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

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EX-99.1 - EX-99.1 - PRUDENTIAL FINANCIAL INC	d582090dex991.htm
8-K - FORM 8-K - PRUDENTIAL FINANCIAL INC	d582090d8k.htm

Exhibit 99.2

Prudential Financial, Inc. (PRU)

LOGO

Quarterly Financial Supplement

Second Quarter 2018

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.

August 1, 2018

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

TABLE OF CONTENTS


	Page
HIGHLIGHTS
Financial Highlights		1
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. INDIVIDUAL SOLUTIONS 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
Supplementary Information for Individual Life		17

U.S. WORKPLACE SOLUTIONS DIVISION
Combined Statements of Operations		18
Combining Statements of Operations		19
Retirement Segment Sales Results and Account Values		20
Supplementary Information for Group Insurance		21

PGIM DIVISION
Statements of Operations		22
Supplementary Revenue and Assets Under Management Information		23
Supplementary Assets Under Management Information		24

DEFERRED POLICY ACQUISITION COSTS & DEFERRED SALES INDUCEMENTS - INDIVIDUAL ANNUITIES, INDIVIDUAL LIFE AND GROUP INSURANCE		25

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

INVESTMENT PORTFOLIO
Investment Portfolio Composition		30
Investment Portfolio Composition - Japanese Insurance Operations and Excluding Japanese Insurance Operations		31
Investment Results		32
Investment Results - Japanese Insurance Operations		33
Investment Results - Excluding Japanese Insurance Operations		34

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

KEY DEFINITIONS AND FORMULAS		37

RATINGS AND INVESTOR INFORMATION		40

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

This quarterly financial supplement reflects a name change for the Investment Management Division and Investment Management Segment to PGIM Division and PGIM Segment, respectively.

iii

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date						%			2017									2018
2018			2017			Change			2Q			3Q			4Q			1Q			2Q
								Pre-tax adjusted operating income (loss) by division:
	1,105			641			72%	U.S. Individual Solutions Division		55			727			639			555			550
	731			875			-16%	U.S. Workplace Solutions Division		444			309			313			372			359
	486			414			17%	PGIM Division		218			259			306			232			254
	1,640			1,622			1%	International Insurance Division		823			799			777			856			784
	(580	)		(664	)		13%	Corporate and other operations		(312	)		(310	)		(463	)		(294	)		(286	)

	3,382			2,888			17%	Total pre-tax adjusted operating income		1,228			1,784			1,572			1,721			1,661
	744			732			2%	Income taxes, applicable to adjusted operating income		309			461			399			381			363

	2,638			2,156			22%	After-tax adjusted operating income		919			1,323			1,173			1,340			1,298


								Reconciling items:
	341			(641	)		153%	Realized investment gains (losses), net, and related charges and adjustments		(679	)		1,164			(581	)		64			277
	(596	)		245			-343%	Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		201			85			6			(403	)		(193	)
	503			(157	)		420%	Change in experience-rated contractholder liabilities due to asset value changes		(145	)		(31	)		37			418			85
								Divested businesses:
	(40	)		16			-350%	Closed Block Division		(18	)		33			(4	)		(9	)		(31	)
	(1,598	)		41			-3998%	Other divested businesses		35			10			(13	)		(72	)		(1,526	)
	(49	)		(42	)		-17%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(14	)		(24	)		99			(26	)		(23	)

	(1,439	)		(538	)		-167%	Total reconciling items, before income taxes		(620	)		1,237			(456	)		(28	)		(1,411	)
	(324	)		(212	)		-53%	Income taxes, not applicable to adjusted operating income		(184	)		339			(3,157	)		(29	)		(295	)

	(1,115	)		(326	)		-242%	Total reconciling items, after income taxes		(436	)		898			2,701			1			(1,116	)

	1,523			1,830			-17%	Income (after-tax) before equity in earnings of operating joint ventures		483			2,221			3,874			1,341			182
	37			30			23%	Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests		8			17			(109	)		22			15

	1,560			1,860			-16%	Income attributable to Prudential Financial, Inc.		491			2,238			3,765			1,363			197
	4			8			-50%	Earnings attributable to noncontrolling interests		5			3			100			1			3

	1,564			1,868			-16%	Net income		496			2,241			3,865			1,364			200
	4			8			-50%	Less: Income attributable to noncontrolling interests		5			3			100			1			3

	1,560			1,860			-16%	Net income attributable to Prudential Financial, Inc.		491			2,238			3,765			1,363			197

	13.5%			12.3%				Operating Return on Average Equity (based on adjusted operating income) (1)(2)		10.4%			14.7%			12.5%			13.7%			13.1%

(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 amounts included for foreign currency exchange rate remeasurement and certain deferred taxes as described 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 net income). Return on average equity (based on net income) represents income 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 (2) (based on net income) is 1.6%, 10.3%, 28.7%, 18.1%, and 4.1% for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.

(2)	2017 amounts have been revised resulting from the elimination of Gibraltar Life’s one-month reporting lag.

Page 1

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						Earnings per share of Common Stock (diluted):
	6.10			4.88		After-tax adjusted operating income		2.09			3.01			2.69			3.08			3.01
						Reconciling items:
	0.79			(1.46	)	Realized investment gains (losses), net, and related charges and adjustments		(1.55	)		2.68			(1.34	)		0.15			0.65
	(1.39	)		0.56		Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		0.46			0.20			0.01			(0.94	)		(0.45	)
	1.17			(0.36	)	Change in experience-rated contractholder liabilities due to asset value changes		(0.33	)		(0.07	)		0.09			0.97			0.20
						Divested businesses:
	(0.09	)		0.04		Closed Block Division		(0.04	)		0.08			(0.01	)		(0.02	)		(0.07	)
	(3.72	)		0.09		Other divested businesses		0.08			0.02			(0.03	)		(0.17	)		(3.57	)
	0.03			0.01		Difference in earnings allocated to participating unvested share-based payment awards		0.01			(0.03	)		(0.07	)		—			0.02

	(3.21	)		(1.12	)	Total reconciling items, before income taxes		(1.37	)		2.88			(1.35	)		(0.01	)		(3.22	)
	(0.73	)		(0.45	)	Income taxes, not applicable to adjusted operating income		(0.40	)		0.80			(7.27	)		(0.07	)		(0.67	)

	(2.48	)		(0.67	)	Total reconciling items, after income taxes		(0.97	)		2.08			5.92			0.06			(2.55	)

	3.62			4.21		Net income attributable to Prudential Financial, Inc.		1.12			5.09			8.61			3.14			0.46


	420.8			429.1		Weighted average number of outstanding Common shares (basic)		428.3			426.2			423.7			422.0			419.5
	429.5			438.1		Weighted average number of outstanding Common shares (diluted)		437.2			435.0			432.7			430.9			428.0

						Earnings calculation, per share of Common Stock:

	1,560			1,860		Net income attributable to Prudential Financial, Inc.		491			2,238			3,765			1,363			197
	11			9		Earnings related to interest, net of tax, on exchangeable surplus notes		5			4			4			5			6
	18			23		Less: Earnings allocated to participating unvested share-based payment awards		7			27			44			16			4

	1,553			1,846		Net income attributable to Prudential Financial, Inc. for earnings per share of Common Stock calculation		489			2,215			3,725			1,352			199


	2,638			2,156		After-tax adjusted operating income		919			1,323			1,173			1,340			1,298
	11			9		Earnings related to interest, net of tax, on exchangeable surplus notes		5			4			4			5			6
	30			26		Less: Earnings allocated to participating unvested share-based payment awards		11			16			14			16			14

	2,619			2,139		After-tax adjusted operating income for earnings per share of Common Stock calculation		913			1,311			1,163			1,329			1,290

Page 2

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date					2017									2018
2018		2017			2Q			3Q			4Q			1Q			2Q

				*Capitalization Data (1):*
				Senior Debt:
				Short-term debt		1,779			2,358			1,380			1,383			2,056
				Long-term debt		11,806			10,532			10,550			11,516			10,706
				Junior Subordinated Long-Term Debt		5,820			6,621			6,622			6,627			6,026

				Prudential Financial Inc. Equity:
				Including accumulated other comprehensive income (2)		48,611			50,540			54,236			51,830			48,232
				Excluding accumulated other comprehensive income (2)(3)		32,249			33,942			37,162			37,069			36,577
				Amount included above for remeasurement of foreign currency and certain deferred taxes (4)(5)		(2,889	)		(2,758	)		(969	)		(2,892	)		(2,650	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for remeasurement of foreign currency and certain deferred taxes (2)(4)(5)		35,138			36,700			38,131			39,961			39,227


				Book value per share of Common Stock:
				Including accumulated other comprehensive income (2)(6)		111.73			116.70			125.63			120.99			113.59
				Excluding accumulated other comprehensive income (2)(3)(6)		74.34			78.64			86.44			86.86			86.43
				Amount included above for remeasurement of foreign currency and certain deferred taxes (4)(5)		(6.66	)		(6.39	)		(2.23	)		(6.69	)		(6.17	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for remeasurement of foreign currency and certain deferred taxes (2)(4)(5)(6)		81.00			85.03			88.67			93.55			92.60


				Number of diluted shares at end of period (6)		433.8			431.6			435.7			432.5			429.0

				*Common Stock Price Range (based on closing price):*
	126.02		113.82	High		109.13			115.23			117.15			126.02			107.62
	93.22		102.92	Low		102.92			98.65			107.28			100.64			93.22
	93.51		108.14	Close		108.14			106.32			114.98			103.55			93.51

				*Common Stock market capitalization (1)*		46,176			45,154			48,591			43,595			39,059

(1)	As of end of period.

(2)	2017 amounts have been revised resulting from the elimination of Gibraltar Life’s one-month reporting lag.

(3)	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.

(4)	Includes the 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.

(5)	Includes $1,678 million impact reported in net income for the fourth quarter of 2017 from the remeasurement of deferred tax assets and liabilities originally established through accumulated other comprehensive income, related to enactment of the Tax Cuts and Jobs Act on December 22, 2017.

(6)

As of the first and second quarters of 2018 and the fourth quarter of 2017, exchangeable surplus notes are dilutive when book value per share is greater than $85.00 (equivalent to an additional 5.88 million in diluted shares and an increase of $500 million in equity). As of the second and third quarters of 2017, exchangeable surplus notes are dilutive when book value per share is greater than $86.92 (equivalent to an additional 5.75 million in diluted shares and an increase of $500 million in equity). See page 37 for more information.

Page 3

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

OPERATIONS HIGHLIGHTS


Year-to-date					2017						2018
2018		2017			2Q		3Q		4Q		1Q		2Q

				*Assets Under Management and Administration ($ billions) (1)(2):*
				Assets Under Management:
				PGIM Division:
				Institutional customers		461.2		478.3		489.5		489.6		490.8
				Retail customers		231.2		239.9		245.6		246.2		252.0
				General account		412.3		415.7		420.2		420.0		413.3

				Total PGIM Division		1,104.7		1,133.9		1,155.3		1,155.8		1,156.1
				U.S. Individual Solutions Division		114.4		116.7		119.8		115.7		115.7
				U.S. Workplace Solutions Division		85.8		86.9		88.5		86.2		87.6
				International Insurance Division		28.7		28.7		30.0		30.8		28.8

				Total assets under management		1,333.6		1,366.2		1,393.6		1,388.5		1,388.2
				Client assets under administration		188.3		202.4		213.6		218.4		228.7

				Total assets under management and administration		1,521.9		1,568.6		1,607.2		1,606.9		1,616.9


				Assets managed or administered for customers outside of the United States at end of period		341.1		350.5		358.0		373.3		365.7

				*Distribution Representatives (1):*
				Prudential Advisors		2,921		2,937		2,882		2,958		3,052
				International Life Planners		7,735		7,831		7,831		7,771		7,638
				Gibraltar Life Consultants		8,509		8,327		8,326		8,137		7,938

	56		49	*Prudential Advisor productivity ($ thousands)*		51		53		72		52		60

(1)	As of end of period.

