Prudential 2007 Annual Report Download - page 142

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
11. REINSURANCE (continued)
Reinsurance amounts included in the Consolidated Statements of Operations for the years ended December 31, were as follows:
2007 2006 2005
(in millions)
Direct premiums ........................................................................... $15,688 $15,122 $14,746
Reinsurance assumed ................................................................... 35 99 102
Reinsurance ceded ..................................................................... (1,372) (1,313) (1,092)
Premiums ................................................................................ $14,351 $13,908 $13,756
Policyholders’ benefits ceded ................................................................. $(1,354) $ (1,326) $ (1,108)
Reinsurance recoverables at December 31, are as follows:
2007 2006
(in millions)
Individual and group annuities(1) ......................................................................... $1,378 $1,283
Life insurance ........................................................................................ 602 524
Other reinsurance ..................................................................................... 135 139
Total reinsurance recoverable ............................................................................ $2,115 $1,946
(1) Primarily represents reinsurance recoverables established under the reinsurance arrangements associated with the acquisition of the retirement business
of CIGNA. The Company has recorded related reinsurance payables of $1,377 million and $1,282 million at December 31, 2007 and 2006, respectively.
Excluding the reinsurance recoverable associated with the acquisition of the retirement business of CIGNA, three major reinsurance
companies account for approximately 53% of the reinsurance recoverable at December 31, 2007. The Company periodically reviews the
financial condition of its reinsurers and amounts recoverable therefrom in order to minimize its exposure to loss from reinsurer
insolvencies, recording an allowance when necessary for uncollectible reinsurance.
12. SHORT-TERM AND LONG-TERM DEBT
Short-term Debt
Short-term debt at December 31, is as follows:
2007 2006
(in millions)
Commercial paper ............................................................................................. $ 8,439 $ 7,536
Floating rate convertible senior notes .............................................................................. 4,883 4,000
Other notes payable ............................................................................................ 590 557
Current portion of long-term debt ................................................................................. 1,745 443
Total short-term debt ........................................................................................... $15,657 $12,536
The weighted average interest rate on outstanding short-term debt, excluding the current portion of long-term debt and convertible
debt, was approximately 4.6% and 5.3% at December 31, 2007 and 2006, respectively.
At December 31, 2007, the Company had $5,075 million in committed lines of credit from numerous financial institutions,
substantially all of which were unused. These lines of credit generally have terms ranging from one to five years. The Company also has
access to uncommitted lines of credit from banks and other financial institutions.
The Company issues commercial paper primarily to manage operating cash flows and existing commitments, to meet working capital
needs and to take advantage of current investment opportunities. At December 31, 2007 and 2006, a portion of commercial paper
borrowings were supported by $5,000 million and $4,000 million of the Company’s existing lines of credit, respectively. At December 31,
2007 and 2006, the weighted average maturity of commercial paper outstanding was 28 and 18 days, respectively.
On November 16, 2005, Prudential Financial issued in a private placement $2.0 billion of floating rate convertible senior notes, that
were convertible by the holders at any time after issuance into cash and shares of Prudential Financial’s Common Stock. On April 13,
2007, Prudential Financial announced its intention to call all such outstanding floating rate convertible senior notes for redemption on
140 Prudential Financial 2007 Annual Report