Prudential 2002 Annual Report Download - page 107
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Notes to Consolidated Financial Statements
6. INVESTMENTS (continued)
Commercial Loans
The Company’s commercial loans are as follows at December 31,
2002 2001
Amount
(in millions)
%of
Total
Amount
(in millions)
%of
Total
Collateralized loans by property type
Office buildings .................................................... $ 3,333 18.9% $ 3,553 20.7%
Retail stores ....................................................... 1,993 11.3% 2,058 12.0%
Residential properties ............................................... 2,137 12.1% 2,184 12.7%
Apartment complexes ............................................... 4,414 25.0% 4,209 24.5%
Industrial buildings ................................................. 3,099 17.6% 2,685 15.7%
Agricultural properties .............................................. 1,863 10.6% 1,908 11.1%
Other ............................................................ 800 4.5% 569 3.3%
Subtotal of collateralized loans .................................... 17,639 100.0% 17,166 100.0%
Valuation allowance ................................................ (198) (220)
Total collateralized loans ............................................. 17,441 16,946
Uncollateralized loans
Gibraltar Life uncollateralized loans .................................... 2,130 3,098
Valuation allowance ................................................ (284) (315)
Total uncollateralized loans ........................................... 1,846 2,783
Net carrying value .................................................. $19,287 $19,729
The commercial loans are geographically dispersed throughout the United States, Canada and Asia with the
largest concentrations in California (21.7%) and Asia (16.0%) at December 31, 2002.
Activity in the allowance for losses for all commercial loans, for the years ended December 31, is
summarized as follows:
2002 2001 2000
(in millions)
Allowance for losses, beginning of year ............................................. $ 535 $225 $ 221
Allowance on loans acquired from Gibraltar Life ...................................... — 739 —
Addition (release) of allowance for losses ............................................ (42) (24) 17
Charge-offs, net of recoveries ..................................................... (29) (412) (13)
Change in foreign exchange ....................................................... 18 7 —
Allowance for losses, end of year .................................................. $ 482 $535 $ 225
Non-performing commercial loans identified in management’s specific review of probable loan losses and
the related allowance for losses at December 31, are as follows:
2002 2001
(in millions)
Non-performing commercial loans with allowance for losses ....................................... $349 $463
Non-performing commercial loans with no allowance for losses .................................... 182 243
Allowance for losses, end of year ............................................................. (271) (333)
Net carrying value of non-performing commercial loans ........................................... $260 $373
Growing and Protecting Your Wealth106