P RUDENTIAL F INANCIAL , INC . S ECOND Q UARTER 2015 A UGUST 6, 2015 - - PDF document

PRUDENTIAL FINANCIAL, INC.

SECOND QUARTER 2015 EARNINGS CONFERENCE CALL PRESENTATION

AUGUST 6, 2015

SECOND QUARTER FINANCIAL HIGHLIGHTS(1)

Second Quarter 2015 2014 Reported 1,841 $ 1,623 $ Market driven and discrete items

(2)

203 (12) Excluding market driven and discrete items 1 638 $ 1 635 $ Pre-Tax Adjusted Operating Income (AOI) Excluding market driven and discrete items 1,638 $ 1,635 $ Reported 2.91 $ 2.49 $ Market driven and discrete items

(2)

0.29 (0.02) Excluding market driven and discrete items 2.62 $ 2.51 $ Earnings Per Share (EPS) Reported 1,406 $ 1,049 $ June 30, December 31, 2015 2014 Book Value Per Share of Common Stock Net Income Reported (including Accumulated Other Comprehensive Income, "AOCI") 91.17 $ 88.80 $ Excluding AOCI and adjusted to remove amounts included for foreign currency exchange rate remeasurement 71.09 $ 64.75 $ 1) Amounts attributable to Prudential Financial, Inc. (PFI); represents results of Financial Services Businesses for periods prior to first quarter 2015. Dollar amounts 2015 2014 Reported 16.9% 16.0% Excluding impact of market driven and discrete items on AOI(2) 15.6% 16.3% Operating Return on Average Equity(3) Year to Date June 30,

2 2Q15 Earnings Conference Call

1) Amounts attributable to Prudential Financial, Inc. (PFI); represents results of Financial Services Businesses for periods prior to first quarter 2015. Dollar amounts in millions except per share amounts. Per share amounts on diluted basis. 2) Market driven and discrete items as disclosed on pages 4 and 26; based on application of 35% tax rate for EPS and operating return on average equity. 3) Annualized; based on after-tax adjusted operating income. Gives effect to direct equity adjustment for earnings per share calculation for periods prior to first quarter

• 2015. Based on average attributed equity excluding accumulated other comprehensive income and adjusted to remove amounts included for foreign currency

exchange rate remeasurement.

ANNUAL REVIEW OF ACTUARIAL ASSUMPTIONS(1)

Second Quarter 2015

Pre-tax Adjusted Operating Income(2) Earnings Per Share(3)

Individual Annuities 31 $ 0.04 $ Individual Life 68 0.10 Group Insurance 28 0.04 International Insurance - Life Planner Operations (11) (0.02) p ( ) ( ) International Insurance - Gibraltar Life (10) (0.01) Corporate & Other 11 0.02 Total impact from annual review of actuarial assumptions 117 $ 0.17 $

3 2Q15 Earnings Conference Call

1) Includes refinements of reserves and amortization of deferred policy acquisition and other costs. 2) In millions. 3) Diluted; based on after-tax impact; tax effect for market driven and discrete items at 35%.

IMPACT OF MARKET DRIVEN AND DISCRETE ITEMS

Pre-tax Adjusted Earnings Per Pre-tax Adjusted Earnings Per

2015 2014 Second Quarter

j Operating Income(1) g Share(2) j Operating Income(1) g Share(2)

Reported Results(3) 1,841 $ 2.91 $ 1,623 $ 2.49 $ Market driven and discrete items:

Annual review of actuarial assumptions(4)

117 0.17

• Individual Annuities - Market unlockings and experience true-ups(5)

94 0.13 (4) (0.01)

Individual Life - Integration costs for Hartford Life acquisition

(8) (0.01) (8) (0.01) Subtotal 203 0.29 (12) (0.02) Results excluding market driven and discrete items 1,638 $ 2.62 $ 1,635 $ 2.51 $ 1) In millions

4 2Q15 Earnings Conference Call

1) In millions. 2) Diluted; based on after-tax adjusted operating income; tax effect for market driven and discrete items at 35%. 3) Represents results of Financial Services Businesses for periods prior to first quarter 2015. 4) Includes refinements of reserves and amortization of deferred policy acquisition and other costs. 5) Includes adjustments to reflect updated estimates of profitability based on market performance in relation to our assumptions.

