquisition costs (201) (74) - (34) (93) (9) (25)
Amortization of acquisition costs 192 55 - 39 98 18 21
Securities operations non-interest
expenses 595 - 595 - - - -
General and administrative expenses 649 276 9 203 161 133 70
---------- ---------- ------------ ----------- --------- -------- ---------
Total benefits and expenses 1,938 494 604 305 535 142 163
---------- ---------- ------------ ----------- --------- -------- ---------
Adjusted operating income before
income taxes (13) 31 (79) 38 (3) 15 23
========== ========== ============ =========== ========= ======== =========
Quarter Ended December 31, 2000
-------------------------------------------------------------------------------------
Retail Investments
Total U.S. Individual Property & -------------------
Consumer Life Private Retail Casualty Mutual
Division Insurance Client Group Investments Insurance Funds(2) Annuities
---------- ---------- ------------ ----------- --------- -------- ---------
Revenues (1):
Premiums 483 70 - 17 396 - 17
Policy charges and fee income 326 258 - 68 - - 68
Net investment income 325 87 67 121 50 4 117
Commissions, investment management
fees, and other income 796 51 548 196 1 175 21
---------- ---------- ------------ ----------- --------- -------- ---------
Total revenues 1,930 466 615 402 447 179 223
---------- ---------- ------------ ----------- --------- -------- ---------
Benefits and Expenses(1):
Insurance and annuity benefits 505 179 - 44 282 - 44
Interest credited to policyholder
account balances 101 33 - 68 - - 68
Interest expense 9 10 - (1) - 1 (2)
Deferral of acquisition costs (211) (75) - (41) (95) (16) (25)
Amortization of acquisition costs 213 38 - 74 101 20 54
Securities operations non-interest
expenses 641 - 641 - - - -
General and administrative expenses 734 312 15 233 174 157 76
---------- ---------- ------------ ----------- --------- -------- ---------
Total benefits and expenses 1,992 497 656 377 462 162 215
---------- ---------- ------------ ----------- --------- -------- ---------
Adjusted operating income before
income taxes (62) (31) (41) 25 (15) 17 8
========== ========== ============ =========== ========= ======== =========
(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 11
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINING STATEMENTS OF OPERATIONS - U. S. CONSUMER DIVISION
(in millions)
Twelve Months Ended December 31, 2001
------------------------------------------------------------------------------------
Retail Investments
Total U.S. Individual Private Property & ----------------------
Consumer Life Client Retail Casualty Mutual
Division Insurance Group Investments Insurance Funds(2) Annuities
--------- ---------- ---------- ----------- ---------- ---------- ----------
Revenues (1):
Premiums 2,317 387 -- 46 1,884 -- 46
Policy charges and fee income 1,259 1,017 -- 242 -- -- 242
Net investment income 1,235 391 243 443 158 3 440
Commissions, investment management fees,
and other income 2,833 124 1,973 727 9 651 76
--------- ---------- ---------- ----------- ---------- ---------- ----------
Total revenues 7,644 1,919 2,216 1,458 2,051 654 804
--------- ---------- ---------- ----------- ---------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 2,143 699 -- 110 1,334 -- 110
Interest credited to policyholder
account balances 396 137 -- 259 -- -- 259
Interest expense 7 -- -- 7 -- 4 3
Deferral of acquisition costs (838) (301) -- (147) (390) (48) (99)
Amortization of acquisition costs 837 232 -- 210 395 76 134
Securities operations non-interest expenses 2,420 -- 2,420 -- -- -- --
General and administrative expenses 2,369 879 35 838 617 551 287
--------- ---------- ---------- ----------- ---------- ---------- ----------
Total benefits and expenses 7,334 1,646 2,455 1,277 1,956 583 694
--------- ---------- ---------- ----------- ---------- ---------- ----------
Adjusted operating income before income taxes 310 273 (239) 181 95 71 110
========= ========== ========== =========== ========== ========== ==========
Twelve Months Ended December 31, 2000
------------------------------------------------------------------------------------
Retail Investments
Total U.S. Individual Private Property & ----------------------
Consumer Life Client Retail Casualty Mutual
Division Insurance Group Investments Insurance Funds(2) Annuities
---------- ---------- ---------- ----------- ---------- ---------- ----------
Revenues (1):
Premiums 1,941 270 -- 72 1,599 -- 72
Policy charges and fee income 1,307 1,023 -- 284 -- -- 284
Net investment income 1,344 374 299 478 193 7 471
Commissions, investment management fees,
and other income 3,434 161 2,468 797 8 712 85
--------- ---------- ---------- ----------- ---------- ---------- ----------
Total revenues 8,026 1,828 2,767 1,631 1,800 719 912
--------- ---------- ---------- ----------- ---------- ---------- ----------
Benefits and Expenses(1):
Insurance and annuity benefits 1,838 640 -- 153 1,045 -- 153
Interest credited to policyholder
account balances 395 131 -- 264 -- -- 264
Interest expense 11 10 -- 1 -- 3 (2)
Deferral of acquisition costs (867) (277) -- (219) (371) (77) (142)
Amortization of acquisition costs 749 172 -- 212 365 79 133
Securities operations non-interest expenses 2,485 -- 2,485 -- -- -- --
General and administrative expenses 2,675 1,038 45 981 611 622 359
--------- ---------- ---------- ----------- ---------- ---------- ----------
Total benefits and expenses 7,286 1,714 2,530 1,392 1,650 627 765
--------- ---------- ---------- ----------- ---------- ---------- ----------
Adjusted operating income before income taxes 740 114 237 239 150 92 147
========= ========== ========== =========== ========== ========== ==========
(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 12
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
U. S. CONSUMER DIVISION - LIFE INSURANCE SALES AND RETAIL INVESTMENTS SEGMENT
MUTUAL FUNDS, WRAP-FEE PRODUCTS AND ANNUITY SALES AND ASSETS UNDER MANAGEMENT
(in millions)
Year-to-date 2000 2001
- ----------------- --------- ----------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- -------- -------- --------- -------- -------- -------- --------
INDIVIDUAL LIFE INSURANCE SALES (1):
228 286 Variable and universal life 78 65 58 51 54
199 42 COLI 29 37 28 117 17
43 59 Term life 17 10 11 11 11
- -------- -------- --------- -------- --------- --------- --------
470 387 Total 124 112 97 179 82
======== ======== ========= ======== ========= ========= ========
RETAIL INVESTMENTS SEGMENT MUTUAL FUNDS,
WRAP-FEE PRODUCTS AND ANNUITY SALES AND
ASSETS UNDER MANAGEMENT:
Mutual Funds:
57,764 55,245 Beginning total mutual funds assets 57,754 57,764 58,168 59,618 56,951
5,273 5,378 Sales (other than money market) 1,265 1,324 2,106 907 936
(4,697) (5,561) Redemptions (other than money market) (1,205) (1,202) (1,103) (1,110) (1,282)
(1,894) 726 Reinvestment of distributions and change in market value (1,326) (1,254) 1,056 (3,840) 2,144
1,363 1,976 Net money market sales 1,276 1,536 (609) 1,376 (940)
- -------- -------- --------- -------- --------- --------- --------
57,809 57,764 Ending total mutual funds assets 57,764 58,168 59,618 56,951 57,809
======== ======== ========= ======== ========= ========= ========
Net Mutual Funds sales (redemptions) other than money
576 (183) market 60 122 1,003 (203) (346)
======== ======== ========= ======== ========= ========= ========
Wrap-fee Products:
19,621 16,723 Beginning total Wrap-fee product assets 20,421 19,621 17,335 18,714 16,141
7,452 10,503 Sales 2,526 2,295 1,968 1,626 1,563
(6,060) (5,705) Redemptions (1,352) (1,878) (1,378) (1,462) (1,342)
(3,058) (1,900) Reinvestment of distributions and change in market value (1,974) (2,703) 789 (2,737) 1,593
- -------- -------- --------- -------- --------- --------- --------
17,955 19,621 Ending total Wrap-fee product assets 19,621 17,335 18,714 16,141 17,955
1,157 1,508 Unit investment trust assets at end of period 1,508 1,552 1,420 1,168 1,157
- -------- -------- --------- -------- --------- --------- --------
Total wrap-fee and unit investment trust assets at end of
19,112 21,129 period 21,129 18,887 20,134 17,309 19,112
======== ======== ========= ======== ========= ========= ========
1,392 4,798 Net wrap-fee product sales (redemptions) 1,174 417 590 164 221
======== ======== ========= ======== ========= ========= ========
Variable Annuities:
21,059 22,614 Beginning total account value 22,229 21,059 19,118 19,523 17,190
1,271 1,809 Sales, excluding exchanges 383 339 328 274 330
- 481 Exchange sales 5 - - - -
(2,356) (2,989) Surrenders, withdrawals and exchange redemptions (600) (665) (591) (552) (548)
Change in market value, interest credited, and other
(1,285) (856) activity (2) (958) (1,615) 668 (2,055) 1,717
- -------- -------- --------- -------- --------- --------- --------
18,689 21,059 Ending total account value 21,059 19,118 19,523 17,190 18,689
======== ======== ========= ======== ========= ========= ========
(1,085) (699) Net sales (redemptions) (212) (326) (263) (278) (218)
======== ======== ========= ======== ========= ========= ========
Fixed Annuities:
2,926 3,020 Beginning total account value 2,942 2,926 2,889 2,872 2,865
120 221 Sales 30 30 27 32 31
(216) (361) Surrenders, withdrawals and exchange redemptions (61) (69) (55) (48) (44)
145 46 Interest credited and other activity (2) 15 2 11 9 123
- -------- -------- --------- -------- --------- --------- --------
2,975 2,926 Ending account value 2,926 2,889 2,872 2,865 2,975
======== ======== ========= ======== ========= ========= ========
(96) (140) Net sales (redemptions) (31) (39) (28) (16) (13)
======== ======== ========= ======== ========= ========= ========
(1) Statutory first year premiums and deposits.
