Jun 02, 2018
8/11/2019 Prudential AR2013
P R U D E N T I A L F I N A N C I A L , I N C . A N N U A L R E P O R T
8/11/2019 Prudential AR2013
WHO WE ARE
For more than 135 years, Prudential Financial, Inc. has
helped people grow and protect their wealth. We offer
individual and institutional clients a wide array of financial
products and services. Today, we are one of the worlds largest
financial services institutions. We have more than $1.1 trillion
in assets under management and approximately $3.5 trillion
of gross life insurance in force worldwide as of December 31,
2013. We have operations in the United States, Asia, Europeand Latin America. We also have one of the most recognized
and trusted brand symbols: The Rock, an icon of strength,
stability, expertise and innovation. We measure our long-
term success by our ability to deliver value for shareholders,
meet customer needs, attract and develop the best talent
in our industry, offer an inclusive work environment where
employees can develop to their full potential and support the
communities where we live and work.
8/11/2019 Prudential AR2013
Prudential Financial, Inc. 2013 Annual Report
Dear fellow shareholders:
I am pleased to report that Prudential Financial delivered another strong performance in 2013
Our outstanding results for the year were broadly based, reflecting strong growth across our
businesses, coupled with effective pricing discipline and risk management. We also benefited
from meaningful contributions from the significant transactions we have completed over the
past three years: our acquisition of Star Life and Edison Life from AIG in 2011, the completion
in late 2012 of two landmark pension risk transfer transactions, and our acquisition in early2013 of the U.S. individual life insurance business from The Hartford.
The strength of our operations was proven by the achievement of our objective to deliver a
return on equity in 2013 of 13 to 14 percent. In fact, we exceeded the top end of that goal.
In addition, in 2013 we altered our schedule of dividend payments to shareholders from
annual to quarterly, ultimately delivering more than $800 million in Common Stock dividends
during the year.
The achievement of our earnings objectives and other actions throughout the year
demonstrate our ongoing commitment to maintaining a strategic mix of high-quality
businesses, managing risk appropriately, deploying capital effectively, and pursuing profitable
growth for the long term.
We continue to adhere to four key characteristics that drive our companys success:
1. Our unique business mix,which we have developed by deliberately focusing on our core
strengths and on markets in which we see opportunities. The complementary nature of our
portfolio of operations provides a mix of growth and stability, helping balance risk across
2. Our high-quality businesses,which have outstanding leadership, robust fundamentals and
strong positioning in the markets in which we operate.
3. Our financial strength,which enables us to continue delivering on our promises to our
stakeholders, while also seizing opportunities to innovate and grow.
4. The talent and integrity of our people,who remain our most important point of
differentiation in the market. Our commitment to nurturing a diverse and inclusive culture
helps us attract, develop and retain high-quality employees.
In short, 2013 was a year of major progress and accomplishments for the company on
many fronts. We maintained strong momentum in our businesses and further enhanced our
For 2013, on an after-tax adjusted operating income basis,* our Financial Services Businesses
earned $4.586 billion, or $9.67 per share of Common Stock, compared to $3.019 billion, or
$6.40 per share of Common Stock in 2012. On this basis, our earnings per share represent a
20 percent compound growth rate over the past three years.
Based on U.S. generally accepted accounting principles, our Financial Services Businesses
reported a net loss of $713 million, or $1.55 per share of Common Stock, in 2013, compared
to net income of $479 million, or $1.05 per share of Common Stock, in 2012. The 2013 net
loss was mainly driven by volatility in the currency markets and remeasurement of non-yenproduct reserves in our Japanese insurance operations, which we consider non-economic since
we support these reserves with investments in appropriate currencies. Changes in the market
value of derivatives we use to manage our interest rate exposure were also a factor, largely due
to rising U.S. interest rates.
Our worldwide assets under management continued to increase, reaching more than
$1.1 trillion by year-end 2013. This growth is an important indicator of the confidence
our clients continue to have in Prudential.
MESSAGE FROM THE CHAIRMAN
*Adjusted operating income is not calculated under U.S. generally accepted accounting principles (GAAP) and is afinancial measure we use to analyze the operating performance of our Financial Services Businesses. See footnote (1)on page 5 and footnote (A) on page 7 for a further description of adjusted operating income.
2013 was a year of
major progress and
the company on many
fronts. We maintained
strong momentum in
our businesses and
further enhanced our
long-term positioning.John Strangfeld
8/11/2019 Prudential AR2013
2 Prudential Financial, Inc. 2013 Annual Report
Our strong operating results for the year were driven by
solid underlying performance across our businesses. Based
on our excellent performance, our solid positioning in the
marketplace and the talent of our people, we remain confident
in our long-term prospects and excited about our potential
as a company.
Achieving our 2013 ROE objectiveIn 2010, we announced our objective to achieve an ROE of
13 to 14 percent in 2013. We believed then, as we do now,
that achieving and sustaining that level of performance would
demonstrate our superior performance relative to our peers.
Our ability to achieve and exceed that goal in 2013
confirms our belief in our earnings power. Yet we never saw
that objective as a one-year, once and done objective.
Looking ahead, we remain confident in our ability to sustain an
ROE of 13 to 14 percent over the long term.
Building on our momentumIn 2013, we benefited from the contributions of several
targeted acquisitions and transactions we have completed
since 2011 in key markets and segments that complement our
strategic business mix.
We have substantially completed the integration of the
Star Life and Edison Life companies with our Gibraltar Life
operation in Japan. This acquisition is delivering what we
expected in terms of both synergies and business results. We
are benefiting from expanded distribution capabilities from
this acquisition, including new sales professionals and third-
party distributors, as well as the addition of a large force of
independent agents to our existing channel.
The integration of the U.S. individual life insurance operations
we acquired from The Hartford in 2013 is also well on track.
Through this acquisition, our U.S. life insurance operations
achieved greater scale, expanded product offerings andbroader distribution capabilities. Our domestic individual
life insurance business is already benefiting from a unified
distribution system, strong connections with financial
institutions, and our solid positioning in the brokerage general
The two landmark pension risk transfer transactions we
completed in 2012 contributed to the achievement of record
earnings in 2013 in our Retirement unit. We are confident
that the pension risk transfer market will continue to offer
exciting opportunities to our company, for which we are
In addition to producing significant contributions to our
earnings, these acquisitions and transactions have brought
more diversity to our stream of earnings and, thus, morebalance to our operations as a whole. Their successful
execution has further distinguished our company within our
industry and positioned us for further growth.
In 2013, we continued to invest in and expand our operations
in pursuit of other promising opportunities, particularly on the
international front. In August, we announced an agreement to
purchase Uni.Asia Life Assurance Berhad (UAL), a mid-sized
life insurer in Malaysia, through a new joint venture with Bank
Simpanan Nasional, a government-owned bank. We closed
this transaction in January 2014, and hold 70 percent of
UAL. Malaysia is an attractive market, with low life insurance
penetration, a well-developed regulatory environment and
long-term growth potential. This transaction is aligned with ourstrategy to build upon our success in Japan, South Korea and
Taiwan, and expand our footprint in growth markets in Asia.
Our success with all of these transactions demonstrates our
ability to identify, seize and execute on opportunities that
offer the potential for significant earnings and that further
differentiate Prudential in the marketplace.
Operating high-performing businessesW