Prudential 2006 Annual Report Download - page 119

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
Commercial Loans
The Company’s commercial loans are comprised as follows at December 31:
2006 2005
Amount
(in millions)
%of
Total
Amount
(in millions)
%of
Total
Collateralized loans by property type
Office buildings .......................................................... $ 4,629 18.8% $ 4,555 19.7%
Retail stores ............................................................. 3,392 13.8% 3,102 13.4%
Residential properties ..................................................... 999 4.1% 1,198 5.2%
Apartment complexes ..................................................... 5,014 20.4% 5,063 21.8%
Industrial buildings ....................................................... 5,435 22.1% 5,201 22.4%
Agricultural properties ..................................................... 1,953 7.9% 1,733 7.5%
Other .................................................................. 3,172 12.9% 2,313 10.0%
Total collateralized loans ............................................... 24,594 100.0% 23,165 100.0%
Valuation allowance ...................................................... (172) (193)
Total net collateralized loans ................................................ 24,422 22,972
Uncollateralized loans
Uncollateralized loans ..................................................... 1,330 1,524
Valuation allowance ...................................................... (13) (55)
Total net uncollateralized loans .............................................. 1,317 1,469
Total commercial loans .................................................... $25,739 $24,441
The commercial loans are geographically dispersed throughout the United States, Canada and Asia with the largest
concentrations in California (23%) and New York (8%) at December 31, 2006.
Activity in the allowance for losses for all commercial loans, for the years ended December 31, is as follows:
2006 2005 2004
(in millions)
Allowance for losses, beginning of year ............................................................ $248 $ 600 $597
Release of allowance for losses ................................................................... (57) (273) (12)
Charge-offs, net of recoveries .................................................................... (7) (30) (7)
Change in foreign exchange ..................................................................... 1 (49) 22
Allowance for losses, end of year ................................................................. $185 $ 248 $600
Non-performing commercial loans identified in management’s specific review of probable loan losses and the related
allowance for losses at December 31, are as follows:
2006 2005
(in millions)
Non-performing commercial loans with allowance for losses ................................................ $35 $134
Non-performing commercial loans with no allowance for losses ............................................. 8 17
Allowance for losses, end of year ..................................................................... (28) (102)
Net carrying value of non-performing commercial loans ................................................... $15 $ 49
PRUDENTIAL FINANCIAL, INC. 2006 ANNUAL REPORT
117