EX-99.1 2 dex991.htm SLIDE PRESENTATION OF PRUDENTIAL FINANCIAL, INC. Slide presentation of Prudential Financial, Inc.
1
Investor Day 12.04.07
Prudential Financial, Inc.
Investor Day
December 4, 2007
Prudential Financial, Inc.
Investor Day
December 4, 2007
Exhibit 99.1

2
Investor Day
December 4, 2007
Investor Day
December 4, 2007
Eric Durant
Senior Vice President
Investor Relations
Eric Durant
Senior Vice President
Investor Relations

3
Investor Day 12.04.07
Forward-Looking Statements
Certain
of
the
statements
included
in
this
presentation
constitute
forward-looking
statements
within
the
meaning
of
the
U.S.
Private
Securities
Litigation
Reform
Act
of
1995.
It
is
possible
that
actual
results
may
differ
materially
from
any
expectations
or
predictions
expressed
in
this
presentation.
Words
such
as
“expects,”
“believes,”
“anticipates,”
“includes,”
“plans,”
“assumes,”
“estimates,”
“projects,”
“intends,”
“should,”
“will,”
“shall,”
or
variations
of
such
words
are
generally
part
of
forward-looking
statements.
Forward-looking
statements
are
made
based
on
management’s
current
expectations
and
beliefs
concerning
future
developments
and
their
potential
effects
upon
Prudential
Financial,
Inc.
and
its
subsidiaries.
There
can
be
no
assurance
that
future
developments
affecting
Prudential
Financial,
Inc.
and
its
subsidiaries
will
be
those
anticipated
by
management.
These
forward-looking
statements
are
not
a
guarantee
of
future
performance
and
involve
risks
and
uncertainties,
and
there
are
certain
important
factors
that
could
cause
actual
results
to
differ,
possibly
materially,
from
expectations
or
estimates
reflected
in
such
forward-looking
statements,
including,
among
others:
(1)
general
economic,
market
and
political
conditions,
including
the
performance
and
fluctuations
of
stock,
real
estate,
and
other
financial
markets;
(2)
interest
rate
fluctuations;
(3)
reestimates
of
our
reserves
for
future
policy
benefits
and
claims;
(4)
differences
between
actual
experience
regarding
mortality,
morbidity,
persistency,
surrender
experience,
interest
rates
or
market
returns
and
the
assumptions
we
use
in
pricing
our
products,
establishing
liabilities
and
reserves
or
for
other
purposes;
(5)
changes
in
our
assumptions
related
to
deferred
policy
acquisition
costs,
valuation
of
business
acquired
or
goodwill;
(6)
changes
in
our
claims-paying
or
credit
ratings;
(7)
investment
losses
and
defaults;
(8)
competition
in
our
product
lines
and
for
personnel;
(9)
changes
in
tax
law;
(10)
economic,
political,
currency
and
other
risks
relating
to
our
international
operations;
(11)
fluctuations
in
foreign
currency
exchange
rates
and
foreign
securities
markets;
(12)
regulatory
or
legislative
changes;
(13)
adverse
determinations
in
litigation
or
regulatory
matters
and
our
exposure
to
contingent
liabilities,
including
in
connection
with
our
divestiture
or
winding
down
of
businesses;
(14)
domestic
or
international
military
actions,
natural
or
man-made
disasters
including
terrorist
activities
or
pandemic
disease,
or
other
events
resulting
in
catastrophic
loss
of
life;
(15)
ineffectiveness
of
risk
management
policies
and
procedures
in
identifying,
monitoring
and
managing
risks;
(16)
effects
of
acquisitions,
divestitures
and
restructurings,
including
possible
difficulties
in
integrating
and
realizing
the
projected
results
of
acquisitions;
(17)
changes
in
statutory
or
U.S.
GAAP
accounting
principles,
practices or policies; (18)
changes in assumptions for retirement expense; (19)
Prudential Financial, Inc.’s primary reliance, as a holding
company,
on
dividends
or
distributions
from
its
subsidiaries
to
meet
debt
payment
obligations
and
continue
share
repurchases,
and
the
applicable
regulatory
restrictions
on
the
ability
of
the
subsidiaries
to
pay
such
dividends
or
distributions;
and
(20)
risks
due
to
the
lack
of
legal
separation
between
our
Financial
Services
Businesses
and
our
Closed
Block
Business.
Prudential
Financial,
Inc.
does
not
intend,
and
is
under
no
obligation,
to
update
any
particular
forward-looking
statement
included
in
this
presentation.
_______________________________________________________________________________
Prudential
Financial,
Inc.
of
the
United
States
is
not
affiliated
with
Prudential
PLC
which
is
headquartered
in
the
United
Kingdom.

4
Investor Day 12.04.07
Non–GAAP Measure
Adjusted
operating
income
is
a
non-GAAP
measure
of
performance
of
our
Financial
Services
Businesses.
Adjusted
operating
income
excludes
"Realized
investment
gains
(losses),
net,"
as
adjusted,
and
related
charges
and
adjustments.
A
significant
element
of
realized
investment
gains
and
losses
are
impairments
and
credit-related
and
interest
rate-related
gains
and
losses.
Impairments
and
losses
from
sales
of
credit-impaired
securities,
the
timing
of
which
depends
largely
on
market
credit
cycles,
can
vary
considerably
across
periods.
The
timing
of
other
sales
that
would
result
in
gains
or
losses,
such
as
interest
rate-related
gains
or
losses,
is
largely
subject
to
our
discretion
and
influenced
by
market
opportunities
as
well
as
our
tax
profile.
Realized
investment
gains
(losses)
representing
profit
or
loss
of
certain
of
our
businesses
which
primarily
originate
investments
for
sale
or
syndication
to
unrelated
investors,
and
those
associated
with
terminating
hedges
of
foreign
currency
earnings
and
current
period
yield
adjustments
are
included
in
adjusted
operating
income.
Realized
investment
gains
and
losses
from
products
that
are
free
standing
derivatives
or
contain
embedded
derivatives,
and
from
associated
derivative
portfolios
that
are
part
of
an
economic
hedging
program
related
to
the
risk
of
those
products,
are
included
in
adjusted
operating
income.
Adjusted
operating
income
also
excludes
investment
gains
and
losses
on
trading
account
assets
supporting
insurance
liabilities
and
changes
in
experience-rated
contractholder
liabilities
due
to
asset
value
changes,
because
these
recorded
changes
in
asset
and
liability
values
will
ultimately
accrue
to
contractholders.
Trends
in
the
underlying
profitability
of
our
businesses
can
be
more
clearly
identified
without
the
fluctuating
effects
of
these
transactions.
In
addition,
adjusted
operating
income
excludes
the
results
of
divested
businesses,
which
are
not
relevant
to
our
ongoing
operations.
Discontinued
operations,
which
is
presented
as
a
separate
component
of
net
income
under
GAAP,
is
also
excluded
from
adjusted
operating
income.
We
believe
that
the
presentation
of
adjusted
operating
income
as
we
measure
it
for
management
purposes
enhances
understanding
of
the
results
of
operations
of
the
Financial
Services
Businesses
by
highlighting
the
results
from
ongoing
operations
and
the
underlying
profitability
of
our
businesses.
However,
adjusted
operating
income
is
not
a
substitute
for
income
determined
in
accordance
with
GAAP,
and
the
excluded
items
are
important
to
an
understanding
of
our
overall
results
of
operations.
The
schedules
on
the
following
three
pages
provide
a
reconciliation
of
adjusted
operating
income
for
the
Financial
Services
Businesses
to
income
from
continuing
operations
in
accordance
with
GAAP.
Return
on
equity
(“ROE”)
based
on
adjusted
operating
income
is
determined
by
dividing
adjusted
operating
income
after-tax
(giving
effect
to
the
direct
equity
adjustment
for
earnings
per
share
calculation),
annualized
for
interim
periods,
by
average
attributed
equity
for
the
Financial
Services
Businesses
excluding
accumulated
other
comprehensive
income
related
to
unrealized
gains
and
losses
on
investments
for
all
periods
and
accumulated
other
comprehensive
income
related
to
pension
and
postretirement
benefits
for
periods
including
and
after
2004.
An
alternative
measure
to
ROE
based
on
adjusted
operating
income
is
return
on
average
equity
based
on
income
from
continuing
operations.
Return
on
average
equity
based
on
income
from
continuing
operations
represents
income
from
continuing
operations
after-tax
as
determined
in
accordance
with
GAAP
(giving
effect
to
the
direct
equity
adjustment
for
earnings
per
share
calculation),
annualized
for
interim
periods,
divided
by
average
total
attributed
equity
for
the
Financial
Services
Businesses.
Return
on
average
equity
based
on
income
from
continuing
operations
is
16.82%
and
14.04%
for
the
nine
months
ended
September
30,
2007
and
2006,
respectively,
and
14.67%,
15.48%,
9.23%,
5.38%
and
3.79%
for
the
years
ended
December
31,
2006,
2005,
2004,
2003
and
2002,
respectively.
Our
expectations
of
Common
Stock
earnings
per
share
and
return
on
equity
are
based
on
after-tax
adjusted
operating
income.
Because
we
do
not
predict
future
realized
investment
gains
/
losses
or
recorded
changes
in
asset
and
liability
values
that
will
ultimately
accrue
to
contractholders,
we
cannot
provide
a
measure
of
our
Common
Stock
earnings
per
share
or
return
on
equity
expectations
based
on
income
from
continuing
operations
of
the
Financial
Services
Businesses,
which
is
the
GAAP
measure
most
comparable
to
adjusted
operating
income.
For
additional
information
about
adjusted
operating
income
and
the
comparable
GAAP
measure
please
refer
to
our
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2006,
our
Quarterly
Report
on
Form
10-Q
for
the
quarter
ended
September
30,
2007
and
our
Current
Report
on
Form
8-K
dated
October
4,
2007
on
the
Investor
Relations
Web
site
at
www.investor.prudential.com.
Additional
historical
information
relating
to
the
Company’s
financial
performance,
including
its
third
quarter
2007
Quarterly
Financial
Supplement,
is
also
located
on
the
Investor
Relations
website.
The
information
referred
to
above
and
on
the
prior
page,
as
well
as
the
risks
of
our
businesses
described
in
our
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2006,
and
our
Quarterly
Report
on
Form
10-Q
for
the
quarter
ended
September
30,
2007,
should
be
considered
by
readers
when
reviewing
forward-looking
statements
contained
in
this
presentation.