(2) Year-to-date and 4Q 2001 include increases in policyholder account values
of $429 million for Variable Annuities and $157 million for Fixed Annuities
as a result of policyholder credits issues in connection with the Company's
demutualization, as well as a decrease in policyholder account values of
$50 million in Fixed Annuities transferred to the Closed Block Business
upon its establishment.
Page 13
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
U. S. CONSUMER DIVISION - LIFE INSURANCE, RETAIL INVESTMENTS
SEGMENT MUTUAL FUNDS, WRAP-FEE PRODUCTS, AND ANNUITY SALES BY
DISTRIBUTION CHANNEL
(in millions)
Year-to-date 2000 2001
- -------------------- ------ -----------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- --------- --------- ------ ------ ------ ------ ------
INDIVIDUAL LIFE INSURANCE SALES(1) BY
DISTRIBUTION CHANNEL
218 259 Prudential Agents 68 57 54 56 51
252 128 Third party distribution 56 55 43 123 31
- --------- --------- ------ ------ ------ ------ ------
470 387 Total 124 112 97 179 82
========= ========= ====== ====== ====== ====== ======
RETAIL INVESTMENTS SEGMENT MUTUAL FUNDS, WRAP-FEE
PRODUCTS AND ANNUITY SALES BY DISTRIBUTION CHANNEL
Mutual funds, excluding wrap-fee products (2):
----------------------------------------------
743 1,123 Prudential Agents 214 233 199 161 150
1,602 2,930 Financial Advisors 630 575 429 298 300
2,851 1,196 Third-party distributors 379 445 1,470 457 479
77 129 Other 42 71 8 (9) 7
- --------- --------- ------ ------ ------ ------ ------
5,273 5,378 Total 1,265 1,324 2,106 907 936
========= ========= ====== ====== ====== ====== ======
Wrap-fee products:
------------------
424 406 Prudential Agents 115 109 110 104 101
6,837 9,833 Financial Advisors 2,366 2,138 1,807 1,488 1,404
191 264 Third-party distributors 45 48 51 34 58
- --------- --------- ------ ------ ------ ------ ------
7,452 10,503 Total 2,526 2,295 1,968 1,626 1,563
========= ========= ====== ====== ====== ====== ======
Variable and Fixed Annuities:
-----------------------------
1,144 2,086 Prudential Agents 317 296 293 257 298
230 421 Financial Advisors 99 72 58 46 54
17 4 Third-party distributors 2 1 4 3 9
- --------- --------- ------ ------ ------ ------ ------
1,391 2,511 Total 418 369 355 306 361
========= ========= ====== ====== ====== ====== ======
(1) Statutory first year premiums and deposits.
(2) Other than money market.
Page 14
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Fourth Quarter 2001
U. S. CONSUMER DIVISION - ACCOUNT VALUE ACTIVITY
(in millions)
Year-to-date 2000 2001
- ----------------- ------ -----------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------ ------ ------ ------ ------
INDIVIDUAL LIFE INSURANCE:
---------- ----------
Policyholders' Account Balances:
3,526 3,303 Beginning balance 3,470 3,526 3,578 3,628 3,664
772 812 Premiums and deposits 187 191 181 194 206
90 88 Interest credited 24 24 21 20 25
(706) (783) Surrenders and withdrawals (175) (172) (174) (159) (201)
89 149 Net transfers (to) from separate account 33 32 26 24 7
(59) (60) Policy charges (15) (14) (14) (17) (14)
114 17 Benefits and other 2 (9) 10 (26) 139
- ------ ------ ------ ------ ------ ------ ------
3,826 3,526 Ending balance 3,526 3,578 3,628 3,664 3,826
====== ====== ====== ====== ====== ====== ======
Separate Account Liabilities:
13,892 14,051 Beginning balance 14,232 13,892 12,849 13,391 12,021
1,774 1,642 Premiums and deposits 444 447 417 491 419
(915) (123) Change in market value and interest credited (373) (1,059) 531 (1,418) 1,031
(677) (590) Surrenders and withdrawals (142) (172) (179) (117) (209)
(107) (147) Net transfers (to) from general account (32) (20) 19 (96) (10)
(864) (858) Policy charges (215) (216) (215) (210) (223)
(93) (83) Benefits and other (22) (23) (31) (20) (19)
- ------ ------ ------ ------ ------ ------ ------
13,010 13,892 Ending balance 13,892 12,849 13,391 12,021 13,010
====== ====== ====== ====== ====== ====== ======
INDIVIDUAL ANNUITIES:
Account Values in General Account:
5,677 5,842 Beginning balance 5,712 5,677 5,624 5,587 5,566
1,391 2,511 Premiums and deposits 418 369 355 306 361
310 321 Interest credited 82 78 79 76 77
(2,572) (3,350) Surrenders and withdrawals (661) (734) (646) (600) (592)
1,001 540 Net transfers (to) from separate account 163 283 235 240 243
(5) (5) Policy charges (2) (1) (1) (1) (2)
350 (182) Benefits and other (1) (35) (48) (59) (42) 499
- ------ ------ ------ ------ ------ ------ ------
6,152 5,677 Ending balance 5,677 5,624 5,587 5,566 6,152
====== ====== ====== ====== ====== ====== ======
Account Values in Separate Account:
18,308 19,792 Beginning balance 19,459 18,308 16,383 16,808 14,489
905 2,117 Premiums and deposits 449 265 246 206 188
(1,578) (693) Change in market value and interest credited (928) (1,584) 717 (2,027) 1,316
(2,064) (2,586) Surrenders and withdrawals (511) (569) (536) (481) (478)
158 (71) Net transfers (to) from general account (101) 21 55 35 47
(217) (251) Policy charges (60) (58) (57) (52) (50)
- - Benefits and other - - - - -
- ------ ------ ------ ------ ------ ------ ------
15,512 18,308 Ending balance 18,308 16,383 16,808 14,489 15,512
====== ====== ====== ====== ====== ====== ======
---------- ----------
(1) Year-to-date and 4Q 2001 include increases in policyholder account values
of $586 million as a result of policyholder credits issued in connection
with the Company's demutualization, as well as a decrease in policyholder
account values of $50 million transferred to the Closed Block Business upon
its establishment.
Page 15
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
U. S. CONSUMER DIVISION - DEFERRED POLICY ACQUISITION COSTS
(in millions)
Year-to-date 2000 2001
- ----------------- ------ -------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------- -------- ------ ------- -------- -------- ------
---------- ----------
INDIVIDUAL LIFE INSURANCE:
3,090 3,014 Beginning balance 3,069 3,090 3,088 3,117 3,115
301 277 Capitalization 75 76 77 74 74
(232) (172) Amortization - operating results (38) (62) (55) (60) (55)
- - Amortization - realized investment gains and losses - - - - -
(26) (29) Impact of unrealized (gains) or losses on AFS securities (16) (16) 7 (16) (1)
- - Other - - - - -
- ------- -------- ------ ------- -------- -------- ------
3,133 3,090 Ending balance 3,090 3,088 3,117 3,115 3,133
======= ======== ====== ======= ======== ======== ======
INDIVIDUAL ANNUITIES:
682 693 Beginning balance 724 682 648 655 612
99 142 Capitalization 25 26 24 24 25
(134) (133) Amortization - operating results (54) (41) (21) (51) (21)
14 6 Amortization - realized investment gains and losses 3 (1) (2) 2 15
(33) (26) Impact of unrealized (gains) or losses on AFS securities (16) (18) 6 (18) (3)
- - Other - - - - -
- ------- -------- ------ ------- -------- -------- ------
628 682 Ending balance 682 648 655 612 628
======= ======== ====== ======= ======== ======== ======
PROPERTY & CASUALTY INSURANCE:
137 110 Beginning balance 143 137 137 141 137
390 371 Capitalization 95 100 102 95 93
(395) (365) Amortization - operating results (101) (100) (98) (99) (98)
- - Amortization - realized investment gains and losses - - - - -
- - Impact of unrealized (gains) or losses on AFS securities - - - - -
- 21 Other - - - - -
- ------- -------- ------ ------- -------- -------- ------
132 137 Ending balance 137 137 141 137 132
======= ======== ====== ======= ======== ======== ======
TOTAL U. S. CONSUMER DIVISION:
3,909 3,817 Beginning balance 3,936 3,909 3,873 3,913 3,864
790 790 Capitalization 195 202 203 193 192
(761) (670) Amortization - operating results (193) (203) (174) (210) (174)
14 6 Amortization - realized investment gains and losses 3 (1) (2) 2 15
(59) (55) Impact of unrealized (gains) or losses on AFS securities (32) (34) 13 (34) (4)
- 21 Other - - - - -
- ------- -------- ------ ------- -------- -------- ------
3,893 3,909 Ending balance 3,909 3,873 3,913 3,864 3,893
======= ======== ====== ======= ======== ======== ======
---------- ----------
Page 16
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Fourth 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 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------ ------ ------ ------ ------
Individual Life Insurance:
-------- --------
Policy Surrender Experience:
637 641 Cash value of surrenders 144 180 149 132 176
Cash value of surrenders as a percentage of mean future
policy benefits, policyholders' account balances,
3.8% 3.7% and separate account balances 3.3% 4.3% 3.5% 3.2% 4.4%
Death claims per $1,000 of in-force: (1)
2.10 2.06 Variable and universal life 2.22 2.22 1.65 2.53 2.01
1.50 1.18 Term life 1.10 1.07 1.25 2.78 0.86
1.93 1.82 Total, Individual Life Insurance Segment 1.88 1.88 1.55 2.61 1.65
-------- --------
Year-to-date 2000 2001
- ----------------- ------ ---------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------ ------ ------ ------ ------
Private Client Group:
-------- --------
Non-Interest Revenues:
1,155 1,561 Commissions 327 320 296 252 287
684 748 Fees 198 182 168 178 156
134 159 Other non-interest revenues 23 34 35 37 28
- ------ ------ ------ ------ ------ ------ ------
1,973 2,468 Total non-interest revenues 548 536 499 467 471
====== ====== ====== ====== ====== ====== ======
Recurring revenue as a percentage of total non-interest revenue (2) 31% 34% 34% 36% 35%
4,300 6,540 Average customer margin lending balances 6,251 5,223 4,376 4,200 3,470
-------- --------
(1) Annualized, for interim reporting periods
(2) Calculated on a trailing 12 month basis excluding
Consumer Banking revenue.
