PRUDENTIAL FINANCIAL INC – 10-K – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 You should read the following analysis of our consolidated financial condition and results of operations in conjunction with the Forward-Looking Statements included below the Table of Contents, "Risk Factors," "Selected Financial Data" and the Consolidated Financial Statements included in this Annual Report on Form 10-K.                                        Overview    Prudential Financial has two classes of common stock outstanding. The Common Stock, which is publicly traded (NYSE:PRU), reflects the performance of the Financial Services Businesses, while the Class B Stock, which was issued through a private placement and does not trade on any exchange, reflects the performance of the Closed Block Business. The Financial Services Businesses and the Closed Block Business are discussed below.    Financial Services Businesses    Our Financial Services Businesses consist of three operating divisions, which together encompass six segments, and our Corporate and Other operations. The U.S. Retirement Solutions and Investment Management division consists of our Individual Annuities, Retirement and Asset Management segments. The U.S. Individual Life and Group Insurance division consists of our Individual Life and Group Insurance segments. The International Insurance division consists of our International Insurance segment. Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments, as well as businesses that have been or will be divested.    We attribute financing costs to each segment based on the amount of financing used by each segment, excluding financing costs associated with corporate debt which are reflected in Corporate and Other operations. The net investment income of each segment includes earnings on the amount of capital that management believes is necessary to support the risks of that segment.    

We seek growth internally and through acquisitions, joint ventures or other forms of business combinations or investments. Our principal acquisition focus is in our current business lines, both domestic and international.

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  Table of Contents  Closed Block Business    In connection with the demutualization, we ceased offering domestic participating products. The liabilities for our traditional domestic in force participating products were segregated, together with assets, in a regulatory mechanism referred to as the "Closed Block." The Closed Block is designed generally to provide for the reasonable expectations for future policy dividends after demutualization of holders of participating individual life insurance policies and annuities included in the Closed Block by allocating assets that will be used exclusively for payment of benefits, including policyholder dividends, expenses and taxes with respect to these products. See Note 12 to the Consolidated Financial Statements for more information on the Closed Block. At the time of demutualization, we determined the amount of Closed Block assets so that the Closed Block assets initially had a lower book value than the Closed Block liabilities. We expect that the Closed Block assets will generate sufficient cash flow, together with anticipated revenues from the Closed Block policies, over the life of the Closed Block to fund payments of all expenses, taxes, and policyholder benefits to be paid to, and the reasonable dividend expectations of, holders of the Closed Block policies. We also segregated for accounting purposes the assets that we need to hold outside the Closed Block to meet capital requirements related to the Closed Block policies. No policies sold after demutualization will be added to the Closed Block, and its in force business is expected to ultimately decline as we pay policyholder benefits in full. We also expect the proportion of our business represented by the Closed Block to decline as we grow other businesses.    Concurrently with our demutualization, Prudential Holdings, LLC, a wholly-owned subsidiary of Prudential Financial that owns the capital stock of Prudential Insurance, issued $1.75 billion in senior secured notes, which we refer to as the IHC debt. The net proceeds from the issuances of the Class B Stock and IHC debt, except for $72 million used to purchase a guaranteed investment contract to fund a portion of the bond insurance cost associated with that debt, were allocated to the Financial Services Businesses. However, we expect that the IHC debt will be serviced by the net cash flows of the Closed Block Business over time, and we include interest expenses associated with the IHC debt when we report results of the Closed Block Business.    The Closed Block Business consists principally of the Closed Block, assets that we must hold outside the Closed Block to meet capital requirements related to the Closed Block policies, invested assets held outside the Closed Block that represent the difference between the Closed Block assets and Closed Block liabilities and the interest maintenance reserve, deferred policy acquisition costs related to Closed Block policies, the principal amount of the IHC debt and related hedging activities, and certain other related assets and liabilities.    The Closed Block Business is not a separate legal entity from the Financial Services Businesses; however, they are operated as separate entities and are separated for financial reporting purposes. The Financial Services Businesses are not obligated to pay dividends on Closed Block policies. Dividends on Closed Block policies reflect the experience of the Closed Block over time and are subject to adjustment by Prudential Insurance's Board of Directors. Further, our plan of demutualization provides that we are not required to pay dividends on policies within the Closed Block from assets that are not within the Closed Block and that the establishment of the Closed Block does not represent a guarantee that any certain level of dividends will be maintained.    Revenues and Expenses    We earn our revenues principally from insurance premiums; mortality, expense, and asset management and administrative fees from insurance and investment products; and investment of general account and other funds. We earn premiums primarily from the sale of individual life insurance and group life and disability insurance. We earn mortality, expense, and asset management fees from the sale and servicing of separate account products including variable life insurance and variable annuities. We also earn asset management and administrative fees from the distribution, servicing and management of mutual funds, retirement products and other asset management products and services. Our operating expenses principally consist of insurance benefits provided, general business expenses, dividends to policyholders, commissions and other costs of selling and servicing the various products we sell and interest credited on general account liabilities.                                           81 

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  Table of Contents  Profitability    Our profitability depends principally on our ability to price and manage risk on insurance and annuity products, our ability to attract and retain customer assets and our ability to manage expenses. Specific drivers of our profitability include:        •   our ability to manufacture and distribute products and services and to

introduce new products that gain market acceptance on a timely basis;

• our ability to price our insurance and annuity products at a level that

enables us to earn a margin over the cost of providing benefits and the

         expense of acquiring customers and administering those products;         •   our mortality and morbidity experience on individual and group life         insurance, annuity and group disability insurance products, which can         fluctuate significantly from period to period;    

• our actual policyholder behavior experience, including persistency, and

benefit utilization and withdrawal rates for our variable annuity

contracts, which could deviate significantly from our pricing assumptions;

        •   our persistency experience, which affects our ability to recover the cost

        of acquiring new business over the lives of the contracts;         •   our cost of administering insurance contracts and providing asset         management products and services;    

