1. Prudential Financial, Inc. Covering Analyst: Christian Meunier meunier@uoregon.edu

2. Company Overview ›Founded in 1875 ›Became a mutual company in 1915, offering group life insurance ›Went public in 2001, splitting up the company into Closed Block and Financial Service Business ›Has since expanded internationally, offering a variety of products ›Manages over $1 trillion in assets

3. Product Offering ›Individual Life Insurance ›Group Life Insurance ›Asset Management -Retirement Solutions -Pension-Risk Transfers -Opportunity to invest in mutual funds

4. Business Divisions ›U.S. Individual and Group Life Insurance (18%) ›International Insurance & Investments (41%) ›U.S. Retirement Solutions & Investment Management (22%) ›Closed Block Business (14%) ›Corporate and Other (5%)

5. Business Growth Strategies ›Domestic Growth Strategies - Acquisitions (Hartford Individual Life Insurance) -Organic Growth (Verizon and General Motors pension transfers) ›International Growth Strategies - Growth in Asia through acquisitions -Continued presence in South America and Eastern Europe ›Joint Ventures - China and India

6. Industry Overview ›Life Insurance and Annuities -Expected annual growth of 3.4% -Highly regulated both internationally and domestically -Recent low interest rates have halted growth -Highly saturated U.S. industry has led to international growth -No company in the U.S. has over a 4% share of the industry -Ageing population in Japan and U.S. will improve sales

7. Macro Factors ›Prudential is highly dependent on economic conditions -Group Life Insurance sales -Individual Life Insurance sales -Annuity revenue is dependent on investment gains ›Interest Rates -High percentage of investments are in bonds

8. Portfolio History ›Tall Firs - 220 shares at $64.95. Purchased 10/02/2011 - 1.62% of portfolio, has returned -13.30% ›Svigals - 40 shares at $63.46. Purchased 11/02/ 2011

9. Revenue Model ›Split into 5 divisions ›U.S. Individual Life and Group Insurance –Improving economy -Acquisition of Hartford Life Insurance ›International Insurance -Foreign acquisitions will increase sales -Aging population in Japan and Korea ›U.S. Retirement Solutions and Investments –Pension transfers -Recent growth has been slowed due to interest rate

10. Revenue Model Continued ›Closed Block Business -Policies that were in place during demutualization -Will expire ›Corporate and Other -Averaged out the last five years to find fixed value

11. Working Capital Expenditure ›Very few current assets - Included 50% of cash and cash equivalents in my model ›Trend of greater liabilities expected to continue -Used up current assets for acquisitions -Must have a positive working capital terminal year ›Company does not have capital expenditure

12. Discounted Cash Flow ›Benefits - Policy pricing from acquisitions cannot be changed by Prudential ›General and Administrative Costs - Cost projected as % of revenue ›Dividends to Policyholders -Will increase in the future due to high competition ›Interest Expense on Policies -Greater Investment income -Set themselves apart from competition

13. Amortization and Depreciation ›Amortization of Deferred Policy Acquisitions -Costs that have to do with selling new and renewed policies (commission) -Constant rate, lowers towards end due to efficient distribution channels ›Depreciation -Flat rate due to Prudential not increasing equipment with revenue

14. Beta

15. Final DCF Valuation

16. Comparable Analysis ›Looked at market capitalization, product offering, beta, geographic sales and growth. ›MetLife (35%), Aflac (35%), Principal Financial Group (20%), Manulife (10%), AIG (0%)

17. Multiples Multiple Implied PriceWeight EV/Gross Profit $79.0540.00% EV/EBITDA $45.3860.00% Price Target $58.85 Current Price $57.21 Undervalued 2.86%

18. Final Valuation

19. Catalysts ›Upside -Increase in interest rates -Entry into China and India -Decreased regulation ›Downside -Continued high unemployment -Interests remain at historical lows

20. Questions?

21. Recommendation ›Hold in both portfolios ›Withstood difficult economic conditions ›Strong global position ›Intelligent acquisitions