Prudential 2002 Annual Report Download - page 34
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Please find page 34 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.Year Ended December 31,
2002 2001 2000
(in millions)
Financial Services Businesses:
Realized investment losses, net, and related charges and adjustments:
Fixed maturity investments .............................................................. $(500) $(342) $(690)
Equity securities ....................................................................... (149) (59) 206
Derivative instruments .................................................................. (226) 236 70
Other ............................................................................... 104 37 57
FSB realized investment losses, net of gains ..................................................... (771) (128) (357)
Related charges ....................................................................... 6 26 (29)
Derivative gains included in adjusted operating income ........................................ (94) (34) (22)
Total FSB realized investment losses, net, and related charges and adjustments ......................... $(859) $(136) $(408)
Year Ended December 31,
2002 2001 2000
(in millions)
Closed Block Business:
Realized investment gains (losses), net:
Fixed maturity investments .............................................................. $(212) $(372) $(376)
Equity securities ....................................................................... (186) (177) 244
Derivative instruments .................................................................. (174) (10) 117
Other ............................................................................... (15) 16 106
Total CBB realized investment gains (losses), net ................................................ $(587) $(543) $ 91
2002 to 2001 Comparison. Consolidated realized investment losses, net of gains and related charges and
adjustments, were $1,446 million for 2002, compared to $679 million for 2001.
The Financial Services Businesses’ net realized investment losses for 2002, before related charges and
adjustments, were $771 million compared to $128 million for 2001. Realized losses from impairments and credit
related sales were $1,055 million for 2002 and $785 million for 2001. These losses were offset in part, in both
periods, by realized gains driven largely by sales of fixed income securities in declining rate environments and
gains from prepayments of private bonds. Realized losses for 2002 include derivative losses of $226 million,
compared to derivative gains of $236 million for 2001. These amounts include $94 million and $34 million of
realized investment gains for 2002 and 2001, respectively, that are included as part of adjusted operating income.
The remaining derivative losses in 2002 were primarily the result of losses of $152 million on treasury futures
contracts used to manage the duration of the Company’s fixed maturity investment portfolio. In addition, there
were losses of $88 million on foreign currency forward contracts used to hedge the future income of non-U.S.
businesses, driven by the weakening of the U.S. dollar. Derivative gains recorded for 2001 were primarily
attributable to the impact of the strengthening dollar on currency hedges of non-U.S. dollar investments, as well
as gains on Japanese equity futures contracts held in anticipation of sales of equity securities.
For the Closed Block Business, net realized investment losses for 2002 were $587 million compared to $543
million for 2001. Net losses on derivatives were $174 million for 2002 compared to $10 million for 2001.
Derivative losses for 2002 were largely attributable to losses on equity futures contracts and currency hedges of
non-U.S. dollar investments. Realized losses from non-derivative activity were $413 million for 2002 compared
to $533 million for 2001. Realized losses in 2002 include impairments and credit related losses aggregating $896
million, which were offset in part by realized gains on sales of fixed income securities and prepayment premiums.
Realized losses in 2001 included $659 million of impairments and credit related losses, which were offset in part
by realized gains on sales of fixed income securities and prepayment premiums.
2001 to 2000 Annual Comparison. Consolidated realized investment losses, net of gains and related
charges and adjustments, were $679 million in 2001, compared to $317 million in 2000.
The Financial Services Businesses’ net realized investment losses for 2001, before related charges and
adjustments, were $128 million compared to $357 million for 2000. Realized losses from impairments and credit
Prudential Financial 2002 Annual Report 33