Page 17
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
U. S. CONSUMER DIVISION - SUPPLEMENTARY INFORMATION FOR PROPERTY
AND CASUALTY INSURANCE
(dollar amounts in millions)
Year-to-date 2000 2001
- ----------------- -------- ------------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- -------- ------- -------- ------- -------- -------- -------
Earned premium:
1,403 1,153 Automobile 290 328 346 356 373
448 413 Homeowners' 97 109 112 113 114
33 33 Other 9 8 8 9 8
- -------- ------- -------- ------ -------- -------- -------
1,884 1,599 Total earned premium 396 445 466 478 495
======== ======= ======== ====== ======== ======== =======
Loss ratio(1)(2):
70.6% 64.0% Automobile 66.4% 56.9% 74.1% 69.1% 81.0%
76.5% 72.4% Homeowners' 82.9% 79.5% 60.2% 97.3% 69.0%
70.8% 65.8% Overall 71.3% 61.8% 70.5% 75.6% 74.5%
Expense ratio(1)(3):
30.8% 35.3% Automobile 43.6% 32.0% 31.2% 30.3% 29.5%
36.6% 45.3% Homeowners' 62.6% 43.3% 34.8% 34.3% 35.9%
32.1% 37.8% Overall 48.3% 34.3% 32.0% 31.3% 31.0%
Combined ratio(4):
101.4% 99.3% Automobile 110.0% 88.9% 105.3% 99.4% 110.5%
113.1% 117.7% Homeowners' 145.5% 122.8% 95.0% 131.6% 104.9%
102.9% 103.6% Overall 119.6% 96.1% 102.5% 106.9% 105.5%
42.1 45.1 Catastrophe losses (5) 10.0 3.3 26.6 14.2 (2.0)
2.2% 2.7% Effect of catastrophic losses on combined ratio 2.5% 0.7% 5.7% 3.0% -0.4%
Accident year combined ratio (6) 114.6% 106.1% 106.0% 106.9% 107.0%
(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 18
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINED STATEMENTS OF OPERATIONS - EMPLOYEE BENEFITS DIVISION
(in millions)
Year-to-date % 2000 2001
- ----------------- ------ --------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
- -------- -------- ------ ------ ------ ------ ------
Revenues (1):
2,532 2,190 16% Premiums 556 610 622 650 650
244 250 -2% Policy charges and fee income 98 53 55 68 68
2,728 2,817 -3% Net investment income 711 705 688 671 664
408 429 -5% Commissions, investment management fees, and other income 105 93 106 110 99
- ------- ------- ------ ------ ------ ------ ------
5,912 5,686 4% Total revenues 1,470 1,461 1,471 1,499 1,481
- ------- ------- ------ ------ ------ ------ ------
Benefits and Expenses (1):
3,403 2,972 15% Insurance and annuity benefits 817 811 835 919 838
1,201 1,224 -2% Interest credited to policyholder account balances 292 279 304 307 311
11 43 -74% Interest expense 7 2 4 3 2
(30) (26) -15% Deferral of acquisition costs (7) (6) (7) (7) (10)
14 23 -39% Amortization of acquisition costs 13 3 4 2 5
1,130 1,063 6% General and administrative expenses 272 268 279 272 311
- ------- ------- ------ ------ ------ ------ ------
5,729 5,299 8% Total benefits and expenses 1,394 1,357 1,419 1,496 1,457
- ------- ------- ------ ------ ------ ------ ------
183 387 -53% Adjusted operating income before income taxes 76 104 52 3 24
======= ======= ====== ====== ====== ====== ======
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of losses
Page 19
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINING STATEMENTS OF OPERATIONS - EMPLOYEE BENEFITS DIVISION
(in millions)
Twelve Months Ended December 31, 2001 Quarter Ended December 31, 2001
--------------------------------------- ----------------------------------
Total Total
Employee Other Employee Other
Benefits Group Employee Benefits Group Employee
Division Insurance Benefits Division Insurance Benefits
--------- ---------- --------- ---------- ---------- --------
Revenues (1):
Premiums 2,532 2,512 20 650 643 7
Policy charges and fee income 244 164 80 68 45 23
Net investment income 2,728 547 2,181 664 140 524
Commissions, investment management fee
and other income 408 25 383 99 8 91
--------- ---------- --------- --------- ---------- --------
Total revenues 5,912 3,248 2,664 1,481 836 645
--------- ---------- --------- --------- ---------- --------
Benefits and Expenses (1):
Insurance and annuity benefits 3,403 2,490 913 838 618 220
Interest credited to policyholder account
balances 1,201 224 977 311 61 250
Interest expense 11 (2) 13 2 (1) 3
Deferral of acquisition costs (30) (18) (12) (10) (7) (3)
Amortization of acquisition costs 14 4 10 5 3 2
General and administrative expenses 1,130 480 650 311 141 170
--------- ---------- --------- --------- ---------- --------
Total benefits and expenses 5,729 3,178 2,551 1,457 815 642
--------- ---------- --------- --------- ---------- --------
Adjusted operating income before income taxes 183 70 113 24 21 3
========= ========== ========= ========= ========== ========
Twelve Months Ended December 31, 2000 Quarter Ended December 31, 2000
--------------------------------------- ----------------------------------
Total Total
Employee Other Employee Other
Benefits Group Employee Benefits Group Employee
Division Insurance Benefits Division Insurance Benefits
--------- ---------- --------- --------- ---------- --------
Revenues (1):
Premiums 2,190 2,119 71 556 545 11
Policy charges and fee income 250 172 78 98 79 19
Net investment income 2,817 485 2,332 711 131 580
Commissions, investment management fees,
and other income 429 25 404 105 7 98
--------- ---------- --------- --------- ---------- --------
Total revenues 5,686 2,801 2,885 1,470 762 708
--------- ---------- --------- --------- ---------- --------
Benefits and Expenses (1):
Insurance and annuity benefits 2,972 2,042 930 817 538 279
Interest credited to policyholder account
balances 1,224 200 1,024 292 55 237
Interest expense 43 (1) 44 7 (1) 8
Deferral of acquisition costs (26) (11) (15) (7) (3) (4)
Amortization of acquisition costs 23 1 22 13 1 12
General and administrative expenses 1,063 412 651 272 104 168
--------- ---------- --------- --------- ---------- --------
Total benefits and expenses 5,299 2,643 2,656 1,394 694 700
--------- ---------- --------- --------- ---------- --------
Adjusted operating income before income taxes 387 158 229 76 68 8
========= ========== ========= ========= ========== ========
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
Page 20
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Fourth Quarter 2001
EMPLOYEE BENEFITS DIVISION - SALES RESULTS AND ASSETS UNDER MANAGEMENT
(in millions)
Year-to-date 2000 2001
- --------------- ------ ---------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------ ------ ------ ------ ------
-------- --------
GROUP INSURANCE NEW ANNUALIZED PREMIUMS:
483 321 Group life (1) 47 274 30 64 115
147 162 Group disability (2) 25 64 18 34 31
- ------ ------ ------ ------ ------ ------ ------
630 483 Total 72 338 48 98 146
====== ====== ====== ====== ====== ====== ======
OTHER EMPLOYEE BENEFITS - SALES AND
ASSETS UNDER MANAGEMENT:
Defined Contribution:
26,046 25,788 Beginning total account value 27,129 26,046 24,473 25,319 22,710
3,689 5,439 Sales 1,407 1,255 923 729 782
(3,422) (3,937) Withdrawals (1,041) (1,035) (1,021) (728) (638)
(1,673) (1,244) Change in market value, interest credited and other (3) (1,449) (1,793) 944 (2,610) 1,786
- ------ ------ ------ ------ ------ ------ ------
24,640 26,046 Ending total account value 26,046 24,473 25,319 22,710 24,640
====== ====== ====== ====== ====== ====== ======
267 1,502 Net sales 366 220 (98) 1 144
====== ====== ====== ====== ====== ====== ======
Asset management of ending total account value:
Proprietary 19,132 17,941 18,287 16,501 17,665
Non-proprietary 6,914 6,532 7,032 6,209 6,975
------ ------ ------ ------ ------
Total 26,046 24,473 25,319 22,710 24,640
====== ====== ====== ====== ======
Guaranteed Products:
41,577 41,757 Beginning total account value 41,751 41,577 40,461 39,920 39,008
2,299 2,024 Sales 420 400 1,181 285 433
(4,372) (5,279) Withdrawals and benefits (1,253) (1,569) (877) (1,123) (803)
2,198 2,997 Change in market value and interest income 822 326 646 388 838
(1,877) 78 Other (4) (163) (273) (1,491) (462) 349
- ------ ------ ------ ------ ------ ------ ------
39,825 41,577 Ending total account value 41,577 40,461 39,920 39,008 39,825
====== ====== ====== ====== ====== ====== ======
(2,073) (3,255) Net sales (833) (1,169) 304 (838) (370)
====== ====== ====== ====== ====== ====== ======
Product composition of ending total account value:
Spread-lending products 19,184 19,069 19,020 18,841 18,887
Fee-based products 22,393 21,392 20,900 20,167 20,938
------ ------ ------ ------ ------
Total 41,577 40,461 39,920 39,008 39,825
====== ====== ====== ====== ======
-------- --------
(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) Year-to-date and 4Q 2001 include an increase in policyholder account values
of $433 million as a result of policyholder credits issued in connection
with the Company's demutualization.
