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

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EX-99.1 - EX-99.1 - PRUDENTIAL FINANCIAL INC	d578386dex991.htm
8-K - FORM 8-K - PRUDENTIAL FINANCIAL INC	d578386d8k.htm

Exhibit 99.2

Prudential Financial, Inc. (PRU)

LOGO

Quarterly Financial Supplement

First 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.

May 2, 2018

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

CONTENTS


	Page
HIGHLIGHTS
Financial Highlights		1-3
Operations Highlights		4

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

U.S. INDIVIDUAL SOLUTIONS DIVISION
Combined Statements of Operations		10
Combining Statements of Operations		11
Individual Annuities Sales Results and Account Values		12
Individual Annuities Account Value Activity		13
Individual Annuities Living Benefit Features		14
Individual Annuities Death Benefit Features		15
Supplementary Information for Individual Life		16

U.S. WORKPLACE SOLUTIONS DIVISION
Combined Statements of Operations		17
Combining Statements of Operations		18
Retirement Segment Sales Results and Account Values		19
Supplementary Information for Group Insurance		20

INVESTMENT MANAGEMENT DIVISION
Statements of Operations		21
Supplementary Revenue and Assets Under Management Information		22
Supplementary Assets Under Management Information		23

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

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

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

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

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

KEY DEFINITIONS AND FORMULAS		37-39

RATINGS AND INVESTOR INFORMATION		40

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

This quarterly financial supplement reflects, for all periods presented, a modified retrospective adoption of ASU 2016-01 (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities. This ASU revises an entity’s accounting related to the recognition and measurement of certain equity investments. The ASU requires equity investments, except for those accounted for using the equity method, to be measured at fair value with changes in fair value recognized in net income.

In the first quarter of 2018, the Company eliminated the one-month reporting lag for balance sheet and results of operations of Gibraltar Life Insurance Company, Ltd. (“Gibraltar Life”) consolidated operations. This elimination resulted in an increase in “Other equity” of approximately $167 million for all periods presented. The elimination did not have a material impact on the Company’s results of operations for any period presented. In addition, 2017 sales results now reflect January 1, 2017 through December 31, 2017 activity for comparability to 2018.

iii

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


Year-to-date						%			2017												2018
2018			2017			Change			1Q			2Q			3Q			4Q			1Q
								Pre-tax adjusted operating income (loss) by division:
	555			586			-5%	U.S. Individual Solutions Division		586			55			727			639			555
	372			431			-14%	U.S. Workplace Solutions Division		431			444			309			313			372
	232			196			18%	Investment Management Division		196			218			259			306			232
	856			799			7%	International Insurance Division		799			823			799			777			856
	(294	)		(352	)		16%	Corporate and other operations		(352	)		(312	)		(310	)		(463	)		(294	)

	1,721			1,660			4%	Total pre-tax adjusted operating income		1,660			1,228			1,784			1,572			1,721
	381			423			-10%	Income taxes, applicable to adjusted operating income		423			309			461			399			381

	1,340			1,237			8%	After-tax adjusted operating income		1,237			919			1,323			1,173			1,340


								Reconciling items:
	64			38			68%	Realized investment gains (losses), net, and related charges and adjustments		38			(679	)		1,164			(581	)		64
	(403	)		44			-1016%	Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		44			201			85			6			(403	)
	418			(12	)		3583%	Change in experience-rated contractholder liabilities due to asset value changes		(12	)		(145	)		(31	)		37			418
								Divested businesses:
	(9	)		34			-126%	Closed Block Division		34			(18	)		33			(4	)		(9	)
	(72	)		6			-1300%	Other divested businesses		6			35			10			(13	)		(72	)
	(26	)		(28	)		7%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(28	)		(14	)		(24	)		99			(26	)

	(28	)		82			-134%	Total reconciling items, before income taxes		82			(620	)		1,237			(456	)		(28	)
	(29	)		(28	)		-4%	Income taxes, not applicable to adjusted operating income		(28	)		(184	)		339			(3,157	)		(29	)

	1			110			-99%	Total reconciling items, after income taxes		110			(436	)		898			2,701			1

	1,341			1,347			0%	Income (after-tax) before equity in earnings of operating joint ventures		1,347			483			2,221			3,874			1,341
	22			22			0%	Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests		22			8			17			(109	)		22

	1,363			1,369			0%	Income attributable to Prudential Financial, Inc.		1,369			491			2,238			3,765			1,363
	1			3			-67%	Earnings attributable to noncontrolling interests		3			5			3			100			1

	1,364			1,372			-1%	Net income		1,372			496			2,241			3,865			1,364
	1			3			-67%	Less: Income attributable to noncontrolling interests		3			5			3			100			1

	1,363			1,369			0%	Net income attributable to Prudential Financial, Inc.		1,369			491			2,238			3,765			1,363

	13.7%			14.1%				Operating Return on Average Equity (based on adjusted operating income) (1)(2)		14.1%			10.4%			14.7%			12.5%			13.7%

(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 10.3%, 28.7%, 18.1%, 4.1%, and 11.8% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, and March 31, 2017, respectively.

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

Page 1

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


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

						Earnings per share of Common Stock (diluted):
	3.08			2.79		After-tax adjusted operating income		2.79			2.09			3.01			2.69			3.08
						Reconciling items:
	0.15			0.09		Realized investment gains (losses), net, and related charges and adjustments		0.09			(1.55	)		2.68			(1.34	)		0.15
	(0.94	)		0.10		Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		0.10			0.46			0.20			0.01			(0.94	)
	0.97			(0.03	)	Change in experience-rated contractholder liabilities due to asset value changes		(0.03	)		(0.33	)		(0.07	)		0.09			0.97
						Divested businesses:
	(0.02	)		0.08		Closed Block Division		0.08			(0.04	)		0.08			(0.01	)		(0.02	)
	(0.17	)		0.01		Other divested businesses		0.01			0.08			0.02			(0.03	)		(0.17	)
	—			—		Difference in earnings allocated to participating unvested share-based payment awards		—			0.01			(0.03	)		(0.07	)		—

	(0.01	)		0.25		Total reconciling items, before income taxes		0.25			(1.37	)		2.88			(1.35	)		(0.01	)
	(0.07	)		(0.05	)	Income taxes, not applicable to adjusted operating income		(0.05	)		(0.40	)		0.80			(7.27	)		(0.07	)

	0.06			0.30		Total reconciling items, after income taxes		0.30			(0.97	)		2.08			5.92			0.06

	3.14			3.09		Net income attributable to Prudential Financial, Inc.		3.09			1.12			5.09			8.61			3.14


	422.0			429.9		Weighted average number of outstanding Common shares (basic)		429.9			428.3			426.2			423.7			422.0
	430.9			439.1		Weighted average number of outstanding Common shares (diluted)		439.1			437.2			435.0			432.7			430.9

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

						*Earnings allocated to participating unvested share-based payment awards for earnings per share calculation*

	16			15		After-tax adjusted operating income		15			11			16			14			16
	16			16		Net income		16			7			27			44			16

Page 2

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

FINANCIAL HIGHLIGHTS

(in millions, except per share data)


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

				*Capitalization Data (1):*
				Senior Debt:
				Short-term debt		1,415			1,779			2,358			1,380			1,383
				Long-term debt		12,074			11,806			10,532			10,550			11,516
				Junior Subordinated Long-Term Debt		5,819			5,820			6,621			6,622			6,627

				Prudential Financial Inc. Equity:
				Including accumulated other comprehensive income (2)		46,951			48,611			50,540			54,236			51,830
				Excluding accumulated other comprehensive income (2)(3)		32,308			32,249			33,942			37,162			37,069
				Amount included above for remeasurement of foreign currency and certain deferred taxes (4)(5)		(3,060	)		(2,889	)		(2,758	)		(969	)		(2,892	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for remeasurement of foreign currency and certain deferred taxes (2)(4)(5)		35,368			35,138			36,700			38,131			39,961


				Book value per share of Common Stock:
				Including accumulated other comprehensive income (2)(6)		107.46			111.73			116.70			125.63			120.99
				Excluding accumulated other comprehensive income (2)(3)(6)		74.13			74.34			78.64			86.44			86.86
				Amount included above for remeasurement of foreign currency and certain deferred taxes (4)(5)		(7.02	)		(6.66	)		(6.39	)		(2.23	)		(6.69	)

				Excluding accumulated other comprehensive income and adjusted to remove amount included for remeasurement of foreign currency and certain deferred taxes (2)(4)(5)(6)		81.15			81.00			85.03			88.67			93.55


				Number of diluted shares at end of period (6)		435.8			433.8			431.6			435.7			432.5

				*Common Stock Price Range (based on closing price):*
	126.02		113.82	High		113.82			109.13			115.23			117.15			126.02
	100.64		103.92	Low		103.92			102.92			98.65			107.28			100.64
	103.55		106.68	Close		106.68			108.14			106.32			114.98			103.55

				*Common Stock market capitalization (1)*		45,798			46,176			45,154			48,591			43,595

(1)	As of end of period.

