Prudential 2012 Annual Report Download - page 99

Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its
obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its
indebtedness. The following table summarizes the ratings for Prudential Financial and certain of its subsidiaries as of February 22, 2013.
A.M.
Best(1) S&P(2) Moody’s(3) Fitch(4)
Last review date ................................................................... 6/12/2012 7/26/2012 7/24/2012 12/6/2012
Current outlook .................................................................... Stable Stable(5) Positive Stable
Financial Strength Ratings:
The Prudential Insurance Company of America ............................................ A+ AA- A2 A+
Pruco Life Insurance Company ........................................................ A+ AA- A2 A+
Pruco Life Insurance Company of New Jersey ............................................ A+ AA- NR* A+
Prudential Annuities Life Assurance Corporation .......................................... A+ AA- NR A+
Prudential Retirement Insurance and Annuity Company ..................................... A+ AA- A2 A+
The Prudential Life Insurance Company Ltd. (Prudential of Japan) ............................ NR AA- NR NR
Gibraltar Life Insurance Company, Ltd. .................................................. NR AA- NR NR
Credit Ratings:
Prudential Financial, Inc.:
Short-term borrowings ........................................................... AMB-1 A-1 P-2 F2
Long-term senior debt(6) ......................................................... a- A Baa2 BBB+
Junior subordinated long-term debt ................................................. bbb BBB+ Baa3 BBB-
The Prudential Insurance Company of America:
Capital and surplus notes ......................................................... a A Baa1 A-
Prudential Funding, LLC:
Short-term debt ................................................................. AMB-1 A-1+ P-2 F1
Long-term senior debt ............................................................ a+ AA- A3 A
PRICOA Global Funding I:
Long-term senior debt ............................................................ aa- AA- A2 A+
* “NR” indicates not rated.
(1) A.M. Best Company , which we refer to as A.M. Best, financial strength ratings for insurance companies currently range from “A++ (superior)” to “F
(in liquidation).” A.M. Best’s ratings reflect its opinion of an insurance company’s financial strength, operating performance and ability to meet its
obligations to policyholders. An A.M. Best long-term credit rating is an opinion of the ability of an obligor to pay interest and principal in accordance
with the terms of the obligation. A.M. Best long-term credit ratings range from “aaa (exceptional)” to “d (in default),” with ratings from “aaa” to “bbb”
considered as investment grade. An A.M. Best short-term credit rating reflects an opinion of the issuer’s fundamental credit quality. Ratings range from
“AMB-1+,” which represents an exceptional ability to repay short-term debt obligations, to “AMB-4,” which correlates with a speculative (“bb”) long-
term rating.
(2) Standard & Poor’s Rating Services, which we refer to as S&P, financial strength ratings currently range from “AAA (extremely strong)” to “R
(regulatory supervision).” These ratings reflect S&P’s opinion of an operating insurance company’s financial capacity to meet the obligations of its
insurance policies in accordance with their terms. A “+” or “-” indicates relative strength within a category. An S&P credit rating is a current opinionof
the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations or a specific financial program.
S&P’s long-term issue credit ratings range from “AAA (extremely strong)” to “D (default).” S&P short-term ratings range from “A-1 (highest
category)” to “D (default).”
(3) Moody’s Investors Service, Inc., which we refer to as Moody’s, insurance financial strength ratings currently range from “Aaa (exceptional)” to “C
(lowest).” Moody’s insurance ratings reflect the ability of insurance companies to repay punctually senior policyholder claims and obligations. Numeric
modifiers are used to refer to the ranking within the group—with 1 being the highest and 3 being the lowest. These modifiers are used to indicate
relative strength within a category. Moody’s credit ratings currently range from “Aaa (highest)” to “C (default).” Moody’s credit ratings grade debt
according to its investment quality. Moody’s considers “A1,” “A2” and “A3” rated debt to be upper medium grade obligations, subject to low credit
risk. Moody’s short-term ratings are opinions of the ability of issuers to honor senior financial obligations and contracts. Prime ratings range from
“Prime-1 (P-1),” which represents a superior ability for repayment of senior short-term debt obligations, to “Prime-3 (P-3),” which represents an
acceptable ability for repayment of such obligations. Issuers rated “Not Prime” do not fall within any of the Prime rating categories.
(4) Fitch Ratings Ltd., which we refer to as Fitch, financial strength ratings currently range from “AAA (exceptionally strong)” to “D (distressed).” Fitch’s
ratings reflect its assessment of the likelihood of timely payment of policyholder and contractholder obligations. Fitch long-term credit ratings currently
range from “AAA (highest credit quality),” which denotes exceptionally strong capacity for timely payment of financial commitments, to “D (default).”
Investment grade ratings range between “AAA” and “BBB.” Short-term ratings range from “F1 (highest credit quality)” to “C (high default risk).”
Within long-term and short-term ratings, a “+” or a “–” may be appended to a rating to denote relative status within major rating categories.
(5) S&P has the ratings of our U.S.-domiciled entities on stable outlook and the ratings of The Prudential Life Insurance Company Ltd. and Gibraltar Life
Insurance Company Ltd. on negative outlook as part of S&P’s decision to put the sovereign debt ratings of Japan on negative outlook.
(6) Includes the retail medium-term notes program.
The ratings set forth above reflect current opinions of each rating agency. Each rating should be evaluated independently of any other
rating. These ratings are not directed toward shareholders and do not in any way reflect evaluations of the safety and security of the
Common Stock. These ratings are reviewed periodically and may be changed at any time by the rating agencies. As a result, we cannot
assure you that we will maintain our current ratings in the future.
Rating agencies use an “outlook” statement for both industry sectors and individual companies. For an industry sector, a stable
outlook generally implies that over the next 12-18 months the rating agency expects ratings to remain unchanged among companies in the
sector. Currently, A.M. Best, S&P and Fitch all have the U.S. life insurance industry on stable outlook. Moody’s has the U.S. life insurance
industry on negative outlook. For a particular company, an outlook generally indicates a medium- or long-term trend (generally six months
Prudential Financial, Inc. 2012 Annual Report 97