Prudential 2015 Annual Report Download - page 130

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-
backed, commercial mortgage-backed, and residential mortgage-backed securities are shown separately in the table above, as they are not
due at a single maturity date.
The following table depicts the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on
impairments of both fixed maturities and equity securities:
2015 2014 2013
(in millions)
Fixed maturities, available-for-sale
Proceeds from sales ................................................................................. $27,679 $28,359 $37,248
Proceeds from maturities/repayments ................................................................... 19,559 21,040 23,573
Gross investment gains from sales, prepayments, and maturities .............................................. 2,115 1,664 1,571
Gross investment losses from sales and maturities ......................................................... (340) (414) (1,465)
Fixed maturities, held-to-maturity
Gross investment gains from prepayments ............................................................... $ 0 $ 0 $ 0
Proceeds from maturities/repayments ................................................................... 235 415 583
Equity securities, available-for-sale
Proceeds from sales ................................................................................. $ 4,589 $ 4,993 $ 4,235
Gross investment gains from sales ...................................................................... 746 676 554
Gross investment losses from sales ..................................................................... (169) (132) (94)
Fixed maturity and equity security impairments
Net writedowns for other-than-temporary impairment losses on fixed maturities recognized in earnings(1) ............ $ (141) $ (56) $ (200)
Writedowns for impairments on equity securities .......................................................... (126) (32) (15)
(1) Excludes the portion of OTTI recorded in “Other comprehensive income (loss),” representing any difference between the fair value of the impaired debt
security and the net present value of its projected future cash flows at the time of impairment.
As discussed in Note 2, a portion of certain OTTI losses on fixed maturity securities is recognized in “Other comprehensive income
(loss)”. For these securities, the net amount recognized in earnings (“credit loss impairments”) represents the difference between the
amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in
the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in “Other
comprehensive income (loss)”. The following table sets forth the amount of pre-tax credit loss impairments on fixed maturity securities
held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in “Other comprehensive income
(loss)”, and the corresponding changes in such amounts:
Year Ended December 31,
2015 2014
(in millions)
Balance, beginning of period ............................................................................... $781 $968
Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the
period ............................................................................................... (243) (230)
Credit loss impairments previously recognized on securities impaired to fair value during the period(1) .................... (20) (6)
Credit loss impairments recognized in the current period on securities not previously impaired ........................... 3 16
Additional credit loss impairments recognized in the current period on securities previously impaired ..................... 3 6
Increases due to the passage of time on previously recorded credit losses ............................................ 20 42
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected ......... (12) (15)
Balance, end of period .................................................................................... $532 $781
(1) Represents circumstances where the Company determined in the current period that it intends to sell the security or it is more likely than not that it will
be required to sell the security before recovery of the security’s amortized cost.
Trading Account Assets Supporting Insurance Liabilities
The following table sets forth the composition of “Trading account assets supporting insurance liabilities” as of the dates indicated:
December 31, 2015 December 31, 2014
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(in millions)
Short-term investments and cash equivalents ................................................. $ 765 $ 765 $ 196 $ 196
Fixed maturities:
Corporate securities ................................................................ 12,797 12,851 11,922 12,439
Commercial mortgage-backed securities ................................................ 1,860 1,862 2,505 2,546
Residential mortgage-backed securities(1) ............................................... 1,411 1,428 1,640 1,676
Asset-backed securities(2) ........................................................... 1,295 1,299 1,180 1,198
Foreign government bonds ........................................................... 680 694 621 650
U.S. government authorities and agencies and obligations of U.S. states ....................... 326 369 303 372
Total fixed maturities ................................................................... 18,369 18,503 18,171 18,881
Equity securities ....................................................................... 1,030 1,254 896 1,186
Total trading account assets supporting insurance liabilities ..................................... $20,164 $20,522 $19,263 $20,263
128 Prudential Financial, Inc. 2015 Annual Report