(2)	At fair market value.

Page 4

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINED STATEMENTS OF OPERATIONS

(in millions)


Year-to-date					%			2017									2018
2018		2017			Change			2Q			3Q			4Q			1Q			2Q


							Revenues (1):
	13,348		13,331			0%	Premiums		7,557			7,111			8,720			6,638			6,710
	3,145		2,349			34%	Policy charges and fee income		794			1,565			1,604			1,575			1,570
	6,741		6,689			1%	Net investment income		3,335			3,345			3,465			3,337			3,404
	2,684		2,666			1%	Asset management fees, commissions and other income		1,342			1,340			1,461			1,325			1,359

	25,918		25,035			4%	Total revenues		13,028			13,361			15,250			12,875			13,043


							Benefits and Expenses (1):
	14,013		13,532			4%	Insurance and annuity benefits		7,386			7,376			9,163			6,853			7,160
	1,843		1,873			-2%	Interest credited to policyholders’ account balances		953			927			929			911			932
	687		648			6%	Interest expense		326			330			344			340			347
	(1,402)		(1,479	)		5%	Deferral of acquisition costs		(755	)		(653	)		(686	)		(718	)		(684	)
	1,085		1,143			-5%	Amortization of acquisition costs		662			470			480			530			555
	6,310		6,430			-2%	General and administrative expenses		3,228			3,127			3,448			3,238			3,072

	22,536		22,147			2%	Total benefits and expenses		11,800			11,577			13,678			11,154			11,382

	3,382		2,888			17%	Adjusted operating income before income taxes		1,228			1,784			1,572			1,721			1,661

							Reconciling items:
	480		(1,443	)		133%	Realized investment gains (losses), net, and related adjustments		(1,377	)		1,395			(554	)		87			393
	(139)		802			-117%	Related charges		698			(231	)		(27	)		(23	)		(116	)

	341		(641	)		153%	Total realized investment gains (losses), net, and related charges and adjustments		(679	)		1,164			(581	)		64			277

	(596)		245			-343%	Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		201			85			6			(403	)		(193	)
	503		(157	)		420%	Change in experience-rated contractholder liabilities due to asset value changes		(145	)		(31	)		37			418			85
							Divested businesses:
	(40)		16			-350%	Closed Block Division		(18	)		33			(4	)		(9	)		(31	)
	(1,598)		41			-3998%	Other divested businesses		35			10			(13	)		(72	)		(1,526	)
	(49)		(42	)		-17%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(14	)		(24	)		99			(26	)		(23	)

	(1,439)		(538	)		-167%	Total reconciling items, before income taxes		(620	)		1,237			(456	)		(28	)		(1,411	)


	1,943		2,350			-17%	Income before income taxes and equity in earnings of operating joint ventures		608			3,021			1,116			1,693			250
	420		520			-19%	Income tax expense (benefit)		125			800			(2,758	)		352			68

	1,523		1,830			-17%	Income before equity in earnings of operating joint ventures		483			2,221			3,874			1,341			182

(1)

Revenues exclude realized investment gains, net of losses and related charges and adjustments; investment gains, net of losses, on assets supporting experience-rated contractholder 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 noncontrolling interests. See pages 35 and 36 for reconciliation.

Page 5

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING STATEMENTS OF OPERATIONS

(in millions)


	Quarter Ended June 30, 2018
				U.S. Individual			U.S. Workplace						International			Corporate
				Solutions			Solutions			PGIM			Insurance			and Other
	Total			Division			Division			Division			Division			Operations

Revenues (1):
Premiums		6,710			262			2,689			—			3,767			(8	)
Policy charges and fee income		1,570			1,236			217			—			129			(12	)
Net investment income		3,404			686			1,271			31			1,320			96
Asset management fees, commissions and other income		1,359			533			235			785			72			(266	)

Total revenues		13,043			2,717			4,412			816			5,288			(190	)


Benefits and Expenses (1):
Insurance and annuity benefits		7,160			737			3,125			—			3,300			(2	)
Interest credited to policyholders’ account balances		932			275			435			—			222			—
Interest expense		347			195			9			11			5			127
Deferral of acquisition costs		(684	)		(270	)		(12	)		(1	)		(413	)		12
Amortization of acquisition costs		555			251			9			2			306			(13	)
General and administrative expenses		3,072			979			487			550			1,084			(28	)

Total benefits and expenses		11,382			2,167			4,053			562			4,504			96

Adjusted operating income (loss) before income taxes		1,661			550			359			254			784			(286	)


	Quarter Ended June 30, 2017
				U.S. Individual			U.S. Workplace						International			Corporate
				Solutions			Solutions			PGIM			Insurance			and Other
	Total			Division			Division			Division			Division			Operations
Revenues (1):
Premiums		7,557			271			3,259			—			4,032			(5	)
Policy charges and fee income		794			472			223			—			112			(13	)
Net investment income		3,335			667			1,257			37			1,260			114
Asset management fees, commissions and other income		1,342			550			230			750			79			(267	)

Total revenues		13,028			1,960			4,969			787			5,483			(171	)


Benefits and Expenses (1):
Insurance and annuity benefits		7,386			360			3,601			—			3,422			3
Interest credited to policyholders’ account balances		953			255			476			—			222			—
Interest expense		326			179			8			7			3			129
Deferral of acquisition costs		(755	)		(246	)		(9	)		(1	)		(507	)		8
Amortization of acquisition costs		662			360			6			2			304			(10	)
General and administrative expenses		3,228			997			443			561			1,216			11

Total benefits and expenses		11,800			1,905			4,525			569			4,660			141

Adjusted operating income (loss) before income taxes		1,228			55			444			218			823			(312	)

(1)

Page 6

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING STATEMENTS OF OPERATIONS

(in millions)


	Six Months Ended June 30, 2018
				U.S. Individual			U.S. Workplace						International			Corporate
				Solutions			Solutions			PGIM			Insurance			and Other
	Total			Division			Division			Division			Division			Operations

Revenues (1):
Premiums		13,348			529			4,527			—			8,308			(16	)
Policy charges and fee income		3,145			2,481			417			—			272			(25	)
Net investment income		6,741			1,343			2,509			48			2,621			220
Asset management fees, commissions and other income		2,684			1,041			464			1,594			127			(542	)

Total revenues		25,918			5,394			7,917			1,642			11,328			(363	)


Benefits and Expenses (1):
Insurance and annuity benefits		14,013			1,472			5,337			—			7,215			(11	)
Interest credited to policyholders’ account balances		1,843			540			843			—			460			—
Interest expense		687			381			17			20			9			260
Deferral of acquisition costs		(1,402	)		(519	)		(17	)		(3	)		(888	)		25
Amortization of acquisition costs		1,085			453			14			4			637			(23	)
General and administrative expenses		6,310			1,962			992			1,135			2,255			(34	)

Total benefits and expenses		22,536			4,289			7,186			1,156			9,688			217

Adjusted operating income (loss) before income taxes		3,382			1,105			731			486			1,640			(580	)


	Six Months Ended June 30, 2017
				U.S. Individual			U.S. Workplace						International			Corporate
				Solutions			Solutions			PGIM			Insurance			and Other
	Total			Division			Division			Division			Division			Operations
Revenues (1):
Premiums		13,331			526			4,823			—			7,994			(12	)
Policy charges and fee income		2,349			1,704			425			—			246			(26	)
Net investment income		6,689			1,339			2,570			69			2,465			246
Asset management fees, commissions and other income		2,666			1,051			471			1,474			187			(517	)

Total revenues		25,035			4,620			8,289			1,543			10,892			(309	)


Benefits and Expenses (1):
Insurance and annuity benefits		13,532			1,090			5,583			—			6,855			4
Interest credited to policyholders’ account balances		1,873			518			907			—			448			—
Interest expense		648			349			15			12			6			266
Deferral of acquisition costs		(1,479	)		(508	)		(16	)		(3	)		(972	)		20
Amortization of acquisition costs		1,143			559			11			6			589			(22	)
General and administrative expenses		6,430			1,971			914			1,114			2,344			87

Total benefits and expenses		22,147			3,979			7,414			1,129			9,270			355

Adjusted operating income (loss) before income taxes		2,888			641			875			414			1,622			(664	)

(1)

Page 7

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

CONSOLIDATED BALANCE SHEETS

(in millions)


	06/30/2017		09/30/2017		12/31/2017		03/31/2018		06/30/2018

Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost $303,287; $307,527; $312,385; $319,180; $317,548)		335,254		340,100		346,780		347,630		341,151
Fixed maturities, held-to-maturity, at amortized cost (fair value $2,516; $2,475; $2,430; $2,511; $2,388)		2,123		2,084		2,049		2,120		2,020
Fixed maturities, trading, at fair value (amortized cost $3,893; $3,379; $3,509; $2,852; $2,980) (1)		3,814		3,340		3,507		2,885		2,916
Assets supporting experience-rated contractholder liabilities, at fair value		22,073		22,126		22,097		21,637		21,497
Equity securities, at fair value (cost $8,413; $8,116; $5,154; $5,382; $5,374) (1)		11,235		10,854		7,329		7,289		7,191
Commercial mortgage and other loans		54,915		55,373		56,045		58,098		58,622
Policy loans		11,719		11,765		11,891		12,036		11,935
Other invested assets (1)		13,626		13,714		13,373		14,044		13,459
Short-term investments (1)		3,642		5,535		6,800		5,752		5,728

Total investments		458,401		464,891		469,871		471,491		464,519
Cash and cash equivalents		16,605		14,541		14,490		15,676		14,918
Accrued investment income		3,228		3,278		3,325		3,169		3,235
Deferred policy acquisition costs		18,715		18,724		18,992		19,649		19,643
Value of business acquired		1,897		1,817		1,591		1,995		2,027
Other assets (3)		16,526		16,985		17,250		17,112		16,860
Separate account assets		297,433		301,110		306,617		300,585		298,658

Total assets		812,805		821,346		832,136		829,677		819,860


Liabilities:
Future policy benefits		250,706		252,339		257,317		261,144		260,435
Policyholders’ account balances		147,554		148,342		148,189		149,917		149,359
Securities sold under agreements to repurchase		8,817		8,145		8,400		8,633		9,540
Cash collateral for loaned securities		4,036		4,697		4,354		4,312		4,307
Income taxes (3)		11,679		12,557		9,648		9,296		7,888
Senior short-term debt		1,779		2,358		1,380		1,383		2,056
Senior long-term debt		11,806		10,532		10,550		11,516		10,706
Junior subordinated long-term debt		5,820		6,621		6,622		6,627		6,026
Notes issued by consolidated variable interest entities		2,176		1,517		1,518		954		937
Other liabilities		22,192		22,396		23,030		23,135		21,356
Separate account liabilities		297,433		301,110		306,617		300,585		298,658

Total liabilities		763,998		770,614		777,625		777,502		771,268

Equity:
Accumulated other comprehensive income (2)		16,362		16,598		17,074		14,761		11,655
Other equity (2)(3)		32,249		33,942		37,162		37,069		36,577

Total Prudential Financial, Inc. equity		48,611		50,540		54,236		51,830		48,232

Noncontrolling Interest		196		192		275		345		360

Total Equity		48,807		50,732		54,511		52,175		48,592

Total liabilities and equity		812,805		821,346		832,136		829,677		819,860

(1)	2017 amounts have been reclassified to conform to current period presentation.

(2)	Total equity for March 31, 2018 includes the cumulative effect of adoption of ASU 2016-01, effective January 1, 2018, which includes an increase in “Other equity” of $904 million and a decrease in Accumulated other comprehensive income of $847 million.

(3)	2017 amounts include an increase resulting from the elimination of Gibraltar Life’s one-month reporting lag.

