This summary is based on the first quarter fiscal 2008 earnings call conducted by Prudential Financial, Inc. (PRU: chart) on May 1, 2008.

Management:

CEO: John R. Strangfeld
CFO, EVP: Richard J. Carbone
Vice Chairman: Mark B. Grier
Head of Domestic Businesses: Bernard Winograd
Sr. VP of IR: Eric Durant
EVP - International Businesses: Edward P. Baird

Key Investors Issues

- EPS were 20 cents per common share compared to $2.18 per common share last year.
- Net income came in at $77 million, down 92% from a year earlier $1.025 billion.
- Commercial mortgage securitization business lost $107 million, before taxes.

First Quarter Highlights

Net income declined and adjusted operating income was $1.65 per share versus $1.83 a year ago.

Net income declined because below the line items nearly offset adjusted operating income. Net income included the loss attributable to commercial mortgage securitization business previously included within asset management segment. The company is exiting this business. The decision was driven not only by the current market environment and the associated volatility but also because the business case for this activity was not proving out. The company recorded realized investment losses that resulted primarily from accounting rules. Accounting driven charges amounted to $600 million were as actual credit related losses amounted to less than $100 million.

- Net income of the Financial Services Businesses amounted to $77 million compared to $1.025 billion in the year-ago quarter. Current quarter net income includes $678 million of pre-tax net realized investment losses and related charges and adjustments.
- Adjusted operating income includes transition costs associated and are related to the integration of A.G. Edwards into Wachovia Securities. In addition, several unusual items mostly related to unfavorable market conditions were a drag on adjusted operating income.
- Current quarter GAAP pretax income includes realized net investment losses of $678 million. This compares to net realized gains of $140 million a year ago. Accounting designation realized doesn''t necessarily refer to actual cash or credit loss. In fact actual credit losses are estimated at $87 million.

Holdings remain substantially all investment grade with about 80% AAA and AA. This compares to about 90% at year-end.

At March 31st, the fixed maturity portfolio of the Financial Services business included $7 billion of commercial mortgage-backed securities, over 90% of these holdings have AAA ratings and gross unrealized losses of $146 million. The remainder of the $3.6 billion of gross unrealized losses on fixed maturities or $2.3 billion relates primarily to widening credit spreads on other investment grade securities.

The decrease in book value for realized investment losses and divested businesses was more than offset by an increase to equity resulting from the combination of the A.G. Edwards business acquired by Wachovia with the retail joint-venture reflected in Financial Advisory segment.

As a result of this combination on January 1st, 2008 the company recorded a $1 billion increase in paid-in capital, reflecting the after-tax gain on exchanging part of interest in the joint venture as previously constituted and receiving a share of ownership in the A.G. Edwards business in return plus a value assigned to rights under the look-back option elected. Because the company has the option to restore ownership back to the 38%, GAAP requires this gain to be recorded indirectly into book value adding about $2.20 per share to book value but it does not count in net income.

Election of the look-back option establishes a new flow for the value of investment. This value is now being finalized as the multiple paid by Wachovia for the A.G. Edwards business was applied to investment. The additional gain the company would recognize on exercise of the put would be around $2 billion after-tax.

Equity market levels influence the amortization of DAC and other items in both Individual Life business and affected several items in annuity business.

In Individual Life business, amortization of DAC and other items which reflected a 10% decline of the S&P in the first quarter on separate account values resulted in a negative swing of about 3 cents per share in comparison to a year ago when the S&P was flat for the quarter. In annuity business, financial market conditions are a driver of provisions for guaranteed minimum death benefits and income benefits as well as amortization of DAC and other cost. The true up for actual experience excluding hedging breakage and excluding market value changes captured in annual unlocking produced a negative swing equal to about 4 cents per share in comparison to a year ago.

The Insurance division reported adjusted operating income of $301 million compared to $318 million in the year-ago quarter.

Individual Life segment reported adjusted operating income of $96 million compared to $101 million in the year-ago quarter. Current quarter results included higher net amortization of deferred policy acquisition and other costs, reflecting less favorable separate account performance than that of the year-ago quarter. The greater net amortization in the current quarter, together with lower revenues related to separate account values and modestly higher expenses, essentially offset more favorable mortality experience. Individual Annuities segment reported adjusted operating income of $115 million compared to $166 million in the year-ago quarter. Less favorable results from mark-to-market of embedded derivatives and related hedge positions associated with living benefits, after related amortization of deferred policy acquisition and other costs, contributed $24 million to the decrease in adjusted operating income, reflecting net costs of $17 million in the current quarter primarily due to financial market conditions compared to a net benefit of $7 million in the year-ago quarter. In addition, current quarter results reflected greater amortization of deferred policy acquisition and other costs, and higher costs for guaranteed minimum death and income benefits, resulting from less favorable than expected experience.

Group Insurance segment reported adjusted operating income of $90 million, an increase of $39 million from the year-ago quarter. Current quarter results include a $20 million benefit from a cumulative adjustment of premiums for earlier periods on a large group life insurance case. The remainder of the increase resulted primarily from more favorable group disability results.

The Investment division reported adjusted operating income of $287 million compared to $420 million in the year-ago quarter.