Tokyo Investor Day
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YEN EQUITY HEDGE PROTECTS USD VALUE OF JAPAN OPERATIONS
AND OVERALL PRUDENTIAL ROE FROM FX MOVEMENTS
U.S. dollar investments in Japan support value of Yen-based business
Cash flows to/from Japan on internal hedge reflect currency movements
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Provides cash to holding company over time which, on redeployment, mitigates
negative impact to earnings and ROES in weakening Yen scenario
Creates "Yen-denominated" assets on Japanese books, mitigating solvency margin
ratio volatility that would otherwise result from owning USD assets
Cash payments to / from holding company over multi-year period to help manage
liquidity
Future USD Value of
Dividends from Japan
Lower Future
Dividend
USD Asset
Value
Hedge Cash
Flows
-800%
SMR
Weakening
Yen
USD Assets
Worth More \
Cash from
Japan
-800%
SMR
Stable Yen
USD Assets
Worth Same \
No Cash
Movement
No Change
~800%
SMR
Strengthening
Yen
USD Assets
Worth Less \
Cash to
Japan
Higher Future
Dividend
Prudential
Tokyo Investor Day 9.15.2016
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