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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
The table below presents unrealized gains (losses) on investments by asset class at December 31:
2005 2004 2003
(in millions)
Fixed maturities ........................................................................... $5,788 $7,816 $7,750
Equity securities .......................................................................... 832 739 602
Derivatives designated as cash flow hedges(1) ................................................... (122) (210) (111)
Other investments ......................................................................... 1 20 1
Net unrealized gains on investments ........................................................... $6,499 $8,365 $8,242
(1) See Note 19 for more information on cash flow hedges.
Duration of Gross Unrealized Loss Positions for Fixed Maturities
The following table shows the fair value and gross unrealized losses aggregated by investment category and length of time that
individual fixed maturity securities have been in a continuous unrealized loss position, at December 31:
2005
Less than twelve months Twelve months or more Total
Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses
(in millions)
Fixed maturities(1)
U.S. Treasury securities and obligations of U.S.
government corporations and agencies ...... $ 722 $ 5 $ 18 $— $ 740 $ 5
Obligations of U.S. states and their political
subdivisions ........................... 224 3 331 2 555 5
Foreign government bonds .................. 1,853 14 839 39 2,692 53
Corporate securities ....................... 30,504 555 5,131 163 35,635 718
Mortgage-backed securities ................. 5,545 86 1,301 48 6,846 134
Total ................................. $38,848 $663 $7,620 $252 $46,468 $915
(1) Includes $2,045 million of fair value and $51 million of gross unrealized losses at December 31, 2005 on securities classified as held to maturity, which
are not reflected in accumulated other comprehensive income.
2004
Less than twelve months Twelve months or more Total
Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses Fair Value
Unrealized
Losses
(in millions)
Fixed maturities(1)
U.S. Treasury securities and obligations of U.S.
government corporations and agencies ......... $ 771 $ 3 $ 4 $— $ 775 $ 3
Obligations of U.S. states and their political
subdivisions .............................. 394 1 86 2 480 3
Foreign government bonds ..................... 2,852 37 1,355 113 4,207 150
Corporate securities .......................... 14,079 230 2,017 172 16,096 402
Mortgage-backed securities .................... 2,503 15 621 14 3,124 29
Total .................................... $20,599 $286 $4,083 $301 $24,682 $587
(1) Includes $1,259 million of fair value and $21 million of gross unrealized losses at December 31, 2004 on securities classified as held to maturity, which
are not reflected in accumulated other comprehensive income.
The gross unrealized losses at December 31, 2005 and 2004 are comprised of $760 million and $490 million related to
investment grade securities and $155 million and $97 million related to below investment grade securities, respectively. At
December 31, 2005, $13 million of the gross unrealized losses represented declines in value of greater than 20%, none of which had
been in that position for twelve months or more, as compared to $3 million at December 31, 2004 that represented declines in value
of greater than 20%, substantially all of which had been in that position for less than six months. At December 31, 2005, the $252
Prudential Financial 2005 Annual Report110