Prudential 2012 Annual Report Download - page 134

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
(1) Represents circumstances where the Company determined in the current period that it intends to sell the security or it is more likely than not that it will
be required to sell the security before recovery of the security’s amortized cost.
Trading Account Assets Supporting Insurance Liabilities
The following table sets forth the composition of “Trading account assets supporting insurance liabilities” as of the dates indicated:
December 31, 2012 December 31, 2011(3)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(in millions)
Short-term investments and cash equivalents .................................. $ 938 $ 938 $ 951 $ 951
Fixed maturities:
Corporate securities ................................................. 11,076 12,107 10,369 11,113
Commercial mortgage-backed securities ................................. 2,096 2,229 2,157 2,247
Residential mortgage-backed securities(1) ................................ 1,965 2,026 1,786 1,844
Asset-backed securities(2) ............................................ 1,179 1,116 1,504 1,367
Foreign government bonds ............................................ 683 708 599 608
U.S. government authorities and agencies and obligations of U.S. states ........ 369 426 413 440
Total fixed maturities .................................................... 17,368 18,612 16,828 17,619
Equity securities ........................................................ 943 1,040 1,050 911
Total trading account assets supporting insurance liabilities ...................... $19,249 $20,590 $18,829 $19,481
(1) Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
(2) Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
(3) Prior period’s amounts are presented on a basis consistent with the current period presentation.
The net change in unrealized gains / (losses) from trading account assets supporting insurance liabilities still held at period end,
recorded within “Asset management fees and other income” was $689 million, $209 million and $415 million during the years ended
December 31, 2012, 2011 and 2010, respectively.
Other Trading Account Assets
The following table sets forth the composition of the “Other trading account assets” as of the dates indicated:
December 31, 2012 December 31, 2011
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(in millions)
Short-term investments and cash equivalents .................................... $ 42 $ 42 $ 4 $ 3
Fixed maturities .......................................................... 2,196 2,132 1,684 1,491
Equity securities .......................................................... 1,363 1,437 1,682 1,621
Other ................................................................... 3 6 15 19
Subtotal ............................................................. $3,604 $3,617 $3,385 $3,134
Derivative instruments ..................................................... 2,711 2,411
Total other trading account assets ............................................ $3,604 $6,328 $3,385 $5,545
The net change in unrealized gains / (losses) from other trading account assets, excluding derivative instruments, still held at period
end, recorded within “Asset management fees and other income” was $264 million, $63 million and $57 million during the years ended
December 31, 2012, 2011 and 2010, respectively.
Concentrations of Financial Instruments
The Company monitors its concentrations of financial instruments on an on-going basis, and mitigates credit risk by maintaining a
diversified investment portfolio which limits exposure to any one issuer.
132 Prudential Financial, Inc. 2012 Annual Report