Prudential 2006 Annual Report Download - page 120

Download and view the complete annual report

Please find page 120 of the 2006 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 192

  • 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
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
4. INVESTMENTS (continued)
Non-performing commercial loans with no allowance for losses are loans in which the fair value of the collateral or the net
present value of the loans’ expected future cash flows equals or exceeds the recorded investment. The average recorded investment
in non-performing loans before allowance for losses was $48 million, $210 million, $523 million for 2006, 2005 and 2004,
respectively. Net investment income recognized on these loans totaled $3 million, $4 million and $18 million for the years ended
December 31, 2006, 2005 and 2004, respectively.
The Company’s loans held for sale are primarily commercial mortgage loans to be sold in securitization transactions. The net
carrying value of commercial loans held for sale by the Company as of December 31, 2006 and 2005 was $341 million (net of a
valuation allowance of zero million) and $680 million (net of a valuation allowance of zero million), respectively. These loans are
primarily loans collateralized by office buildings, retail stores, apartment complexes and industrial buildings. As of December 31,
2006 and 2005, all of the Company’s commercial loans held for sale were collateralized. In certain transactions, the Company
prearranges that it will sell the loan to an investor. As of December 31, 2006 and 2005, $93 million and $386 million, respectively,
of loans held for sale are subject to such arrangements.
Commercial mortgage loans in securitization transactions accounted for by the Company as sales totaled $2,704 million,
$2,437 million and $1,793 million, for the years ended December 31, 2006, 2005 and 2004, respectively. In some of the commercial
loan securitizations, the Company retained servicing responsibilities, but did not retain any material ownership interest in the
financial assets that were transferred. The Company recognized net pre-tax gains of $36 million, $36 million and $35 million for the
years ended December 31, 2006, 2005 and 2004, respectively, in connection with securitization transactions, which are recorded in
“Realized investment gains (losses), net.”
Other Long-term Investments
“Other long-term investments” are comprised as follows at December 31:
2006 2005
(in millions)
Joint ventures and limited partnerships:
Real estate related .......................................................................... $ 923 $ 861
Non real estate related ....................................................................... 1,426 1,068
Total joint ventures and limited partnerships .......................................................... 2,349 1,929
Real estate held through direct ownership ................................................................ 1,009 1,147
Other ............................................................................................ 1,387 1,163
Total other long-term investments .................................................................. $4,745 $4,239
PRUDENTIAL FINANCIAL, INC. 2006 ANNUAL REPORT
118