Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2015 Earnings Teleconference. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given to you at that time. And as a reminder, today's conference is being recorded. I would now like to turn the conference over to Mark Finkelstein. Please go ahead.

Thank you, Cynthia. Good morning and thank you for joining our call. Representing Prudential on today's call are John Strangfeld, CEO; Mark Grier, Vice Chairman; Charlie Lowrey, Head of International Businesses; Steve Pelletier, Head of Domestic Businesses; Rob Falzon, Chief Financial Officer; and Rob Axel, Controller and Principal Accounting Officer. We will start with prepared comments by John, Mark and Rob, and then we will answer your questions. Today's presentation may include forward-looking statements. It is possible that actual results may differ materially from the predictions we make today. In addition, this presentation may include references to non-GAAP measures. For a reconciliation of such measures to the comparable GAAP measures and a discussion of factors that could cause actual results to differ materially from those in the forward-looking statements, please see the section titled Forward-Looking Statements and Non-GAAP Measure of our earnings press release, which can be found on our website at www.investor.prudential.com. John, I'll hand it over to you. John R. Strangfeld - Chairman & Chief Executive Officer: Thank you, Mark. Good morning, everyone, and thank you for joining us. I'm pleased to say we reported strong first quarter results and are off to a solid start for the year. Overall, for the first quarter of 2015, we produced an 8% increase in adjusted operating income per share, excluding market driven and discrete items. This, in turn, meant that we achieved an annualized return on equity in excess of 16% for the period. The core fundamentals across our businesses and diversification in our earnings are key strengths and have helped us mitigate certain market headwinds such as translating our Japanese yen based earnings at a less favorable currency rate and the impact of lower new money yields. We also benefited from stronger than expected investment returns on non-coupon investments…

Thank you, John. Good morning, good afternoon, or good evening. Thanks for joining us on the earnings call today. I'll take you through our results and then I'll turn it over to Rob Falzon who will cover our capital and liquidity picture. I'll start with an overview of our financial results for the quarter shown on slide 2. On a reported basis, common stock earnings per share amounted to $2.79 for the first quarter based on after tax-adjusted operating income. Excuse me. This compares to EPS of $2.40 a year ago. After adjusting for market-driven and discrete items in both the current quarter and the year-ago quarter, EPS was up by 8% amounting to $2.65 compared to $2.46 a year ago. Looking across our businesses, here are some highlights of this comparison, and I'll mention four favorable items. First, higher fees reflecting growth in account values in our annuities business and greater assets under management in our Asset Management business. Second, a greater contribution from Pension Risk Transfer business with case experience more favorable than our average expectations. Third, improved Group Insurance underwriting margins, driven by more favorable disability results. And fourth, in International Insurance, continued growth on a constant currency basis in our Life Planner operations. These benefits were partly offset by three things: one, lower contribution from net investment results with returns on non-coupon investments above our average expectations but below the exceptionally strong level of the year-ago quarter. Two, higher net expenses in several businesses. And three, less favorable currency exchange rates in International Insurance. I would also note the decreased corporate income tax rates in Japan including a recently enacted reduction drove a lower effective tax rate in the current quarter. On a GAAP basis, including amounts categorized as realized investment gains, we reported net income…

Thank you, ladies and gentlemen. And our first question will come from the line of Jimmy Bhullar with JPMorgan. Your line is open.

Hi, I had a couple of questions on your international business. Gibraltar, your sales were up a lot and I think in the bank channel, you've had success selling more than the paid premium products. So we've seen some other companies back out of the bank channel. So what type of returns are you getting on bank channel sales in the current interest rate environment? And then secondly, on the Life Planner count, it was up 2% sequentially this quarter. So is something changing in the business or was this an aberration this quarter, because that seems stronger than it's been in the recent past?

Sure, let me take those in order, Jimmy. And let me start by making some overall comment about sort of the rate environment and how we approach pricing, and then I'll get into the bank channel and then I'll answer your second question. But my first comment is an important one, and that is we have expected profitability targets for each of our products, and margins may vary or hurdle rates may vary on specific products, but every product has to stand on its own merit. So we don't have loss leader products in any sense. As a result, we continue to examine our product lineup and its profitability, adjusting pricing when necessary to reflect lower rate levels, and we also reduce commissions or discontinue sales of certain products that can't meet profit expectations. As an example, Gibraltar Life stopped selling a six-year single premium endowment product effective at the end of this quarter just because we thought we should eliminate it from the product lineup. So in terms of an overall framework with which we think about profitability, we really have three different aspects to it. You can think of three circles, and we talked about this before. But first, you have the customer need and you have to provide products to fulfill those needs. Secondly, you have product profitability and each product, again, has to stand on its own relative to the hurdle rate we've established for it. And third, you have business mix, which is how much of any given product do we want to sell relative to return and to risk. So, if we think about that relative to the bank strategy, what I would say is that we have a very differentiated strategy relative to others. When we first acquired Star/Edison, there were over 100…

Yeah.

