Prudential 2005 Annual Report Download - page 124

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
9. CLOSED BLOCK (continued)
Closed Block Liabilities and Assets designated to the Closed Block at December 31, as well as maximum future earnings to be
recognized from Closed Block Liabilities and Closed Block Assets, are as follows:
2005 2004
(in millions)
Closed Block Liabilities
Future policy benefits ......................................................................... $50,112 $49,511
Policyholders’ dividends payable ................................................................ 1,089 1,077
Policyholder dividend obligation ................................................................. 2,628 3,141
Policyholders’ account balances ................................................................. 5,568 5,557
Other Closed Block liabilities ................................................................... 9,676 8,943
Total Closed Block Liabilities ............................................................... 69,073 68,229
Closed Block Assets
Fixed maturities, available for sale, at fair value ..................................................... 45,564 44,870
Equity securities, available for sale, at fair value ..................................................... 2,967 2,620
Commercial loans ............................................................................ 6,750 6,707
Policy loans ................................................................................. 5,403 5,454
Other long-term investments .................................................................... 923 996
Short-term investments ........................................................................ 1,340 1,769
Total investments ......................................................................... 62,947 62,416
Cash and cash equivalents ...................................................................... 2,167 1,800
Accrued investment income ..................................................................... 658 668
Other Closed Block assets ...................................................................... 286 343
Total Closed Block Assets .................................................................. 66,058 65,227
Excess of reported Closed Block Liabilities over Closed Block Assets ....................................... 3,015 3,002
Portion of above representing accumulated other comprehensive income:
Net unrealized investment gains ............................................................. 2,402 3,459
Allocated to policyholder dividend obligation ................................................... (2,302) (3,141)
Future earnings to be recognized from Closed Block Assets and Closed Block Liabilities ........................ $ 3,115 $ 3,320
Information regarding the policyholder dividend obligation is as follows:
2005 2004
(in millions)
Balance, January 1 .................................................................................. $3,141 $2,443
Impact on income before gains allocable to policyholder dividend obligation .................................... 326 —
Change in unrealized investment gains .................................................................. (839) 698
Balance, December 31 ............................................................................... $2,628 $3,141
Closed Block revenues and benefits and expenses for the years ended December 31, 2005, 2004 and 2003 were as follows:
2005 2004 2003
(in millions)
Revenues
Premiums ............................................................................ $3,619 $3,776 $3,860
Net investment income ................................................................. 3,447 3,392 3,326
Realized investment gains (losses), net ..................................................... 624 709 430
Other income ......................................................................... 50 59 64
Total Closed Block revenues ......................................................... 7,740 7,936 7,680
Benefits and Expenses
Policyholders’ benefits ................................................................. 3,993 4,056 4,174
Interest credited to policyholders’ account balances ........................................... 137 137 139
Dividends to policyholders .............................................................. 2,653 2,364 2,452
General and administrative expenses ...................................................... 717 710 759
Total Closed Block benefits and expenses .............................................. 7,500 7,267 7,524
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes ................. 240 669 156
Income tax expense (benefit) ................................................................. 35 19 (21)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes .................... $ 205 $ 650 $ 177
Prudential Financial 2005 Annual Report122