EX-12.1 3 dex121.htm STATEMENT OF RATIO OF EARNINGS TO FIXED CHARGES Statement of Ratio of Earnings to Fixed Charges

 

Exhibit 12.1

 

PRUDENTIAL FINANCIAL, INC.

RATIO OF EARNINGS TO FIXED CHARGES

 

    Nine  Months
Ended
September 30,
2010		     Three  Months
Ended
September 30,
2010		    

 

Year Ended December 31,

  
        2009     2008     2007     2006     2005  
   

($ in millions)

  

Earnings:

              

Income (loss) from continuing operations before income taxes(1)

   $ 4,320      $ 1,758      $ 3,916      $ (1,880 )    $ 4,872      $ 4,597      $ 4,400   

Less:

              

Undistributed income (loss) of investees accounted for under the equity method

     (4 )      12        (172 )      (1,026 )      109        70        281   

Interest capitalized

     —          —          —          5        6        —          —     
                                                       

Adjusted earnings

     4,324        1,746        4,088        (859 )      4,757        4,527        4,119   
                                                       

Add fixed charges:

              

Interest credited to policyholders’ account balances

     3,640        1,174        4,484        2,335        3,222        2,917        2,699   

Gross interest expense(2)

     910        307        1,168        1,401        1,502        1,217        785   

Interest component of rental expense

     56        20        77        64        60        58        64   
                                                       

Total fixed charges

     4,606        1,501        5,729        3,800        4,784        4,192        3,548   
                                                       

Total earnings plus fixed charges

   $ 8,930      $ 3,247      $ 9,817      $ 2,941      $ 9,541      $ 8,719      $ 7,667   
                                                       

Ratio of earnings to fixed charges(3)

     1.94        2.16        1.71        —          1.99        2.08        2.16   
                                                       

 

(1) Excludes earnings attributable to noncontrolling interests. The year ended December 31, 2009 includes a $2.247 billion pre-tax gain related to the sale of the Company’s minority joint venture interest in Wachovia Securities.
(2) Interest expense on short-term and long-term debt. Includes interest expense of securities businesses reported in “Net investment income” in the Consolidated Statements of Operations, capitalized interest and amortization of debt discounts and premiums. Interest expense does not include interest on liabilities recorded under the authoritative guidance on accounting for uncertainty in income taxes. The Company’s policy is to classify such interest in income tax provision in the consolidated statements of operations.
(3) Due to the Company’s loss for the year ended December 31, 2008, the ratio coverage was less than 1:1 and is therefore not presented. Additional earnings of $859 million would have been required for the year ended December 31, 2008 to achieve a ratio of 1:1.