Prudential 2015 Annual Report Download - page 72

Fixed Maturity Securities and Unrealized Gains and Losses by Industry Category
The following table sets forth the composition of the portion of our fixed maturity securities portfolio by industry category attributable
to PFI excluding the Closed Block division as of the dates indicated and the associated gross unrealized gains (losses).
December 31, 2015 December 31, 2014
Industry(1)
Amortized
Cost
Gross
Unrealized
Gains(2)
Gross
Unrealized
Losses(2)
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains(2)
Gross
Unrealized
Losses(2)
Fair
Value
(in millions)
Corporate securities:
Finance ............................... $ 21,505 $ 1,385 $ 224 $ 22,666 $ 20,569 $ 1,984 $ 55 $ 22,498
Consumer non-cyclical .................. 20,732 2,073 408 22,397 20,956 2,822 141 23,637
Utility ................................ 17,369 1,423 393 18,399 16,144 2,149 82 18,211
Capital goods .......................... 10,503 978 241 11,240 10,170 1,348 67 11,451
Consumer cyclical ...................... 9,223 846 146 9,923 9,447 1,129 37 10,539
Foreign agencies ....................... 5,222 1,086 67 6,241 5,186 1,227 38 6,375
Energy ............................... 10,793 674 855 10,612 11,395 1,135 275 12,255
Communications ....................... 6,294 690 200 6,784 6,465 1,021 41 7,445
Basic industry .......................... 5,658 404 321 5,741 6,003 640 71 6,572
Transportation ......................... 6,536 605 105 7,036 5,718 769 18 6,469
Technology ........................... 3,459 278 72 3,665 3,474 389 30 3,833
Industrial other ......................... 3,547 245 73 3,719 2,746 333 21 3,058
Total corporate securities ..................... 120,841 10,687 3,105 128,423 118,273 14,946 876 132,343
Foreign government(3) ...................... 72,265 12,167 131 84,301 70,327 11,286 111 81,502
Residential mortgage-backed .................. 4,861 353 6 5,208 5,747 466 4 6,209
Asset-backed securities(4) .................... 6,873 195 69 6,999 7,094 292 78 7,308
Commercial mortgage-backed ................. 7,300 160 37 7,423 9,688 344 24 10,008
U.S. Government ........................... 11,479 2,900 11 14,368 11,493 3,468 5 14,956
State & Municipal(5) ........................ 7,661 675 39 8,297 5,163 693 3 5,853
Total(6) .......................... $231,280 $27,137 $3,398 $255,019 $227,785 $31,495 $1,101 $258,179
(1) Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for
all other holdings.
(2) Includes $316 million of gross unrealized gains and $0 million of gross unrealized losses as of December 31, 2015, compared to $328 million of gross
unrealized gains and $1 million of gross unrealized losses as of December 31, 2014, on securities classified as held-to-maturity.
(3) As of both December 31, 2015 and 2014, based on amortized cost, 76% represent Japanese government bonds held by our Japanese insurance
operations, with no other individual country representing more than 10% of the balance.
(4) Includes securities collateralized by sub-prime mortgages. See “—Asset-Backed Securities” below.
(5) Includes securities related to the Build America Bonds program.
(6) Excluded from the table above are securities held outside the general account in other entities and operations. For additional information regarding
investments held outside the general account, see “—Invested Assets of Other Entities and Operations” below. Also excluded from the table above are
fixed maturity securities classified as trading. See “—Trading Account Assets Supporting Insurance Liabilities” and “—Other Trading Account Assets”
for additional information.
The decrease in net unrealized gains from December 31, 2014 to December 31, 2015, was primarily due to a net decrease in fair value
driven by an increase in interest rates in the U.S. and credit spread widening.
As of December 31, 2015, PFI excluding the Closed Block division had direct and indirect energy and related exposure with a market
value of approximately $13.4 billion, and a net unrealized loss of approximately $0.2 billion, which is reflected in AOCI. The exposure was
primarily through public and private corporate securities, 87% of which are investment grade, and also included trading assets, equity
securities and private equity investments. OTTI related to investments in the energy sector were $79 million for the year ended
December 31, 2015, and we could be exposed to future valuation declines or impairments if energy prices remain at current or lower levels
for an extended period of time.
70 Prudential Financial, Inc. 2015 Annual Report