Prudential 2007 Annual Report Download - page 172

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
20. SEGMENT INFORMATION
Segments
The Company has organized its principal operations into the Financial Services Businesses and the Closed Block Business. Within the
Financial Services Businesses, the Company operates through three divisions, which together encompass eight reportable segments. The
Company’s real estate and relocation services business as well as businesses that are not sufficiently material to warrant separate disclosure
and businesses to be divested are included in Corporate and Other operations within the Financial Services Businesses. Collectively, the
businesses that comprise the three operating divisions and Corporate and Other are referred to as the Financial Services Businesses.
Insurance Division. The Insurance division consists of the Individual Life, Individual Annuities and Group Insurance segments. The
Individual Life segment manufactures and distributes individual variable life, term life, universal life and non-participating whole life
insurance, primarily to the U.S. mass market and mass affluent market. The Individual Annuities segment manufactures and distributes
variable and fixed annuity products, primarily to the U.S. mass affluent market. The Group Insurance segment manufactures and distributes
a full range of group life, long-term and short-term group disability, long-term care and corporate-owned and trust-owned life insurance in
the U.S. primarily to institutional clients for use in connection with employee and membership benefit plans.
Investment Division. The Investment division consists of the Asset Management, Financial Advisory and Retirement segments. The
Asset Management segment provides a broad array of investment management and advisory services by means of institutional portfolio
management, mutual funds, asset securitization activity and other structured products, and proprietary investments. These products and
services are provided to the public and private marketplace, as well as to other segments of the Company. The Financial Advisory segment
consists of the Company’s investment in Wachovia Securities. The Retirement segment manufactures and distributes products and provides
administrative services for qualified and non-qualified retirement plans and offers guaranteed investment contracts, funding agreements,
institutional and retail notes, structured settlement annuities and group annuities.
International Insurance and Investments Division. The International Insurance and Investments division consists of the International
Insurance and International Investments segments. The International Insurance segment manufactures and distributes individual life
insurance products to the mass affluent and affluent markets in Japan, Korea and other foreign countries through its Life Planner
operations. In addition, similar products are offered to the broad middle income market across Japan through Life Advisors, the proprietary
distribution channel of the Company’s Gibraltar Life operation. The International Investments segment offers proprietary and
non-proprietary asset management, investment advice and services to retail and institutional clients in selected international markets.
Corporate and Other. Corporate and Other includes corporate operations, after allocations to business segments, and real estate and
relocation services, as well as divested businesses. Corporate operations consist primarily of (1) corporate-level income and expenses, after
allocations to any business segments, including income and expense from the Company’s qualified pension and other employee benefit
plans and investment returns on capital that is not deployed in any business segments; (2) returns from investments not allocated to any
business segments, including debt-financed investment portfolios, as well as tax credit investments and other tax enhanced investments
financed by the Company’s business segments; and (3) businesses that have been placed in wind-down status but have not been divested,
such as certain individual life insurance polices assumed under reinsurance and individual health insurance, as well as the impact of
transactions with other segments and consolidating adjustments. The divested businesses consist primarily of property and casualty
insurance businesses, Prudential Securities capital markets business and exchange shares previously held by the Company’s discontinued
Prudential Equity Group.
Closed Block Business. The Closed Block Business, which is managed separately from the Financial Services Businesses, was
established on the date of demutualization. It includes the Closed Block (as discussed in Note 10); assets held outside the Closed Block
necessary to meet insurance regulatory capital requirements related to products included within the Closed Block; deferred policy
acquisition costs related to the Closed Block policies; the principal amount of the IHC debt (as discussed in Note 12) and certain related
assets and liabilities.
Segment Accounting Policies. The accounting policies of the segments are the same as those described in Note 2. Results for each
segment include earnings on attributed equity established at a level which management considers necessary to support each segment’s
risks. Operating expenses specifically identifiable to a particular segment are allocated to that segment as incurred. Operating expenses not
identifiable to a specific segment that are incurred in connection with the generation of segment revenues are generally allocated based
upon the segment’s historical percentage of general and administrative expenses.
170 Prudential Financial 2007 Annual Report