Prudential 2002 Annual Report Download - page 77
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Please find page 77 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.Our borrowings as of December 31, 2002 and 2001, categorized by use of proceeds, are summarized below:
As of December 31,
2002 2001
(in millions)
General obligations:
General corporate purposes ..................................................................... $1,596 $ 2,667
Investment related ............................................................................ 899 1,420
Securities business related ...................................................................... 2,614 3,123
Specified other businesses ...................................................................... 793 1,155
Total general obligations ................................................................... 5,902 8,365
Limited and non-recourse debt ...................................................................... 2,324 2,344
Total borrowings ........................................................................ $8,226 $10,709
Long-term debt .................................................................................. $4,757 $ 5,304
Short-term debt .................................................................................. 3,469 5,405
Total borrowings ........................................................................ $8,226 $10,709
Borrowings of Financial Services Businesses ........................................................... $6,476 $ 8,959
BorrowingsofClosedBlockBusiness ................................................................ 1,750 1,750
Total borrowings ........................................................................ $8,226 $10,709
Our short-term debt includes bank borrowings and commercial paper outstanding under Prudential Funding’s
domestic commercial paper program as well as borrowings outstanding under an asset-backed commercial paper
conduit that is described below. Prudential Funding’s commercial paper borrowings as of December 31, 2002 and
2001 were $1.3 billion and $3.0 billion, respectively. In the second quarter of 2002, Prudential Financial issued a
subordinated guarantee covering Prudential Funding’s domestic commercial paper program. The weighted
average interest rates on the commercial paper borrowings under these programs were 1.26%, 4.22% and 6.31%
for the years ended December 31, 2002, 2001 and 2000, respectively. The total principal amount of debt
outstanding under Prudential Funding’s medium-term note programs as of December 31, 2002 and 2001 was $1.4
billon and $2.0 billion, respectively. The weighted average interest rates on Prudential Funding’s long-term debt,
in the aggregate, were 4.71%, 5.94% and 6.67% for the years ended December 31, 2002, 2001 and 2000,
respectively. As of December 31, 2002, Prudential Financial had no short-term or long-term debt outstanding.
We had outstanding surplus notes totaling $990 million and $989 million as of December 31, 2002 and 2001,
respectively. These debt securities, which are included as surplus of Prudential Insurance on a statutory
accounting basis, are subordinate to other borrowings and to policyholder obligations and are subject to regulatory
approvals for principal and interest payments.
As of December 31, 2002, Prudential Insurance and Prudential Funding had unsecured committed lines of
credit totaling $2.6 billion. The lines consist of $0.1 billion expiring during 2003, $1.0 billion expiring in May
2004, and $1.5 billion expiring in October 2006. Borrowings under the outstanding facilities must mature no later
than the respective expiration dates of the facilities. The facility expiring in May 2004 includes 28 financial
institutions, many of which are also among the 27 financial institutions participating in the October 2006 facility.
Up to $2.0 billion of the $2.6 billion available under these facilities can be utilized by Prudential Financial. The
$2.0 billion consists of $1.0 billion made available under each of the facilities expiring in May 2004 and October
2006. We use these facilities primarily as back-up liquidity lines for our commercial paper programs, and there
were no outstanding borrowings under these facilities as of December 31, 2002 or 2001. Our ability to borrow
under these facilities is conditioned on our continued satisfaction of customary conditions, including maintenance
at all times by Prudential Insurance of total adjusted capital of at least $5.5 billion based on statutory accounting
principles prescribed under New Jersey law. Prudential Insurance’s total adjusted capital as of December 31, 2002
and 2001 was $9.1 billion and $10.0 billion, respectively. The ability of Prudential Financial to borrow under
these facilities is conditioned on its maintenance of consolidated net worth of at least $12.5 billion, based on
GAAP. Prudential Financial’s consolidated net worth totaled $21.3 billion and $20.5 billion as of December 31,
2002 and 2001, respectively. In addition, we have a credit facility utilizing a third party-sponsored, asset-backed
commercial paper conduit, under which we can borrow up to $500 million. This facility is 100% supported by
unsecured committed lines of credit from many of the financial institutions included in our other facilities. Our
actual ability to borrow under this facility depends on market conditions, and with respect to the lines of credit,
Prudential Financial is subject to the same net worth requirement as with our other facilities. This facility expires
in December 2003. We also use uncommitted lines of credit from banks and other financial institutions.
Growing and Protecting Your Wealth76