SECOND QUARTER NON-AOI ITEMS(1)

($ millions)

2015 2014

Pre-tax realized investment gains (losses), net, and related charges and dj t t i l d d i t i

Second Quarter

Product related embedded derivatives and hedging activities 510 $ (365) $ General investment portfolio activities 405 255 Foreign currency exchange rate remeasurement 133 (231) adjustments included in net income: Changes in market value of derivatives used in risk management activities including asset/liability duration management (728) 95 Impairments and credit losses (34) (27)

Subtotal 286 $ (273) $ ( )

Results of divested businesses (57) 47 Other(2) 14 36

S b l (43) $ 83 $

Other Non-AOI pre-tax items:

1) Certain prior period items have been reclassified to conform to current period presentation

Subtotal (43) $ 83 $ Total Non-AOI items(3) 243 $ (190) $

5 2Q15 Earnings Conference Call

1) Certain prior period items have been reclassified to conform to current period presentation. 2) Includes changes in recorded asset values and liabilities representing changes in value which are expected to ultimately accrue to contractholders, primarily from interest related mark to market adjustments. Excludes pre-tax reconciling item between AOI and U.S. GAAP for equity in earnings of operating joint ventures and earnings attributable to non-controlling interests. 3) See earnings release tables for related tax effect.

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION – INDIVIDUAL ANNUITIES

($ millions)

Individual Annuities Retirement Asset Management g Second Quarter 2015

Reported pre-tax adjusted operating income 548 $ 237 $ 196 $

(1)

Market driven and discrete items(1) 125

• Excluding impact of market driven and discrete items

423 $ 237 $ 196 $ Second Quarter 2014

Reported pre-tax adjusted operating income 390 $ 286 $ 200 $ Market driven and discrete items(1) (4)

• Excluding impact of market driven and discrete items

394 $ 286 $ 200 $

6 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

INDIVIDUAL ANNUITIES – EARNINGS AND RETURN ON ASSETS

Earnings(1) ($ millions) Return on Assets (bps)

101 101 98 107 105 120 $500 60 80 100 $300 $400 394 403 390 423 423 20 40 $100 $200

Average Account Values ($ billions) $156.4 $158.8 $157.5 $160.0 $161.9

$0 2Q14 3Q14 4Q14 1Q15 2Q15

AOI excluding market driven and discrete items Return on Assets (ROA)(2) 7 2Q15 Earnings Conference Call

1) Pre-tax AOI excluding market driven and discrete items as disclosed on page 27. 2) Annualized pre-tax AOI excluding market driven and discrete items divided by average account values based on daily averages for separate accounts.

INDIVIDUAL ANNUITIES – SALES AND PRODUCT MIX

0.3 $2.7 $2.6 $2.4 $2.3

Gross Sales

($ billions)

0.5 0.6 0.3 $2.2 $2.3

30% 64%

1.9 0.8 0.6

36% 70%

0.8 2Q14 3Q14 4Q14 1Q15 2Q15

Net Sales ($ millions) $443 $392 $193 $31 $138

No optional living benefit risk(1) Gross Sales Prudential Defined Income (PDI) Reinsured Highest Daily Income (HDI) risk(2) HDI risk retained by Prudential

8 2Q15 Earnings Conference Call

1) Includes Prudential Premier Investment contracts, and other annuities without optional living benefit guarantees. 2) Includes portion of account values for certain variable annuities for which living benefits are covered under an external reinsurance agreement.

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION – RETIREMENT

($ millions)

Individual Annuities Retirement Asset Management g Second Quarter 2015

Reported pre-tax adjusted operating income 548 $ 237 $ 196 $

(1)

Market driven and discrete items(1) 125

• Excluding impact of market driven and discrete items

423 $ 237 $ 196 $ Second Quarter 2014

Reported pre-tax adjusted operating income 390 $ 286 $ 200 $ Market driven and discrete items(1) (4)

• Excluding impact of market driven and discrete items

394 $ 286 $ 200 $

9 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

RETIREMENT – SALES AND ACCOUNT VALUES

Gross Deposits and Sales

36.2

Gross Deposits and Sales

($ billions)

6.6 14.2 7.3 14.2

9.2

4.5 5.0 2Q14 3Q14 4Q14 1Q15 2Q15

($ billions)

Account Values(1)

2.1

330.5 356.1 363.8 365.3 372.6

148.9 183.8

Investment Only Stable Value Full Service Longevity Reinsurance Group Annuities and Other Products

Institutional Investment Products

181.6 188.8

10 2Q15 Earnings Conference Call

1) At end of period.

