Prudential 2012 Annual Report Download - page 66

Our portfolio asset allocation reflects our emphasis on diversification across asset classes, sectors, and issuers. The CIO Organization,
directly and through related functions within the insurance subsidiaries, implements portfolio strategies primarily through various asset
management units within Prudential’s Asset Management segment. Activities of the Asset Management segment on behalf of the general
account portfolios are directed and overseen by the CIO Organization and monitored by Risk Management for compliance with investment
risk limits.
Portfolio Composition
Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, equity
securities and other invested assets. The composition of our general account reflects, within the discipline provided by our risk
management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our
Asset Management segment. The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.
In the fourth quarter of 2012, our Retirement segment completed two significant pension risk transfer transactions, in which we issued
non-participating group annuity contracts to two unaffiliated pension plan sponsors, and assumed responsibility for certain pension benefit
obligations for participants covered by the agreements. In return for assuming these obligations, we received approximately $33 billion of
in-kind assets, consisting of approximately $31 billion of fixed maturity securities and approximately $2 billion of private equity
partnership assets. The addition of these assets to our portfolio increased our investments in fixed maturity securities and other long-term
investments by approximately 11%, and 30%, respectively. For additional information on these transactions, see “—Executive Summary—
Current Developments” above.
The following tables set forth the composition of the investments of our general account apportioned between the Financial Services
Businesses and the Closed Block Business as of the dates indicated.
December 31, 2012
Financial
Services
Businesses
Closed Block
Business Total % of Total
($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value ............................................ $225,306 $28,790 $254,096 63.7%
Public, held-to-maturity, at amortized cost ......................................... 3,116 0 3,116 0.8
Private, available-for-sale, at fair value ............................................ 29,246 17,629 46,875 11.7
Private, held-to-maturity, at amortized cost ........................................ 1,152 0 1,152 0.3
Trading account assets supporting insurance liabilities, at fair value ......................... 20,590 0 20,590 5.2
Other trading account assets, at fair value .............................................. 1,426 275 1,701 0.4
Equity securities, available-for-sale, at fair value ........................................ 5,031 3,225 8,256 2.1
Commercial mortgage and other loans, at book value .................................... 26,623 9,608 36,231 9.1
Policy loans, at outstanding balance .................................................. 6,455 5,120 11,575 2.9
Other long-term investments(1) ..................................................... 6,665 2,012 8,677 2.2
Short-term investments ............................................................ 5,124 1,261 6,385 1.6
Total general account investments ............................................... 330,734 67,920 398,654 100.0%
Invested assets of other entities and operations(2) ....................................... 6,928 0 6,928
Total investments ............................................................ $337,662 $67,920 $405,582
December 31, 2011
Financial
Services
Businesses
Closed Block
Business Total % of Total
($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value ............................................ $179,086 $30,211 $209,297 60.6%
Public, held-to-maturity, at amortized cost ......................................... 3,743 0 3,743 1.1
Private, available-for-sale, at fair value ............................................ 26,938 16,305 43,243 12.5
Private, held-to-maturity, at amortized cost ........................................ 1,364 0 1,364 0.4
Trading account assets supporting insurance liabilities, at fair value ......................... 19,481 0 19,481 5.6
Other trading account assets, at fair value .............................................. 2,104 317 2,421 0.7
Equity securities, available-for-sale, at fair value ........................................ 4,401 3,122 7,523 2.2
Commercial mortgage and other loans, at book value .................................... 25,073 9,040 34,113 9.9
Policy loans, at outstanding balance .................................................. 6,263 5,296 11,559 3.3
Other long-term investments(1) ..................................................... 4,481 1,990 6,471 1.9
Short-term investments ............................................................ 5,609 528 6,137 1.8
Total general account investments ............................................... 278,543 66,809 345,352 100.0%
Invested assets of other entities and operations(2) ....................................... 10,895 0 10,895
Total investments ............................................................ $289,438 $66,809 $356,247
(1) Other long-term investments consist of real estate and non-real estate-related investments in joint ventures and partnerships, investment real estate held
through direct ownership and other miscellaneous investments. For additional information regarding these investments, see “—Other Long-Term
Investments” below.
64 Prudential Financial, Inc. 2012 Annual Report