XML 202 R34.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Schedule II - Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Schedule II - Condensed Financial Information of Registrant
PRUDENTIAL FINANCIAL, INC.
Schedule II
Condensed Financial Information of Registrant
Condensed Statements of Financial Positions as of December 31, 2019 and 2018
(in millions)
 
 
 
2019
 
2018
ASSETS
 
 
 
 
Investment contracts from subsidiaries
 
$
1

 
$
1

Fixed maturities, available for sale, at fair value (amortized cost: 2019- $1,643; 2018- $1,354)
 
1,697

 
1,387

Equity securities, at fair value (cost: 2019- $25; 2018- $25)
 
25

 
25

Other invested assets
 
2,326

 
3,537

Total investments
 
4,049

 
4,950

Cash and cash equivalents
 
1,162

 
1,327

Due from subsidiaries
 
1,670

 
1,601

Loans receivable from subsidiaries
 
7,151

 
7,044

Investment in subsidiaries
 
76,101

 
57,934

Property, plant and equipment
 
471

 
502

Income taxes receivable
 
540

 
413

Other assets
 
101

 
98

TOTAL ASSETS
 
$
91,245

 
$
73,869

LIABILITIES AND EQUITY
 
 
 
 
LIABILITIES
 
 
 
 
Due to subsidiaries
 
$
2,560

 
$
2,117

Loans payable to subsidiaries
 
6,110

 
5,260

Short-term debt
 
1,204

 
1,115

Long-term debt
 
17,430

 
16,141

Other liabilities
 
826

 
619

Total liabilities
 
28,130

 
25,252

EQUITY
 
 
 
 
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)
 
0

 
0

Common Stock ($.01 par value; 1,500,000,000 shares authorized; 666,305,189 and 660,111,339 shares issued as of December 31, 2019 and 2018, respectively)
 
6

 
6

Additional paid-in capital
 
25,532

 
24,828

Common Stock held in treasury, at cost (267,472,781 and 249,398,887 shares as of December 31, 2019 and 2018, respectively)
 
(19,453
)
 
(17,593
)
Accumulated other comprehensive income (loss)
 
24,039

 
10,906

Retained earnings
 
32,991

 
30,470

Total equity
 
63,115

 
48,617

TOTAL LIABILITIES AND EQUITY
 
$
91,245

 
$
73,869

 



















See Notes to Condensed Financial Information of Registrant
PRUDENTIAL FINANCIAL, INC.
Schedule II
Condensed Financial Information of Registrant
Condensed Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
(in millions)
 
 
 
2019
 
2018
 
2017
REVENUES
 
 
 
 
 
 
Net investment income
 
$
203

 
$
168

 
$
92

Realized investment gains (losses), net
 
(250
)
 
106

 
(73
)
Affiliated interest revenue
 
362

 
374

 
379

Other income (loss)
 
21

 
(7
)
 
(79
)
Total revenues
 
336

 
641

 
319

EXPENSES
 
 
 
 
 
 
General and administrative expenses
 
92

 
126

 
126

Interest expense
 
1,161

 
1,087

 
1,057

Total expenses
 
1,253

 
1,213

 
1,183

INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES
 
(917
)
 
(572
)
 
(864
)
Total income tax expense (benefit)
 
(223
)
 
(130
)
 
(397
)
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES
 
(694
)
 
(442
)
 
(467
)
Equity in earnings of subsidiaries
 
4,880

 
4,516

 
8,330

NET INCOME (LOSS)
 
$
4,186

 
$
4,074

 
$
7,863

Other Comprehensive Income (loss)
 
13,126


(6,974
)

2,453

TOTAL COMPREHENSIVE INCOME (LOSS)
 
$
17,312

 
$
(2,900
)
 
$
10,316

 




























See Notes to Condensed Financial Information of Registrant
PRUDENTIAL FINANCIAL, INC.
Schedule II
Condensed Financial Information of Registrant
Condensed Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017(in millions)
 
 
2019
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income (loss)
 
$
4,186

 
$
4,074

 
$
7,863

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
(4,880
)
 
(4,516
)
 
(8,330
)
Realized investment (gains) losses, net
 
250

 
(106
)
 
73

Dividends received from subsidiaries
 
2,269

 
2,975

 
1,975

Property, plant and equipment
 
0

 
(4
)
 
(1
)
Change in:
 
 
 
 
 
 
Due to/from subsidiaries, net
 
669

 
(1
)
 
213

Other, operating(1)
 
(229
)
 
115

 
(149
)
Cash flows from (used in) operating activities(1)
 