• our ability to manage and control our operating expenses, including

        overhead expenses;    

• our returns on invested assets, including the impact of credit losses, net

        of the amounts we credit to policyholders' accounts;       •   our assumptions with respect to rates of return;    

• the amount of our assets under management and changes in their fair value,

        which affect the amount of asset management fees we receive;         •   our ability to generate favorable investment results through

asset/liability management and strategic and tactical asset allocation; and

where available and appropriate, our ability to take timely crediting rate

        actions to maintain investment spread margins;       •   our credit and financial strength ratings;       •   our ability to effectively utilize our tax capacity;       •   our returns on strategic investments we make;    

• our ability to manage risk and exposures, including the degree to which,

        and the effectiveness of, hedging these risks and exposures;       •   our ability to effectively deploy capital; and       •   our ability to attract and retain talent.     In addition, factors such as credit and real estate market conditions, regulation, competition, interest rates, taxes, foreign exchange rates, market fluctuations and general economic, market and political conditions affect our profitability. In some of our product lines, particularly those in the Closed Block Business, we share experience on mortality, morbidity, persistency and investment results with our customers, which can offset the impact of these factors on our profitability from those products.    Historically, the participating products included in the Closed Block have yielded lower returns on capital invested than many of our other businesses. As we have ceased offering domestic participating products, we expect that the proportion of the traditional participating products in our in force business will gradually diminish as these older policies age, and we grow other businesses. However, the relatively lower returns to us on this existing block of business will continue to affect our consolidated results of operations for many years. Our Common Stock reflects the performance of our Financial Services Businesses, but there can be no assurance that the market value of the Common Stock will reflect solely the performance of these businesses.                                           82

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  See "Risk Factors" for a discussion of risks that have affected and may affect in the future our business, results of operations or financial condition, cause the trading price of our Common Stock to decline materially or cause our actual results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company.                                   Executive Summary    Prudential Financial, a financial services leader with approximately $900.7 billion of assets under management as of December 31, 2011, has operations in the United States, Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds, and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.    Industry Trends   

Our U.S. and international businesses are impacted by financial markets, economic conditions, regulatory oversight, and a variety of trends that affect the industries where we compete.

   U.S. Businesses    Financial and Economic Environment.  Our businesses and results of operations are impacted by general economic and market conditions and are sensitive to the pace of and extent of changes in equity markets, interest rates and real estate valuations, as well as the changes in behavior of individuals and institutions that these changes in economic and market conditions may cause. Recent years have been affected by adverse global market conditions, and uncertainty continues to be a factor in the market environment. This uncertainty, particularly in the equity markets, has led to, among other things, increased demand for guaranteed retirement income, fixed income and stable value products, and defined benefit risk transfer solutions.    Volatile conditions continue to characterize the overall financial markets. The low interest rate environment we have experienced in recent years has impacted the profitability of certain products we offer as well as returns on the investment portfolio backing our insurance liabilities and equity. Disruptions in the credit markets have also limited sales opportunities in recent years for certain products we offer and have impacted the cost and implementation of our capital management activities by reducing the availability of financing. Continued high unemployment rates and limited growth in salaries also continue to be factors impacting certain business drivers, including contributions to defined contribution plans and the costs of group disability claims.    Regulatory Environment.  Our businesses are subject to comprehensive regulation and supervision. The financial market dislocations we have experienced have produced, and are expected to continue to produce, extensive changes in existing laws and regulations, and regulatory frameworks applicable to our businesses. In particular, the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law on July 21, 2010 made comprehensive changes to the regulation of financial services in the U.S. and subjects us to substantial additional federal regulation. In addition, state insurance laws regulate all aspects of our U.S. insurance businesses and our insurance products are substantially affected by federal and state tax laws. Insurance regulators have begun to implement significant changes in the way in which industry participants must determine statutory reserves and statutory capital, particularly for products with embedded options and guarantees such as variable annuities, and are considering further potentially significant changes in these requirements for life insurance products. In addition, there is general uncertainty regarding U.S. taxes both for individuals and corporations in light of the fact that many tax provisions recently enacted or extended will sunset by the end of 2012. In addition, the recommendations made by the President's bipartisan National Commission on Fiscal Responsibility and Reform and other deficit reduction panels suggest the need to reform the U.S. Tax Code. Congress has held a number of hearings devoted to tax reform. Some of those hearings have discussed lowering the tax rates and broadening the base by reducing or eliminating certain tax expenditures. Reducing or eliminating certain tax expenditures could make our products less attractive to customers. It is unclear whether or when Congress may take up overall tax reform and what would be the impact of reform on the Company and its products.                                           83 

