PRUDENTIAL FINANCIAL INC - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - PRUDENTIAL FINANCIAL INC	d341951dex991.htm
8-K - FORM 8-K - PRUDENTIAL FINANCIAL INC	d341951d8k.htm

Exhibit 99.2

Prudential Financial, Inc. (PRU)

LOGO

Quarterly Financial Supplement

Fourth Quarter 2016

Reference is made to Prudential Financial, Inc.‘s (PFI) filings with the Securities and Exchange Commission for general information, and consolidated financial information. All financial information in this document is unaudited.

February 8, 2017

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

CONTENTS


	Page
HIGHLIGHTS
Financial Highlights		1-3
Operations Highlights		4

Combined Statements of Operations		5
Combining Statements of Operations (Quarter)		6
Combining Statements of Operations		7
Consolidated Balance Sheets		8
Combining Balance Sheets by Division		9
Short-Term and Long-Term Debt - Unaffiliated		10

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION
Combined Statements of Operations		11
Combining Statements of Operations		12
Individual Annuities Sales Results and Account Values		13
Individual Annuities Account Value Activity		14
Individual Annuities Living Benefit Features		15
Individual Annuities Death Benefit Features		16
Retirement Segment Sales Results and Account Values		17
Supplementary Revenue and Assets Under Management Information for Asset Management Segment		18
Supplementary Assets Under Management Information for Asset Management Segment		19

U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION
Combined Statements of Operations		20
Combining Statements of Operations		21
Individual Life Annualized New Business Premiums, Account Value Activity, and Face Amount in Force		22
Supplementary Information for Group Insurance		23

DEFERRED POLICY ACQUISITION COSTS & DEFERRED SALES INDUCEMENTS - INDIVIDUAL ANNUITIES, INDIVIDUAL LIFE AND GROUP INSURANCE		24

INTERNATIONAL INSURANCE DIVISION
Combined Statements of Operations		25
Combining Statements of Operations		26
Sales Results and Supplementary Information		27-28

INVESTMENT PORTFOLIO
Investment Portfolio Composition		29
Investment Portfolio Composition - Japanese Insurance Operations and Excluding Japanese Insurance Operations		30
Investment Results		31
Investment Results - Japanese Insurance Operations		32
Investment Results - Excluding Japanese Insurance Operations		33

LINE ITEM IMPACT OF MARKET DRIVEN AND DISCRETE ITEMS - ADJUSTED OPERATING INCOME		34

COMBINED STATEMENTS OF OPERATIONS - AOI TO U.S. GAAP RECONCILIATION OF REVENUES AND BENEFITS AND EXPENSES		35-36

KEY DEFINITIONS AND FORMULAS		37-39

RATINGS AND INVESTOR INFORMATION		40

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

This quarterly financial supplement reflects, for all periods presented, the retrospective adoption of a revised accounting standard related to the classification of certain debt issuance costs on Prudential Financial, Inc.’s consolidated balance sheet.

iii

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date						%			2015			2016
2016			2015			Change			4Q			1Q			2Q			3Q			4Q

								Pre-tax adjusted operating income (loss) by division:
	3,564			3,507			2%	U.S. Retirement Solutions and Investment Management Division		776			712			870			1,018			964
	299			811			-63%	U.S. Individual Life and Group Insurance Division		126			146			(201	)		173			181
	3,117			3,226			-3%	International Insurance Division		738			779			803			780			755
	(1,581	)		(1,313	)		-20%	Corporate and other operations		(458	)		(312	)		(415	)		(413	)		(441	)

	5,399			6,231			-13%	Total pre-tax adjusted operating income		1,182			1,325			1,057			1,558			1,459
	1,292			1,582			-18%	Income taxes, applicable to adjusted operating income		291			328			228			367			369

	4,107			4,649			-12%	After-tax adjusted operating income		891			997			829			1,191			1,090


								Reconciling items:
	523			1,579			-67%	Realized investment gains (losses), net, and related charges and adjustments		(196	)		338			360			649			(824	)
	(17	)		(524	)		97%	Investment gains (losses) on trading account assets supporting insurance liabilities, net		(159	)		216			108			37			(378	)
	21			433			-95%	Change in experience-rated contractholder liabilities due to asset value changes		138			(130	)		(133	)		1			283
								Divested businesses:
	(132	)		58			-328%	Closed Block division		(80	)		(73	)		(32	)		31			(58	)
	(84	)		(66	)		-27%	Other divested businesses		(40	)		31			(11	)		56			(160	)
	(5	)		58			-109%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(2	)		25			(8	)		(17	)		(5	)

	306			1,538			-80%	Total reconciling items, before income taxes		(339	)		407			284			757			(1,142	)
	43			490			-91%	Income taxes, not applicable to adjusted operating income		(181	)		40			203			134			(334	)

	263			1,048			-75%	Total reconciling items, after income taxes		(158	)		367			81			623			(808	)

	4,370			5,697			-23%	Income from continuing operations (after-tax) before equity in earnings of operating joint ventures		733			1,364			910			1,814			282
	(2	)		(55	)		96%	Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests		2			(28	)		11			13			2

	4,368			5,642			-23%	Income from continuing operations attributable to Prudential Financial, Inc.		735			1,336			921			1,827			284
	51			70			-27%	Earnings attributable to noncontrolling interests		5			33			4			5			9

	4,419			5,712			-23%	Income from continuing operations (after-tax)		740			1,369			925			1,832			293
	—			—			—	Income from discontinued operations, net of taxes		—			—			—			—			—

	4,419			5,712			-23%	Net income		740			1,369			925			1,832			293
	51			70			-27%	Less: Income attributable to noncontrolling interests		5			33			4			5			9

	4,368			5,642			-23%	Net income attributable to Prudential Financial, Inc.		735			1,336			921			1,827			284

	12.0%			14.5%				Operating Return on Average Equity (based on adjusted operating income) (1)		10.7%			11.9%			9.8%			13.8%			12.6%

(1)

Operating Return on Average Equity (based on adjusted operating income) is a non-GAAP measure and represents adjusted operating income after-tax, annualized for interim periods, divided by average Prudential Financial, Inc. equity excluding accumulated other comprehensive income and adjusted to remove amount included for foreign currency exchange rate remeasurement on page 3. The comparable GAAP measure to operating return on average equity (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, attributable to consolidated Prudential Financial, Inc., as determined in accordance with U.S. GAAP, annualized for interim periods, divided by average total Prudential Financial, Inc. equity. Return on average equity (based on income from continuing operations) is 2.2%, 13.1%, 7.1%, 11.7%, and 6.9% for the three months ended December 31, 2016, September 30, 2016, June, 30, 2016, March 31, 2016, and December 31, 2015, respectively, and 8.8% and 13.3% for years ended December 31, 2016 and 2015, respectively.

Page 1

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						Earnings per share of Common Stock (diluted):
	9.13			10.04		After-tax adjusted operating income		1.94			2.18			1.84			2.66			2.46

						Reconciling items:
	1.17			3.43		Realized investment gains (losses), net, and related charges and adjustments		(0.43	)		0.75			0.80			1.46			(1.87	)
	(0.04	)		(1.14	)	Investment gains (losses) on trading account assets supporting insurance liabilities, net		(0.35	)		0.48			0.24			0.08			(0.86	)
	0.05			0.94		Change in experience-rated contractholder liabilities due to asset value changes		0.30			(0.29	)		(0.30	)		—			0.64
						Divested businesses:
	(0.30	)		0.13		Closed Block division		(0.17	)		(0.16	)		(0.07	)		0.07			(0.13	)
	(0.19	)		(0.14	)	Other divested businesses		(0.09	)		0.07			(0.02	)		0.13			(0.36	)
	—			(0.02	)	Difference in earnings allocated to participating unvested share-based payment awards		—			(0.01	)		—			(0.01	)		0.02

	0.69			3.20		Total reconciling items, before income taxes		(0.74	)		0.84			0.65			1.73			(2.56	)
	0.11			1.07		Income taxes, not applicable to adjusted operating income		(0.40	)		0.09			0.45			0.32			(0.75	)

	0.58			2.13		Total reconciling items, after income taxes		(0.34	)		0.75			0.20			1.41			(1.81	)

	9.71			12.17		Income from continuing operations (after-tax) attributable to Prudential Financial, Inc.		1.60			2.93			2.04			4.07			0.65
	—			—		Income from discontinued operations, net of taxes		—			—			—			—			—

	9.71			12.17		Net income attributable to Prudential Financial, Inc.		1.60			2.93			2.04			4.07			0.65


	438.2			451.7		Weighted average number of outstanding Common shares (basic)		448.7			445.3			441.1			435.9			430.7
	446.6			460.4		Weighted average number of outstanding Common shares (diluted)		457.5			453.2			449.3			444.3			439.8

	17			17		Earnings related to interest, net of tax, on exchangeable surplus notes		4			4			5			4			4

						Earnings allocated to participating unvested share-based payment awards for earnings per share calculation
	47			45		After-tax adjusted operating income		8			11			9			15			12
	49			54		Income from continuing operations (after-tax)		6			14			11			21			3

Page 2

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date					2015			2016
2016		2015			4Q			1Q			2Q			3Q			4Q

				*Capitalization Data (1):*
				Senior Debt:
				Short-term debt		1,216			969			676			907			1,133
				Long-term debt		13,783			13,795			13,172			12,942			12,224
				Junior Subordinated Long-Term Debt		5,811			5,813			5,814			5,816			5,817

				Prudential Financial Inc. Equity:
				Including accumulated other comprehensive income		41,890			49,242			55,149			56,431			45,863
				Excluding accumulated other comprehensive income (2)		29,605			30,176			30,482			31,506			31,242
				Amount included above for foreign currency exchange rate remeasurement (3)		(3,747	)		(3,628	)		(3,509	)		(3,327	)		(3,199	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for foreign currency exchange rate remeasurement (3)		33,352			33,804			33,991			34,833			34,441


				Book value per share of Common Stock:
				Including accumulated other comprehensive income (4)		92.39			109.66			123.77			128.37			104.91
				Excluding accumulated other comprehensive income (2)		65.32			67.36			68.65			71.95			71.62
				Amount included above for foreign currency exchange rate remeasurement (3)		(8.27	)		(8.10	)		(7.90	)		(7.60	)		(7.33	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for foreign currency exchange rate remeasurement (3)		73.59			75.46			76.55			79.55			78.95


				Number of diluted shares at end of period (5)		453.2			448.0			444.0			437.9			436.2

				*Common Stock Price Range (based on closing price):*
	107.10		91.68	High		87.69			79.84			79.71			81.65			107.10
	58.00		74.22	Low		75.40			58.00			66.93			68.74			81.43
	104.06		81.41	Close		81.41			72.22			71.34			81.65			104.06

				*Common Stock market capitalization (1)*		36,398			32,001			31,304			35,248			44,704

(1)	As of end of period.

(2)	Foreign currency translation adjustments and the cumulative impact of foreign currency exchange rate remeasurement, except for those items remeasured through net income (loss), are a component of accumulated other comprehensive income.

(3)	Represents cumulative impact of net gains and losses resulting from foreign currency exchange rate remeasurement and associated realized investment gains and losses included in net income (loss) and currency translation adjustments corresponding to realized investment gains and losses.

(4)

Book value per share of Common Stock, including accumulated other comprehensive income, for the fourth quarter of 2015 and the first, second and third quarters of 2016, includes a $500 million increase in equity and a 5.6 million increase in diluted shares reflecting the dilutive impact of exchangeable surplus notes when book value per share is greater than $88.90. The fourth quarter of 2016 includes a $500 million increase in equity and a 5.75 million increase in diluted shares, reflecting the dilutive impact of exchangeable surplus notes when book value per share is greater than $86.92.

(5)	The number of diluted shares at end of period excludes the impact of exchangeable surplus notes due to the antidilutive impact of conversion.

Page 3

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

OPERATIONS HIGHLIGHTS


Year-to-date					2015		2016
2016		2015			4Q		1Q		2Q		3Q		4Q

				*Assets Under Management and Administration ($ billions) (1) (2):*
				Assets Under Management:
				Managed by U.S. Retirement Solutions and Investment Management Division:
				Asset Management Segment - Investment Management & Advisory Services
				Institutional customers		389.1		403.6		418.8		445.9		431.5
				Retail customers		197.3		198.6		202.1		209.0		209.2
				General account		376.7		400.8		426.3		430.3		399.4

				Total Investment Management and Advisory Services		963.1		1,003.0		1,047.2		1,085.2		1,040.1
				Non-proprietary assets under management		175.5		167.0		169.8		176.4		172.6

				Total managed by U.S. Retirement Solutions and Investment Management Division		1,138.6		1,170.0		1,217.0		1,261.6		1,212.7
				Managed by U.S. Individual Life and Group Insurance Division		24.1		25.1		25.7		24.8		24.9
				Managed by International Insurance Division		21.0		22.8		25.0		27.9		26.2

				Total assets under management		1,183.7		1,217.9		1,267.7		1,314.3		1,263.8
				Client assets under administration		163.2		170.5		171.7		177.0		177.3

				Total assets under management and administration		1,346.9		1,388.4		1,439.4		1,491.3		1,441.1

				Assets managed or administered for customers outside of the United States at end of period		270.5		297.5		324.6		335.4		311.1
				*Distribution Representatives (1):*
				Prudential Agents		2,903		2,969		2,987		3,031		2,937
				International Life Planners		7,592		7,608		7,551		7,667		7,680
				Gibraltar Life Consultants		8,805		8,781		8,734		8,790		8,884
	56		56	*Prudential Agent productivity ($ thousands)*		68		47		54		56		67

(1)	As of end of period.