2,265

 
2,537

 
1,644

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
Proceeds from the sale/maturity of:
 
 
 
 
 
 
Fixed maturities, available-for-sale
 
371

 
234

 
740

Short-term investments
 
21,700

 
18,708

 
15,973

Payments for the purchase of:
 
 
 
 
 
 
Equity securities, at fair value
 
0

 
(25
)
 
0

Fixed maturities, available for sale
 
(660
)
 
(370
)
 
(865
)
Short-term investments
 
(20,486
)
 
(19,914
)
 
(15,087
)
Capital contributions to subsidiaries
 
(593
)
 
(874
)
 
(1,135
)
Returns of capital contributions from subsidiaries
 
1,013

 
1,083

 
1,150

Acquisition of Assurance IQ
 
(1,758
)
 
0

 
0

Loans to subsidiaries, net of maturities
 
(108
)
 
803

 
(1,127
)
Other, investing
 
0

 
0

 
61

Cash flows from (used in) investing activities
 
(521
)
 
(355
)
 
(290
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
Cash dividends paid on Common Stock
 
(1,641
)
 
(1,521
)
 
(1,296
)
Common Stock acquired
 
(2,500
)
 
(1,500
)
 
(1,250
)
Common Stock reissued for exercise of stock options
 
133

 
132

 
246

Proceeds from the issuance of debt (maturities longer than 90 days)
 
2,465

 
2,531

 
742

Repayments of debt (maturities longer than 90 days)
 
(1,114
)
 
(1,443
)
 
(480
)
Repayments of loans from subsidiaries
 
(7
)
 
(728
)
 
(310
)
Proceeds from loans payable to subsidiaries
 
818

 
99

 
1,627

Net change in financing arrangements (maturities of 90 days or less)
 
9

 
(36
)
 
(16
)
Other, financing(1)
 
(72
)
 
(66
)
 
(68
)
Cash flows from (used in) financing activities(1)
 
(1,909
)
 
(2,532
)
 
(805
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
(165
)
 
(350
)
 
549

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
 
1,327

 
1,677

 
1,128

CASH AND CASH EQUIVALENTS, END OF YEAR
 
$
1,162

 
$
1,327

 
$
1,677

 
 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 
 
 
Cash paid during the period for interest
 
$
1,084

 
$
1,014

 
$
1,019

Cash paid (refunds received) during the period for taxes
 
$
(103
)
 
$
(231
)
 
$
(213
)
 
 
 
 
 
 
 
NON-CASH TRANSACTIONS DURING THE YEAR
 
 
 
 
 
 
Non-cash capital contributions to subsidiaries
 
$
(596
)
 
$
(22
)
 
$
(17
)
Non-cash dividends/returns of capital from subsidiaries
 
$
1

 
$
101

 
$
0

Treasury Stock shares issued for stock-based compensation programs
 
$
197

 
$
138

 
$
104

 
 
 
 
 
 
 
Acquisitions:
 
 
 
 
 
 
Assets Acquired
 
$
2,428

 
 
 
 
Liabilities assumed
 
216

 
 
 
 
Treasury Stock shares issued
 
454

 
 
 
 
Net cash paid on acquisition
 
$
1,758

 
 
 
 
 
__________
(1)
Prior period amounts are presented on a basis consistent with current period presentation, reflecting the adoption of ASU 2016-09. See Note 2 to the Consolidated Financial Statements for additional information.
See Notes to Condensed Financial Information of Registrant
PRUDENTIAL FINANCIAL, INC.
Schedule II
Condensed Financial Information of Registrant
Notes to Condensed Financial Information of Registrant
1.    ORGANIZATION AND PRESENTATION
 
Prudential Financial, Inc. (“Prudential Financial”) was incorporated on December 28, 1999, as a wholly-owned subsidiary of The Prudential Insurance Company of America (“PICA”). On December 18, 2001, PICA converted from a mutual life insurance company to a stock life insurance company and became an indirect, wholly-owned subsidiary of Prudential Financial.
 
The condensed financial information of Prudential Financial, Inc. (the “Parent Company”) should be read in conjunction with the consolidated financial statements of Prudential Financial, Inc. and its subsidiaries and the notes thereto (the “Consolidated Financial Statements”). The condensed financial statements of Prudential Financial reflect its direct wholly-owned subsidiaries using the equity method of accounting.
 