5
Investor Day 12.04.07
Reconciliation between adjusted operating income
and the comparable GAAP measure
Reconciliation between adjusted operating income
and the comparable GAAP measure
Prudential Financial, Inc.
(in millions, except per share data)
2002
2003
2004
2005
2006
Financial Services Businesses:
Pre-tax adjusted operating income by division:
Insurance Division
545
$      
788
$      
991
$      
1,227
$   
1,359
$   
Investment Division
238
287
351
707
1,129
International Insurance and Investments Division
757
803
994
1,416
1,566
Corporate and other operations
133
75
161
188
47
Total pre-tax adjusted operating income
1,673
1,953
2,497
3,538
4,101
Income taxes, applicable to adjusted operating income
559
638
673
1,115
1,174
Financial Services Businesses after-tax adjusted operating income
1,114
1,315
1,824
2,423
2,927
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments
(856)
(204)
4
561
90
Investment gains (losses) on trading account assets supporting insurance liabilities, net
-
-
(55)
(33)
35
Change in experience-rated contractholder
liabilities due to asset value changes
-
-
1
(44)
11
Sales practices remedies and costs
(20)
-
-
-
-
Divested businesses
(10)
(171)
(24)
(16)
76
Equity in earnings of operating joint ventures
(7)
(71)
(72)
(214)
(322)
Total reconciling items, before income taxes
(893)
(446)
(146)
254
(110)
Income taxes, not applicable to adjusted operating income
(497)
(148)
(75)
(473)
(48)
Total reconciling items, after income taxes
(396)
(298)
(71)
727
(62)
Income from continuing operations (after-tax) of Financial Services Businesses
before equity in earnings of operating joint ventures, extraordinary gain on acquisition
and cumulative effect of accounting change
718
1,017
1,753
3,150
2,865
Equity in earnings of operating joint ventures, net of taxes
5
45
55
142
208
Income from continuing operations (after-tax) of Financial Services Businesses
before extraordinary gain on acquisition and cumulative effect of accounting change
723
1,062
1,808
3,292
3,073
Income (loss) from discontinued operations, net of taxes
(44)
(37)
(76)
(73)
71
Extraordinary gain on acquisition, net of taxes
-
-
21
-
-
Cumulative effect of accounting change, net of taxes
-
-
(79)
-
-
Net income of Financial Services Businesses
679
$      
1,025
$   
1,674
$   
3,219
$   
3,144
$   
Earnings per share of Common Stock (diluted):
Financial Services Businesses after-tax adjusted operating income
2.00
$     
2.51
$     
3.59
$     
4.81
$     
6.06
$     
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments
(1.48)
(0.37)
0.01
1.08
0.18
Investment gains (losses) on trading account assets supporting insurance liabilities, net
-
-
(0.10)
(0.06)
0.07
Change in experience-rated contractholder
liabilities due to asset value changes
-
-
-
(0.08)
0.02
Sales practices remedies and costs
(0.03)
-
-
-
-
Divested businesses
(0.02)
(0.31)
(0.05)
(0.03)
0.15
Equity in earnings of operating joint ventures
(0.01)
(0.13)
(0.13)
(0.42)
(0.64)
Total reconciling items, before income taxes
(1.54)
(0.81)
(0.27)
0.49
(0.22)
Income taxes, not applicable to adjusted operating income
(0.86)
(0.26)
(0.14)
(0.91)
(0.10)
Total reconciling items, after income taxes
(0.68)
(0.55)
(0.13)
1.40
(0.12)
Income from continuing operations (after-tax) of Financial Services Businesses
before equity in earnings of operating joint ventures, extraordinary gain on acquisition
and cumulative effect of accounting change
1.32
1.96
3.46
6.21
5.94
Equity in earnings of operating joint ventures, net of taxes
0.01
0.09
0.10
0.27
0.42
Income from continuing operations (after-tax) of Financial Services Businesses
before extraordinary gain on acquisition and cumulative effect of accounting change
1.33
2.05
3.56
6.48
6.36
Income (loss) from discontinued operations, net of taxes
(0.08)
(0.07)
(0.14)
(0.14)
0.14
Extraordinary gain on acquisition, net of taxes
-
-
0.04
-
-
Cumulative effect of accounting change, net of taxes
-
-
(0.15)
-
-
Net income of Financial Services Businesses
1.25
$     
1.98
$     
3.31
$     
6.34
$     
6.50
$     
Weighted average number of outstanding Common shares (diluted basis)
578.0
548.4
531.2
520.9
494.0
Reconciliation to Consolidated Net Income of Prudential Financial, Inc:
Net income of Financial Services Businesses (above)
679
$      
1,025
$   
1,674
$   
3,219
$   
3,144
$   
Net income (loss) of Closed Block Business
(485)
239
582
321
284
Consolidated net income
194
$      
1,264
$   
2,256
$   
3,540
$   
3,428
$   
Direct equity adjustments for earnings per share calculations
43
$        
60
$        
84
$        
82
$        
68
$        
Year ended December 31,