Now, in terms of the second question, in terms of LP count and why it was up so much, you may recall that last year we said that we had a very high number of Life Planners that moved over to become sales managers and they transferred over in April of 2014. That has led directly to higher recruiting. Now, it takes a while for those sales managers to get up to speed, to train, to start looking for recruiting, but what we said back then in the second quarter call was that we would expect to see a larger number of LPs come on board at the end of the year or the beginning of this year. So there's really a couple of things happening. There is much higher recruiting that's taking place as a result of the higher number of sales managers, but there's also fewer terminations given the amount of business that we're doing. Now, in terms of the overall LP count, what we can say is that if you look over a five-year period, you really see a lower growth rate than this quarter. So if you were to average out the LP count in Japan, it's really over five years been sort of 1% to 2%. We've had some quarters that are flat, maybe some that are a little negative if we've transferred a lot of LPs over to SMs, but in general – and then some that have been higher as a result of that. But in general, it's sort of 1% to 2%. If you look at the Life Planner business as a whole within PII, you'll see that the Life Planner growth over five years has been sort of 2% to 3% because you have a higher growth rate in places like Brazil and perhaps some others. But that's generally what you expect. So this is higher than we'd normally expect, but you'd expect some aberration quarter-to-quarter depending upon the dynamics of how many people we've transferred and what's going on.

Okay. And then lastly, if I could ask about your tax rate overall, I think you'd spoken about 27%-ish or so previously, but the tax rate was 25.6% this quarter. So what drove that and what's your expectation for the year? Robert F. Falzon - Chief Financial Officer & Executive Vice President: Jimmy, it's Rob Falzon. The primary driver to the difference between the tax rate we gave at guidance, which was actually just a little under 27%, and the number that you're seeing in our first quarter results was the decreases in taxes in Japan. We blend that it into our overall tax rate as a result of the earnings that we keep there versus repatriating, we wind up with the delta that you've seen and that number, the 25.6%, is the number that we think is sustainable for the year.

Okay. Thank you.

Thank you. Our next question comes from the line of Nigel Dally with Morgan Stanley. Your line is open. Nigel P. Dally - Morgan Stanley & Co. LLC: Great, thanks. Good morning. A couple of questions on capital. First, you commented that declining interest rates were only a slight negative to available capital. Does that imply that the recent backswing in rates that we've seen thus far this quarter will only be a slight positive? And then on the Japan capital hedge, what should we expect with regards to further gains over the remainder of the year, assuming no major changes in exchange rates from here? Robert F. Falzon - Chief Financial Officer & Executive Vice President: Nigel, it's Rob again. So, let me first use this as an opportunity on the interest rate question to talk a little bit more broadly on how we connect risks with the management of capital. And we've hit on this theme at both Investor Day and Financial Strength Symposium, but it's probably good to set the context. First, our businesses and the capital that supports those businesses are sensitive to the markets. Our construct is a capital protection framework that we've spoken about before, and that's what we use to manage the sensitivity. We think about risks as being a spectrum between tail events and less severe scenarios, which we think about as being in the, quote, body of the distribution of volatility. Our objective is to take off the table risks that are associated with tail events. For less extreme market conditions, things that are in the body of the distribution, we hedge the vast majority of those risks, particularly in the equity and the interest rate worlds, and we think about those risks across our business units as they're netted at…

Thank you. Our next question comes from the line of Erik Bass with Citigroup. Your line is open.

Hi, thank you. Rob, just wanted to follow up on a couple of your comments on capital and kind of your willingness to accept some volatility there. I guess, first, how do you think about that volatility ahead of being subject to a potential balance sheet stress test from the Fed? And do you think that they would view kind of volatility the same way? And secondly, with the $2.5 billion of deployable excess capital, do you view that as all truly deployable or does some of it need to be retained as a buffer in case markets move against you in the short-term?