(2)	At fair market value.

Page 4

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS

(in millions)


Year-to-date						%			2015			2016
2016			2015			Change			4Q			1Q			2Q			3Q			4Q

								Revenues (1):
	27,953			25,463			10%	Premiums		7,495			5,577			6,146			8,934			7,296
	5,887			6,003			-2%	Policy charges and fee income		1,514			1,511			1,288			1,559			1,529
	12,695			11,958			6%	Net investment income		2,964			3,017			3,087			3,292			3,299
	5,039			5,206			-3%	Asset management fees, commissions and other income		1,272			1,187			1,291			1,265			1,296

	51,574			48,630			6%	Total revenues		13,245			11,292			11,812			15,050			13,420


								Benefits and Expenses (1):
	29,709			26,698			11%	Insurance and annuity benefits		7,917			5,984			6,813			9,254			7,658
	3,698			3,585			3%	Interest credited to policyholders’ account balances		879			907			914			932			945
	1,315			1,302			1%	Interest expense		322			325			357			314			319
	(2,845	)		(2,652	)		-7%	Deferral of acquisition costs		(691	)		(685	)		(718	)		(731	)		(711	)
	1,672			1,631			3%	Amortization of acquisition costs		443			479			281			444			468
	12,626			11,835			7%	General and administrative expenses		3,193			2,957			3,108			3,279			3,282

	46,175			42,399			9%	Total benefits and expenses		12,063			9,967			10,755			13,492			11,961

	5,399			6,231			-13%	Adjusted operating income before income taxes		1,182			1,325			1,057			1,558			1,459


								Reconciling items:
	989			2,258			-56%	Realized investment gains (losses), net, and related adjustments		(461	)		1,418			802			223			(1,454	)
	(466	)		(679	)		31%	Related charges		265			(1,080	)		(442	)		426			630

	523			1,579			-67%	Total realized investment gains (losses), net, and related charges and adjustments		(196	)		338			360			649			(824	)

	(17	)		(524	)		97%	Investment gains (losses) on trading account assets supporting insurance liabilities, net		(159	)		216			108			37			(378	)
	21			433			-95%	Change in experience-rated contractholder liabilities due to asset value changes		138			(130	)		(133	)		1			283
								Divested businesses:
	(132	)		58			-328%	Closed Block division		(80	)		(73	)		(32	)		31			(58	)
	(84	)		(66	)		-27%	Other divested businesses		(40	)		31			(11	)		56			(160	)
	(5	)		58			-109%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(2	)		25			(8	)		(17	)		(5	)

	306			1,538			-80%	Total reconciling items, before income taxes		(339	)		407			284			757			(1,142	)


	5,705			7,769			-27%	Income from continuing operations before income taxes and equity in earnings of operating joint ventures		843			1,732			1,341			2,315			317
	1,335			2,072			-36%	Income tax expense		110			368			431			501			35

	4,370			5,697			-23%	Income from continuing operations before equity in earnings of operating joint ventures		733			1,364			910			1,814			282

(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 other than those classified as divested businesses. Benefits and expenses exclude charges related to realized investment gains, net of losses; change in experience-rated contractholder liabilities due to asset value changes; and benefits and expenses of divested businesses and include charges for income attributable to non controlling interests. See pages 35 and 36 for reconciliation.

Page 5

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING STATEMENTS OF OPERATIONS

(in millions)


	Quarter Ended December 31, 2016
				U.S. Retirement Solutions & Investment			U.S. Individual Life & Group			International			Corporate
				Management			Insurance			Insurance			and Other
	Total			Division			Division			Division			Operations
Revenues (1):
Premiums		7,296			2,258			1,231			3,814			(7	)
Policy charges and fee income		1,529			712			699			129			(11	)
Net investment income		3,299			1,324			630			1,206			139
Asset management fees, commissions and other income		1,296			1,280			190			89			(263	)

Total revenues		13,420			5,574			2,750			5,238			(142	)


Benefits and Expenses (1):
Insurance and annuity benefits		7,658			2,760			1,611			3,280			7
Interest credited to policyholders’ account balances		945			473			246			226			—
Interest expense		319			23			153			3			140
Deferral of acquisition costs		(711	)		(95	)		(203	)		(426	)		13
Amortization of acquisition costs		468			146			71			264			(13	)
General and administrative expenses		3,282			1,303			691			1,136			152

Total benefits and expenses		11,961			4,610			2,569			4,483			299

Adjusted operating income (loss) before income taxes		1,459			964			181			755			(441	)


	Quarter Ended December 31, 2015
				U.S. Retirement Solutions & Investment			U.S. Individual Life & Group			International			Corporate
				Management			Insurance			Insurance			and Other
	Total			Division			Division			Division			Operations
Revenues (1):
Premiums		7,495			3,005			1,190			3,307			(7	)
Policy charges and fee income		1,514			707			699			122			(14	)
Net investment income		2,964			1,188			562			1,078			136
Asset management fees, commissions and other income		1,272			1,198			177			164			(267	)

Total revenues		13,245			6,098			2,628			4,671			(152	)


Benefits and Expenses (1):
Insurance and annuity benefits		7,917			3,502			1,570			2,833			12
Interest credited to policyholders’ account balances		879			440			226			213			—
Interest expense		322			21			140			1			160
Deferral of acquisition costs		(691	)		(122	)		(198	)		(387	)		16
Amortization of acquisition costs		443			140			80			233			(10	)
General and administrative expenses		3,193			1,341			684			1,040			128

Total benefits and expenses		12,063			5,322			2,502			3,933			306


Adjusted operating income (loss) before income taxes		1,182			776			126			738			(458	)

(1)

Page 6

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING STATEMENTS OF OPERATIONS

(in millions)


	Twelve Months Ended December 31, 2016
				U.S. Retirement Solutions & Investment			U.S. Individual Life & Group			International			Corporate
				Management			Insurance			Insurance			and Other
	Total			Division			Division			Division			Operations
Revenues (1) :
Premiums		27,953			7,738			4,894			15,348			(27	)
Policy charges and fee income		5,887			2,797			2,636			499			(45	)
Net investment income		12,695			5,041			2,430			4,759			465
Asset management fees, commissions and other income		5,039			4,927			738			403			(1,029	)

Total revenues		51,574			20,503			10,698			21,009			(636	)


Benefits and Expenses (1):
Insurance and annuity benefits		29,709			9,634			6,817			13,232			26
Interest credited to policyholders’ account balances		3,698			1,835			943			920			—
Interest expense		1,315			105			588			8			614
Deferral of acquisition costs		(2,845	)		(449	)		(706	)		(1,750	)		60
Amortization of acquisition costs		1,672			532			121			1,068			(49	)
General and administrative expenses		12,626			5,282			2,636			4,414			294

Total benefits and expenses		46,175			16,939			10,399			17,892			945


Adjusted operating income (loss) before income taxes		5,399			3,564			299			3,117			(1,581	)


	Twelve Months Ended December 31, 2015
				U.S. Retirement Solutions & Investment			U.S. Individual Life & Group			International			Corporate
				Management			Insurance			Insurance			and Other
	Total			Division			Division			Division			Operations
Revenues (1):
Premiums		25,463			6,845			4,781			13,844			(7	)
Policy charges and fee income		6,003			2,885			2,637			530			(49	)
Net investment income		11,958			4,796			2,255			4,357			550
Asset management fees, commissions and other income		5,206			4,934			703			633			(1,064	)

Total revenues		48,630			19,460			10,376			19,364			(570	)


Benefits and Expenses (1):
Insurance and annuity benefits		26,698			8,664			6,146			11,872			16
Interest credited to policyholders’ account balances		3,585			1,804			901			880			—
Interest expense		1,302			104			558			5			635
Deferral of acquisition costs		(2,652	)		(487	)		(660	)		(1,565	)		60
Amortization of acquisition costs		1,631			550			139			989			(47	)
General and administrative expenses		11,835			5,318			2,481			3,957			79

Total benefits and expenses		42,399			15,953			9,565			16,138			743


Adjusted operating income (loss) before income taxes		6,231			3,507			811			3,226			(1,313	)

(1)

Page 7

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

CONSOLIDATED BALANCE SHEETS

(in millions)


	12/31/2015		03/31/2016		06/30/2016		09/30/2016		12/31/2016

Assets:
Investments:
Fixed maturities, available for sale, at fair value (amortized cost $265,416; $278,000; $286,066; $297,745; $292,581)		290,323		314,529		332,270		343,244		321,419
Fixed maturities, held to maturity, at amortized cost (fair value $2,624; $2,841; $3,026; $2,956; $2,524)		2,308		2,411		2,485		2,471		2,144
Trading account assets supporting insurance liabilities, at fair value		20,522		21,447		21,702		21,828		21,840
Other trading account assets, at fair value		14,458		8,052		7,268		7,559		5,764
Equity securities, available for sale, at fair value (cost $6,847; $7,026; $7,088; $7,197; $7,149)		9,274		9,400		9,496		9,765		9,748
Commercial mortgage and other loans		50,559		50,798		51,447		52,273		52,779
Policy loans		11,657		11,805		11,930		12,031		11,755
Other long-term investments		9,986		10,281		10,247		11,346		11,283
Short-term investments		8,105		3,697		5,035		5,254		7,508

Total investments		417,192		432,420		451,880		465,771		444,240
Cash and cash equivalents		17,612		22,492		24,142		24,728		14,127
Accrued investment income		3,110		3,180		3,211		3,279		3,204
Deferred policy acquisition costs		16,718		15,998		16,152		16,975		17,661
Value of business acquired		2,828		2,582		1,951		2,159		2,314
Other assets		14,225		14,822		14,322		15,403		14,780
Separate account assets		285,570		281,501		284,832		291,550		287,636

Total assets		757,255		772,995		796,490		819,865		783,962

Liabilities:
Future policy benefits		224,384		234,728		242,950		252,228		240,908
Policyholders’ account balances		136,784		139,745		142,716		146,577		145,205
Securities sold under agreements to repurchase		7,882		8,357		7,335		6,830		7,606
Cash collateral for loaned securities		3,496		4,052		4,643		5,037		4,333
Income taxes		8,714		12,128		15,140		15,326		10,412
Senior short-term debt		1,216		969		676		907		1,133
Senior long-term debt		13,783		13,795		13,172		12,942		12,224
Junior subordinated long-term debt		5,811		5,813		5,814		5,816		5,817
Notes issued by consolidated variable interest entities		8,597		2,946		2,094		2,722		2,150
Other liabilities		19,095		19,696		21,940		22,956		20,450
Separate account liabilities		285,570		281,501		284,832		291,550		287,636

Total liabilities		715,332		723,730		741,312		762,891		737,874

Equity:
Accumulated other comprehensive income		12,285		19,066		24,667		24,925		14,621
Other equity		29,605		30,176		30,482		31,506		31,242

Total Prudential Financial, Inc. equity		41,890		49,242		55,149		56,431		45,863

Noncontrolling Interest		33		23		29		543		225

Total Equity		41,923		49,265		55,178		56,974		46,088

Total liabilities and equity		757,255		772,995		796,490		819,865		783,962

Page 8

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING BALANCE SHEETS BY DIVISION

(in millions)


	As of December 31, 2016

	Consolidated PFI		Closed Block Division			PFI Excluding Closed Block Division		U.S. Retirement Solutions & Investment Management Division		U.S. Individual Life & Group Insurance Division		International Insurance Division		Corporate and Other Operations
Assets:
Total investments		444,240		59,714			384,526		132,915		55,333		176,252		20,026
Deferred policy acquisition costs		17,661		336			17,325		5,003		5,454		7,208		(340	)
Other assets		34,425		2,001			32,424		12,908		11,235		10,842		(2,561	)
Separate account assets		287,636		—			287,636		242,799		46,144		2,817		(4,124	)

Total assets		783,962		62,051			721,911		393,625		118,166		197,119		13,001

Liabilities:
Future policy benefits		240,908		49,281			191,627		65,972		16,987		103,930		4,738
Policyholders’ account balances		145,205		5,204			140,001		58,371		33,872		47,747		11
Debt		19,174		—			19,174		3,147		7,282		87		8,658
Other liabilities		44,951		8,967			35,984		7,076		7,248		18,457		3,203
Separate account liabilities		287,636		—			287,636		242,799		46,144		2,817		(4,124	)

Total liabilities		737,874		63,452			674,422		377,365		111,533		173,038		12,486

Equity:
Accumulated other comprehensive income (loss)		14,621		(4	)		14,625		1,294		706		14,320		(1,695	)
Other equity		31,242		(1,399	)		32,641		14,692		5,927		9,716		2,306

Total Prudential Financial, Inc. equity		45,863		(1,403	)		47,266		15,986		6,633		24,036		611

Noncontrolling Interest		225		2			223		274		—		45		(96	)

Total Equity		46,088		(1,401	)		47,489		16,260		6,633		24,081		515

Total liabilities and equity		783,962		62,051			721,911		393,625		118,166		197,119		13,001



