Prudential 2006 Annual Report Download - page 32

$54 million from 2004 to 2005 in policyholders’ benefits, including interest credited to policyholders’ account balances, including a $47
million benefit from the increased estimate of total gross profits and decreased cost of actual and expected death claims discussed above.
Account Values
The following table sets forth changes in account values for the individual annuity business, for the periods indicated. For our
individual annuity business, assets are reported at account value, and net sales (redemptions) are gross sales minus redemptions or
surrenders and withdrawals, as applicable.
Year ended December 31,
2006 2005 2004
(in millions)
Variable Annuities(1):
Beginning total account value ....................................................................... $50,778 $47,418 $43,949
Sales .......................................................................................... 9,593 7,106 5,806
Surrenders and withdrawals ........................................................................ (7,722) (5,691) (5,224)
Net sales ................................................................................... 1,871 1,415 582
Benefit payments ................................................................................ (918) (678) (613)
Net flows ................................................................................... 953 737 (31)
Change in market value, interest credited and other activity ............................................... 7,448 3,299 4,091
Policy charges ................................................................................... (936) (676) (591)
Acquisition ..................................................................................... 16,312 — —
Ending total account value ..................................................................... $74,555 $50,778 $47,418
Fixed Annuities:
Beginning total account value ....................................................................... $ 3,991 $ 3,879 $ 3,514
Sales .......................................................................................... 119 361 532
Surrenders and withdrawals ........................................................................ (313) (231) (191)
Net sales (redemptions) ........................................................................ (194) 130 341
Benefit payments ................................................................................ (176) (160) (163)
Net flows ................................................................................... (370) (30) 178
Interest credited and other activity ................................................................... 131 147 191
Policy charges ................................................................................... (4) (5) (4)
Ending total account value ..................................................................... $ 3,748 $ 3,991 $ 3,879
(1) Variable annuities include only those sold as retail investment products. Investments through defined contribution plan products are included with such
products.
2006 to 2005 Annual Comparison. Total account values for fixed and variable annuities amounted to $78.3 billion as of
December 31, 2006, an increase of $23.5 billion from December 31, 2005, primarily reflecting $16.3 billion of variable annuity account
values acquired from Allstate, as well as increases in the market value of customers’ variable annuities and variable annuity net flows.
Individual variable annuity gross sales increased by $2.5 billion, from $7.1 billion in 2005 to $9.6 billion in 2006, reflecting increased sales
which benefited from the popularity of our optional living benefit product features, particularly guaranteed lifetime withdrawal benefit
programs introduced in 2005 and 2006, growth of our distribution relationships, including those associated with the business acquired from
Allstate, our retirement marketing strategy and sales of $1.0 billion related to the business acquired from Allstate. Individual variable
annuity surrenders and withdrawals increased by $2.0 billion, from $5.7 billion in 2005 to $7.7 billion in 2006, including $1.4 billion of
surrenders and withdrawals in the current year related to the business acquired from Allstate.
2005 to 2004 Annual Comparison. Total account values for fixed and variable annuities amounted to $54.8 billion as of
December 31, 2005, an increase of $3.5 billion from December 31, 2004. The increase came primarily from net sales of $1.5 billion and
increases in the market value of customers’ variable annuities. Individual variable annuity gross sales were $7.1 billion in 2005, an increase
of $1.3 billion from 2004, reflecting the introduction of new product features late in the first quarter of 2005.
PRUDENTIAL FINANCIAL, INC. 2006 ANNUAL REPORT
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