Prudential 2015 Annual Report Download - page 4

2 Prudential Financial, Inc. 2015 Annual Report
We remain committed to four primary priorities that are
fundamental to the strength of our operations:
1. Our strategic business mix, purposefully focused on
Protection, Retirement and Asset Management, which
drives our performance and differentiates us as a company.
Our focus on these three areas is the result of numerous
actions taken over several years, including acquisitions in key
markets and the divesture of businesses that were not core to
our mission.
2. Our high-quality businesses, which have leading positions
in the markets in which we operate, as well as outstanding
leadership, strong fundamentals and high rates of
customer satisfaction.
3. Our financial strength and brand, which remain integral
to our ability to deliver on our long-term promises to our
customers.
4. The talent of our people and the culture of our company,
which remain our most important competitive advantage and
drive the performance of our businesses.
We are confident in our earnings power
Our performance over the past few years reinforces our confidence
that our diversified and balanced business mix positions us well for
sustainable long-term performance consistent with our goals.
Our complementary business mix, combined with our strong
execution and opportunistic approach to markets, has enabled
us to grow our earnings per share, based on after-tax AOI, at a
pace well above industry averages – about 12 percent annually
over the last five years. This growth has contributed to our ability
to deploy increasing amounts of capital to shareholders through
dividends and buybacks, amounting to about $9 billion since the
beginning of 2011.
Our ability to exceed an ROE of 13 to 14 percent, our long-term
objective, for each of the past three years confirms our confidence
in our earnings power. We continue to believe that this ROE
objective is appropriate, given our mix of businesses and ongoing
investments to support longer-term growth, and one that we
can achieve throughout a market cycle. Achieving that level of
performance differentiates us in the marketplace, while ensuring
we have the flexibility to invest in our businesses, capitalize on
opportunities and deliver value to our shareholders.
We execute effectively
In 2015, our businesses continued to perform well, despite
significant market headwinds.
Our International Insurance segment delivered another year of
solid performance, and the fundamentals and earnings power of
its underlying businesses remain strong. We continue to look for
opportunities to expand our presence in the countries in which
we currently operate, as well as select other markets where we
see long-term growth potential. In March 2016, we completed the
acquisition of a stake in a leading provider of retirement services
in Chile. This strategic partnership expands our presence in Latin
America, a region where we see potential for long-term growth, and
enables us to participate in the growing Chilean pension market.
In our U.S. businesses, we are seeing fundamental growth drivers
in several areas.
In 2015, our Asset Management segment generated unaffiliated
third-party net flows of $22 billion for the year, including its
13th consecutive year of positive net institutional flows. In
addition, sales within our Individual Life insurance segment grew
31 percent across products, while meeting our targeted product mix.
We also continue to see significant opportunity in the retirement
arena. We serve retail and institutional clients in multiple
capacities, including through our defined contribution, stable
value, pension risk transfer and annuity platforms, and we bring
exceptional execution skills and asset management capabilities.
We believe the growth and margin opportunity through the
longer-term theme of retirement puts us in position to deliver
significant value to our shareholders.
We continued to show leadership in the pension risk transfer
market, closing approximately $9 billion of significant funded
and unfunded case wins during the year. Our success reflects the
impact of our strategic investments in our retirement business
over the past decade. Pension risk transfer is an area of specialty
for which we believe we are uniquely suited and where we
continue to see exciting growth opportunities.
We also view annuities as a key part of the broader retirement
theme and a core product in our global platform of businesses,
with solid return and cash flow prospects. In our Individual
Annuities segment, we remain disciplined in our pricing and
are achieving our diversification objectives. We generate good
risk-adjusted returns from variable annuities, particularly as
competitors have exited the market and we have improved the
risk profile of our products.
In 2015, our U.S. businesses also produced attractive underwriting
margins. Most notably, our Retirement segment delivered
significant positive case experience in pension risk transfer for the
year. Our Individual Life segment delivered solid underwriting
results, reflecting growth of our universal life and term insurance
business. Our Group Insurance segment also produced solid
underwriting results, particularly in disability, which has benefited
from its multiyear pricing efforts. We are confident that our
Group Insurance segment is positioned for controlled growth,
with ongoing pricing and underwriting discipline, reflecting the
substantial completion of underwriting and repricing actions we
have taken over the last few years.
We manage capital prudently and seek to reduce complexity
and volatility in results
Effective capital management remains a hallmark of our
company and an essential element of our overall strategy.
Maintaining robust capital and liquidity positions enables us
to retain the capital strength and flexibility we need to pursue
new opportunities while providing a source of insulation from
market volatility.