6
Investor Day 12.04.07
Reconciliation between adjusted operating income
and the comparable GAAP measure (continued)
Reconciliation between adjusted operating income
and the comparable GAAP measure (continued)
Prudential Financial, Inc.
(in millions, except per share data)
Sept 30, 2006
Sept 30, 2007
Financial Services Businesses:
Pre-tax adjusted operating income by division:
Insurance Division
1,010
$        
1,255
$        
Investment Division
768
1,086
International Insurance and Investments Division
1,168
1,410
Corporate and other operations
60
(4)
Total pre-tax adjusted operating income
3,006
3,747
Income taxes, applicable to adjusted operating income
861
1,104
Financial Services Businesses after-tax adjusted operating income
2,145
2,643
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments
(40)
63
Investment gains (losses) on trading account assets supporting insurance liabilities, net
(8)
10
Change in experience-rated contractholder
liabilities due to asset value changes
28
4
Sales practices remedies and costs
-
-
Divested businesses
58
29
Equity in earnings of operating joint ventures
(223)
(323)
Total reconciling items, before income taxes
(185)
(217)
Income taxes, not applicable to adjusted operating income
(91)
(90)
Total reconciling items, after income taxes
(94)
(127)
Income from continuing operations (after-tax) of Financial Services Businesses
before equity in earnings of operating joint ventures, extraordinary gain on acquisition
and cumulative effect of accounting change
2,051
2,516
Equity in earnings of operating joint ventures, net of taxes
146
200
Income from continuing operations (after-tax) of Financial Services Businesses
before extraordinary gain on acquisition and cumulative effect of accounting change
2,197
2,716
Income (loss) from discontinued operations, net of taxes
54
4
Extraordinary gain on acquisition, net of taxes
-
-
Cumulative effect of accounting change, net of taxes
-
-
Net income of Financial Services Businesses
2,251
$        
2,720
$        
Earnings per share of Common Stock (diluted):
Financial Services Businesses after-tax adjusted operating income
4.41
$          
5.69
$          
Reconciling items:
Realized investment gains (losses), net, and related charges and adjustments
(0.08)
0.13
Investment gains (losses) on trading account assets supporting insurance liabilities, net
(0.02)
0.02
Change in experience-rated contractholder
liabilities due to asset value changes
0.06
0.01
Sales practices remedies and costs
-
-
Divested businesses
0.12
0.06
Equity in earnings of operating joint ventures
(0.45)
(0.68)
Total reconciling items, before income taxes
(0.37)
(0.46)
Income taxes, not applicable to adjusted operating income
(0.18)
(0.19)
Total reconciling items, after income taxes
(0.19)
(0.27)
Income from continuing operations (after-tax) of Financial Services Businesses
before equity in earnings of operating joint ventures, extraordinary gain on acquisition
and cumulative effect of accounting change
4.22
5.42
Equity in earnings of operating joint ventures, net of taxes
0.29
0.43
Income from continuing operations (after-tax) of Financial Services Businesses
before extraordinary gain on acquisition and cumulative effect of accounting change
4.51
5.85
Income (loss) from discontinued operations, net of taxes
0.11
0.01
Extraordinary gain on acquisition, net of taxes
-
-
Cumulative effect of accounting change, net of taxes
-
-
Net income of Financial Services Businesses
4.62
$          
5.86
$          
Weighted average number of outstanding Common shares (diluted basis)
497.8
471.6
Reconciliation to Consolidated Net Income of Prudential Financial, Inc:
Net income of Financial Services Businesses (above)
2,251
$        
2,720
$        
Net income (loss) of Closed Block Business
140
113
Consolidated net income
2,391
$        
2,833
$        
Direct equity adjustments for earnings per share calculations
51
$             
42
$             
Nine months ended

7
Investor Day 12.04.07
Reconciliation between adjusted operating income
and the comparable GAAP measure (continued)
Reconciliation between adjusted operating income
and the comparable GAAP measure (continued)
Prudential Financial, Inc.
COMBINED STATEMENTS OF OPERATIONS -
FINANCIAL SERVICES BUSINESSES
(in millions)
2002
2003
2004
2005
2006
Sept 30, 2006
Sept 30, 2007
Revenues (1):
Premiums
7,195
$   
7,848
$   
8,736
$   
10,128
$ 
10,287
$ 
7,694
$         
8,077
$         
Policy charges and fee income
1,815
1,978
2,385
2,529
2,649
1,912
2,294
Net investment income
5,017
4,913
5,771
6,861
7,657
5,647
6,240
Asset management fees, commissions and other income
3,618
2,971
2,783
3,358
3,969
2,831
3,406
Total revenues
17,645
17,710
19,675
22,876
24,562
18,084
20,017
Benefits and Expenses (1):
Insurance and annuity benefits
7,662
8,158
8,897
9,990
10,423
7,818
8,104
Interest credited to policyholders' account balances
1,730
1,718
2,220
2,516
2,790
2,045
2,286
Interest expense
195
200
334
615
949
694
831
Deferral of acquisition costs
(1,064)
(1,270)
(1,528)
(1,801)
(2,037)
(1,492)
(1,649)
Amortization of acquisition costs
739
533
766
910
670
431
643
General and administrative expenses
6,710
6,418
6,489
7,108
7,666
5,582
6,055
Total benefits and expenses
15,972
15,757
17,178
19,338
20,461
15,078
16,270
Adjusted operating income before income taxes
1,673
1,953
2,497
3,538
4,101
3,006
3,747
Reconciling items:
Realized investment gains (losses), net, and related adjustments
(862)
(161)
62
669
73
(70)
80
Related charges
6
(43)
(58)
(108)
17
30
(17)
Total realized investment gains (losses), net, and related charges and adjustments
(856)
(204)
4
561
90
(40)
63
Investment gains (losses) on trading account assets supporting insurance liabilities, net
-
-
(55)
(33)
35
(8)
10
Change in experience-rated contractholder
liabilities due to asset value changes
-
-
1
(44)
11
28
4
Sales practices remedies and costs
(20)
-
-
-
-
-
-
Divested businesses
(10)
(171)
(24)
(16)
76
58
29
Equity in earnings of operating joint ventures
(7)
(71)
(72)
(214)
(322)
(223)
(323)
Total reconciling items, before income taxes
(893)
(446)
(146)
254
(110)
(185)
(217)
Income from continuing operations before income taxes, equity inearnings of operating
joint ventures, extraordinary gain on acquisition and cumulative effect of accounting change
780
1,507
2,351
3,792
3,991
2,821
3,530
Income tax expense
62
490
598
642
1,126
770
1,014
Income from continuing operations before equity in earnings of operating joint ventures,
extraordinary gain on acquisition and cumulative effect of accounting change
718
$      
1,017
$   
1,753
$   
3,150
$   
2,865
$   
2,051
$         
2,516
$         
(1) Revenues exclude realized investment gains, net of losses and related charges and adjustments; investment gains, net of losses, on trading account assets supporting insurance
liabilities, and revenues of divested businesses, and include revenues representing equity in earnings of operating joint ventures.  Benefits and expenses exclude charges related to
realized investment gains, net of losses; change in experience-rated contractholder
liabilities due to asset value changes, benefits and expenses of divested businesses, and
sales practices remedies and costs.
Year ended December 31,
Nine months ended

8
Prudential Financial, Inc.
Prudential Financial, Inc.
Art Ryan
CEO and Chairman
Art Ryan
CEO and Chairman

9
Investor Day 12.04.07
Where We Are Today
•
Balanced portfolio of businesses and risks
•
High ROE combined with strong capital position and
cash flow generation
•
Growth engines in international insurance and
domestic retirement and savings
•
Asset management capabilities complement product
manufacturing and generate strong earnings
•
Diversified distribution channels
•
Acquisition and integration track record

10
Investor Day 12.04.07
ROE Progress
(1)
16.5%
7.5%
14.3%
12.3%
10.1%
6.1%
0.0%
5.0%
10.0%
15.0%
20.0%
2002
2003
2004
2005
2006
YTDSept07
1)
For
the Financial Services Businesses (FSB); based on after-tax adjusted operating income and on attributed equity
excluding accumulated other comprehensive income related to unrealized gains and losses on investments for all periods
and accumulated other comprehensive income related to pension and postretirement benefits for periods including and after
2004; YTD September 2007 on an annualized basis.

11
Investor Day 12.04.07
$2.51
$3.59
$4.81
$6.06
$2.00
2002
2003
2004
2005
2006
Earnings Per Share Growth
(1)
1)
Based on after-tax adjusted operating income of the FSB

12
Investor Day 12.04.07
83% of Equity is Attributed to
Operating Businesses
1)
As of September 30, 2007 for the FSB; excludes accumulated other comprehensive income related to
unrealized gains and losses on investments and pension/postretirement benefits
Total
Total
attributed
attributed
equity
equity
of
of
$22.2
$22.2
billion
billion
(1)
17%
83%
Operating Businesses
Corporate & Other

13
Investor Day 12.04.07
$3.7
$4.9
$6.4
$3.6
Attributed Equity of Operating Businesses
INTERNATIONAL INSURANCE
RETIREMENT & SAVINGS
DOMESTIC INSURANCE
Attributed
Attributed
equity
equity
$18.6
$18.6
billion
billion
(1)
•
Life Planner model
•
Gibraltar Life
•
Retirement
•
Individual Annuities
•
Individual Life
•
Group Insurance
INVESTMENT BUSINESSES
•
Financial Advisory
•
Asset Management
•
International Investments
1)
As of September 30, 2007 for the FSB; excludes accumulated other comprehensive income related to
unrealized gains and losses on investments and pension/postretirement benefits

14
Investor Day 12.04.07
32%
25%
19%
24%
Complementary and Diversified Businesses
DOMESTIC INSURANCE
Individual
Life
Group
Insurance
Adjusted
Adjusted
operating
operating
income
income
$3.747
$3.747
billion
billion
(1)
(1)
)
1)
Before-tax; for the FSB; for the nine months ended September 30, 2007
RETIREMENT
& SAVINGS
Retirement
Individual
Annuities
INVESTMENT BUSINESSES
& CORPORATE
Financial
Advisory
Asset
Management
International
Investments
Corporate
&
Other
INTERNATIONAL
INSURANCE
Life
Planner
model
Gibraltar
Life

15
International Division
International Division
Mark Grier
Vice Chairman
Prudential Financial, Inc.
Mark Grier
Vice Chairman
Prudential Financial, Inc.

