Prudential 2007 Annual Report Download - page 29

Sales Results
The following table sets forth individual life insurance business sales, as measured by scheduled premiums from new sales on an
annualized basis and first year excess premiums and deposits on a cash-received basis, for the periods indicated. Sales of the individual life
insurance business do not correspond to revenues under U.S. GAAP. They are, however, a relevant measure of business activity. In
managing our individual life insurance business, we analyze new sales on this basis because it measures the current sales performance of
the business, while revenues primarily reflect the renewal persistency and aging of in force policies written in prior years and net
investment income as well as current sales.
Year ended December 31,
2007 2006 2005
(in millions)
Life insurance sales(1):
Excluding corporate-owned life insurance:
Variable life ....................................................................................... $106 $ 90 $ 83
Universal life ...................................................................................... 176 192 214
Term life .......................................................................................... 212 148 122
Total excluding corporate-owned life insurance ......................................................... 494 430 419
Corporate-owned life insurance .......................................................................... 11 12 7
Total ........................................................................................... $505 $442 $426
Life insurance sales by distribution channel, excluding corporate-owned life insurance(1):
Prudential Agents ................................................................................... $174 $181 $212
Third party ........................................................................................ 320 249 207
Total ........................................................................................... $494 $430 $419
(1) Scheduled premiums from new sales on an annualized basis and first year excess premiums and deposits on a cash-received basis.
2007 to 2006 Annual Comparison. Sales of new life insurance, excluding corporate-owned life insurance, measured as described
above, increased $64 million, from $430 million in 2006 to $494 million in 2007. Sales of term life products increased $64 million. Sales
of variable life products increased $16 million, which included the benefit of several large case sales in 2007. Sales of universal life
products decreased $16 million.
The increase in sales of life insurance, excluding corporate-owned life insurance, was driven by a $71 million increase in sales from
the third party distribution channel, primarily in term life and variable life products, with universal life sales slightly lower than the prior
year due to a higher level of large universal life cases placed in 2006. Sales by Prudential Agents of $174 million in 2007 were $7 million
lower than the prior year, reflecting a large case placed in 2006 and a decline in the number of agents from 2,562 at December 31, 2006 to
2,425 at December 31, 2007.
2006 to 2005 Annual Comparison. Sales of new life insurance, excluding corporate-owned life insurance, measured as described
above, increased $11 million, from $419 million in 2005 to $430 million in 2006. Sales of our term life and variable life products increased
$33 million. This increase was partially offset by decreased sales of our universal life products.
Sales of life insurance, excluding corporate-owned life insurance, from the third party distribution channel increased $42 million,
reflecting increased term and variable life sales, with universal life sales remaining unchanged, as both periods benefited from a large level
of universal life sales. Sales of life insurance by Prudential Agents decreased $31 million, reflecting a decline in the number of agents from
2,946 at December 31, 2005 to 2,562 at December 31, 2006, which impacted all life insurance product lines. In 2006, for the first time,
more than half of our individual life insurance sales were generated through third party channels.
Policy Surrender Experience
The following table sets forth the individual life insurance business’ policy surrender experience for variable and universal life
insurance, measured by cash value of surrenders, for the periods indicated. These amounts do not correspond to expenses under U.S.
GAAP. In managing this business, we analyze the cash value of surrenders because it is a measure of the degree to which policyholders are
maintaining their in force business with us, a driver of future profitability. Our term life insurance products do not provide for cash
surrender values.
Year ended December 31,
2007 2006 2005
(in millions)
Cash value of surrenders ................................................................................ $752 $744 $698
Cash value of surrenders as a percentage of mean future benefit reserves, policyholders’ account balances, and separate
account balances .................................................................................... 3.3% 3.5% 3.5%
Prudential Financial 2007 Annual Report 27