The IFS ratings encompass PFI's insurance companies operating in the
The Rating Outlook pertaining to PFI's holding company ratings is Stable, and reflects Fitch's view that a downgrade of the IFS ratings triggered by a
KEY RATING DRIVERS
The upgrade of PFI's ratings reflects a sustained improvement in the company's business and earnings profile in recent years, as it has benefited from recent acquisitions in the
PFI's very strong business profile considers the company's market-leading positions in several major life insurance segments in the
A key rating sensitivity in recent years has been PFI's persistently high levels of financial and operating debt used throughout the organization. Over the past four years, PFI has reduced total debt by almost 30% on an absolute basis, and financial leverage ratio has declined to approximately 26% at
Based on PFI's improved earnings profile and reduced financial leverage, the company's interest coverage metrics have improved in recent years to levels consistent with current rating expectations. The level and diversification of subsidiary cash flows to the holding company for debt service has improved, with meaningful dividends sourced from domestic insurance, international insurance, and asset management.
PFI's ratings continue to reflect the company's strong statutory capitalization. Over the near term, we expect the
Fitch views PFI's ratings as partially constrained by
Key rating triggers that could result in an upgrade include: sustained reduction in financial leverage to 20% or below; GAAP interest coverage in the 12x-14x range (based on pre-tax operating income); stated regulatory capital ratios in the
Triggers that could result in a downgrade include: GAAP ROE below 10%; financial leverage above 30%; TFC above 1.5x; stated NAIC RBC ratio below 450%;
FULL LIST OF RATING ACTIONS
Fitch has upgraded the following ratings with a Stable Outlook:
Prudential Financial, Inc.
--Long-Term IDR to 'A' from 'A-';
--Senior notes to 'A-' from 'BBB+';
--Junior subordinated notes to 'BBB' from 'BBB-'.
--Short-Term IDR to 'F1' from 'F2';
--CP to 'F1' from 'F2'.
--Long-Term IDR to 'A+' from 'A';
--Surplus notes to 'A' from 'A-';
--Short-Term IDR to 'F1+' from 'F1'.
--Senior unsecured to 'A+' from 'A'.
--Commercial paper to 'F1+' from 'F1'.
Fitch has upgraded the following ratings with a Negative Outlook:
--IFS to 'AA-' from 'A+'.
PRICOA Global Funding I
--Secured notes program to 'AA-' from 'A+'.
Additional information is available on www.fitchratings.com
Insurance Rating Methodology (pub.
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Source: Fitch Ratings