16
Investor Day 12.04.07
International Developments
•
•
Market Needs
•
Distribution
•
Regulation

17
Investor Day 12.04.07
Japanese
Life Planner
Operations
International Division
Organizational Structure
International
Division
Finance
Investment
Management
Operations
and
Technology
Human
Resources
Gibraltar
Life
Insurance
Operations
Outside Japan
International
Investments
Businesses

18
Investor Day 12.04.07
International Division Today
India
Mexico
Poland
Germany
Brazil
Argentina
China
Taiwan
Korea
Italy
Life Planning
Insurance
Japan
International
Investments
Traditional
Insurance

19
Investor Day 12.04.07
Key Elements of Our International Strategy
•
Concentrate on a limited number of attractive
countries
•
Emphasize proprietary distribution: recruiting,
selection, needs-based selling
•
Target the affluent and mass affluent consumer
•
Focus on both life insurance and asset management
•
Grow both organically and through
opportunistic acquisitions

20
Investor Day 12.04.07
Our Division Goals
•
Sustainable low to mid-teen AOI growth
•
Sustainable 20% ROE’s
•
Strong free cash flow
•
Complementary group of International businesses
with short-term and long-term growth potential

21
Investor Day 12.04.07
Where We Are Today
•
Leadership positions in life planning
•
Gibraltar generates high ROE’s and cash flows
•
Developing asset management platforms
•
Profitability dominated by Japan and Korea
•
Acquisitions potentially additive
•
Expect to achieve our financial goals

22
Investor Day 12.04.07
Japan
Room for Growth in a Leading Market
•
Japan is world’s second largest life insurance
market with a 16.4% world share
(1)
•
88% of households have life insurance
(2)
•
Industry’s insurance in-force has
been declining
•
Prudential’s market share is
4.1% and has been
increasing
(3)
1)
World Insurance in 2006, SGMA, Swiss RE
2)
As of April-June 2006, according to Japanese Institute of Life Insurance
3)
Based on face amount in-force as of March 31, 2007, according to Statistics of Life Insurance Business
in Japan 2006

23
Investor Day 12.04.07
Competitive Advantage
Life Planning Insurance
•
Variable compensation structure
•
Rewards productivity and persistency
•
Identify protection needs before
discussing products
•
Protection life insurance purchased as
a solution to identified need
•
Life Planner profile similar to
customer profile
•
Life Planner maintains contact with client,
as trusted professional
Compensation structure
•
Aligns customer/agent/company interest
Needs-based selling
•
Financial planning approach
•
Emphasis on protection products
Life Planners
•
Very selective recruiting
•
Highly trained career professionals

24
Investor Day 12.04.07
17%
16%
16%
51%
Yen-based
protection
products
(2)
Yen-based
savings and retirement
income products
(3)
U.S. Dollar-based
products
(4)
Prudential of Japan
In Force Annualized Premium
as
of
September
30,
2007
(1)
1)
Includes single premium business at 10%
2)
Primarily whole life and term
3)
Primarily endowment
4)
Whole life and retirement income
5)
Cancer, medical, accident and sickness; primarily riders
Third
Sector
(5)
Life Planner Business
Emphasis on Protection Products

25
Investor Day 12.04.07
1997
1999
2000
2001
2002
2003
1,603
1,908
2,332
2,813
3,416
4,026
4,432
2004
2005
4,910
2006
5,316
Korea
Taiwan
Japan
All other countries
1)
At end of period
1998
1996
5,627
5,828
Life Planners
(1)
3Q2007
6,038

26
Investor Day 12.04.07
Growth in the Life Planner Business
1)
Before-tax, GAAP exchange rate basis
Units
Life Planners
Policies in force (000)
Adjusted operating income
(1)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
$-
$200
$400
$600
$800
$1,000

27
Investor Day 12.04.07
Gibraltar Life:  “Prudentialized”
Traditional
Model Japanese Life Insurance Company
•
Variable agent compensation
•
Life Planner training principles adapted to traditional
field force
•
Emphasize protection products
•
Introduce products targeted to customer base
•
Maintain and cultivate strong affinity group
relationships
•
Develop third party distribution for selected
products

28
Investor Day 12.04.07
Gibraltar Life:  Retirement Market Products
Complement Core Protection Portfolio
60%
1%
8%
31%
8%
1%
76%
15%
Yen-based
protection
products
(2)
In-force Annualized Premium
as of September 30, 2007
(1)
New Business Annualized Premium
nine months ended September 30, 2007
(1)
Yen-based
savings and retirement
income
products
(3)
U.S. dollar-based
life insurance
1)
Includes single premium business at 10%
2)
Primarily whole life and term
3)
Primarily endowment
U.S. dollar
fixed annuities

29
Investor Day 12.04.07
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Gibraltar Life –
Growing Distribution,
Maintaining High Persistency
90%
94%
13 Month Persistency Ratio
Number of Life
Advisors

30
Investor Day 12.04.07
Market Developments
Drive Growth Opportunities
•
Lifetime relationships with clients support sales through life cycle
•
Gibraltar’s association relationships: strong market access
•
U.S. dollar retirement income and fixed annuity products offer
attractive value proposition, favorable returns for Prudential
•
Growing demand for
retirement products with
aging customer bases
•
Emphasis on protection insurance targeted to income
replacement: higher income means greater need
•
Japan enjoys longest post-
World War II economic
recovery (since 2002)
•
Selected Gibraltar products adaptable for postal distribution
•
Needs-based selling continues as competitive advantage for
protection products
•
Privatization of
Japanese “Kampo”
postal life insurance
•
Formed major bank relationships; commenced bank distribution
of selected products
•
Transferred approximately 70 Life Planners to Gibraltar, to
contribute
to
bank
channel
expansion
(1)
•
Japan regulation changes
support bancassurance
sales growth;
alliances emerging
Prudential Positioning
Development
Emerging/Developing Markets Complement Long Term Prospects
1)
Through September 30, 2007

31
International Division
International Division
John Hanrahan
Chief Financial Officer
International Insurance and Investments
John Hanrahan
Chief Financial Officer
International Insurance and Investments

32
Investor Day 12.04.07
Prudential International Insurance
Sustainable Financial Performance
•
High ROE products generate substantial
excess capital
•
Capital management opportunities enhance
overall returns
•
Duration lengthening supported by long-term
nature of liabilities contributes to returns
•
U.S. dollar investing: natural hedge for
Prudential, enhanced portfolio returns
•
Strong persistency drives revenue growth
•
Margins earned throughout in-force period
•
Business growth increases scale benefits
•
Favorable mortality margins drive strong
returns
Investment Portfolio Strategies
Capital Management
Needs-Based Selling
Emphasis on Protection Products

33
Investor Day 12.04.07
93%
93%
93%
93%
93%
93%
93%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2001
2002
2003
2004
2005
2006
3Q2007
0%
20%
40%
60%
80%
100%
# of Life Planners
13 Month Persistency
Disciplined Life Planner Growth
Continued Strong Persistency
Number of
Number of
Life Planners
Life Planners
13 Month
Persistency Ratio

34
Investor Day 12.04.07
Life Planner Business
Established Sales Force and Excellent
Persistency Drive Baseline Growth
Illustration assuming current policy persistency and Life Planner productivity, and
No Life Planner count increase
5% annual Life Planner count increase
10% annual Life Planner count increase
(Not a forecast)
Years
4,000
5,000
6,000
7,000
8,000
9,000
0
1
2
3
4
5
Revenues
($ millions)

35
Investor Day 12.04.07
Prudential International Insurance
Capital Management Opportunities
•
Inter-company reinsurance arrangements
•
Inter-company loans
•
Dividends
•
Gibraltar subordinated debt repayment
•
Acquisition and expansion funding
•
Purchase of parent company debt

36
Investor Day 12.04.07
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Prudential International Insurance
Capital Redeployment
$-
$500
$1,000
$1,500
2002
2003
2004
2005
2006
$millions
Cumulative 2002 –
9/30/07
504
419
551
273
669
541
897
151
1,016
414
4,478
2,760
After-Tax Adjusted Operating Income
Capital Redeployment

37
Investor Day 12.04.07
International Division Financial Performance
1)
Based on annualized after-tax adjusted operating income
$ 736
$  930
$   808
Life Planner businesses
$ 1,410
$1,566
$1,416
International Division
219
143
106
International Investments
1,191
455
Nine months
ended
September
30, 2007
$1,423
493
2006
2005
($millions)
$1,310
International Insurance
502
Gibraltar Life
Adjusted operating income
before tax:
Year ended
December 31,
23.2% ROE
(1)

38
Prudential’s U. S. Businesses
Growing and Protecting Wealth
in the Domestic Market
Prudential’s U. S. Businesses
Growing and Protecting Wealth
in the Domestic Market
John
Strangfeld
Vice Chairman
Prudential Financial, Inc.
John
Strangfeld
Vice Chairman
Prudential Financial, Inc.

