Prudential 2006 Annual Report Download - page 57

December 31, 2005
Financial
Services
Businesses
Closed
Block
Business Total % of Total
($ in millions)
Fixed Maturities:
Public, available for sale, at fair value ................................................ $ 87,012 $35,885 $122,897 56.7%
Public, held to maturity, at amortized cost ............................................. 3,022 — 3,022 1.4
Private, available for sale, at fair value ................................................ 17,619 13,361 30,980 14.3
Private, held to maturity, at amortized cost ............................................ 227 — 227 0.1
Trading account assets supporting insurance liabilities, at fair value ............................. 13,781 — 13,781 6.3
Other trading account assets, at fair value ................................................. 124 — 124 0.1
Equity securities, available for sale, at fair value ............................................ 3,851 3,216 7,067 3.3
Commercial loans, at book value ........................................................ 15,781 7,264 23,045 10.6
Policy loans, at outstanding balance ...................................................... 2,967 5,403 8,370 3.8
Other long-term investments(1) ......................................................... 2,518 973 3,491 1.6
Short-term investments ................................................................ 2,443 1,394 3,837 1.8
Total general account investments ................................................... 149,345 67,496 216,841 100.0%
Invested assets of other entities and operations(2) ........................................... 4,560 — 4,560
Total investments ................................................................ $153,905 $67,496 $221,401
(1) Other long-term investments consist of real estate and non-real estate related investments in joint ventures (other than our investment in operating joint
ventures, which includes our investment in Wachovia Securities) and partnerships, investment real estate held through direct ownership and other
miscellaneous investments.
(2) Includes invested assets of securities brokerage, securities trading, banking operations, real estate and relocation services, and asset management
operations. Excludes assets of our asset management operations managed for third parties and those assets classified as “separate account assets” on our
balance sheet.
The increase in general account investments attributable to the Financial Services Businesses in 2006 was primarily due to portfolio
growth as a result of the reinvestment of net investment income and changes in foreign exchange rates, partially offset by the net decline in
market values attributable to higher interest rates. Also contributing to the increase was the addition of investments related to the
acquisition of the variable annuity business of The Allstate Corporation and the conversion of the modified coinsurance arrangement
associated with the CIGNA defined benefit guaranteed-cost contracts to an indemnity coinsurance arrangement. The increase in general
account investments attributable to the Closed Block Business in 2006 was primarily due to portfolio growth as a result of reinvestment of
net investment income, partially offset by the net decline in market values attributable to higher interest rates.
We have substantial insurance operations in Japan, with 30% of our Financial Services Businesses’ general account investments
relating to our Japanese insurance operations as of both December 31, 2006 and December 31, 2005. The increase in our Japanese
insurance operations’ general account investments in 2006 is primarily attributable to portfolio growth as a result of increased annuity
sales, the reinvestment of net investment income and changes in foreign currency exchange rates. The following table sets forth the
composition of the investments of our Japanese insurance operations’ general account as of the dates indicated.
December 31,
2006
December 31,
2005
(in millions)
Fixed Maturities:
Public, available for sale, at fair value ............................................................... $32,242 $30,757
Public, held to maturity, at amortized cost ............................................................ 3,025 3,022
Private, available for sale, at fair value .............................................................. 3,139 2,659
Private, held to maturity, at amortized cost ........................................................... 443 227
Trading account assets supporting insurance liabilities, at fair value ........................................... 1,106 1,022
Other trading account assets, at fair value ................................................................ 28 26
Equity securities, available for sale, at fair value ........................................................... 2,372 2,021
Commercial loans, at book value ....................................................................... 2,782 2,278
Policy loans, at outstanding balance ..................................................................... 1,016 943
Other long-term investments(1) ........................................................................ 970 941
Short-term investments ............................................................................... 374 326
Total Japanese general account investments(2) ........................................................ $47,497 $44,222
(1) Other long-term investments consist of real estate and non-real estate related investments in joint ventures and partnerships, investment real estate held
through direct ownership, and other miscellaneous investments.
(2) Excludes assets classified as “separate accounts assets” on our balance sheet.
Our Japanese insurance operations use the yen as their functional currency, as it is the currency in which they conduct the majority of
their operations. Although the majority of the Japanese general account is invested in yen denominated investments, our Japanese insurance
PRUDENTIAL FINANCIAL, INC. 2006 ANNUAL REPORT
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