(2)	Prior period 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 quarter 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 first, 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

First Quarter 2018

OPERATIONS HIGHLIGHTS


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

				*Assets Under Management and Administration ($ billions) (1)(2):*
				Assets Under Management:
				Investment Management Division:
				Institutional customers		445.2		461.2		478.3		489.5		489.6
				Retail customers		217.6		231.2		239.9		245.6		246.2
				General account		406.1		412.3		415.7		420.2		420.0

				Total Investment Management Division		1,068.9		1,104.7		1,133.9		1,155.3		1,155.8
				U.S. Individual Solutions Division		119.1		114.4		116.7		119.8		115.7
				U.S. Workplace Solutions Division		84.3		85.8		86.9		88.5		86.2
				International Insurance Division		26.5		28.7		28.7		30.0		30.8

				Total assets under management		1,298.8		1,333.6		1,366.2		1,393.6		1,388.5
				Client assets under administration		185.2		188.3		202.4		213.6		218.4

				Total assets under management and administration		1,484.0		1,521.9		1,568.6		1,607.2		1,606.9


				Assets managed or administered for customers outside of the United States at end of period		326.6		341.1		350.5		358.0		373.3

				*Distribution Representatives (1):*
				Prudential Advisors		2,922		2,921		2,937		2,882		2,958
				International Life Planners		7,819		7,735		7,831		7,831		7,771
				Gibraltar Life Consultants		8,752		8,509		8,327		8,326		8,137

	52		47	*Prudential Advisor productivity ($ thousands)*		47		51		53		72		52

(1)	As of end of period.

(2)	At fair market value.

Page 4

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

COMBINED STATEMENTS OF OPERATIONS

(in millions)


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


							Revenues (1):
	6,638		5,774			15%	Premiums		5,774			7,557			7,111			8,720			6,638
	1,575		1,555			1%	Policy charges and fee income		1,555			794			1,565			1,604			1,575
	3,337		3,354			-1%	Net investment income		3,354			3,335			3,345			3,465			3,337
	1,325		1,324			0%	Asset management fees, commissions and other income		1,324			1,342			1,340			1,461			1,325

	12,875		12,007			7%	Total revenues		12,007			13,028			13,361			15,250			12,875


							Benefits and Expenses (1):
	6,853		6,146			12%	Insurance and annuity benefits		6,146			7,386			7,376			9,163			6,853
	911		920			-1%	Interest credited to policyholders’ account balances		920			953			927			929			911
	340		322			6%	Interest expense		322			326			330			344			340
	(718)		(724	)		1%	Deferral of acquisition costs		(724	)		(755	)		(653	)		(686	)		(718	)
	530		481			10%	Amortization of acquisition costs		481			662			470			480			530
	3,238		3,202			1%	General and administrative expenses		3,202			3,228			3,127			3,448			3,238

	11,154		10,347			8%	Total benefits and expenses		10,347			11,800			11,577			13,678			11,154

	1,721		1,660			4%	Adjusted operating income before income taxes		1,660			1,228			1,784			1,572			1,721

							Reconciling items:
	87		(66	)		232%	Realized investment gains (losses), net, and related adjustments		(66	)		(1,377	)		1,395			(554	)		87
	(23)		104			-122%	Related charges		104			698			(231	)		(27	)		(23	)

	64		38			68%	Total realized investment gains (losses), net, and related charges and adjustments		38			(679	)		1,164			(581	)		64

	(403)		44			-1016%	Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net		44			201			85			6			(403	)
	418		(12	)		3583%	Change in experience-rated contractholder liabilities due to asset value changes		(12	)		(145	)		(31	)		37			418
							Divested businesses:
	(9)		34			-126%	Closed Block Division		34			(18	)		33			(4	)		(9	)
	(72)		6			-1300%	Other divested businesses		6			35			10			(13	)		(72	)
	(26)		(28	)		7%	Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests		(28	)		(14	)		(24	)		99			(26	)

	(28)		82			-134%	Total reconciling items, before income taxes		82			(620	)		1,237			(456	)		(28	)


	1,693		1,742			-3%	Income before income taxes and equity in earnings of operating joint ventures		1,742			608			3,021			1,116			1,693
	352		395			-11%	Income tax expense (benefit)		395			125			800			(2,758	)		352

	1,341		1,347			0%	Income before equity in earnings of operating joint ventures		1,347			483			2,221			3,874			1,341

(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

First Quarter 2018

COMBINING STATEMENTS OF OPERATIONS

(in millions)


	Three Months Ended March 31, 2018
	Total			U.S. Individual Solutions Division			U.S. Workplace Solutions Division			Investment Management Division			International Insurance Division			Corporate and Other Operations

Revenues (1):
Premiums		6,638			267			1,838			—			4,541			(8	)
Policy charges and fee income		1,575			1,245			200			—			143			(13	)
Net investment income		3,337			657			1,238			17			1,301			124
Asset management fees, commissions and other income		1,325			508			229			809			55			(276	)

Total revenues		12,875			2,677			3,505			826			6,040			(173	)


Benefits and Expenses (1):
Insurance and annuity benefits		6,853			735			2,212			—			3,915			(9	)
Interest credited to policyholders’ account balances		911			265			408			—			238			—
Interest expense		340			186			8			9			4			133
Deferral of acquisition costs		(718	)		(249	)		(5	)		(2	)		(475	)		13
Amortization of acquisition costs		530			202			5			2			331			(10	)
General and administrative expenses		3,238			983			505			585			1,171			(6	)

Total benefits and expenses		11,154			2,122			3,133			594			5,184			121

Adjusted operating income (loss) before income taxes		1,721			555			372			232			856			(294	)


	Three Months Ended March 31, 2017
	Total			U.S. Individual Solutions Division			U.S. Workplace Solutions Division			Investment Management Division			International Insurance Division			Corporate and Other Operations
Revenues (1):
Premiums		5,774			255			1,564			—			3,962			(7	)
Policy charges and fee income		1,555			1,232			202			—			134			(13	)
Net investment income		3,354			672			1,313			32			1,205			132
Asset management fees, commissions and other income		1,324			501			241			724			108			(250	)

Total revenues		12,007			2,660			3,320			756			5,409			(138	)


Benefits and Expenses (1):
Insurance and annuity benefits		6,146			730			1,982			—			3,433			1
Interest credited to policyholders’ account balances		920			263			431			—			226			—
Interest expense		322			170			7			5			3			137
Deferral of acquisition costs		(724	)		(262	)		(7	)		(2	)		(465	)		12
Amortization of acquisition costs		481			199			5			4			285			(12	)
General and administrative expenses		3,202			974			471			553			1,128			76

Total benefits and expenses		10,347			2,074			2,889			560			4,610			214

Adjusted operating income (loss) before income taxes		1,660			586			431			196			799			(352	)

(1)

Page 6

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

CONSOLIDATED BALANCE SHEETS

(in millions)


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

Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost $300,437; $303,287; $307,527; $312,385; $319,180)		328,717		335,254		340,100		346,780		347,630
Fixed maturities, held-to-maturity, at amortized cost (fair value $2,552; $2,516; $2,475; $2,430; $2,511)		2,166		2,123		2,084		2,049		2,120
Fixed maturities, trading, at fair value (amortized cost $3,882; $3,893; $3,379; $3,509; $2,852) (1)		3,731		3,814		3,340		3,507		2,885
Assets supporting experience-rated contractholder liabilities, at fair value		21,820		22,073		22,126		22,097		21,637
Equity securities, at fair value (cost $8,412; $8,413; $8,116; $5,154; $5,382) (1)		11,212		11,235		10,854		7,329		7,289
Commercial mortgage and other loans		53,660		54,915		55,373		56,045		58,098
Policy loans		11,893		11,719		11,765		11,891		12,036
Other invested assets (1)		12,487		13,626		13,714		13,373		14,044
Short-term investments (1)		5,201		3,642		5,535		6,800		5,752

Total investments		450,887		458,401		464,891		469,871		471,491
Cash and cash equivalents		13,308		16,605		14,541		14,490		15,676
Accrued investment income		3,231		3,228		3,278		3,325		3,169
Deferred policy acquisition costs		18,197		18,715		18,724		18,992		19,649
Value of business acquired		2,266		1,897		1,817		1,591		1,995
Other assets (3)		15,886		16,526		16,985		17,250		17,112
Separate account assets		293,805		297,433		301,110		306,617		300,585

Total assets		797,580		812,805		821,346		832,136		829,677


Liabilities:
Future policy benefits		244,705		250,706		252,339		257,317		261,144
Policyholders’ account balances		147,026		147,554		148,342		148,189		149,917
Securities sold under agreements to repurchase		8,535		8,817		8,145		8,400		8,633
Cash collateral for loaned securities		4,175		4,036		4,697		4,354		4,312
Income taxes (3)		10,646		11,679		12,557		9,648		9,296
Senior short-term debt		1,415		1,779		2,358		1,380		1,383
Senior long-term debt		12,074		11,806		10,532		10,550		11,516
Junior subordinated long-term debt		5,819		5,820		6,621		6,622		6,627
Notes issued by consolidated variable interest entities		2,179		2,176		1,517		1,518		954
Other liabilities		20,060		22,192		22,396		23,030		23,135
Separate account liabilities		293,805		297,433		301,110		306,617		300,585