	As of December 31, 2015

	Consolidated PFI		Closed Block Division			PFI Excluding Closed Block Division		U.S. Retirement Solutions & Investment Management Division		U.S. Individual Life & Group Insurance Division		International Insurance Division		Corporate and Other Operations
Assets:
Total investments		417,192		59,758			357,434		132,934		50,547		157,800		16,153
Deferred policy acquisition costs		16,718		373			16,345		5,048		5,064		6,554		(321	)
Other assets		37,775		1,996			35,779		15,081		11,143		8,246		1,309
Separate account assets		285,570		—			285,570		242,058		44,446		2,553		(3,487	)

Total assets		757,255		62,127			695,128		395,121		111,200		175,153		13,654

Liabilities:
Future policy benefits		224,384		49,539			174,845		63,585		15,053		91,931		4,276
Policyholders’ account balances		136,784		5,250			131,534		55,833		31,987		43,711		3
Debt		20,810		—			20,810		2,846		7,251		29		10,684
Other liabilities		47,784		8,747			39,037		15,524		6,633		14,865		2,015
Separate account liabilities		285,570		—			285,570		242,058		44,446		2,553		(3,487	)

Total liabilities		715,332		63,536			651,796		379,846		105,370		153,089		13,491

Equity:
Accumulated other comprehensive income (loss)		12,285		2			12,283		576		504		12,897		(1,694	)
Other equity		29,605		(1,411	)		31,016		14,686		5,326		9,119		1,885

Total Prudential Financial, Inc. equity		41,890		(1,409	)		43,299		15,262		5,830		22,016		191

Noncontrolling Interest		33		—			33		13		—		48		(28	)

Total Equity		41,923		(1,409	)		43,332		15,275		5,830		22,064		163


Total liabilities and equity		757,255		62,127			695,128		395,121		111,200		175,153		13,654

Page 9

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

SHORT-TERM AND LONG-TERM DEBT - UNAFFILIATED

(in millions)


	As of December 31, 2016								As of December 31, 2015
	Senior debt				Junior Subordinated Long-term Debt				Senior debt				Junior Subordinated Long-term Debt
	Short-term Debt		Long-term Debt		Junior Subordinated Long-term Debt		Total Debt		Short-term Debt		Long-term Debt		Junior Subordinated Long-term Debt		Total Debt
*Borrowings by use of proceeds:*
Capital Debt		—		5,822		5,817		11,639		194		5,875		5,811		11,880
Operating Debt - Investment related		477		4,901		—		5,378		438		6,573		—		7,011
Operating Debt - Specified businesses		584		914		—		1,498		584		770		—		1,354
Limited recourse and non-recourse borrowing		72		587		—		659		—		565		—		565

Total debt		1,133		12,224		5,817		19,174		1,216		13,783		5,811		20,810


	As of December 31, 2016								As of December 31, 2015
	Prudential Financial, Inc.		The Prudential Insurance Co. of America (1)(2)		Other Affiliates		Total		Prudential Financial, Inc.		The Prudential Insurance Co. of America (1)(2)		Other Affiliates		Total
*Borrowings by sources:*
Capital Debt		10,645		939		55		11,639		10,888		941		51		11,880
Operating Debt - Investment related		4,314		65		999		5,378		5,328		72		1,611		7,011
Operating Debt - Specified businesses		965		533		—		1,498		970		384		—		1,354
Limited recourse and non-recourse borrowing		—		659		—		659		—		565		—		565

Total debt		15,924		2,196		1,054		19,174		17,186		1,962		1,662		20,810

(1)	Includes Prudential Funding, LLC.

(2)	Capital debt at Prudential Insurance Co. of America includes $839 million and $841 million of surplus notes as of December 31, 2016 and December 31, 2015, respectively.

Page 10

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS - U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION

(in millions)


Year-to-date						%			2015			2016
2016			2015			Change			4Q			1Q			2Q			3Q			4Q

								Revenues (1):
	7,738			6,845			13%	Premiums		3,005			671			1,018			3,791			2,258
	2,797			2,885			-3%	Policy charges and fee income		707			675			687			723			712
	5,041			4,796			5%	Net investment income		1,188			1,198			1,194			1,325			1,324
	4,927			4,934			0%	Asset management fees, commissions and other income		1,198			1,164			1,217			1,266			1,280

	20,503			19,460			5%	Total revenues		6,098			3,708			4,116			7,105			5,574


								Benefits and Expenses (1):
	9,634			8,664			11%	Insurance and annuity benefits		3,502			1,171			1,460			4,243			2,760
	1,835			1,804			2%	Interest credited to policyholders’ account balances		440			453			451			458			473
	105			104			1%	Interest expense		21			25			28			29			23
	(449	)		(487	)		8%	Deferral of acquisition costs		(122	)		(110	)		(128	)		(116	)		(95	)
	532			550			-3%	Amortization of acquisition costs		140			155			131			100			146
	5,282			5,318			-1%	General and administrative expenses		1,341			1,302			1,304			1,373			1,303

	16,939			15,953			6%	Total benefits and expenses		5,322			2,996			3,246			6,087			4,610

	3,564			3,507			2%	Adjusted operating income before income taxes		776			712			870			1,018			964

(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. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to non controlling interests.

Page 11

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING STATEMENTS OF OPERATIONS - U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT

DIVISION

(in millions)


	Twelve Months Ended December 31, 2016												Quarter Ended December 31, 2016
	Total U.S. Retirement Solutions & Investment Management Division			Individual Annuities			Retirement			Asset Management			Total U.S. Retirement Solutions & Investment Management Division			Individual Annuities			Retirement			Asset Management
Revenues (1):
Premiums		7,738			159			7,579			—			2,258			44			2,214			—
Policy charges and fee income		2,797			2,569			228			—			712			651			61			—
Net investment income		5,041			698			4,263			80			1,324			184			1,120			20
Asset management fees, commissions and other income		4,927			1,240			806			2,881			1,280			314			213			753

Total revenues		20,503			4,666			12,876			2,961			5,574			1,193			3,608			773

Benefits and Expenses (1):
Insurance and annuity benefits		9,634			306			9,328			—			2,760			100			2,660			—
Interest credited to policyholders’ account balances		1,835			362			1,473			—			473			92			381			—
Interest expense		105			71			19			15			23			14			5			4
Deferral of acquisition costs		(449	)		(408	)		(31	)		(10	)		(95	)		(87	)		(6	)		(2	)
Amortization of acquisition costs		532			484			33			15			146			134			8			4
General and administrative expenses		5,282			2,086			1,042			2,154			1,303			518			242			543

Total benefits and expenses		16,939			2,901			11,864			2,174			4,610			771			3,290			549

Adjusted operating income before income taxes		3,564			1,765			1,012			787			964			422			318			224


	Twelve Months Ended December 31, 2015												Quarter Ended December 31, 2015
	Total U.S. Retirement Solutions & Investment Management Division			Individual Annuities			Retirement			Asset Management			Total U.S. Retirement Solutions & Investment Management Division			Individual Annuities			Retirement			Asset Management
Revenues (1):
Premiums		6,845			117			6,728			—			3,005			29			2,976			—
Policy charges and fee income		2,885			2,668			217			—			707			653			54			—
Net investment income		4,796			603			4,082			111			1,188			153			1,005			30
Asset management fees, commissions and other income		4,934			1,307			794			2,833			1,198			306			191			701

Total revenues		19,460			4,695			11,821			2,944			6,098			1,141			4,226			731

Benefits and Expenses (1):
Insurance and annuity benefits		8,664			314			8,350			—			3,502			79			3,423			—
Interest credited to policyholders’ account balances		1,804			363			1,441			—			440			95			345			—
Interest expense		104			69			25			10			21			14			4			3
Deferral of acquisition costs		(487	)		(430	)		(46	)		(11	)		(122	)		(105	)		(14	)		(3	)
Amortization of acquisition costs		550			465			66			19			140			121			14			5
General and administrative expenses		5,318			2,117			1,054			2,147			1,341			527			286			528

Total benefits and expenses		15,953			2,898			10,890			2,165			5,322			731			4,058			533

Adjusted operating income before income taxes		3,507			1,797			931			779			776			410			168			198

(1)

Page 12

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - INDIVIDUAL ANNUITIES SALES RESULTS AND ACCOUNT VALUES

(in millions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						SALES AND ACCOUNT VALUES:

						Variable Annuities:
	149,441			155,083		Beginning total account value		146,685			149,441			149,246			151,188			154,903
	2,494			3,682		Sales: Highest Daily Suite - risk retained by Prudential (1)		680			683			666			587			558
	1,367			1,545		Highest Daily Suite - externally reinsured living benefits		486			374			354			321			318
	4,133			3,505		Other variable annuities (2)		910			944			1,247			1,180			762

	7,994			8,732		Total sales		2,076			2,001			2,267			2,088			1,638
	(7,776	)		(8,291	)	Surrenders and withdrawals		(1,989	)		(1,748	)		(1,914	)		(1,992	)		(2,122	)

	218			441		Net sales (redemptions)		87			253			353			96			(484	)
	(1,450	)		(1,541	)	Benefit payments		(351	)		(355	)		(399	)		(349	)		(347	)

	(1,232	)		(1,100	)	Net flows		(264	)		(102	)		(46	)		(253	)		(831	)
	8,638			(955	)	Change in market value, interest credited, and other		3,909			764			2,873			4,877			124
	(3,552	)		(3,587	)	Policy charges		(889	)		(857	)		(885	)		(909	)		(901	)

	153,295			149,441		Ending total account value		149,441			149,246			151,188			154,903			153,295


						Variable Annuities Account Value by Product:
	112,543			112,060		Highest Daily Suite - risk retained by Prudential (1)		112,060			111,229			111,820			113,902			112,543
	2,932			1,513		Highest Daily Suite - externally reinsured living benefits		1,513			1,893			2,259			2,629			2,932
	37,820			35,868		Other variable annuities (2)		35,868			36,124			37,109			38,372			37,820

	153,295			149,441		Ending total account value		149,441			149,246			151,188			154,903			153,295


						Fixed Annuities and other products (3):
	3,504			3,581		Beginning total account value		3,532			3,504			3,487			3,489			3,485
	60			48		Sales		13			16			14			12			18
	(105	)		(124	)	Surrenders and withdrawals		(32	)		(31	)		(26	)		(21	)		(27	)

	(45	)		(76	)	Net redemptions		(19	)		(15	)		(12	)		(9	)		(9	)
	(344	)		(369	)	Benefit payments		(91	)		(88	)		(90	)		(91	)		(75	)

	(389	)		(445	)	Net flows		(110	)		(103	)		(102	)		(100	)		(84	)
	374			370		Interest credited and other		83			86			105			96			87
	(1	)		(2	)	Policy charges		(1	)		—			(1	)		—			—

	3,488			3,504		Ending total account value		3,504			3,487			3,489			3,485			3,488


						SALES BY DISTRIBUTION CHANNEL:

						Variable and Fixed Annuities (4):
	2,353			2,549		Insurance Agents		627			580			625			598			550
	1,492			1,681		Wirehouses		415			385			452			376			279
	3,180			3,285		Independent Financial Planners		761			783			897			841			659
	1,029			1,265		Bank Distribution		286			269			307			285			168

	8,054			8,780		Total		2,089			2,017			2,281			2,100			1,656

(1)	Includes variable annuities with “Highest Daily” optional living benefits retained by Prudential and predecessor “Lifetime Five” feature.

(2)	Includes Prudential Defined Income (PDI), and products without guaranteed minimum income and withdrawal benefits.

(3)	Includes single premium immediate annuities.

(4)	Amounts represent gross sales.

Page 13

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - INDIVIDUAL ANNUITIES ACCOUNT VALUE ACTIVITY

(in millions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						INDIVIDUAL ANNUITIES:

						Account Values in General Account (1):
	9,942			9,852		Beginning balance		10,030			9,942			10,017			9,977			9,863
	868			1,165		Premiums and deposits		279			238			221			215			194
	(563	)		(704	)	Surrenders and withdrawals		(146	)		(141	)		(140	)		(134	)		(148	)

	305			461		Net sales		133			97			81			81			46
	(411	)		(446	)	Benefit payments		(109	)		(105	)		(110	)		(107	)		(89	)

	(106	)		15		Net flows		24			(8	)		(29	)		(26	)		(43	)
	241			263		Interest credited and other		70			64			62			58			57
	(184	)		(186	)	Net transfers (to) from separate account		(181	)		19			(72	)		(146	)		15
	(1	)		(2	)	Policy charges		(1	)		—			(1	)		—			—

	9,892			9,942		Ending balance		9,942			10,017			9,977			9,863			9,892


						Account Values in Separate Account (1):
	143,003			148,812		Beginning balance		140,187			143,003			142,716			144,700			148,525
	7,186			7,615		Premiums and deposits		1,810			1,779			2,060			1,885			1,462
	(7,318	)		(7,711	)	Surrenders and withdrawals		(1,875	)		(1,638	)		(1,800	)		(1,879	)		(2,001	)

	(132	)		(96	)	Net sales (redemptions)		(65	)		141			260			6			(539	)
	(1,383	)		(1,464	)	Benefit payments		(333	)		(338	)		(379	)		(333	)		(333	)

	(1,515	)		(1,560	)	Net flows		(398	)		(197	)		(119	)		(327	)		(872	)
	8,771			(848	)	Change in market value, interest credited and other		3,922			786			2,916			4,915			154
	184			186		Net transfers (to) from general account		181			(19	)		72			146			(15	)
	(3,552	)		(3,587	)	Policy charges		(889	)		(857	)		(885	)		(909	)		(901	)

	146,891			143,003		Ending balance		143,003			142,716			144,700			148,525			146,891

(1)

Premiums and deposits, and surrenders and withdrawals, are classified within the general account and separate account for purposes of this presentation based on the allocation of customer funds. For example, premiums allocated by customers to separate account investments at the time of sale, while remitted through the company’s general account, are shown as separate account premium in this display, rather than as general account premium and transfers to the separate account.