Full Service

2Q14 3Q14 4Q14 1Q15 2Q15

U.S. RETIREMENT SOLUTIONS AND INVESTMENT MANAGEMENT DIVISION – ASSET MANAGEMENT

($ millions)

Individual Annuities Retirement Asset Management g Second Quarter 2015

Reported pre-tax adjusted operating income 548 $ 237 $ 196 $

(1)

Market driven and discrete items(1) 125

• Excluding impact of market driven and discrete items

423 $ 237 $ 196 $ Second Quarter 2014

Reported pre-tax adjusted operating income 390 $ 286 $ 200 $ Market driven and discrete items(1) (4)

• Excluding impact of market driven and discrete items

394 $ 286 $ 200 $

11 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION – INDIVIDUAL LIFE

($ millions)

Individual Lif Group I Life Insurance Second Quarter 2015

Reported pre-tax adjusted operating income 237 $ 75 $ Market driven and discrete items(1) 60 28

Excluding impact of market driven and discrete items 177 $ 47 $ Second Quarter 2014

Reported pre-tax adjusted operating income 158 $ 46 $ Market driven and discrete items(1) (8)

• (8)

Excluding impact of market driven and discrete items 166 $ 46 $

12 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

INDIVIDUAL LIFE – SALES TREND

Annualized New Business Premiums

($ millions) 22 18 13 103 130 124 130 $120 $140 17 46 44 49 49 52 11 10 03 97 $60 $80 $100 30 30 43 40 48 16 13 16 17 17 $20 $40 $60 $65 $46 $0 2Q14 3Q14 4Q14 1Q15 2Q15 Guaranteed Universal Life (GUL) Other Universal Life Term Variable

13 2Q15 Earnings Conference Call

U.S. INDIVIDUAL LIFE AND GROUP INSURANCE DIVISION – GROUP INSURANCE

($ millions)

Individual Lif Group I Life Insurance Second Quarter 2015

Reported pre-tax adjusted operating income 237 $ 75 $ Market driven and discrete items(1) 60 28

Excluding impact of market driven and discrete items 177 $ 47 $ Second Quarter 2014

Reported pre-tax adjusted operating income 158 $ 46 $ Market driven and discrete items(1) (8)

• Market driven and discrete items

(8)

Excluding impact of market driven and discrete items 166 $ 46 $

14 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

GROUP INSURANCE – BENEFITS RATIO TRENDS

92 8%

Group Life

89.3% 89.7% 88.1% 92.8% 88.3% 2Q14 3Q14 4Q14 1Q15 2Q15

Group Disability

Reported Benefits Ratio(1) 89.9% 86.5%

83.9% 84.6% 79.1% 72.2% 76.3% 2Q14 3Q14 4Q14 1Q15 2Q15

Reported Benefits Ratio(1) 133.8% 61.6%

Benefits ratio excluding impact of market driven and discrete items as disclosed on page 28

15 2Q15 Earnings Conference Call

1) As reported in quarterly financial supplement, inclusive of impact of annual reviews of actuarial assumptions and reserve refinements in third quarter 2014 and second quarter 2015.

Benefits ratio excluding impact of market driven and discrete items as disclosed on page 28.

INTERNATIONAL INSURANCE DIVISION – LIFE PLANNER OPERATIONS

($ millions)

Life Planner Operations Gibraltar Life & Other Operations Second Quarter 2015

R t d t dj t d ti i 381 $ 461 $ Reported pre-tax adjusted operating income 381 $ 461 $ Market driven and discrete items(1) (11) (10)

Excluding impact of market driven and discrete items 392 $ 471 $ Second Quarter 2014

Reported pre-tax adjusted operating income 382 $ 502 $ Market driven and discrete items(1)

• Excluding impact of market driven and discrete items

382 $ 502 $

16 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

INTERNATIONAL INSURANCE DIVISION – GIBRALTAR LIFE & OTHER OPERATIONS

($ millions)