Total liabilities		750,439		763,998		770,614		777,625		777,502


Equity:
Accumulated other comprehensive income (2)		14,643		16,362		16,598		17,074		14,761
Other equity (2)(3)		32,308		32,249		33,942		37,162		37,069

Total Prudential Financial, Inc. equity		46,951		48,611		50,540		54,236		51,830

Noncontrolling Interest		190		196		192		275		345

Total Equity		47,141		48,807		50,732		54,511		52,175

Total liabilities and equity		797,580		812,805		821,346		832,136		829,677

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

Page 7

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

COMBINING BALANCE SHEETS BY DIVISION

(in millions)


	As of March 31, 2018

	Consolidated PFI		Closed Block Division			PFI Excluding Closed Block Division		U.S. Individual Solutions Division		U.S. Workplace Solutions Division		Investment Management Division			International Insurance Division		Corporate and Other Operations
Assets:
Total investments		471,491		59,923			411,568		60,963		129,632		4,325			197,869		18,779
Deferred policy acquisition costs		19,649		289			19,360		10,720		309		—			8,654		(323	)
Other assets		37,952		1,759			36,193		14,803		7,425		2,598			12,407		(1,040	)
Separate account assets		300,585		—			300,585		176,365		84,181		40,888			3,838		(4,687	)

Total assets		829,677		61,971			767,706		262,851		221,547		47,811			222,768		12,729


Liabilities:
Future policy benefits		261,144		48,631			212,513		22,725		63,256		—			121,028		5,504
Policyholders’ account balances		149,917		5,120			144,797		35,019		57,564		—			52,194		20
Debt		19,526		—			19,526		8,225		839		1,873			125		8,464
Other liabilities		46,330		9,942			36,388		6,675		5,953		2,430			17,292		4,038
Separate account liabilities		300,585		—			300,585		176,365		84,181		40,888			3,838		(4,687	)

Total liabilities		777,502		63,693			713,809		249,009		211,793		45,191			194,477		13,339


Equity:
Accumulated other comprehensive income (loss) (1)		14,761		(15	)		14,776		367		1,979		(75	)		14,039		(1,534	)
Other equity (1)		37,069		(1,715	)		38,784		13,465		7,738		2,205			14,192		1,184

Total Prudential Financial, Inc. equity		51,830		(1,730	)		53,560		13,832		9,717		2,130			28,231		(350	)

Noncontrolling Interest		345		8			337		10		37		490			60		(260	)

Total Equity		52,175		(1,722)			53,897		13,842		9,754		2,620			28,291		(610)

Total liabilities and equity		829,677		61,971			767,706		262,851		221,547		47,811			222,768		12,729



	As of December 31, 2017

	Consolidated PFI		Closed Block Division			PFI Excluding Closed Block Division		U.S. Individual Solutions Division		U.S. Workplace Solutions Division		Investment Management Division			International Insurance Division		Corporate and Other 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 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.

(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 8

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

SHORT-TERM AND LONG-TERM DEBT - UNAFFILIATED

(in millions)


	As of March 31, 2018								As of December 31, 2017
	Senior debt				Junior Subordinated Long-term Debt				Senior debt				Junior Subordinated Long-term Debt		Total Debt
	Short-term Debt		Long-term Debt		Junior Subordinated Long-term Debt		Total Debt		Short-term Debt		Long-term Debt		Junior Subordinated Long-term Debt		Total Debt
*Borrowings by use of proceeds:*
Capital Debt		—		5,800		6,627		12,427		—		5,402		6,622		12,024
Operating Debt - Investment related		832		3,765		—		4,597		676		3,306		—		3,982
Operating Debt - Specified businesses		519		1,181		—		1,700		704		1,043		—		1,747
Limited recourse and non-recourse borrowing		32		770		—		802		—		799		—		799

Total debt		1,383		11,516		6,627		19,526		1,380		10,550		6,622		18,552


	As of March 31, 2018								As of December 31, 2017
	Prudential Financial, Inc.		The Prudential Insurance Co. of America (1)(2)		Other Affiliates		Total		Prudential Financial, Inc.		The Prudential Insurance Co. of America (1)(2)		Other Affiliates		Total
*Borrowings by sources:*
Capital Debt		11,427		941		59		12,427		11,028		940		56		12,024
Operating Debt - Investment related		4,531		66		—		4,597		3,917		65		—		3,982
Operating Debt - Specified businesses		1,198		502		—		1,700		1,239		508		—		1,747
Limited recourse and non-recourse borrowing		—		802		—		802		—		799		—		799

Total debt		17,156		2,311		59		19,526		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 March 31, 2018 and $840 million as of December 31, 2017.

Page 9

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

								Revenues (1):
	267		255			5	%	Premiums		255			271			264			253			267
	1,245		1,232			1	%	Policy charges and fee income		1,232			472			1,245			1,286			1,245
	657		672			-2	%	Net investment income		672			667			666			685			657
	508		501			1	%	Asset management fees, commissions and other income		501			550			540			525			508

	2,677		2,660			1	%	Total revenues		2,660			1,960			2,715			2,749			2,677


								Benefits and Expenses (1):
	735		730			1	%	Insurance and annuity benefits		730			360			642			722			735
	265		263			1	%	Interest credited to policyholders’ account balances		263			255			263			268			265
	186		170			9	%	Interest expense		170			179			183			186			186
	(249)		(262	)		5	%	Deferral of acquisition costs		(262	)		(246	)		(232	)		(265	)		(249	)
	202		199			2	%	Amortization of acquisition costs		199			360			187			201			202
	983		974			1	%	General and administrative expenses		974			997			945			998			983

	2,122		2,074			2	%	Total benefits and expenses		2,074			1,905			1,988			2,110			2,122

	555		586			-5	%	Adjusted operating income before income taxes		586			55			727			639			555

(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 10

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


	Three Months Ended March 31, 2018
	Total U.S. Individual Solutions Division			Individual Annuities			Individual Life
Revenues (1):
Premiums		267			41			226
Policy charges and fee income		1,245			727			518
Net investment income		657			169			488
Asset management fees, commissions and other income		508			315			193

Total revenues		2,677			1,252			1,425


Benefits and Expenses (1):
Insurance and annuity benefits		735			84			651
Interest credited to policyholders’ account balances		265			78			187
Interest expense		186			18			168
Deferral of acquisition costs		(249	)		(90	)		(159	)
Amortization of acquisition costs		202			111			91
General and administrative expenses		983			532			451

Total benefits and expenses		2,122			733			1,389

Adjusted operating income before income taxes		555			519			36


	Three Months Ended March 31, 2017
	Total U.S. Individual Solutions Division			Individual Annuities			Individual Life
Revenues (1):
Premiums		255			39			216
Policy charges and fee income		1,232			659			573
Net investment income		672			190			482
Asset management fees, commissions and other income		501			327			174

Total revenues		2,660			1,215			1,445


Benefits and Expenses (1):
Insurance and annuity benefits		730			88			642
Interest credited to policyholders’ account balances		263			87			176
Interest expense		170			14			156
Deferral of acquisition costs		(262	)		(79	)		(183	)
Amortization of acquisition costs		199			128			71
General and administrative expenses		974			509			465

Total benefits and expenses		2,074			747			1,327

Adjusted operating income before income taxes		586			468			118

(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

First Quarter 2018

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

(in millions)


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

						SALES AND ACCOUNT VALUES:

						Variable Annuities:
	165,153			153,295		Beginning total account value		153,295			156,830			159,202			162,107			165,153
	1,010			782		Sales: Highest Daily Suite - risk retained by Prudential (1)		782			688			576			817			1,010
	1			14		Highest Daily Suite - externally reinsured living benefits		14			6			7			—			1
	683			632		Other variable annuities (2)		632			799			735			796			683

	1,694			1,428		Total sales		1,428			1,493			1,318			1,613			1,694
	(2,867	)		(2,326	)	Surrenders and withdrawals		(2,326	)		(2,382	)		(2,288	)		(2,721	)		(2,867	)

	(1,173	)		(898	)	Net redemptions		(898	)		(889	)		(970	)		(1,108	)		(1,173	)
	(453	)		(413	)	Benefit payments		(413	)		(391	)		(359	)		(395	)		(453	)

	(1,626	)		(1,311	)	Net flows		(1,311	)		(1,280	)		(1,329	)		(1,503	)		(1,626	)
	(1,418	)		5,751		Change in market value, interest credited, and other		5,751			4,578			5,170			5,494			(1,418	)
	(938	)		(905	)	Policy charges		(905	)		(926	)		(936	)		(945	)		(938	)

	161,171			156,830		Ending total account value		156,830			159,202			162,107			165,153			161,171


						Variable Annuities Account Value by Product:
	118,249			115,314		Highest Daily Suite - risk retained by Prudential (1)		115,314			116,905			119,001			121,150			118,249
	3,165			3,025		Highest Daily Suite - externally reinsured living benefits		3,025			3,084			3,153			3,227			3,165
	39,757			38,491		Other variable annuities (2)		38,491			39,213			39,953			40,776			39,757

	161,171			156,830		Ending total account value		156,830			159,202			162,107			165,153			161,171


						Fixed Annuities and other products (3):
	3,473			3,488		Beginning total account value		3,488			3,489			3,492			3,493			3,473
	30			12		Sales		12			14			11			5			30
	(28	)		(27	)	Surrenders and withdrawals		(27	)		(25	)		(21	)		(31	)		(28	)

	2			(15	)	Net sales (redemptions)		(15	)		(11	)		(10	)		(26	)		2
	(84	)		(84	)	Benefit payments		(84	)		(82	)		(72	)		(77	)		(84	)

	(82	)		(99	)	Net flows		(99	)		(93	)		(82	)		(103	)		(82	)
	89			100		Interest credited and other		100			96			84			83			89
	—			—		Policy charges		—			—			(1	)		—			—

	3,480			3,489		Ending total account value		3,489			3,492			3,493			3,473			3,480

						SALES BY DISTRIBUTION CHANNEL:

						Variable and Fixed Annuities (4):
	525			507		Insurance Agents		507			490			418			489			525
	323			236		Wirehouses		236			238			202			303			323
	758			573		Independent Financial Planners		573			631			597			713			758
	118			124		Bank Distribution		124			148			112			113			118

	1,724			1,440		Total		1,440			1,507			1,329			1,618			1,724

(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)	Includes single premium immediate annuities.