39
Investor Day 12.04.07
2002 AOI
$783
million
(2)
1)
Insurance and Investment Divisions of Financial Services Businesses
2)
Before income taxes
2002 –
2006 U.S. Business Mix
(1)
2006 AOI
$2,488
million
(2)
Individual Annuities      –5%
Financial Advisory        –11%
Individual
Life
55%
Group Insurance
20%
Retirement
18%
Individual
Life
22%
Retirement
20%
Asset Management
23%
9%
Asset Management
24%
Individual Annuities               
24%
Financial Advisory
1%
Group Insurance

40
Investor Day 12.04.07
Domestic Business Portfolio
(1)
Growing Wealth
2006
AOI
$1,715
million
(2)
Protecting Wealth
2006
AOI
$773
million
(2)
68%                      
32%                      
AOI
AOI
Contribution
Contribution
Favorable Growth
Prospects
Earnings/Cash Flow
Contributors
1)
Insurance and Investment Divisions of Financial Services Businesses
2)
Before income taxes

41
Investor Day 12.04.07
Financial Advisory
•
Combination of Private Client Group with Wachovia
July 1, 2003
•
62% Wachovia, 38% Prudential
•
Combined business created one of the top 5
brokerage firms in the U.S.
(1)
•
Segment operating results represent 19.4% ROE
(2)
•
Wachovia acquires A.G. Edwards in 2007;
Prudential exercised “look-back”
option
1)
Based on client assets of $532.1 billion as of March 31, 2003
2)
Based on annualized after-tax adjusted operating income contribution for  the nine months ended
September 30, 2007

42
Investor Day 12.04.07
Wachovia JV Look-Back Option
Significant Upside Opportunities, Strong Downside Protection
•
Prudential’s ownership is diluted during two-year
look-back period while business integration
proceeds
•
After two years, Prudential can:
–
Restore ownership up to 38% level, at today’s price; or
–
Retain diluted investment stake going forward ; or
–
Put ownership position to Wachovia at today’s price
•
Prudential will retain its option to put its investment
at fair market value commencing on July 1, 2008

43
Investor Day 12.04.07
Domestic Protection Businesses
•
Maintain market position:
#2 in Group Life
(1)
•
Focus on returns: case
selection; appropriate
pricing
•
Generate strong cash
flows
•
Optional life purchases
contribute to growth
prospects
Group
Insurance
•
Focus on returns through
capital management, cost-
effective distribution
•
Expanded third party
distribution is growth
opportunity
•
Deliver stable earnings
and strong cash flows
•
Mature, low-growth
industry
•
Overcapacity
•
Commodity products
Individual
Life
Prudential Strategies
Protection Marketplace
1)
Based on A.M. Best ranking of statutory premiums for the year ended December 31, 2006

44
Investor Day 12.04.07
Individual Life ROE
1)
In millions
2)
Average attributed equity for the period; in billions
3)
Based
on
annualized
after-tax
adjusted
operating
income
giving
effect
to
the
direct
equity
adjustment
4)
For the three years ended December 31, 2006
22.1 %
Return on equity
(3)
$ 2.3   
Equity
(2)
$ 489   
Pre-tax
adjusted
operating
income
(1)
Nine months
ended
September 30,
2007
Three-year
average
ROE
(4)
16.1%

45
Investor Day 12.04.07
Individual Life Sales
1)
Scheduled premiums from new sales on an annualized basis and first year excess premiums and deposits
on a cash-received basis, excluding COLI
Sales by distribution channel
(1)
$320
$341
$391
$419
$430
$287
$372
Nine
Months
ended
9/30/06
Nine
Months
ended
9/30/07
2006
2005
2004
2003
2002
$0
$100
$200
$300
$400
$500
Prudential Agents
Third Party

46
Investor Day 12.04.07
Group Insurance
•
Primarily group life business
•
Controlled growth –
focus on margins
•
High persistency of quality business
•
Voluntary life opportunity
•
Return on equity of 16.6%
(1)
1)
Based on annualized after-tax adjusted operating income for the nine months ended September 30, 2007

47
Investor Day 12.04.07
U.S. Retirement Market
Prudential’s Key Domestic Growth Opportunity
$23 Trillion Market
(1)
Personal
Savings
$13.5T
Employer
Controlled
(DB)
$6.4T
Employer
Sponsored
(DC)
$3.3T
Prudential
Investment
Management
•
$430 billion AUM
(2)
•
Top 10 DB Asset
manager
(3)
Prudential
Retirement
•
$157 billion account
values
(2)
Prudential
Annuities
•
$85 billion account
values
(2)
1)
As of December 31, 2006 according to the Flow of Fund Accounts of the United States (September 2007), the
Investment Company Institute, and internal calculations
2)
As of September 30, 2007
3)
As
of
December
31,
2006
according
to
Pensions
&
Investments
(May
2007)

48
Investor Day 12.04.07
Retirement Market Trends Drive
Prudential’s Growth Opportunities
•
Platforms, scale, business integration skills
support attractive acquisitions
•
Industry consolidation continues
•
Asset management, risk management, and
product skills support development of
innovative solutions
•
Legislation and accounting changes
encourage employers to transfer pension
risk
•
A leader in Total Retirement Services
•
Employers seek to outsource retirement
benefit programs
•
Implementing “auto-pilot”
features and lifetime
income products
•
Efforts to make DC plans more like DB
plans
•
Unique
standing:
Market
leading
annuity
and
full
service retirement provider
•
Risk management, product design skills and
innovation culture support development of
income products and features
•
Individuals increasingly responsible for
their own retirement security
•
Aging baby boomers need to convert
assets into income but want continued
control, flexibility, upside potential
Prudential Positioning
Market Dynamic

49
Investor Day 12.04.07
Retirement and Annuities
A Leading Provider in a Growing Market
$0
$50
$100
$150
$200
$250
$300
Retirement
Annuities
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
1)
Includes acquired businesses from dates of acquisitions
$226
$191
$183
$120
$82
9/30/2007
$242

50
Investor Day 12.04.07
Prudential Retirement
Emphasis on Full Service Retirement
1)
Includes business acquired from CIGNA from April 1, 2004 acquisition date
$157
$143
$148
$136
$132
$72
$0
$25
$50
$75
$100
$125
$150
$175
12/31/03
12/31/04
12/31/05
12/31/06
09/30/06
09/30/07
Institutional Investment Products
Full Service

51
Investor Day 12.04.07
Full Service Retirement
Asset Flows
-$2,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Deposits and Sales
Net Flows
1)
For the nine months ended September 30, 2007
97% plan
persistency
(1)
2004
2005
2006
Nine months
ended 9/30/06
Nine months
ended 9/30/07

52
Investor Day 12.04.07
Emphasis on Mid/Large Case and
Tax Exempt Markets
938,000
1,589,000
Participants
(2)
$ 35,300
$ 67,100
Account Values
(1) (2)
Specialized consultants
-
Fee based consultants
-
Commission based advisors
-
Third party administrators
-
Direct
Distribution
Channels
Primary Products
Tax Exempt Market
Corporate Markets
-
DC plans
-
DB plans
-
Total Retirement Services
-
Non-qualified plans
-
Investment only products
1)
In millions
2)
As of September 30, 2007; excludes $3.2 billion retail account values for approximately 54,400 participants
Emphasis on
mid/large
case market

53
Investor Day 12.04.07
A Leader In Total Retirement Services
•
Recordkeeping
•
Participant communications
•
Actuarial services
•
Compliance
•
Investment products and services
DC
Plan
DC
Plan
Non-
qualified
Plan
Non-
qualified
Plan
Integrated Solution for Plan Sponsors
1)
As of September 30, 2007
TRS Account Values: $39 billion
(1)
DB
Plan
DB
Plan

54
Investor Day 12.04.07
Retirement Solutions
Lifetime Relationship Opportunities
•
Variable annuities
feature professional
asset allocation
•
Guaranteed minimum
accumulation and
death benefits
•
DC plan investment
options; Lifecycle
funds; “Goal Maker”
asset allocation
•
Stable value products
offer principal
guarantee
Age
20 yrs       30 yrs        40 yrs       50 yrs        60 yrs   
65+
Accumulation
Income
Prudential
Annuities
Prudential
Retirement
•
Lifetime Five
•
Spousal
Lifetime Five
•
HD Lifetime Five
•
Income Flex
•
Rollover platform

