Prudential 2012 Annual Report Download - page 86

additional information regarding our policies around other-than-temporary impairments for equity securities. See Note 20 to the
Consolidated Financial Statements for information regarding the fair value methodology used for equity securities.
Impairments of equity securities attributable to the Financial Services Businesses were $104 million and $94 million for the years ended
December 31, 2012 and 2011, respectively. Impairments of equity securities attributable to the Closed Block Business were $21 million and
$18 million for years ended December 31, 2012 and 2011, respectively. For a further discussion of impairments, see “—Realized Investment
Gains and Losses” above.
Other Long-Term Investments
“Other long-term investments” are comprised as follows:
December 31, 2012 December 31, 2011
Financial
Services
Businesses
Closed
Block
Business
Financial
Services
Businesses
Closed
Block
Business
(in millions)
Joint ventures and limited partnerships:
Real estate-related ................................................................ $ 320 $ 504 $ 360 $ 413
Non-real estate-related ............................................................. 3,861 1,538 1,733 1,284
Real estate held through direct ownership(1) ............................................... 1,602 0 1,956 10
Other(2) ............................................................................ 882 (30) 432 283
Total other long-term investments .................................................... $6,665 $2,012 $4,481 $1,990
(1) Primarily includes investments in office buildings within our Japanese insurance operations.
(2) Primarily includes derivatives and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional
information regarding our holdings in the Federal Home Loan Banks of New York and Boston, see Note 14 to the Consolidated Financial Statements.
The increase in non-real estate-related joint venture and limited partnership assets is due to private equity partnership assets
acquired from the two pension risk transfer transactions completed in the fourth quarter of 2012.
Invested Assets of Other Entities and Operations
The following table sets forth the composition of investments held outside the general account in other entities and operations, including
the invested assets of our trading, banking and asset management operations, as of the dates indicated. Assets of our asset management
operations managed for third parties and those assets classified as “Separate account assets” on our balance sheet are not included.
December 31,
2012 2011
(in millions)
Fixed maturities:
Public, available-for-sale, at fair value .......................................................................... $ 272 $ 2,026
Private, available-for-sale, at fair value ......................................................................... 93 82
Othertradingaccountassets,atfairvalue(1).......................................................................... 4,627 3,124
Equity securities, available-for-sale, at fair value ...................................................................... 21 12
Commercial mortgage and other loans, at book value(2) ................................................................ 502 1,318
Other long-term investments ...................................................................................... 1,351 1,349
Short-term investments .......................................................................................... 62 2,984
Total investments ...................................................................................... $6,928 $10,895
(1) Includes trading positions held by our derivatives trading operations used in a non-dealer capacity to manage interest rate, currency, credit and equity
exposures.
(2) Book value is generally based on unpaid principal balance net of any allowance for losses, the lower of cost or fair value, or fair value, depending on the
loan.
Commercial Mortgage and Other Loans
Our asset management operations include our commercial mortgage operations, which provide mortgage origination, asset
management and servicing for our general account, institutional clients, and government sponsored entities such as Fannie Mae, the Federal
Housing Administration, and Freddie Mac. We also originate shorter-term interim loans for spread lending that are collateralized by assets
generally under renovation or lease up. All else being equal, these interim loans are inherently more risky than those collateralized by
properties that have already stabilized. Our interim loans are generally paid off through refinancing or the sale of the underlying collateral
by the borrower.
The following table sets forth information regarding the interim loan portfolio held outside the general account in other entities and
operations as of the dates indicated.
December 31, 2012 December 31, 2011
($ in millions)
Interim Loan Portfolio:
Principal balance of loans outstanding ..................................................... $239 $648
Allowance for credit or valuation-related losses ............................................. $ 14 $ 44
Weighted average loan-to-value ratio(1) ................................................... 91% 93%
Weighted average debt service coverage ratio(1) ............................................ 1.25 1.52
(1) A stabilized value and projected net operating income are used in the calculation of the loan-to-value and debt service coverage ratios.
84 Prudential Financial, Inc. 2012 Annual Report