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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
21. DERIVATIVE INSTRUMENTS (continued)
The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying
hedge relationships, excluding the offset of the hedged item in an effective hedge relationship.
Year Ended December 31, 2012
Realized
Investment
Gains/(Losses)
Net
Investment
Income
Other
Income
Interest
Expense
Interest
Credited
To Policyholders’
Account
Balances
Accumulated
Other
Comprehensive
Income(1)
(in millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges
Interest Rate ............................................ $ 22 $ (92) $ 0 $ 4 $33 $ 0
Currency .............................................. (37) (3) 0 0 0 0
Total fair value hedges ................................... (15) (95) 0 4 33 0
Cash flow hedges
Interest Rate ............................................ 0 0 0 (19) (1) 14
Currency/Interest Rate .................................... 0 (5) (20) 0 0 (185)
Total cash flow hedges ................................... 0 (5) (20) (19) (1) (171)
Net investment hedges
Currency(2) ............................................ (1) 0 0 0 0 (9)
Currency/Interest Rate .................................... 0 0 0 0 0 228
Total net investment hedges ............................... (1) 0 0 0 0 219
Derivatives Not Qualifying as Hedging Instruments:
Interest Rate ............................................ 413 0 0 0 0 0
Currency .............................................. (64) 0 0 0 0 0
Currency/Interest Rate .................................... 235 0 0 0 0 0
Credit ................................................. (34) 0 0 0 0 0
Equity ................................................ (2,302) 0 0 0 0 0
Embedded Derivatives .................................... 251 0 0 0 0 0
Total non-qualifying hedges ............................... (1,501) 0 0 0 0 0
Total ................................................. $(1,517) $(100) $(20) $(15) $32 $ 48
Year Ended December 31, 2011
Realized
Investment
Gains/(Losses)
Net
Investment
Income
Other
Income
Interest
Expense
Interest
Credited
To Policyholders’
Account
Balances
Accumulated
Other
Comprehensive
Income(1)
(in millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges
Interest Rate ............................................ $ (122) $(113) $ 0 $ 8 $56 $ 0
Currency .............................................. 28 (5) 0 0 0 0
Total fair value hedges ................................... (94) (118) 0 8 56 0
Cash flow hedges
Interest Rate ............................................ 0 0 0 (19) (1) (4)
Currency/Interest Rate .................................... 0 (14) 22 0 0 180
Total cash flow hedges ................................... 0 (14) 22 (19) (1) 176
Net investment hedges
Currency(2) ............................................ (9) 0 6 0 0 (6)
Currency/Interest Rate .................................... 0 0 0 0 0 (23)
Total net investment hedges ............................... (9) 0 6 0 0 (29)
Derivatives Not Qualifying as Hedging Instruments:
Interest Rate ............................................ 5,133 0 0 0 0 0
Currency .............................................. 125 0 0 0 0 0
Currency/Interest Rate .................................... (4) 0 0 0 0 0
Credit ................................................. (38) 0 0 0 0 0
Equity ................................................ (318) 0 0 0 0 0
Embedded Derivatives .................................... (2,579) 0 0 0 0 0
Total non-qualifying hedges ............................... 2,319 0 0 0 0 0
Total ................................................. $2,216 $(132) $28 $(11) $55 $147
202 Prudential Financial, Inc. 2012 Annual Report