55
Investor Day 12.04.07
43%
21%
11%
5%
20%
27%
27%
21%
11%
14%
AUM by Asset Type
AUM by Client Type
Equity
Real
Estate
Institutional
Customers
General
account
Retail
customers
CB
Total AUM $637 billion
(1)
(1)
1)
As of September 30, 2007
International
Fixed Income
Non-
proprietary
insurance,
annuity &
other
Non-
proprietary
insurance,
annuity &
other
International
Assets Under Management
Significant Scale and Breadth

56
Investor Day 12.04.07
0
500
1,000
1,500
2,000
2,500
3,000
2002
2003
2004
2005
2006
Nine
Months
ended
9/30/06
Nine
Months
ended
9/30/07
Domestic Businesses: Financial
Performance
(1)
1)
Insurance and Investment Divisions of Financial Services Businesses
2)
Based
on
after-tax
adjusted
operating
income
giving
effect
to
the
direct
equity
adjustment;
annualized for interim periods
$1,075
$783
$1,342
$1,934
$2,488
$1,778
$2,341
Growing wealth: Individual Annuities, Retirement, Asset Management, Financial Advisory
Protecting wealth: Individual Life, Group Insurance
ROE
(2)
7.4%      8.6%        9.8%        12.5%       15.5%            
15.0%      18.1%

57
Asset Management
Asset Management
Bernard Winograd
President
Prudential Investment Management
Bernard Winograd
President
Prudential Investment Management

58
Investor Day 12.04.07
Asset Management
Commercial Business and Competitive Advantage
Robust institutional business enhances capabilities, attracts
talented managers
Market leading capabilities: private placement fixed income,
commercial mortgages and real estate
Prominent manager in pension market
Low capital requirements: high ROE opportunity; strong available
cash flows
A Business, Not a “Department”
A Source of Competitive Advantage Throughout The Firm
Seasoned skills in multiple asset classes: risk diversification,
enhanced returns
Differentiated capabilities drive superior value proposition for
stable value retirement products

59
Investor Day 12.04.07
Prudential Investment Management
Competitive Advantages
Scale
Brand and
Reputation
Experience and
Track Record
Breadth and
Depth of
Capabilities
Access to Capital
and Co-investing
Institutional Clients
•
$135 billion third
party institutional
AUM
(1)
•
16% AUM CAGR
(2002 –
2006)
Manager Continuity
•
163 portfolio
managers
(1)
•
Average tenure
14 years
1)
As of September 30, 2007; AUM excludes affiliated institutional assets under management

60
Investor Day 12.04.07
Prudential Investment Management
Business Overview
$   59
Quantitative Equity
Quantitative Management
Associates
$   85
Fundamental Equity
Jennison Associates
(2)
$   29
Real Estate Equity
Prudential Real Estate Investors
$   29
$   42
$ 186
AUM
(1)
Real Estate Debt
Prudential Mortgage Capital
Company
Private Fixed Income
Prudential Capital Group
Public Fixed Income  
Prudential Fixed Income
Investment Discipline
Investment Manager
1)
As of September 30, 2007; in billions
2)
AUM includes $18.5 billion public fixed income securities managed by Jennison Associates

61
Investor Day 12.04.07
Public
Equity
30%
Public
Fixed
Income
47%
9%
Private
Fixed
Income
7%
Commercial
Mortgages
7% 
Real
Estate
Assets Under Management
$430 Billion
(1)
Public
Equity
(3)
19%
Public
Fixed
Income
20%
Private
Fixed
Income 8%
Commercial
Mortgages
15%
Asset Management Revenue
$1.6 Billion
(2)
Real
Estate
38%
1)
As of September 30, 2007
2)
For the year ended December 31, 2006; excludes mutual fund distribution revenues
3)
Includes revenue from management of public fixed income securities by Jennison Associates
Fixed
Income
Broad Asset Class Capabilities

62
Investor Day 12.04.07
Public Fixed Income
$186 Billion AUM
(1)
1)
As of September 30, 2007; excludes public fixed income securities managed by Jennison Associates
Retail
11%
General
Account
57%
•
Comprehensive product line offers
traditional and alternative strategies
•
Corporates, Governments, Structured
Products, Mortgages, Emerging
Markets, Money Markets
•
Proprietary models for risk analysis
and management
•
Managing Asset-Backed Securities
since 1991
•
Internal collateral evaluation and rating
assignments
Breadth of Capabilities Serves
General Account and Third Parties
Institutional
32%

63
Investor Day 12.04.07
Private Fixed Income
$42 Billion AUM
(1)
1)
As of September 30, 2007
Private Placement Debt Market
•
Often well-suited to fund
insurance liability cash flows
•
Terms and covenants offer
investors protection from
“event risks”
•
Attractive long-term capital
source for middle
market companies
•
Higher credit spreads or
coupons relative to like-quality
public securities
Prudential Positioning
•
Prudential general account is
preferred customer
•
Not a “price taker”
–
direct
access to issuers allows
negotiation of terms
and covenants
•
“Reliable partner”: proprietary
direct origination network built
on relationships
•
Over 60 years experience;
over 1,000 issuers
(1)

64
Investor Day 12.04.07
1)
In billions
2)
Source: SourceMedia
–
Private Placement Letter
(September 24, 2007)
Market Leader in
Private Placement Debt
Originations
(1)
Portfolio –
12/31/06
(1) (2)
1.
Prudential
$ 38.9
2.
MetLife
30.8
3.
NY Life 
23.1
4.
Principal Global    17.6
5.
Sun Life
17.1
$5.3
$6.6
$6.9
$7.3
2004
2005
2006
YTD 3Q2007
General Account
Non-Affiliates

65
Investor Day 12.04.07
Non-Affiliates
General Account
$8.0
$9.4
$11.0
2004
2005
Originations
(2)
2006
Commercial Mortgages
$29 Billion AUM
(1)
1)
As of September 30, 2007
2)
In billions
$10.8
YTD 3Q2007

66
Investor Day 12.04.07
Global real estate investment manager, 18 offices worldwide
(1)
;
serving institutional investors since 1970
Approximately 190 investment professionals and 430 institutional
clients
(1)
Prudential Real Estate Investors
$29 Billion AUM
(1)
1)
As of September 30, 2007
Intermediary
between
pension funds
and developers
Opportunities
for upside
participation
Benefits from
strong recent
market
conditions
Chicago
Parsippany
Atlanta
San Francisco
London
Singapore
Rio de Janeiro
Amsterdam
Munich
Zurich
Milan
Madrid
Lisbon
Paris
Mexico City
Budapest
Luxembourg
Hong Kong

67
Investor Day 12.04.07
Public Equity
Two Distinct Approaches
•
Approximately 150
Institutional clients
(1)
•
Approximately 150
Institutional clients
(1)
•
Decades of experience
•
Established 1969; acquired 1984
•
Quantitative equity
management
•
Fundamental equity
management
•
$59 billion AUM
(1)
•
$85 billion AUM
(1) (2)
1)
As of September 30, 2007
2)
Includes $18.5 billion public fixed income securities

68
Investor Day 12.04.07
74%
54%
88%
93%
88%
95%
1 Year
3 Year
5 Year
AUM = $170 Billion
(1)
September 2006
September
2007
1)
As of September 30, 2007
Percentage of Third Party AUM
At or Exceeding Benchmark

69
Investor Day 12.04.07
$6.8
$11.6
$0.9
$3.9
$5.4
$4.3
$1.4
$11.1
$2.3
$1.8
$6.7
$10.8
$1.8
($0.6)
$3.1
($0.7)
Equity
Fixed Income
Real Estate
Total
2004
2005
2006
YTD3Q2007
Third Party Institutional Flows are the Best
Indicator of Competitiveness
Percent of Beginning of Period Assets
(2)
13%
10%
4%
13%
9%
10%
7%
10%
13%
12%
9%
8%
-1%
4%
-3%
1%
Institutional
Net
Flows
($Billions)
(1)
1)
Excludes money market funds and the effects of certain nonrecurring transfer and disposition events.
Includes assets transferred from the Retirement segment.
2)
Third party institutional net flows as a percentage of total institutional assets under management.