(4) Represents changes in asset balances for externally managed accounts. In
addition, year-to-date and 4Q 2001 include an increase in policyholder
account values of $181 million representing cumulative conversions of
client account balances to products currently included in this division as
well as $2 million of policyholder credits issued in connection with the
Company's demutualization.
Page 21
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
EMPLOYEE BENEFITS DIVISION - SUPPLEMENTARY INFORMATION
(dollar amounts in millions)
2000 2001
-------- ------------------------------------------
4Q 1Q 2Q 3Q 4Q
-------- -------- -------- -------- --------
------------ ------------
Future Policy Benefits (1):
Group life 1,416 1,414 1,452 1,623 1,664
Group disability (2) 67 96 101 98 103
Other employee benefits 12,582 12,595 12,446 12,498 12,317
-------- -------- -------- -------- --------
Total 14,065 14,105 13,999 14,219 14,084
======== ======== ======== ======== ========
Policyholder Account Balances (1):
Group life 3,344 3,424 3,664 3,764 3,805
Group disability (2) 51 45 41 57 61
Other employee benefits 15,338 15,288 15,305 15,208 15,372
-------- -------- -------- -------- --------
Total 18,733 18,757 19,010 19,029 19,238
======== ======== ======== ======== ========
Separate Account Liabilities (1):
Group life 7,130 6,897 7,156 7,246 7,634
Group disability (2) - - - - -
Other employee benefits 23,917 23,591 22,808 22,189 21,538
-------- -------- -------- -------- --------
Total separate account 31,047 30,488 29,964 29,435 29,172
======== ======== ======== ======== ========
Group Life Insurance:
Gross premiums, policy charges and fee income (3) 561 565 596 637 641
Earned premiums, policy charges and fee income 492 501 529 579 551
Benefits ratio 82.3% 90.0% 94.7% 96.6% 88.6%
Administrative operating expense ratio 11.6% 10.4% 9.7% 8.8% 11.2%
Persistency ratio 95.2% 98.8% 98.7% 97.9% 97.4%
Group Disability Insurance (2):
Gross premiums, policy charges and fee income (3) 125 129 131 141 142
Earned premiums, policy charges and fee income 132 125 125 129 137
Benefits ratio 100.6% 88.5% 97.8% 99.2% 94.9%
Administrative operating expense ratio 14.6% 23.3% 25.2% 22.0% 25.4%
Persistency ratio 90.6% 92.4% 91.3% 89.4% 88.8%
------------ ------------
(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 22
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL DIVISION
(in millions)
Year-to-date % 2000 2001
------------ -------- ---------------------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
---- ----- --------- ----------- ---------- --------- --------
Revenues (1):
3,337 1,680 99% Premiums 445 454 817 1,020 1,046
307 92 234% Policy charges and fee income 26 24 111 102 70
511 195 162% Net investment income 55 50 129 170 162
Commissions, investment management fees,
539 657 -18% and other income 145 144 134 118 143
- ------- ------- ----------- ----------- ---------- --------- --------
4,694 2,624 79% Total revenues 671 672 1,191 1,410 1,421
- ------- ------- ----------- ----------- ---------- --------- --------
Benefits and Expenses (1):
2,674 1,266 111% Insurance and annuity benefits 327 337 702 794 841
Interest credited to policyholder account
72 2 3496% balances - 1 18 28 25
4 4 0% Interest expense 2 2 2 2 (2)
(539) (404) -33% Deferral of acquisition costs (109) (114) (143) (133) (149)
164 146 12% Amortization of acquisition costs 38 38 35 44 47
530 586 -10% Securities operations non-interest expenses 147 127 131 125 147
1,266 702 80% General and administrative expenses 206 183 326 370 387
- ------- ------- ----------- ----------- ---------- --------- --------
4,171 2,302 81% Total benefits and expenses 611 574 1,071 1,230 1,296
- ------- ------- ----------- ----------- ---------- --------- --------
523 322 62% Adjusted operating income before income taxes 60 98 120 180 125
======= ======= =========== =========== ========== ======== ========
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains, net of
losses.
Page 23
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINING STATEMENTS OF OPERATIONS - INTERNATIONAL DIVISION
(in millions)
Twelve Months Ended December 31, 2001
--------------------------------------------------------------------
International
Total Insurance International International
International excl.Gibraltar Insurance- Securities and
Division Life Gibraltar Life(2) Investments
------------- --------------- ----------------- ---------------
Revenues (1):
Premiums 3,337 1,832 1,505 --
Policy charges and fee income 307 102 205 --
Net investment income 511 146 304 61
Commissions, investment management fees, and other income 539 40 12 487
---------- ----------- ---------- ----------
Total revenues 4,694 2,120 2,026 548
---------- ----------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 2,674 1,383 1,291 --
Interest credited to policyholder account balances 72 5 67 --
Interest expense 4 5 (1) --
Deferral of acquisition costs (539) (458) (81) --
Amortization of acquisition costs 164 154 9 1
Securities operations non-interest expenses 530 -- -- 530
General and administrative expenses 1,266 682 479 105
---------- ----------- ---------- ----------
Total benefits and expenses 4,171 1,771 1,764 636
---------- ----------- ---------- ----------
Adjusted operating income before income taxes 523 349 262 (88)
========== =========== ========== ==========
Twelve Months Ended December 31, 2000
--------------------------------------------------------------------
International
Total Insurance International International
International excl.Gibraltar Insurance- Securities and
Division Life Gibraltar Life(2) Investments
------------- --------------- ----------------- --------------
Revenues (1):
Premiums 1,680 1,680 -- --
Policy charges and fee income 92 92 -- --
Net investment income 195 129 -- 66
Commissions, investment management fees, and other income 657 19 -- 638
---------- ----------- ---------- ----------
Total revenues 2,624 1,920 -- 704
---------- ----------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 1,266 1,266 -- --
Interest credited to policyholder account balances 2 2 -- --
Interest expense 4 4 -- --
Deferral of acquisition costs (404) (403) -- (1)
Amortization of acquisition costs 146 145 -- 1
Securities operations non-interest expenses 586 - -- 586
General and administrative expenses 702 610 -- 92
---------- ----------- ---------- ----------
Total benefits and expenses 2,302 1,624 -- 678
---------- ----------- ---------- ----------
Adjusted operating income before income taxes 322 296 -- 26
========== =========== ========== ==========
Quarter Ended December 31, 2001
--------------------------------------------------------------------
International
Total Insurance International International
International excl.Gibraltar Insurance- Securities and
Division Life Gibraltar Life(2) Investments
------------- -------------- ----------------- ---------------
Revenues (1):
Premiums 1,046 481 565 --
Policy charges and fee income 70 31 39 --
Net investment income 162 41 107 14
Commissions, investment management fees, and other income 143 12 10 121
---------- ----------- ---------- ----------
Total revenues 1,421 565 721 135
---------- ----------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 841 364 477 --
Interest credited to policyholder account balances 25 2 23 --
Interest expense (2) -- (2) --
Deferral of acquisition costs (149) (112) (37) --
Amortization of acquisition costs 47 41 6 --
Securities operations non-interest expenses 147 -- -- 147
General and administrative expenses 387 175 177 35
---------- ----------- ---------- ----------
Total benefits and expenses 1,296 470 644 182
---------- ----------- ---------- ----------
Adjusted operating income before income taxes 125 95 77 (47)
========== =========== ========== ==========
Quarter Ended December 31, 2000
--------------------------------------------------------------------
International
Total Insurance International International
International excl.Gibraltar Insurance- Securities and
Division Life Gibraltar Life(2) Investments
-------------- ---------------- ----------------- ---------------
Revenues (1):
Premiums 445 445 -- --
Policy charges and fee income 26 26 -- --
Net investment income 55 35 -- 20
Commissions, investment management fees, and other income 145 6 -- 139
---------- ----------- ---------- ----------
Total revenues 671 512 -- 159
---------- ----------- ---------- ----------
Benefits and Expenses (1):
Insurance and annuity benefits 327 327 -- --
Interest credited to policyholder account balances -- -- -- --
Interest expense 2 2 -- --
Deferral of acquisition costs (109) (109) -- --
Amortization of acquisition costs 38 38 -- --
Securities operations non-interest expenses 147 -- -- 147
General and administrative expenses 206 169 -- 37
---------- ----------- ---------- ----------
Total benefits and expenses 611 427 -- 184
---------- ----------- ---------- ----------
Adjusted operating income before income taxes 60 85 -- (25)
========== =========== ========== ==========
(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 November 30, 2001.
