Prudential 2002 Annual Report Download - page 64
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Please find page 64 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.reflecting strong sales and continued favorable persistency, offset continued costs of expansion into other
countries and the $8 million benefit to results of the year-ago period from a refinement in the methodology used
to calculate reserves in our Korean operation. Excluding the impact of the currency fluctuations, our international
insurance operations other than Gibraltar Life would have had a 20% increase in adjusted operating income over
the prior year.
The segment’s increase in adjusted operating income includes the effect of year-over-year fluctuations in
currency exchange rates as well as the impact of our hedging at expected exchange rates. On a constant exchange
rate basis and excluding the impact of currency hedging, adjusted operating income, including results of Gibraltar
Life, increased $165 million.
2001 to 2000 Annual Comparison. Adjusted operating income increased $315 million from 2000 to 2001.
Results of Gibraltar Life, which we include in our results from April 2, 2001, the date of its reorganization,
through November 30, 2001, contributed $262 million to the increase in adjusted operating income. The
International Insurance segment reported adjusted operating income of $172 million for the fourth quarter of
2001, including $77 million from Gibraltar Life.
The $262 million adjusted operating income reported by Gibraltar Life reflected revenues of $2.026 billion
and benefits and expenses of $1.764 billion. Gibraltar Life’s revenues were comprised primarily of $1.710 billion
of premiums, policy charges and fees, and $304 million net investment income, and its benefits and expenses
were comprised primarily of $1.358 billion of policy benefits including changes in reserves, interest credited to
policyholders’ account balances and dividends to policyholders and $406 million of general and administrative
expenses. Gibraltar Life’s adjusted operating income for the initial eight-month period included in our results
benefited from gains on policy surrenders of about $56 million, including about $6 million in the three months
ended November 30, 2001. Substantially all of this contribution to adjusted operating income resulted from a high
level of surrenders due to customer response to the initial impact of policy changes introduced as part of Gibraltar
Life’s reorganization.
Adjusted operating income, excluding the impact of the Gibraltar Life acquisition discussed above, increased
$53 million, or 18%, from 2000 to 2001. Adjusted operating income for 2001 benefited $8 million from a
refinement in the methodology used to calculate reserves in our Korean operations. Excluding this item, adjusted
operating income increased $45 million, or 15%. The increase came from improved results both from our
operations in countries other than Japan and our Japanese insurance operations. Our operations in countries other
than Japan contributed adjusted operating income of $6 million for 2001, excluding the reserve refinement,
compared to an operating loss of $19 million for 2000, as increased profits from our operations in Korea and
Taiwan more than offset continued costs associated with our expansion into additional countries. Our Japanese
insurance operations reported continuing improved results, with adjusted operating income of $335 million in
2001 compared to $315 million in 2000, due to strong persistency and new sales, partially offset by a negative
impact of about $24 million from currency fluctuations and less favorable mortality experience.
The segment’s increase in adjusted operating income includes the unfavorable effect of year over year
fluctuations in currency exchange rates as well as the impact of our hedging at expected exchange rates. On a
constant exchange rate basis and excluding the impact of currency hedging, adjusted operating income, including
results of Gibraltar Life, increased $323 million.
Revenues
2002 to 2001 Annual Comparison. Revenues, as shown in the table above under “—Operating Results,”
increased $927 million from $4.146 billion in 2001 to $5.073 billion in 2002, including a $668 million increase
from Gibraltar Life. Excluding the impact of Gibraltar Life, revenues increased $259 million, or 12%, from
$2.120 billion in 2001 to $2.379 billion in 2002. The $259 million increase in revenues came primarily from an
increase in premium revenue of $251 million, or 14%, from $1.832 billion in 2001 to $2.083 billion in 2002.
Premiums from our Korean operation increased $154 million, from $285 million in 2001 to $439 million in 2002,
and premiums in our Japanese operation other than Gibraltar Life increased $75 million primarily the result of
strong persistency and new sales partially offset by the impact of currency exchange rate fluctuations. Premium
Prudential Financial 2002 Annual Report 63