Life Planner Operations Gibraltar Life & Other Operations Second Quarter 2015

R t d t dj t d ti i 381 $ 461 $ Reported pre-tax adjusted operating income 381 $ 461 $ Market driven and discrete items(1) (11) (10)

Excluding impact of market driven and discrete items 392 $ 471 $ Second Quarter 2014

Reported pre-tax adjusted operating income 382 $ 502 $ Market driven and discrete items(1)

• Excluding impact of market driven and discrete items

382 $ 502 $

17 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

INTERNATIONAL INSURANCE – EARNINGS TREND

($ millions)

Earnings(1)

759 853 884 843 767 834 863 $800 $1,000 378 418 502 446 385 395 471 $400 $600 381 435 382 397 382 439 392 $200 $400 $0 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Gibraltar Life & Other Operations

18 2Q15 Earnings Conference Call

1) Pre-tax AOI excluding market driven and discrete items as disclosed on pages 29 and 30.

Life Planner Operations

INTERNATIONAL INSURANCE – SALES TREND

Annualized New Business Premiums(1)

($ millions)

Annualized New Business Premiums(1)

68 81 732 710 724 780 777 $800 $900 175 161 173 166 171 191 76 68 68 $500 $600 $700 104 105 122 121 118 220 186 179 175 204 $200 $300 $400

Savings Accident & Health Retirement Death Protection

171 178 189 245 183 $0 $100 $200 2Q14 3Q14 4Q14 1Q15 2Q15

Independent Agency Bank Channel Gibraltar Life Consultants Life Planners – Excluding Japan

19 2Q15 Earnings Conference Call

1) Foreign denominated activity translated to U.S. dollars at uniform exchange rates for all periods presented, including Japanese yen 91 per U.S. dollar, and Korean won 1,120 per U.S. dollar. U.S. dollar-denominated activity is included based on the amounts as transacted in U.S. dollars.

g p Life Planners – Japan

CORPORATE & OTHER OPERATIONS

($ millions)

2015 2014

Reported pre-tax adjusted operating income (loss) (294) $ (341) $

Second Quarter

Reported pre tax adjusted operating income (loss) (294) $ (341) $ Market driven and discrete items(1) 11

• Excluding impact of market driven and discrete items

(305) $ (341) $

20 2Q15 Earnings Conference Call

1) Market driven and discrete items as disclosed on pages 3 and 4.

FINANCIAL STRENGTH AND FLEXIBILITY HIGHLIGHTS INSURANCE OPERATIONS

Risk Based Capital Ratio (RBC) Risk Based Capital Ratio (RBC)(1)

(1)

Target Target

December December 31, 2014 31, 2014 498% Prudential Insurance 400% Estimated June 30, 2015 Estimated June 30, 2015 Well Above Target

Solvency Solvency Margin Ratio Margin Ratio Target Target March 31, 2015 March 31, 2015

Prudential of Japan(2) 600% 700% 844% Prudential of Japan(2) 600% - 700% 844% Gibraltar Life(2)(3) 600% - 700% 882%

1) Th i l i f RBC i i t d d l l f th i f ti f i t d i t i t d d f th f ki i f

21 2Q15 Earnings Conference Call

1) The inclusion of RBC measures is intended solely for the information of investors and is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities. 2) Based on Japanese statutory accounting and risk measurement standards applicable to regulatory filings as of March 31, 2015. 3) Gibraltar consolidated basis.

FINANCIAL STRENGTH AND FLEXIBILITY HIGHLIGHTS ON BALANCE SHEET CAPITAL CAPACITY AND LIQUIDITY POSITION

Estimated On Balance Sheet Capital Capacity(1) Second Quarter Highlights

• Capital generated by businesses

Slight positive from interest rates

$4.5

>

($ billions)

• Slight positive from interest rates
• Approximately $500 million

dividends and share repurchases

$4.0 $3.0

~

Financial $2.0 $2.5 $3.0 December 31, 2014 March 31, 2015 June 30, 2015

~ > >

Capital Earmarked for Reduction of Capital Debt Estimated On Balance Sheet Capital Capacity

Parent Company $4 2 $3 7 $5 6

Financial Leverage Ratios(2) 29.3% 29.7% 23.9%

Estimated On Balance Sheet Capital Capacity

1) Based on targeted RBC ratio of 400% for Prudential Insurance and equivalent levels of capital at other insurance operating entities. Gives pro-forma effect to a t t d 25% d bt t it l ti f i d ith t l ti i f t t