Erik, this is Mark. Let me start off with a comment on capital standards. As you know, we don't yet have capital standards. We're constructively engaged in the process of developing capital standards with the Federal Reserve domestically, but also as part of a number of moving parts on the international arena. And I think it's early to speculate on the context of stress test and short-term volatility without the underpinning of the genuine view of capital. And as you know, the way we've talked about it and the points I made, for example, about margins and reserves on Investor Day, we take a longer term view of the loss absorption capacity of the company, which is, in many respects, a totally separate point from short-term accounting volatility. And so I'd be thinking about the fact that loss absorption capacity and quarterly accounting volatility are very different points. The real constructive approach to solvency and stress testing will focus on loss absorption capacity and the assets that we have available to meet all of our obligations. However, they're categorized as line items on the GAAP financials. And I'll ask Rob if he wants to add anything to that and then let him take the second. Robert F. Falzon - Chief Financial Officer & Executive Vice President: Well, I would merely observe that we do look at tail events and we try to take that risk off the table, as I indicated. So while we don't have a construct in place to the extent that that's stress testing, as we anticipate, we'll be looking at severe scenarios. That's the risk that we try to address through our capital protection framework that we don't tolerate and don't want to see that variability come in on a quarter to quarter basis. With regard to the variability quarter to quarter, yeah, there'll be some noise in our capital capacity as a result of interest rate movements. We'd expect as interest rates move back up that that will add to our capital capacity in the way that it is moderately trimmed on capital capacity in this quarter as we described.

Thanks, that's helpful. And then, just one quick question on PRT. Can you give us a sense of how quickly the earnings in capital run off on the funded deals? And how much capital will be freed from prior deals in 2015?

Erik, this is Steve. I'll comment on the asset front. Generally speaking in PRT, on the funded side, we experience about $700 million in runoff on a quarterly basis and on the longevity side, about $400 million. Robert F. Falzon - Chief Financial Officer & Executive Vice President: And I don't have a specific forecast on what that would do to our capital capacity. Obviously, what happens is as those are running off the reserves in the pad that we have in those reserves burns off as well and then, we'll establish some level of increase in our capital capacity.

Got it. Thank you.

Thank you. Our next question comes from the line of Tom Gallagher with Credit Suisse. Your line is open. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Good morning. Rob, just to start out, just a follow-up on the interest rate sensitivity to capital comments you made. Would that also be true if you look at through, say, year-end 2015 that your sensitivity would be less to a further decline in rates all else equal relative to the way it played out last year? Robert F. Falzon - Chief Financial Officer & Executive Vice President: So, I assume, Tom, you're referring to the impact of AAT, and I'd sort of make two observations. The first is that... Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Well, sorry, Rob, AAT and VA sensitivity, we'll call it. Robert F. Falzon - Chief Financial Officer & Executive Vice President: Yeah, Okay. So the VA sensitivity, as I described, further declines in interest rates – that volatility is substantially muted to further declines in interest rates because of the impact of the – of options in our hedging strategy. And so, it is likely that what you'll see, as you look forward, is if interest rates were to move down further, you would see that the declines there would be more muted and would continue to be substantially offset by the gains that we would have in other parts of the enterprise. And we try to calibrate it just that way. With outside of Pruco Re, with respect to the broader impact of AAT, I would reiterate what I said before, which is a substantial portion of our AAT increased during the course of last year was a result of model refinements. The actual impact resulting from interest rates was…

Thank you. Our next question comes from the line of Yaron Kinar with Deutsche Bank. Your line is open.

Hi. Good morning, everybody. And maybe shifting gears a little bit from the capital side, I was curious to hear your thoughts and comments about the DOL proposal. I think one of your peers recently mentioned that VA sales to qualified plans could fall by up to 15% or 20% for the industry as a whole. So want to hear your thoughts on that and where you see Pru fall in respect to that number.

