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Prudential Financial 2001 Annual Report - page 122 / 172

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122 / 172

Prudential Financial, Inc.

Notes to Consolidated Financial Statements

8. Policyholders’ Liabilities (continued)

Certain contract provisions that determine the policyholders’ account balances are as follows (excluding account balances relating to Gibraltar Life):

Product Individual annuities . . . . . . . . . . . . . . . Group annuities . . . . . . . . . . . . . . . . . .

Interest Rate 2.5% to 16.0% (a) 2.0% to 13.9% (a)

Withdrawal/Surrender Charges 0% to 7% for up to 9 years (b) Contractually limited or subject to market value adjustment (b)

Guaranteed investment contracts and guaranteed interest accounts . . . . . .

3.0% to 15.4%

Generally, subject to market value withdrawal provisions for any funds withdrawn other than for benefit responsive and contractual payments

Interest-sensitive life contracts . . . . . . Dividend accumulations and other . . .

1.5% to 12.4% (a) 2.0% to 11.5% (a)

Various up to 10 years (c)

Generally, not subject to withdrawal/surrender charges, except for certain contracts where withdrawal/surrender is limited or subject to a market value adjustment (b)

  • (a)

    Account balances relating to Gibraltar Life contain interest crediting rates of 0.5% to 1.8% for individual annuities, 1.5% for group annuities,

    • 0.5

      % to 1.5% for interest-sensitive life contracts, and 0.5% for dividend accumulations and other contracts.

  • (b)

    Individual and group annuity account balances relating to Gibraltar Life are subject to withdrawal/surrender charges which decline from 15% to 0% over 8 years.

  • (c)

    Account balances of interest-sensitive life contracts relating to Gibraltar Life are subject to various withdrawal/surrender charges up to 10 years.

Balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less reinsurance recoverables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,701 246

$1,848 608

$1,735 378

$2,409 451

$2,307 50

$2,716 533

Net balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,455

1,240

1,357

1,958

2,257

2,183

Incurred related to: Current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

632 (45)

1,440 (113)

537 (22)

1,271 (150)

4,218 (73)

1,249 (54)

Total incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

587

1,327

515

1,121

4,145

1,195

Paid related to: Current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

219 312

932 553

152 265

842 634

3,206 874

700 720

Total paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisitions (dispositions) (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

531 15

1,485

417

1,476 (363)

4,080 (965)

1,420

Net balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus reinsurance recoverables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,526 129

1,082 671

1,455 246

1,240 608

1,357 378

1,958 451

Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,655

$1,753

$1,701

$1,848

$1,735

$2,409

(a) The 2001 accident and health increase relates to the acquisition of Gibraltar Life. The reduction in the 2000 property and casualty balance is primarily attributable to the sale of Gibraltar Casualty Company; the 1999 accident and health reduction relates to the sale of Prudential’s healthcare business.

120

Growing and Protecting Your Wealth

Unpaid Claims and Claim Adjustment Expenses The following table provides a reconciliation of the activity in the liability for unpaid claims and claim adjustment expenses for property and casualty insurance, which includes the Company’s Property and Casualty Insurance segment, as well as the Company’s wind-down commercial lines business, primarily environmental and asbestos- related claims, and accident and health insurance at December 31:

Accident

Property

Accident

Property

Accident

Property

and

and

and

and

and

and

2001

Health

Casualty

2000

Health

Casualty

(In Millions)

1999

Health

Casualty

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