Prudential 2002 Annual Report Download - page 49
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Please find page 49 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.group disability sales. The group life sales increase came from a small number of large sales to new and existing
customers, including annualized premiums of $99 million from one sale. The group disability sales decrease
reflected the benefit to 2000 results from sales opportunities resulting from the well-publicized financial
difficulties of a competitor.
Property and Casualty Insurance
Operating Results
The following table sets forth the Property and Casualty Insurance segment’s operating results for the
periods indicated.
Year Ended December 31,
2002 2001 2000
(in millions)
Operating results:
Revenues(1) ......................................................................... $2,209 $2,051 $1,800
Benefits and expenses .................................................................. 2,199 1,956 1,650
Adjusted operating income .............................................................. 10 95 150
Realized investment gains (losses), net .................................................. (6) (4) 16
Income (loss) from continuing operations before income taxes ..................................$4$91$166
(1) Revenues exclude realized investment gains (losses), net, of $(6) million, $(4) million and $16 million for the years ended December 31,
2002, 2001 and 2000, respectively.
Income From Continuing Operations Before Income Taxes
2002 to 2001 Annual Comparison. Income from continuing operations before income taxes decreased $87
million, from $91 million in 2001 to $4 million in 2002. The decrease reflects an $85 million decline in adjusted
operating income in 2002 from 2001, as discussed below. Additionally, realized investment losses, net, increased
$2 million, to losses of $6 million in 2002. For a discussion of realized investment losses, net, see
“—Consolidated Results of Operations—Realized Investment Gains.”
2001 to 2000 Annual Comparison. Income from continuing operations before income taxes decreased $75
million, from $166 million in 2000 to $91 million in 2001. The decrease reflects a $55 million decline in adjusted
operating income in 2001 to 2000, as discussed below. Additionally, realized investment losses, net, amounted to
$4 million in 2001, as compared to realized investment gains, net, of $16 million in 2000.
Adjusted Operating Income
2002 to 2001 Annual Comparison. Adjusted operating income decreased $85 million, or 89%, from 2001
to 2002. Results for 2002 reflected a $103 million lower net benefit from prior accident-year development and a
$39 million lower benefit from stop-loss reinsurance recoveries. Also impacting the 2002 result was a $33 million
charge to write off the goodwill associated with a reporting unit within this segment. This charge was the outcome
of our annual impairment test. Partially offsetting these declines were premium increases reflecting rate increases
we have implemented, and lower expenses as a result of our expense reduction efforts.
As previously announced, we are exploring options related to our personal lines property and casualty
insurance business, including the possible sale of all or part of these operations, while no decision has yet been
made. Based upon current market conditions, we believe that a sale of these operations would result in a charge to
earnings that could be material to quarterly or annual net income, although the amount of any charge will depend
on the terms of any such agreement. The Individual Life and Annuities segment is compensated for property and
casualty insurance products sold through its distribution network. In the event of a sale of the property and
casualty operations that resulted in continued access to non-proprietary property and casualty products by the
Prudential Agents, as expected by management, the Individual Life and Annuities segment would expect to
Growing and Protecting Your Wealth48