Yaron, this is Steve Pelletier. Let me address your question and I'll address it more broadly and then touch upon a few particular areas, including the Annuities business. First off, just let me say right up-front that we certainly support a regulatory framework that helps ensure client confidence in the advice, the services and the solutions they receive. We're reviewing the proposed regulation and we will be participating in the industry commentary. As it stands today, as it's written today, the proposed regulation would certainly have some industry-wide impacts of increased compliance costs for starters. At the same time, though, we think that our business mix and the strength of our franchises position us pretty well for adapting to any changes that are brought about by this regulation. Let me give examples of that in three areas of potential impact that are being widely discussed. First, IRA rollovers. As it stands today, the regulation could make that process more complicated. But the IRA rollovers that we do directly with clients are a modest portion of our overall business mix. And if these regulations do result in a higher retention of assets and DC plans, that would be a positive offset that we'd have in our Retirement business. Second, speaking of Retirement, let me talk for a minute about DC record keeping. Our business in that space has a couple of key risk mitigants in regard to the proposed regulation. Virtually, all of our business is done with companies who have over 100 participants in their plan, and that's not by accident. That's due to our mid-market focus in this business. And that segment, as you know, is relatively less affected by the proposals. Also, we've always approached this business with an open architecture philosophy as it regards the investment platform.…

So a follow-up on that. As you're selling more of the non-living benefit guaranteed product, do you think that would come under greater pressure with this proposal? And also could you maybe give us some quantification as to what percentage of your VA business is qualified versus – is in qualified plans versus non-qualified or what percentage is from a fee commission – fee business versus a commission business?

About two-thirds of our business, Yaron, is done with qualified money, that's consistent with industry averages. And if you're talking about the compensation breakdown, about a third is done on a purely commission based – sorry, about two-thirds is done on purely commission-based business and the remainder is done with a mix of commission-based and fee-based.

And then thoughts on living benefits or...

I think the living benefit strategy and looking to diversify our product range is a strategy that we would continue to maintain over time. I don't think that particular element would be specifically impacted by the regulatory change. Like I say, what we need to do is work with our distribution partners to ensure that we can make the adjustments necessary to provide continued availability of the full range of product sets to their clients.

Thank you for the comments.

Thank you. Cynthia, I think we'll take one more question, please.

Thank you. And that will be from the line of Steve Schwartz with Raymond James. Your line is open. Steven D. Schwartz - Raymond James & Associates, Inc.: Good morning, everybody. Just a quick couple. Mark, you talked about the adverse mortality in life, the $35 million. And it wasn't clear to me, are you referencing that $35 million relative to a quarterly average, or were you referencing that $35 million relative to what would normally be adverse seasonality in the first quarter? Robert F. Falzon - Chief Financial Officer & Executive Vice President: Steve, it's actually Rob. That quantification is against an average for the year, so it is not adjusted for seasonality. Steven D. Schwartz - Raymond James & Associates, Inc.: Okay. Rob, would you happen to know if it were, what the effect would be? Robert F. Falzon - Chief Financial Officer & Executive Vice President: No, I don't. Steven D. Schwartz - Raymond James & Associates, Inc.: Okay. Something to get from Mark. And then just one more. Going back to the question of VA and the effective interest rates, I just want to make sure I understand what you're saying here. At lower rates, okay, the sensitivity is lower such that if rates were to go lower from here, it wouldn't be that big of a deal, and there are other areas in the business that would benefit, that would make up the difference?

They would directionally offset. They aren't perfectly hedged but you'll see derivative marks going the other way from the specific impact of interest rates on the VA living benefit hedge. Now, keep in mind there are a lot of moving parts in that VA living benefit hedge. So you can't always look at that and make a linear connection to interest rates either. But I think the answer to your question is there are directional offsets in other parts of the company, as Rob referenced, that mitigate the impact of interest rates directly on the VA living benefit. Steven D. Schwartz - Raymond James & Associates, Inc.: Okay. So to follow up from that, that would be at this level but it didn't really when you move down from 2.6% to 2.19% or wherever we were.

Are you talking about the fourth quarter movement? Steven D. Schwartz - Raymond James & Associates, Inc.: Right. Yeah, I'm trying to compare the two.

Yeah. So as I mentioned, what happens is as rates get lower and we remove the tail risk associated with continued lower interest rates, the hedging strategy that we have kicks in such that we have a significantly more muted effect at current levels than we would have at levels that would have been mid 2% range. Robert F. Falzon - Chief Financial Officer & Executive Vice President: But even in the fourth quarter, I don't have this number right in front of me, but there were gains on duration management derivatives of several hundred million dollars that went the other way from the move you're talking about. So, the answer is, yes, there was some of that in the fourth quarter. There were less other things that mitigated the overall impact, but there was a meaningful, meaning several hundred million dollars, going the other way in other derivative marks. And you can find it if you go back and look, or call Mark, we'll tell you the answer. I don't remember the exact number. Steven D. Schwartz - Raymond James & Associates, Inc.: Okay. I will do that. Thank you, guys.

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