Page 24
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
INTERNATIONAL DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION
(dollar amounts in millions unless otherwise noted)
Year-to-date 2000 2001
- -------------- ------ --------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------ ------ ------- ------- -------
INTERNATIONAL INSURANCE OPERATING DATA:
GAAP exchange rate basis (1):
Net premiums, policy charges and fee income:
1,526 1,485 Japan, excluding Gibraltar Life 388 394 361 376 395
1,710 - Gibraltar Life (2) - - 467 639 604
408 287 All other countries 83 84 100 107 117
- ------ ------ ------ ------ ------- ------- -------
3,644 1,772 Total 471 478 928 1,122 1,116
====== ====== ====== ====== ======= ======= =======
Annualized new business premiums:
370 359 Japan, excluding Gibraltar Life 115 114 92 77 87
110 - Gibraltar Life (2) - - 10 44 56
212 150 All other countries 47 48 60 51 53
- ------ ------ ------ ------ ------- ------- -------
692 509 Total 162 162 162 172 196
====== ====== ====== ====== ======= ======= =======
Constant exchange rate basis (3):
Net premiums, policy charges and fee income:
1,526 1,318 Japan, excluding Gibraltar Life 350 384 365 376 401
1,719 - Gibraltar Life (2) - - 472 645 602
408 256 All other countries 75 81 102 106 119
- ------ ------ ------ ------ ------- ------- -------
3,653 1,574 Total 425 465 939 1,127 1,122
====== ====== ====== ====== ======= ======= =======
Annualized new business premiums:
370 319 Japan, excluding Gibraltar Life 103 111 93 77 89
110 - Gibraltar Life (2) - - 10 44 56
212 133 All other countries 44 47 61 51 53
- ------ ------ ------ ------ ------- ------- -------
692 452 Total 147 158 164 172 198
====== ====== ====== ====== ======= ======= =======
Face amount of individual policies inforce
at end of period (in billions):
Japan, excluding Gibraltar Life 112 117 120 124 127
Gibraltar Life (2) - - 265 244 232
All other countries 26 27 32 34 38
------ ------ ------- ------- -------
Total 138 144 417 402 397
====== ====== ======= ======= =======
Number of individual policies in force at
end of period (in thousands):
Japan, excluding Gibraltar Life 805 858 892 918 946
Gibraltar Life (2) - - 5,322 5,047 4,911
All other countries 376 410 452 492 536
------ ------ ------- ------- -------
Total 1,181 1,268 6,666 6,457 6,393
====== ====== ======= ======= =======
(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 November 30, 2001.
(3) Translated based on average exchange rates for the year ended December 31,
2001.
Page 25
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
INTERNATIONAL DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION
(dollar amounts in millions unless otherwise noted)
2000 2001
---------- ----------------------------------------------------
4Q 1Q 2Q 3Q 4Q
---------- ---------- ---------- ---------- ----------
--------------- ---------------
International insurance policy persistency (1):
13 months 94.0% 93.6% 93.1% 93.1% 93.2%
25 months 88.4% 88.2% 88.9% 88.9% 88.1%
Number of Life Planners at end of period (2):
Japan 1,811 1,802 1,853 1,944 1,992
All other countries 1,684 1,632 1,837 2,055 2,112
---------- ---------- ---------- ---------- ----------
Total 3,495 3,434 3,690 3,999 4,104
========== ========== ========== ========== ==========
Number of International Retail Financial Advisors at
end of period 620 643 632 646 633
Assets managed or administered for customers outside
of the United States at end of period 34,061 32,802 66,388 62,642 64,280
--------------- ---------------
(1) Excluding Gibraltar Life.
(2) Excluding Gibraltar Life Advisors.
Page 26
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINED STATEMENTS OF OPERATIONS - ASSET MANAGEMENT DIVISION
(in millions)
Year-to-date % 2000 2001
- --------------- ------- -------------------------------
2001 2000 Change 4Q 1Q 2Q 3Q 4Q
- ------ ------ ------- ------- ------- ----- ------
Revenues (1):
--------- ---------
90 52 73% Net investment income 22 19 24 19 28
1,182 1,292 -9% Commissions, investment management fees, and other income 317 310 286 273 313
- ------ ------ ------- ------ ------- ------ -------
1,272 1,344 -5% Total revenues 339 329 310 292 341
- ------ ------ ------- ------ ------- ------ -------
Benefits and Expenses:
15 5 200% Interest expense 5 4 4 3 4
292 324 -10% Securities operations non-interest expenses 88 73 85 70 64
746 739 1% General and administrative expenses 206 174 189 174 209
- ------ ------ ------- ------ ------ ------ ------
1,053 1,068 -1% Total benefits and expenses 299 251 278 247 277
- ------ ------ ------- ------ ------ ------ ------
219 276 -21% Adjusted operating income before income taxes 40 78 32 45 64
====== ====== ======= ====== ====== ====== ======
Analysis of revenues by source:
Investment Management and Advisory Services segment:
210 244 -14% Retail customers 58 53 54 52 51
383 409 -6% Institutional customers 112 97 104 93 89
242 221 10% General account 57 55 51 59 77
- ------ ------ ------- ------ ------ ------ ------
835 874 -4% Subtotal 227 205 209 204 217
437 470 -7% Other Asset Management segment revenues 112 124 101 88 124
- ------ ------ ------- ------ ------ ------ ------
1,272 1,344 -5% Total revenues 339 329 310 292 341
====== ====== ======= ====== ====== ====== ======
Analysis of commissions, investment management fees and
other revenues by type:
Investment Management and Advisory Services segment:
741 794 -7% Asset-based fees 196 183 188 186 184
52 59 -12% Transaction-based and other revenues 21 14 10 12 16
- ------ ------ ------- ------ ------ ------ ------
793 853 -7% Subtotal 217 197 198 198 200
389 439 -11% Other Asset Management 100 113 88 75 113
- ------ ------ ------- ------ ------ ------ ------
1,182 1,292 -9% Total 317 310 286 273 313
====== ====== ======= ====== ====== ====== ======
--------- ---------
(1) Revenues exclude realized investment gains, net
of losses.
Page 27
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
COMBINING STATEMENTS OF OPERATIONS - ASSET MANAGEMENT DIVISION
(in millions)
Twelve Months Ended December 31, 2001
----------------------------------------------
Investment
Management
Total Asset & Advisory Other Asset
Management Services Management
-------------- -------------- --------------
Revenues (1):
Net investment income 90 42 48
Commissions, investment management fees, and other income 1,182 793 389
-------------- -------------- --------------
Total revenues 1,272 835 437
-------------- -------------- --------------
Benefits and Expenses:
Interest expense 15 15 -
Securities operations non-interest expenses 292 - 292
General and administrative expenses 746 715 31
-------------- -------------- --------------
Total benefits and expenses 1,053 730 323
-------------- -------------- --------------
Adjusted operating income before income taxes 219 105 114
============== ============== ==============
Twelve Months Ended December 31, 2000
----------------------------------------------
Investment
Management
Total Asset & Advisory Other Asset
Management Services Management
-------------- -------------- --------------
Revenues (1):
Net investment income 52 21 31
Commissions, investment management fees, and other income 1,292 853 439
-------------- -------------- --------------
Total revenues 1,344 874 470
-------------- -------------- --------------
Benefits and Expenses:
Interest expense 5 5 -
Securities operations non-interest expenses 324 - 324
General and administrative expenses 739 715 24
-------------- -------------- --------------
Total benefits and expenses 1,068 720 348
-------------- -------------- --------------
Adjusted operating income before income taxes 276 154 122
============== ============== ==============
Quarter Ended December 31, 2001
---------------------------------------------
Investment
Management
Total Asset & Advisory Other Asset
Management Services Management
------------- -------------- -------------
Revenues (1):
Net investment income 28 17 11
Commissions, investment management fees, and other income 313 200 113
------------- -------------- -------------
Total revenues 341 217 124
------------- -------------- -------------
Benefits and Expenses:
Interest expense 4 4 -
Securities operations non-interest expenses 64 - 64
General and administrative expenses 209 199 10
------------- -------------- -------------
Total benefits and expenses 277 203 74
------------- -------------- -------------
Adjusted operating income before income taxes 64 14 50
============= ============== =============
Quarter Ended December 31, 2000
---------------------------------------------
Investment
Management
Total Asset & Advisory Other Asset
Management Services Management
------------- -------------- -------------
Revenues (1):
Net investment income 22 10 12
Commissions, investment management fees, and other income 317 217 100
------------- -------------- -------------
Total revenues 339 227 112
------------- -------------- -------------
Benefits and Expenses:
Interest expense 5 5 -
Securities operations non-interest expenses 88 - 88
General and administrative expenses 206 196 10
------------- -------------- -------------
Total benefits and expenses 299 201 98
------------- -------------- -------------
Adjusted operating income before income taxes 40 26 14
============= ============== =============
(1) Revenues exclude realized investment gains, net of losses.
