PRUDENTIAL FINANCIAL INC
For the period ended Dec 31, 2023. Filed Feb 21, 2024.
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FY2023 · Filed Feb 21, 2024
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8. Separate Accounts
- SEPARATE ACCOUNTS
The Company issues variable annuity and variable life insurance contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. Most variable annuity and variable life insurance contracts are offered with both separate and general account options. See Note 13 for additional information.
The assets supporting the variable portion of variable annuity and variable life insurance contracts are carried at fair value and reported as “Separate account assets” with an equivalent amount reported as “Separate account liabilities.” The liabilities related to the net amount at risk are reflected within future policy benefits or market risk benefits. Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in “Policy charges and fee income” and changes in liabilities for minimum guarantees are generally included in “Policyholders’ benefits” or “Realized investment gains (losses), net.”
Separate Account Assets
The aggregate fair value of assets, by major investment asset category, supporting separate accounts is as follows:
| December 31,2023 | December 31,2022 | |
|---|---|---|
| (in millions) | ||
| Asset Type: | ||
| U.S. Treasury securities and obligations of U.S. government authorities and agencies | $4,411 | $5,208 |
| Obligations of U.S. states and their political subdivisions | 2,116 | 2,006 |
| Foreign government bonds | 101 | 120 |
| U.S. corporate securities | 12,782 | 13,135 |
| Foreign corporate securities | 3,288 | 3,261 |
| Asset-backed securities | 1,211 | 1,131 |
| Mortgage-backed securities | 14,253 | 14,653 |
| Mutual funds: | ||
| Equity | 88,397 | 82,781 |
| Fixed Income | 37,065 | 38,109 |
| Other | 5,587 | 3,797 |
| Equity securities | 5,410 | 5,177 |
| Commercial mortgage and other loans | 67 | 74 |
| Other invested assets | 20,739 | 24,590 |
| Short-term investments | 1,202 | 1,306 |
| Cash and cash equivalents | 2,259 | 2,331 |
| Total | $198,888 | $197,679 |
For the periods ended December 31, 2023, 2022 and 2021, there were no transfers of assets, other than cash, from the general account to a separate account; therefore, no gains or losses were recorded.
Separate Account Liabilities
The balances of and changes in separate account liabilities as of and for the periods ended are as follows:
| Year Ended December 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|
| Retirement Strategies | |||||||
| PGIM · Institutional · Individual · Group Insurance · Individual Life · Total | |||||||
| (in millions) | |||||||
| Balance, BOP | $40,056 | $11,428 | $93,395 | $23,513 | $32,930 | $201,322 | |
| Deposits | 6,848 | 259 | 446 | 103 | 2,972 | 10,628 | |
| Investment performance | (1,045) | 830 | 12,598 | 1,828 | 6,742 | 20,953 | |
| Policy charges | (81) | (12) | (2,316) | (337) | (1,075) | (3,821) | |
| Surrenders and withdrawals | (8,109) | (660) | (9,891) | (52) | (765) | (19,477) | |
| Benefit payments | (3,477) | (562) | (95) | (290) | (342) | (4,766) | |
| Net transfers (to) from general account | (501) | (74) | (17) | 44 | (1,344) | (1,892) | |
| Other | (1,043) | (198) | 10 | 212 | 105 | (914) | |
| Balance, EOP | $32,648 | $11,011 | $94,130 | $25,021 | $39,223 | 202,033 | |
| Other businesses(1) | (3,145) | ||||||
| Total separate account liabilities | $198,888 | ||||||
| Cash surrender value(2) | $32,648 | $11,011 | $92,927 | $24,911 | $35,921 | $197,418 | |
(1)Primarily represents activity from the Company’s Divested and Run-off Businesses as well as the impact of intercompany eliminations. There are no associated cash surrender charges.
(2)“Cash surrender value” represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. There are no cash surrender charges for the PGIM and Institutional Retirement Strategies segments.
| Year Ended December 31, 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Retirement Strategies | |||||||
| PGIM · Institutional · Individual · Group Insurance · Individual Life · Total | |||||||
| (in millions) | |||||||
| Balance, BOP | $42,020 | $14,064 | $158,546 | $27,097 | $39,789 | $281,516 | |
| Deposits | 8,092 | 744 | 700 | 104 | 2,527 | 12,167 | |
| Investment performance | 645 | (2,256) | (23,956) | (3,984) | (6,934) | (36,485) | |
| Policy charges | (68) | (15) | (2,682) | (332) | (1,014) | (4,111) | |
| Surrenders and withdrawals | (6,561) | (3,177) | (9,422) | (34) | (712) | (19,906) | |
| Benefit payments | (3,319) | (553) | (95) | (251) | (421) | (4,639) | |
| Net transfers (to) from general account | (634) | 2,674 | (282) | 41 | (394) | 1,405 | |
| Other(1) | (119) | (53) | (29,414) | 872 | 89 | (28,625) | |
| Balance, EOP | $40,056 | $11,428 | $93,395 | $23,513 | $32,930 | 201,322 | |
| Other businesses(2) | (3,643) | ||||||
| Total separate account liabilities | $197,679 | ||||||
| Cash surrender value(3) | $40,056 | $11,428 | $91,831 | $23,391 | $30,049 | $196,755 | |
(1)Primarily represents the sale of PALAC in Individual Retirement Strategies.
(2)Primarily represents activity from the Company’s Divested and Run-off Businesses as well as the impact of intercompany eliminations. There are no associated cash surrender charges.
(3)“Cash surrender value” represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. There are no cash surrender charges for the PGIM and Institutional Retirement Strategies segments.
| Year Ended December 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|
| Retirement Strategies | |||||||
| PGIM · Institutional · Individual · Group Insurance · Individual Life · Total | |||||||
| (in millions) | |||||||
| Balance, BOP | $38,139 | $15,345 | $158,708 | $28,340 | $33,877 | $274,409 | |
| Deposits | 10,330 | (12) | 1,665 | 104 | 2,648 | 14,735 | |
| Investment performance | 4,417 | 225 | 17,469 | 628 | 5,743 | 28,482 | |
| Policy charges | (95) | (15) | (3,598) | (345) | (954) | (5,007) | |
| Surrenders and withdrawals | (7,933) | (187) | (14,767) | (55) | (829) | (23,771) | |
| Benefit payments | (3,200) | (616) | (140) | (234) | (424) | (4,614) | |
| Net transfers (to) from general account | 26 | (120) | (796) | (2) | (352) | (1,244) | |
| Other(1) | 336 | (556) | 5 | (1,339) | 80 | (1,474) | |
| Balance, EOP | $42,020 | $14,064 | $158,546 | $27,097 | $39,789 | 281,516 | |
| Other businesses(2) | 62,731 | ||||||
| Reclassified to “Liabilities held-for-sale”(3) | (98,102) | ||||||
| Total separate account liabilities | $246,145 | ||||||
| Cash surrender value(4) | $42,020 | $14,064 | $156,071 | $26,965 | $36,916 | $276,036 | |
(1)Primarily represents open trades of fixed income securities in Group Insurance.
(2)Primarily represents activity from the Company’s Divested and Run-off Businesses including Full Service Retirement as well as the impact of intercompany eliminations. There are no associated cash surrender charges.
(3)Represents “Liabilities held-for-sale” of $65,835 million and $32,267 million in Full Service Retirement (included in “Other businesses”) and Individual Retirement Strategies, respectively.
(4)“Cash surrender value” represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. There are no cash surrender charges for the PGIM and Institutional Retirement Strategies segments.
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