Prudential Financial, Inc. (PRU)

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Prudential Financial (PRU)

Q2 2013 Earnings Call

August 08, 2013 11:00 am ET


Eric Durant

John Robert Strangfeld - Chairman, Chief Executive Officer, President and Member of Executive Committee

Mark B. Grier - Vice Chairman

Robert Michael Falzon - Chief Financial Officer and Executive Vice President

Charles Frederick Lowrey - Head of Asset Management Business, Executive Vice President, Chief Operating Officer of US Businesses, Chief Executive Officer of Prudential Investment Management, President of Prudential Investment Management and Executive Vice President of Prudential Financial & Prudential Insurance


Ryan Krueger - Dowling & Partners Securities, LLC

Suneet L. Kamath - UBS Investment Bank, Research Division

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Thomas G. Gallagher - Crédit Suisse AG, Research Division

Sean Dargan - Macquarie Research

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Erik James Bass - Citigroup Inc, Research Division



Ladies and gentlemen, thank you for standing by, and welcome to the second quarter 2013 earnings teleconference. [Operator Instructions] And as a reminder, today's conference call is being recorded.

I would now like to turn the conference over to Mr. Eric Durant. Please go ahead.

Eric Durant

Thank you, Cynthia. Good morning. Thank you for joining our call to review second quarter results. We realize we were relatively late to report this quarter. We hope the wait was worthwhile.

In order to help you to understand Prudential Financial, we will make some forward-looking statements in the following presentation. It is possible that actual results may differ materially from the predictions we make today. Additional information regarding factors that could cause such a difference appears in the section titled Forward-Looking Statements and Non-GAAP Measures of our earnings press release for the second quarter of 2013, which can be found on our website at

In addition, this presentation may include references to adjusted operating income, which are earnings per share, or EPS, or return on equity, or ROE, which are determined based on adjusted operating income. Adjusted operating income is a non-GAAP measure of performance of our Financial Services businesses that excludes certain items. Adjusted operating income is not a substitute for income determined in accordance with generally accepted accounting principles, GAAP, and the excluded items are important to an understanding of our overall results of operation.

For a reconciliation of adjusted operating income and the comparable GAAP measure, please see our earnings press release on our website. Additional information relating to the company's financial performance is also located on our website. Who writes this stuff anyway.

Representing Prudential on today's call are John Strangfeld; CEO; Mark Grier, Vice Chairman; Charlie Lowrey, Head of Domestic Businesses; Ed Baird, Head of International Businesses; Rob Falzon, Chief Financial Officer; and Peter Sayre, Controller and Principal Accounting Officer. We'll begin with prepared comments by John, Mark and Rob. We'll be referring to slides that you can get on our website, again, at After the presentations, we'll have -- answer your questions.


John Robert Strangfeld

Thank you, Eric. Good morning, everyone, and thank you for joining us. The central message today is that we had another strong quarter, and we're tracking well to achieve our goals for 2013. While we clearly benefited from some tailwinds, including strong investment results, the main driver of our improving results is business fundamentals, and each of our divisions is contributing. Mark and Rob will review the quarter in greater detail in a few minutes, but here are a few highlights.

Our Retirement business had record earnings, largely on the strength of the 2 large pension risk transfer deals we completed late last year. We invested for many years to develop our capabilities in pension risk transfer, and it's pleasing to see initial tangible benefit from the commitment we made.

Individual Life Insurance also had a strong quarter, reflecting a solid contribution from The Hartford Life block we acquired early this year. Integration is on plan, and both integration and expenses and cost savings are tracking with our expectations. The expanded distribution in the wirehouse and bank channels and the high-quality staff that this deal bring us are exceeding our expectations.

Results in International Insurance continue to reflect solid organic growth, as well as increasing expense synergies from our acquisition of Star and Edison. To be sure, challenges remain. It's clear to us that we will continue to focus on building a company that achieves and sustains superior financial performance, especially as measured by return on equity, over time and through challenging environments.

We believe our goal of superior performance is supported by a strong foundation that we can build upon. First, our portfolio of businesses is balanced and diverse. We believe our set of businesses should produce superior returns over time because of the markets they serve, along with the high value-added products at the core of our value proposition.

Second, our businesses are well led and are leaders in their markets as competitive measures, such as sales, flows and persistency, as well as overall performance, will attest.

Third, capital management is a part of our value proposition. We strive for a disciplined balance of capital deployment between a normal course organic growth, growth through innovative new products or applications, such as pension risk transfer, M&A and return to our shareholders.

And finally, while it's hard to demonstrate except through results, we strongly believe that superior talent and the culture in which they work is and will continue to be the biggest driver of our long-term performance.

With that, I'd like to turn it over to Mark.

Mark B. Grier

Thanks, John. Good morning, good afternoon, good evening, depending on where you are. Thanks for joining us today. I'll take you through our results for the quarter, and then I'll turn it over to Rob Falzon.

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