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  Demographics.  Income protection, wealth accumulation and the needs of retiring baby boomers continue to shape the insurance industry. Retirement security is one of the most critical issues in the U.S. for individuals and the investment professionals and institutions that support them. The risk and responsibility of retirement savings continues to shift to employees, away from the government and employers. Life insurance ownership among U.S. households has reached its lowest point in fifty years, with consumers citing other financial priorities and cost of insurance as reasons for the lack of coverage.    Competitive Environment.  Our annuities, retirement and asset management businesses operate in a highly competitive environment. For the annuities business, market volatility in recent years led many companies within the industry to reduce risk in product features and increase costs. However, in 2011, certain of our competitors became more aggressive in product design and pricing, while we implemented modifications to scale back benefits and increase pricing for certain product features. In spite of this, we believe our current product offerings remain competitively positioned and that our differentiated risk management strategies will continue to provide us with an attractive risk and profitability profile. All of our new variable annuity sales, as well as a significant portion of our in force business, where an optional living benefit has been elected, include an automatic rebalancing feature, which is a feature that is valued in the variable annuity market. Our retirement and asset management businesses compete on price, service and investment performance. The full service retirement markets are mature, with few dominant players. We have seen a trend toward unbundling of the purchase decision related to the recordkeeping and investment offerings, where the variety of available funds and their performance are the key selection criteria of plan sponsors and intermediaries. Additionally, changes in the regulatory environment have driven more transparent fee disclosures, which have heightened pricing pressures and may accelerate the trend toward unbundling of services. Market disruption and rating agency downgrades have caused some of our institutional investment product competitors to withdraw from the market, creating significant growth opportunities for us in certain markets, including the investment-only stable value market. The recovery of the equity, fixed income, and commercial real estate markets has positively impacted asset managers by increasing assets under management and corresponding fee levels. In addition, institutional fixed income managers have generally experienced positive flows as investors have re-allocated assets into fixed income to reduce risk, including the reduction of risk in pension plans.    The individual life and group life and disability markets are mature and, due to the large number of competitors, competition is driven mainly by price and service. The economy has exacerbated pressure on pricing, creating an even greater challenge of maintaining pricing discipline. This has limited growth of our individual life sales, in an industry which has shifted toward non-proprietary distribution channels, which are more price sensitive than proprietary distribution channels. For group products, rate guarantees have become the industry norm, with rate guarantee durations trending upward, primarily for group life insurance, as a general industry practice. There is also an increased demand from clients for bundling of products and services to streamline administration and save costs by dealing with fewer carriers. As employers are attempting to control costs and shift benefit decisions and funding to employees, who continue to value benefits offered in the workplace, employee-pay (voluntary) product offerings and services are becoming increasingly important in the group market. Industry sales of voluntary products, as well as our own, were up again in 2011 despite the adverse economic conditions.    International Businesses    Financial and Economic Environment.  Our international businesses and the financial results of these operations are impacted by the global economy as well as the financial and economic conditions in the countries in which we operate. Recent periods have been characterized by low interest rates. Similar to our U.S. businesses, interest rates and the pace and extent of changes in rates have impacted the profitability of certain products we offer by impacting the returns on the investment portfolio backing our insurance liabilities as well as on the equity in the businesses. Our Japanese operations have operated in this environment for an extended period. We are also subject to financial impacts associated with movements in foreign currency rates, particularly the Japanese yen. The strengthening of the yen has increased the attractiveness of multi-currency denominated products.    Regulatory Environment.  Our international insurance and investments operations are subject to comprehensive local regulation and supervision. It is likely that the recent financial market dislocations will lead                                           84

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  to changes in existing laws and regulations, and regulatory frameworks affecting our international businesses. The Financial Services Agency, the insurance regulator in Japan, has implemented revisions to the solvency margin requirements that will revise risk charges for certain assets and change the manner in which an insurance company's core capital is calculated. These changes are effective for the fiscal year ending March 31, 2012. We anticipate further changes in solvency regulation from jurisdiction to jurisdiction based on regulatory developments in the U.S., the European Union, and recommendations by an international standard setting body for the insurance regulators, as well as regulatory requirements for those companies deemed to be systemically important financial institutions, or SIFIs, in the U.S. or abroad. In addition, local regulations, primarily in Japan, may apply heightened scrutiny to non-domestic companies. Internationally, regulators are also increasingly adopting measures to provide greater consumer protection and privacy rights.    Demographics.  Japan has a rapidly aging population as well as a large pool of household assets invested in low yielding deposit and savings vehicles. The aging of Japan's population as well as strains on government pension programs have led to a growing demand for insurance products with a savings element to meet savings and retirement needs as the population transitions to retirement. The growing demand for retirement oriented products has led to higher premiums with more of a savings component. We are seeing a similar shift to retirement oriented products in Korea and Taiwan, each of which also has an aging population.    Competitive Environment.  The life insurance markets in Japan and Korea are mature. We generally compete more on service provided to the customers than on price. The aging of Japan's population creates an increasing need for product innovation, introducing insurance products which allow for savings and income as the population transitions to retirement. The ability to sell through multiple and complementary distribution channels is a competitive advantage. However, competition for sales personnel as well as access to third party distribution channels is intense.    Current Developments    On February 1, 2011, Prudential Financial completed the acquisition from American International Group, Inc., or AIG, of AIG Star Life Insurance Co., Ltd., or "Star", AIG Edison Life Insurance Company, or "Edison", and certain other AIG subsidiaries (collectively, the "Star and Edison Businesses") pursuant to the stock purchase agreement dated September 30, 2010 between Prudential Financial and AIG. The total purchase price was $4,709 million, comprised of $4,213 million in cash and $496 million in assumed third party debt, substantially all of which is expected to be repaid, over time, with excess capital of the acquired entities. On January 1, 2012, the Star and Edison companies were merged into Gibraltar Life. See "-Results of Operations for Financial Services Businesses by Segment-International Insurance Division-International Insurance" for more information on this acquisition.    On March 11, 2011, Japan experienced a massive earthquake followed by a tsunami which caused extensive damage and loss of life. Our results include a pre-tax charge of $61 million for the year ended December 31, 2011 associated primarily with estimated claims from our operations in Japan arising from these events. We have not experienced and do not expect a significant impact to the valuation of our investments or our ability to operate our Japanese businesses as a result of these events.    On April 6, 2011, Prudential Financial entered into a stock and asset purchase agreement to sell all of the issued and outstanding shares of capital stock of its subsidiaries that conduct its Global Commodities Business and certain assets that are primarily used in connection with the Global Commodities Business. This sale was completed on July 1, 2011. The Company recorded a pre-tax loss on the sale of $18 million. As a result of the sale, we have reflected the results of the Global Commodities Business, including the loss on the sale, as discontinued operations for all periods presented.    In June 2011, Prudential Financial's Board of Directors authorized the Company to repurchase at management's discretion up to $1.5 billion of its outstanding Common Stock through June 2012. As of December 31, 2011, 19.8 million shares were repurchased under this authorization at a total cost of $999.5 million. The timing and amount of any additional share repurchases will be determined by management based upon market conditions and other considerations, and the repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans designed to comply with Rule 10b5-1(c) under the Exchange Act.                                           85