(4)	Amounts represent gross sales.

Page 12

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

						INDIVIDUAL ANNUITIES:

						Account Values in General Account (1):
	9,892			9,892		Beginning balance		9,892			9,810			9,804			9,816			9,892
	211			185		Premiums and deposits		185			168			130			167			211
	(163	)		(153	)	Surrenders and withdrawals		(153	)		(145	)		(133	)		(166	)		(163	)

	48			32		Net sales (redemptions)		32			23			(3	)		1			48
	(100	)		(100	)	Benefit payments		(100	)		(101	)		(89	)		(90	)		(100	)

	(52	)		(68	)	Net flows		(68	)		(78	)		(92	)		(89	)		(52	)
	61			58		Interest credited and other		58			56			63			71			61
	31			(72	)	Net transfers (to) from separate account		(72	)		16			42			94			31
	—			—		Policy charges		—			—			(1	)		—			—

	9,932			9,810		Ending balance		9,810			9,804			9,816			9,892			9,932


						Account Values in Separate Account (1):
	158,734			146,891		Beginning balance		146,891			150,509			152,890			155,784			158,734
	1,513			1,255		Premiums and deposits		1,255			1,339			1,199			1,451			1,513
	(2,732	)		(2,200	)	Surrenders and withdrawals		(2,200	)		(2,262	)		(2,176	)		(2,586	)		(2,732	)

	(1,219	)		(945	)	Net redemptions		(945	)		(923	)		(977	)		(1,135	)		(1,219	)
	(437	)		(397	)	Benefit payments		(397	)		(372	)		(342	)		(382	)		(437	)

	(1,656	)		(1,342	)	Net flows		(1,342	)		(1,295	)		(1,319	)		(1,517	)		(1,656	)
	(1,390	)		5,793		Change in market value, interest credited and other		5,793			4,618			5,191			5,506			(1,390	)
	(31	)		72		Net transfers (to) from general account		72			(16	)		(42	)		(94	)		(31	)
	(938	)		(905	)	Policy charges		(905	)		(926	)		(936	)		(945	)		(938	)

	154,719			150,509		Ending balance		150,509			152,890			155,784			158,734			154,719

(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 13

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

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

Variable Annuity Account Values with Living Benefit Features
Guaranteed minimum accumulation benefits		3,879		3,661		3,530		3,380		3,134
Guaranteed minimum withdrawal benefits		509		494		483		477		450
Guaranteed minimum income benefits		2,761		2,755		2,772		2,791		2,690
Guaranteed minimum withdrawal & income benefits - risk retained by Prudential		123,609		125,869		128,465		131,146		128,176
Guaranteed minimum withdrawal & income benefits - externally reinsured		3,025		3,084		3,153		3,227		3,165

Total		133,783		135,863		138,403		141,021		137,615


Living Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature - risk retained by Prudential		110,286		111,750		113,691		115,690		112,913
Account Values with Auto-Rebalancing Feature - externally reinsured		3,025		3,084		3,153		3,227		3,165
Account Values without Auto-Rebalancing Feature		20,472		21,029		21,559		22,104		21,537

Total		133,783		135,863		138,403		141,021		137,615


Living Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature - risk retained by Prudential		3,872		3,594		3,250		2,928		3,506
Net Amount at Risk with Auto-Rebalancing Feature - externally reinsured		—		—		—		—		—
Net Amount at Risk without Auto-Rebalancing Feature		939		846		752		661		742

Total		4,811		4,440		4,002		3,589		4,248

(1)	At end of period.

Page 14

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

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		121,507		123,591		126,009		128,545		125,515
Net amount at risk		385		323		297		285		356
Minimum return, anniversary contract value, or maximum contract value:
Account value		31,460		31,612		31,952		32,269		31,322
Net amount at risk		3,215		3,012		2,785		2,611		3,078

Death Benefit Features Account Values by Product Design Type
Account Values with Auto-Rebalancing Feature		113,311		114,834		116,844		118,916		116,078
Account Values without Auto-Rebalancing Feature		39,656		40,369		41,117		41,898		40,759

Total		152,967		155,203		157,961		160,814		156,837


Death Benefit Features Net Amount at Risk by Product Design Type
Net Amount at Risk with Auto-Rebalancing Feature		1,265		1,168		1,060		1,008		1,403
Net Amount at Risk without Auto-Rebalancing Feature		2,335		2,167		2,022		1,888		2,031

Total		3,600		3,335		3,082		2,896		3,434

(1)	At end of period.

Page 15

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

						ANNUALIZED NEW BUSINESS PREMIUMS (1):

	49			49		Term life		49			54			57			53			49
	21			53		Guaranteed Universal life		53			40			31			32			21
	26			21		Other Universal life		21			33			28			43			26
	29			23		Variable life		23			26			26			55			29

	125			146		Total		146			153			142			183			125

						ANNUALIZED NEW BUSINESS PREMIUMS BY DISTRIBUTION CHANNEL (1):

	30			27		Prudential Advisors		27			29			29			33			30
	95			119		Third party distribution		119			124			113			150			95

	125			146		Total		146			153			142			183			125


						ACCOUNT VALUE ACTIVITY:

						*Policyholders’ Account Balances (2):*
	26,861			26,041		Beginning balance		26,041			26,358			26,399			26,612			26,861
	734			804		Premiums and deposits		804			832			738			831			734
	(249	)		(233	)	Surrenders and withdrawals		(233	)		(289	)		(228	)		(281	)		(249	)

	485			571		Net sales		571			543			510			550			485
	(145	)		(182	)	Benefit payments		(182	)		(123	)		(121	)		(140	)		(145	)

	340			389		Net flows		389			420			389			410			340
	524			228		Interest credited and other		228			(85	)		119			131			524
	119			106		Net transfers from separate account		106			106			116			110			119
	(424	)		(406	)	Policy charges		(406	)		(400	)		(411	)		(402	)		(424	)
	—			—		Acquisition		—			—			—			—			—

	27,420			26,358		Ending balance		26,358			26,399			26,612			26,861			27,420


						*Separate Account Liabilities:*
	32,085			28,455		Beginning balance		28,455			29,669			30,259			31,100			32,085
	419			442		Premiums and deposits		442			343			330			491			419
	(253	)		(220	)	Surrenders and withdrawals		(220	)		(227	)		(338	)		(464	)		(253	)

	166			222		Net sales (redemptions)		222			116			(8	)		27			166
	(55	)		(46	)	Benefit payments		(46	)		(44	)		(32	)		(47	)		(55	)

	111			176		Net flows		176			72			(40	)		(20	)		111
	51			1,373		Change in market value, interest credited and other		1,373			851			1,227			1,347			51
	(119	)		(106	)	Net transfers to general account		(106	)		(106	)		(116	)		(110	)		(119	)
	(231	)		(229	)	Policy charges		(229	)		(227	)		(230	)		(232	)		(231	)
	—			—		Acquisition		—			—			—			—			—

	31,897			29,669		Ending balance		29,669			30,259			31,100			32,085			31,897


						FACE AMOUNT IN FORCE (3):

						Term life		727,736			736,348			745,849			753,804			761,014
						Guaranteed Universal life		137,801			139,663			141,031			142,546			143,449
						Other Universal life		45,704			46,328			46,888			47,516			47,842
						Variable life		162,611			162,452			162,660			163,174			162,514

						Total		1,073,851			1,084,791			1,096,429			1,107,040			1,114,820

(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 16

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

									Revenues (1):
	1,838			1,564			18	%	Premiums		1,564			3,259			2,962			4,651			1,838
	200			202			-1	%	Policy charges and fee income		202			223			204			199			200
	1,238			1,313			-6	%	Net investment income		1,313			1,257			1,226			1,323			1,238
	229			241			-5	%	Asset management fees, commissions and other income		241			230			230			230			229

