Prudential 2015 Annual Report Download - page 79

As of December 31, 2015, our general account investments in commercial and agricultural mortgage loans attributable to PFI
excluding the Closed Block division had a weighted average debt service coverage ratio of 2.45 times, and a weighted average loan-to-
value ratio of 57%. As of December 31, 2015, approximately 96% of commercial and agricultural mortgage loans were fixed rate loans.
For those general account commercial and agricultural mortgage loans that were originated in 2015, the weighted average debt service
coverage ratio was 2.58 times and the weighted average loan-to-value ratio was 65%.
The values utilized in calculating these loan-to-value ratios are developed as part of our periodic review of the commercial and
agricultural mortgage loan portfolio, which includes an internal evaluation of the underlying collateral value. Our periodic review also
includes a quality re-rating process, whereby we update the internal quality rating originally assigned at underwriting based on the
proprietary quality rating system mentioned above. As discussed below, the internal quality rating is a key input in determining our
allowance for loan losses.
For loans with collateral under construction, renovation or lease-up, a stabilized value and projected net operating income are used in
the calculation of the loan-to-value and debt service coverage ratios. Our commercial and agricultural mortgage loan portfolio included
approximately $1.4 billion and $1.3 billion of such loans as of December 31, 2015 and 2014, respectively. All else being equal, these loans
are inherently more risky than those collateralized by properties that have already stabilized. As of December 31, 2015, there are no loan-
specific reserves related to these loans. In addition, these unstabilized loans are included in the calculation of our portfolio reserve as
discussed below. For information regarding similar loans we hold as part of our commercial and agricultural mortgage operations, see “—
Invested Assets of Other Entities and Operations” below.
The following tables set forth the gross carrying value of our general account investments in commercial and agricultural mortgage
loans attributable to PFI excluding the Closed Block division as of the dates indicated by loan-to-value and debt service coverage ratios.
Commercial and Agricultural Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios
December 31, 2015
Debt Service Coverage Ratio
Greater
than
1.2x
1.0x
to
< 1.2x
Less
than
1.0x
Total
Commercial
and
Agricultural
Mortgage
Loans
Loan-to-Value Ratio (in millions)
0%—59.99% .............................................................................. $21,684 $ 446 $165 $22,295
60%—69.99% ............................................................................. 10,491 318 211 11,020
70%—79.99% ............................................................................. 4,874 386 97 5,357
Greater than 80% ........................................................................... 89 118 123 330
Total commercial and agricultural mortgage loans ............................................. $37,138 $1,268 $596 $39,002
The following table sets forth the breakdown of our commercial and agricultural mortgage loans attributable to PFI excluding the
Closed Block division by year of origination as of December 31, 2015.
December 31, 2015
Gross
Carrying
Value
%of
Total
Year of Origination ($ in millions)
2015 ....................................................................................................... $ 8,120 20.8%
2014 ....................................................................................................... 7,394 18.9
2013 ....................................................................................................... 8,019 20.6
2012 ....................................................................................................... 4,171 10.7
2011 ....................................................................................................... 4,173 10.7
2010 ....................................................................................................... 2,467 6.3
2009 ....................................................................................................... 737 1.9
2008 & Prior ................................................................................................ 3,921 10.1
Total commercial and agricultural mortgage loans ............................................................... $39,002 100.0%
Prudential Financial, Inc. 2015 Annual Report 77