KEY RATING DRIVERS
The ratings are equivalent to the ratings assigned to PFI's existing senior unsecured notes, and reflect standard notching based on Fitch's rating criteria.
Proceeds from the debt issuance are anticipated to fund debt maturing in 2014. As a result, Fitch's view of financial leverage is not affected by this issuance.
PFI's balance sheet fundamentals remain consistent with rating expectations, and recent financial performance has exceeded rating expectations. The ratings assigned to PFI and its subsidiaries continue to reflect the company's very strong competitive position in the U.S. and Japanese life insurance markets.
Fitch views the statutory capital adequacy of PFI's insurance subsidiaries as very strong. At year-end 2013, PFI reported a combined risk-based capital (RBC) ratio for its U.S. insurance subsidiaries of 456%. PFI's two Japanese insurance subsidiaries, Prudential of
As a result of recent improvement in financial performance, which has benefited from improved financial market conditions and recent acquisitions, GAAP interest coverage has improved to 9.5x in 2013 compared to 6.1x in 2012.
Key rating triggers that could result in an upgrade of PFI's operating and holding company ratings are: continued reduced reliance on short-term funding; progress lowering the financial leverage ratio to the mid-20% range and total leverage below 40%; GAAP interest coverage in the 8x-10x range (based on pre-tax adjusted operating earnings); stated NAIC RBC ratio remaining near current levels; and a
Key rating triggers that could result in a downgrade of PFI's holding company ratings (i.e. wider notching from the operating company) include: an FLR above 35%; outstanding commercial paper (CP) above 10% of total debt on a sustained basis; a total financing and commitments ratio (TFC) above 1.5x; and/or a GAAP interest coverage ratio below 5x.
Triggers that could result in a downgrade of both operating and holding company ratings include: a stated NAIC RBC ratio below 400%,
Fitch has assigned the following rating:
Prudential Financial, Inc.
Additional information is available at 'www.fitchratings.com'.
--'Insurance Rating Methodology,
Source: Fitch Ratings
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