Page 28
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
ASSETS UNDER MANAGEMENT - INVESTMENT MANAGEMENT AND ADVISORY SERVICES SEGMENT
(in billions)
December 31, 2001
------------------------------------------------------------
Fixed Real
Equity Income Estate Total
------------- ------------- ------------- -------------
Retail customers 44.2 52.3 - 96.5
Institutional customers 39.6 39.5 10.0 89.1
General account 1.9 110.5 1.4 113.8
------------- ------------- ------------- -------------
Total 85.7 202.3 11.4 299.4
============= ============= ============= =============
December 31, 2000
------------------------------------------------------------
Fixed Real
Equity Income Estate Total
------------- ------------- ------------- -------------
Retail customers 58.7 48.7 - 107.4
Institutional customers 46.4 38.7 10.0 95.1
General account 2.2 105.6 2.2 110.0
------------- ------------- ------------- -------------
Total 107.3 193.0 12.2 312.5
============= ============= ============= =============
Year-to-date 2000 2001
- -------------------------- ------------ -------------------------------------
2001 2000 4Q 1Q 2Q 3Q 4Q
- ------------ ------------ ------------ ------- -------- -------- ---------
Institutional Assets Under Management:
Assets gathered by Asset Management
division sales force:
74.5 76.0 Beginning assets under management 77.4 74.5 70.5 70.4 65.3
13.7 18.5 Additions to managed portfolio 4.8 3.9 3.2 2.4 4.2
(17.7) (17.2) Withdrawals (4.6) (3.0) (5.0) (4.2) (5.5)
(2.6) (2.8) Change in market value (3.1) (4.9) 1.7 (3.3) 3.9
- ------------ ------------ ------------ ------- -------- -------- ---------
67.9 74.5 Ending assets under management 74.5 70.5 70.4 65.3 67.9
Other institutional assets under
21.2 20.6 management 20.6 19.0 20.3 19.6 21.2
- ------------ ------------ ------------ ------- -------- -------- ---------
Total assets managed for institutional
89.1 95.1 customers at end of period 95.1 89.5 90.7 84.9 89.1
============ ============ ============ ======= ======== ======== =========
Page 29
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
CONSOLIDATED INVESTMENT PORTFOLIO COMPOSITION
(in millions)
December 31, 2001 December 31, 2000
--------------------------- ---------------------------
Amount % of Total Amount % of Total
------------- ------------ ------------ -------------
General Account (1):
Fixed maturities:
Public available for sale, at fair value 77,807 51.8% 62,454 47.6%
Public held to maturity, at amortized cost 318 0.2% 757 0.6%
Private available for sale, at fair value 32,040 21.3% 21,294 16.2%
Private held to maturity, at amortized cost 53 0.0% 11,686 8.9%
Trading account assets, at fair value 112 0.1% 3 0.0%
Equity securities, at fair value 2,259 1.5% 2,315 1.8%
Commercial loans 19,176 12.8% 15,418 11.8%
Other long-term investments (2) 5,095 3.4% 4,259 3.2%
Policy loans, at outstanding balance 8,570 5.7% 8,046 6.1%
Short term investments, at amortized cost 4,854 3.2% 4,963 3.8%
------------- ------------ ------------ -------------
Total general account investments 150,284 100.0% 131,195 100.0%
============ =============
Invested assets of other entities and operations (3) 15,550 17,320
------------- ------------
Consolidated invested assets 165,834 148,515
Invested assets of Closed Block Business (4) 56,474 62,273
------------- ------------
Invested assets of Financial Services Businesses 109,360 86,242
============= ============
Fixed Maturities by Credit Quality(1):
December 31, 2001
------------------------------------------
Amortized Estimated
Cost % of Total Fair Value
------------- ------------ ------------
Public Fixed Maturities:
NAIC Rating Rating Agency Equivalent
1 Aaa, Aa, A 54,220 70.8% 55,495
2 Baa 17,543 22.9% 17,832
3 Ba 2,893 3.8% 2,937
4 B 1,436 1.9% 1,385
5 C and lower 234 0.3% 238
6 In or near default 258 0.3% 254
------------- ------------ ------------
Total 76,584 100.0% 78,141
============= ============ ============
Private Fixed Maturities:
NAIC Rating Rating Agency Equivalent
1 Aaa, Aa, A 10,073 32.3% 10,568
2 Baa 15,691 50.4% 16,150
3 Ba 2,906 9.3% 2,944
4 B 1,591 5.1% 1,525
5 C and lower 734 2.4% 739
6 In or near default 162 0.5% 172
------------- ------------ ------------
Total 31,157 100.0% 32,098
============= ============ ============
December 31, 2000
-----------------------------------------
Amortized Estimated
Cost % of Total Fair Value
------------ ------------- ------------
Public Fixed Maturities:
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 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. Invested assets as of December 31, 2001 include
investments of Gibraltar Life acquired in April 2001.
(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.
(4) Represents Traditional Participating Products segment at December 31, 2000.
Page 30
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
INVESTMENT PORTFOLIO COMPOSITION - JAPANESE INSURANCE OPERATIONS
(in millions)
December 31, 2001 December 31, 2000
-------------------------- -------------------------
Amount % of Total Amount % of Total
----------- ------------- ----------- ------------
General Account (1):
Fixed maturities:
Public available for sale, at fair value 20,883 73.8% 2,418 62.3%
Public held to maturity, at amortized cost 318 1.1% 752 19.4%
Private available for sale, at fair value 98 0.4% - 0.0%
Private held to maturity, at amortized cost 53 0.2% 75 1.9%
Trading account assets, at fair value 74 0.3% - 0.0%
Equity securities, at fair value 1,032 3.6% 165 4.3%
Commercial loans 4,255 15.0% - 0.0%
Other long-term investments (2) 1,001 3.5% 196 5.1%
Policy loans, at outstanding balance 605 2.1% 190 4.9%
Short term investments, at amortized cost 2 0.0% 83 2.1%
----------- ------------- ----------- ------------
Total general account investments 28,321 100.0% 3,879 100.0%
=========== ============= =========== ============
INVESTMENT PORTFOLIO COMPOSITION - EXCLUDING JAPANESE INSURANCE OPERATIONS
(in millions)
December 31, 2001 December 31, 2000
-------------------------- -------------------------
Amount % of Total Amount % of Total
----------- ------------- ----------- ------------
General Account (1):
Fixed maturities:
Public available for sale, at fair value 56,924 46.7% 60,036 47.2%
Public held to maturity, at amortized cost - 0.0% 5 0.0%
Private available for sale, at fair value 31,942 26.2% 21,294 16.7%
Private held to maturity, at amortized cost - 0.0% 11,611 9.1%
Trading account assets, at fair value 38 0.0% 3 0.0%
Equity securities, at fair value 1,227 1.0% 2,150 1.7%
Commercial loans 14,921 12.2% 15,418 12.1%
Other long-term investments (2) 4,094 3.4% 4,063 3.2%
Policy loans, at outstanding balance 7,965 6.5% 7,856 6.2%
Short term investments, at amortized cost 4,852 4.0% 4,880 3.8%
----------- ------------- ----------- ------------
Total general account investments 121,963 100.0% 127,316 100.0%
=========== ============= =========== ============
(1) Excludes investments of 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.
Page 31
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
CONSOLIDATED INVESTMENT RESULTS
(in millions)
Quarter Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(4) Amount (Losses) Yield(4) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 6.08% 1,641 (276) 7.24% 1,713 (220)
Equity securities 1.66% 11 (117) 2.30% 14 68
Commercial loans 7.22% 356 (25) 8.09% 314 (8)
Policy loans 6.37% 137 - 6.23% 123 -
Short-term investments and cash equivalents 2.03% 95 - 10.64% 270 3
Other investments 6.96% 88 (20) 12.31% 138 20
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 5.72% 2,328 (438) 7.61% 2,572 (137)
Investment expenses -0.36% (145) - -0.74% (250) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 5.36% 2,183 (438) 6.87% 2,322 (137)
========== ==========
Investment results of other entities and operations (2) 73 3 118 -
Less amount relating to discontinued operations and divested
business (8) - (14) -
---------- ---------- ---------- ----------
Consolidated amount 2,248 (435) 2,426 (137)
Closed Block Business (3) 946 (270) 1,110 26
---------- ---------- ---------- ----------
Financial Services Businesses 1,302 (165) 1,316 (163)
========== ========== ========== ==========
Twelve Months Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(4) Amount (Losses) Yield(4) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 6.37% 6,833 (640) 7.54% 6,958 (1,066)
Equity securities 1.30% 45 (237) 2.42% 67 450
Commercial loans 7.27% 1,395 1 8.23% 1,255 (5)
Policy loans 6.22% 522 - 6.34% 478 -
Short-term investments and cash equivalents 2.98% 453 (3) 7.58% 683 8
Other investments 6.96% 328 174 9.54% 420 325
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 6.06% 9,576 (705) 7.54% 9,861 (288)
Investment expenses -0.48% (741) - -0.69% (871) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 5.58% 8,835 (705) 6.85% 8,990 (288)
========== ==========
Investment results of other entities and operations (2) 316 - 507 -
Less amount relating to discontinued operations and divested
business (15) - (101) -
---------- ---------- ---------- ----------
Consolidated amount 9,136 (705) 9,396 (288)
Closed Block Business (3) 3,897 (543) 4,172 91
---------- ---------- ---------- ----------
Financial Services Businesses 5,239 (162) 5,224 (379)
========== ========== ========== ==========
(1) Excludes investments of 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) Represents Traditional Participating Products segment for periods prior to
effective date of demutualization.