Page 14

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - INDIVIDUAL ANNUITIES LIVING BENEFIT FEATURES

(in millions)


	2015		2016
	4Q		1Q		2Q		3Q		4Q

LIVING BENEFIT FEATURES ACCOUNT VALUE AND NET AMOUNT AT RISK (1):

Variable Annuity Account Values with Living Benefit Features
Guaranteed minimum accumulation benefits		4,767		4,658		4,524		4,403		4,104
Guaranteed minimum withdrawal benefits		578		552		537		532		514
Guaranteed minimum income benefits		2,870		2,780		2,749		2,780		2,730
Guaranteed minimum withdrawal & income benefits - risk retained by Prudential		116,724		116,818		118,666		121,747		120,468
Guaranteed minimum withdrawal & income benefits - externally reinsured		1,513		1,893		2,259		2,629		2,932

Total		126,452		126,701		128,735		132,091		130,748


Living Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature - risk retained by Prudential		107,411		106,699		107,253		109,175		107,752
Account Values with Auto-Rebalancing Feature - externally reinsured		1,513		1,893		2,259		2,629		2,932
Account Values without Auto-Rebalancing Feature		17,528		18,109		19,223		20,287		20,064

Total		126,452		126,701		128,735		132,091		130,748


Living Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature - risk retained by Prudential		4,019		4,395		4,366		3,928		4,494
Net Amount at Risk with Auto-Rebalancing Feature - externally reinsured		—		—		—		—		—
Net Amount at Risk without Auto-Rebalancing Feature		1,194		1,225		1,179		1,049		1,082

Total		5,213		5,620		5,545		4,977		5,576

(1)	At end of period.

Page 15

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION—INDIVIDUAL ANNUITIES DEATH BENEFIT FEATURES

(in millions)


	2015		2016
	4Q		1Q		2Q		3Q		4Q

DEATH BENEFIT FEATURES ACCOUNT VALUE AND NET AMOUNT AT RISK (1):

Variable Annuity Account Values by Death Benefit Features
Return of net deposits:
Account value		114,402		114,662		116,599		119,755		118,620
Net amount at risk		737		648		544		399		487
Minimum return, anniversary contract value, or maximum contract value:
Account value		31,658		31,188		31,127		31,534		30,980
Net amount at risk		4,212		4,367		4,147		3,533		3,714

Death Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature		108,924		108,592		109,512		111,804		110,684
Account Values without Auto-Rebalancing Feature		37,136		37,258		38,214		39,485		38,916

Total		146,060		145,850		147,726		151,289		149,600


Death Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature		1,919		2,025		1,852		1,392		1,597
Net Amount at Risk without Auto-Rebalancing Feature		3,030		2,990		2,839		2,540		2,604

Total		4,949		5,015		4,691		3,932		4,201

(1)	At end of period.

Page 16

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - RETIREMENT SEGMENT SALES RESULTS AND ACCOUNT VALUES

(in millions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						RETIREMENT SEGMENT SALES AND ACCOUNT VALUES

						Full Service:
	188,961			184,196		Beginning total account value		184,515			188,961			190,953			194,007			200,476
	21,928			25,684		Deposits and sales		4,908			6,656			4,699			5,405			5,168
	(20,127	)		(21,559	)	Withdrawals and benefits		(5,575	)		(5,286	)		(4,513	)		(5,013	)		(5,315	)
	12,040			640		Change in market value, interest credited, interest income and other activity		5,113			622			2,868			6,077			2,473

	202,802			188,961		Ending total account value		188,961			190,953			194,007			200,476			202,802


	1,801			4,125		Net additions (withdrawals)		(667	)		1,370			186			392			(147	)


						Stable value account values included above		45,971			46,865			47,581			48,352			48,725

						Institutional Investment Products:
	179,964			179,641		Beginning total account value		181,662			179,964			180,819			180,882			186,224
	16,140			15,572		Additions		3,425			2,061			3,421			6,907			3,751
	(12,161	)		(15,388	)	Withdrawals and benefits		(4,145	)		(2,783	)		(3,119	)		(2,339	)		(3,920	)
	5,299			3,476		Change in market value, interest credited and interest income		658			2,198			2,053			1,953			(905	)
	(5,866	)		(3,337	)	Other (1)		(1,636	)		(621	)		(2,292	)		(1,179	)		(1,774	)

	183,376			179,964		Ending total account value		179,964			180,819			180,882			186,224			183,376


	3,979			184		Net additions (withdrawals)		(720	)		(722	)		302			4,568			(169	)


						Amounts included in ending total account value above:
	70,196			66,827		Investment-only stable value wraps		66,827			68,624			69,567			71,482			70,196
	29,959			33,453		Longevity reinsurance (2)		33,453			32,364			31,438			31,280			29,959
	83,221			79,684		Group annuities and other products		79,684			79,831			79,877			83,462			83,221

	183,376			179,964		Ending total account value		179,964			180,819			180,882			186,224			183,376

(1)

“Other” activity includes the effect of foreign exchange rate changes associated with our United Kingdom longevity reinsurance business; net presentation of receipts and payments related to funding agreements backed commercial paper which typically have maturities of less than 90 days, and changes in asset balances for externally-managed accounts.

(2)	Represents notional amounts based on present value of future benefits under longevity reinsurance contracts which have not been significantly pre-funded.

Page 17

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - SUPPLEMENTARY REVENUE AND ASSETS UNDER MANAGEMENT INFORMATION FOR ASSET MANAGEMENT SEGMENT


						Supplementary Revenue Information (in millions):
Year-to-date				%			2015		2016
2016		2015		Change			4Q		1Q		2Q		3Q		4Q

						Analysis of revenues by type:
	2,227		2,135		4%	Asset management fees		529		524		547		577		579
	255		241		6%	Other related revenues		68		71		67		52		65
	479		568		-16%	Service, distribution and other revenues		134		111		118		121		129

	2,961		2,944		1%	Total Asset Management segment revenues		731		706		732		750		773


						Analysis of asset management fees by source:
	1,046		923		13%	Institutional customers		231		242		256		273		275
	707		764		-7%	Retail customers		187		169		173		182		183
	474		448		6%	General account		111		113		118		122		121

	2,227		2,135		4%	Total asset management fees		529		524		547		577		579


Supplementary Assets Under Management Information (in billions):
	December 31, 2016
	Equity		Fixed Income		Real Estate		Total
Institutional customers		59.3		332.2		40.0		431.5
Retail customers		112.4		94.5		2.3		209.2
General account		6.4		391.3		1.7		399.4

Total		178.1		818.0		44.0		1,040.1


	December 31, 2015
	Equity		Fixed Income		Real Estate		Total
Institutional customers		59.9		289.9		39.3		389.1
Retail customers		121.4		73.7		2.2		197.3
General account		7.4		367.5		1.8		376.7

Total		188.7		731.1		43.3		963.1

Page 18

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION - SUPPLEMENTARY ASSETS UNDER MANAGEMENT INFORMATION FOR ASSET MANAGEMENT SEGMENT

(in billions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						Institutional Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	347.1			323.6		Beginning assets under management		338.6			347.1			359.3			373.4			398.9
	59.4			66.9		Additions		16.3			12.5			14.8			16.4			15.7
	(54.1	)		(45.7	)	Withdrawals		(10.3	)		(15.1	)		(12.8	)		(13.0	)		(13.2	)
	21.8			2.1		Change in market value		2.2			12.7			11.3			8.4			(10.6	)
	11.8			0.3		Net money market flows		0.3			(1.0	)		0.4			13.5			(1.1	)
	0.4			(0.1	)	Other (1)		—			3.1			0.4			0.2			(3.3	)

	386.4			347.1		Ending assets under management		347.1			359.3			373.4			398.9			386.4
	45.1			42.0		Affiliated institutional assets under management		42.0			44.3			45.4			47.0			45.1

	431.5			389.1		Total assets managed for institutional customers at end of period		389.1			403.6			418.8			445.9			431.5


	5.3			21.2		Net institutional additions (withdrawals), excluding money market activity		6.0			(2.6	)		2.0			3.4			2.5


						Retail Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	128.9			126.8		Beginning assets under management		125.9			128.9			127.8			131.3			137.7
	42.1			40.9		Additions		9.3			10.2			11.5			10.5			9.9
	(41.7	)		(40.1	)	Withdrawals		(10.5	)		(10.7	)		(9.9	)		(9.6	)		(11.5	)
	4.5			1.4		Change in market value		4.2			(1.2	)		1.9			5.5			(1.7	)
	(0.1	)		—		Net money market flows		—			(0.1	)		—			—			—
	2.9			(0.1	)	Other (1)		—			0.7			—			—			2.2

	136.6			128.9		Ending assets under management		128.9			127.8			131.3			137.7			136.6
	72.6			68.4		Affiliated retail assets under management		68.4			70.8			70.8			71.3			72.6

	209.2			197.3		Total assets managed for retail customers at end of period		197.3			198.6			202.1			209.0			209.2


	0.4			0.8		Net retail additions (withdrawals), excluding money market activity		(1.2	)		(0.5	)		1.6			0.9			(1.6	)

(1)

“Other” activity represents transfers from the Retirement Segment as a result of changes in the client contract form, a $2 billion reclassification of assets under management from institutional to retail in 4Q’16, impact of acquired business of $3.4 billion as of March 4, 2016 and FX related to International assets under management.

Page 19

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS – U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION

(in millions)


Year-to-date						%			2015			2016
2016			2015			Change			4Q			1Q			2Q			3Q			4Q

								Revenues (1):
	4,894			4,781			2%	Premiums		1,190			1,219			1,234			1,210			1,231
	2,636			2,637			0%	Policy charges and fee income		699			719			505			713			699
	2,430			2,255			8%	Net investment income		562			582			593			625			630
	738			703			5%	Asset management fees, commissions and other income		177			166			187			195			190

	10,698			10,376			3%	Total revenues		2,628			2,686			2,519			2,743			2,750


								Benefits and Expenses (1):
	6,817			6,146			11%	Insurance and annuity benefits		1,570			1,634			1,950			1,622			1,611
	943			901			5%	Interest credited to policyholders’ account balances		226			227			233			237			246
	588			558			5%	Interest expense		140			142			146			147			153
	(706	)		(660	)		-7%	Deferral of acquisition costs		(198	)		(162	)		(172	)		(169	)		(203	)
	121			139			-13%	Amortization of acquisition costs		80			78			(111	)		83			71
	2,636			2,481			6%	General and administrative expenses		684			621			674			650			691

	10,399			9,565			9%	Total benefits and expenses		2,502			2,540			2,720			2,570			2,569


	299			811			-63%	Adjusted operating income (loss) before income taxes		126			146			(201	)		173			181

(1)	Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 20

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING STATEMENTS OF OPERATIONS - U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION

(in millions)


	Twelve Months Ended December 31, 2016									Quarter Ended December 31, 2016
	Total U.S. Individual Life & Group Insurance Division			Individual Life			Group Insurance			Total U.S. Individual Life & Group Insurance Division			Individual Life			Group Insurance
Revenues (1):
Premiums		4,894			860			4,034			1,231			218			1,013
Policy charges and fee income		2,636			2,020			616			699			566			133
Net investment income		2,430			1,822			608			630			472			158
Asset management fees, commissions and other income		738			653			85			190			168			22

Total revenues		10,698			5,355			5,343			2,750			1,424			1,326


Benefits and Expenses (1):
Insurance and annuity benefits		6,817			2,785			4,032			1,611			603			1,008
Interest credited to policyholders’ account balances		943			680			263			246			176			70
Interest expense		588			583			5			153			151			2
Deferral of acquisition costs		(706	)		(706	)		—			(203	)		(203	)		—
Amortization of acquisition costs		121			115			6			71			69			2
General and administrative expenses		2,636			1,819			817			691			490			201

Total benefits and expenses		10,399			5,276			5,123			2,569			1,286			1,283


Adjusted operating income before income taxes		299			79			220			181			138			43


	Twelve Months Ended December 31, 2015									Quarter Ended December 31, 2015
	Total U.S. Individual Life & Group Insurance Division			Individual Life			Group Insurance			Total U.S. Individual Life & Group Insurance Division			Individual Life			Group Insurance
Revenues (1):
Premiums		4,781			896			3,885			1,190			216			974
Policy charges and fee income		2,637			2,054			583			699			553			146
Net investment income		2,255			1,669			586			562			421			141
Asset management fees, commissions and other income		703			614			89			177			157			20

Total revenues		10,376			5,233			5,143			2,628			1,347			1,281


Benefits and Expenses (1):
Insurance and annuity benefits		6,146			2,278			3,868			1,570			598			972
Interest credited to policyholders’ account balances		901			644			257			226			164			62
Interest expense		558			550			8			140			139			1
Deferral of acquisition costs		(660	)		(650	)		(10	)		(198	)		(197	)		(1	)
Amortization of acquisition costs		139			133			6			80			78			2
General and administrative expenses		2,481			1,643			838			684			466			218

Total benefits and expenses		9,565			4,598			4,967			2,502			1,248			1,254


Adjusted operating income before income taxes		811			635			176			126			99			27

(1)	Revenues exclude realized investment gains, net of losses and related charges and adjustments. Benefits and expenses exclude charges related to realized investment gains, net of losses.

