Prudential 2015 Annual Report Download - page 18

Shown below are the contributions of each segment and Corporate and Other operations to our adjusted operating income for the
periods indicated and a reconciliation of adjusted operating income of our segments and Corporate and Other operations to income (loss)
from continuing operations before income taxes and equity in earnings of operating joint ventures.
Year ended December 31,
2015 2014 2013
(in millions)
Adjusted operating income before income taxes:
Individual Annuities ............................................................................... $1,797 $ 1,467 $ 2,085
Retirement ....................................................................................... 931 1,215 1,039
Asset Management ................................................................................ 779 785 723
Total U.S. Retirement Solutions and Investment Management division ................................... 3,507 3,467 3,847
Individual Life ................................................................................... 635 498 583
Group Insurance .................................................................................. 176 23 157
Total U.S. Individual Life and Group Insurance division ............................................... 811 521 740
International Insurance ............................................................................. 3,226 3,252 3,152
Total International Insurance division ............................................................. 3,226 3,252 3,152
Corporate and Other operations ...................................................................... (1,313) (1,348) (1,370)
Total Corporate and Other ...................................................................... (1,313) (1,348) (1,370)
Adjusted operating income before income taxes ......................................................... 6,231 5,892 6,369
Reconciling Items:
Realized investment gains (losses), net, and related adjustments(1) .......................................... 2,258 (3,588) (9,956)
Charges related to realized investment gains (losses), net(2) ................................................ (679) (542) 1,807
Investment gains (losses) on trading account assets supporting insurance liabilities, net(3) ........................ (524) 339 (250)
Change in experience-rated contractholder liabilities due to asset value changes(4) .............................. 433 (294) 227
Divested businesses:
Closed Block division(5) ....................................................................... 58 0 0
Other divested businesses(6) ..................................................................... (66) 167 29
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(7) ............... 58 44 28
Subtotal(8) ........................................................................................... 7,769 2,018 (1,746)
Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures for Closed
Block Business(9) ................................................................................... 0 (259) 62
Consolidated income (loss) from continuing operations before income taxes and equity in earnings of operating joint
ventures ........................................................................................... $7,769 $ 1,759 $(1,684)
(1) Represents “Realized investment gains (losses), net,” and related adjustments. See “—Realized Investment Gains (Losses)” and Note 22 to our
Consolidated Financial Statements for additional information.
(2) Includes charges that represent the impact of realized investment gains (losses), net, on the amortization of deferred policy acquisition costs and other
costs, and on changes in reserves. Also includes charges resulting from payments related to market value adjustment features of certain of our annuity
products and the impact of realized investment gains (losses), net, on the amortization of unearned revenue reserves.
(3) Represents net investment gains (losses) on trading account assets supporting insurance liabilities. See “—Experience-Rated Contractholder Liabilities,
Trading Account Assets Supporting Insurance Liabilities and Other Related Investments.”
(4) Represents changes in contractholder liabilities due to asset value changes in the pool of investments supporting these experience-rated contracts. See
“—Experience-Rated Contractholder Liabilities, Trading Account Assets Supporting Insurance Liabilities and Other Related Investments.”
(5) As a result of the Class B Repurchase, for the year ended December 31, 2015, the Closed Block, along with certain related assets and liabilities,
comprises the Closed Block division, which is accounted for as a divested business that is reported separately from the divested businesses that are
included in Corporate and Other operations.
(6) See “—Divested Businesses.”
(7) Equity in earnings of operating joint ventures are included in adjusted operating income but excluded from income from continuing operations before
income taxes and equity in earnings of operating joint ventures as they are reflected on a U.S. GAAP basis on an after-tax basis as a separate line in our
Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in
income from continuing operations before taxes and equity earnings of operating joint ventures as they are reflected on a U.S. GAAP basis as a separate
line in our Consolidated Statements of Operations. Earnings attributable to noncontrolling interests represent the portion of earnings from consolidated
entities that relates to the equity interests of minority investors.
(8) Amounts for the years ended December 31, 2014 and 2013 represent “Income (loss) from continuing operations before income taxes and equity in
earnings of operating joint ventures” of the Company’s former Financial Services Businesses, reflecting the existence of two classes of common stock
and the separate reporting of the Financial Services Businesses and the Closed Block Business for each period.
(9) Reflects the existence of two classes of common stock and the separate reporting of the Company’s former Financial Services Businesses and the
Closed Block Business for the years ended December 31, 2014 and 2013.
Results for 2015 presented above reflect the following:
Individual Annuities. Segment results for 2015 increased in comparison to 2014, primarily reflecting a favorable comparative impact
from changes in the estimated profitability of the business, higher net asset-based fee income and lower interest expense, partially offset by
costs for contract cancellations.
16 Prudential Financial, Inc. 2015 Annual Report