Page 8

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING BALANCE SHEETS BY DIVISION

(in millions)


	As of June 30, 2018

						PFI Excluding		U.S. Individual			U.S. Workplace					International		Corporate
	Consolidated		Closed Block			Closed Block		Solutions			Solutions		PGIM			Insurance		and Other
	PFI		Division			Division		Division			Division		Division			Division		Operations
Assets:
Total investments		464,519		58,784			405,735		60,074			126,814		3,897			194,175		20,775
Deferred policy acquisition costs		19,643		281			19,362		10,865			310		—			8,466		(279	)
Other assets		37,040		1,718			35,322		14,282			8,318		2,779			11,157		(1,214	)
Separate account assets		298,658		—			298,658		175,897			83,251		40,577			3,739		(4,806	)

Total assets		819,860		60,783			759,077		261,118			218,693		47,253			217,537		14,476

Liabilities:
Future policy benefits		260,435		48,518			211,917		22,454			63,242		—			118,499		7,722
Policyholders’ account balances		149,359		5,097			144,262		35,552			57,002		—			50,856		852
Debt		18,788		—			18,788		7,492			806		1,655			126		8,709
Other liabilities		44,028		8,876			35,152		6,556			5,736		2,621			16,831		3,408
Separate account liabilities		298,658		—			298,658		175,897			83,251		40,577			3,739		(4,806	)

Total liabilities		771,268		62,491			708,777		247,951			210,037		44,853			190,051		15,885

Equity:
Accumulated other comprehensive income (loss) (1)		11,655		(18	)		11,673		(164	)		1,063		(76	)		12,728		(1,878	)
Other equity (1)		36,577		(1,701	)		38,278		13,316			7,541		2,001			14,695		725

Total Prudential Financial, Inc. equity		48,232		(1,719	)		49,951		13,152			8,604		1,925			27,423		(1,153	)

Noncontrolling Interest		360		11			349		15			52		475			63		(256	)

Total Equity		48,592		(1,708	)		50,300		13,167			8,656		2,400			27,486		(1,409	)

Total liabilities and equity		819,860		60,783			759,077		261,118			218,693		47,253			217,537		14,476



	As of December 31, 2017

						PFI Excluding		U.S. Individual			U.S. Workplace					International		Corporate
	Consolidated		Closed Block			Closed Block		Solutions			Solutions		PGIM			Insurance		and Other
	PFI		Division			Division		Division			Division		Division			Division		Operations
Assets:
Total investments		469,871		61,291			408,580		62,322			131,957		5,143			189,454		19,704
Deferred policy acquisition costs		18,992		299			18,693		10,535			308		—			8,214		(364	)
Other assets (2)		36,656		1,543			35,113		14,473			7,820		2,823			10,244		(247	)
Separate account assets		306,617		—			306,617		180,321			85,120		41,978			3,735		(4,537	)

Total assets		832,136		63,133			769,003		267,651			225,205		49,944			211,647		14,556

Liabilities:
Future policy benefits		257,317		48,870			208,447		24,446			64,246		—			114,515		5,240
Policyholders’ account balances		148,189		5,147			143,042		34,429			58,252		—			50,353		8
Debt		18,552		—			18,552		7,970			845		1,936			120		7,681
Other liabilities (2)		46,950		10,831			36,119		6,624			6,573		3,667			16,005		3,250
Separate account liabilities		306,617		—			306,617		180,321			85,120		41,978			3,735		(4,537	)

Total liabilities		777,625		64,848			712,777		253,790			215,036		47,581			184,728		11,642


Equity:
Accumulated other comprehensive income (loss)		17,074		(1	)		17,075		1,062			3,087		(102	)		13,891		(863	)
Other equity (2)(3)		37,162		(1,716	)		38,878		12,798			7,075		2,030			12,979		3,996

Total Prudential Financial, Inc. equity		54,236		(1,717	)		55,953		13,860			10,162		1,928			26,870		3,133

Noncontrolling Interest		275		2			273		1			7		435			49		(219	)

Total Equity		54,511		(1,715	)		56,226		13,861			10,169		2,363			26,919		2,914


Total liabilities and equity		832,136		63,133			769,003		267,651			225,205		49,944			211,647		14,556

(1)	Total equity for June 30, 2018 includes the cumulative effect of adoption of ASU 2016-01, effective January 1, 2018, which includes an increase in “Other equity” of $904 million and a decrease in Accumulated other comprehensive income of $847 million.

(2)	Prior period amounts include an increase resulting from the elimination of Gibraltar Life’s one-month reporting lag.

(3)	“Other equity” for December 31, 2017 includes estimated impacts of enactment of the Tax Act, including $1,678 million in Corporate and Other Operations related to the remeasurement of certain deferred tax assets and liabilities originally established through accumulated other comprehensive income.

Page 9

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

SHORT-TERM AND LONG-TERM DEBT - UNAFFILIATED

(in millions)


	As of June 30, 2018								As of December 31, 2017
	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		749		5,050		6,026		11,825		—		5,402		6,622		12,024
Operating Debt - Investment related		747		3,848		—		4,595		676		3,306		—		3,982
Operating Debt - Specified businesses		519		1,098		—		1,617		704		1,043		—		1,747
Limited recourse and non-recourse borrowing		41		710		—		751		—		799		—		799

Total debt		2,056		10,706		6,026		18,788		1,380		10,550		6,622		18,552


	As of June 30, 2018								As of December 31, 2017
	The Prudential								The Prudential
	Prudential		Insurance Co.		Other				Prudential		Insurance Co.		Other
	Financial, Inc.		of America (1)(2)		Affiliates		Total		Financial, Inc.		of America (1)(2)		Affiliates		Total
*Borrowings by sources:*
Capital Debt		10,828		941		56		11,825		11,028		940		56		12,024
Operating Debt - Investment related		4,513		82		—		4,595		3,917		65		—		3,982
Operating Debt - Specified businesses		1,110		507		—		1,617		1,239		508		—		1,747
Limited recourse and non-recourse borrowing		—		751		—		751		—		799		—		799

Total debt		16,451		2,281		56		18,788		16,184		2,312		56		18,552

(1)	Includes Prudential Funding, LLC.

(2)	Capital debt at Prudential Insurance Co. of America includes $841 million of surplus notes as of June 30, 2018 and $840 million as of December 31, 2017.

Page 10

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINED STATEMENTS OF OPERATIONS - U.S. INDIVIDUAL SOLUTIONS DIVISION

(in millions)


Year-to-date					%				2017									2018
2018		2017			Change				2Q			3Q			4Q			1Q			2Q

								Revenues (1):
	529		526			1	%	Premiums		271			264			253			267			262
	2,481		1,704			46	%	Policy charges and fee income		472			1,245			1,286			1,245			1,236
	1,343		1,339			0	%	Net investment income		667			666			685			657			686
	1,041		1,051			-1	%	Asset management fees, commissions and other income		550			540			525			508			533

	5,394		4,620			17	%	Total revenues		1,960			2,715			2,749			2,677			2,717


								Benefits and Expenses (1):
	1,472		1,090			35	%	Insurance and annuity benefits		360			642			722			735			737
	540		518			4	%	Interest credited to policyholders’ account balances		255			263			268			265			275
	381		349			9	%	Interest expense		179			183			186			186			195
	(519)		(508	)		-2	%	Deferral of acquisition costs		(246	)		(232	)		(265	)		(249	)		(270	)
	453		559			-19	%	Amortization of acquisition costs		360			187			201			202			251
	1,962		1,971			0	%	General and administrative expenses		997			945			998			983			979

	4,289		3,979			8	%	Total benefits and expenses		1,905			1,988			2,110			2,122			2,167

	1,105		641			72	%	Adjusted operating income before income taxes		55			727			639			555			550

(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 11

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING STATEMENTS OF OPERATIONS - U.S. INDIVIDUAL SOLUTIONS DIVISION

(in millions)


	Six Months Ended June 30, 2018									Quarter Ended June 30, 2018
	Total									Total
	U.S. Individual									U.S. Individual
	Solutions			Individual			Individual			Solutions			Individual			Individual
	Division			Annuities			Life			Division			Annuities			Life
Revenues (1):
Premiums		529			71			458			262			30			232
Policy charges and fee income		2,481			1,448			1,033			1,236			721			515
Net investment income		1,343			343			1,000			686			174			512
Asset management fees, commissions and other income		1,041			656			385			533			341			192

Total revenues		5,394			2,518			2,876			2,717			1,266			1,451


Benefits and Expenses (1):
Insurance and annuity benefits		1,472			157			1,315			737			73			664
Interest credited to policyholders’ account balances		540			166			374			275			88			187
Interest expense		381			34			347			195			16			179
Deferral of acquisition costs		(519	)		(197	)		(322	)		(270	)		(107	)		(163	)
Amortization of acquisition costs		453			257			196			251			146			105
General and administrative expenses		1,962			1,075			887			979			543			436

Total benefits and expenses		4,289			1,492			2,797			2,167			759			1,408

Adjusted operating income before income taxes		1,105			1,026			79			550			507			43


	Six Months Ended June 30, 2017									Quarter Ended June 30, 2017
	Total									Total
	U.S. Individual									U.S. Individual
	Solutions			Individual			Individual			Solutions			Individual			Individual
	Division			Annuities			Life			Division			Annuities			Life
Revenues (1):
Premiums		526			80			446			271			41			230
Policy charges and fee income		1,704			1,371			333			472			712			(240	)
Net investment income		1,339			374			965			667			184			483
Asset management fees, commissions and other income		1,051			696			355			550			369			181

Total revenues		4,620			2,521			2,099			1,960			1,306			654


Benefits and Expenses (1):
Insurance and annuity benefits		1,090			159			931			360			71			289
Interest credited to policyholders’ account balances		518			164			354			255			77			178
Interest expense		349			31			318			179			17			162
Deferral of acquisition costs		(508	)		(159	)		(349	)		(246	)		(80	)		(166	)
Amortization of acquisition costs		559			230			329			360			102			258
General and administrative expenses		1,971			1,016			955			997			507			490

Total benefits and expenses		3,979			1,441			2,538			1,905			694			1,211

Adjusted operating income (loss) before income taxes		641			1,080			(439	)		55			612			(557	)

(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 12

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

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

(in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						SALES AND ACCOUNT VALUES:

						Variable Annuities:
	165,153			153,295		Beginning total account value		156,830			159,202			162,107			165,153			161,171
	2,136			1,470		Sales: Highest Daily Suite - risk retained by Prudential (1)		688			576			817			1,010			1,126
	1			20		Highest Daily Suite - externally reinsured living benefits		6			7			—			1			—
	1,564			1,431		Other variable annuities (2)		799			735			796			683			881

	3,701			2,921		Total sales		1,493			1,318			1,613			1,694			2,007
	(5,796	)		(4,708	)	Surrenders and withdrawals		(2,382	)		(2,288	)		(2,721	)		(2,867	)		(2,929	)

	(2,095	)		(1,787	)	Net redemptions		(889	)		(970	)		(1,108	)		(1,173	)		(922	)
	(922	)		(804	)	Benefit payments		(391	)		(359	)		(395	)		(453	)		(469	)

	(3,017	)		(2,591	)	Net flows		(1,280	)		(1,329	)		(1,503	)		(1,626	)		(1,391	)
	(126	)		10,329		Change in market value, interest credited, and other		4,578			5,170			5,494			(1,418	)		1,292
	(1,867	)		(1,831	)	Policy charges		(926	)		(936	)		(945	)		(938	)		(929	)

	160,143			159,202		Ending total account value		159,202			162,107			165,153			161,171			160,143


						Variable Annuities Account Value by Product:
	117,348			116,905		Highest Daily Suite - risk retained by Prudential (1)		116,905			119,001			121,150			118,249			117,348
	3,146			3,084		Highest Daily Suite - externally reinsured living benefits		3,084			3,153			3,227			3,165			3,146
	39,649			39,213		Other variable annuities (2)		39,213			39,953			40,776			39,757			39,649

	160,143			159,202		Ending total account value		159,202			162,107			165,153			161,171			160,143


						Fixed Annuities and other products:
	3,473			3,488		Beginning total account value		3,489			3,492			3,493			3,473			3,480
	90			26		Sales		14			11			5			30			60
	(56	)		(52	)	Surrenders and withdrawals		(25	)		(21	)		(31	)		(28	)		(28	)

	34			(26	)	Net sales (redemptions)		(11	)		(10	)		(26	)		2			32
	(171	)		(166	)	Benefit payments		(82	)		(72	)		(77	)		(84	)		(87	)

	(137	)		(192	)	Net flows		(93	)		(82	)		(103	)		(82	)		(55	)
	166			196		Interest credited and other		96			84			83			89			77
	—			—		Policy charges		—			(1	)		—			—			—

	3,502			3,492		Ending total account value		3,492			3,493			3,473			3,480			3,502

						SALES BY DISTRIBUTION CHANNEL:

						Variable and Fixed Annuities (3):
	1,144			997		Insurance Agents		490			418			489			525			619
	678			474		Wirehouses		238			202			303			323			355
	1,709			1,204		Independent Financial Planners		631			597			713			758			951
	260			272		Bank Distribution		148			112			113			118			142

	3,791			2,947		Total		1,507			1,329			1,618			1,724			2,067

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

(2)	Includes Prudential Defined Income (PDI), Legacy Protection Plus (LPP) death benefit and products without guaranteed minimum income and withdrawal benefits.

