Prudential 2007 Annual Report Download - page 61

Investment Results
The following tables set forth the income yield and investment income, excluding realized investment gains (losses), for each major
investment category of our general account for the periods indicated.
Year Ended December 31, 2007
Financial Services
Businesses
Closed Block
Business Combined
Yield(1) Amount Yield(1) Amount Yield(1) Amount
($ in millions)
Fixed maturities ........................................................ 5.10% $5,700 6.59% $3,047 5.53% $ 8,747
Trading account assets supporting insurance liabilities .......................... 5.12 716 — — 5.12 716
Equity securities ........................................................ 4.95 198 2.91 93 4.04 291
Commercial loans ...................................................... 6.17 1,081 7.00 504 6.41 1,585
Policy loans ........................................................... 5.23 188 6.35 333 5.90 521
Short-term investments and cash equivalents ................................. 4.58 378 9.83 183 5.05 561
Other investments ...................................................... 4.80 136 17.83 176 8.19 312
Gross investment income before investment expenses ...................... 5.20 8,397 6.64 4,336 5.60 12,733
Investment expenses ................................................ (0.14) (521) (0.23) (547) (0.17) (1,068)
Investment income after investment expenses ........................ 5.06% 7,876 6.41% 3,789 5.43% 11,665
Investment results of other entities and operations(2) ........................... 352 — 352
Total investment income ................................................. $8,228 $3,789 $12,017
Year Ended December 31, 2006
Financial Services
Businesses
Closed Block
Business Combined
Yield(1) Amount Yield(1) Amount Yield(1) Amount
($ in millions)
Fixed maturities ........................................................ 4.95% $5,315 6.59% $3,001 5.42% $ 8,316
Trading account assets supporting insurance liabilities .......................... 4.73 652 — — 4.73 652
Equity securities ........................................................ 5.15 182 2.81 81 4.10 263
Commercial loans ...................................................... 6.15 982 7.58 529 6.58 1,511
Policy loans ........................................................... 5.04 158 6.35 333 5.86 491
Short-term investments and cash equivalents ................................. 5.38 342 10.91 191 6.06 533
Other investments ...................................................... 8.03 217 10.76 94 8.72 311
Gross investment income before investment expenses ...................... 5.14 7,848 6.61 4,229 5.56 12,077
Investment expenses ................................................ (0.15) (515) (0.24) (549) (0.18) (1,064)
Investment income after investment expenses ......................... 4.99% 7,333 6.37% 3,680 5.38% 11,013
Investment results of other entities and operations(2) ........................... 307 — 307
Total investment income ................................................. $7,640 $3,680 $11,320
(1) Yields are based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity. Yields for fixed
maturities are based on amortized cost. Yields for equity securities are based on cost. Yields for securities lending activity are calculated net of
corresponding liabilities and rebate expenses. Yields exclude investment income on assets other than those included in invested assets of the Financial
Services Businesses. Prior periods yields are presented on a basis consistent with the current period presentation.
(2) Includes investment income of securities brokerage, securities trading, banking operations, real estate and relocation services, and asset management
operations.
The net investment income yield on our general account investments after investment expenses, excluding realized investment gains
(losses), was 5.43% and 5.38% for the years ended December 31, 2007 and 2006, respectively. The net investment income yield
attributable to the Financial Services Businesses was 5.06% for the year ended December 31, 2007, compared to 4.99% for the year ended
December 31, 2006. See below for a discussion of the change in the Financial Services Businesses’ yields.
The net investment income yield attributable to the Closed Block Business was 6.41% for the year ended December 31, 2007,
compared to 6.37% for the year ended December 31, 2006. The increase was primarily due to higher income from investments in joint
ventures and limited partnerships, driven by net appreciation of underlying assets and gains from the sale of underlying assets partially
offset by lower mortgage loan prepayment income.
Prudential Financial 2007 Annual Report 59