Prudential 2011 Annual Report Download - page 187

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
Duration of Gross Unrealized Loss Positions for Equity Securities
The following table shows the fair value and gross unrealized losses aggregated by length of time that individual equity securities have
been in a continuous unrealized loss position, at December 31:
2011
Less than twelve months Twelve months or more Total
Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses
(in millions)
Equity securities, available-for-sale ................. $2,602 $448 $0 $0 $2,602 $448
2010
Less than twelve months Twelve months or more Total
Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses
(in millions)
Equity securities, available-for-sale ................. $1,098 $87 $326 $34 $1,424 $121
At December 31, 2011, $236 million of the gross unrealized losses represented declines of greater than 20%, $225 million of which
had been in that position for less than six months. At December 31, 2010, $35 million of the gross unrealized losses represented declines of
greater than 20%, $18 million of which had been in that position for less than six months. Included in the December 31, 2010 table above
are perpetual preferred securities. Perpetual preferred securities have characteristics of both debt and equity securities. Since an impairment
model similar to fixed maturity securities is applied to these securities, an other-than-temporary impairment has not been recognized on
certain perpetual preferred securities that have been in a continuous unrealized loss position for twelve months or more as of December 31,
2010. In accordance with its policy described in Note 2, the Company concluded that an adjustment for other-than-temporary impairments
for these equity securities was not warranted at December 31, 2011 and 2010.
Securities Pledged, Restricted Assets and Special Deposits
The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including
securities lending, securities sold under agreements to repurchase, collateralized borrowings and postings of collateral with derivative
counterparties. At December 31, the carrying value of investments pledged to third parties as reported in the Consolidated Statements of
Financial Position included the following:
2011 2010
(in millions)
Fixed maturities(1) ................................................................................ $13,070 $11,610
Trading account assets supporting insurance liabilities .................................................... 738 276
Other trading account assets ........................................................................ 46 355
Separate account assets ............................................................................ 4,073 4,082
Equity securities .................................................................................. 276 334
Total securities pledged ........................................................................ $18,203 $16,657
(1) Includes $4 million and $132 million of fixed maturity securities classified as short-term investments at December 31, 2011 and 2010, respectively.
As of December 31, 2011, the carrying amount of the associated liabilities supported by the pledged collateral was $17,408 million.
Of this amount, $6,218 million was “Securities sold under agreements to repurchase,” $4,160 million was “Separate account liabilities,”
$2,973 million was “Cash collateral for loaned securities,” $725 million was “Long-term debt,” $199 million was “Short-term debt,”
$1,500 million was “Policyholders’ account balances,” and $1,633 million was “Other liabilities.” As of December 31, 2010, the carrying
amount of the associated liabilities supported by the pledged collateral was $16,026 million. Of this amount, $5,885 million was “Securities
sold under agreements to repurchase,” $4,082 million was “Separate account liabilities,” $2,171 million was “Cash collateral for loaned
securities,” $725 million was “Long-term debt,” $275 million was “Short-term debt,” $1,500 million was “Policyholders’ account
balances,” and $1,388 million was “Other liabilities.”
In the normal course of its business activities, the Company accepts collateral that can be sold or repledged. The primary sources of
this collateral are securities in customer accounts and securities purchased under agreements to resell. The fair value of this collateral was
approximately $2,258 million and $1,773 million at December 31, 2011 and 2010, respectively, all of which, for both periods, had either
been sold or repledged.
Prudential Financial, Inc. 2011 Annual Report 185