	3,505			3,320			6	%	Total revenues		3,320			4,969			4,622			6,403			3,505


									Benefits and Expenses (1):
	2,212			1,982			12	%	Insurance and annuity benefits		1,982			3,601			3,391			5,134			2,212
	408			431			-5	%	Interest credited to policyholders’ account balances		431			476			434			440			408
	8			7			14	%	Interest expense		7			8			7			9			8
	(5	)		(7	)		29	%	Deferral of acquisition costs		(7	)		(9	)		(9	)		(11	)		(5	)
	5			5			0	%	Amortization of acquisition costs		5			6			17			12			5
	505			471			7	%	General and administrative expenses		471			443			473			506			505

	3,133			2,889			8	%	Total benefits and expenses		2,889			4,525			4,313			6,090			3,133


	372			431			-14	%	Adjusted operating income before income taxes		431			444			309			313			372

(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 17

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


	Three Months Ended March 31, 2018
	Total U.S. Workplace Solutions Division			Retirement			Group Insurance
Revenues (1):
Premiums		1,838			735			1,103
Policy charges and fee income		200			60			140
Net investment income		1,238			1,083			155
Asset management fees, commissions and other income		229			211			18

Total revenues		3,505			2,089			1,416


Benefits and Expenses (1):
Insurance and annuity benefits		2,212			1,149			1,063
Interest credited to policyholders’ account balances		408			339			69
Interest expense		8			8			—
Deferral of acquisition costs		(5	)		(5	)		—
Amortization of acquisition costs		5			4			1
General and administrative expenses		505			277			228

Total benefits and expenses		3,133			1,772			1,361


Adjusted operating income before income taxes		372			317			55


	Three Months Ended March 31, 2017
	Total U.S. Workplace Solutions Division			Retirement			Group Insurance
Revenues (1):
Premiums		1,564			512			1,052
Policy charges and fee income		202			58			144
Net investment income		1,313			1,148			165
Asset management fees, commissions and other income		241			219			22

Total revenues		3,320			1,937			1,383


Benefits and Expenses (1):
Insurance and annuity benefits		1,982			917			1,065
Interest credited to policyholders’ account balances		431			364			67
Interest expense		7			6			1
Deferral of acquisition costs		(7	)		(7	)		—
Amortization of acquisition costs		5			4			1
General and administrative expenses		471			256			215

Total benefits and expenses		2,889			1,540			1,349


Adjusted operating income before income taxes		431			397			34

(1)

Page 18

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


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

						RETIREMENT SEGMENT SALES AND ACCOUNT VALUES

						Full Service:
	234,616			202,802		Beginning total account value		202,802			210,400			214,731			227,438			234,616
	9,922			6,736		Deposits and sales		6,736			4,771			11,188			6,832			9,922
	(8,154	)		(6,690	)	Withdrawals and benefits		(6,690)			(5,786	)		(5,132	)		(7,203)			(8,154	)
	(264	)		7,552		Change in market value, interest credited, interest income and other activity		7,552			5,346			6,651			7,549			(264	)

	236,120			210,400		Ending total account value		210,400			214,731			227,438			234,616			236,120


	1,768			46		Net additions (withdrawals)		46			(1,015	)		6,056			(371	)		1,768


						Stable value account values included above		48,737			48,829			48,834			48,667			48,692

						Institutional Investment Products:
	194,492			183,376		Beginning total account value		183,376			185,115			186,610			188,399			194,492
	688			4,042		Additions		4,042			2,557			4,764			10,267			688
	(4,889	)		(4,241	)	Withdrawals and benefits		(4,241	)		(4,171	)		(3,552	)		(5,442	)		(4,889	)
	(214	)		1,229		Change in market value, interest credited and interest income		1,229			1,673			1,341			947			(214	)
	1,441			709		Other (1)		709			1,436			(764	)		321			1,441

	191,518			185,115		Ending total account value		185,115			186,610			188,399			194,492			191,518


	(4,201	)		(199	)	Net additions (withdrawals)		(199	)		(1,614	)		1,212			4,825			(4,201	)


						Amounts included in ending total account value above:
	66,518			70,576		Investment-only stable value wraps		70,576			69,808			69,637			69,239			66,518
	41,173			32,004		Longevity reinsurance (2)		32,004			33,138			36,053			40,072			41,173
	83,827			82,535		Group annuities and other products		82,535			83,664			82,709			85,181			83,827

	191,518			185,115		Ending total account value		185,115			186,610			188,399			194,492			191,518

(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 19

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(dollar amounts in millions)


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

						GROUP INSURANCE ANNUALIZED NEW BUSINESS PREMIUMS:
	243			186		Group life		186			56			23			22			243
	140			115		Group disability		115			14			12			12			140

	383			301		Total		301			70			35			34			383


						Future Policy Benefits (1)(2):
						Group life		2,166			2,139			2,087			2,286			2,216
						Group disability		28			20			9			2			26

						Total		2,194			2,159			2,096			2,288			2,242


						Policyholders’ Account Balances (1):
						Group life		8,614			8,516			8,599			8,737			8,675
						Group disability		237			212			231			246			174

						Total		8,851			8,728			8,830			8,983			8,849


						Separate Account Liabilities (1):
						Group life		23,812			24,073			23,922			23,955			24,353
						Group disability		—			—			—			—			—

						Total		23,812			24,073			23,922			23,955			24,353


						Group Life Insurance:
	1,046			1,038		Gross premiums, policy charges and fee income (3)		1,038			1,054			1,013			1,019			1,046
	1,000			985		Earned premiums, policy charges and fee income		985			981			965			955			1,000
	87.2	%		92.2	%	Benefits ratio (4)		92.2	%		86.3	%		87.0	%		89.3	%		87.2	%
	11.6	%		10.8	%	Administrative operating expense ratio		10.8	%		10.5	%		11.2	%		12.5	%		11.6	%
						Persistency ratio		94.9	%		94.6	%		93.9	%		93.8	%		95.7	%

						Group Disability Insurance:
	251			233		Gross premiums, policy charges and fee income (3)		233			237			239			244			251
	243			211		Earned premiums, policy charges and fee income		211			209			220			222			243
	79.0	%		74.3	%	Benefits ratio (5)		74.3	%		76.7	%		78.7	%		85.6	%		79.0	%
	27.1	%		29.4	%	Administrative operating expense ratio		29.4	%		29.0	%		29.2	%		29.8	%		27.1	%
						Persistency ratio		93.7	%		93.4	%		91.7	%		91.4	%		94.9	%

						Total Group Insurance:
	85.6	%		89.1	%	Benefits ratio (6)		89.1	%		84.5	%		85.5	%		88.6	%		85.6	%
	14.6	%		14.2	%	Administrative operating expense ratio		14.2	%		13.9	%		14.6	%		15.8	%		14.6	%

(1)	As of end of period.

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

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

(4)

Group Life Insurance benefit ratios excluding market driven and discrete items. Benefit ratios including market driven and discrete items are 87.2%, 89.3%, 87.0%, 86.9%, and 92.2% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, and March 31, 2017, respectively.

(5)

Group Disability Insurance benefit ratios excluding market driven and discrete items. Benefits ratios including market driven and discrete items are 79.0%, 85.6%, 78.7%, 47.5%, and 74.3% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, and March 31, 2017, respectively.

(6)

Group Insurance benefit ratios excluding market driven and discrete items. Benefits ratios including market driven and discrete items are 85.6%, 88.6%, 85.5%, 80.0%, and 89.1% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, and March 31, 2017, respectively.

Page 20

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

STATEMENTS OF OPERATIONS - INVESTMENT MANAGEMENT DIVISION

(in millions)


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

							Revenues (1):
	—		—			—	Premiums		—			—			—			—			—
	—		—			—	Policy charges and fee income		—			—			—			—			—
	17		32			-47%	Net investment income		32			37			55			46			17
	809		724			12%	Asset management fees, commissions and other income		724			750			772			939			809

	826		756			9%	Total revenues		756			787			827			985			826


							Benefits and Expenses (1):
	—		—			—	Insurance and annuity benefits		—			—			—			—			—
	—		—			—	Interest credited to policyholders’ account balances		—			—			—			—			—
	9		5			80%	Interest expense		5			7			7			8			9
	(2)		(2	)		0%	Deferral of acquisition costs		(2	)		(1	)		(2	)		(1	)		(2	)
	2		4			-50%	Amortization of acquisition costs		4			2			2			3			2
	585		553			6%	General and administrative expenses		553			561			561			669			585

	594		560			6%	Total benefits and expenses		560			569			568			679			594


	232		196			18%	Adjusted operating income before income taxes		196			218			259			306			232

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

Page 21

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT MANAGEMENT DIVISION - SUPPLEMENTARY REVENUE AND ASSETS UNDER MANAGEMENT INFORMATION


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

							Analysis of revenues by type:
	633		575		10	%	Asset management fees		575		592		619		631		633
	73		58		26	%	Other related revenues (1)		58		69		83		229		73
	120		123		-2	%	Service, distribution and other revenues		123		126		125		125		120

	826		756		9	%	Total Investment Management revenues		756		787		827		985		826


							Analysis of asset management fees by source:
	296		275		8	%	Institutional customers		275		279		296		297		296
	217		185		17	%	Retail customers		185		194		203		218		217
	120		115		4	%	General account		115		119		120		116		120