(3)	Amounts represent gross sales.

Page 13

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES ACCOUNT VALUE ACTIVITY

(in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						INDIVIDUAL ANNUITIES:

						Account Values in General Account (1):
	9,892			9,892		Beginning balance		9,810			9,804			9,816			9,892			9,932
	467			353		Premiums and deposits		168			130			167			211			256
	(318	)		(298	)	Surrenders and withdrawals		(145	)		(133	)		(166	)		(163	)		(155	)

	149			55		Net sales (redemptions)		23			(3	)		1			48			101
	(206	)		(201	)	Benefit payments		(101	)		(89	)		(90	)		(100	)		(106	)

	(57	)		(146	)	Net flows		(78	)		(92	)		(89	)		(52	)		(5	)
	130			114		Interest credited and other		56			63			71			61			69
	(33	)		(56	)	Net transfers (to) from separate account		16			42			94			31			(64	)
	—			—		Policy charges		—			(1	)		—			—			—

	9,932			9,804		Ending balance		9,804			9,816			9,892			9,932			9,932


						Account Values in Separate Account (1):
	158,734			146,891		Beginning balance		150,509			152,890			155,784			158,734			154,719
	3,324			2,594		Premiums and deposits		1,339			1,199			1,451			1,513			1,811
	(5,534	)		(4,462	)	Surrenders and withdrawals		(2,262	)		(2,176	)		(2,586	)		(2,732	)		(2,802	)

	(2,210	)		(1,868	)	Net redemptions		(923	)		(977	)		(1,135	)		(1,219	)		(991	)
	(887	)		(769	)	Benefit payments		(372	)		(342	)		(382	)		(437	)		(450	)

	(3,097	)		(2,637	)	Net flows		(1,295	)		(1,319	)		(1,517	)		(1,656	)		(1,441	)
	(90	)		10,411		Change in market value, interest credited and other		4,618			5,191			5,506			(1,390	)		1,300
	33			56		Net transfers (to) from general account		(16	)		(42	)		(94	)		(31	)		64
	(1,867	)		(1,831	)	Policy charges		(926	)		(936	)		(945	)		(938	)		(929	)

	153,713			152,890		Ending balance		152,890			155,784			158,734			154,719			153,713

(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

Second Quarter 2018

U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES LIVING BENEFIT FEATURES

(in millions)


	2017						2018
	2Q		3Q		4Q		1Q		2Q

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

Variable Annuity Account Values with Living Benefit Features
Guaranteed minimum accumulation benefits		3,661		3,530		3,380		3,134		2,950
Guaranteed minimum withdrawal benefits		494		483		477		450		433
Guaranteed minimum income benefits		2,755		2,772		2,791		2,690		2,651
Guaranteed minimum withdrawal & income benefits - risk retained by Prudential		125,869		128,465		131,146		128,176		127,490
Guaranteed minimum withdrawal & income benefits - externally reinsured		3,084		3,153		3,227		3,165		3,146

Total		135,863		138,403		141,021		137,615		136,670


Living Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature - risk retained by Prudential		111,750		113,691		115,690		112,913		112,055
Account Values with Auto-Rebalancing Feature - externally reinsured		3,084		3,153		3,227		3,165		3,146
Account Values without Auto-Rebalancing Feature		21,029		21,559		22,104		21,537		21,469

Total		135,863		138,403		141,021		137,615		136,670


Living Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature - risk retained by Prudential		3,594		3,250		2,928		3,506		3,775
Net Amount at Risk with Auto-Rebalancing Feature - externally reinsured		—		—		—		—		—
Net Amount at Risk without Auto-Rebalancing Feature		846		752		661		742		797

Total		4,440		4,002		3,589		4,248		4,572

(1)	At end of period.

Page 15

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

U.S. INDIVIDUAL SOLUTIONS DIVISION - INDIVIDUAL ANNUITIES DEATH BENEFIT FEATURES

(in millions)


	2017						2018
	2Q		3Q		4Q		1Q		2Q

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		123,591		126,009		128,545		125,515		124,777
Net amount at risk		323		297		285		356		456
Minimum return, anniversary contract value, or maximum contract value:
Account value		31,612		31,952		32,269		31,322		30,925
Net amount at risk		3,012		2,785		2,611		3,078		3,179

Death Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature		114,834		116,844		118,916		116,078		115,201
Account Values without Auto-Rebalancing Feature		40,369		41,117		41,898		40,759		40,501

Total		155,203		157,961		160,814		156,837		155,702


Death Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature		1,168		1,060		1,008		1,403		1,545
Net Amount at Risk without Auto-Rebalancing Feature		2,167		2,022		1,888		2,031		2,090

Total		3,335		3,082		2,896		3,434		3,635

(1)	At end of period.

Page 16

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

U.S. INDIVIDUAL SOLUTIONS DIVISION - SUPPLEMENTARY INFORMATION FOR INDIVIDUAL LIFE

(in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						ANNUALIZED NEW BUSINESS PREMIUMS (1):

	103			103		Term life		54			57			53			49			54
	45			93		Guaranteed Universal life		40			31			32			21			24
	55			54		Other Universal life		33			28			43			26			29
	64			49		Variable life		26			26			55			29			35

	267			299		Total		153			142			183			125			142

						ANNUALIZED NEW BUSINESS PREMIUMS BY DISTRIBUTION CHANNEL (1):

	63			56		Prudential Advisors		29			29			33			30			33
	204			243		Third party distribution		124			113			150			95			109

	267			299		Total		153			142			183			125			142


						ACCOUNT VALUE ACTIVITY:

						*Policyholders’ Account Balances (2):*
	26,861			26,041		Beginning balance		26,358			26,399			26,612			26,861			27,420
	1,472			1,636		Premiums and deposits		832			738			831			734			738
	(542	)		(522	)	Surrenders and withdrawals		(289	)		(228	)		(281	)		(249	)		(293	)

	930			1,114		Net sales		543			510			550			485			445
	(300	)		(305	)	Benefit payments		(123	)		(121	)		(140	)		(145	)		(155	)

	630			809		Net flows		420			389			410			340			290
	1,051			143		Interest credited and other		(85	)		119			131			524			527
	238			212		Net transfers from separate account		106			116			110			119			119
	(838	)		(806	)	Policy charges		(400	)		(411	)		(402	)		(424	)		(414	)
	—			—		Acquisition		—			—			—			—			—

	27,942			26,399		Ending balance		26,399			26,612			26,861			27,420			27,942


						*Separate Account Liabilities:*
	32,085			28,455		Beginning balance		29,669			30,259			31,100			32,085			31,897
	798			785		Premiums and deposits		343			330			491			419			379
	(565	)		(447	)	Surrenders and withdrawals		(227	)		(338	)		(464	)		(253	)		(312	)

	233			338		Net sales (redemptions)		116			(8	)		27			166			67
	(101	)		(90	)	Benefit payments		(44	)		(32	)		(47	)		(55	)		(46	)

	132			248		Net flows		72			(40	)		(20	)		111			21
	912			2,224		Change in market value, interest credited and other		851			1,227			1,347			51			861
	(238	)		(212	)	Net transfers to general account		(106	)		(116	)		(110	)		(119	)		(119	)
	(461	)		(456	)	Policy charges		(227	)		(230	)		(232	)		(231	)		(230	)
	—			—		Acquisition		—			—			—			—			—

	32,430			30,259		Ending balance		30,259			31,100			32,085			31,897			32,430


						FACE AMOUNT IN FORCE (3):

						Term life		736,348			745,849			753,804			761,014			770,208
						Guaranteed Universal life		139,663			141,031			142,546			143,449			144,110
						Other Universal life		46,328			46,888			47,516			47,842			48,598
						Variable life		162,452			162,660			163,174			162,514			162,762

						Total		1,084,791			1,096,429			1,107,040			1,114,820			1,125,678

(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 17

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINED STATEMENTS OF OPERATIONS - U.S. WORKPLACE SOLUTIONS DIVISION

(in millions)


Year-to-date						%				2017									2018
2018			2017			Change				2Q			3Q			4Q			1Q			2Q

									Revenues (1):
	4,527			4,823			-6	%	Premiums		3,259			2,962			4,651			1,838			2,689
	417			425			-2	%	Policy charges and fee income		223			204			199			200			217
	2,509			2,570			-2	%	Net investment income		1,257			1,226			1,323			1,238			1,271
	464			471			-1	%	Asset management fees, commissions and other income		230			230			230			229			235

	7,917			8,289			-4	%	Total revenues		4,969			4,622			6,403			3,505			4,412


									Benefits and Expenses (1):
	5,337			5,583			-4	%	Insurance and annuity benefits		3,601			3,391			5,134			2,212			3,125
	843			907			-7	%	Interest credited to policyholders’ account balances		476			434			440			408			435
	17			15			13	%	Interest expense		8			7			9			8			9
	(17	)		(16	)		-6	%	Deferral of acquisition costs		(9	)		(9	)		(11	)		(5	)		(12	)
	14			11			27	%	Amortization of acquisition costs		6			17			12			5			9
	992			914			9	%	General and administrative expenses		443			473			506			505			487

	7,186			7,414			-3	%	Total benefits and expenses		4,525			4,313			6,090			3,133			4,053


	731			875			-16	%	Adjusted operating income before income taxes		444			309			313			372			359

(1)

Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder 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.

