This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Prudential Financial Inc. (PRU: chart) on February 7, 2008.

Management:

- CEO and Chairman-Elect: John R. Strangfeld
- CFO: Richard J. Carbone
- Vice Chairman: Mark B. Grier
- EVP, U.S.A.: Bernard Winograd
- Controller and Principal Accounting Officer: Peter Sayre
- Head of IR: Eric Durant

Key Investors Issues

- Net income dropped 11% to $893 million or $1.88 a share.
- Sales increased by 2.5% from $6.48 billion in 2006 to $6.64 billion.
- The Board authorized the repurchase of up to $3.5 billion for 2008.

Full Year Highlights:

- Net income grew 11.7% to $3.5 billion or $7.61 a share.
- Revenues rose by 8.5% to $26.7 billion from $24.6 billion in 2006.
- Insurance and annuity benefits were up 3.9% to $10.8 billion.

Fourth Quarter Highlights

Net income amounted to $792 million or $1.75 per share, down 11.3% from $893 million or $1.88 per share in 2006 as dislocations in credit markets resulted in significant mark-to-market losses on investments.

- Several of the segments recorded mark-to-market losses within adjusted operating income, amounting to $83 million pre-tax or 14 cents per share on externally managed fixed income investments in the European market.
- The underlying assets are mainly European corporate bonds and asset-backed securities with about 90% at investment grade and no exposure to U.S. subprime mortgage paper.
- The changes in market value reflect continued widening of spreads in European credit markets, rather than defaults or impairments.

Gross unrealized losses on fixed maturities in the general account stood at $2 billion at year-end, with $680 million related to subprime holdings of $8 billion at year-end based on amortized costs.

- About 97% of the subprime holdings were priced as of year-end using third party pricing services, and these unrealized losses essentially reflect widening of credit spreads. - During the quarter, downgrades affected 76 million par value of the total $8 billion of holdings and there were upgrades on par value of about $39 million.
- The firm has no exposure to subprime mortgage-backed CDOs and continue to be comfortable with the level of risk in the holdings.
- Sales increased by 2.5% from $6.48 billion in 2006 to $6.64 billion on robust growth in premiums and investment income.

The fixed maturity portfolio of the financial services businesses included $7 billion of commercial mortgage-backed securities and over 90% of these holdings have AAA ratings and gross unrealized losses are $25 million.

- The remainder of the $2 billion of gross unrealized loses on fixed maturities relates primarily to widening credit spreads on other investment grade securities.
- The fixed maturity portfolio remains at a net gain position at year-end and net unrealized gains of $1.3 billion.
- Closed Block business reported net income of $79 million compared to $144 million a year ago.
- The current quarter expense for dividends to policyholders was $30 million greater than a year ago reflecting an increase in the dividends scale.

The firm also recorded an $18 million expense relating to the insurance guarantee fund obligations, stemming from the bankruptcy that occurred many years ago.

- In the asset management business, widening credit spreads resulted in a pre-tax loss of $49 million or roughly 8 cents per share from the commercial mortgage securitization operation.
- The portfolio of businesses is well balanced and diverse and has the requisite skills to manage through the challenges.
-Capital management has been instrumental,with $2 billion of excess equity on the books as well as $4.5 billion in untapped capacity to issue capital debt and hybrids.
- The Board authorized the repurchase of up to $3.5 billion for 2008.

Segment Highlights:

- Individual Life Insurance reported operating income of $125 million, compared to $132 million a year ago.
- The amortization of differed policy acquisition costs and related items was $20 million higher than a year ago.
- The current quarter downturn in the equity markets, in contrast to a strong quarter for the equity markets a year earlier, was largely responsible for the unfavorable swing in back amortization.

Mortality experience was more favorable than a year ago, partly offsetting the impact of greater back amortization on.

- Sales, excluding COLI amounted to $122 million, compared to $143 million a year ago as a $28 million decrease in Universal Life sales more than offset an increase of $7 million or 15% in term insurance sales.
- Sales for the year ago quarter benefited from large Universal Life cases with substantial initial drop in premiums, mainly sold through third party distribution.
- The firm continues to maintain vigilance to screen out stranger-owned life insurance, and avoided participation in some premium financing programs that can generate substantial large case sales in order to stay clear of this market.
- Agent count stood at 2400 at year-end, down about 150 from a year ago, reflecting attrition mainly of lower producers coupled with selective hiring.

- The annuity business reported adjusted operating income of $167 million, compared to $154 million a year ago, with the $13 million increase emanating from higher asset-based fees driven by market appreciation together with strong net sales of variable annuities, which amounted to $2.1 billion for the year.
- Gross variable annuity sales were $3 billion, up 15% from a year ago, as the innovative living benefit features have been well received by customers and their financial advisors.
- The overall take rate for living benefit was more than 80% and account values with the Highest Daily or HD Lifetime Five feature that introduced just over a year ago, reached $3.7 billion at year-end.