Prudential 2012 Annual Report Download - page 131

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
3. ACQUISITIONS AND DISPOSITIONS (continued)
Acquisition of Hyundai Investment and Securities Co., Ltd.
In 2004, the Company acquired an 80 percent interest in Hyundai Investment and Securities Co., Ltd., a Korean asset management
firm, from an agency of the Korean government. In January, 2008, the Company acquired the remaining 20 percent. In February 2010, the
Company signed a definitive agreement to sell Prudential Investment & Securities Co., Ltd. and Prudential Asset Management Co., Ltd,
which together comprise its Korean asset management operations. This transaction closed on June 1, 2010 and the results of these
operations are now reflected in discontinued operations. See below for a further discussion of the sale of these operations.
Discontinued Operations
Income from discontinued businesses, including charges upon disposition, for the years ended December 31, are as follows:
2012 2011 2010
(in millions)
Real estate investments sold or held for sale(1) ..................................................... $22 $37 $ 7
Global commodities business(2) ................................................................. 0 16 30
Korean asset management operations(3) ........................................................... 0 0 37
Mexican asset management operations(4) .......................................................... 0 0 6
Other ...................................................................................... 1 0 1
Income from discontinued operations before income taxes ........................................ 23 53 81
Income tax expense ................................................................... 8 18 48
Income from discontinued operations, net of taxes ............................................... $15 $35 $33
(1) Reflects the income from discontinued real estate investments.
(2) In 2011, the Company completed the sale of all the issued and outstanding shares of capital stock of the subsidiaries that conduct its global commodities
business (the “Global Commodities Business”) and certain assets that are primarily used in connection with the Global Commodities Business to
Jefferies Group, Inc. (“Jefferies”). Subsidiaries included in the sale were Prudential Bache Commodities, LLC, Prudential Bache Securities, LLC, Bache
Commodities Limited, and Bache Commodities (Hong Kong) Ltd. The Company received cash proceeds of $422 million. Included in the table above
for the year ended December 31, 2011, are after-tax losses of $17 million recorded in connection with the sale of these operations, consisting of pre-tax
losses of $18 million and income tax benefit of $1 million.
(3) In 2010, the Company completed the sale of Prudential Investment & Securities Co. Ltd. and Prudential Asset Management Co. Ltd., which together
comprised the Company’s Korean asset management operations. Included within the table above for the year ended December 31, 2010, is an after-tax
loss of $5 million recorded in connection with the sale of these operations, consisting of a pre-tax gain of $29 million and income tax expense of $34
million.
(4) In 2009 the Company completed the sale of its mutual fund and banking operations in Mexico. Included within the table above for the year ended
December 31, 2010 is $6 million pre-tax gains recorded in connection with the sale of this business.
The Company’s Consolidated Statements of Financial Position include total assets and total liabilities related to discontinued
businesses of $13 million and $0 million, respectively, at December 31, 2012 and $464 million and $7 million, respectively, at
December 31, 2011.
Charges recorded in connection with the disposals of businesses include estimates that are subject to subsequent adjustment.
4. INVESTMENTS
Fixed Maturities and Equity Securities
The following tables provide information relating to fixed maturities and equity securities (excluding investments classified as trading)
as of the dates indicated:
December 31, 2012
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Other-than-
temporary
Impairments
in AOCI(3)
(in millions)
Fixed maturities, available-for-sale
U.S. Treasury securities and obligations of U.S. government
authorities and agencies ............................. $ 13,973 $ 3,448 $ 35 $ 17,386 $ 0
Obligations of U.S. states and their political subdivisions ..... 2,952 505 5 3,452 0
Foreign government bonds ............................. 81,578 6,778 66 88,290 1
Corporate securities .................................. 146,924 13,996 1,589 159,331 (2)
Asset-backed securities(1) ............................. 11,846 221 731 11,336 (964)
Commercial mortgage-backed securities .................. 11,228 726 17 11,937 5
Residential mortgage-backed securities(2) ................. 9,153 484 33 9,604 (11)
Total fixed maturities, available-for-sale .............. $277,654 $26,158 $2,476 $301,336 $(971)
Equity securities, available-for-sale .................... $ 6,759 $ 1,573 $ 55 $ 8,277
Prudential Financial, Inc. 2012 Annual Report 129