Page 18

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING STATEMENTS OF OPERATIONS - U.S. WORKPLACE SOLUTIONS DIVISION

(in millions)


	Six Months Ended June 30, 2018									Quarter Ended June 30, 2018
	Total									Total
	U.S. Workplace									U.S. Workplace
	Solutions						Group			Solutions						Group
	Division			Retirement			Insurance			Division			Retirement			Insurance
Revenues (1):
Premiums		4,527			2,332			2,195			2,689			1,597			1,092
Policy charges and fee income		417			123			294			217			63			154
Net investment income		2,509			2,195			314			1,271			1,112			159
Asset management fees, commissions and other income		464			427			37			235			216			19

Total revenues		7,917			5,077			2,840			4,412			2,988			1,424


Benefits and Expenses (1):
Insurance and annuity benefits		5,337			3,242			2,095			3,125			2,093			1,032
Interest credited to policyholders’ account balances		843			701			142			435			362			73
Interest expense		17			16			1			9			8			1
Deferral of acquisition costs		(17	)		(16	)		(1	)		(12	)		(11	)		(1	)
Amortization of acquisition costs		14			11			3			9			7			2
General and administrative expenses		992			529			463			487			252			235

Total benefits and expenses		7,186			4,483			2,703			4,053			2,711			1,342


Adjusted operating income before income taxes		731			594			137			359			277			82


	Six Months Ended June 30, 2017									Quarter Ended June 30, 2017
	Total									Total
	U.S. Workplace									U.S. Workplace
	Solutions						Group			Solutions						Group
	Division			Retirement			Insurance			Division			Retirement			Insurance
Revenues (1):
Premiums		4,823			2,745			2,078			3,259			2,233			1,026
Policy charges and fee income		425			117			308			223			59			164
Net investment income		2,570			2,252			318			1,257			1,104			153
Asset management fees, commissions and other income		471			430			41			230			211			19

Total revenues		8,289			5,544			2,745			4,969			3,607			1,362


Benefits and Expenses (1):
Insurance and annuity benefits		5,583			3,566			2,017			3,601			2,649			952
Interest credited to policyholders’ account balances		907			773			134			476			409			67
Interest expense		15			12			3			8			6			2
Deferral of acquisition costs		(16	)		(16	)		—			(9	)		(9	)		—
Amortization of acquisition costs		11			8			3			6			4			2
General and administrative expenses		914			496			418			443			240			203

Total benefits and expenses		7,414			4,839			2,575			4,525			3,299			1,226


Adjusted operating income before income taxes		875			705			170			444			308			136

(1)

Page 19

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

U.S. WORKPLACE SOLUTIONS - RETIREMENT SEGMENT SALES RESULTS AND ACCOUNT VALUES

(in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						RETIREMENT SEGMENT SALES AND ACCOUNT VALUES

						Full Service:
	234,616			202,802		Beginning total account value		210,400			214,731			227,438			234,616			236,120
	17,634			11,507		Deposits and sales		4,771			11,188			6,832			9,922			7,712
	(14,624	)		(12,476	)	Withdrawals and benefits		(5,786	)		(5,132	)		(7,203	)		(8,154)			(6,470	)
	3,296			12,898		Change in market value, interest credited, interest income and other activity		5,346			6,651			7,549			(264	)		3,560

	240,922			214,731		Ending total account value		214,731			227,438			234,616			236,120			240,922


	3,010			(969	)	Net additions (withdrawals)		(1,015	)		6,056			(371	)		1,768			1,242


						Stable value account values included above		48,829			48,834			48,667			48,692			48,882

						Institutional Investment Products:
	194,492			183,376		Beginning total account value		185,115			186,610			188,399			194,492			191,518
	6,149			6,599		Additions		2,557			4,764			10,267			688			5,461
	(8,740	)		(8,412	)	Withdrawals and benefits		(4,171	)		(3,552	)		(5,442	)		(4,889	)		(3,851	)
	984			2,902		Change in market value, interest credited and interest income		1,673			1,341			947			(214	)		1,198
	(1,163	)		2,145		Other (1)		1,436			(764	)		321			1,441			(2,604	)

	191,722			186,610		Ending total account value		186,610			188,399			194,492			191,518			191,722


	(2,591	)		(1,813	)	Net additions (withdrawals)		(1,614	)		1,212			4,825			(4,201	)		1,610


						Amounts included in ending total account value above:
	67,406			69,808		Investment-only stable value wraps		69,808			69,637			69,239			66,518			67,406
	41,325			33,138		Longevity reinsurance (2)		33,138			36,053			40,072			41,173			41,325
	82,991			83,664		Group annuities and other products		83,664			82,709			85,181			83,827			82,991

	191,722			186,610		Ending total account value		186,610			188,399			194,492			191,518			191,722

(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 20

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

U.S. WORKPLACE SOLUTIONS DIVISION - SUPPLEMENTARY INFORMATION FOR GROUP INSURANCE

(dollar amounts in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						GROUP INSURANCE ANNUALIZED NEW BUSINESS PREMIUMS:
	289			242		Group life		56			23			22			243			46
	154			129		Group disability		14			12			12			140			14

	443			371		Total		70			35			34			383			60


						Future Policy Benefits (1)(2):
						Group life		2,139			2,087			2,286			2,216			2,180
						Group disability		20			9			2			26			19

						Total		2,159			2,096			2,288			2,242			2,199


						Policyholders’ Account Balances (1):
						Group life		8,516			8,599			8,737			8,675			8,769
						Group disability		212			231			246			174			181

						Total		8,728			8,830			8,983			8,849			8,950


						Separate Account Liabilities (1):
						Group life		24,073			23,922			23,955			24,353			23,758
						Group disability		—			—			—			—			—

						Total		24,073			23,922			23,955			24,353			23,758


						Group Life Insurance:
	2,121			2,092		Gross premiums, policy charges and fee income (3)		1,054			1,013			1,019			1,046			1,075
	1,996			1,966		Earned premiums, policy charges and fee income		981			965			955			1,000			996

	87.9	%		89.3	%	Benefits ratio (4)		86.3	%		87.0	%		89.3	%		87.2	%		88.6	%
	12.1	%		10.6	%	Administrative operating expense ratio		10.5	%		11.2	%		12.5	%		11.6	%		12.6	%
						Persistency ratio		94.6	%		93.9	%		93.8	%		95.7	%		95.3	%

						Group Disability Insurance:
	512			470		Gross premiums, policy charges and fee income (3)		237			239			244			251			261
	493			420		Earned premiums, policy charges and fee income		209			220			222			243			250

	75.3	%		75.5	%	Benefits ratio (4)		76.7	%		78.7	%		85.6	%		79.0	%		71.6	%
	26.7	%		29.2	%	Administrative operating expense ratio		29.0	%		29.2	%		29.8	%		27.1	%		26.4	%
						Persistency ratio		93.4	%		91.7	%		91.4	%		94.9	%		94.7	%

						Total Group Insurance:
	85.4	%		86.8	%	Benefits ratio (4)		84.5	%		85.5	%		88.6	%		85.6	%		85.3	%
	14.9	%		14.1	%	Administrative operating expense ratio		13.9	%		14.6	%		15.8	%		14.6	%		15.3	%

(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)

Benefit ratios excluding the impact of the annual assumption updates and other refinements in the second quarter. Benefit ratios including these impacts for Group Life, Group Disability, and Total Group Insurance are 86.9%, 47.5%, and 80.0% for the three months ended June 30, 2017, respectively, and 87.5%, 64.0%, and 82.8% for the three months ended June 30, 2018, respectively.

Page 21

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

STATEMENTS OF OPERATIONS - PGIM DIVISION

(in millions)


Year-to-date						%			2017									2018
2018			2017			Change			2Q			3Q			4Q			1Q			2Q

								Revenues (1):
	—			—			—	Premiums		—			—			—			—			—
	—			—			—	Policy charges and fee income		—			—			—			—			—
	48			69			-30%	Net investment income		37			55			46			17			31
	1,594			1,474			8%	Asset management fees, commissions and other income		750			772			939			809			785

	1,642			1,543			6%	Total revenues		787			827			985			826			816


								Benefits and Expenses (1):
	—			—			—	Insurance and annuity benefits		—			—			—			—			—
	—			—			—	Interest credited to policyholders’ account balances		—			—			—			—			—
	20			12			67%	Interest expense		7			7			8			9			11
	(3	)		(3	)		0%	Deferral of acquisition costs		(1	)		(2	)		(1	)		(2	)		(1	)
	4			6			-33%	Amortization of acquisition costs		2			2			3			2			2
	1,135			1,114			2%	General and administrative expenses		561			561			669			585			550

	1,156			1,129			2%	Total benefits and expenses		569			568			679			594			562


	486			414			17%	Adjusted operating income before income taxes		218			259			306			232			254

(1)	Revenues exclude realized investment gains, net of losses. Benefits and expenses include charges for income attributable to noncontrolling interests.

Page 22

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

PGIM DIVISION - SUPPLEMENTARY REVENUE AND ASSETS UNDER MANAGEMENT INFORMATION


							Supplementary Revenue Information (in millions):
Year-to-date				%				2017						2018
2018		2017		Change				2Q		3Q		4Q		1Q		2Q

							Analysis of revenues by type:
	1,262		1,167		8	%	Asset management fees		592		619		631		633		629
	138		127		9	%	Other related revenues (1)		69		83		229		73		65
	242		249		-3	%	Service, distribution and other revenues		126		125		125		120		122

	1,642		1,543		6	%	Total PGIM revenues		787		827		985		826		816


							Analysis of asset management fees by source:
	591		554		7	%	Institutional customers		279		296		297		296		295
	436		379		15	%	Retail customers		194		203		218		217		219
	235		234		0	%	General account		119		120		116		120		115

	1,262		1,167		8	%	Total asset management fees		592		619		631		633		629


Supplementary Assets Under Management Information (in billions):
	June 30, 2018
			Fixed		Real
	Equity		Income		Estate		Total
Institutional customers		62.2		386.1		42.5		490.8
Retail customers		133.4		117.1		1.5		252.0
General account		5.5		405.9		1.9		413.3

Total		201.1		909.1		45.9		1,156.1


	June 30, 2017
			Fixed		Real
	Equity		Income		Estate		Total
Institutional customers		62.1		357.1		42.0		461.2
Retail customers		124.2		105.5		1.5		231.2
General account		6.5		404.0		1.8		412.3

Total		192.8		866.6		45.3		1,104.7

(1)	Other related revenues for 4Q17 include $95 million of revenues associated with noncontrolling interests which are fully offset in general and administrative expenses.

Page 23

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

PGIM DIVISION - SUPPLEMENTARY ASSETS UNDER MANAGEMENT INFORMATION

(in billions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						Institutional Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	437.9			386.4		Beginning assets under management		399.1			414.6			431.0			437.9			438.6
	37.2			33.1		Additions		17.2			15.9			16.2			19.4			17.8
	(31.9)			(26.1	)	Withdrawals		(10.7	)		(11.2	)		(16.3	)		(19.6	)		(12.3	)
	(5.1)			20.4		Change in market value		10.8			9.1			8.5			(0.8	)		(4.3	)
	2.1			0.3		Net money market flows		(1.7	)		2.6			(1.6	)		1.8			0.3
	(0.7)			0.5		Other		(0.1	)		—			0.1			(0.1	)		(0.6	)

	439.5			414.6		Ending assets under management		414.6			431.0			437.9			438.6			439.5
	51.3			46.6		Affiliated institutional assets under management		46.6			47.3			51.6			51.0			51.3

	490.8			461.2		Total assets managed for institutional customers at end of period		461.2			478.3			489.5			489.6			490.8


	5.3			7.0		Net institutional additions (withdrawals), excluding money market activity		6.5			4.7			(0.1	)		(0.2	)		5.5


						Retail Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	164.3			136.6		Beginning assets under management		144.2			150.0			157.5			164.3			166.2
	28.0			23.8		Additions		10.8			11.9			14.0			14.6			13.4
	(25.2	)		(22.5	)	Withdrawals		(9.6	)		(10.6	)		(12.5	)		(13.6	)		(11.6	)
	4.6			12.0		Change in market value		4.6			6.2			5.3			0.9			3.7
	—			—		Net money market flows		—			—			—			—			—
	(0.1	)		0.1		Other		—			—			—			—			(0.1	)

	171.6			150.0		Ending assets under management		150.0			157.5			164.3			166.2			171.6
	80.4			81.2		Affiliated retail assets under management		81.2			82.4			81.3			80.0			80.4

	252.0			231.2		Total assets managed for retail customers at end of period		231.2			239.9			245.6			246.2			252.0


	2.8			1.3		Net retail additions, excluding money market activity		1.2			1.3			1.5			1.0			1.8

Page 24

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

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

(in millions)


Year-to-date							2017									2018
2018			2017				2Q			3Q			4Q			1Q			2Q

						DEFERRED POLICY ACQUISITION COSTS

						INDIVIDUAL ANNUITIES:
	5,130			4,871		Beginning balance		4,865			5,312			5,089			5,130			5,083
	197			159		Capitalization		80			71			84			90			107
	(257	)		(230	)	Amortization - operating results		(102	)		(116	)		(118	)		(111	)		(146	)
	(101	)		555		Amortization - realized investment gains and losses		505			(173	)		82			(62	)		(39	)
	78			(43	)	Impact of unrealized (gains) or losses on AFS securities		(36	)		(5	)		(7	)		36			42
	—			—		Other		—			—			—			—			—

