Prudential 2003 Annual Report Download - page 49

policy charges and fee income of $373 million, or 16%, from $2.343 billion in 2002 to $2.716 billion in 2003.
Premiums and policy charges and fee income from our Japanese operation other than Gibraltar Life increased $210
million, from $1.734 billion in 2002 to $1.944 billion in 2003 and premiums from our Korean operation increased $120
million, from $459 million in 2002 to $579 million in 2003. The increase in premium and policy charges and fee
income in both operations was primarily the result of new sales and strong persistency. Premiums in all other countries
increased modestly from 2002 to 2003.
Revenues for Gibraltar Life excluding the impact of the currency fluctuations, decreased $128 million, from
$2.898 billion in 2002 to $2.770 billion in 2003. Gibraltar Life’s decrease of $128 million is primarily due to a $114
million decline in premium revenue. The decline in premium revenue reflects a reduction in the in force business
resulting from a higher than normal level of policy surrenders associated with the periods following Gibraltar Life’s
restructuring.
2002 to 2001 Annual Comparison. Revenues increased $927 million from $4.146 billion in 2001 to $5.073
billion in 2002, including a net unfavorable effect of $191 million related to currency fluctuations. Revenues on a
constant exchange rate basis increased $1.118 billion, $765 million from Gibraltar Life and $353 million from our
international insurance operations other than Gibraltar Life. The $353 million increase in revenues from our
international insurance operations other than Gibraltar Life came primarily from an increase in premium revenue of
$301 million, or 16%, from $1.925 billion in 2001 to $2.226 billion in 2002. Premiums, on this same basis, from our
Korean operation increased $150 million, from $309 million in 2001 to $459 million in 2002, and premiums in our
Japanese operation other than Gibraltar Life increased $125 million primarily the result of strong persistency and new
sales. Premium revenue in all other countries increased $26 million from 2001 to 2002.
Benefits and Expenses
2003 to 2002 Annual Comparison. Benefits and expenses, as shown in the table above under “—Operating
Results,” increased $520 million, from $4.316 billion in 2002 to $4.836 billion in 2003, which include a negative
impact of $316 million relating currency fluctuations. Excluding the impact of currency fluctuations, benefits and
expenses increased $204 million reflecting a $347 million increase in our international insurance operations, other than
Gibraltar Life, partially offset by a $143 million decrease from Gibraltar Life. The $347 million increase in our
international insurance operations, other than Gibraltar Life, reflects an increase in policyholders’ benefits, including
changes in reserves, and an increase in amortization of deferred policy acquisition costs resulting from the aging of
business in force and a greater volume of business in force in our Japanese and Korean operations, which was driven
by new sales and continued strong persistency.
Gibraltar Life’s benefits and expenses increased $34 million, from $2.316 billion in 2002 to $2.350 billion in
2003, which include an increase of $177 million relating to year over year fluctuations in currency exchange rates.
Excluding the impact of the currency fluctuations, benefits and expenses decreased $143 million, from $2.518 billion
in 2002 to $2.375 billion in 2003. The $143 million decrease is primarily due to a decrease in policyholder benefits,
including changes in reserves, as a result of a continued reduction of the in force business resulting from a higher than
normal level of policy surrenders associated with the periods following Gibraltar Life’s restructuring.
2002 to 2001 Annual Comparison. Benefits and expenses increased $781 million from $3.535 billion in 2001 to
$4.316 billion in 2002, including a $552 million increase from Gibraltar Life. Excluding the impact of the Gibraltar
Life acquisition, benefits and expenses increased $229 million, or 13%, from $1.771 billion in 2001 to $2.000 billion in
2002. The $229 million increase in benefits and expenses came primarily from an increase of $164 million in
policyholders’ benefits, which includes the change in reserves for future policy benefits, and an increase of $56 million
in amortization of deferred policy acquisition costs. Policyholders’ benefits increased from $1.382 billion in 2001 to
$1.546 billion in 2002. The increase reflected a greater volume of business in force, which was driven by the aging of
business in force in markets where our operations are more mature, new sales, and continued strong persistency,
partially offset by the impact of currency fluctuations. On a constant exchange rate basis, total segment benefits and
expenses increased $944 million.
Prudential Financial 2003 Annual Report 47