70
Investor Day 12.04.07
Prudential Investment Management
$288
$304
$338
$367
$403
$430
Proprietary Assets Under Management
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
9/30/07
$ in Billions

71
Investor Day 12.04.07
$0
$500
$1,000
$1,500
$2,000
$2,500
2003
2004
2005
2006
9 mos 2006
9 mos 2007
$ in Millions
Asset Management
Fees
Asset Management Revenues
Service,
Distribution
and Other
Revenue
Incentive,
Transaction,
Principal Investing
and Capital Markets
Revenue
$1,360
$1,464
$1,696
$2,050
$1,692
$1,414

72
Investor Day 12.04.07
7%
    17%
5%
42%
5%
24%
Year Ended 12/31/06
$593 Million
(1)
Equity
Public
Fixed
Income
Prudential
Capital Group
Prudential
Mortgage
Capital
Company
Prudential
Real Estate
Investors
Nine Months Ended 9/30/07
$493 Million
(1)
Prudential
Investments
(2)
Asset Management
Adjusted Operating Income by Business
1)
Before income taxes
2)
Mutual fund distribution
15%
    13%
6%
45%
4%
17%
Equity
Prudential
Capital Group
Prudential
Mortgage
Capital
Company
Prudential
Real Estate
Investors
Prudential
Investments
(2)
Public
Fixed
Income

73
Investor Day 12.04.07
36%
33%
27%
Return on equity
(5)
1.3
1.3
1.2
Attributed equity
(1) (4)
493
$ 430.2
Nine months
ended
September
30, 2007
593
$ 403.4
2006
2005
464
Pre-tax adjusted
operating income
(3)
$ 367.4
Assets under management
(1) (2)
1)
In billions
2)
At end of period
3)
In millions
4)
Average attributed equity for period
5)
Based on after-tax adjusted operating income; annualized for interim period
Asset Management
Financial Performance

74
Individual Annuities
Individual Annuities
David Odenath
President
Prudential Annuities
David Odenath
President
Prudential Annuities

75
Investor Day 12.04.07
Variable Annuity Market Trends
•
Retirement income solutions drive sales
•
Continued customer interest in downside protection
•
Increased customer focus on locking in gains
•
Industry consolidation likely to increase as
manufacturers require greater scale to compete

76
Investor Day 12.04.07
Prudential Annuities: Competitive Advantages
in a Retirement-Focused Market
•
Proven product innovation capabilities
•
Sophisticated risk management and hedging
•
Scale
•
Strong branding
•
Broad, multi-channel distribution capabilities
•
Acquisition integration expertise

77
Investor Day 12.04.07
1)
Source: VARDS 2Q07; Advisor-sold market excludes group/retirement plan contracts
Prudential Annuities is ranked #4 in advisor-sold VA account values
(1)
($ billions)
#4
#4
111.9
95.9
85.1
76.2
72.0
52.0
51.5
50.8
48.5
46.0
Top 10 Variable Annuity Company
Account Values
Hartford
Met Life
AXA Equitable
Prudential
Lincoln National
John Hancock
Ameriprise
Financial
Pacific Life
ING
Nationwide

78
Investor Day 12.04.07
Prudential Annuities
Innovation Team
•
Innovation: a
proven strength
•
Informal weekly
meetings, an
11-year tradition
•
Spirited discussion:
leave your title at
the door; have an
open mind; be
a subject
matter expert
•
Listen to
the marketplace
•
Lifetime Five
•
Spousal
Lifetime Five
•
HD Lifetime Five
•
More to come…
Attractive value
propositions for
retirement-focused
customers
©
2007 Annuity Market News and SourceMedia, Inc.  All rights reserved.

79
Investor Day 12.04.07
Awarded “Best Living Benefits”
by Boomer Market Advisor
Magazine for Third Consecutive Year
•
“HD Lifetime Five…the living benefit that best addresses the 
income and longevity issues clients face.”
2006
2006
2007
2007
2005
2005
Market-Leading Retirement Solutions

80
Investor Day 12.04.07
Active Management of Product Risks
•
•
Innovative product design minimizes
product/benefit risk while meeting
customers’
needs
•
Strategic risk retention
–
Retain risks we are best suited to carry
–
Actively hedge risks where appropriate
•
Strong governance structure provides constant
monitoring and oversight

81
Investor Day 12.04.07
Lower Risk Profile in Newest Benefits
Reduces equity risk in
severe market
conditions
Effectively self hedges
much of the equity risk
Systematically takes
money “off the table”
as market declines,
preserving
account value
Daily Rebalancing by
Individual Contract
(“GRO”; HD-Lifetime
Five)
Reduces concentration
risk
Access to
professionally
managed, diversified
investment options
Required Asset
Allocation Portfolios
Reduces longevity risk
Reduces cost of
benefit
Minimum Age
Requirement
Benefit to
Benefit to
Prudential
Prudential
Benefit to
Benefit to
Policyholder
Policyholder
Feature
Feature
•
Attractive Value Proposition
Attractive Value Proposition
•
•
Minimizes Risk to Prudential
Minimizes Risk to Prudential
Living Benefit
Living Benefit
Product Design
Product Design

82
Investor Day 12.04.07
Excludes GMIB as election rate is de-minimus
Risk Profile of HD-5 Compared to Lifetime Five
•
HD-5 has lower overall risk profile due to reduced tail exposure
•
Less hedge rebalancing required during volatile markets
•
Interest rate exposure more efficient to hedge –
lower basis risk,
better liquidity
Self Hedged
GRO
HD-5
Hedged
LT5
SLT5
GMWB
Allstate
GMAB
Living Benefit Election Rates
New Living Benefits Feature Self-Hedging
0%
10%
20%
30%
40%
50%
60%
70%
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
Hedged
Self Hedge
Self Hedge Trend

83
Investor Day 12.04.07
$5
$10
$15
$20
$25
$30
$35
$40
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
HD5 -
26% election rate
(1)
$2.6
Equity
Risk Self
Hedged
$16.0
Fully
Hedged
LT5, GMWB, and GMAB -
40% election rate
(1)
$10.1
Equity
and Int
Rate Risk
Self Hedged
“GRO”
-
15% election rate
(1)
$7.3
Retain
Risk
GMIB
(2)
Account Values ($ billions)
Living Benefit Risk Management
1)
For the nine months ended September 30, 2007
2)
Includes Prudential and Allstate business; no significant recent
sales
$0

84
Investor Day 12.04.07
Broad Multi-Channel Distribution Capabilities
203
358
607
$1,673
3Q:07
Sales
(1)
226
257
466
$1,407
3Q:06
Sales
(1)
•
Increase distribution through
Allstate and Prudential bank
relationships
•
Pursue new relationships on
opportunistic basis
7%
Banks
•
Expand distribution through
Allstate and current
relationships
13%
Wirehouses
•
Continued focus on captive
sales to maintain momentum
•
Ongoing focus on expanding
distribution in Allstate 
channel
21%
Insurance
Agents
•
Maintain leadership position
•
Enhance distribution through
existing relationships
59%
Independent
Financial
Planners
Strategy
Percentage
of 3Q:07
Sales
Channel
1)
In millions; all annuity products (variable and fixed)

85
Investor Day 12.04.07
Products and Distribution Drive Sales Growth
0
2
4
6
8
10
12
2002
2003
2004
2005
2006
2006
2007
Year ended
December 31
(1)
Nine months ended
September 30
(1)
1)
Includes American Skandia from May 1, 2003 acquisition date and Allstate variable annuity business from
June 1, 2006 acquisition date
2)
All annuity products (variable and fixed)
Allstate Distribution
$4.7
$2.0
$6.3
$7.5
$9.7
$7.0
$8.7

86
Investor Day 12.04.07
Sustained Account Value Growth
1)
As of end of period; all annuity products (variable and fixed)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2003
2004
2005
2006
Sep-07
Allstate
$47.5
$51.3
$54.8
$78.3
$84.7

87
Investor Day 12.04.07
Allstate Variable Annuity Business
Integration on Track
Major Project Milestones
2006
2007
September
February
Closed Allstate
transaction
June 1
August
Transition Service Agreement Period with Allstate
Transition Service Agreement Period with Allstate
July
Launched
Prudential
products in
Allstate
proprietary
channel
Launched
Prudential
products in
Morgan Stanley
Launched
Allstate-branded,
Prudential-
designed product
in Bank Channel
2008
May
Launched
Prudential
products in A.G.
Edwards
Se2 selected to
integrate Allstate
book and provide
processing
support
Prudential to
assume
responsibility for
administration of
Allstate’s book of
business
January