In October 2019, the Company completed the acquisition of Assurance IQ, Inc. (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs, for approximately $1,758 million in cash, net of transaction expenses, and restricted Prudential Financial Common Stock and equity awards with a market value of approximately $454 million as of the closing date. Assurance IQ is reported as a wholly owned subsidiary of Prudential.
2.    OTHER INVESTMENTS
 
Prudential Financial’s other investments as of December 31, 2019 and 2018 consisted primarily of highly liquid debt investments and intercompany enterprise liquidity account funds.
3.    DEBT
 
A summary of Prudential Financial’s short- and long-term debt is as follows:
 
 
 
 
 
 
December 31,
 
Maturity
Dates
 
Rate(1)
 
2019
 
2018
 
 
 
 
 
($ in millions)
Short-term debt:
 
 
 
 
 
 
 
Commercial paper(2)
 
 
 
 
$
25

 
$
15

Current portion of long-term debt
 
 
 
 
1,179

 
1,100

Total short-term debt
 
 
 
 
$
1,204

 
$
1,115

Long-term debt:
 
 
 
 
 
 
 
Fixed rate senior notes
2021-2051
 
1.35%-6.63%
 
$
9,912

 
$
8,601

Floating rate senior notes

 

 
0

 
29

Junior subordinated notes
2042-2058
 
4.50%-5.88%
 
7,518

 
7,511

Total long-term debt
 
 
 
 
$
17,430

 
$
16,141

 __________
(1)
Ranges of interest rates are for the year ended December 31, 2019.
(2)
The weighted average interest rate on outstanding commercial paper was 1.71% and 2.45% at December 31, 2019 and 2018, respectively.

Long-term Debt
 
In order to manage exposure to interest rate movements, Prudential Financial utilizes derivative instruments, primarily interest rate swaps, in conjunction with some of its debt issues. The impact of these derivative instruments is not reflected in the rates presented in the table above. For those derivatives that qualify for hedge accounting treatment, interest expense was $0 million, $0 million, and $1 million for each of the years ended December 31, 2019, 2018 and 2017, respectively.

Schedule of Long-term Debt Maturities
 
The following table presents Prudential Financial’s contractual maturities for long-term debt as of December 31, 2019:
 
 
Calendar Year
 
 
 
2021
 
2022
 
2023
 
2024
 
2025 and
thereafter
 
Total
 
(in millions)
Long-term debt
$
400

 
$
0

 
$
0

 
$
700

 
$
16,330

 
$
17,430


4.    DIVIDENDS AND RETURNS OF CAPITAL
 
For the years ended December 31, Prudential Financial received cash dividends and/or returns of capital from the following subsidiaries:
 
 
 
2019
 
2018
 
2017
 
 
(in millions)
Prudential Annuities Holding Company
 
$
163

 
$
175

 
$
145

International Insurance and Investments Holding Companies
 
1,065

 
2,270

 
546

The Prudential Insurance Company of America
 
600

 
0

 
1,000

PGIM Holding Company
 
462

 
578

 
467

Prudential Annuities Life Assurance Corporation
 
978

 
1,025

 
950

Other Holding Companies
 
14

 
10

 
16

Total
 
$
3,282

 
$
4,058

 
$
3,124


5.    COMMITMENTS AND GUARANTEES
 
Prudential Financial has issued a subordinated guarantee covering a subsidiary’s domestic commercial paper program. As of December 31, 2019, there was $524 million outstanding under this commercial paper program.
 
Prudential Financial has provided guarantees of the payment of principal and interest on intercompany loans between affiliates. As of December 31, 2019, Prudential Financial had issued guarantees of outstanding loans totaling $3.8 billion between international insurance subsidiaries and other affiliates.
 
In 2013, Prudential Financial entered into a $500 million indemnity and guarantee agreement with Wells Fargo Bank Northwest, N.A. Under this agreement, Prudential Financial guaranteed obligations with respect to an affiliated loan from PICA to an affiliate. The loan proceeds were utilized to construct Prudential’s new home office in Newark, New Jersey.

Prudential Financial is also subject to other financial guarantees, net worth maintenance agreements and indemnity arrangements, including those made in the normal course of businesses guaranteeing the performance of, or representations made by, Prudential Financial subsidiaries. Prudential Financial has provided indemnities and guarantees related to acquisitions and dispositions, investments, debt issuances and other transactions, including those provided as part of its ongoing operations that are triggered by, among other things, breaches of representations, warranties or covenants provided by Prudential Financial or its subsidiaries. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, it is not possible to determine the maximum potential amount due under these guarantees. At December 31, 2019, Prudential Financial has no accrued liabilities associated with other financial guarantees and indemnity arrangements.