Prudential 2003 Annual Report Download - page 41

2003 to 2002 Annual Comparison. Total new annualized premiums decreased $60 million, or 14%, from 2002 to
2003. Group life sales decreased in 2003 due primarily to a smaller contribution from large case sales in 2003 as well
as the expected slowing of our sales due to the implementation of pricing adjustments in 2002. Group disability sales
decreased in 2003 due primarily to one large sale in the fourth quarter of 2002.
2002 to 2001 Annual Comparison. Total new annualized premiums decreased $145 million, or 25%, from 2001
to 2002 due to a decrease in group life sales. The group life sales decrease came from a decrease in sales to new
customers reflecting a sale of $99 million to one large customer in 2001 and the expected slowing of our sales due to
the implementation of pricing adjustments in 2002, partially offset by increased sales to existing customers. Group
disability sales increased in 2002 due primarily to one large fourth quarter sale.
Investment Division
Investment Management
Operating Results
The following table sets forth the Investment Management segment’s operating results for the periods indicated.
Year ended December 31,
2003 2002 2001
(in millions)
Operating results:
Revenues .................................................................................. $1,259 $1,235 $1,357
Expenses .................................................................................. 1,097 1,096 1,216
Adjusted operating income .................................................................... 162 139 141
Realized investment gains (losses), net(1) ....................................................... 5 64 (8)
Income from continuing operations before income taxes ............................................. $ 167 $ 203 $ 133
(1) Revenues exclude realized investment gains (losses), net. For a discussion of these items see “—Realized Investment Gains and General
Account Investments—Realized Investment Gains.”
Adjusted Operating Income
2003 to 2002 Annual Comparison. Adjusted operating income increased $23 million, from $139 million in 2002
to $162 million in 2003. The increase reflected lower expenses, excluding the impact of recent acquisitions, and higher
asset-based fees in our investment management and advisory operations, which were partially offset by a decline in
retained fees as a result of the combination of our retail securities brokerage and clearing operations with those of
Wachovia. We estimate the decline in retained fees reduced the segment’s adjusted operating income for the second
half of 2003 by $22 million.
2002 to 2001 Annual Comparison. Adjusted operating income for 2002 was essentially unchanged from 2001.
Lower fee revenues resulting from declines in market value of the underlying equity assets under management as well
as lower average mutual fund customer account balances on which our fees are based, and lower mortgage loan
origination and servicing revenue were largely offset by a decrease in expenses resulting from the decline in revenue
and cost saving measures implemented in 2001. We incurred $23 million and $55 million of employee termination and
facilities consolidation costs in 2002 and 2001, respectively.
Prudential Financial 2003 Annual Report 39