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Dear Financial Professional:
On February 19, Fitch Ratings lowered the financial
strength ratings of Prudential Financial, Inc.’s
domestic life insurance subsidiaries from AA- to A+ and
senior debt rating from A- to BBB. It also lowered the
short-term credit ratings that are applicable to our
commercial paper programs: Prudential Funding, LLC (from
F1+ to F1) and Prudential Financial, Inc. (from F1 to
F2). Fitch’s outlook for these ratings is negative.
Prudential strongly disagrees with the rating
actions. Fitch acknowledges that Prudential has ample
liquidity to meet all of its obligations. It also
acknowledged that we have a strong capital position. In
short, Fitch has not given us a substantive reason for
this unwarranted action.
The attached letter from Prudential Chairman and CEO
John Strangfeld and accompanying brochure provide more
detail and can be used with your clients. [Click here for a copy of the letter
and brochure].
Our exposure to asset-backed securities
collateralized by sub-prime mortgages, which was
significantly reduced last year, continues to be a
manageable exposure for Prudential. To put this into
perspective, our exposure to sub-prime asset-backed
securities represents only 3% of the total Financial
Services Businesses’ investment portfolio. Furthermore,
as of December 31, 2008, roughly 80% of this exposure is
investment grade.
In comparison to ACLI (American Council of Life
Insurers) industry measures, our whole loan commercial
mortgage portfolio is underweighted in office and retail
properties and well diversified by location. As of
December 31, 2008, less than one-half of one percent of
the entire portfolio was delinquent or in foreclosure
and 94% of our commercial mortgage-backed securities
portfolio is AAA rated.
Our businesses are competitive in their markets, our
liquidity is ample, and our sources of earnings are
diverse. Despite these challenging economic conditions,
we remain committed to meeting consumers' life insurance
needs, including products that offer lifetime
guarantees.
Thank you for your continued business.
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