Prudential 2007 Annual Report Download - page 170
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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
19. DERIVATIVE INSTRUMENTS (continued)
The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying
hedge relationships, excluding embedded derivatives and the offset of the hedged item in an effective hedge relationship:
Years Ended
December 31
2007 2006 2005
(in millions)
Qualifying hedges:
Net investment income
Interest rate ......................................................................... $ 14 $ 13 $ (6)
Currency(1) ......................................................................... (60) (69) (61)
Interest credited to policyholder account balances—(increase)/decrease
Interest rate ......................................................................... (17) (1) 12
Interest expense—(increase)/decrease
Interest rate ......................................................................... 26 4 15
Realized investment gains (losses), net
Interest rate ......................................................................... (195) 24 7
Currency ........................................................................... (51) (43) (25)
Other income
Currency ........................................................................... (13) 58 (198)
Other comprehensive income
Interest rate ......................................................................... (8) (2) 6
Currency ........................................................................... (66) (145) 116
Non-qualifying hedges:
Realized investment gains (losses), net
Interest rate ......................................................................... 104 82 51
Credit ............................................................................. (76) 29 3
Currency ........................................................................... (83) 1 387
Equity ............................................................................. 162 (50) (3)
Total Derivative Impact ..................................................................... $(263) $ (99) $ 304
(1) Interest rate component of currency derivatives
The ineffective portion of derivatives accounted for using hedge accounting in the years ended December 31, 2007, 2006 and 2005
was not material to the results of operations of the Company. In addition, there were no material amounts reclassified into earnings relating
to discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional
time period permitted by SFAS No. 133.
168 Prudential Financial 2007 Annual Report