Page 21

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION - INDIVIDUAL LIFE ANNUALIZED NEW BUSINESS PREMIUMS, ACCOUNT VALUE ACTIVITY, AND FACE AMOUNT IN FORCE

(in millions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						ANNUALIZED NEW BUSINESS PREMIUMS (1):

	200			204		Term life		52			48			50			52			50
	243			220		Guaranteed Universal life		73			51			61			54			77
	95			89		Other Universal life		32			20			23			21			31
	92			78		Variable life		22			26			25			16			25

	630			591		Total		179			145			159			143			183


						ANNUALIZED NEW BUSINESS PREMIUMS BY DISTRIBUTION CHANNEL (1):

	116			113		Prudential Agents		31			29			30			28			29
	514			478		Third party distribution		148			116			129			115			154

	630			591		Total		179			145			159			143			183


						ACCOUNT VALUE ACTIVITY:

						*Policyholders’ Account Balances (2):*
	24,487			22,526		Beginning balance		23,922			24,487			24,437			24,747			25,000
	3,330			3,219		Premiums and deposits		890			809			821			751			949
	(988	)		(1,032	)	Surrenders and withdrawals		(242	)		(251	)		(257	)		(240	)		(240	)

	2,342			2,187		Net sales		648			558			564			511			709
	(490	)		(492	)	Benefit payments		(109	)		(125	)		(121	)		(138	)		(106	)

	1,852			1,695		Net flows		539			433			443			373			603
	786			1,193		Interest credited and other		296			(224	)		137			155			718
	396			432		Net transfers from separate account		87			99			93			102			102
	(1,480	)		(1,359	)	Policy charges		(357	)		(358	)		(363	)		(377	)		(382	)
	—			—		Acquisition		—			—			—			—			—

	26,041			24,487		Ending balance		24,487			24,437			24,747			25,000			26,041


						*Separate Account Liabilities:*
	27,027			27,888		Beginning balance		26,183			27,027			26,887			27,227			28,129
	1,439			1,409		Premiums and deposits		420			456			337			287			359
	(852	)		(882	)	Surrenders and withdrawals		(239	)		(217	)		(222	)		(212	)		(201	)

	587			527		Net sales		181			239			115			75			158
	(163	)		(144	)	Benefit payments		(42	)		(51	)		(40	)		(39	)		(33	)

	424			383		Net flows		139			188			75			36			125
	2,308			109		Change in market value, interest credited and other		1,020			(5	)		585			1,196			532
	(396	)		(432	)	Net transfers to general account		(87	)		(99	)		(93	)		(102	)		(102	)
	(908	)		(921	)	Policy charges		(228	)		(224	)		(227	)		(228	)		(229	)
	—			—		Acquisition		—			—			—			—			—

	28,455			27,027		Ending balance		27,027			26,887			27,227			28,129			28,455


						FACE AMOUNT IN FORCE (3):

						Term life		689,527			697,687			706,636			714,733			721,602
						Guaranteed Universal life		121,290			124,061			127,453			130,400			134,973
						Other Universal life		44,051			44,203			44,505			44,781			45,350
						Variable life		164,020			162,960			162,416			163,184			162,574

						Total		1,018,889			1,028,910			1,041,010			1,053,098			1,064,500

(1)	Excludes corporate-owned life insurance.

(2)	Includes fixed rate funds, alliance deposits, supplementary contracts and deferred revenues on variable products.

(3)	At end of period; before reinsurance ceded.

Page 22

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION - SUPPLEMENTARY INFORMATION FOR GROUP INSURANCE

(dollar amounts in millions)


Year-to-date					2015		2016
2016		2015			4Q		1Q		2Q		3Q		4Q

				GROUP INSURANCE ANNUALIZED NEW BUSINESS PREMIUMS:
	316		204	Group life		25		232		24		29		31
	119		69	Group disability		5		79		21		13		6

	435		273	Total		30		311		45		42		37


				Future Policy Benefits (1) (2):
				Group life		2,185		2,103		2,124		2,065		2,238
				Group disability		3		29		21		11		3

				Total		2,188		2,132		2,145		2,076		2,241


				Policyholders’ Account Balances (1):
				Group life		8,359		8,271		8,367		8,497		8,634
				Group disability		210		216		240		208		224

				Total		8,569		8,487		8,607		8,705		8,858

				Separate Account Liabilities (1):
				Group life		23,292		24,339		23,816		24,839		23,594
				Group disability		—		—		—		—		—

				Total		23,292		24,339		23,816		24,839		23,594


				Group Life Insurance:
	4,095		3,940	Gross premiums, policy charges and fee income (3)		982		1,009		1,064		1,016		1,006
	3,845		3,731	Earned premiums, policy charges and fee income		932		955		998		953		939
	88.5%		89.2%	Benefits ratio (4)		87.1%		89.4%		88.6%		88.6%		87.3%
	10.6%		11.0%	Administrative operating expense ratio		12.2%		10.8%		10.6%		10.6%		10.7%
				Persistency ratio		91.3%		96.1%		95.8%		95.3%		95.2%

				Group Disability Insurance:
	880		813	Gross premiums, policy charges and fee income (3)		196		216		222		219		223
	805		737	Earned premiums, policy charges and fee income		188		203		196		199		207
	82.9%		79.2%	Benefits ratio (5)		85.3%		82.2%		77.5%		80.4%		91.3%
	31.4%		34.1%	Administrative operating expense ratio		36.9%		31.9%		31.1%		31.4%		31.0%
				Persistency ratio		87.0%		94.9%		93.7%		92.9%		91.7%

				Total Group Insurance (6):
	87.5%		87.5%	Benefits ratio		86.8%		88.1%		86.6%		87.1%		88.0%

(1)	As of end of period.

(2)	The amounts shown exclude liabilities for unpaid claims and claim adjustment expenses.

(3)	Before returns of premiums to participating policyholders for favorable claims experience.

(4)

Group Life Insurance benefit ratios excluding market driven and discrete items. Benefit ratios including market driven and discrete items are 87.3%, 88.6%, 90.8%, 89.4%, and 87.1% for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively, and 89.1% and 88.7% for year-to-date December 2016 and 2015, respectively.

(5)

Group Disability Insurance benefit ratios excluding market driven and discrete items. Benefits ratios including market driven and discrete items are 91.3% 80.4%, 47.9%, 82.2%, and 85.3% for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively, and 75.7% for both year-to-date December 2016 and 2015.

(6)

Group Insurance benefit ratios excluding market driven and discrete items. Benefits ratios including market driven and discrete items are 88.0%, 87.1%, 83.8%, 88.1%, and 86.8% for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively, and 86.7% and 86.6% for year-to-date December 2016 and 2015, respectively.

Page 23

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

DEFERRED POLICY ACQUISITION COSTS & DEFERRED SALES INDUCEMENTS - INDIVIDUAL ANNUITIES, INDIVIDUAL LIFE AND GROUP INSURANCE

(in millions)


Year-to-date							2015			2016
2016			2015				4Q			1Q			2Q			3Q			4Q

						DEFERRED POLICY ACQUISITION COSTS

						INDIVIDUAL ANNUITIES:
	4,916			5,376		Beginning balance		4,735			4,916			4,130			4,119			4,515
	408			430		Capitalization		105			100			117			104			87
	(484	)		(465	)	Amortization - operating results		(121	)		(144	)		(122	)		(84	)		(134	)
	21			(475	)	Amortization - realized investment gains and losses		178			(717	)		17			374			347
	10			50		Impact of unrealized (gains) or losses on AFS securities		19			(25	)		(23	)		2			56
	—			—		Other		—			—			—			—			—

	4,871			4,916		Ending balance		4,916			4,130			4,119			4,515			4,871


						INDIVIDUAL LIFE INSURANCE:
	4,883			4,056		Beginning balance		4,683			4,883			4,727			4,773			4,840
	706			650		Capitalization		197			162			172			169			203
	(115	)		(133	)	Amortization - operating results		(78	)		(77	)		113			(82	)		(69	)
	(100	)		1		Amortization - realized investment gains and losses		9			(26	)		(80	)		2			4
	(96	)		309		Impact of unrealized (gains) or losses on AFS securities		72			(215	)		(159	)		(22	)		300

	5,278			4,883		Ending balance		4,883			4,727			4,773			4,840			5,278


						GROUP INSURANCE:
	182			177		Beginning balance		182			181			181			179			178
	—			10		Capitalization		1			—			—			—			—
	(6	)		(6	)	Amortization - operating results		(2	)		(1	)		(2	)		(1	)		(2	)
	—			—		Amortization - realized investment gains and losses		—			—			—			—			—
	—			—		Impact of unrealized losses on AFS securities		—			—			—			—			—

	176			181		Ending balance		181			180			179			178			176


						DEFERRED SALES INDUCEMENTS
						INDIVIDUAL ANNUITIES:
	1,188			1,513		Beginning balance		1,176			1,188			916			893			1,012
	3			8		Capitalization		2			1			1			1			—
	(168	)		(162	)	Amortization - operating results		(45	)		(51	)		(50	)		(23	)		(44	)
	56			(187	)	Amortization - realized investment gains and losses		50			(216	)		29			140			103
	3			16		Impact of unrealized (gains) or losses on AFS securities		5			(6	)		(3	)		1			11
	—			—		Other		—			—			—			—			—

	1,082			1,188		Ending balance		1,188			916			893			1,012			1,082

Page 24

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


Year-to-date						% Change			2015			2016
2016			2015			% Change			4Q			1Q			2Q			3Q			4Q

								Revenues (1):
	15,348			13,844			11%	Premiums		3,307			3,696			3,899			3,939			3,814
	499			530			-6%	Policy charges and fee income		122			130			106			134			129
	4,759			4,357			9%	Net investment income		1,078			1,120			1,204			1,229			1,206
	403			633			-36%	Asset management fees, commissions and other income		164			98			134			82			89

	21,009			19,364			8%	Total revenues		4,671			5,044			5,343			5,384			5,238


								Benefits and Expenses (1):
	13,232			11,872			11%	Insurance and annuity benefits		2,833			3,173			3,397			3,382			3,280
	920			880			5%	Interest credited to policyholders’ account balances		213			227			230			237			226
	8			5			60%	Interest expense		1			2			1			2			3
	(1,750	)		(1,565	)		-12%	Deferral of acquisition costs		(387	)		(426	)		(436	)		(462	)		(426	)
	1,068			989			8%	Amortization of acquisition costs		233			260			273			271			264
	4,414			3,957			12%	General and administrative expenses		1,040			1,029			1,075			1,174			1,136

	17,892			16,138			11%	Total benefits and expenses		3,933			4,265			4,540			4,604			4,483


	3,117			3,226			-3%	Adjusted operating income before income taxes		738			779			803			780			755

(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 include revenues representing equity in earnings of operating joint ventures. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to non controlling interests.

Page 25

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINING STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


	Twelve Months Ended December 31, 2016									Quarter Ended December 31, 2016
	Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations			Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations
Revenues (1):
Premiums		15,348			7,471			7,877			3,814			1,831			1,983
Policy charges and fee income		499			346			153			129			90			39
Net investment income		4,759			1,952			2,807			1,206			492			714
Asset management fees, commissions and other income		403			217			186			89			64			25

Total revenues		21,009			9,986			11,023			5,238			2,477			2,761


Benefits and Expenses (1):
Insurance and annuity benefits		13,232			6,607			6,625			3,280			1,608			1,672
Interest credited to policyholders’ account balances		920			234			686			226			55			171
Interest expense		8			5			3			3			2			1
Deferral of acquisition costs		(1,750	)		(834	)		(916	)		(426	)		(211	)		(215	)
Amortization of acquisition costs		1,068			506			562			264			121			143
General and administrative expenses		4,414			1,929			2,485			1,136			507			629

Total benefits and expenses		17,892			8,447			9,445			4,483			2,082			2,401


Adjusted operating income before income taxes		3,117			1,539			1,578			755			395			360


	Twelve Months Ended December 31, 2015									Quarter Ended December 31, 2015
	Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations			Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations
Revenues (1):
Premiums		13,844			6,728			7,116			3,307			1,628			1,679
Policy charges and fee income		530			339			191			122			82			40
Net investment income		4,357			1,751			2,606			1,078			448			630
Asset management fees, commissions and other income		633			354			279			164			91			73

Total revenues		19,364			9,172			10,192			4,671			2,249			2,422


Benefits and Expenses (1):
Insurance and annuity benefits		11,872			5,933			5,939			2,833			1,448			1,385
Interest credited to policyholders’ account balances		880			204			676			213			47			166
Interest expense		5			3			2			1			1			—
Deferral of acquisition costs		(1,565	)		(752	)		(813	)		(387	)		(186	)		(201	)
Amortization of acquisition costs		989			472			517			233			111			122
General and administrative expenses		3,957			1,727			2,230			1,040			461			579

Total benefits and expenses		16,138			7,587			8,551			3,933			1,882			2,051


Adjusted operating income before income taxes		3,226			1,585			1,641			738			367			371

(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 include revenues representing equity in earnings of operating joint ventures. Benefits and expenses exclude charges related to realized investment gains, net of losses and change in experience-rated contractholder liabilities due to asset value changes and include charges for income attributable to non controlling interests.

