Prudential 2015 Annual Report Download - page 96

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 19, 2016.
A.M.
Best(1) S&P(2) Moody’s(3) Fitch(4)
Last review date ......................................................................... 5/13/2015 9/18/2015 11/11/2015 12/15/2015
Current outlook .......................................................................... Stable Stable Stable Positive
Financial Strength Ratings:
The Prudential Insurance Company of America .................................................. A+ AA- A1 A+
Pruco Life Insurance Company .............................................................. A+ AA- A1 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- A1 A+
The Prudential Life Insurance Company Ltd. (Prudential of Japan) .................................. NR A+ NR NR
Gibraltar Life Insurance Company, Ltd. ........................................................ NR A+ NR NR
The Prudential Gibraltar Financial Life Insurance Co. Ltd ......................................... NR A+ NR NR
Prudential Life Insurance Co. of Taiwan, Inc.(5) ................................................. NR twAA+ NR NR
Credit Ratings:
Prudential Financial, Inc.:
Short-term borrowings ................................................................. AMB-1 A-1 P-2 F2
Long-term senior debt .................................................................. a- A Baa1 BBB+
Junior subordinated long-term debt ....................................................... bbb BBB+ Baa2 BBB-
The Prudential Insurance Company of America:
Capital and surplus notes ............................................................... a A A3 A-
Prudential Funding, LLC:
Short-term debt ....................................................................... AMB-1 A-1+ P-1 F1
Long-term senior debt .................................................................. a+ AA- A2 A
PRICOA Global Funding I:
Long-term senior debt .................................................................. aa- AA- A1 A+
* “NR” indicates not rated.
(1) A.M. Best Company, which we refer to as A.M. Best, financial strength ratings for insurance companies range from “A++ (superior)” to “s
(suspended).” A rating of A+ is the second highest of sixteen rating categories. A.M. Best long-term credit ratings range from “aaa (exceptional)” to “s
(suspended)”. A.M. Best short-term credit ratings range from “AMB-1+,” which represents an exceptional ability to repay short-term debt obligations,
to “s(suspended)”.
(2) Standard & Poor’s Rating Services, which we refer to as S&P, financial strength ratings for insurance companies range from “AAA (extremely strong)”
to “D (default).” A rating of AA- is the fourth highest of twenty-three rating categories. 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 range from “Aaa (exceptional)” to “C (lowest).” A
rating of A1 is the fifth highest of twenty-one rating categories. 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 range from “Aaa
(highest)” to “C (default). Moody’s short-term 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 Inc., which we refer to as Fitch, financial strength ratings range from “AAA (exceptionally strong)” to “C (distressed).” A rating ofA+is
the fifth highest of nineteen rating categories. Fitch long-term credit ratings 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).”
(5) This rating for Prudential Life Insurance Company of Taiwan, Inc. was affirmed on December 10, 2015 by Taiwan Ratings Corporation, a partner of
S&P.
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 stakeholders 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, Moody’s, A.M. Best, S&P and Fitch all have the U.S. life insurance industry on stable outlook. For a particular company,
an outlook generally indicates a medium- or long-term trend (generally six months to two years) in credit fundamentals, which if continued,
may lead to a rating change. These indicators are not necessarily a precursor of a rating change nor do they preclude a rating agency from
changing a rating at any time without notice. Currently, Fitch has all the Company’s ratings on positive outlook, and Moody’s, S&P and
A.M. Best have all the Company’s ratings on stable outlook.
Requirements to post collateral or make other payments as a result of ratings downgrades under certain agreements, including
derivative agreements, can be satisfied in cash or by posting permissible securities held by the subsidiaries subject to the agreements. In
addition, a ratings downgrade by A.M. Best to “A-” for our domestic life insurance companies would require Prudential Insurance to either
post collateral or a letter of credit in the amount of approximately $1.5 billion, based on the level of statutory reserves related to the
variable annuity business acquired from Allstate. We believe that the posting of such collateral would not be a material liquidity event for
Prudential Insurance.
94 Prudential Financial, Inc. 2015 Annual Report