	5,047			5,312		Ending balance		5,312			5,089			5,130			5,083			5,047


						INDIVIDUAL LIFE INSURANCE:
	5,405			5,278		Beginning balance		5,393			5,330			5,355			5,405			5,637
	322			349		Capitalization		166			161			181			159			163
	(196	)		(329	)	Amortization - operating results		(258	)		(71	)		(83	)		(91	)		(105	)
	11			107		Amortization - realized investment gains and losses		105			(2	)		(4	)		9			2
	276			(75	)	Impact of unrealized (gains) or losses on AFS securities		(76	)		(63	)		(44	)		155			121

	5,818			5,330		Ending balance		5,330			5,355			5,405			5,637			5,818


						GROUP INSURANCE:
	162			176		Beginning balance		175			173			163			162			161
	1			—		Capitalization		—			—			—			—			1
	(3	)		(3	)	Amortization - operating results		(2	)		(10	)		(1	)		(1	)		(2	)
	—			—		Amortization - realized investment gains and losses		—			—			—			—			—
	—			—		Impact of unrealized losses on AFS securities		—			—			—			—			—

	160			173		Ending balance		173			163			162			161			160


						DEFERRED SALES INDUCEMENTS
						INDIVIDUAL ANNUITIES:
	1,125			1,082		Beginning balance		1,064			1,211			1,133			1,125			1,083
	1			1		Capitalization		1			1			—			1			—
	(71	)		(71	)	Amortization - operating results		(30	)		(34	)		(36	)		(31	)		(40	)
	(24	)		209		Amortization - realized investment gains and losses		184			(43	)		29			(20	)		(4	)
	20			(10	)	Impact of unrealized (gains) or losses on AFS securities		(8	)		(2	)		(1	)		8			12
	—			—		Other		—			—			—			—			—

	1,051			1,211		Ending balance		1,211			1,133			1,125			1,083			1,051

Page 25

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


Year-to-date						%				2017									2018
2018			2017			Change				2Q			3Q			4Q			1Q			2Q

									Revenues (1):
	8,308			7,994			4	%	Premiums		4,032			3,891			3,822			4,541			3,767
	272			246			11	%	Policy charges and fee income		112			128			129			143			129
	2,621			2,465			6	%	Net investment income		1,260			1,278			1,284			1,301			1,320
	127			187			-32	%	Asset management fees, commissions and other income		79			79			57			55			72

	11,328			10,892			4	%	Total revenues		5,483			5,376			5,292			6,040			5,288

									Benefits and Expenses (1):
	7,215			6,855			5	%	Insurance and annuity benefits		3,422			3,342			3,291			3,915			3,300
	460			448			3	%	Interest credited to policyholders’ account balances		222			230			221			238			222
	9			6			50	%	Interest expense		3			4			3			4			5
	(888	)		(972	)		9	%	Deferral of acquisition costs		(507	)		(417	)		(418	)		(475	)		(413	)
	637			589			8	%	Amortization of acquisition costs		304			275			274			331			306
	2,255			2,344			-4	%	General and administrative expenses		1,216			1,143			1,144			1,171			1,084

	9,688			9,270			5	%	Total benefits and expenses		4,660			4,577			4,515			5,184			4,504


	1,640			1,622			1	%	Adjusted operating income before income taxes		823			799			777			856			784

(1)

Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder 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 noncontrolling interests.

Page 26

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

COMBINING STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


	Six Months Ended June 30, 2018									Quarter Ended June 30, 2018
	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		8,308			4,354			3,954			3,767			1,982			1,785
Policy charges and fee income		272			200			72			129			94			35
Net investment income		2,621			1,124			1,497			1,320			562			758
Asset management fees, commissions and other income		127			87			40			72			49			23

Total revenues		11,328			5,765			5,563			5,288			2,687			2,601


Benefits and Expenses (1):
Insurance and annuity benefits		7,215			3,898			3,317			3,300			1,793			1,507
Interest credited to policyholders’ account balances		460			126			334			222			55			167
Interest expense		9			5			4			5			3			2
Deferral of acquisition costs		(888	)		(457	)		(431	)		(413	)		(206	)		(207	)
Amortization of acquisition costs		637			337			300			306			164			142
General and administrative expenses		2,255			1,064			1,191			1,084			502			582

Total benefits and expenses		9,688			4,973			4,715			4,504			2,311			2,193


Adjusted operating income before income taxes		1,640			792			848			784			376			408


	Six Months Ended June 30, 2017									Quarter Ended June 30, 2017
	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		7,994			4,049			3,945			4,032			1,933			2,099
Policy charges and fee income		246			173			73			112			77			35
Net investment income		2,465			1,025			1,440			1,260			516			744
Asset management fees, commissions and other income		187			108			79			79			51			28

Total revenues		10,892			5,355			5,537			5,483			2,577			2,906


Benefits and Expenses (1):
Insurance and annuity benefits		6,855			3,577			3,278			3,422			1,711			1,711
Interest credited to policyholders’ account balances		448			118			330			222			56			166
Interest expense		6			4			2			3			2			1
Deferral of acquisition costs		(972	)		(528	)		(444	)		(507	)		(263	)		(244	)
Amortization of acquisition costs		589			299			290			304			151			153
General and administrative expenses		2,344			1,148			1,196			1,216			591			625

Total benefits and expenses		9,270			4,618			4,652			4,660			2,248			2,412


Adjusted operating income before income taxes		1,622			737			885			823			329			494

(1)

Revenues exclude realized investment gains, net of losses and related charges and adjustments, investment gains, net of losses, on assets supporting experience-rated contractholder 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 noncontrolling interests.

Page 27

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION

(in millions)


Year-to-date					2017						2018
2018		2017			2Q		3Q		4Q		1Q		2Q

				INTERNATIONAL INSURANCE OPERATING DATA:

				Actual exchange rate basis (1):

				Net premiums, policy charges and fee income:
	3,417		3,158	Japan, excluding Gibraltar Life		1,467		1,459		1,439		1,880		1,537
	4,026		4,018	Gibraltar Life		2,134		1,989		1,893		2,206		1,820
	1,137		1,064	All other countries		543		571		619		598		539

	8,580		8,240	Total		4,144		4,019		3,951		4,684		3,896


				Annualized new business premiums:
	424		587	Japan, excluding Gibraltar Life		251		162		164		234		190
	806		840	Gibraltar Life (2)		413		403		352		407		399
	223		234	All other countries		106		115		129		117		106

	1,453		1,661	Total (2)		770		680		645		758		695


				Annualized new business premiums by distribution channel:
	647		821	Life Planner Operations		357		277		293		351		296
	430		396	Gibraltar Life Consultants (2)		210		178		167		196		234
	262		301	Banks (2)		133		178		136		158		104
	114		143	Independent Agency (2)		70		47		49		53		61

	1,453		1,661	Total (2)		770		680		645		758		695

				Constant exchange rate basis (3):
				Net premiums, policy charges and fee income:
	3,362		3,185	Japan, excluding Gibraltar Life		1,466		1,458		1,456		1,842		1,520
	3,970		4,066	Gibraltar Life		2,144		1,988		1,903		2,168		1,802
	1,094		1,037	All other countries		528		547		594		562		532

	8,426		8,288	Total		4,138		3,993		3,953		4,572		3,854


				Annualized new business premiums:
	420		592	Japan, excluding Gibraltar Life		251		162		165		232		188
	804		843	Gibraltar Life (2)		413		403		353		405		399
	212		225	All other countries		102		108		121		108		104

	1,436		1,660	Total (2)		766		673		639		745		691


				Annualized new business premiums by distribution channel:
	632		817	Life Planner Operations		353		270		286		340		292
	429		398	Gibraltar Life Consultants (2)		210		178		167		195		234
	262		301	Banks (2)		133		178		136		158		104
	113		144	Independent Agency (2)		70		47		50		52		61

	1,436		1,660	Total (2)		766		673		639		745		691

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

(2)	2017 sales amounts have been revised from the elimination of Gibraltar Life’s one-month reporting lag.

(3)	Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 111 per U.S. dollar and Korean won 1,150 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars.

Page 28

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION


	2017									2018
	2Q			3Q			4Q			1Q			2Q

Face amount of individual policies in force at end of period (in billions) (1)(2):
(Constant exchange rate basis)
Japan, excluding Gibraltar Life		334			337			339			343			347
Gibraltar Life		335			338			340			341			342
All other countries		126			127			130			132			125

Total		795			802			809			816			814


Number of individual policies in force at end of period (in thousands) (2):
Japan, excluding Gibraltar Life		3,632			3,674			3,714			3,773			3,814
Gibraltar Life		7,207			7,222			7,220			7,219			7,217
All other countries		2,122			2,146			2,169			2,134			2,096

Total		12,961			13,042			13,103			13,126			13,127


International life insurance policy persistency:

Life Planner Operations:
13 months		93.0	%		92.9	%		92.9	%		92.9	%		93.3	%
25 months		86.5	%		86.1	%		86.2	%		86.6	%		86.9	%

Gibraltar Life (3):
13 months		93.4	%		93.4	%		93.4	%		93.5	%		93.6	%
25 months		86.9	%		87.2	%		87.2	%		87.2	%		87.1	%

Number of Life Planners at end of period:
Japan		3,861			3,951			3,941			4,076			3,964
All other countries		3,874			3,880			3,890			3,695			3,674

Total Life Planners		7,735			7,831			7,831			7,771			7,638


Gibraltar Life Consultants		8,509			8,327			8,326			8,137			7,938

(1)	Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 111 per U.S. dollar and Korean won 1,150 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 29

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INVESTMENT PORTFOLIO COMPOSITION

(in millions)


	June 30, 2018									December 31, 2017
	Total		Closed Block		PFI Excluding Closed Block Division					Total		Closed Block		PFI Excluding Closed Block Division
	Portfolio		Division		Amount		% of Total			Portfolio		Division		Amount		% of Total
Fixed maturities:
Public, available-for-sale, at fair value		283,522		26,291		257,231		64.2	%		287,878		27,448		260,430		64.7	%
Public, held-to-maturity, at amortized cost		1,747		—		1,747		0.4	%		1,747		—		1,747		0.4	%
Private, available-for-sale, at fair value		57,178		13,088		44,090		11.0	%		58,293		13,814		44,479		11.1	%
Private, held-to-maturity, at amortized cost		273		—		273		0.1	%		302		—		302		0.1	%
Fixed maturities, trading, at fair value (1)		1,774		190		1,584		0.4	%		1,789		200		1,589		0.4	%
Assets supporting experience-rated contractholder liabilities, at fair value		21,497		—		21,497		5.4	%		22,097		—		22,097		5.5	%
Equity securities, at fair value (1)		6,577		2,149		4,428		1.1	%		6,755		2,479		4,276		1.1	%
Commercial mortgage and other loans, at book value		58,252		8,898		49,354		12.2	%		55,411		9,017		46,394		11.5	%
Policy loans, at outstanding balance		11,935		4,469		7,466		1.9	%		11,891		4,543		7,348		1.8	%
Other invested assets (1)(2)		11,218		3,335		7,883		2.0	%		10,669		3,159		7,510		1.9	%
Short-term investments		5,701		364		5,337		1.3	%		6,734		631		6,103		1.5	%

Subtotal (3)		459,674		58,784		400,890		100.0	%		463,566		61,291		402,275		100.0	%

Invested assets of other entities and operations (4)		4,845		—		4,845					6,305		—		6,305

Total investments		464,519		58,784		405,735					469,871		61,291		408,580

Fixed Maturities by Credit Quality (3)(5):


	June 30, 2018											December 31, 2017
	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 (6)
1		199,475		23,488		2,406		220,557		85.1	%		195,968		26,830		872		221,926		84.4	%
2		26,870		1,685		752		27,803		10.7	%		26,795		3,040		142		29,693		11.3	%

Subtotal - High or Highest Quality Securities		226,345		25,173		3,158		248,360		95.8	%		222,763		29,870		1,014		251,619		95.7	%

3		5,809		249		164		5,894		2.3	%		5,541		442		44		5,939		2.3	%
4		3,754		351		98		4,007		1.5	%		3,457		467		77		3,847		1.5	%
5		771		128		30		869		0.3	%		781		179		32		928		0.4	%
6		191		8		3		196		0.1	%		196		10		3		203		0.1	%

Subtotal - Other Securities		10,525		736		295		10,966		4.2	%		9,975		1,098		156		10,917		4.3	%

Total		236,870		25,909		3,453		259,326		100.0	%		232,738		30,968		1,170		262,536		100.0	%


Private Fixed Maturities:


NAIC Rating (6)
1		12,039		423		215		12,247		27.6	%		11,823		720		53		12,490		27.9	%
2		25,180		900		627		25,453		57.3	%		23,956		1,520		193		25,283		56.5	%

Subtotal - High or Highest Quality Securities		37,219		1,323		842		37,700		84.9	%		35,779		2,240		246		37,773		84.4	%

3		4,820		110		118		4,812		10.8	%		4,660		228		35		4,853		10.8	%
4		1,152		24		29		1,147		2.6	%		1,224		34		28		1,230		2.7	%
5		686		24		11		699		1.6	%		885		46		25		906		2.0	%
6		24		2		1		25		0.1	%		40		4		3		41		0.1	%

Subtotal - Other Securities		6,682		160		159		6,683		15.1	%		6,809		312		91		7,030		15.6	%

Total		43,901		1,483		1,001		44,383		100.0	%		42,588		2,552		337		44,803		100.0	%

(1)	Prior period amounts have been reclassified to conform to current period presentation.

