A.M. Best Assigns Debt Rating to Prudential Financial, Inc.’s New Junior Subordinated Notes

  A.M. Best Assigns Debt Rating to Prudential Financial, Inc.’s New Junior
  Subordinated Notes

Business Wire

OLDWICK, N.J. -- November 15, 2012

A.M. Best Co. has assigned a debt rating of “bbb” to the recently issued $1.5
billion 5.625% fixed-to-floating rate junior subordinated notes maturing June
15, 2043 of Prudential Financial, Inc. (PFI) (Newark, NJ) [NYSE: PRU]. The
assigned outlook is stable. The financial strength, issuer credit and existing
debt ratings of PFI and its domestic life/health insurance companies are
unchanged.

The assigned rating reflects the notes’ deeply subordinated status within
PFI’s capital structure. Specifically, these securities will rank junior to
PFI’s existing and future senior indebtedness and pari passu with PFI’s
existing junior subordinated notes.

A.M. Best notes that the newly issued junior subordinated notes mirror the key
terms of the company’s most recent issuance. (See A.M. Best’s press release
dated August 8, 2012 for further information.) Similarly, these notes differ
from the other existing junior subordinated debt in that PFI may redeem the
new notes on or after June 15, 2023 or at any time within 90 days after the
occurrence of a “tax event,” a rating agency event” or a “regulatory capital
event.” The net proceeds of the hybrid offering are expected to be used for
general corporate purposes including the redemption of PFI’s outstanding
retail medium-term notes.

The rating recognizes PFI’s very strong liquidity at the holding company in
addition to the strong operating performance of its various business segments.
PFI has repeatedly demonstrated its access to the capital markets,
particularly over the past two years. However, A.M. Best notes that PFI,
although consistent with its scale and business mix, continues to utilize
significant amounts of total leverage. A.M. Best notes that this most recent
issuance somewhat reduces PFI’s overall financial flexibility. However,
incorporating partial equity credit for the new notes, financial leverage
remains within the guidelines for the company’s current rating level. Based on
A.M. Best’s methodology, interest coverage is below guidelines for the current
rating but is more than mitigated by the strong reported adjusted operating
income and excess cash at the holding company.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Ken Johnson, CFA, CTP
Senior Financial Analyst
(908) 439-2200, ext. 5056
ken.johnson@ambest.com
or
Thomas Rosendale
Assistant Vice President
(908) 439-2200, ext. 5201
thomas.rosendale@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com
 
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