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  On October 20, 2011, the Company announced it had entered into an agreement to sell its stake in Afore XXI, S.A. de C.V., a private pension fund manager in Mexico, to Banorte, a major bank based in Mexico. This sale was completed on December 2, 2011. We recorded a pre-tax gain on the sale of $96 million in 2011 reflected in adjusted operating income of our International Insurance segment.    On November 8, 2011, Prudential Financial declared an annual dividend for 2011 of $1.45 per share of Common Stock, reflecting an increase of approximately 26% from the 2010 Common Stock dividend.    On December 6, 2011, the Company sold its real estate brokerage franchise and relocation services businesses, which was comprised of Prudential Real Estate and Relocation Services, Inc. ("PRERS") and its subsidiaries, to Brookfield Asset Management, Inc. ("Brookfield"). We retained ownership of a financing subsidiary of PRERS with debt and equity investments in a limited number of real estate brokerage franchises. The Company recorded a pre-tax gain on the sale of $49 million. As a result of the sale, we have reflected the results of the real estate brokerage franchise and relocation services businesses, including the pre-tax gain on the sale, as a divested business for all periods presented.    Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Prudential Financial, as a savings and loan holding company, became subject to the examination, enforcement and supervisory authority of the Board of Governors of the Federal Reserve System ("FRB"), effective as of July 21, 2011. However, we intend to limit the operations of Prudential Bank & Trust, FSB to trust services prior to effectiveness of the Volcker rule on July 21, 2012, permitting us to continue our institutional asset management business without the restrictions that might otherwise apply under the Volcker Rule. Such limitation will allow us to deregister as a savings and loan holding company. See "Business-Regulation" for more information regarding the potential impact of the Dodd-Frank Act on the Company.   

Our financial condition and results of operations for the year ended December 31, 2011 reflect the following:

• Net income of our Financial Services Businesses attributable to Prudential

Financial, Inc. for the year ended December 31, 2011 was $3,531 million

        compared to $2,714 million for 2010.    

• Pre-tax net realized investment gains and related charges and adjustments

of the Financial Services Businesses were $685 million of net gains in 2011

primarily reflecting the impact of changes in foreign currency exchange

rates on certain assets and liabilities for which we economically hedge the

foreign currency exposure and net increases in the market value of

derivatives used to manage investment portfolio duration. These gains were

partially offset by other-than-temporary impairments of fixed maturity and

equity securities and net losses related to the embedded derivatives and

related hedge positions associated with certain of our variable annuity

        contracts.    

• Net unrealized gains on general account fixed maturity investments of the

Financial Services Businesses amounted to $10.493 billion as of

December 31, 2011, compared to net unrealized gains of $5.726 billion as of

December 31, 2010. Gross unrealized gains increased from $8.826 billion as

of December 31, 2010 to $14.749 billion as of December 31, 2011 and gross

unrealized losses increased from $3.100 billion to $4.256 billion for the

same periods. Net unrealized gains on general account fixed maturity

investments of the Closed Block Business amounted to $3.876 billion as of

December 31, 2011, compared to net unrealized gains of $1.671 billion as of

December 31, 2010.         •   Individual Annuity total account values were $113.5 billion as of

December 31, 2011. Gross sales were $20.3 billion in 2011 compared to $21.8

billion in 2010, and net sales were $13.1 billion in 2011 compared to $14.6

        billion in 2010.         •   Full Service Retirement account values were $139.4 billion as of

December 31, 2011. Institutional Investment Products account values reached

        a record high of $90.1 billion as of December 31, 2011, driven by $21.6         billion of net additions in 2011.    

• Asset Management total third party institutional and retail net flows were

$20.2 billion in 2011 compared to $35.0 billion in 2010, contributing to

the segment's assets under management of $619.1 billion as of December 31,

        2011.                                            86 

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• International Insurance constant dollar basis annualized new business

premiums were a record high of $3,040 million in 2011, including $728

million from the acquired Star and Edison Businesses, compared to $1,870

        million in 2010.    

• Individual Life annualized new business premiums were $278 million in 2011,

        compared to $260 million in 2010.    

• Group Insurance annualized new business premiums were a record high of $690

         million in 2011, compared to $607 million in 2010.         •   As of December 31, 2011, Prudential Financial, the parent holding company,

        had cash and short-term investments of $4.944 billion.     Outlook    Management expects that results in 2012 will continue to reflect the quality of our individual businesses and their prospects, as well as our overall business mix and effective capital management. In 2012, we continue to focus on long-term strategic positioning and growth opportunities, including the following:    

• U.S. Retirement and Investment Management Market. We seek to capitalize on

the growing need of baby boomers for products that provide guaranteed

income for longer retirement periods. In addition, we continue to focus on

our clients' increasing needs for retirement income security given

volatility in the financial markets. We also seek to provide products that

        respond to the needs of plan sponsors to manage risk and control their         benefit costs.    

• U.S. Insurance Market. We continue to focus on writing high-quality

business and expect to continue to benefit from expansion of our

distribution channels and deepening our relationships with third-party

distributors. We also seek to capitalize on opportunities for additional

voluntary life purchases in the group insurance market, as institutional

         clients are focused on controlling their benefit costs.         •   International Markets.  We continue to concentrate on deepening our

presence in the markets in which we currently operate, such as Japan, and

expanding our distribution capabilities, including through the integration

of the acquired Star and Edison Businesses. We seek to capitalize on

opportunities arising in international markets as changing demographics and

        public policy have resulted in a growing demand for retirement income         products.                                            87 

