Prudential 2003 Annual Report Download - page 22

SELECTED FINANCIAL DATA
We derived the selected consolidated income statement data for the years ended December 31, 2003, 2002 and
2001 and the selected consolidated balance sheet data as of December 31, 2003 and 2002 from our Consolidated
Financial Statements included elsewhere herein. We derived the selected consolidated income statement data for the
years ended December 31, 2000 and 1999 and the selected consolidated balance sheet data as of December 31, 2001,
2000 and 1999 from consolidated financial statements not included herein.
On May 1, 2003 we completed our acquisition of Skandia U.S. Inc., which included American Skandia, Inc.
Results for 2003 included results of American Skandia from the date of acquisition.
On July 1, 2003, we completed an agreement with Wachovia to combine each company’s respective retail
securities brokerage and clearing operations forming Wachovia Securities. We have a 38% ownership interest in the
joint venture, while Wachovia owns the remaining 62%. The transaction included our securities brokerage operations
but did not include our equity sales, trading and research operations. As part of the transaction we retained certain
assets and liabilities related to the contributed businesses, including liabilities for certain litigation and regulatory
matters. We account for our 38% ownership of the joint venture under the equity method of accounting; periods prior
to July 1, 2003, continue to reflect the results of our previously wholly owned securities brokerage operations on a fully
consolidated basis. Accordingly, operating results for 2003 reflect our securities brokerage operations on a
consolidated basis for the first six months of 2003 and earnings from the joint venture on the equity basis for the
remaining six month period. Results for 2002 and prior years reflect our securities brokerage operations on a
consolidated basis.
In April 2001, we completed the acquisition of Gibraltar Life, which has adopted a November 30 fiscal year end.
Consolidated balance sheet data as of December 31, 2003, 2002 and 2001 includes Gibraltar Life assets and liabilities
as of November 30 and consolidated income statement data for 2001 includes Gibraltar Life results from April 2, 2001,
the date of its reorganization, through November 30, 2001. Consolidated income statement data for 2002 and 2003
includes Gibraltar Life results for the twelve months ended November 30, 2002 and 2003, respectively.
We have made several dispositions that materially affect the comparability of the data presented below. In the
fourth quarter of 2003, we completed the sale of our property and casualty insurance companies that operate nationally
in 48 states outside of New Jersey, and the District of Columbia, to Liberty Mutual Group (“Liberty Mutual”), as well
as our New Jersey property and casualty insurance companies to Palisades Group. Results for 2003 include a pre-tax
loss of $491 million related to the disposition of these businesses. In the fourth quarter of 2000, we terminated the
capital markets activities of Prudential Securities. This business had pre-tax income of $287 million in 2003 (including
the gain from a $332 million settlement of an arbitration award), a pre-tax loss of $36 million in 2002, a pre-tax loss of
$159 million in 2001, a pre-tax loss of $620 million in 2000, and pre-tax income of $23 million in 1999. The loss from
these operations in 2000 included charges of $476 million associated with our termination and wind-down of these
businesses. In 2000, we sold Gibraltar Casualty Company, a commercial property and casualty insurer that we placed
in wind-down status in 1985. We incurred losses of $81 million in 2003 and $79 million in 2002 under a stop-loss
agreement we entered into at the time of sale. Gibraltar Casualty had no impact on results in 2001 and incurred pre-tax
losses of $6 million in 2000, and $72 million in 1999.
On December 18, 2001, Prudential Insurance converted from a mutual life insurance company owned by its
policyholders to a stock life insurance company and became an indirect, wholly owned subsidiary of Prudential
Financial. “Demutualization costs and expenses” amounted to $588 million in 2001, $143 million in 2000, and $75
million in 1999. “Demutualization costs and expenses” in 2001 include $340 million of demutualization consideration
paid to former Canadian branch policyholders.
You should read this selected consolidated financial information in conjunction with “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements included
elsewhere herein.
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