88
Investor Day 12.04.07
3,546
3,748
3,991
Fixed annuities
18.2%
18.2%
17.9%
Return on equity
(5)
$ 2.8
$2.3
$1.9
Attributed equity
(4)
549
84,719 
$ 81,173 
Nine months
ended
September
30, 2007
586
78,303
$ 74,555
2006
2005
505
Pre-tax adjusted
operating income
(3)
54,769
Total
$ 50,778
Account Values
(2)
Variable annuities
1)
Includes
results
of
Allstate
variable
annuity
business
from
June
1,
2006
acquisition
date
2)
In millions; at end of period
3)
In millions
4)
In billions; average attributed equity for period
5)
Based on after-tax adjusted operating income; annualized for interim period
Individual Annuities Financial Performance
(1)

89
Financial Position and Outlook
Financial Position and Outlook
Rich Carbone
Chief Financial Officer
Rich Carbone
Chief Financial Officer

90
Investor Day 12.04.07
Financial Review and Outlook
•
Strong capital position; significant financial
flexibility
•
Disciplined investment portfolio risk selection
and management
•
Financial outlook for 2008

91
Investor Day 12.04.07
“Available Capital”
Capacity $7 -
$8 Billion
(1)
Over
$2.5 bn
$7 –
$8 bn
1)
As of September 30, 2007
2)
Attributed equity of Financial Services Businesses, excluding accumulated other comprehensive income
related to unrealized gains and losses on investments and pension/postretirement benefits
Outstanding
Capital
Required
Capital
“On Balance
Sheet”
Excess
Capital
Unused
Capacity:
Capital Debt,
Hybrid Equity
Securities
Available
Capital
Capacity
$26 bn
$4 bn
Capital
Debt
$22 bn
Equity
(2)
$22 bn
Equity
(2)
$23 bn
$23 bn
$5 bn
Targeted Structure:
70% Equity,
30% Capital Debt and
Hybrid Securities

92
Investor Day 12.04.07
Insurance Operations are Overcapitalized
“AA”
Ratings
Target  
350
“AA”
Ratings
Target
700 -
800
Risk-Based Capital
(1)
Solvency Margins
(2)
Prudential
Insurance
Gibraltar
Life
Prudential
of Japan
1)
Based on U.S. statutory accounting
2)
Based on Japanese statutory accounting

93
Investor Day 12.04.07
“Available Capital”
Capacity       Financial Flexibility
1)
Assuming a capital structure of 70% common equity, 30% capital debt and hybrids
International
Insurance
excess capital
Hybrid security
and debt
issuance capacity
(1)
Corporate &
other excess
capital
Available for
share
repurchases
Potentially
available for
attractive
transactions
September 30, 2007
Potential value of
Wachovia JV “put”
$7+

94
Investor Day 12.04.07
Strong and Sustainable Ongoing
Capital Generation
•
Focus on high ROE businesses with
favorable growth prospects
•
Mature businesses: favorable returns,
modest capital needs, strong cash flows

95
Investor Day 12.04.07
Diverse Sources of Cash Flow
Domestic
Insurance
Companies
Domestic
Insurance
Companies
Asset
Management
Operations
Asset
Management
Operations
Wachovia
Joint
Venture
Wachovia
Joint
Venture
2006 Dividends
& Returns of
Capital $3.2
billion
International
Operations
International
Operations

96
Investor Day 12.04.07
Capital Returned to Shareholders
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2002
2003
2004
2005
2006
9 Mos
ended
9/30/06
9 Mos
ended
9/30/07
Dividends
Share Repurchases
$1,026
$1,270
$1,831
$2,483
$2,953
$ millions
$1,873
$2,250
$3.5 billion
annual share repurchase
authorization,
effective 2008

97
Investor Day 12.04.07
Book Value per Share of Common Stock
(1)
01/01/02
01/01/03
01/01/04
01/01/05
01/01/06
01/01/07
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
9/30/07
$32.80
$34.10
$37.10
$40.37
$44.38
1)
Excluding
accumulated other comprehensive income related to unrealized gains and losses on investments for
all periods and accumulated other comprehensive income related to pension and postretirement benefits for
periods including and after 2004
$48.15

98
Investor Day 12.04.07
Disciplined Investment Portfolio Management
Leverages Proven Investment Expertise
•
Asset Management is a key Prudential business
•
Asset selection reflects liability characteristics
•
Broad capabilities support risk diversification:
–
Asset class
–
Sector
–
Issuer   
•
Well-managed exposure to “risk”
assets

99
Investor Day 12.04.07
Asset Selection
Focus on Liability Characteristics
Public fixed
maturities
Long-term Japanese
government bonds;
equities support
“tail”
Private placement
bonds, commercial
mortgages
Representative
Asset Types
Long duration,
variable crediting
rates; floor
guarantees
Domestic Universal Life
Extremely long
duration (30 years +);
fixed rate guarantees
Japanese Life Planner
Protection Products
Predictable
withdrawals, crediting
rates experience-
based
Retirement –
Full Service Stable Value
Liability
Characteristics
Products

100
Investor Day 12.04.07
9%
12%
13%
58%
Asset Selection
Skill Sets Support Risk Diversification
1)
As of September 30, 2007 at balance sheet carrying amount; excludes invested assets of securities brokerage,
securities
trading,
banking
and
asset
management
operations,
and
real
estate
and
relocation
services
2)
Trading account assets supporting insurance liabilities (investment results ultimately accrue
to contract-holders)
FSB Fixed Maturities
$114.8 billion
(1)
US Government
3%
Foreign
Government
24%
Other Asset-
Backed
12%
Commercial
Mortgage-
Backed
7%
Residential MBS
Agency
passthroughs
7%
Corporate
47%
FSB General Account
$161.1 billion
(1)
Public
Private
Commercial Loans
“TAASIL”
(2)
Fixed
Maturities
Equities 3%
Other long-term 2%
Policy loans,
Short-term, other 3%

101
Investor Day 12.04.07
Asset Selection
Focus on Quality
1)
In billions; at fair value. Excludes invested assets of securities brokerage, securities trading,
banking and asset management operations, and real estate and relocation services
FSB Fixed Maturity Portfolio
(1)
$81.9
$87.4
$104.7
$107.9
$114.6
$114.7
6.2
6.2
6.2
6.2
5.9
5.9
6.2
6.2
7.4
7.4
7.5
7.5
Investment
grade
Non-investment
grade
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
9/30/07

102
Investor Day 12.04.07
$855
$48
$288
$129
$100
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
2002
2003
2004
2005
2006
1)
Other than temporary impairments and credit-related losses on sales of securities included in
realized investment gains and losses of  the Financial Services Businesses
Fixed Maturities
Impairments and Credit-Related Losses
(1)

103
Investor Day 12.04.07
AAA
AA
A             
BBB
Sub-Prime Mortgage Exposure
Risk-Based Selection
1)
Financial Services Businesses, as of September 30, 2007.  At amortized cost.
2)
The short-term portfolio is used primarily to invest proceeds of securities lending and repurchase
activities, and cash generated from certain trading and operating activities; securities have remaining
expected average life of 2 years or less when purchased.
81%
AAA/AA
Short Term Portfolio
$3.8 billion
(1) (2)
All Other Portfolios
$4.4 billion
(1)
Total      ’07         ’06        ’05        Pre ’05
<Vintages>
Total        ’07        ’06         ’05        Pre ‘05
100%
AAA
$3.8
$0.8
$2.8
$0.2
$4.4
$0.5
$1.8
$0.6
$1.5
$5.0

104
Investor Day 12.04.07
Financial Strength and Flexibility
•
Strong “available capital”
position provides
significant financial flexibility; migrating to optimal
capital structure
•
Insurance operations capitalized in excess of “AA”
ratings objectives
•
Diverse cash flow sources contribute to flexibility
•
Sustained growth in book value per share while
returning capital through share repurchases
•
Investment portfolio: disciplined management;
leverages proven investment expertise

105
Investor Day 12.04.07
Considerations for 2008
•
2007 baseline earnings
•
Business growth
•
Capital management: share repurchases,
increased leverage
•
8% equity market appreciation from year end
•
Less favorable commercial real estate environment
•
US dollar @ 106 yen
•
28.4% effective tax rate
•
Wachovia Securities one-time costs

106
Investor Day 12.04.07
FSB Full Year 2008
Earnings Guidance
2007 Guidance
(1)
$7.45 -
$7.60
Non-Recurring/
Unsustainable
2007 Items
Baseline
Baseline
Earnings Level
Earnings Level
$7.15
$7.15
-
-
$7.30
$7.30
7.30
Capital
management:
share repurchases,
increased leverage
1)
Based on after-tax adjusted operating income for the Financial Services Businesses
Growth/
Expense
Management
2008 Guidance
(1)
Baseline
Baseline
Earnings
Earnings
Growth
Growth
Non-Recurring
2008 Items
Wachovia Securities
one-time costs