Prudential 2001 Annual Report Download - page 7

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Prude ntial Financ ial 2 00 1 Annual Repo rt 5
Leading Market
Presence
#1 in U.S.
variable life
assets
#2 U.S. individual
life insurance
business
#2 U.S. group
insurance
business
8th-largest
U.S. securities
brokerage firm
(bas ed on number
of retail registered
repres e ntatives )
11th-largest
asset manager
worldwide
(bas ed on ass e ts
under management)
Leading
non-domestic
insurer in Japan
Specific earnings targets by business create accountability for results.
Over the past several years, we’ve given our management team clear ROE
targets for each of our businesses.
Institutional relationships can provide opportunities for leverage. More
than 24,000 institutions rely on Prudential Financial for high-quality employee
benefits. Through worksite marketing, we have an excellent opportunity to
create new individual customer relationships and deepen existing ones.
Redeployment of capital gives us flexibility. After demutualization we held
over $2 billion in cash at the parent company which may be used to accelerate
growth of existing businesses, buy back stock, or make acquisitions. Our
selection among these alternatives will be driven by our commitment to building
shareholder value through ROE growth. In addition, we believe that we have
other underutilized capital that will be aggressively managed to enhance our ROE.
Acquisitions will be part of our strategy but will continue to be
pursued with discipline. In evaluating candidates, our number one priority
will be return on equity. Our acquisition of Kyoei Life in 2001 is an example
of a transaction that has enhanced our ROE.
Raising our return on equity is, of course, also dependent on many factors
beyond our control. Chief among them is performance of the financial
markets. Our plans assume that market conditions will be consistent with their
long-term historical norms, although our goal is to build our businesses
to sustain profitability even in uncertain times.
Fundamental reasons for confidence.
Prudential Financial is ready to meet the demands of public ownership.
Our mission is clear: to help clients around the world both grow and protect
their wealth.
Our domestic business is in the midst of an important transformation, focusing
on serving the right clients, with the right products and services, and at the right cost.
Our international businesses have expanded rapidly, and we will continue
to look abroad for sources of future growth.
Our target for raising our return on equity is challenging, but we believe it
is appropriate for Prudential, and our resolve for meeting it is strong.
Having a globally recognized brand is a great source of strength.
And, our history is an important reminder of what Prudential Financial can
achieve. Our company has stood strong for more than 125 years. Through it all,
we’ve been challenged, and we’ve adapted. We will continue to grow and
change. But one thing remains constant: We are, and will always be, Rock Solid.
Arthur F. Ryan
Chairman & Chief Executive Officer