Prudential 2011 Annual Report Download - page 191

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
7. INVESTMENTS IN OPERATING JOINT VENTURES (continued)
The following table sets forth information related to the Company’s investments in operating joint ventures as of and for the years
ended December 31:
2011 2010 2009
(in millions)
Investment in operating joint ventures:
Wachovia Securities ..................................................................... $ 0 $ 0 $ 0
All other joint ventures(1) ................................................................. 407 787 857
Subtotal ........................................................................... $407 $787 $ 857
Dividends received from investment in:
Wachovia Securities ..................................................................... $ 0 $ 0 $ 23
All other joint ventures ................................................................... 49 47 33
Subtotal ........................................................................... $ 49 $ 47 $ 56
After-tax equity earnings (losses):
Wachovia Securities(2) ................................................................... $ 0 $ 0 $1,483
All other joint ventures ................................................................... 185 84 40
Subtotal ........................................................................... $185 $ 84 $1,523
(1) Includes $126 million, $459 million and $528 million related to an indirect investment in China Pacific Group as of December 31, 2011, 2010 and 2009,
respectively.
(2) Includes pre-tax equity earnings from Wachovia Securities of $2.288 billion, including the gain on the sale of $2.247 billion, and tax expense of $805
million, including $790 million associated with the gain on the sale, for the year ended December 31, 2009.
Investments in operating joint ventures
The Company has made investments in operating joint ventures as part of its International Insurance segment. The Company’s
combined investment in these operating joint ventures includes an indirect investment in China Pacific Group, a Chinese insurance
operation. The indirect investment in China Pacific Group includes unrealized changes in market value, which are included in accumulated
other comprehensive income and relate to the market price of China Pacific Group’s publicly traded shares, which began trading on the
Shanghai Exchange in 2007 and since the fourth quarter of 2009 are trading on the Hong Kong exchange. In December 2010, a consortium
of investors including the Company sold approximately 16% of its holdings, resulting in a pre-tax gain of $66 million to the Company, and
sold approximately 50% of its original holdings in 2011, resulting in a pre-tax gain of $237 million to the Company. The Company
transacts with certain of these operating joint ventures in the normal course of business, on terms equivalent to those that prevail in arm’s
length transactions. For the years ended December 31, 2011, 2010 and 2009, the Company recognized $15 million, $16 million and $15
million, respectively, of asset management fee income from these transactions.
Former Investment in Afore XXI, S.A. de C.V.
On October 20, 2011, the Company entered into an agreement to sell its stake in Afore XXI, S.A. de C.V., a private pension fund
manager in Mexico, to Banorte, a major bank based in Mexico. The transaction was completed on December 2, 2011 and resulted in a
pre-tax gain of $96 million to the International Insurance segment. This gain is reflected in “Asset management fees and other income” of
the Company’s Consolidated Statements of Operations.
Former Investment in Wachovia Securities
On December 31, 2009, the Company completed the sale of its minority joint venture interest in Wachovia Securities (including Wells
Fargo Advisors) to Wells Fargo. For the year ended December 31, 2009, “Equity in earnings of operating joint ventures, net of taxes”
includes the associated pre-tax gain on the sale of $2.247 billion. In addition, “General and administrative expenses” includes certain
one-time costs related to the sale of the joint venture interest of $104 million, for pre-tax compensation costs and costs related to increased
contributions to the Company’s charitable foundation. Results related to the joint venture are included in Corporate and Other operations as
a divested business.
Prudential Financial, Inc. 2011 Annual Report 189