(4) 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 commercial loans are calculated gross of any
allowance for losses on commercial loans. Reflects Gibraltar Life
investments from acquisition in April 2001.
Page 32
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
INVESTMENT RESULTS - JAPANESE INSURANCE OPERATIONS
(in millions)
Quarter Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(2) Amount (Losses) Yield(2) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 1.76% 95 66 2.58% 21 (15)
Equity securities 1.02% 3 (23) 0.89% - (14)
Commercial loans 3.85% 45 (2) 0.00% - -
Policy loans 1.67% 3 - 4.78% 2 -
Short-term investments and cash equivalents 0.08% 1 (2) 0.21% - -
Other investments -0.32% (1) (145) 5.29% 2 (6)
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 1.75% 146 (106) 2.68% 25 (35)
Investment expenses -0.11% (9) - -0.04% (1) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 1.64% 137 (106) 2.64% 24 (35)
========== ========== ========== ========== ========== ==========
Twelve Months Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(2) Amount (Losses) Yield(2) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 1.38% 243 46 2.70% 82 4
Equity securities 0.41% 6 (120) 2.02% 3 (14)
Commercial loans 4.17% 162 9 0.00% - -
Policy loans 1.38% 9 - 5.43% 9 -
Short-term investments and cash equivalents 0.08% 2 (1) 0.16% - -
Other investments 1.56% 13 (18) 5.48% 7 (6)
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 1.62% 435 (84) 2.85% 101 (16)
Investment expenses -0.10% (25) - -0.05% (2) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 1.52% 410 (84) 2.80% 99 (16)
========== ========== ========== ========== ========== ==========
(1) Excludes investments of 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) 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 commercial loans are calculated gross of any
allowance for losses on commercial loans. Reflects Gibraltar Life
investments from acquisition in April 2001.
Page 33
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
INVESTMENT RESULTS - EXCLUDING JAPANESE INSURANCE OPERATIONS
(in millions)
Quarter Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(2) Amount (Losses) Yield(2) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 7.16% 1,546 (342) 7.41% 1,692 (205)
Equity securities 2.17% 8 (94) 2.41% 14 82
Commercial loans 8.28% 311 (23) 8.09% 314 (8)
Policy loans 6.73% 134 - 6.26% 121 -
Short-term investments and cash equivalents 2.57% 94 2 10.72% 270 3
Other investments 9.04% 89 125 12.60% 136 26
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 6.74% 2,182 (332) 7.76% 2,547 (102)
Investment expenses -0.42% (136) - -0.77% (249) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 6.32% 2,046 (332) 6.99% 2,298 (102)
========== ========== ========== ========== ========== ==========
Twelve Months Ended December 31
----------------------------------------------------------------------
2001 2000
---------------------------------- ----------------------------------
Investment Income Realized Investment Income Realized
---------------------- ----------------------
Gains / Gains /
Yield(2) Amount (Losses) Yield(2) Amount (Losses)
---------- ---------- ---------- ---------- ---------- ----------
General Account (1):
Fixed maturities 7.59% 6,590 (686) 7.71% 6,876 (1,070)
Equity securities 2.12% 39 (117) 2.59% 64 464
Commercial loans 8.36% 1,233 (8) 8.23% 1,255 (5)
Policy loans 6.61% 513 - 6.37% 469 -
Short-term investments and cash equivalents 3.94% 451 (2) 7.64% 683 8
Other investments 8.35% 315 192 9.66% 413 331
---------- ---------- ---------- ---------- ---------- ----------
Gross investment income before investment expenses 7.24% 9,141 (621) 7.68% 9,760 (272)
Investment expenses -0.59% (716) - -0.71% (869) -
---------- ---------- ---------- ---------- ---------- ----------
Total for General Account 6.65% 8,425 (621) 6.97% 8,891 (272)
========== ========== ========== ========== ========== ==========
(1) Excludes investments of 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) 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 commercial loans are calculated gross of any
allowance for losses on commercial loans.
Page 34
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
RECLASSIFIED STATEMENTS OF OPERATIONS - U.S. CONSUMER DIVISION
(in millions)
Year ended December 31 2000 2001
- ------------------------ ------------------------------ ----------------------
1998 1999 1Q 2Q 3Q 4Q 1Q 2Q 3Q
- ------- ------- ------ ------ ------ ------ ------ ------ ------
Revenues (1):
1,843 1,843 Premiums 453 512 493 483 545 575 561
1,281 1,293 Policy charges and fee income 328 324 329 326 315 321 305
1,345 1,273 Net investment income 358 334 327 325 333 303 304
Commissions, investment management fees, and
2,882 3,154 other income 981 860 797 796 755 713 689
- ------- ------- ------ ------ ------ ------ ------ ------ ------
7,351 7,563 Total revenues 2,120 2,030 1,946 1,930 1,948 1,912 1,859
- ------- ------- ------ ------ ------ ------ ------ ------ ------
Benefits and Expenses (1):
1,715 1,733 Insurance and annuity benefits 437 441 455 505 456 527 555
Interest credited to policyholder account
411 397 balances 96 99 99 101 103 99 96
7 9 Interest expense - 1 1 9 2 3 2
(1,025) (896) Deferral of acquisition costs (206) (229) (221) (211) (219) (216) (202)
705 765 Amortization of acquisition costs 155 191 190 213 222 193 230
2,124 2,269 Securities operations non-interest expenses 652 590 602 641 603 645 577
2,562 2,619 General and administrative expenses 633 654 654 734 587 579 554
- ------- ------- ------ ------ ------ ------ ------ ------ ------
6,499 6,896 Total benefits and expenses 1,767 1,747 1,780 1,992 1,754 1,830 1,812
- ------- ------- ------ ------ ------ ------ ------ ------ ------
852 667 Adjusted operating income before income taxes 353 283 166 (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 35
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
RECLASSIFIED STATEMENTS OF OPERATIONS - INDIVIDUAL LIFE INSURANCE
(in millions)
Year ended December 31 2000 2001
- ----------------------- ----------------------- ----------------
1998 1999 1Q 2Q 3Q 4Q 1Q 2Q 3Q
- -------- -------- ---- ---- ---- ---- ---- ---- ----
Revenues (1):
203 242 Premiums 65 81 54 70 87 96 71
1,056 1,030 Policy charges and fee income 254 253 258 258 251 256 248
300 316 Net investment income 97 97 93 87 99 97 95
95 115 Commissions, investment management fees, and other income 45 32 33 51 30 29 35
- -------- -------- ---- ---- ---- ---- ---- ---- ----
1,654 1,703 Total revenues 461 463 438 466 467 478 449
- -------- -------- ---- ---- ---- ---- ---- ---- ----
Benefits and Expenses (1):
520 515 Insurance and annuity benefits 157 145 159 179 157 173 166
117 126 Interest credited to policyholder account balances 32 33 33 33 35 34 33
4 4 Interest expense - - - 10 - 1 -
(375) (292) Deferral of acquisition costs (67) (65) (70) (75) (76) (77) (74)
185 185 Amortization of acquisition costs 45 50 39 38 62 55 60
- - Securities operations non-interest expenses - - - - - - -
1,025 1,048 General and administrative expenses 241 219 266 312 210 205 188
- -------- -------- ---- ---- ---- ---- ---- ---- ----
1,476 1,586 Total benefits and expenses 408 382 427 497 388 391 373
- -------- -------- ---- ---- ---- ---- ---- ---- ----
178 117 Adjusted operating income before income taxes 53 81 11 (31) 79 87 76
======== ======== ==== ==== ==== ==== ==== ==== ====
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 36
Prudential Financial, Inc. Prudential [LOGO] Financial
Quarterly Financial Supplement
Fourth Quarter 2001
RECLASSIFIED STATEMENTS OF OPERATIONS - PRIVATE CLIENT GROUP
(in millions)
Year ended December 31 2000 2001
- ------------------------ ----------------------- ----------------
1998 1999 1Q 2Q 3Q 4Q 1Q 2Q 3Q
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
Revenues (1):
- - Premiums - - - - - - -
- - Policy charges and fee income - - - - - - -
255 269 Net investment income 82 77 73 67 70 57 62
2,098 2,293 Commissions, investment management fees, and other income 734 623 563 548 536 499 467
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
2,353 2,562 Total revenues 816 700 636 615 606 556 529
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
Benefits and Expenses (1):
- - Insurance and annuity benefits - - - - - - -
- - Interest credited to policyholder account balances - - - - - - -
- - Interest expense - - - - - - -
- - Deferral of acquisition costs - - - - - - -
- - Amortization of acquisition costs - - - - - - -
2,124 2,269 Securities operations non-interest expenses 652 590 602 641 603 645 577
115 69 General and administrative expenses 15 9 6 15 9 9 8
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
2,239 2,338 Total benefits and expenses 667 599 608 656 612 654 585
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
114 224 Adjusted operating income before income taxes 149 101 28 (41) (6) (98) (56)
========== ========== ==== ==== ==== ==== ==== ==== ====
Non-Interest Revenues:
1,489 1,554 Commissions 524 359 351 327 320 296 252
462 571 Fees 172 189 189 198 182 168 178
147 168 Other non-interest revenues 38 75 23 23 34 35 37
- ---------- ---------- ---- ---- ---- ---- ---- ---- ----
2,098 2,293 Total non-interest revenues 734 623 563 548 536 499 467
========== ========== ==== ==== ==== ==== ==== ==== ====
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 37
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential {LOGO] Financial
RECLASSIFIED STATEMENTS OF OPERATIONS - GIBRALTAR LIFE
(in millions)
Year ended December 31 2000 2001
- ------------------------- ----------------------- ----------------
1998 1999 1Q 2Q 3Q 4Q 1Q 2Q 3Q
- ----------- ----------- ---- ---- ---- ---- ---- ---- ----
Revenues (1):
- - Premiums - - - - - 378 562
- - Policy charges and fee income - - - - - 89 77
- - Net investment income - - - - - 80 117
- - Commissions, investment management fees, and other income - - - - - 1 1
- ----------- ----------- ---- ---- ---- ---- ---- ---- ----
- - Total revenues - - - - - 548 757
- ----------- ----------- ---- ---- ---- ---- ---- ---- ----
Benefits and Expenses (1):
- - Insurance and annuity benefits - - - - - 365 449
- - Interest credited to policyholder account balances - - - - - 17 27
- - Interest expense - - - - - - 1
- - Deferral of acquisition costs - - - - - (24) (20)
- - Amortization of acquisition costs - - - - - - 3
- - Securities operations non-interest expenses - - - - - - -
- - General and administrative expenses - - - - - 131 171
- ----------- ----------- ---- ---- ---- ---- ---- ---- ----
- - Total benefits and expenses - - - - - 489 631
- ----------- ----------- ---- ---- ---- ---- ---- ---- ----
- - Adjusted operating income before income taxes - - - - - 59 126
=========== =========== ==== ==== ==== ==== ==== ==== ====
(1) Revenues exclude realized investment gains, net of losses. Benefits and
expenses exclude charges related to realized investment gains net of losses.