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  Table of Contents  Results of Operations    We analyze performance of the segments and Corporate and Other operations of the Financial Services Businesses using a measure called adjusted operating income. See "-Consolidated Results of Operations-Segment Measures" for a discussion of adjusted operating income and its use as a measure of segment operating performance.    Shown below are the contributions of each segment and Corporate and Other operations to our adjusted operating income for the years ended December 31, 2011, 2010 and 2009 and a reconciliation of adjusted operating income of our segments and Corporate and Other operations to income from continuing operations before income taxes and equity in earnings of operating joint ventures.                                                                    Year ended December 31,                                                             2011         2010          2009                                                                      (in millions) Adjusted operating income before income taxes for segments of the Financial Services Businesses: Individual Annuities                                      $    713      $ 1,046      $    757 Retirement                                                     598          572           494 Asset Management                                               659          487            55  Total U.S. Retirement Solutions and Investment Management Division                                          1,970        2,105         1,306  Individual Life                                                517          500           562 Group Insurance                                                208          215           331  Total U.S. Individual Life and Group Insurance Division        725          715           893  International Insurance                                      2,705        2,085         1,868  Total International Insurance Division                       2,705        2,085         1,868  Corporate and Other                                         (1,127 )       (923 )        (779 ) 

Adjusted operating income before income taxes for the Financial Services Businesses

                                4,273        3,982         3,288 Reconciling Items: Realized investment gains (losses), net, and related adjustments                                                  2,521          

116 (1,216 ) Charges related to realized investment gains (losses), net

                                                         (1,836 )       

(178 ) (492 ) Investment gains (losses) on trading account assets supporting insurance liabilities, net

                          223          

501 1,601 Change in experience-rated contractholder liabilities due to asset value changes

                                    (123 )       (631 )        (899 ) Divested businesses                                             54          

(25 ) 2,086 Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests

             (192 )        

(98 ) (2,364 )

Income from continuing operations before income taxes and equity in earnings of operating joint ventures for Financial Services Businesses

                                4,920        

3,667 2,004 Income (loss) from continuing operations before income taxes for Closed Block Business

                                197          

725 (480 )

Consolidated income from continuing operations before income taxes and equity in earnings of operating joint ventures

                                                  $  5,117      $ 4,392      $  1,524     

Results for 2011 presented above reflect the following:

• Income (loss) from continuing operations before income taxes and equity in

earnings of operating joint ventures for the Financial Services Businesses

for 2011 was $4,920 million, compared to $3,667 million for 2010. Adjusted

operating income before income taxes for the Financial Services Businesses

        for 2011 was $4,273 million, compared to $3,982 million for 2010.    

• Individual Annuities segment results for 2011 decreased in comparison to

2010 primarily reflecting the impact of adjustments to the amortization of

deferred policy acquisition and other costs and to the reserves for the

guaranteed minimum death and income benefit features of our variable

annuity products, which were unfavorable in 2011 and favorable in 2010.

These adjustments were primarily driven by the impact of market performance

on the estimated profitability of the business, as well as the impact of

annual reviews and updates of assumptions and updates to reflect current

period experience. Excluding these items, results increased in comparison

to the prior year, primarily reflecting higher fee income resulting from

the impact of positive net flows on variable annuity account values.

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• Retirement segment results for 2011 increased in comparison to 2010. The

increase reflects higher fee income due to higher fee-based investment-only

stable value account values in our institutional investment products

business primarily from net additions and an increase in average full

service fee-based retirement account values resulting primarily from market

appreciation. This increase was partially offset by lower net investment

spread results, higher general and administrative expenses, net of

capitalization, and the unfavorable impact of annual reviews and updates of

the assumptions used in amortizing deferred policy acquisition costs and

         value of business acquired.         •   Asset Management segment results improved in 2011 in comparison to 2010

primarily from improved results from the segment's commercial mortgage and

         strategic investing activities and increased asset management fees.         •   Individual Life segment results for 2011 increased in comparison to 2010

primarily driven by a greater benefit in 2011 from annual updates of our

actuarial assumptions resulting in lower amortization of deferred policy

acquisition costs, net of related amortization of unearned revenue

reserves, and a net decrease in insurance reserves. The 2011 benefit was

$75 million, compared to a benefit of $52 million in 2010. Absent the

impact of these annual reviews, results for 2011 decreased $6 million from

2010 primarily due to an increase in amortization of deferred policy

acquisition costs net of related amortization of unearned revenue reserves,

largely reflecting the impact of equity markets on separate account fund

performance in the respective periods, partially offset by the impact of

         less unfavorable mortality experience.         •   Group Insurance segment results declined in 2011, compared to 2010

primarily due to less favorable group disability underwriting results and

higher expenses, largely offset by more favorable group life underwriting

         results.         •   International Insurance segment results for 2011 improved from 2010.

Results from the segment's Life Planner operations improved in 2011,

reflecting the continued growth of our Japanese Life Planner operation and

lower expenses, partially offset by claims resulting from the March 2011

earthquake and tsunami and less favorable mortality experience. Results

from the segment's Gibraltar Life and Other operations reflect the

comparative impact of a $237 million benefit to 2011 results compared to a

$66 million benefit to 2010 resulting from partial sales of our investment,

through a consortium, in China Pacific Group. Also contributing to the

increase in adjusted income was $354 million of earnings from operations of

the acquired Star and Edison Businesses, excluding claims resulting from

the March 2011 earthquake and tsunami, and a $96 million gain on sale of

our investment in Afore XXI. These benefits were partially offset by $213

million of Star and Edison acquisition- and integration-related expenses

and $49 million of charges primarily resulting from claims associated with

the earthquake and tsunami in Japan. The remainder of the improvements in

results compared to the prior year quarter came primarily from a greater

contribution from investment results, reflecting business growth including

higher earnings from our fixed annuities business and from expanding bank

         channel sales of protection products.         •   Corporate and Other operations resulted in an increased loss for 2011 as

        compared to 2010 primarily due to a higher level of expenses in other         corporate activities, including a $93 million increase in expenses for         estimated payments arising from use of new Social Security Master Death         File matching criteria to identify deceased policyholders and         contractholders and a $20 million charge related to a voluntary

contribution to an insurance industry insolvency fund, related to Executive

Life Insurance Company of New York.    

