Prudential 2002 Annual Report Download - page 60
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Please find page 60 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.the increase in premium activity noted above. Operating expenses for our defined contribution business decreased
$21 million due primarily to cost reduction measures implemented in prior periods.
2001 to 2000 Annual Comparison. Benefits and expenses decreased $153 million, or 6%, from 2000 to
2001. This decrease includes the effect of refinements in our annuity reserves in 2000 as noted above. Excluding
this change, benefits and expenses decreased $217 million, or 9%. Policyholders’ benefits together with the
change in policy reserves and interest credited to policyholders, decreased $128 million in 2001 from 2000,
excluding the effect of the 2000 refinement in annuity reserves. The decrease reflected our maturing block of
group annuity business and the decline in premiums mentioned above. In addition, operating expenses for our
defined contribution business decreased $39 million due primarily to cost reduction measures implemented in
prior periods. Interest expense decreased $31 million from 2000 to 2001 as a result of a lower level of investment-
related borrowing and lower borrowing rates.
Sales Results and Account Values
The following table shows the changes in the account values and net sales of Retirement segment products
for the periods indicated. Net sales are total sales minus withdrawals or withdrawals and benefits, as applicable.
As noted above under “—Insurance Division—Individual Life and Annuities—Sales Results and Account
Values,” neither sales nor net sales are revenues under GAAP.
Year Ended December 31,
2002 2001 2000
(in millions)
Defined Contribution:
Beginning total account value ............................................................... $24,640 $26,046 $25,788
Sales ................................................................................... 3,858 3,689 5,439
Withdrawals ............................................................................. (3,248) (3,422) (3,937)
Change in market value, interest credited and other activity(1) ...................................... (2,336) (1,673) (1,244)
Ending total account value .............................................................. $22,914 $24,640 $26,046
Net sales ................................................................................ $ 610 $ 267 $ 1,502
Guaranteed Products(2):
Beginning total account value ............................................................... $39,825 $41,577 $41,757
Sales ................................................................................... 1,467 2,299 2,024
Withdrawals and benefits ................................................................... (3,590) (4,372) (5,279)
Change in market value and interest income .................................................... 2,166 2,198 2,997
Other(3) ................................................................................ (810) (1,877) 78
Ending total account value .............................................................. $39,058 $39,825 $41,577
Net sales ................................................................................ $(2,123) $ (2,073) $ (3,255)
(1) The year ended December 31, 2002 includes increases to account values of $360 million added to customer accounts due to Common
Stock received as demutualization consideration and increases to account values of $448 million added to customer accounts from
inclusion of amounts not previously reflected in this segment. The year ended December 31, 2001 includes increases to account values of
$433 million added to customer accounts due to Common Stock received as demutualization consideration.
(2) Prudential’s retirement plan accounted for 32%, 29% and 27% of sales for the years ended December 31, 2002, 2001 and 2000,
respectively. This sales activity predominantly represents repricing of scheduled maturities. These scheduled maturities are also reflected
in withdrawals and therefore have no impact on net sales. Ending total account value includes assets of Prudential’s retirement plan of
$8.5 billion, $9.1 billion and $8.2 billion at December 31, 2002, 2001 and 2000, respectively.
(3) Represents changes in asset balances for externally managed accounts. The year ended December 31, 2001 includes an increase to
policyholder account values of $181 million representing cumulative conversions of client balances to products currently included in the
business.
2002 to 2001 Annual Comparison. Account values in our full service defined contribution business
amounted to $22.9 billion at December 31, 2002, a decrease of $1.7 billion, or 7%, from December 31, 2001. The
decrease came primarily from a decline in market value of mutual funds reflecting the general downturn of the
equity markets. This decline was partially offset by net sales of $610 million and $808 million added to customer
Prudential Financial 2002 Annual Report 59