Prudential 2005 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2005 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

Commercial Loans by Contractual Maturity Date
The following tables set forth the breakdown of our commercial loan portfolio by contractual maturity as of December 31, 2005.
December 31, 2005
Financial Services
Businesses
Closed Block
Business
Gross
Carrying
Value
%of
Total
Gross
Carrying
Value
%of
Total
($ in millions)
Maturing in 2006 ............................................................................ $ 1,070 6.7% $ 175 2.4%
Maturing in 2007 ............................................................................ 1,456 9.2 421 5.8
Maturing in 2008 ............................................................................ 1,535 9.7 414 5.7
Maturing in 2009 ............................................................................ 2,555 16.1 745 10.2
Maturing in 2010 ............................................................................ 1,805 11.4 669 9.1
Maturing in 2011 ............................................................................ 1,028 6.5 678 9.3
Maturing in 2012 ............................................................................ 1,107 7.0 583 8.0
Maturing in 2013 ............................................................................ 1,335 8.4 580 7.9
Maturing in 2014 ............................................................................ 546 3.4 570 7.8
Maturing in 2015 and beyond .................................................................. 3,437 21.6 2,465 33.8
Total Commercial Loans .................................................................. $15,874 100.0% $7,300 100.0%
Commercial Loan Quality
We establish valuation allowances for loans that are determined to be non-performing as a result of our loan review process. We
define a non-performing loan as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement
will not be collected. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows
discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. We record
subsequent adjustments to our valuation allowances when appropriate.
The following tables set forth the gross carrying value for commercial loans by loan classification as of the dates indicated:
December 31, 2005 December 31, 2004
Financial Services
Businesses
Closed Block
Business
Financial Services
Businesses
Closed Block
Business
(in millions)
Performing ..................................................... $15,812 $7,298 $16,901 $7,334
Delinquent, not in foreclosure ...................................... 52 1 359 1
Delinquent, in foreclosure ......................................... — — — 2
Restructured .................................................... 10 1 97 1
Total Commercial Loans ...................................... $15,874 $7,300 $17,357 $7,338
The following table sets forth the change in valuation allowances for our commercial loan portfolio as of the dates indicated:
December 31, 2005 December 31, 2004
Financial Services
Businesses
Closed Block
Business
Financial Services
Businesses
Closed Block
Business
(in millions)
Allowance, beginning of year ...................................... $440 $ 41 $415 $ 53
(Release of)/addition to allowance for losses ....................... (269) (5) 4 (10)
Charge-offs, net of recoveries .................................. (29) — (1) (2)
Change in foreign exchange .................................... (49) — 22 —
Allowance, end of year ............................................ $ 93 $ 36 $440 $ 41
The release of allowance for losses of $269 million for the year ended December 31, 2005 includes $293 million related to the Dai
Ichi settlement. The settlement resulted in a reduction in the commercial loan balance of $293 million and the release of the corresponding
allowance, as well as a $110 million realized investment gain, as discussed in “—Realized Investment Gains” above.
Prudential Financial 2005 Annual Report 59