Prudential 2003 Annual Report Download - page 126

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
Duration of Gross Unrealized Loss Positions for Equity Securities
The following table shows the fair value and gross unrealized losses aggregated by length of time that individual
equity securities have been in a continuous unrealized loss position, as of December 31, 2003:
Less than twelve months Twelve months or more Total
Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses
(in millions)
Equity securities available for sale .... $548 $65 $123 $24 $671 $89
As of December 31, 2003, gross unrealized losses on equity securities totaled $89 million comprising 1,474
issuers. Of this amount, there were $65 million in less than twelve months category comprising 1,043 issuers and $24
million in the greater than twelve months category comprising 431 issuers. Approximately $8 million of the total gross
unrealized losses represented declines of greater than 20%, substantially all of which was less than six months old.
There were no individual issuers comprising more than $5 million of the $24 million of gross unrealized losses in the
greater than twelve months category. Based on a review of the above information in conjunction with other factors
outlined in the policy surrounding other than temporary impairments (see Note 2), the Company has concluded that an
adjustment for other than temporary impairments is not warranted at December 31, 2003.
Securities Pledged, Restricted Assets and Special Deposits
The Company pledges investment securities it owns to unaffiliated parties through certain transactions, including
securities lending, securities sold under agreements to repurchase and futures contracts. At December 31, the carrying
value of investments pledged to third parties as reported in the Consolidated Statements of Financial Position included
the following:
2003 2002
(in millions)
Fixed maturities available for sale .............................................................. $13,537 $15,600
Trading account assets ....................................................................... 1,927 1,799
Separate account assets ...................................................................... 3,196 2,496
Total securities pledged ...................................................................... $18,660 $19,895
In the normal course of its business activities, the Company accepts collateral that can be sold or repledged. The
primary sources of this collateral are securities in customer accounts, securities purchased under agreements to resell
and securities borrowed transactions. The fair value of this collateral was approximately $1,628 million and $13,488
million at December 31, 2003 and 2002, respectively, of which $1,478 million in 2003 and $9,288 million in 2002 had
either been sold or repledged.
Assets of $419 million and $399 million at December 31, 2003 and 2002, respectively, were on deposit with
governmental authorities or trustees as required by certain insurance laws. Additionally, assets valued at $601 million
and $789 million at December 31, 2003 and 2002, respectively, were held in voluntary trusts established primarily to
fund guaranteed dividends to certain policyholders and to fund certain employee benefits. Assets valued at $73 million
and $424 million at December 31, 2003 and 2002, respectively, were pledged as collateral for bank loans and other
financing agreements. Letter stock or other securities restricted as to sale amounted to $11 million and $25 million at
December 31, 2003 and 2002, respectively. Restricted cash and securities of $1,908 million and $1,869 million at
December 31, 2003 and 2002, respectively, were included in “Other assets.” The restricted cash represents funds
deposited by clients and funds accruing to clients as a result of trades or contracts.
Growing and Protecting Your Wealth124