(2)	Other invested assets consist of investments in limited partnerships and limited liability companies (“LPs/LLCs”), investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.

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

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

(5)	Excludes fixed maturity securities classified as trading.

(6)

Reflects equivalent ratings for investments of the international insurance operations. Includes, as of June 30, 2018 and December 31, 2017, 1,018 securities with amortized cost of $4,209 million (fair value $4,178 million) and 982 securities with amortized cost of $6,022 million (fair value $6,217 million), respectively, that have been categorized based on expected NAIC designations pending receipt of SVO ratings.

Page 30

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INVESTMENT PORTFOLIO COMPOSITION - JAPANESE INSURANCE OPERATIONS AND EXCLUDING JAPANESE INSURANCE OPERATIONS (1)

(in millions)


	June 30, 2018					December 31, 2017
	Amount		% of Total			Amount		% of Total
Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		130,921		75.3	%		128,332		76.0	%
Public, held-to-maturity, at amortized cost		1,747		1.0	%		1,747		1.0	%
Private, available-for-sale, at fair value		15,185		8.7	%		14,538		8.6	%
Private, held-to-maturity, at amortized cost		273		0.2	%		302		0.2	%
Fixed maturities, trading, at fair value (3)		180		0.1	%		257		0.1	%
Assets supporting experience-rated contractholder liabilities, at fair value		2,570		1.5	%		2,586		1.5	%
Equity securities, at fair value (3)		2,191		1.2	%		2,151		1.3	%
Commercial mortgage and other loans, at book value		16,287		9.4	%		14,268		8.5	%
Policy loans, at outstanding balance		2,613		1.5	%		2,545		1.5	%
Other invested assets (3)(4)		1,577		0.9	%		2,021		1.2	%
Short-term investments		416		0.2	%		244		0.1	%

Total		173,960		100.0	%		168,991		100.0	%


	June 30, 2018					December 31, 2017
	Amount		% of Total			Amount		% of Total
Excluding Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		126,310		55.7	%		132,098		56.6	%
Public, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Private, available-for-sale, at fair value		28,905		12.7	%		29,941		12.8	%
Private, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Fixed maturities, trading, at fair value (3)		1,404		0.6	%		1,332		0.6	%
Assets supporting experience-rated contractholder liabilities, at fair value		18,927		8.3	%		19,511		8.3	%
Equity securities, at fair value (3)		2,237		1.0	%		2,125		0.9	%
Commercial mortgage and other loans, at book value		33,067		14.6	%		32,126		13.8	%
Policy loans, at outstanding balance		4,853		2.1	%		4,803		2.1	%
Other invested assets (3)(4)		6,306		2.8	%		5,489		2.4	%
Short-term investments		4,921		2.2	%		5,859		2.5	%

Total		226,930		100.0	%		233,284		100.0	%

(1)	Excludes Closed Block Division.

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

(3)	Prior period amounts have been reclassified to conform to current period presentation.

(4)	Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.

Page 31

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INVESTMENT RESULTS (1)

(in millions)



	Quarter Ended June 30
	2018									2017
	Investment Income						Realized Gains /			Investment Income						Realized Gains /
	Yield (5)			Amount			(Losses)			Yield (5)			Amount			(Losses)
General Account (2)
Fixed maturities (3)		3.84	%		2,669			197			3.85	%		2,511			182
Equity securities		3.50	%		39			—			4.71	%		95			48
Commercial mortgage and other loans		4.00	%		431			(3	)		4.13	%		400			(5	)
Policy loans		4.81	%		90			—			4.87	%		87			—
Short-term investments and cash equivalents		2.01	%		71			3			1.27	%		39			—
Other investments (3)		4.21	%		99			341			6.41	%		133			(1,407	)

Gross investment income before investment expenses		3.83	%		3,399			538			3.93	%		3,265			(1,182	)
Investment expenses		-0.15	%		(159	)		—			-0.14	%		(117	)		—

Subtotal		3.68	%		3,240			538			3.79	%		3,148			(1,182	)

Investment results of other entities and operations (4)					265			37						269			8
Less, investment income related to adjusted operating income reconciling items					(101	)								(82	)

Total					3,404			575						3,335			(1,174	)


	Six Months Ended June 30
	2018									2017
	Investment Income						Realized Gains /			Investment Income						Realized Gains /
	Yield (5)			Amount			(Losses)			Yield (5)			Amount			(Losses)
General Account (2)
Fixed maturities (3)		3.86	%		5,294			247			3.87	%		4,968			315
Equity securities		2.61	%		57			—			4.24	%		167			74
Commercial mortgage and other loans		4.01	%		843			(3	)		4.07	%		775			(5	)
Policy loans		4.82	%		178			—			4.88	%		173			—
Short-term investments and cash equivalents		1.82	%		132			2			1.20	%		74			—
Other investments (3)		3.87	%		180			699			8.85	%		358			(1,402	)

Gross investment income before investment expenses		3.81	%		6,684			945			3.97	%		6,515			(1,018	)
Investment expenses		-0.15	%		(298	)		—			-0.14	%		(230	)		—

Subtotal		3.66	%		6,386			945			3.83	%		6,285			(1,018	)

Investment results of other entities and operations (4)					524			57						548			(2	)
Less, investment income related to adjusted operating income reconciling items					(169	)								(144	)

Total					6,741			1,002						6,689			(1,020	)

(1)	Excludes Closed Block Division.

(2)

Excludes commercial loans and assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders, derivative operations, assets of our investment management operations, including assets that are managed for third parties, and those assets classified as “Separate account assets” on our balance sheet.

(3)

Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in “Other investments.” Realized gains / (losses) for “Other investments” includes changes in fair value of product-related and other derivatives and embedded derivatives.

(4)	Includes invested income of commercial loans, assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and our investment management and derivative operations.

(5)

Yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included 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 and securities lending activity. Yields for fixed maturities are based on quarterly average amortized cost. Yields for fixed maturities, 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 assets supporting experience-rated contractholder liabilities where the investment results generally accrue to contractholders and investment income on assets other than those included in invested assets. Prior period yields have been revised to conform with current period presentation.

Page 32

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INVESTMENT RESULTS - JAPANESE INSURANCE OPERATIONS

(in millions)


	Quarter Ended June 30
	2018									2017
	Investment Income						Realized Gains /			Investment Income						Realized Gains /
	Yield (1)			Amount			(Losses)			Yield (1)			Amount			(Losses)
Japanese Insurance Operations:
Fixed maturities (2)		2.87	%		922			259			3.05	%		910			183
Equity securities		5.48	%		30			—			2.86	%		21			21
Commercial mortgage and other loans		3.93	%		156			(2	)		4.26	%		133			(1	)
Policy loans		3.83	%		25			—			3.95	%		25			—
Short-term investments and cash equivalents		1.92	%		10			—			1.44	%		4			—
Other investments (2)(3)		6.47	%		33			(87	)		8.24	%		39			117

Gross investment income before investment expenses		3.08	%		1,176			170			3.24	%		1,132			320
Investment expenses		-0.13	%		(60	)		—			-0.12	%		(44	)		—

Total		2.95	%		1,116			170			3.12	%		1,088			320


	Six Months Ended June 30
	2018									2017
	Investment Income						Realized Gains /			Investment Income						Realized Gains /
	Yield (1)			Amount			(Losses)			Yield (1)			Amount			(Losses)
Japanese Insurance Operations:
Fixed maturities (2)		2.92	%		1,845			348			3.05	%		1,786			373
Equity securities		3.54	%		38			—			2.45	%		36			34
Commercial mortgage and other loans		3.92	%		299			(2	)		4.11	%		250			—
Policy loans		3.86	%		50			—			3.94	%		48			—
Short-term investments and cash equivalents		1.91	%		17			—			1.34	%		7			—
Other investments (2)(3)		5.62	%		60			6			8.60	%		73			186

Gross investment income before investment expenses		3.08	%		2,309			352			3.21	%		2,200			593
Investment expenses		-0.13	%		(113	)		—			-0.12	%		(87	)		—

Total		2.95	%		2,196			352			3.09	%		2,113			593

(1)

(2)	Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in “Other investments”.

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

Page 33

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

INVESTMENT RESULTS - EXCLUDING JAPANESE INSURANCE OPERATIONS (1)

(in millions)


	Quarter Ended June 30
	2018									2017
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (4)			Amount			Realized Gains / (Losses)			Yield (4)			Amount			Realized Gains / (Losses)
Excluding Japanese Insurance Operations (2):
Fixed maturities (3)		4.68	%		1,747			(62	)		4.53	%		1,601			(1	)
Equity securities		1.56	%		9			—			5.83	%		74			27
Commercial mortgage and other loans		4.04	%		275			(1	)		4.06	%		267			(4	)
Policy loans		5.35	%		65			—			5.35	%		62			—
Short-term investments and cash equivalents		2.02	%		61			3			1.26	%		35			—
Other investments (3)		3.60	%		66			428			5.87	%		94			(1,524	)

Gross investment income before investment expenses		4.40	%		2,223			368			4.43	%		2,133			(1,502	)
Investment expenses		-0.17	%		(99	)		—			-0.15	%		(73	)		—

Total		4.23	%		2,124			368			4.28	%		2,060			(1,502	)


	Six Months Ended June 30
	2018									2017
	Investment Income						Realized Gains / (Losses)			Investment Income						Realized Gains / (Losses)
	Yield (4)			Amount			Realized Gains / (Losses)			Yield (4)			Amount			Realized Gains / (Losses)
Excluding Japanese Insurance Operations (2):
Fixed maturities (3)		4.65	%		3,449			(101	)		4.55	%		3,182			(58	)
Equity securities		1.68	%		19			—			5.34	%		131			40
Commercial mortgage and other loans		4.05	%		544			(1	)		4.05	%		525			(5	)
Policy loans		5.34	%		128			—			5.36	%		125			—
Short-term investments and cash equivalents		1.81	%		115			2			1.19	%		67			—
Other investments (3)		3.36	%		120			693			8.92	%		285			(1,588	)

Gross investment income before investment expenses		4.36	%		4,375			593			4.52	%		4,315			(1,611	)
Investment expenses		-0.16	%		(185	)		—			-0.16	%		(143	)		—

Total		4.20	%		4,190			593			4.36	%		4,172			(1,611	)

(1)	Excludes Closed Block Division.