Page 26

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION

(in millions)


Year-to-date					2015		2016
2016		2015			4Q		1Q		2Q		3Q		4Q

				INTERNATIONAL INSURANCE OPERATING DATA:

				Actual exchange rate basis (1):

				Net premiums, policy charges and fee income:
	5,875		5,251	Japan, excluding Gibraltar Life		1,239		1,583		1,434		1,472		1,386
	8,030		7,307	Gibraltar Life		1,719		1,794		2,120		2,094		2,022
	1,942		1,816	All other countries		471		449		451		507		535

	15,847		14,374	Total		3,429		3,826		4,005		4,073		3,943


				Annualized new business premiums:
	840		669	Japan, excluding Gibraltar Life		164		237		190		208		205
	1,726		1,548	Gibraltar Life		370		409		449		460		408
	436		448	All other countries		116		98		99		115		124

	3,002		2,665	Total		650		744		738		783		737


				Annualized new business premiums by distribution channel:
	1,276		1,117	Life Planner Operations		280		335		289		323		329
	740		630	Gibraltar Life Consultants		150		161		204		200		175
	716		679	Banks		166		194		176		188		158
	270		239	Independent Agency		54		54		69		72		75

	3,002		2,665	Total		650		744		738		783		737

				Constant exchange rate basis (2):
				Net premiums, policy charges and fee income:

	5,982		5,772	Japan, excluding Gibraltar Life		1,364		1,677		1,451		1,436		1,418
	8,167		7,956	Gibraltar Life		1,870		1,921		2,175		2,064		2,007
	1,998		1,828	All other countries		492		480		465		504		549

	16,147		15,556	Total		3,726		4,078		4,091		4,004		3,974


				Annualized new business premiums:
	854		737	Japan, excluding Gibraltar Life		181		250		192		204		208
	1,728		1,619	Gibraltar Life		390		425		453		456		394
	444		444	All other countries		121		106		102		111		125

	3,026		2,800	Total		692		781		747		771		727


				Annualized new business premiums by distribution channel:
	1,298		1,181	Life Planner Operations		302		356		294		315		333
	747		668	Gibraltar Life Consultants		161		169		206		198		174
	719		701	Banks		172		199		177		186		157
	262		250	Independent Agency		57		57		70		72		63

	3,026		2,800	Total		692		781		747		771		727

(1)	Translated based on applicable average exchange rates for the period shown.

(2)	Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 106 per U.S. dollar and Korean won 1,100 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars.

Page 27

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION


	2015			2016
	4Q			1Q			2Q			3Q			4Q

Face amount of individual policies in force at end of period (in billions) (1) (2):
(Constant exchange rate basis)
Japan, excluding Gibraltar Life		316			321			324			329			333
Gibraltar Life		331			334			335			339			342
All other countries		118			119			120			121			124

Total		765			774			779			789			799


Number of individual policies in force at end of period (in thousands) (2):
Japan, excluding Gibraltar Life		3,278			3,341			3,384			3,436			3,488
Gibraltar Life		7,146			7,150			7,141			7,170			7,182
All other countries		1,980			2,007			2,024			2,048			2,076

Total		12,404			12,498			12,549			12,654			12,746


International life insurance policy persistency:

Life Planner Operations:
13 months		92.8	%		93.0	%		93.1	%		93.0	%		93.0	%
25 months		85.4	%		85.6	%		85.6	%		86.2	%		86.3	%

Gibraltar Life (3):
13 months		92.9	%		93.2	%		93.3	%		93.4	%		93.5	%
25 months		84.0	%		84.8	%		85.3	%		85.5	%		86.2	%

Number of Life Planners at end of period:
Japan		3,528			3,650			3,653			3,776			3,824
All other countries		4,064			3,958			3,898			3,891			3,856

Total Life Planners		7,592			7,608			7,551			7,667			7,680


Gibraltar Life Consultants		8,805			8,781			8,734			8,790			8,884

(1)	Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 106 per U.S. dollar and Korean won 1,100 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars.

(2)	Direct business only; policy count includes annuities.

(3)	Reflects business sold by Life Consultants and Independent Agents.

Page 28

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INVESTMENT PORTFOLIO COMPOSITION

(in millions)


	December 31, 2016									December 31, 2015
	Total Portfolio		Closed Block Division		PFI Excluding Closed Block Division					Total Portfolio		Closed Block Division		PFI Excluding Closed Block Division
	Total Portfolio		Closed Block Division		Amount		% of Total			Total Portfolio		Closed Block Division		Amount		% of Total
Fixed maturities:
Public, available-for-sale, at fair value		268,118		24,917		243,201		64.2	%		240,133		23,505		216,628		63.1	%
Public, held-to-maturity, at amortized cost		1,772		—		1,772		0.5	%		1,834		—		1,834		0.5	%
Private, available-for-sale, at fair value		53,061		13,987		39,074		10.3	%		50,057		14,290		35,767		10.4	%
Private, held-to-maturity, at amortized cost		372		—		372		0.1	%		474		—		474		0.1	%
Trading account assets supporting insurance liabilities, at fair value		21,840		—		21,840		5.8	%		20,522		—		20,522		6.0	%
Other trading account assets, at fair value		1,805		284		1,521		0.4	%		1,849		288		1,561		0.5	%
Equity securities, available-for-sale, at fair value		9,735		2,572		7,163		1.9	%		9,263		2,726		6,537		1.9	%
Commercial mortgage and other loans, at book value		52,208		9,437		42,771		11.2	%		50,257		9,771		40,486		11.8	%
Policy loans, at outstanding balance		11,755		4,660		7,095		1.9	%		11,657		4,790		6,867		2.0	%
Other long-term investments (1)		10,251		3,020		7,231		1.9	%		9,470		2,921		6,549		1.9	%
Short-term investments		7,494		837		6,657		1.8	%		7,717		1,467		6,250		1.8	%

Subtotal (2)		438,411		59,714		378,697		100.0	%		403,233		59,758		343,475		100.0	%

Invested assets of other entities and operations (3)		5,829		—		5,829					13,959		—		13,959

Total investments		444,240		59,714		384,526					417,192		59,758		357,434

Fixed Maturities by Credit Quality (2):


	December 31, 2016											December 31, 2015
	PFI Excluding Closed Block Division											PFI Excluding Closed Block Division
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		% of Total			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		% of Total
Public Fixed Maturities:

NAIC Rating (4)
1		184,831		26,239		2,261		208,809		85.1	%		166,400		21,997		1,271		187,126		85.6	%
2		26,922		2,479		454		28,947		11.8	%		24,238		2,260		1,044		25,454		11.6	%

Subtotal - High or Highest Quality Securities		211,753		28,718		2,715		237,756		96.9	%		190,638		24,257		2,315		212,580		97.2	%

3		4,837		323		90		5,070		2.1	%		3,870		320		149		4,041		1.8	%
4		1,951		178		52		2,077		0.8	%		1,591		142		59		1,674		0.8	%
5		230		43		6		267		0.1	%		176		67		3		240		0.1	%
6		152		4		1		155		0.1	%		199		11		1		209		0.1	%

Subtotal - Other Securities		7,170		548		149		7,569		3.1	%		5,836		540		212		6,164		2.8	%

Total		218,923		29,266		2,864		245,325		100.0	%		196,474		24,797		2,527		218,744		100.0	%


Private Fixed Maturities:
NAIC Rating (4)
1		10,448		647		164		10,931		27.7	%		10,950		786		174		11,562		31.9	%
2		22,364		1,249		627		22,986		58.2	%		19,493		1,438		501		20,430		56.3	%

Subtotal - High or Highest Quality Securities		32,812		1,896		791		33,917		85.9	%		30,443		2,224		675		31,992		88.2	%

3		3,709		131		92		3,748		9.5	%		3,215		88		143		3,160		8.7	%
4		927		22		30		919		2.3	%		741		8		41		708		2.0	%
5		649		30		22		657		1.7	%		239		11		9		241		0.7	%
6		194		49		10		233		0.6	%		168		9		3		174		0.4	%

Subtotal - Other Securities		5,479		232		154		5,557		14.1	%		4,363		116		196		4,283		11.8	%

Total		38,291		2,128		945		39,474		100.0	%		34,806		2,340		871		36,275		100.0	%

(1)	Other long-term investments consist of real estate and non-real estate related investments in joint ventures and partnerships, investment real estate held through direct ownership, and other miscellaneous investments.

(2)	Excludes (i) assets of our asset management operations, including assets managed for third parties, (ii) derivative operations and (iii) those assets classified as “Separate account assets” on our balance sheet.

(3)	Includes invested assets of our asset management and derivative operations. Excludes assets of our asset management operations managed for third parties and those assets classified as “Separate account assets” on our balance sheet.

(4)

Reflects equivalent ratings for investments of the international insurance operations. Includes, as of December 31, 2016 and December 31, 2015, 918 securities with amortized cost of $4,634 million (fair value $4,759 million) and 938 securities with amortized cost of $4,253 million (fair value $4,325 million), respectively, that have been categorized based on expected NAIC designations pending receipt of SVO ratings.

Page 29

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INVESTMENT PORTFOLIO COMPOSITION (1)

(in millions)


	December 31, 2016					December 31, 2015
	Amount		% of Total			Amount		% of Total
Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		123,285		77.9	%		109,257		77.6	%
Public, held-to-maturity, at amortized cost		1,772		1.1	%		1,834		1.3	%
Private, available-for-sale, at fair value		11,646		7.4	%		9,747		6.9	%
Private, held-to-maturity, at amortized cost		372		0.2	%		474		0.3	%
Trading account assets supporting insurance liabilities, at fair value		2,166		1.4	%		2,020		1.4	%
Other trading account assets, at fair value		434		0.3	%		647		0.5	%
Equity securities, available-for-sale, at fair value		2,654		1.7	%		2,660		1.9	%
Commercial mortgage and other loans, at book value		11,700		7.4	%		9,756		6.9	%
Policy loans, at outstanding balance		2,369		1.5	%		2,208		1.6	%
Other long-term investments (3)		1,186		0.8	%		1,742		1.3	%
Short-term investments		398		0.3	%		417		0.3	%

Total		157,982		100.0	%		140,762		100.0	%


	December 31, 2016					December 31, 2015
	Amount		% of Total			Amount		% of Total
Excluding Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		119,916		54.4	%		107,371		53.0	%
Public, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Private, available-for-sale, at fair value		27,428		12.4	%		26,020		12.8	%
Private, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Trading account assets supporting insurance liabilities, at fair value		19,674		9.0	%		18,502		9.1	%
Other trading account assets, at fair value		1,087		0.5	%		914		0.4	%
Equity securities, available-for-sale, at fair value		4,509		2.0	%		3,877		1.9	%
Commercial mortgage and other loans, at book value		31,071		14.1	%		30,730		15.2	%
Policy loans, at outstanding balance		4,726		2.1	%		4,659		2.3	%
Other long-term investments (3)		6,045		2.7	%		4,807		2.4	%
Short-term investments		6,259		2.8	%		5,833		2.9	%

Total		220,715		100.0	%		202,713		100.0	%

(1)	Excludes Closed Block Division.

(2)	Excludes assets classified as “Separate account assets” on our balance sheet.

(3)	Other long-term investments consist of real estate and non-real estate related investments in joint ventures and partnerships, investment real estate held through direct ownership, derivatives and other miscellaneous investments.

Page 30

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INVESTMENT RESULTS (1)

(in millions)


	Quarter Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (4)			Amount			Realized Gains / (Losses)			Yield (4)			Amount			Realized Gains / (Losses)
General Account (2)
Fixed maturities		3.84	%		2,457			(41	)		3.95	%		2,228			452
Equity securities		5.02	%		68			109			4.80	%		58			(39	)
Commercial mortgage and other loans		4.22	%		389			1			4.47	%		388			6
Policy loans		4.89	%		88			—			4.93	%		84			—
Short-term investments and cash equivalents		0.86	%		35			—			0.35	%		16			—
Other investments		7.54	%		166			(2,198	)		3.87	%		81			(803	)

Gross investment income before investment expenses		3.89	%		3,203			(2,129	)		3.84	%		2,855			(384	)
Investment expenses		-0.13	%		(104	)		—			-0.16	%		(106	)		—

Subtotal		3.76	%		3,099			(2,129	)		3.68	%		2,749			(384	)

Investment results of other entities and operations (3)					264			22						266			19
Less, investment income related to adjusted operating income reconciling items					(64	)								(51	)

Total					3,299			(2,107	)					2,964			(365	)


	Twelve Months Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (4)			Amount			Realized Gains / (Losses)			Yield (4)			Amount			Realized Gains / (Losses)
General Account (2)
Fixed maturities		3.95	%		9,515			605			4.03	%		8,876			1,408
Equity securities		5.97	%		307			128			5.67	%		266			3
Commercial mortgage and other loans		4.32	%		1,528			2			4.52	%		1,482			3
Policy loans		5.00	%		347			—			5.01	%		334			—
Short-term investments and cash equivalents		0.68	%		122			1			0.25	%		43			1
Other investments		5.67	%		473			970			5.91	%		489			1,643

Gross investment income before investment expenses		3.92	%		12,292			1,706			3.98	%		11,490			3,058
Investment expenses		-0.14	%		(413	)		—			-0.16	%		(394	)		—

Subtotal		3.78	%		11,879			1,706			3.82	%		11,096			3,058

Investment results of other entities and operations (3)					1,063			54						1,080			134
Less, investment income related to adjusted operating income reconciling items					(247	)								(218	)

Total					12,695			1,760						11,958			3,192

(1)	Excludes Closed Block Division.