• Income from continuing operations before income taxes in the Closed Block

Business decreased $528 million in 2011 compared to 2010, primarily

reflecting an increase in the policyholder dividend obligation expense.

                          Accounting Policies & Pronouncements   

Application of Critical Accounting Estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the                                           89 

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  preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, results of operations and financial position as reported in the Consolidated Financial Statements could change significantly.    

The following sections discuss the accounting policies applied in preparing our financial statements that management believes are most dependent on the application of estimates and assumptions and require management's most difficult, subjective, or complex judgments.

Deferred Policy Acquisition and Other Costs

    We capitalize costs that vary with and are related primarily to the acquisition of new and renewal insurance and annuity contracts. These costs primarily include commissions, costs of policy issuance and underwriting, and variable field office expenses that are incurred in producing new business. See Note 2 to our Consolidated Financial Statements for a discussion of the new authoritative guidance adopted effective January 1, 2012, regarding which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. We also defer costs associated with sales inducements related to our variable and fixed annuity contracts primarily within our Individual Annuities segment. Sales inducements are amounts that are credited to the policyholder's account balance as an inducement to purchase the contract. For additional information about sales inducements, see Note 11 to the Consolidated Financial Statements. We amortize these deferred policy acquisition costs, or DAC, and deferred sales inducements, or DSI, over the expected lives of the contracts, based on our estimates of the level and timing of gross margins, gross profits, or gross premiums, depending on the type of contract. As described in more detail below, in calculating DAC and DSI amortization, we are required to make assumptions about investment returns, mortality, persistency, and other items that impact our estimates of the level and timing of gross margins, gross profits, or gross premiums. As of December 31, 2011, DAC and DSI in our Financial Services Businesses were $16.1 billion and $1.0 billion, respectively, and DAC in our Closed Block Business was $667 million.    Amortization methodologies    DAC associated with the traditional participating products of our Closed Block Business is amortized over the expected lives of those contracts in proportion to estimated gross margins. Gross margins consider premiums, investment returns, benefit claims, costs for policy administration, changes in reserves, and dividends to policyholders. We evaluate our estimates of future gross margins and adjust the related DAC balance with a corresponding charge or credit to current period earnings for the effects of actual gross margins and changes in our expected future gross margins. We also evaluate the recoverability of the DAC balance at the end of each reporting period. These DAC adjustments generally have not created significant volatility in our results of operations since many of the factors that affect gross margins are also included in the determination of our dividends to these policyholders and, during most years, the Closed Block has recognized a cumulative policyholder dividend obligation expense in "Policyholders' dividends," for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization. However, if actual cumulative earnings fall below expected cumulative earnings in future periods, thereby eliminating the cumulative policyholder dividend obligation expense, changes in gross margins and DAC amortization would result in a net impact to the Closed Block Business results of operations. As of December 31, 2011, the excess of actual cumulative earnings over the expected cumulative earnings was $762 million.    DAC associated with the non-participating whole life and term life policies of our Individual Life segment and the non-participating whole life, term life, endowment and health policies of our International Insurance segment is amortized in proportion to gross premiums. We evaluate the recoverability of our DAC related to these policies as part of our premium deficiency testing. If a premium deficiency exists, we reduce DAC by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than the DAC balance, we reduce the DAC balance to zero and increase the reserve for future policy benefits by the excess, by means of a charge to current period earnings. Generally, we do not expect significant deterioration in future experience, and therefore do not expect significant writedowns to the related DAC.    DAC and DSI associated with the variable and universal life policies of our Individual Life and International Insurance segments and the variable and fixed annuity contracts of our Individual Annuities and International Insurance segments are amortized over the expected life of these policies in proportion to total gross                                           90 

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  profits. DAC and DSI are also subject to recoverability testing which we perform at the end of each reporting period to ensure that each balance does not exceed the present value of estimated gross profits. In calculating gross profits, we consider mortality, persistency, and other elements as well as rates of return on investments associated with these contracts and the costs related to our guaranteed minimum death and guaranteed minimum income benefits. Total gross profits include both actual experience and estimates of gross profits for future periods. We regularly evaluate and adjust the related DAC and DSI balances with a corresponding charge or credit to current period earnings for the effects of our actual gross profits and changes in our assumptions regarding estimated future gross profits. Adjustments to the DAC and DSI balances include the impact to our estimate of total gross profits of the annual review of assumptions, our quarterly adjustments for current period experience, and our quarterly adjustments for market performance. Each of these adjustments is further discussed below in "-Annual assumptions review and quarterly adjustments."    In addition to the gross profit components mentioned above, we also include the impact of the embedded derivatives associated with certain of the optional living benefit features of our variable annuity contracts and related hedging activities in actual gross profits used as the basis for calculating current period amortization. Prior to the third quarter of 2010, we also included the impact of these embedded derivatives and related hedging activities, excluding the impact of the market-perceived risk of our own non-performance, in our estimate of total gross profits used to determine the DAC and DSI amortization rates. In the third quarter of 2010, we revised our hedging strategy, which resulted in a change in how certain gross profit components are used to determine the DAC and DSI amortization rates. Prior to the third quarter of 2010 our hedging strategy sought to generally match the sensitivities of the embedded derivative liability as defined by U.S. GAAP, excluding the impact of the market-perceived risk of our own non-performance, with capital market derivatives. Under our current hedging strategy, our hedge target continues to be grounded in a U.S. GAAP/capital markets valuation framework but incorporates two modifications to the U.S. GAAP valuation assumptions. We add a credit spread to the U.S. GAAP risk-free rate of return assumption used to estimate future growth of bond investments in the customer separate account funds to account for the fact that the underlying customer separate account funds which support these living benefits are invested in assets that contain risk. We also adjust our volatility assumption to remove certain risk margins embedded in the valuation technique used to determine the fair value of the embedded derivative liability under U.S. GAAP, as we believe the increase in the liability driven by these margins is temporary and does not reflect the economic value of the liability. For a discussion of the change in our hedging strategy and the results of our hedging program, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities-Net impact of embedded derivatives related to our living benefit features and related hedge positions."    As mentioned above, this change in our hedging strategy also led to a change in the components included in our estimate of total gross profits used to determine the DAC and DSI amortization rates. Beginning in the third quarter of 2010, management's best estimate of the total gross profits associated with these optional living benefit features and related hedge positions is based on the updated hedge target definition as described above. However, total gross profits for these purposes includes the difference between the change in the value of the hedge target liability and the change in the asset value only to the extent this net amount is determined by management to be other-than-temporary, as well as the impact of assumption updates on the valuation of the hedge target liability. The determination of whether the difference between the change in the value of the hedge target liability and the change in the asset value is other-than-temporary is based on an evaluation of the effectiveness of the hedge program. Management generally expects differences between the value of the hedge target liability and asset value to be temporary and to reverse over time. Such differences would not be included in total gross profits for purposes of determining the amortization rates. However, based on the effectiveness of the hedge program, management may determine that the difference between the value of the hedge target liability and the asset value is other-than-temporary and would include that amount in our best estimate of total gross profits for setting the DAC and DSI amortization rates.    Management may also decide to temporarily hedge to an amount that differs from the hedge target definition, given overall capital considerations of the Company and prevailing market conditions. The impact from temporarily hedging to an amount that differs from the hedge target definition, as well as the results of the capital hedge program we began in the second quarter of 2009 and modified in 2010, are not considered in calculating total gross profits used to determine amortization rates nor included in actual gross profits used in calculating current period amortization as these items are related to capital considerations and are not directly related to product profits.                                           91