(2)

(3)

Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading, which are included in “Other investments.” Realized gains / (losses) for “Other investments” includes changes in fair value of product-related and other derivatives and embedded derivatives.

(4)

Page 34

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

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

(in millions)


	Three Months Ended June 30, 2018																							Three Months Ended June 30, 2017
				Reconciling Items																							Reconciling Items
	Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net			Change in experience-rated contractholder liabilities due to asset value changes			Closed Block Division		Other divested businesses			Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)			Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		Change in experience- rated contractholder liabilities due to asset value changes		Closed Block Division		Other divested businesses		Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)

Revenues:

Premiums		6,710			—			—			—			600		128			—			7,438			7,557			—			—		—		670		99		—			8,326
Policy charges and fee income		1,570			(92	)		—			—			—		2			—			1,480			794			(69	)		—		—		—		—		—			725
Net investment income		3,404			(10	)		—			—			591		111			—			4,096			3,335			(9	)		—		—		672		91		—			4,089
Realized investment gains (losses), net		151			434			—			—			110		(10	)		—			685			161			(1,372	)		—		—		82		37		—			(1,092	)
Asset management fees, commissions and other income		1,208			(31	)		(193	)		—			87		(88	)		(27	)		956			1,181			4			201		—		25		1		(19	)		1,393

Total revenues		13,043			301			(193	)		—			1,388		143			(27	)		14,655			13,028			(1,446	)		201		—		1,449		228		(19	)		13,441


Benefits and Expenses:

Insurance and annuity benefits		7,160			(24	)		—			—			1,288		1,628			—			10,052			7,386			(69	)		—		—		1,328		174		—			8,819
Interest credited to policyholders’ account balances		932			9			—			(85	)		33		5			—			894			953			(184	)		—		145		33		—		—			947
Interest expense		347			—			—			—			—		1			—			348			326			—			—		—		—		1		—			327
Deferral of acquisition costs		(684	)		—			—			—			—		(2	)		—			(686	)		(755	)		—			—		—		—		—		—			(755	)
Amortization of acquisition costs		555			48			—			—			8		2			—			613			662			(586	)		—		—		8		—		—			84
General and administrative expenses		3,072			(9	)		—			—			90		35			(4	)		3,184			3,228			72			—		—		98		18		(5	)		3,411

Total benefits and expenses		11,382			24			—			(85	)		1,419		1,669			(4	)		14,405			11,800			(767	)		—		145		1,467		193		(5	)		12,833



	Six Months Ended June 30, 2018																							Six Months Ended June 30, 2017
				Reconciling Items																							Reconciling Items
	Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net			Change in experience-rated contractholder liabilities due to asset value changes			Closed Block Division		Other divested businesses			Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)			Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		Change in experience- rated contractholder liabilities due to asset value changes		Closed Block Division		Other divested businesses		Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)

Revenues:

Premiums		13,348			—			—			—			1,151		250			—			14,749			13,331			—			—		—		1,274		202		—			14,807
Policy charges and fee income		3,145			(163	)		—			—			—		2			—			2,984			2,349			(91	)		—		—		—		—		—			2,258
Net investment income		6,741			(20	)		—			—			1,184		189			—			8,094			6,689			(17	)		—		—		1,317		161		—			8,150
Realized investment gains (losses), net		214			867			—			—			108		(79	)		—			1,110			283			(1,345	)		—		—		355		42		—			(665	)
Asset management fees, commissions and other income		2,470			(367	)		(596	)		—			108		(87	)		(53	)		1,475			2,383			(81	)		245		—		60		4		(50	)		2,561

Total revenues		25,918			317			(596	)		—			2,551		275			(53	)		28,412			25,035			(1,534	)		245		—		3,006		409		(50	)		27,111


Benefits and Expenses:

Insurance and annuity benefits		14,013			(86	)		—			—			2,323		1,805			—			18,055			13,532			(108	)		—		—		2,708		327		—			16,459
Interest credited to policyholders’ account balances		1,843			34			—			(503	)		66		4			—			1,444			1,873			(209	)		—		157		66		—		—			1,887
Interest expense		687			—			—			—			—		2			—			689			648			—			—		—		1		2		—			651
Deferral of acquisition costs		(1,402	)		—			—			—			—		(3	)		—			(1,405	)		(1,479	)		—			—		—		—		—		—			(1,479	)
Amortization of acquisition costs		1,085			95			—			—			18		3			—			1,201			1,143			(639	)		—		—		19		—		—			523
General and administrative expenses		6,310			(67	)		—			—			184		62			(4	)		6,485			6,430			63			—		—		196		39		(8	)		6,720

Total benefits and expenses		22,536			(24	)		—			(503	)		2,591		1,873			(4	)		26,469			22,147			(893	)		—		157		2,990		368		(8	)		24,761

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

(2)	U.S. generally accepted accounting principles

Page 35

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

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

(in millions)


	Three Months Ended September 30, 2017																				Three Months Ended December 31, 2017
				Reconciling Items																				Reconciling Items
	Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		Change in experience-rated contractholder liabilities due to asset value changes		Closed Block Division		Other divested businesses		Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)			Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		Change in experience- rated contractholder liabilities due to asset value changes			Closed Block Division		Other divested businesses			Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)

Revenues:

Premiums		7,111			—			—		—		578		106		—			7,795			8,720			—			—		—			674		95			—			9,489
Policy charges and fee income		1,565			(63	)		—		—		—		—		—			1,502			1,604			(61	)		—		—			—		—			—			1,543
Net investment income		3,345			(9	)		—		—		666		74		—			4,076			3,465			(12	)		—		—			670		86			—			4,209
Realized investment gains (losses), net		121			1,377			—		—		107		3		—			1,608			82			(663	)		—		—			72		(2	)		—			(511	)
Asset management fees, commissions and other income		1,219			27			85		—		25		2		(26	)		1,332			1,379			121			6		—			28		2			(1	)		1,535

Total revenues		13,361			1,332			85		—		1,376		185		(26	)		16,313			15,250			(615	)		6		—			1,444		181			(1	)		16,265


Benefits and Expenses:

Insurance and annuity benefits		7,376			(46	)		—		—		1,207		156		—			8,693			9,163			85			—		—			1,311		174			—			10,733
Interest credited to policyholders’ account balances		927			43			—		31		34		—		—			1,035			929			(25	)		—		(37	)		33		—			—			900
Interest expense		330			—			—		—		—		—		—			330			344			—			—		—			—		2			—			346
Deferral of acquisition costs		(653	)		—			—		—		—		—		—			(653	)		(686	)		—			—		—			—		—			—			(686	)
Amortization of acquisition costs		470			165			—		—		8		—		—			643			480			(76	)		—		—			10		—			—			414
General and administrative expenses		3,127			6			—		—		94		19		(2	)		3,244			3,448			(18	)		—		—			94		18			(100	)		3,442

Total benefits and expenses		11,577			168			—		31		1,343		175		(2	)		13,292			13,678			(34	)		—		(37	)		1,448		194			(100	)		15,149



	Three Months Ended March 31, 2018
				Reconciling Items
	Adjusted Operating Income basis (1)			Total realized investment gains (losses), net, and related charges and adjustments			Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net			Change in experience-rated contractholder liabilities due to asset value changes			Closed Block Division			Other divested businesses			Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests			U.S. GAAP (2)

Revenues:

Premiums		6,638			—			—			—			551			122			—			7,311
Policy charges and fee income		1,575			(71	)		—			—			—			—			—			1,504
Net investment income		3,337			(10	)		—			—			593			78			—			3,998
Realized investment gains (losses), net		63			433			—			—			(2	)		(69	)		—			425
Asset management fees, commissions and other income		1,262			(336	)		(403	)		—			21			1			(26	)		519

Total revenues		12,875			16			(403	)		—			1,163			132			(26	)		13,757


Benefits and Expenses:

Insurance and annuity benefits		6,853			(62	)		—			—			1,035			177			—			8,003
Interest credited to policyholders’ account balances		911			25			—			(418	)		33			(1	)		—			550
Interest expense		340			—			—			—			—			1			—			341
Deferral of acquisition costs		(718	)		—			—			—			—			(1	)		—			(719	)
Amortization of acquisition costs		530			47			—			—			10			1			—			588
General and administrative expenses		3,238			(58	)		—			—			94			27			—			3,301

Total benefits and expenses		11,154			(48	)		—			(418	)		1,172			204			—			12,064

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

(2)	U.S. generally accepted accounting principles

Page 36

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

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 assets supporting experience-rated contractholder 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. Earnings attributable to noncontrolling interests is presented as a separate component of net income under GAAP and excluded from adjusted operating income.

Adjusted operating income does not equate to “Net income” 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 accumulated other comprehensive income (loss) (“AOCI”) and adjusted to remove amount included for remeasurement of foreign currency exchange rate and certain deferred taxes is a non-GAAP measure. These items are excluded in order to highlight the book value attributable to our core business operations. 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 AOCI under GAAP as well as remeasurement of deferred tax assets and liabilities, for the fourth quarter of 2017 only, originally established through AOCI, related to enactment of the Tax Cuts and Jobs Act on December 22, 2017. However, book value per share excluding both AOCI and adjusted to remove amount included for foreign currency exchange rate remeasurement and certain deferred taxes is not a substitute for book value per share including AOCI determined in accordance with GAAP, and the adjustments made to derive the measure are important to an understanding of our overall financial position.

Book value per share of Common Stock - including AOCI: As of the second and third quarters of 2017, book value including AOCI per share of common stock includes a $500 million increase in equity and a 5.75 million increase in diluted shares, reflecting the dilutive impact of exchangeable surplus notes (“ESNs”) when book value per share of common stock is greater than $86.92. Reflecting the dilutive impact of ESNs when book value per share is greater than $85.00, to calculate book value including AOCI per share of common stock as of December 31, 2017, March 31, 2018 and June 30, 2018, equity is increased by $500 million and diluted shares include 5.88 million shares.

Book value per share of Common Stock - excluding AOCI, and excluding AOCI and remeasurement of foreign currency and certain deferred taxes: The ESNs are subject to customary antidilution adjustments and the exchange rate is accordingly revalued in the fourth quarter of each year. As of second and third quarters of 2017, the conversion of ESNs is antidilutive as book value excluding AOCI per share of common stock and book value excluding AOCI and remeasurement of foreign currency and certain deferred taxes per share of common stock is less than $86.92. Reflecting the dilutive impact of ESNs when book value per share is greater than $85.00, for the fourth quarter of 2017 and the first and second quarters of 2018, to calculate book value excluding AOCI per share of common stock and book value excluding AOCI and remeasurement of foreign currency and certain deferred taxes per share of common stock equity is increased by $500 million and diluted shares include 5.88 million shares.

Diluted shares as of the second and third quarters of 2017 do not include shares related to ESNs due to the antidilutive impact of conversion of ESNs when book value per share of common stock (i.e., book value excluding AOCI per share of common stock and book value excluding AOCI and remeasurement of foreign currency and certain deferred taxes per share of common stock) is less than $86.92. Diluted shares as of December 31, 2017, March 31, 2018 and June 30, 2018 include 5.88 million shares due to the dilutive impact of conversion of ESNs when book value per share of common stock (i.e., book value excluding AOCI per share of common stock and book value excluding AOCI and remeasurement of foreign currency and certain deferred taxes per share of common stock) is greater than $85.00.

Page 37

Prudential Financial, Inc.

Quarterly Financial Supplement

Second Quarter 2018

KEY DEFINITIONS AND FORMULAS

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 investment management business.

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

Second Quarter 2018

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 Advisors 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 Advisors:

Captive financial professionals and field managers in our insurance operations in the United States.

28. Prudential Advisor productivity:

Commissions on new sales of all products by Prudential Advisors under contract for the entire period, divided by the number of those Prudential Advisors. Excludes commissions on new sales by Prudential Advisors 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

Second Quarter 2018

RATINGS AND INVESTOR INFORMATION

FINANCIAL STRENGTH RATINGS

as of August 1, 2018


	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 August 1, 2018

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 - August 1, 2018

Attached files