v3.8.0.1
Schedule II - Condensed Financial Information of Registrant
 12 Months Ended
Dec. 31, 2017
Condensed Financial Information of Parent Company Only 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, 2017 and 2016
(in millions)
 
 
 
2017
 
2016
ASSETS
 
 
 
 
Investment contracts from subsidiaries
 
$
1

 
$
1

Fixed maturities, available for sale, at fair value (amortized cost: 2017- $1,218; 2016- $1,105)
 
1,250

 
1,071

Other investments
 
2,330

 
3,215

Total investments
 
3,581

 
4,287

Cash and cash equivalents
 
1,665

 
1,116

Due from subsidiaries
 
1,500

 
1,836

Loans receivable from subsidiaries
 
7,846

 
6,719

Investment in subsidiaries
 
63,241

 
54,422

Property, plant and equipment
 
529

 
559

Other assets
 
562

 
384

TOTAL ASSETS
 
$
78,924

 
$
69,323

LIABILITIES AND EQUITY
 
 
 
 
LIABILITIES
 
 
 
 
Due to subsidiaries
 
$
2,205

 
$
2,585

Loans payable to subsidiaries
 
5,738

 
4,295

Short-term debt
 
880

 
535

Long-term debt
 
15,304

 
15,389

Income taxes payable
 
5

 
0

Other liabilities
 
723

 
656

Total liabilities
 
24,855

 
23,460

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; 660,111,339 shares issued as of both December 31, 2017 and 2016)
 
6

 
6

Additional paid-in capital
 
24,769

 
24,606

Common Stock held in treasury, at cost (237,559,118 and 230,537,166 shares as of December 31, 2017 and 2016, respectively)
 
(16,284
)
 
(15,316
)
Accumulated other comprehensive income (loss)
 
17,074

 
14,621

Retained earnings
 
28,504

 
21,946

Total equity
 
54,069

 
45,863

TOTAL LIABILITIES AND EQUITY
 
$
78,924

 
$
69,323

 



















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, 2017, 2016 and 2015
(in millions)
 
 
 
2017
 
2016
 
2015
REVENUES
 
 
 
 
 
 
Net investment income
 
$
92

 
$
61

 
$
19

Realized investment gains (losses), net
 
(73
)
 
(126
)
 
(98
)
Affiliated interest revenue
 
379

 
353

 
353

Other income (loss)
 
(79
)
 
(2
)
 
28

Total revenues
 
319

 
286

 
302

EXPENSES
 
 
 
 
 
 
General and administrative expenses
 
126

 
101

 
170

Interest expense
 
1,057

 
1,106

 
1,080

Total expenses
 
1,183

 
1,207

 
1,250

INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES
 
(864
)
 
(921
)
 
(948
)
Total income tax expense (benefit)
 
(397
)
 
(320
)
 
(396
)
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES
 
(467
)
 
(601
)
 
(552
)
Equity in earnings of subsidiaries
 
8,330

 
4,969

 
6,194

NET INCOME (LOSS)
 
$
7,863

 
$
4,368

 
$
5,642

Other Comprehensive Income (loss)
 
2,453


2,336


(3,765
)
TOTAL COMPREHENSIVE INCOME (LOSS)
 
$
10,316

 
$
6,704

 
$
1,877

 




























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, 2017, 2016 and 2015
(in millions)
 
 
2017
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income (loss)
 
$
7,863

 
$
4,368

 
$
5,642

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
(8,330
)
 
(4,969
)
 
(6,194
)
Realized investment (gains) losses, net
 
73

 
126

 
98

Dividends received from subsidiaries
 
1,975

 
2,828

 
4,557

Property, plant and equipment
 
(1
)
 
(13
)
 
(579
)
Change in:
 
 
 
 
 
 
Due to/from subsidiaries, net
 
213

 
(5,109
)
 
(493
)
Other, operating(1)
 
(149
)
 
204

 
(333
)
Cash flows from (used in) operating activities(1)
 
1,644

 
(2,565
)
 
2,698

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
Proceeds from the sale/maturity of:
 
 
 
 
 
 
Fixed maturities, available-for-sale
 
740

 
0

 
0

Short-term investments
 
15,973

 
17,575

 
13,700

Payments for the purchase of:
 
 
 
 
 
 
Fixed maturities, available for sale
 
(865
)
 
(1,106
)
 
0

Short-term investments
 
(15,087
)
 
(19,111
)
 
(13,002
)
Capital contributions to subsidiaries
 
(1,135
)
 
(2,018
)
 
(2,545
)
Returns of capital contributions from subsidiaries
 
1,150

 
2,755

 
75

Loans to subsidiaries, net of maturities
 
(1,127
)
 
(596
)
 
2,056

Other, investing
 
61

 
1

 
244

Cash flows from (used in) investing activities
 
(290
)
 
(2,500
)
 
528

CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
Cash dividends paid on Common Stock
 
(1,296
)
 
(1,300
)
 
(1,117
)
Common Stock acquired
 
(1,250
)
 
(2,000
)
 
(1,664
)
Common Stock reissued for exercise of stock options
 
246

 
426

 
209

Proceeds from the issuance of debt (maturities longer than 90 days)
 
742

 
30

 
1,332

Repayments of debt (maturities longer than 90 days)
 
(480
)
 
(1,319
)
 
(2,404
)
Repayments of loans from subsidiaries
 
(310
)
 
(390
)
 
