Prudential 2012 Annual Report Download - page 36

sales or additions, as applicable, minus withdrawals and benefits. Account values include both internally- and externally-managed client
balances as the total balances drive revenue for the Retirement segment. For more information on internally-managed balances see “—
Asset Management.”
Year ended December 31,
2012 2011 2010
(in millions)
Full Service(1):
Beginning total account value .................................................................... $139,430 $141,313 $126,345
Deposits and sales ............................................................................. 16,390 16,821 19,266
Withdrawals and benefits ....................................................................... (19,223) (19,160) (16,804)
Change in market value, interest credited, interest income and other activity(2) ............................. 11,808 456 12,506
Ending total account value .................................................................. $148,405 $139,430 $141,313
Net additions (withdrawals) ..................................................................... $ (2,833) $ (2,339) $ 2,462
Institutional Investment Products(3):
Beginning total account value .................................................................... $ 90,089 $ 64,183 $ 51,908
Additions(4) ................................................................................. 55,005 27,773 15,298
Withdrawals and benefits(5) ..................................................................... (8,495) (6,150) (6,958)
Change in market value, interest credited and interest income ........................................... 4,787 4,581 3,370
Other(6) ..................................................................................... 49 (298) 565
Ending total account value(7) ................................................................ $141,435 $ 90,089 $ 64,183
Net additions(8) .............................................................................. $ 46,510 $ 21,623 $ 8,340
(1) Ending total account value for the full service business includes assets of Prudential’s retirement plan of $6.6 billion, $6.3 billion and $5.8 billion as of
December 31, 2012, 2011 and 2010, respectively.
(2) Change in market value, interest credited and interest income and other activity includes $(1.4) billion for 2012 representing the divestiture of bank
deposits held by PB&T, as a result of our decision to limit its operations to trust services. Other activity also includes $469 million in 2011 representing
the addition of Prudential’s non-qualified pension plan transferred from a third-party administrator.
(3) Ending total account value for the institutional investment products business includes assets of Prudential’s retirement plan of $6.1 billion, $5.8 billion
and $5.4 billion as of December 31, 2012, 2011 and 2010, respectively. Ending total account value for the institutional investment products business
also includes $1.9 billion, $1.5 billion and $1.5 billion as of December 31, 2012, 2011 and 2010, respectively, related to collateralized funding
agreements issued to the Federal Home Loan Bank of New York (FHLBNY), and $0.5 billion and $1.0 billion as of December 31, 2011 and 2010,
respectively, related to affiliated funding agreements issued to Prudential Financial. For additional information, see Note 10 and Note 14 to the
Consolidated Financial Statements.
(4) Additions include $1,008 million in 2012 representing transfers of externally-managed client balances to accounts we manage. These additions are
offset within Other.
(5) Withdrawals and benefits include $(902) million, $(78) million and $(752) million for 2012, 2011 and 2010, respectively, representing transfersof
client balances from accounts we manage to externally-managed accounts. These withdrawals are offset within Other.
(6) Other includes $(106) million, $78 million and $752 million for 2012, 2011 and 2010, respectively, representing net transfers of externally-managed
client balances from/(to) accounts we manage. These transfers are offset within Additions or Withdrawals and benefits.
(7) Ending total account value for the institutional investment products business includes investment-only stable value account values of $60.8 billion,
$41.3 billion and $17.7 billion as of December 31, 2012, 2011 and 2010, respectively, and $33.7 billion as of December 31, 2012 related to the two
significant pension risk transfer transactions in the fourth quarter of 2012.
(8) Net additions for the institutional investment products business include investment-only stable value net additions of $17.5 billion, $22.3 billion and
$12.6 billion for 2012, 2011 and 2010, respectively, and $33.6 billion for 2012 related to the two significant pension risk transfer transactions in the
fourth quarter of 2012.
2012 to 2011 Annual Comparison. The increase in full service account values primarily reflects equity market appreciation in 2012,
partially offset by net withdrawals and the divestiture of bank deposits discussed above. The increase in net withdrawals was primarily due
to an increase in the value of participant withdrawals, driven by the impact of equity market appreciation on account values.
The increase in institutional investment products account values primarily reflects net additions and increases in the market value of
customer funds driven by declines in fixed income yields. The increase in net additions was driven by the two significant pension risk
transfer transactions discussed above, partially offset by a decrease in sales of our investment-only stable value product, resulting from
some of our existing intermediary relationships nearing saturation levels.
2011 to 2010 Annual Comparison. The decrease in full service account values was primarily driven by net withdrawals over the last
twelve months. The decrease in net additions (withdrawals) primarily reflects a lower volume of large new plan sales and higher plan
lapses, driven by higher account values and a higher volume of large plan lapses.
The increase in institutional investment products account values was driven by additions of our investment-only stable value and
structured settlements products, as well as sales of our longevity reinsurance product, which we introduced in 2011. To a lesser extent, the
increase in account values was also driven by increases in the market value of customer funds primarily from declines in fixed income
yields, partially offset by decreases in account values from declines in general account guaranteed investment product account values. The
increase in net additions primarily reflects higher sales of our investment-only stable value and longevity reinsurance products, and lower
general account guaranteed investment product scheduled withdrawals.
34 Prudential Financial, Inc. 2012 Annual Report