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Annual assumptions review and quarterly adjustments

    Annually, during the third quarter, we perform a comprehensive review of the assumptions used in estimating gross profits for future periods. Although we review these assumptions on an ongoing basis throughout the year, we generally only update these assumptions and adjust the DAC and DSI balances during the third quarter, unless a material change that we feel is indicative of a long term trend is observed in an interim period. Over the last several years, the Company's most significant assumption updates resulting in a change to expected future gross profits and the amortization of DAC and DSI have been related to lapse experience and other contractholder behavior assumptions, mortality, and revisions to expected future rates of returns on investments. We expect these assumptions to be the ones most likely to cause potential significant changes in the future. The impact on our results of operations of changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over time.    The quarterly adjustments for current period experience referred to above reflect the impact of differences between actual gross profits for a given period and the previously estimated expected gross profits for that period. To the extent each period's actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change. In these cases, we recognize a cumulative adjustment to all previous periods' amortization, also referred to as an experience true-up adjustment.    The quarterly adjustments for market performance referred to above reflect the impact of changes to our estimate of total gross profits to reflect actual fund performance. A significant portion of gross profits for our variable annuity contracts and, to a lesser degree, our variable life policies are dependent upon the total rate of return on assets held in separate account investment options. This rate of return influences the fees we earn, costs we incur associated with the guaranteed minimum death and guaranteed minimum income benefit features related to our variable annuity contracts, as well as other sources of profit. Returns that are higher than our expectations for a given period produce higher than expected account balances, which increase the fees we earn and decrease the costs we incur associated with the guaranteed minimum death and guaranteed minimum income benefit features related to our variable annuity contracts. The impact of increased fees results in higher expected future gross profits and lower DAC and DSI amortization for the period. The opposite occurs when returns are lower than our expectations. The changes in future expected gross profits are used to recognize a cumulative adjustment to all prior periods' amortization.    The near-term future rate of return assumptions used in evaluating DAC and DSI for our domestic variable annuity and variable life insurance products are derived using a reversion to the mean approach, a common industry practice. Under this approach, we consider actual returns over a period of time and initially adjust future projected returns over the next four years (the "near-term") so that the assets are projected to grow at the long-term expected rate of return for the entire period. Unless there is a sustained interim deviation, our long-term expected rate of return assumptions are generally not impacted by short-term market fluctuations. If the near-term projected future rate of return is greater than our near-term maximum future rate of return, we use our maximum future rate of return. The following table sets forth the weighted average rate of return assumptions, per annum, for our domestic variable annuity and variable life insurance businesses as of December 31, 2011.                                                              Variable                Variable                                                           Annuities            Life Insurance Long-term equity expected rate of return                         9.2 %                     9.2 % Fixed income expected rate of return(1)                          4.3 %                     5.7 % Long-term blended expected rate of return(2)                     7.4 %                     7.7 %  Near-term maximum equity rate of return                         13.0 %                    13.0 % Fixed income expected rate of return(1)                          4.3 %                     5.7 % Blended maximum expected rate of return(2)                       9.9 %                     9.8 %  Near-term mean reversion blended rate of return(3)               8.7 %                     9.8 %    

(1) Fixed income expected rate of return for our variable annuities business is

a levelized rate, blending current rates and long-term expected returns.

Fixed income expected rate of return for our variable life insurance

business is the long-term expected return, as a blend does not materially

affect results due to the long duration of the liability.

(2) Blend is based on the long-term expected distribution of funds between

equity and fixed income funds.