Page 38
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
RECLASSIFIED STATEMENTS OF OPERATIONS - CORPORATE AND OTHER OPERATIONS
(in millions)
Year ended December 31 2000 2001
- ------------------------ ------------------------------ ----------------------
1998 1999 1Q 2Q 3Q 4Q 1Q 2Q 3Q
- ------ ------ ------- ------ ----- ------ ------ ------ -----
Revenues (1):
17 11 Premiums - - 1 14 2 - 10
(5) (4) Policy charges and fee income (2) (3) (2) (3) - (4) (1)
894 926 Net investment income 164 212 237 203 190 208 124
Commissions, investment management
(629) (424) fees, and other income (144) (153) (153) (166) (194) (75) (198)
- ------ ------- ------- ------ ----- ----- ----- ----- -----
277 509 Total revenues 18 56 83 48 (2) 129 (65)
- ------ ------- ------- ------ ----- ----- ----- ----- -----
Benefits and Expenses (1):
25 85 Insurance and annuity benefits 1 8 9 9 7 9 11
Interest credited to policyholder account
- - balances (5) 2 - - (1) 1 1
446 420 Interest expense 65 107 118 95 98 87 60
94 79 Deferral of acquisition costs 33 30 20 22 26 23 17
(50) (32) Amortization of acquisition costs (21) (22) (18) (23) (21) (20) (21)
53 46 Securities operations non-interest expenses 23 14 9 13 14 14 (1)
(257) (226) General and administrative expenses (137) (126) (30) 13 (124) (60) (113)
- ------ ------- ------- ------ ----- ----- ----- ----- -----
311 372 Total benefits and expenses (41) 13 108 129 (1) 54 (46)
- ------ ------- ------- ------ ----- ----- ----- ----- -----
(34) 137 Adjusted operating income before income taxes 59 43 (25) (81) (1) 75 (19)
====== ======= ======= ====== ===== ===== ===== ===== =====
(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 39
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
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 Closed Block Business.
2. Adjusted operating income before income taxes:
- --------------------------------------------------
Adjusted operating income is a non-GAAP measure which excludes realized
investment gains, net of losses and related charges; sales practices remedies
and costs; results of divested businesses; and demutualization costs and
expenses. Revenues and benefits and expenses shown as components of adjusted
operating income, and for the Divisions of the Financial Services Businesses,
are presented on the same basis as pre-tax adjusted operating income and
exclude these items as well. Adjusted operating income should not be viewed as
a substitute for net income determined in accordance with GAAP and our
definition of adjusted operating income may differ from that used by other
companies. The excluded items are important to an understanding of our overall
results of operations. However, we believe that the presentation of adjusted
operating income as we measure it for management purposes enhances the
understanding of our results of operations by highlighting the results from
ongoing operations and the underlying profitability factors of our business.
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. Book value per share of Common Stock:
- -----------------------------------------
Equity attributed to Financial Services Businesses divided by number of Common
shares outstanding at end of period, on a diluted basis.
6. Borrowings - General Corporate Purposes:
- --------------------------------------------
Amounts used for corporate purposes including uses for cash flow timing
mismatches, and investments in equity and debt securities of subsidiaries
including amounts needed for regulatory capital purposes.
7. Borrowings - Investment Related:
- ------------------------------------
Debt issued to finance specific investment assets or portfolios of investment
assets, including real estate, real estate related assets held in consolidated
joint ventures, and institutional spread lending portfolios.
8. Borrowings - Securities Business Related:
- ---------------------------------------------
Debt issued to finance primarily the liquidity of our broker-dealers, and our
capital markets and other securities business related operations.
9. Borrowings - Specified Other Businesses:
- --------------------------------------------
Borrowings associated with consumer banking activities, real estate franchises,
and relocation services.
10. 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.
11. Earned Premiums:
- ---------------------
The portion of a premium, net of any amount ceded, that represents coverage
already provided or that belongs to the insurer based on the part of the
policy period that has passed.
12. Financial Advisors (Domestic and International):
- -----------------------------------------------------
Financial advisors and securities brokers in our securities operations.
13. 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.
14. General Account:
- ---------------------
Invested assets and policyholder liabilities and reserves for which the Company
bears the investment risk. Excludes assets recognized for statutory purposes
that are specifically allocated to a separate account. General account assets
also include assets of the parent company, Prudential Financial, Inc.
15. Gibraltar Life Advisors:
- -----------------------------
Insurance representatives for Gibraltar Life.
Page 40
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
KEY DEFINITIONS AND FORMULAS
16. 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.
17. Group Life Insurance and Group Disability Insurance Benefits Ratios:
- ------------------------------------------------------------------------
Ratio of policyholder benefits to earned premiums, policy charges and fee
income.
18. Insurance and Annuity Benefits
- ----------------------------------
Total death benefits, annuity benefits, disability benefits, other policy
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.
19. International Life Planners:
- --------------------------------
Insurance agents in our insurance operations outside the United States,
excluding Gibraltar Life Advisors.
20. 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.
21. Non-recourse and Limited-recourse Debt:
- -------------------------------------------
Limited and non-recourse borrowing is where the holder is entitled to
collect only against the assets pledged to the debt as collateral or has
only very limited rights to collect against other assets.
22. 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.
23. 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.
24. Prudential Agents:
- ----------------------
Insurance agents in our insurance operations in the United States.
25. 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.
26. Ratio of corporate debt to total capitalization:
- ----------------------------------------------------
For purposes of this ratio, we measure "debt" as the sum of borrowings for
general corporate purposes and 20% of the stated aggregate liquidation
amount of the Equity Security Units, and we measure "total capitalization"
as the sum of equity excluding unrealized gains and losses on
available-for-sale securities, corporate debt and the stated aggregate
liquidation amount of the Equity Security Units. The ratio is calculated
by dividing debt by total capitalization.
27. Redeemable Capital Securities:
- ----------------------------------
Capital Trust Certificates of Prudential Financial Capital Trust I (element
of Equity Security Units).
28. 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.
29. 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 41
Prudential Financial, Inc.
Quarterly Financial Supplement
Fourth Quarter 2001 Prudential [LOGO] Financial
RATINGS AND INVESTOR INFORMATION
INSURANCE CLAIMS PAYING RATINGS
(as of February 12, 2002)
Standard &
A.M. 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 February 12, 2002)
Prudential Financial, Inc.:
Short-Term Borrowings AMB-1 A2 P2 F1
Long-Term Senior Debt A- A- A3 A
Redeemable Capital Securities A- A- A3 A
The Prudential Insurance Company of America :
Capital and surplus notes, due 2001-2005 A- A- A3 NR
Prudential Funding, LLC:
Commercial Paper AMB-1 A1 P1 NR
Long-Term Senior Debt A 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
751 Broad Street information or inquires.
Newark, New Jersey 07102
Web Site:
www.prudential.com
Publicly Traded Securities:
Common Stock of Prudential Financial, Inc. is traded on the New York Stock
Exchange under the symbol PRU.
Equity Security Units of Prudential Financial, Inc. are traded on the New York
Stock Exchange under the symbol PFA.
Page 42