Prudential 2011 Annual Report Download - page 137

(1) The estimated payments due by period for long-term debt reflects the contractual maturities of principal, as disclosed in Note 14 to the Consolidated
Financial Statements, as well as estimated future interest payments. The payment of principal and estimated future interest for short-term debt are
reflected in estimated payments due in less than one year. The estimate for future interest payments includes the effect of derivatives that qualify for
hedge accounting treatment. See Note 14 to the Consolidated Financial Statements for additional information concerning our short-term and long-term
debt.
(2) The estimated payments due by period for operating leases reflect the future minimum lease payments under non-cancelable operating leases, as
disclosed in Note 23 to the Consolidated Financial Statements. We have no significant capital lease obligations.
(3) As discussed in Note 23 to the Consolidated Financial Statements, we have commitments to purchase or fund investments, some of which are
contingent upon events or circumstances not under our control, including those at the discretion of our counterparties. The timing of the fulfillmentof
certain of these commitments cannot be estimated, therefore the settlement of these obligations are reflected in estimated payments due in less than one
year. Commitments to purchase or fund investments include $1.159 billion that we anticipate will ultimately be funded from our separate accounts. Of
these separate account commitments, $0.397 billion have recourse to Prudential Insurance if the separate accounts are unable to fund the amounts when
due. For further discussion of these separate account commitments, see “—Liquidity and Capital Resources of Subsidiaries—Asset Management
Subsidiaries.”
(4) As discussed in Note 23 to the Consolidated Financial Statements, loan commitments of our commercial mortgage operations, which are legally binding
commitments to extend credit to a counterparty, have been reflected in the contractual obligations table above principally based on the expiration date of
the commitment; however, it is possible these loan commitments could be funded prior to their expiration. In certain circumstances the counterparty
may also extend the date of the expiration in exchange for a fee.
(5) The estimated payments due by period for insurance liabilities reflect future estimated cash payments to be made to policyholders and others for future
policy benefits, policyholders’ account balances, policyholder’s dividends, reinsurance payables and separate account liabilities. These future estimated
cash outflows are based on mortality, morbidity, lapse and other assumptions comparable with our experience, consider future premium receipts on
current policies in force, and assume market growth and interest crediting consistent with assumptions used in amortizing deferred acquisition costs and
value of business acquired. These cash outflows are undiscounted with respect to interest and, as a result, the sum of the cash outflows shown for all
years in the table of $1,136 billion exceeds the corresponding liability amounts of $530 billion included in the Consolidated Financial Statements asof
December 31, 2011. Separate account liabilities are legally insulated from general account obligations, and it is generally expected these liabilities will
be fully funded by separate account assets and their related cash flows. We have made significant assumptions to determine the future estimated cash
outflows related to the underlying policies and contracts. Due to the significance of the assumptions used, actual cash outflows will differ, possibly
materially, from these estimates.
(6) The estimated payments due by period for other liabilities includes securities sold under agreements to repurchase, cash collateral for loaned securities,
liabilities for unrecognized tax benefits, bank customer liabilities, and other miscellaneous liabilities.
We also enter into agreements to purchase goods and services in the normal course of business; however, these purchase obligations
are not material to our consolidated results of operations or financial position as of December 31, 2011.
Off-Balance Sheet Arrangements
Guarantees and Other Contingencies
In the course of our business, we provide certain guarantees and indemnities to third parties pursuant to which we may be contingently
required to make payments now or in the future. See “Commitments and Guarantees” within Note 23 to the Consolidated Financial
Statements for additional information.
Other Contingent Commitments
We also have other commitments, some of which are contingent upon events or circumstances not under our control, including those
at the discretion of our counterparties. See “Commitments and Guarantees” within Note 23 to the Consolidated Financial Statements for
additional information regarding these commitments. For further discussion of certain of these commitments that relate to our separate
accounts, also see “—Liquidity and Capital Resources of Subsidiaries—Asset Management Subsidiaries.”
Other Off-Balance Sheet Arrangements
We do not have retained or contingent interests in assets transferred to unconsolidated entities, or variable interests in unconsolidated
entities or other similar transactions, arrangements or relationships that serve as credit, liquidity or market risk support, that we believe are
reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or our access to or requirements for capital resources. In addition, we do not have relationships
with any unconsolidated entities that are contractually limited to narrow activities that facilitate our transfer of or access to associated
assets.
Prudential Financial, Inc. 2011 Annual Report 135