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
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 (based on number of retail registered representatives)
11th-largest asset manager worldwide (based on assets under management)
Leading non-domestic insurer in Japan
Prudential Financial 2001 Annual Report