Prudential 2002 Annual Report Download - page 113
Download and view the complete annual report
Please find page 113 of the 2002 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
8. GOODWILL AND OTHER INTANGIBLES (continued)
amounted to $319 million and $99 million, respectively, and at December 31, 2001, $233 million and $71 million,
respectively. Other intangibles consist primarily of mortgage servicing rights and customer relationships related to
the Investment Management segment. At December 31, 2002 and 2001, mortgage servicing rights, including both
purchased and originated servicing rights, were $124 million and $126 million, respectively, and customer
relationships were $77 million and $21 million, respectively. Amortization expense for other intangibles was $25
million and $22 million for the years ended December 31, 2002 and 2001, respectively. Amortization expense for
other intangibles currently owned by the Company is expected to be approximately $30 million for each of the
next five years.
9. POLICYHOLDERS’ LIABILITIES
Future Policy Benefits
Future policy benefits at December 31, are as follows:
2002 2001
(in millions)
Lifeinsurance ........................................................................ $74,438 $71,582
Annuities ............................................................................ 15,052 14,500
Other contract liabilities ................................................................ 970 909
Total future policy benefits .............................................................. $90,460 $86,991
The Company’s individual participating insurance is included within the Closed Block Business.
Participating insurance represented 34% and 37% of domestic individual life insurance in force at December 31,
2002 and 2001, respectively, and 91%, 92% and 94% of domestic individual life insurance premiums for 2002,
2001 and 2000, respectively.
Life insurance liabilities include reserves for death and endowment policy benefits, terminal dividends and
certain health benefits. Annuity liabilities include reserves for life contingent immediate annuities and life
contingent group annuities. Other contract liabilities primarily consist of unearned premium and benefit reserves
for group health products and property and casualty insurance.
Future policy benefits for individual participating traditional life insurance are based on the net level
premium method, calculated using the guaranteed mortality and nonforfeiture interest rates which range from
2.5% to 9%; less than 1% of the reserves are based on an interest rate in excess of 8%.
Future policy benefits for individual non-participating traditional life insurance policies, group and
individual long-term care policies and individual health insurance policies are equal to the aggregate of (1) the
present value of future benefit payments and related expenses, less the present value of future net premiums, and
(2) premium deficiency reserves. Assumptions as to mortality, morbidity and persistency are based on the
Company’s experience when the basis of the reserve is established. Interest rates used for the aggregate reserves
range from 1.7% to 11.3%; less than 1% of the reserves are based on an interest rate in excess of 8%.
Future policy benefits for individual and group annuities are equal to the aggregate of (1) the present value of
expected future payments on the basis of actuarial assumptions established at issue, and (2) premium deficiency
reserves. Assumptions as to mortality are based on the Company’s experience when the basis of the reserve is
established. The interest rates used in the determination of the aggregate reserves range from 1.7% to 14.8%; less
than 3% of the reserves are based on an interest rate in excess of 8%.
Growing and Protecting Your Wealth112