Prudential 2002 Annual Report Download - page 118
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Please find page 118 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
10. CLOSED BLOCK (continued)
Information regarding the policyholder dividend obligation is as follows:
2002
(in millions)
Balance, January 1, 2002 ....................................................................... $ —
Impact on income before gains allocable to policyholder dividend obligation .............................. —
Net investment gains ........................................................................... —
Unrealized investment gains ..................................................................... 1,606
Balance, December 31, 2002 .................................................................... $1,606
Closed Block revenues and benefits and expenses for the year ended December 31, 2002 and the period from
the date of demutualization through December 31, 2001 were as follows:
2002
December 18, 2001
through
December 31, 2001
(in millions)
Revenues
Premiums ................................................................. $4,022 $293
Net investment income ....................................................... 3,333 129
Realized investment gains (losses), net .......................................... (521) 24
Otherincome .............................................................. 68 3
TotalClosedBlockrevenues .............................................. 6,902 449
Benefits and Expenses
Policyholders’ benefits ....................................................... 4,310 288
Interest credited to policyholders’ account balances ................................ 139 5
Dividends to policyholders ................................................... 2,506 100
General and administrative expenses ............................................ 801 33
Total Closed Block benefits and expenses .................................... 7,756 426
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes ....... (854) 23
Income tax expense (benefit) ...................................................... (147) 2
Closed Block revenues, net of Closed Block benefits and expenses and income taxes ......... $ (707) $ 21
11. REINSURANCE
The Company participates in reinsurance in order to provide additional capacity for future growth and limit
the maximum net loss potential arising from large risks. Life reinsurance is accomplished through various plans of
reinsurance, primarily yearly renewable term and coinsurance. Property and casualty reinsurance is placed on a
pro-rata basis and excess of loss, including stop-loss, basis. Reinsurance ceded arrangements do not discharge the
Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the
reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements.
Reinsurance premiums, commissions, expense reimbursements, benefits and reserves related to reinsured long-
duration contracts are accounted for over the life of the underlying reinsured contracts using assumptions
consistent with those used to account for the underlying contracts. The cost of reinsurance related to short-
duration contracts is accounted for over the reinsurance contract period. Amounts recoverable from reinsurers, for
both short and long-duration reinsurance arrangements, are estimated in a manner consistent with the claim
liabilities and policy benefits associated with the reinsured policies.
The tables presented below exclude amounts pertaining to the Company’s discontinued healthcare
operations. See Note 3 for a discussion of the Company’s coinsurance agreement with Aetna.
Prudential Financial 2002 Annual Report 117