(102
)
Proceeds from loans payable to subsidiaries
 
1,627

 
1,405

 
1,316

Net change in financing arrangements (maturities of 90 days or less)
 
(16
)
 
14

 
8

Excess tax benefits from share-based payment arrangements
 
0

 
10

 
3

Other, financing(1)
 
(68
)
 
(132
)
 
(62
)
Cash flows from (used in) financing activities(1)
 
(805
)
 
(3,256
)
 
(2,481
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
549

 
(8,321
)
 
745

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
 
1,116

 
9,437

 
8,692

CASH AND CASH EQUIVALENTS, END OF YEAR
 
$
1,665

 
$
1,116

 
$
9,437

 
 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 
 
 
Cash paid during the period for interest
 
$
1,019

 
$
1,002

 
$
1,048

Cash paid (refunds received) during the period for taxes
 
$
(213
)
 
$
(544
)
 
$
46

 
 
 
 
 
 
 
NON-CASH TRANSACTIONS DURING THE YEAR
 
 
 
 
 
 
Non-cash capital contributions to subsidiaries
 
$
(17
)
 
$
(4,158
)
 
$
1,453

Non-cash dividends/returns of capital from subsidiaries
 
$
0

 
$
4,142

 
$
1,335

Treasury Stock shares issued for stock-based compensation programs
 
$
104

 
$
115

 
$
115

 
__________
(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 (“Prudential Insurance”). On December 18, 2001, Prudential Insurance 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 statements of Prudential Financial reflect its direct wholly-owned subsidiaries using the equity method of accounting.
 
Certain amounts in prior years have been reclassified to conform to the current year presentation.
2.    OTHER INVESTMENTS
 
Prudential Financial’s other investments as of December 31, 2017 and 2016 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)
 
2017
 
2016
 
 
 
 
 
($ in millions)
Short-term debt:
 
 
 
 
 
 
 
Commercial paper(2)
 
 
 
 
$
50

 
$
65

Current portion of long-term debt
 
 
 
 
830

 
470

Total short-term debt
 
 
 
 
$
880

 
$
535

Long-term debt:
 
 
 
 
 
 
 
Fixed rate senior notes
2019-2049
 
2.35%-7.38%
 
$
8,709

 
$
9,064

Floating rate senior notes
2020
 
3.46%-5.49%
 
29

 
508

Junior subordinated notes
2042-2068
 
4.50%-8.88%
 
6,566

 
5,817

Total long-term debt
 
 
 
 
$
15,304

 
$
15,389

 __________
(1)
Ranges of interest rates are for the year ended December 31, 2017.
(2)
The weighted average interest rate on outstanding commercial paper was 1.15% and 0.6% at December 31, 2017 and 2016, respectively.

Long-term Debt
 
In order to modify 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 are not reflected in the rates presented in the table above. For those derivatives that qualify for hedge accounting treatment, interest expense increased by $1 million, $2 million, and $3 million for each of the years ended December 31, 2017, 2016 and 2015, respectively.

Schedule of Long-term Debt Maturities
 
The following table presents Prudential Financial’s contractual maturities for long-term debt as of December 31, 2017:
 
 
Calendar Year
 
 
 
2019
 
2020
 
2021
 
2022
 
2023 and
thereafter
 
Total
 
($ in millions)
Long-term debt
$
1,100

 
$
1,179

 
$
400

 
$
0

 
$
12,625

 
$
15,304

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 companies:
 
 
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
(in millions)
Pruco Reinsurance
 
$
0

 
$
1,298

 
$
0

Prudential Annuities Holding Company
 
145

 
98

 
102

International Insurance and Investments Holding Companies
 
546

 
1,171

 
1,818

Prudential Insurance Company of America
 
1,000

 
900

 
1,950

Prudential Investment Management
 
467

 
746

 
266

Prudential Annuities Life Assurance Corporation
 
950

 
1,140

 
450

Other Holding Companies
 
16

 
231

 
46

Total
 
$
3,124

 
$
5,584

 
$
4,632

5.    COMMITMENTS AND GUARANTEES
 
Prudential Financial has issued a subordinated guarantee covering a subsidiary’s domestic commercial paper program. As of December 31, 2017, there was $500 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, 2017, Prudential Financial had issued guarantees of outstanding loans totaling $3.9 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, 2017, Prudential Financial has no accrued liabilities associated with other financial guarantees and indemnity arrangements.
6.    REDEMPTION OF CLASS B SHARES
 
From demutualization through December 31, 2014, Prudential Financial had two classes of common stock outstanding. The Common Stock, which is publicly-traded (NYSE:PRU), reflected the performance of the Financial Services Businesses, while the Class B Stock, which was issued through a private placement and did not trade on any exchange, reflected the performance of the Closed Block Business.

On January 2, 2015, pursuant to a Share Repurchase Prudential Agreement entered into on December 1, 2014, between the Company and the holders of the Class B stock, the Company repurchased and canceled all of the shares of the Class B Stock for an aggregate cash purchase price of $651 million, resulting in the elimination of the Class B stock held in treasury, a $484 million decrease in “Retained Earnings” and a $167 million decrease in “Additional paid-in-capital.”

In accordance with the terms of the Share Repurchase agreement, the holders of the Class B Stock subsequently exercised their right to dispute the calculation of the purchase price. This dispute was resolved during the first quarter of 2016, resulting in an increase to the cash purchase price of $119 million, bringing the total aggregate purchase price to $770 million. The increase to the cash purchase price resulted in a corresponding decrease in “Retained Earnings.”