	633		575		10	%	Total asset management fees		575		592		619		631		633


Supplementary Assets Under Management Information (in billions):
	March 31, 2018
			Fixed		Real
	Equity		Income		Estate		Total
Institutional customers		61.2		385.4		43.0		489.6
Retail customers		129.8		114.8		1.6		246.2
General account		5.7		412.3		2.0		420.0

Total		196.7		912.5		46.6		1,155.8


	March 31, 2017
			Fixed		Real
	Equity		Income		Estate		Total
Institutional customers		61.1		343.8		40.3		445.2
Retail customers		117.0		98.8		1.8		217.6
General account		6.6		397.8		1.7		406.1

Total		184.7		840.4		43.8		1,068.9

(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 22

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT MANAGEMENT DIVISION - SUPPLEMENTARY ASSETS UNDER MANAGEMENT INFORMATION

(in billions)


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

						Institutional Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	437.9			386.4		Beginning assets under management		386.4			399.1			414.6			431.0			437.9
	19.4			15.9		Additions		15.9			17.2			15.9			16.2			19.4
	(19.6)			(15.4	)	Withdrawals		(15.4	)		(10.7	)		(11.2	)		(16.3	)		(19.6	)
	(0.8)			9.6		Change in market value		9.6			10.8			9.1			8.5			(0.8	)
	1.8			2.0		Net money market flows		2.0			(1.7	)		2.6			(1.6	)		1.8
	(0.1)			0.6		Other		0.6			(0.1	)		—			0.1			(0.1	)

	438.6			399.1		Ending assets under management		399.1			414.6			431.0			437.9			438.6
	51.0			46.1		Affiliated institutional assets under management		46.1			46.6			47.3			51.6			51.0

	489.6			445.2		Total assets managed for institutional customers at end of period		445.2			461.2			478.3			489.5			489.6


	(0.2	)		0.5		Net institutional additions (withdrawals), excluding money market activity		0.5			6.5			4.7			(0.1	)		(0.2	)


						Retail Customers - Assets Under Management:

						Assets gathered by Investment Management & Advisory Services sales force:
	164.3			136.6		Beginning assets under management		136.6			144.2			150.0			157.5			164.3
	14.6			13.0		Additions		13.0			10.8			11.9			14.0			14.6
	(13.6	)		(12.9	)	Withdrawals		(12.9	)		(9.6	)		(10.6	)		(12.5	)		(13.6	)
	0.9			7.4		Change in market value		7.4			4.6			6.2			5.3			0.9
	—			—		Net money market flows		—			—			—			—			—
	—			0.1		Other		0.1			—			—			—			—

	166.2			144.2		Ending assets under management		144.2			150.0			157.5			164.3			166.2
	80.0			73.4		Affiliated retail assets under management		73.4			81.2			82.4			81.3			80.0

	246.2			217.6		Total assets managed for retail customers at end of period		217.6			231.2			239.9			245.6			246.2


	1.0			0.1		Net retail additions, excluding money market activity		0.1			1.2			1.3			1.5			1.0

Page 23

Prudential Financial, Inc.

Quarterly Financial Supplement

First 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				1Q			2Q			3Q			4Q			1Q

						DEFERRED POLICY ACQUISITION COSTS

						INDIVIDUAL ANNUITIES:
	5,130			4,871		Beginning balance		4,871			4,865			5,312			5,089			5,130
	90			79		Capitalization		79			80			71			84			90
	(111	)		(128	)	Amortization - operating results		(128	)		(102	)		(116	)		(118	)		(111	)
	(62	)		50		Amortization - realized investment gains and losses		50			505			(173	)		82			(62	)
	36			(7	)	Impact of unrealized (gains) or losses on AFS securities		(7	)		(36	)		(5	)		(7	)		36
	—			—		Other		—			—			—			—			—

	5,083			4,865		Ending balance		4,865			5,312			5,089			5,130			5,083


						INDIVIDUAL LIFE INSURANCE:
	5,405			5,278		Beginning balance		5,278			5,393			5,330			5,355			5,405
	159			183		Capitalization		183			166			161			181			159
	(91	)		(71	)	Amortization - operating results		(71	)		(258	)		(71	)		(83	)		(91	)
	9			2		Amortization - realized investment gains and losses		2			105			(2	)		(4	)		9
	155			1		Impact of unrealized (gains) or losses on AFS securities		1			(76	)		(63	)		(44	)		155

	5,637			5,393		Ending balance		5,393			5,330			5,355			5,405			5,637


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

	161			175		Ending balance		175			173			163			162			161


						DEFERRED SALES INDUCEMENTS
						INDIVIDUAL ANNUITIES:
	1,125			1,082		Beginning balance		1,082			1,064			1,211			1,133			1,125
	1			—		Capitalization		—			1			1			—			1
	(31	)		(41	)	Amortization - operating results		(41	)		(30	)		(34	)		(36	)		(31	)
	(20	)		25		Amortization - realized investment gains and losses		25			184			(43	)		29			(20	)
	8			(2	)	Impact of unrealized (gains) or losses on AFS securities		(2	)		(8	)		(2	)		(1	)		8
	—			—		Other		—			—			—			—			—

	1,083			1,064		Ending balance		1,064			1,211			1,133			1,125			1,083

Page 24

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

COMBINED STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


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

									Revenues (1):
	4,541			3,962			15	%	Premiums		3,962			4,032			3,891			3,822			4,541
	143			134			7	%	Policy charges and fee income		134			112			128			129			143
	1,301			1,205			8	%	Net investment income		1,205			1,260			1,278			1,284			1,301
	55			108			-49	%	Asset management fees, commissions and other income		108			79			79			57			55

	6,040			5,409			12	%	Total revenues		5,409			5,483			5,376			5,292			6,040

									Benefits and Expenses (1):
	3,915			3,433			14	%	Insurance and annuity benefits		3,433			3,422			3,342			3,291			3,915
	238			226			5	%	Interest credited to policyholders’ account balances		226			222			230			221			238
	4			3			33	%	Interest expense		3			3			4			3			4
	(475	)		(465	)		-2	%	Deferral of acquisition costs		(465	)		(507	)		(417	)		(418	)		(475	)
	331			285			16	%	Amortization of acquisition costs		285			304			275			274			331
	1,171			1,128			4	%	General and administrative expenses		1,128			1,216			1,143			1,144			1,171

	5,184			4,610			12	%	Total benefits and expenses		4,610			4,660			4,577			4,515			5,184


	856			799			7	%	Adjusted operating income before income taxes		799			823			799			777			856

(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 25

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

COMBINING STATEMENTS OF OPERATIONS - INTERNATIONAL INSURANCE DIVISION

(in millions)


	Three Months Ended March 31, 2018
	Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations
Revenues (1):
Premiums		4,541			2,372			2,169
Policy charges and fee income		143			106			37
Net investment income		1,301			562			739
Asset management fees, commissions and other income		55			38			17

Total revenues		6,040			3,078			2,962


Benefits and Expenses (1):
Insurance and annuity benefits		3,915			2,105			1,810
Interest credited to policyholders’ account balances		238			71			167
Interest expense		4			2			2
Deferral of acquisition costs		(475	)		(251	)		(224	)
Amortization of acquisition costs		331			173			158
General and administrative expenses		1,171			562			609

Total benefits and expenses		5,184			2,662			2,522


Adjusted operating income before income taxes		856			416			440


	Three Months Ended March 31, 2017
	Total International Insurance Division			International Insurance - Life Planner Operations			International Insurance - Gibraltar Life & Other Operations
Revenues (1):
Premiums		3,962			2,116			1,846
Policy charges and fee income		134			96			38
Net investment income		1,205			509			696
Asset management fees, commissions and other income		108			57			51

Total revenues		5,409			2,778			2,631


Benefits and Expenses (1):
Insurance and annuity benefits		3,433			1,866			1,567
Interest credited to policyholders’ account balances		226			62			164
Interest expense		3			2			1
Deferral of acquisition costs		(465	)		(265	)		(200	)
Amortization of acquisition costs		285			148			137
General and administrative expenses		1,128			557			571

Total benefits and expenses		4,610			2,370			2,240


Adjusted operating income before income taxes		799			408			391

(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

First Quarter 2018

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION

(in millions)


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

				INTERNATIONAL INSURANCE OPERATING DATA:

				Actual exchange rate basis (1):

				Net premiums, policy charges and fee income:
	1,880		1,691	Japan, excluding Gibraltar Life		1,691		1,467		1,459		1,439		1,880
	2,206		1,884	Gibraltar Life		1,884		2,134		1,989		1,893		2,206
	598		521	All other countries		521		543		571		619		598

	4,684		4,096	Total		4,096		4,144		4,019		3,951		4,684


				Annualized new business premiums:
	234		336	Japan, excluding Gibraltar Life (3)		336		251		162		164		234
	407		427	Gibraltar Life (2)		427		413		403		352		407
	117		128	All other countries (3)		128		106		115		129		117

	758		891	Total (2)(3)		891		770		680		645		758


				Annualized new business premiums by distribution channel:
	351		464	Life Planner Operations (3)		464		357		277		293		351
	196		186	Gibraltar Life Consultants (2)		186		210		178		167		196
	158		168	Banks (2)		168		133		178		136		158
	53		73	Independent Agency (2)		73		70		47		49		53

	758		891	Total (2)(3)		891		770		680		645		758


				Constant exchange rate basis (4): Net premiums, policy charges and fee income:
	1,842		1,719	Japan, excluding Gibraltar Life		1,719		1,466		1,458		1,456		1,842
	2,168		1,922	Gibraltar Life		1,922		2,144		1,988		1,903		2,168
	562		509	All other countries		509		528		547		594		562

	4,572		4,150	Total		4,150		4,138		3,993		3,953		4,572


				Annualized new business premiums:
	232		341	Japan, excluding Gibraltar Life		341		251		162		165		232
	405		430	Gibraltar Life (2)		430		413		403		353		405
	108		123	All other countries		123		102		108		121		108

	745		894	Total (2)		894		766		673		639		745


				Annualized new business premiums by distribution channel:
	340		464	Life Planner Operations		464		353		270		286		340
	195		188	Gibraltar Life Consultants (2)		188		210		178		167		195
	158		168	Banks (2)		168		133		178		136		158
	52		74	Independent Agency (2)		74		70		47		50		52

	745		894	Total (2)		894		766		673		639		745

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

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

(3)	The amounts for the first quarter of 2017 have been revised to correct the previously reported amounts.