Cash and Short-Term Investments(3) $4.2 billion $3.7 billion $5.6 billion

22 2Q15 Earnings Conference Call

targeted 25% debt to capital ratio for periods with actual ratios in excess of target. 2) Represents capital debt divided by sum of capital debt and equity. Junior subordinated debt treated as 25% equity, 75% capital debt for purposes of calculation. Equity excludes accumulated other comprehensive income, impact of foreign currency exchange rate remeasurement, and non-performance risk adjustment, net of deferred policy acquisition costs. 3) Net of outstanding commercial paper and cash held in an intra-company liquidity account at PFI.

PRUDENTIAL FINANCIAL, INC.

SECOND QUARTER 2015 EARNINGS CONFERENCE CALL PRESENTATION QUESTIONS AND ANSWERS

AUGUST 6, 2015

FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURE

Certain of the statements included in this presentation constitute forward-looking statements within the meaning of the U. S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall,” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. There can be no assurance that future developments affecting Prudential Financial, Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in the “Risk Factors” section included in Prudential Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014. Prudential Financial, Inc. does not intend, and is under no obligation, to update any particular forward-looking statement included in this presentation. This presentation also includes references to “adjusted operating income” and return on equity, which is based on adjusted

• perating income. Adjusted operating income is a measure of performance that is not calculated based on accounting principles

generally accepted in the United States of America (GAAP). For additional information about adjusted operating income and the comparable GAAP measure, including a reconciliation between the two, please refer to our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, which are available on our Web site at www.investor.prudential.com. A reconciliation is also included as part of this presentation. _______________________________________________________________________________ Prudential Financial, Inc. of the United States is not affiliated with Prudential PLC which is headquartered in the United Kingdom.

24 2Q15 Earnings Conference Call

RECONCILIATIONS BETWEEN ADJUSTED OPERATING INCOME

AND THE COMPARABLE GAAP MEASURE

($ millions)

2014 2015 After-tax adjusted operating income (1) 1,176 $ 1,350 $ Reconciling items: Second Quarter Reconciling items: Realized investment gains (losses), net, and related charges and adjustments (273) 286 Investment gains (losses) on trading account assets supporting insurance liabilities, net 225 (220) Change in experience-rated contractholder liabilities due to asset value changes (189) 234 Divested businesses: Closed Block division

• 52

Other divested businesses 47 (109) Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests 18 45 Total reconciling items, before income taxes (172) 288 Income taxes, not applicable to adjusted operating income (58) 188 Total reconciling items, after income taxes (114) 100 Income from continuing operations (after tax) Income from continuing operations (after-tax) before equity in earnings of operating joint ventures (1) 1,062 1,450 Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests (17) (44) Income from continuing operations attributable to Prudential Financial, Inc. (1) 1,045 1,406 Earnings attributable to noncontrolling interests 23 53 Income from continuing operations (after-tax) (1) 1,068 1,459 g p ( ) ( ) , , Income from discontinued operations, net of taxes 4

• Net income (1)

1,072 1,459 Less: Income attributable to noncontrolling interests 23 53 Net income attributable to Prudential Financial, Inc. (1) 1,049 $ 1,406 $

25 2Q15 Earnings Conference Call

1) Represents results of Financial Services Businesses for periods prior to first quarter 2015.

RECONCILIATION FOR PRE-TAX ADJUSTED OPERATING INCOME

EXCLUDING MARKET DRIVEN AND DISCRETE ITEMS

Pre-tax Adjusted Operating Income(1) Earnings Per Share(2) Pre-tax Adjusted Operating Income(1) Earnings Per Share(2)

(3)

Year to Date June 30, 2015 2014 Reported Results(3) 3,586 $ 5.69 $ 3,194 $ 4.89 $ Market driven and discrete items:

Annual review of actuarial assumptions(4)

117 0.17

• Individual Annuities - Market unlockings and experience true-ups(5)

200 0.28 (25) (0.04)

I di id l Lif I t ti t f H tf d Lif i iti

(17) (0 02) (16) (0 02)

Individual Life - Integration costs for Hartford Life acquisition

(17) (0.02) (16) (0.02)