(2)

Excludes commercial loans and trading account assets supporting insurance liabilities where the investment results generally accrue to contractholders, derivative operations, assets of our asset management operations, including assets managed for third parties, and those assets classified as “Separate account assets” on our balance sheet. Realized gains / (losses) for Other investments includes changes in fair value of product-related and other derivatives and embedded derivatives.

(3)	Includes invested income of commercial loans, trading account assets supporting insurance liabilities where the investment results generally accrue to contractholders and our asset management and derivative operations.

(4)

Yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest related and other items, such as settlements of duration management swaps which are reported in realized investment gains and losses and included in adjusted operating income. Yields are annualized, for interim periods, and are based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity. Yields for fixed maturities are based on amortized cost. Yields for equity securities are based on cost. Yields for fixed maturities and short-term investments and cash equivalents are calculated net of liabilities and rebate expenses corresponding to securities lending activity. Yields exclude investment income and assets related to commercial loans and trading account assets supporting insurance liabilities where the investment results generally accrue to contractholders and investment income on assets other than those included in invested assets.

Page 31

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INVESTMENT RESULTS - JAPANESE INSURANCE OPERATIONS

(in millions)


	Quarter Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (1)			Amount			Realized Gains / (Losses)			Yield (1)			Amount			Realized Gains / (Losses)
Japanese Insurance Operations:
Fixed maturities		3.06	%		896			85			3.15	%		793			495
Equity securities		4.57	%		19			54			4.22	%		16			3
Commercial mortgage and other loans		4.02	%		116			—			4.19	%		100			1
Policy loans		4.01	%		24			—			3.94	%		22			—
Short-term investments and cash equivalents		0.77	%		3			—			0.51	%		2			—
Other investments (2)		5.02	%		30			(811	)		2.99	%		21			(64	)

Gross investment income before investment expenses		3.19	%		1,088			(672	)		3.24	%		954			435
Investment expenses		-0.12	%		(43	)		—			-0.11	%		(34	)		—

Total		3.07	%		1,045			(672	)		3.13	%		920			435


	Twelve Months Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (1)			Amount			Realized Gains / (Losses)			Yield (1)			Amount			Realized Gains / (Losses)
Japanese Insurance Operations:
Fixed maturities		3.14	%		3,472			797			3.23	%		3,190			1,349
Equity securities		4.80	%		75			114			4.77	%		69			49
Commercial mortgage and other loans		4.23	%		445			7			4.45	%		390			4
Policy loans		4.05	%		95			—			3.93	%		84			—
Short-term investments and cash equivalents		0.78	%		9			—			0.32	%		5			—
Other investments (2)		5.01	%		129			404			5.32	%		133			(35	)

Gross investment income before investment expenses		3.29	%		4,225			1,322			3.38	%		3,871			1,367
Investment expenses		-0.13	%		(165	)		—			-0.13	%		(155	)		—

Total		3.16	%		4,060			1,322			3.25	%		3,716			1,367

(1)

(2)	Realized gains / (losses) for Other investments includes changes in fair value of product-related and other derivatives and embedded derivatives.

Page 32

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

INVESTMENT RESULTS - EXCLUDING JAPANESE INSURANCE OPERATIONS (1)

(in millions)


	Quarter Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (3)			Amount			Realized Gains / (Losses)			Yield (3)			Amount			Realized Gains / (Losses)
Excluding Japanese Insurance Operations (2):
Fixed maturities		4.51	%		1,561			(126	)		4.60	%		1,435			(43	)
Equity securities		5.21	%		49			55			5.04	%		42			(42	)
Commercial mortgage and other loans		4.31	%		273			1			4.58	%		288			5
Policy loans		5.35	%		64			—			5.40	%		62			—
Short-term investments and cash equivalents		0.86	%		32			—			0.34	%		14			—
Other investments		8.49	%		136			(1,387	)		4.30	%		60			(739	)

Gross investment income before investment expenses		4.38	%		2,115			(1,457	)		4.22	%		1,901			(819	)
Investment expenses		-0.14	%		(61	)		—			-0.19	%		(72	)		—

Total		4.24	%		2,054			(1,457	)		4.03	%		1,829			(819	)


	Twelve Months Ended December 31
	2016									2015
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (3)			Amount			Realized Gains / (Losses)			Yield (3)			Amount			Realized Gains / (Losses)
Excluding Japanese Insurance Operations (2):
Fixed maturities		4.63	%		6,043			(192	)		4.67	%		5,686			59
Equity securities		6.49	%		232			14			6.07	%		197			(46	)
Commercial mortgage and other loans		4.36	%		1,083			(5	)		4.55	%		1,092			(1	)
Policy loans		5.49	%		252			—			5.52	%		250			—
Short-term investments and cash equivalents		0.67	%		113			1			0.25	%		38			1
Other investments		5.96	%		344			566			6.17	%		356			1,678

Gross investment income before investment expenses		4.36	%		8,067			384			4.37	%		7,619			1,691
Investment expenses		-0.16	%		(248	)		—			-0.17	%		(239	)		—

Total		4.20	%		7,819			384			4.20	%		7,380			1,691

(1)	Excludes Closed Block Division.

(2)

Excludes assets of commercial loans, trading account assets supporting insurance liabilities where the investment results generally accrue to contractholders, derivative operations, assets of our asset management operations, including assets managed for third parties, and those assets classified as “Separate account assets” on our balance sheet. Realized gains / (losses) for Other investments includes changes in fair value of product-related and other derivatives and embedded derivatives.

(3)

Page 33

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

LINE ITEM IMPACT OF MARKET DRIVEN AND DISCRETE ITEMS - ADJUSTED OPERATING INCOME

(in millions)


	Fourth Quarter 2016														Fourth Quarter 2015
	Asset Management Fees, Commissions and Other Income			Insurance and Annuity Benefits			Amortization of Acquisition Costs			General and Administrative Expenses			Pre-Tax Adjusted Operating Income		Policy Charges and Fee Income			Insurance and Annuity Benefits			Interest Credited to Policyholders’ Account Balances		Amortization of Acquisition Costs			General and Administrative Expenses			Pre-Tax Adjusted Operating Income
Individual Annuities:
Market performance and experience true-ups		(5	)		(3	)		(2	)		—			—		—			(8	)		1		1			(1	)		7
Total of above items		(5	)		(3	)		(2	)		—			—		—			(8	)		1		1			(1	)		7
Reported amount		314			100			134			—					—			79			95		121			527
Amount excluding impact of items indicated above		319			103			136			—					—			87			94		120			528

Individual Life:
Reserve refinements		—			—			—			—			—		(9	)		20			—		(9	)		—			(20	)
Total of above items		—			—			—			—			—		(9	)		20			—		(9	)		—			(20	)
Reported amount		—			—			—			—					553			598			—		78			—
Amount excluding impact of items indicated above		—			—			—			—					562			578			—		87			—

Corporate & Other:
Change related to the administration of certain separate account investments		—			—			—			—			—		—			—			—		—			80			(80	)
Total of above items		—			—			—			—			—		—			—			—		—			80			(80	)
Reported amount		—			—			—			—					—			—			—		—			128
Amount excluding impact of items indicated above		—			—			—			—					—			—			—		—			48

Retirement:
Settlement of legal matters		—			—			—			(20	)		20		—			—			—		—			—			—
Total of above items		—			—			—			(20	)		20		—			—			—		—			—			—
Reported amount		—			—			—			242					—			—			—		—			—
Amount excluding impact of items indicated above		—			—			—			262					—			—			—		—			—

Page 34

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS - AOI TO U.S. GAAP RECONCILIATION OF REVENUES AND BENEFITS AND EXPENSES

(in millions)


	Three Months Ended December 31, 2016																							Three Months Ended December 31, 2015
				Reconciling Items																							Reconciling Items
	Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net			Change in experience- rated contract- holder liabilities due to asset value changes			Closed Block division		Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)			Adjusted Opera- ting Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net			Change in experience- rated contract- holder liabi- lities due to asset value changes			Closed Block division			Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)

Revenues:

Premiums		7,296			—			—			—			707		94			—			8,097			7,495			—			—			—			724			88			—			8,307
Policy charges and fee income		1,529			(38	)		—			—			—		—			—			1,491			1,514			(24	)		—			—			—			—			—			1,490
Net investment income		3,299			(8	)		—			—			625		72			—			3,988			2,964			1			—			—			633			50			—			3,648
Realized investment gains (losses), net		150			(2,090	)		—			—			174		(167	)		—			(1,933	)		185			(527	)		—			—			200			(23	)		—			(165	)
Asset management fees, commissions and other income		1,146			644			(378	)		—			7		1			(13	)		1,407			1,087			65			(159	)		—			(9	)		—			(8	)		976

Total revenues		13,420			(1,492	)		(378	)		—			1,513		—			(13	)		13,050			13,245			(485	)		(159	)		—			1,548			115			(8	)		14,256


Benefits and Expenses :

Insurance and annuity benefits		7,658			(174	)		—			—			1,429		136			—			9,049			7,917			(12	)		—			—			1,481			129			—			9,515
Interest credited to policyholders’ account balances		945			(103	)		—			(283	)		33		1			—			593			879			(47	)		—			(138	)		34			2			—			730
Interest expense		319			—			—			—			—		1			—			320			322			—			—			—			1			1			—			324
Deferral of acquisition costs		(711	)		—			—			—			—		—			—			(711	)		(691	)		—			—			—			—			—			—			(691	)
Amortization of acquisition costs		468			(343	)		—			—			8		—			—			133			443			(178	)		—			—			9			—			—			274
General and administrative expenses		3,282			(48	)		—			—			101		22			(8	)		3,349			3,193			(52	)		—			—			103			23			(6	)		3,261

Total benefits and expenses		11,961			(668	)		—			(283	)		1,571		160			(8	)		12,733			12,063			(289	)		—			(138	)		1,628			155			(6	)		13,413


	Twelve Months Ended December 31, 2016																							Twelve Months Ended December 31, 2015
				Reconciling Items																							Reconciling Items
	Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net			Change in experience- rated contract- holder liabilities due to asset value changes			Closed Block division		Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)			Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net			Change in experience- rated contract- holder liabi- lities due to asset value changes			Closed Block division			Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)

Revenues:

Premiums		27,953			—			—			—			2,620		391			—			30,964			25,463			—			—			—			2,669			389			—			28,521
Policy charges and fee income		5,887			19			—			—			—		—			—			5,906			6,003			(31	)		—			—			—			—			—			5,972
Net investment income		12,695			(31	)		—			—			2,578		278			—			15,520			11,958			1			—			—			2,653			217			—			14,829
Realized investment gains (losses), net		577			1,256			—			—			434		(73	)		—			2,194			887			2,274			—			—			833			31			—			4,025
Asset management fees, commissions and other income		4,462			(236	)		(17	)		—			37		6			(57	)		4,195			4,319			(17	)		(524	)		—			5			1			(12	)		3,772

Total revenues		51,574			1,008			(17	)		—			5,669		602			(57	)		58,779			48,630			2,227			(524	)		—			6,160			638			(12	)		57,119


Benefits and Expenses :

Insurance and annuity benefits		29,709			131			—			—			5,223		594			—			35,657			26,698			39			—			—			5,495			607			—			32,839
Interest credited to policyholders’ account balances		3,698			(50	)		—			(21	)		134		—			—			3,761			3,585			191			—			(433	)		135			1			—			3,479
Interest expense		1,315			—			—			—			2		3			—			1,320			1,302			—			—			—			1			3			—			1,306
Deferral of acquisition costs		(2,845	)		—			—			—			—		—			—			(2,845	)		(2,652	)		—			—			—			—			—			—			(2,652	)
Amortization of acquisition costs		1,672			168			—			—			37		—			—			1,877			1,631			452			—			—			37			—			—			2,120
General and administrative expenses		12,626			236			—			—			405		89			(52	)		13,304			11,835			(34	)		—			—			434			93			(70	)		12,258

Total benefits and expenses		46,175			485			—			(21	)		5,801		686			(52	)		53,074			42,399			648			—			(433	)		6,102			704			(70	)		49,350

(1)	See page 37 for a definition of AOI.