(4)	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 27

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INTERNATIONAL INSURANCE DIVISION - SALES RESULTS AND SUPPLEMENTARY INFORMATION


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

Face amount of individual policies in force at end of period (in billions) (1)(2):
(Constant exchange rate basis)
Japan, excluding Gibraltar Life		329			334			337			339			343
Gibraltar Life		332			335			338			340			341
All other countries		124			126			127			130			132

Total		785			795			802			809			816


Number of individual policies in force at end of period (in thousands) (2):
Japan, excluding Gibraltar Life		3,581			3,632			3,674			3,714			3,773
Gibraltar Life		7,191			7,207			7,222			7,220			7,219
All other countries		2,105			2,122			2,146			2,169			2,134

Total		12,877			12,961			13,042			13,103			13,126


International life insurance policy persistency:

Life Planner Operations:
13 months		93.0	%		93.0	%		92.9	%		92.9	%		92.9	%
25 months		86.3	%		86.5	%		86.1	%		86.2	%		86.6	%

Gibraltar Life (3):
13 months		93.3	%		93.4	%		93.4	%		93.4	%		93.5	%
25 months		86.7	%		86.9	%		87.2	%		87.2	%		87.2	%

Number of Life Planners at end of period:
Japan		3,932			3,861			3,951			3,941			4,076
All other countries		3,887			3,874			3,880			3,890			3,695

Total Life Planners		7,819			7,735			7,831			7,831			7,771


Gibraltar Life Consultants		8,752			8,509			8,327			8,326			8,137

(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 28

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT PORTFOLIO COMPOSITION

(in millions)


	March 31, 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		288,732		26,521		262,211		64.6	%		287,878		27,448		260,430		64.7	%
Public, held-to-maturity, at amortized cost		1,822		—		1,822		0.4	%		1,747		—		1,747		0.4	%
Private, available-for-sale, at fair value		58,217		13,546		44,671		11.0	%		58,293		13,814		44,479		11.1	%
Private, held-to-maturity, at amortized cost		298		—		298		0.1	%		302		—		302		0.1	%
Fixed maturities, trading, at fair value (1)		1,713		205		1,508		0.4	%		1,789		200		1,589		0.4	%
Assets supporting experience-rated contractholder liabilities, at fair value		21,637		—		21,637		5.3	%		22,097		—		22,097		5.5	%
Equity securities, at fair value (1)		6,713		2,309		4,404		1.1	%		6,755		2,479		4,276		1.1	%
Commercial mortgage and other loans, at book value		57,760		9,027		48,733		12.0	%		55,411		9,017		46,394		11.5	%
Policy loans, at outstanding balance		12,036		4,495		7,541		1.9	%		11,891		4,543		7,348		1.8	%
Other invested assets (1)(2)		11,225		3,407		7,818		1.9	%		10,669		3,159		7,510		1.9	%
Short-term investments		5,721		413		5,308		1.3	%		6,734		631		6,103		1.5	%

Subtotal (3)		465,874		59,923		405,951		100.0	%		463,566		61,291		402,275		100.0	%

Invested assets of other entities and operations (4)		5,617		—		5,617					6,305		—		6,305

Total investments		471,491		59,923		411,568					469,871		61,291		408,580

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


	March 31, 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		201,246		25,176		1,887		224,535		84.9	%		195,968		26,830		872		221,926		84.4	%
2		27,258		2,113		419		28,952		10.9	%		26,795		3,040		142		29,693		11.3	%

Subtotal -High or Highest Quality Securities		228,504		27,289		2,306		253,487		95.8	%		222,763		29,870		1,014		251,619		95.7	%

3		5,809		324		164		5,969		2.3	%		5,541		442		44		5,939		2.3	%
4		3,591		372		125		3,838		1.5	%		3,457		467		77		3,847		1.5	%
5		791		153		36		908		0.3	%		781		179		32		928		0.4	%
6		197		9		4		202		0.1	%		196		10		3		203		0.1	%

Subtotal - Other Securities		10,388		858		329		10,917		4.2	%		9,975		1,098		156		10,917		4.3	%

Total		238,892		28,147		2,635		264,404		100.0	%		232,738		30,968		1,170		262,536		100.0	%


Private Fixed Maturities:


NAIC Rating (6)
1		11,680		551		130		12,101		26.9	%		11,823		720		53		12,490		27.9	%
2		25,132		1,292		367		26,057		57.9	%		23,956		1,520		193		25,283		56.5	%

Subtotal -High or Highest Quality Securities		36,812		1,843		497		38,158		84.8	%		35,779		2,240		246		37,773		84.4	%

3		4,884		176		57		5,003		11.1	%		4,660		228		35		4,853		10.8	%
4		1,103		22		26		1,099		2.4	%		1,224		34		28		1,230		2.7	%
5		683		37		21		699		1.6	%		885		46		25		906		2.0	%
6		29		4		3		30		0.1	%		40		4		3		41		0.1	%

Subtotal - Other Securities		6,699		239		107		6,831		15.2	%		6,809		312		91		7,030		15.6	%

Total		43,511		2,082		604		44,989		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 March 31, 2018 and December 31, 2017, 765 securities with amortized cost of $4,436 million (fair value $4,471 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 29

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


	March 31, 2018					December 31, 2017
	Amount		% of Total			Amount		% of Total
Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		133,161		75.7	%		128,332		76.0	%
Public, held-to-maturity, at amortized cost		1,822		1.0	%		1,747		1.0	%
Private, available-for-sale, at fair value		14,748		8.4	%		14,538		8.6	%
Private, held-to-maturity, at amortized cost		298		0.2	%		302		0.2	%
Fixed maturities, trading, at fair value (3)		255		0.2	%		257		0.1	%
Assets supporting experience-rated contractholder liabilities, at fair value		2,641		1.5	%		2,586		1.5	%
Equity securities, at fair value (3)		2,194		1.3	%		2,151		1.3	%
Commercial mortgage and other loans, at book value		15,661		8.9	%		14,268		8.5	%
Policy loans, at outstanding balance		2,693		1.5	%		2,545		1.5	%
Other invested assets (3)(4)		1,995		1.1	%		2,021		1.2	%
Short-term investments		351		0.2	%		244		0.1	%

Total		175,819		100.0	%		168,991		100.0	%


	March 31, 2018					December 31, 2017
	Amount		% of Total			Amount		% of Total
Excluding Japanese Insurance Operations (2):
Fixed maturities:
Public, available-for-sale, at fair value		129,050		56.1	%		132,098		56.6	%
Public, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Private, available-for-sale, at fair value		29,923		13.0	%		29,941		12.8	%
Private, held-to-maturity, at amortized cost		—		0.0	%		—		0.0	%
Fixed maturities, trading, at fair value (3)		1,253		0.5	%		1,332		0.6	%
Assets supporting experience-rated contractholder liabilities, at fair value		18,996		8.3	%		19,511		8.3	%
Equity securities, at fair value (3)		2,210		0.9	%		2,125		0.9	%
Commercial mortgage and other loans, at book value		33,072		14.4	%		32,126		13.8	%
Policy loans, at outstanding balance		4,848		2.1	%		4,803		2.1	%
Other invested assets (3)(4)		5,823		2.5	%		5,489		2.4	%
Short-term investments		4,957		2.2	%		5,859		2.5	%

Total		230,132		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 30

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT RESULTS (1)

(in millions)



	Three Months Ended March 31
	2018									2017
	Investment Income						Realized Gains /			Investment Income						Realized Gains /
	Yield (5)			Amount			(Losses)			Yield (5)			Amount			(Losses)
General Account (2)
Fixed maturities (3)		3.82	%		2,625			50			3.84	%		2,457			133
Equity securities		1.67	%		18			—			3.69	%		72			26
Commercial mortgage and other loans		3.94	%		412			—			3.97	%		375			—
Policy loans		4.74	%		88			—			4.79	%		86			—
Short-term investments and cash equivalents		1.64	%		61			(1	)		1.18	%		35			—
Other investments (3)		3.47	%		81			358			11.22	%		233			5

Gross investment income before investment expenses		3.74	%		3,285			407			3.98	%		3,258			164
Investment expenses		-0.14	%		(139	)		—			-0.14	%		(113	)		—

Subtotal		3.60	%		3,146			407			3.84	%		3,145			164

Investment results of other entities and operations (4)					259			20						271			(10	)
Less, investment income related to adjusted operating income reconciling items					(68	)		—						(62	)		—

Total					3,337			427						3,354			154

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

(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”.

