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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
All Other Net Unrealized Investment Gains and Losses in AOCI
Net Unrealized
Gains (Losses)
on Investments(1)
Deferred
Policy
Acquisition
Costs,
Deferred
Sales
Inducements,
and
Value of
Business
Acquired
Future
Policy
Benefits
Policyholders’
Dividends
Deferred
Income
Tax
(Liability)
Benefit
Accumulated
Other
Comprehensive
Income (Loss)
Related To Net
Unrealized
Investment
Gains (Losses)
(in millions)
Balance, December 31, 2009 ........................... $ 2,885 $ (803) $ (509) $ 0 $ (383) $ 1,190
Cumulative effect of adoption of accounting principle ....... 0 147 0 0 (52) 95
Net investment gains (losses) on investments arising during the
period ........................................... 6,709 (2,309) 4,400
Reclassification adjustment for (gains) losses included in net
income .......................................... (377) 134 (243)
Reclassification adjustment for OTTI losses excluded from net
income(2) ........................................ 44 (14) 30
Impact of net unrealized investment (gains) losses on deferred
policy acquisition costs, deferred sales inducements and
value of business acquired ........................... (110) 42 (68)
Impact of net unrealized investment (gains) losses on future
policy benefits .................................... (392) 140 (252)
Impact of net unrealized investment (gains) losses on
policyholders’ dividends ............................ (2,454) 874 (1,580)
Balance, December 31, 2010 ........................... $ 9,261 $ (766) $ (901) $(2,454) $(1,568) $ 3,572
Net investment gains (losses) on investments arising during the
period ........................................... 7,142 (2,449) 4,693
Reclassification adjustment for (gains) losses included in net
income .......................................... (710) 250 (460)
Reclassification adjustment for OTTI losses excluded from net
income(2) ........................................ 55 (19) 36
Impact of net unrealized investment (gains) losses on deferred
policy acquisition costs, deferred sales inducements and
value of business acquired ........................... (413) 141 (272)
Impact of net unrealized investment (gains) losses on future
policy benefits .................................... (369) 129 (240)
Impact of net unrealized investment (gains) losses on
policyholders’ dividends ............................ (1,865) 673 (1,192)
Balance, December 31, 2011 ........................... $15,748 $(1,179) $(1,270) $(4,319) $(2,843) $ 6,137
Net investment gains (losses) on investments arising during the
period ........................................... 9,586 (3,373) 6,213
Reclassification adjustment for (gains) losses included in net
income .......................................... (276) 97 (179)
Reclassification adjustment for OTTI losses excluded from net
income(2) ........................................ 93 (32) 61
Impact of net unrealized investment (gains) losses on deferred
policy acquisition costs, deferred sales inducements and
value of business acquired ........................... (49) 17 (32)
Impact of net unrealized investment (gains) losses on future
policy benefits .................................... 126 (43) 83
Impact of net unrealized investment (gains) losses on
policyholders’ dividends ............................ (1,308) 458 (850)
Balance, December 31, 2012 ........................... $25,151 $(1,228) $(1,144) $(5,627) $(5,719) $11,433
(1) Includes cash flow hedges. See Note 21 for information on cash flow hedges.
(2) Represents “transfers out” related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no
prior OTTI loss.
The table below presents net unrealized gains (losses) on investments by asset class at December 31:
2012 2011 2010
(in millions)
Fixed maturity securities on which an OTTI loss has been recognized .............................. $ (194) $ (1,003) $ (849)
Fixed maturity securities, available-for-sale—all other .......................................... 23,876 15,227 8,078
Equity securities, available-for-sale ......................................................... 1,518 613 1,272
Derivatives designated as cash flow hedges(1) ................................................. (257) (86) (262)
Other investments(2) ..................................................................... 14 (6) 173
Net unrealized gains (losses) on investments .............................................. $24,957 $14,745 $8,412
142 Prudential Financial, Inc. 2012 Annual Report