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Prudential Financial Management Discusses Q2 2012 Results - Earnings Call Transcript

On the other hand, this quarter's result also includes a drag of significantly worse-than-expected mortality in Individual Life, stemming from several large claims on seasoned policies. This unfavorable result, the largest in relation to our expectations since the fourth quarter of 2003, is also in our judgment, a random event.

ROE this quarter amounts to an annualized return over 11%, again, based on adjusted operating income, excluding the small number of market driven and discrete items that Rich will describe in a moment. Keep in mind that this 11% return -- 11-plus percent return, reflects the earnings drag from significant capital capacity, and that we intend to deploy approximately $3 billion of this capacity in the next 4 quarters. A portion of that deployment is slated for the GM pension buyout transaction we expect to close by year end. And in addition our board is authorized $1 billion in share repurchases in the 12 months ending June 30, 2013.

Through business expansion, synergy realization and capital deployment, we expect our ROE to improve. And we continue to believe our stated ROE objectives for 2013 of 13% to 14% is achievable. And achievable in a variety of economic and market environments.

We have focused on execution and realization of this ROE objective. Additional expense synergies related to Star and Edison and the broader financial impact of the strong momentum in international will continue to be important drivers of performance. The successful deployment of capital with an accretive impact in ROE is critical as is the improvement of our operating performance in our U.S. businesses.

Fundamentals are exceptional in international and strong in most of our U.S. businesses. This is what gives us the confidence in our ability to distinguish ourselves with distinctive returns and high-quality businesses. Our strong drivers demonstrate our commercial momentum and support our ability to improve our earnings and returns. In annuities, sales for the quarter amounted to just over $5 billion, roughly in line with their levels since early last year. Our new living benefit product will be launched later this month.

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