(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 31

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT RESULTS - JAPANESE INSURANCE OPERATIONS

(in millions)


	Three Months Ended March 31
	2018								2017
	Investment Income						Realized Gains /		Investment Income						Realized Gains /
	Yield (1)			Amount			(Losses)		Yield (1)			Amount			(Losses)
Japanese Insurance Operations:
Fixed maturities (2)		2.93	%		923			89		3.02	%		876			190
Equity securities		1.56	%		8			—		1.99	%		15			13
Commercial mortgage and other loans		3.84	%		143			—		3.91	%		117			1
Policy loans		3.80	%		25			—		3.86	%		23			—
Short-term investments and cash equivalents		1.47	%		7			—		1.24	%		3			—
Other investments (2) (3)		4.60	%		27			93		9.35	%		34			69

Gross investment income before investment expenses		3.03	%		1,133			182		3.16	%		1,068			273
Investment expenses		-0.12	%		(53	)		—		-0.12	%		(43	)		—

Total		2.91	%		1,080			182		3.04	%		1,025			273

(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 32

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

INVESTMENT RESULTS - EXCLUDING JAPANESE INSURANCE OPERATIONS (1)

(in millions)


	Three Months Ended March 31
	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)		4.56	%		1,702			(39	)		4.51	%		1,581			(57	)
Equity securities		1.78	%		10			—			4.73	%		57			13
Commercial mortgage and other loans		4.00	%		269			—			3.99	%		258			(1	)
Policy loans		5.26	%		63			—			5.26	%		63			—
Short-term investments and cash equivalents		1.66	%		54			(1	)		1.18	%		32			—
Other investments (3)		3.10	%		54			265			11.62	%		199			(64	)

Gross investment income before investment expenses		4.26	%		2,152			225			4.56	%		2,190			(109	)
Investment expenses		-0.15	%		(86	)		—			-0.16	%		(70	)		—

Total		4.11	%		2,066			225			4.40	%		2,120			(109	)

(1)	Excludes Closed Block Division.

(2)

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

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

(4)

Page 33

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


	First Quarter 2018														First Quarter 2017
	Asset														Asset
	Management						Interest								Management
	Fees,			Insurance			Credited to			Amortization			Pre-Tax		Fees,		Insurance			Amortization			Pre-Tax
	Commissions			and			Policyholders’			of			Adjusted		Commissions		and			of			Adjusted
	and Other			Annuity			Account			Acquisition			Operating		and Other		Annuity			Acquisition			Operating
	Income			Benefits			Balances			Costs			Income		Income		Benefits			Costs			Income
Individual Annuities:
Market performance and experience true-ups		(7	)		(9	)		(3	)		(11	)		16		7		(8	)		(4	)		19
Total of above items		(7	)		(9	)		(3	)		(11	)		16		7		(8	)		(4	)		19
Reported amount		315			84			78			111					327		88			128
Amount excluding impact of items indicated above		322			93			81			122					320		96			132

Page 34

Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

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

(in millions)


	Three Months Ended March 31, 2018																								Three Months Ended March 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		6,638			—			—			—			551			122			—			7,311			5,774			—			—		—		604		103		—			6,481
Policy charges and fee income		1,575			(71	)		—			—			—			—			—			1,504			1,555			(22	)		—		—		—		—		—			1,533
Net investment income		3,337			(10	)		—			—			593			78			—			3,998			3,354			(8	)		—		—		645		70		—			4,061
Realized investment gains (losses), net		63			433			—			—			(2	)		(69	)		—			425			122			27			—		—		273		5		—			427
Asset management fees, commissions and other income		1,262			(336	)		(403	)		—			21			1			(26	)		519			1,202			(85	)		44		—		35		3		(31	)		1,168

Total revenues		12,875			16			(403	)		—			1,163			132			(26	)		13,757			12,007			(88	)		44		—		1,557		181		(31	)		13,670


Benefits and Expenses:

Insurance and annuity benefits		6,853			(62	)		—			—			1,035			177			—			8,003			6,146			(39	)		—		—		1,380		153		—			7,640
Interest credited to policyholders’ account balances		911			25			—			(418	)		33			(1	)		—			550			920			(25	)		—		12		33		—		—			940
Interest expense		340			—			—			—			—			1			—			341			322			—			—		—		1		1		—			324
Deferral of acquisition costs		(718	)		—			—			—			—			(1	)		—			(719	)		(724	)		—			—		—		—		—		—			(724	)
Amortization of acquisition costs		530			47			—			—			10			1			—			588			481			(53	)		—		—		11		—		—			439
General and administrative expenses		3,238			(58	)		—			—			94			27			—			3,301			3,202			(9	)		—		—		98		21		(3	)		3,309

Total benefits and expenses		11,154			(48	)		—			(418	)		1,172			204			—			12,064			10,347			(126	)		—		12		1,523		175		(3	)		11,928

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

(2)	U.S. generally accepted accounting principles.

Page 35

Prudential Financial, Inc.

Quarterly Financial Supplement

First 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, 2017																				Three Months Ended September 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		7,557			—			—		—		670		99		—			8,326			7,111			—			—		—		578		106		—			7,795
Policy charges and fee income		794			(69	)		—		—		—		—		—			725			1,565			(63	)		—		—		—		—		—			1,502
Net investment income		3,335			(9	)		—		—		672		91		—			4,089			3,345			(9	)		—		—		666		74		—			4,076
Realized investment gains (losses), net		161			(1,372	)		—		—		82		37		—			(1,092	)		121			1,377			—		—		107		3		—			1,608
Asset management fees, commissions and other income		1,181			4			201		—		25		1		(19	)		1,393			1,219			27			85		—		25		2		(26	)		1,332

Total revenues		13,028			(1,446	)		201		—		1,449		228		(19	)		13,441			13,361			1,332			85		—		1,376		185		(26	)		16,313


Benefits and Expenses:

Insurance and annuity benefits		7,386			(69	)		—		—		1,328		174		—			8,819			7,376			(46	)		—		—		1,207		156		—			8,693
Interest credited to policyholders’ account balances		953			(184	)		—		145		33		—		—			947			927			43			—		31		34		—		—			1,035
Interest expense		326			—			—		—		—		1		—			327			330			—			—		—		—		—		—			330
Deferral of acquisition costs		(755	)		—			—		—		—		—		—			(755	)		(653	)		—			—		—		—		—		—			(653	)
Amortization of acquisition costs		662			(586	)		—		—		8		—		—			84			470			165			—		—		8		—		—			643
General and administrative expenses		3,228			72			—		—		98		18		(5	)		3,411			3,127			6			—		—		94		19		(2	)		3,244

Total benefits and expenses		11,800			(767	)		—		145		1,467		193		(5	)		12,833			11,577			168			—		31		1,343		175		(2	)		13,292



	Three Months Ended December 31, 2017
				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		8,720			—			—		—			674		95			—			9,489
Policy charges and fee income		1,604			(61	)		—		—			—		—			—			1,543
Net investment income		3,465			(12	)		—		—			670		86			—			4,209
Realized investment gains (losses), net		82			(663	)		—		—			72		(2	)		—			(511	)
Asset management fees, commissions and other income		1,379			121			6		—			28		2			(1	)		1,535

Total revenues		15,250			(615	)		6		—			1,444		181			(1	)		16,265


Benefits and Expenses:

Insurance and annuity benefits		9,163			85			—		—			1,311		174			—			10,733
Interest credited to policyholders’ account balances		929			(25	)		—		(37	)		33		—			—			900
Interest expense		344			—			—		—			—		2			—			346
Deferral of acquisition costs		(686	)		—			—		—			—		—			—			(686	)
Amortization of acquisition costs		480			(76	)		—		—			10		—			—			414
General and administrative expenses		3,448			(18	)		—		—			94		18			(100	)		3,442

Total benefits and expenses		13,678			(34	)		—		(37	)		1,448		194			(100	)		15,149

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

(2)	U.S. generally accepted accounting principles.

Page 36

Prudential Financial, Inc.

Quarterly Financial Supplement

First 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 first, 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 and March 31, 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 first, 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 quarter 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 first, 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 and March 31, 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

First 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.

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Prudential Financial, Inc.

Quarterly Financial Supplement

First 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.

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Prudential Financial, Inc.

Quarterly Financial Supplement

First Quarter 2018

RATINGS AND INVESTOR INFORMATION

FINANCIAL STRENGTH RATINGS

as of May 2, 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 May 2, 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.

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PRUDENTIAL FINANCIAL INC - FORM 8-K - EX-99.2 - May 2, 2018

Attached files