(2)	U.S. generally accepted accounting principles

Page 35

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

COMBINED STATEMENTS OF OPERATIONS - AOI TO U.S. GAAP RECONCILIATION OF REVENUES AND BENEFITS

AND EXPENSES

(in millions)


	Three Months Ended March 31, 2016																							Three Months Ended June 30, 2016
				Reconciling Items																							Reconciling Items
	Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net		Change in experience- rated contract- holder liabilities due to asset value changes			Closed Block division			Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)			Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net		Change in experience- rated contract- holder liabi- lities due to asset value changes		Closed Block division		Other divested businesses		Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)

Revenues:

Premiums		5,577			—			—		—			622			98			—			6,297			6,146			—			—		—		693		96		—			6,935
Policy charges and fee income		1,511			88			—		—			—			—			—			1,599			1,288			(12	)		—		—		—		—		—			1,276
Net investment income		3,017			(7	)		—		—			612			48			—			3,670			3,087			(8	)		—		—		639		71		—			3,789
Realized investment gains (losses), net		174			1,758			—		—			(98	)		47			—			1,881			138			1,059			—		—		205		31		—			1,433
Asset management fees, commissions and other income		1,013			(333	)		216		—			(7	)		1			(8	)		882			1,153			(249	)		108		—		9		1		(16	)		1,006

Total revenues		11,292			1,506			216		—			1,129			194			(8	)		14,329			11,812			790			108		—		1,546		199		(16	)		14,439


Benefits and Expenses :

Insurance and annuity benefits		5,984			119			—		—			1,054			140			—			7,297			6,813			153			—		—		1,433		188		—			8,587
Interest credited to policyholders’ account balances		907			216			—		130			33			—			—			1,286			914			(23	)		—		133		34		—		—			1,058
Interest expense		325			—			—		—			1			1			—			327			357			—			—		—		—		—		—			357
Deferral of acquisition costs		(685	)		—			—		—			—			—			—			(685	)		(718	)		—			—		—		—		—		—			(718	)
Amortization of acquisition costs		479			712			—		—			11			—			—			1,202			281			138			—		—		8		—		—			427
General and administrative expenses		2,957			121			—		—			103			22			(33	)		3,170			3,108			162			—		—		103		22		(8	)		3,387

Total benefits and expenses		9,967			1,168			—		130			1,202			163			(33	)		12,597			10,755			430			—		133		1,578		210		(8	)		13,098



	Three Months Ended September 30, 2016
				Reconciling Items
	Adjusted Operating Income basis (1)			Total realized invest- ment gains (losses), net, and related charges and adjust- ments			Invest- ment gains (losses) on trading account assets suppor- ting insu- rance liabi- lities, net		Change in experience- rated contract- holder liabi- lities due to asset value changes			Closed Block division			Other divested businesses			Equity in earnings of operating joint ventures and earnings attribu- table to non- controlling interests			U.S. GAAP (2)

Revenues:

Premiums		8,934			—			—		—			598			103			—			9,635
Policy charges and fee income		1,559			(19	)		—		—			—			—			—			1,540
Net investment income		3,292			(8	)		—		—			702			87			—			4,073
Realized investment gains (losses), net		115			529			—		—			153			16			—			813
Asset management fees, commissions and other income		1,150			(298	)		37		—			28			3			(20	)		900

Total revenues		15,050			204			37		—			1,481			209			(20	)		16,961


Benefits and Expenses :

Insurance and annuity benefits		9,254			33			—		—			1,307			130			—			10,724
Interest credited to policyholders’ account balances		932			(140	)		—		(1	)		34			(1	)		—			824
Interest expense		314			—			—		—			1			1			—			316
Deferral of acquisition costs		(731	)		—			—		—			—			—			—			(731	)
Amortization of acquisition costs		444			(339	)		—		—			10			—			—			115
General and administrative expenses		3,279			1			—		—			98			23			(3	)		3,398

Total benefits and expenses		13,492			(445	)		—		(1	)		1,450			153			(3	)		14,646

(1)	See page 37 for a definition of AOI.

(2)	U.S. generally accepted accounting principles

Page 36

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

KEY DEFINITIONS AND FORMULAS

1. Adjusted operating income before income taxes:

Adjusted operating income is a non-GAAP measure of performance that excludes “Realized investment gains (losses), net,” as adjusted, and related charges and adjustments. A significant element of realized investment gains and losses are impairments and credit-related and interest rate-related gains and losses. Impairments and losses from sales of credit-impaired securities, the timing of which depends largely on market credit cycles, can vary considerably across periods. The timing of other sales that would result in gains or losses, such as interest rate-related gains or losses, is largely subject to our discretion and influenced by market opportunities as well as our tax and capital profile.

Realized investment gains (losses) within certain of our businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments are included in adjusted operating income. Adjusted operating income generally excludes realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are part of an asset-liability management program related to the risk of those products. However, the effectiveness of our hedging program will ultimately be reflected in adjusted operating income over time. Adjusted operating income also excludes gains and losses from changes in value of certain assets and liabilities relating to foreign currency exchange movements that have been economically hedged or considered part of our capital funding strategies for our international subsidiaries, as well as gains and losses on certain investments that are classified as other trading account assets.

Adjusted operating income also excludes investment gains and losses on trading account assets supporting insurance liabilities and changes in experience-rated contractholder liabilities due to asset value changes, because these recorded changes in asset and liability values are expected to ultimately accrue to contractholders. In addition, adjusted operating income excludes the results of divested businesses, which are not relevant to our ongoing operations. Discontinued operations and earnings attributable to noncontrolling interests, each of which is presented as a separate component of net income under GAAP, are also excluded from adjusted operating income.

Adjusted operating income does not equate to “Income from continuing operations” as determined in accordance with U.S. GAAP but is the measure of profit or loss we use to evaluate segment performance. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and our definition of adjusted operating income may differ from that used by other companies. The items above 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 of our businesses. Trends in the underlying profitability of our businesses can be more clearly identified without the fluctuating effects of the items described above.

2. 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. The tax effect associated with pre-tax adjusted operating income is based on applicable IRS and foreign tax regulations inclusive of pertinent adjustments.

3. Annualized New Business Premiums:

Premiums from new sales that are expected to be collected over a one year period. Group insurance annualized new business premiums exclude new premiums resulting from rate changes on existing policies, from additional coverage issued under our Servicemembers’ Group Life Insurance contract, and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts. Group insurance annualized new business premiums include premiums from the takeover of claim liabilities. Excess (unscheduled) and single premium business for the company’s domestic individual life and international insurance operations are included in annualized new business premiums based on a 10% credit. Amounts ascribed to Gibraltar Life Consultants include production by captive agents associated with consolidated joint venture of Gibraltar Life and Other Operations.

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. Prudential Financial, Inc. 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. Equity represents all of Prudential Financial, Inc. equity that is not attributable to noncontrolling interests.

6. Book value per share of Common Stock:

Equity attributed to Prudential Financial, Inc. divided by the number of Common shares outstanding at end of period, on a diluted basis. Book value per share excluding both accumulated other comprehensive income (loss) and adjusted to remove amount included for foreign currency exchange rate remeasurement is a non-GAAP measure. These items are excluded in order to highlight the book value attributable to our core business operations separate from the portion attributable to external and potentially volatile capital and currency market conditions. This non-GAAP measure augments the understanding of our financial position by providing a measure of net worth that is primarily attributable to our business operations separate from the portion that is affected by capital and currency market conditions and by isolating the accounting impact associated with insurance liabilities that are generally not marked to market and the supporting investments that are marked to market through accumulated other comprehensive income under GAAP. However, book value per share excluding both accumulated other comprehensive income (loss) and adjusted to remove amount included for foreign currency exchange rate remeasurement is not a substitute for book value per share including accumulated other comprehensive income determined in accordance with GAAP, and the adjustments made to derive the measure are important to an understanding of our overall financial position.

7. Borrowings - Capital Debt:

Borrowings that are or will be used for capital requirements at Prudential Financial, Inc as well as borrowings invested in equity or debt securities of direct or indirect subsidiaries of Prudential Financial, Inc., and subsidiary borrowings, utilized for capital requirements.

8. Borrowings - Operating Debt - Investment Related:

Debt issued to finance specific investment assets or portfolios of investment assets, including institutional spread lending investment portfolios as well as institutional and insurance company portfolio cash flow timing differences.

9. Borrowings - Operating Debt - Specified Businesses:

Borrowings primarily associated with the individual annuity and asset management businesses.

Page 37

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

KEY DEFINITIONS AND FORMULAS

10. Client Assets:

Fair market value of assets in client accounts of International brokerage operations, Prudential Bank and mortgage loan servicing business, 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. Divested Businesses:

Businesses that have been sold or exited, including businesses that have been placed in wind down, but that did not qualify for “discontinued operations” accounting treatment under U.S. GAAP.

12. 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.

13. Full Service Retirement:

The Full Service Retirement line of business provides retirement plan products and services to public, private and not-for-profit organizations. This business provides recordkeeping, plan administration, actuarial advisory services, participant education and communication services, trustee services and institutional and retail investment funds. This business mainly services defined contribution and defined benefit plans; non-qualified plans are also serviced. For clients with both defined contribution and defined benefit plans, integrated recordkeeping services are available.

14. Full Service Stable Value:

Our Full Service Stable Value products represent fixed rate options on investment funds offered to Retirement customers. These products contain an obligation to pay interest at a specified rate for a specific period of time. Upon termination these products repay account balances at market value immediately or may be liquidated at book value over time. Substantially all of these products are either fully or partially participating, with annual or semi-annual resets giving effect to previous investment experience. These products are issued through the general account, separate accounts or client-owned trusts. Profits from partially participating general account products result from the spread between the rate of return on investment assets and the interest rates credited to the customer, less expenses. For fully participating products, generally subject to a minimum interest rate guarantee, we earn fee income.

15. 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.

16. Gibraltar Life:

Includes results from consolidated joint venture operation of Gibraltar Life and Other Operations.

17. Gibraltar Life Consultants:

Captive insurance agents for Gibraltar Life. Count and policy persistency do not include captive agents associated with consolidated joint venture of Gibraltar Life and Other Operations.

18. 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.

19. Group Insurance Benefits Ratios:

Ratio of policyholder benefits to earned premiums, policy charges and fee income.

20. Individual Annuity Account Values in General Account and Separate Account:

Amounts represent the breakdown of invested customer funds in annuities either written or reinsured by the Company.

21. Individual Annuities - Net Amounts at Risk:

Living Benefit Features - For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance.

Death Benefit Features - Net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date.

Page 38

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

KEY DEFINITIONS AND FORMULAS

22. Insurance and Annuity Benefits:

Total death benefits, annuity benefits, disability benefits, other policy benefits, and losses paid or incurred, under insurance and annuity contracts, plus the change in reserves for future policy benefits, losses and loss adjustment expenses.

23. International Life Planners:

Captive insurance agents in our Life Planner Operations.

24. 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.

25. Policy Persistency - Group Insurance:

Percentage of the premiums in force at the end of the prior year that are still in force at the end of the period (excluding Servicemembers’ Group Life Insurance and Prudential Employee Benefit Plan).

26. 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.

27. Prudential Agents:

Captive insurance agents in our insurance operations in the United States.

28. 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.

29. 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.

30. 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 39

Prudential Financial, Inc.

Quarterly Financial Supplement

Fourth Quarter 2016

RATINGS AND INVESTOR INFORMATION

FINANCIAL STRENGTH RATINGS

as of February 8, 2017


	A.M. Best	Standard & Poor’s	Moody’s	Fitch Ratings
The Prudential Insurance Company of America	A+	AA-	A1	AA-
PRUCO Life Insurance Company	A+	AA-	A1	AA-
PRUCO Life Insurance Company of New Jersey	A+	AA-	NR *	AA-
Prudential Annuities Life Assurance Corporation	A+	AA-	NR	AA-
Prudential Retirement Insurance and Annuity Company	A+	AA-	A1	AA-
The Prudential Life Insurance Co., Ltd. (Prudential of Japan)	NR	A+	NR	NR
Gibraltar Life Insurance Company, Ltd.	NR	A+	NR	NR
The Prudential Gibraltar Financial Life Insurance Co. Ltd.	NR	A+	NR	NR
Prudential Life Insurance Co. of Taiwan, Inc.	NR	twAA+	NR	NR

CREDIT RATINGS:
as of February 8, 2017

Prudential Financial, Inc.:
Short-Term Borrowings	AMB-1	A-1	P-2	F1
Long-Term Senior Debt	a-	A	Baa1	A-
Junior Subordinated Long-Term Debt	bbb	BBB+	Baa2	BBB

The Prudential Insurance Company of America:
Capital and surplus notes	a	A	A3	A

Prudential Funding, LLC:
Short-Term Debt	AMB-1	A-1+	P-1	F1+
Long-Term Senior Debt	a+	AA-	A2	A+

PRICOA Global Funding I
Long-Term Senior Debt	aa-	AA-	A1	AA-

*	NR indicates not rated.

(1)	Prudential Life Insurance Co. of Taiwan was assigned a financial strength rating by Taiwan Ratings Corporation, a partner of Standard and Poor’s.

INVESTOR INFORMATION:


Corporate Offices:		Investor Information Hotline:

Prudential Financial, Inc.		Dial 877-998-ROCK for additional printed information or inquiries.
751 Broad Street
Newark, New Jersey 07102		Web Site:
		www.prudential.com

Common Stock:

Common Stock of Prudential Financial, Inc. is traded on the New York Stock Exchange under the symbol PRU.

Page 40

PRUDENTIAL FINANCIAL INC - FORM 8-K - EX-99.2 - February 8, 2017

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