International Insurance - Life Planner Operations - Reserve refinements and related items

• (16)

(0.02) Subtotal 300 0.43 (57) (0.08) Results excluding market driven and discrete items 3 286 $ 5 26 $ 3 251 $ 4 97 $ Results excluding market driven and discrete items 3,286 $ 5.26 $ 3,251 $ 4.97 $ 1) In millions

26 2Q15 Earnings Conference Call

1) In millions. 2) Diluted; based on after-tax adjusted operating income; tax effect for market driven and discrete items at 35%. 3) Represents results of Financial Services Businesses for periods prior to first quarter 2015. 4) Includes refinements of reserves and amortization of deferred policy acquisition and other costs. 5) Includes adjustments to reflect updated estimates of profitability based on market performance in relation to our assumptions.

RECONCILIATION FOR INDIVIDUAL ANNUITIES PRE-TAX ADJUSTED

OPERATING INCOME EXCLUDING MARKET DRIVEN AND DISCRETE ITEMS

($ millions)

2Q14 3Q14 4Q14 1Q15 2Q15

I di id l A iti t dj t d ti i

390 $ 367 $ 322 $ 529 $ 548 $

Individual Annuities pre-tax adjusted operating income

390 $ 367 $ 322 $ 529 $ 548 $ Reconciling items: Market unlockings and experience true-ups(1) (4) (50) (68) 106 94 Annual review of actuarial assumptions(2)

• 14
• 31

Sub-total (4) (36) (68) 106 125

Individual Annuities pre-tax adjusted operating income excluding market driven and discrete items

394 $ 403 $ 390 $ 423 $ 423 $

27 2Q15 Earnings Conference Call

1) Includes adjustments to reflect updated estimates of profitability based on market performance in relation to our assumptions. 2) Includes refinements of reserves and amortization of deferred policy acquisition and other costs.

RECONCILIATION FOR GROUP INSURANCE PRE-TAX ADJUSTED

OPERATING INCOME EXCLUDING MARKET DRIVEN AND DISCRETE ITEMS

($ millions)

2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15

Group Insurance pre-tax adjusted operating income

46 $ (73) $ 44 $ 30 $ 75 $ Reconciling items: Annual review of actuarial assumptions(1)

• (107)
• 28

S b t t l (107) 28 Sub-total

• (107)
• 28

Group Insurance pre-tax adjusted operating income excluding market driven and discrete items

46 $ 34 $ 44 $ 30 $ 47 $

28 2Q15 Earnings Conference Call

1) Includes refinements of reserves and amortization of deferred policy acquisition and other costs.

RECONCILIATION FOR LIFE PLANNER OPERATIONS PRE-TAX ADJUSTED

OPERATING INCOME EXCLUDING MARKET DRIVEN AND DISCRETE ITEMS

($ millions)

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Life Planner Operations pre-tax adjusted operating income

303 $ 419 $ 382 $ 414 $ 374 $ 439 $ 381 $ Reconciling items: Annual review of actuarial assumptions and reserve refinements

(1)

(78) (16)

• 17

(8)

• (11)

Sub-total (78) (16)

• 17

(8)

• (11)

Life Planner Operations pre-tax adjusted operating income excluding market driven and discrete items

381 $ 435 $ 382 $ 397 $ 382 $ 439 $ 392 $ 29 2Q15 Earnings Conference Call

1) Includes refinements of reserves and amortization of deferred policy acquisition and other costs.

RECONCILIATION FOR GIBRALTAR LIFE PRE-TAX ADJUSTED

OPERATING INCOME EXCLUDING MARKET DRIVEN AND DISCRETE ITEMS

($ millions)

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Gibraltar Life pre-tax adjusted operating income

344 $ 418 $ 502 $ 431 $ 312 $ 395 $ 461 $ R ili it Reconciling items: Annual review of actuarial assumptions and reserve refinements

(1)

(23)

• (15)

(73)

• (10)

Intergration costs for Star/Edison acquistion (11)

• Sub-total

(34)

• (15)

(73)

• (10)

Gibraltar Life pre-tax adjusted operating income excluding market driven and discrete items

378 $ 418 $ 502 $ 446 $ 385 $ 395 $ 471 $ 30 2Q15 Earnings Conference Call

1) Includes refinements of reserves and amortization of deferred policy acquisition and other costs.