(3) As of December 31, 2011, more than half of our variable annuities business

and the majority of our variable life insurance business had near-term mean

      reversion rates of return based on the blended maximum expected rate of       return assumption.                                            92 

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  The weighted average rate of return assumptions reflected in the table above are determined independently for variable annuities and variable life insurance and consider many factors specific to each business, including actual rates of return, liability durations, asset allocations and other factors. We update the rates of return and our estimate of total gross profits each quarter to reflect the result of the reversion to the mean approach. These market performance related adjustments to our estimate of total gross profits result in cumulative adjustments to prior amortization, reflecting the application of the new required rate of amortization to all prior periods' gross profits. The new required rate of amortization is also applied prospectively to future gross profits in calculating amortization in future periods.    Sensitivity    For the variable and universal life policies of our Individual Life segment, a significant portion of our gross profits is derived from mortality margins. As a result, our estimates of future gross profits are significantly influenced by our mortality assumptions. Our mortality assumptions represent our expected claims experience over the life of these policies and are developed based on Company experience or standard industry tables. Unless a material change in mortality experience that we feel is indicative of a long term trend is observed in an interim period, we generally update our mortality assumptions annually in the third quarter. Updates to our mortality assumptions in future periods could have a significant adverse or favorable effect on the results of our operations in the Individual Life segment.    The DAC balance associated with the variable and universal life policies of our Individual Life segment as of December 31, 2011 was $2.5 billion. The following table provides a demonstration of the sensitivity of that DAC balance relative to our future mortality assumptions by quantifying the adjustments that would be required, assuming both an increase and decrease in our future mortality rate by 1%. While the information below is for illustrative purposes only and does not reflect our expectations regarding future mortality assumptions, it is a near-term, reasonably likely hypothetical change that illustrates the potential impact of such a change. This information considers only the direct effect of changes in our mortality assumptions on the DAC balance, with no changes in any other assumptions such as persistency, future rate of return, or expenses included in our evaluation of DAC, and does not reflect changes in reserves, such as the unearned revenue reserve, which would partially offset the adjustments to the DAC balance reflected below. The impact of the unearned revenue reserve is discussed in more detail below in "-Policyholder Liabilities."                                                      December 31, 2011                                             Increase/(Reduction) in DAC(1)                                                     (in millions)       Decrease in future mortality by 1%   $                             46       Increase in future mortality by 1%   $                            (46 )    

(1) The sensitivity balances reflected in the table are based on DAC accounting

guidance as of December 31, 2011. As noted previously, new authoritative

guidance was adopted effective January 1, 2012, which will reduce our DAC

      balances and corresponding sensitivities.     For a discussion of DAC adjustments related to our Individual Life segment for the years ended December 31, 2011, 2010 and 2009, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Individual Life and Group Insurance Division-Individual Life."    For variable annuity contracts, DAC and DSI are more sensitive to changes in our future rate of return assumptions due primarily to the significant portion of our gross profits that is dependent upon the total rate of return on assets held in separate account investment options, and the shorter average life of the contracts. The DAC and DSI balances associated with our domestic variable annuity contracts were $2.7 billion and $1.0 billion, respectively, as of December 31, 2011. The following table provides a demonstration of the sensitivity of each of these balances relative to our future rate of return assumptions by quantifying the adjustments to each balance that would be required assuming both an increase and decrease in our future rate of return by 100 basis points. The sensitivity includes an increase and decrease of 100 basis points to both the near-term future rate of return assumptions used over the next four years, and the long-term expected rate of return used thereafter. While the information below is for illustrative purposes only and does not reflect our expectations regarding future rate of return assumptions, it is a near-term, reasonably likely hypothetical change that illustrates the potential impact of such a change. This information considers only the direct effect of changes in our future rate of return on the                                           93

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  DAC and DSI balances and not changes in any other assumptions such as persistency, mortality, or expenses included in our evaluation of DAC and DSI. Further, this information does not reflect changes in reserves, such as the reserves for the guaranteed minimum death and optional living benefit features of our variable annuity products, or the impact that changes in such reserves may have on the DAC and DSI balances.                                                                        December 31, 2011                                                                                                  Increase/                                            Increase/(Reduction) in DAC(1)                    (Reduction) in DSI                                                                       (in millions) Decrease in future rate of return by 100 basis points               $                               (67 )              $                (27 ) Increase in future rate of return by 100 basis points               $                                62                $                 26    

(1) The sensitivity balances reflected in the table are based on DAC accounting

guidance as of December 31, 2011. As noted previously, new authoritative

guidance was adopted effective January 1, 2012, which will reduce our DAC

      balances and corresponding sensitivities.     For a discussion of DAC and DSI adjustments related to our Individual Annuities segment for the years ended December 31, 2011, 2010 and 2009, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities."    Value of Business Acquired    In addition to DAC and DSI, we also recognize an asset for value of business acquired, or VOBA. VOBA includes an explicit adjustment to reflect the cost of capital attributable to the acquired insurance contracts, and represents an adjustment to the stated value of inforce insurance contract liabilities to present them at fair value, determined as of the acquisition date. As of December 31, 2011, VOBA was $3,845 million, and included $3,490 million related to the acquisition from AIG of the Star and Edison Businesses on February 1, 2011. See Note 3 for additional information on the acquisition from AIG of the Star and Edison Businesses. The remaining $355 million relates to previously-acquired traditional life, deferred annuity, defined contribution and defined benefit businesses. VOBA is amortized over the effective life of the acquired contracts. For additional information about VOBA including details on items included in our estimates of future cash flows for the various acquired businesses and its bases for amortization, see Note 2 and Note 8 to the Consolidated Financial Statements. VOBA is also subject to recoverability testing at the end of each reporting period to ensure that the balance does not exceed the present value of anticipated gross profits. Based on this recoverability testing, in 2009 we impaired the entire remaining VOBA asset related to the variable annuity contracts acquired from Allstate. For additional information regarding this charge, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities."    Goodwill    As of December 31, 2011, our goodwill balance of $888 million is reflected in the following four reporting units: $444 million related to our Retirement Full Service business, $238 million related to our Asset Management business, $184 million related to our International Insurance Gibraltar business and $22 million related to our International Insurance Life Planner business.    We test goodwill for impairment on an annual basis as of December 31 of each year and more frequently if events occur or circumstances change that would indicate the potential for impairment is more likely than not. The test is performed at the reporting unit level which is equal to or one level below our operating segments.    Accounting guidance allows a reporting unit to perform a qualitative assessment to determine if its goodwill is impaired. Factors such as macroeconomic conditions; industry and market considerations; cost factors; and others are used to assess the validity of the goodwill. If it is determined that the reporting unit's fair value is not more likely than not below its carrying amount (equity attributed to a business to support its risk), the test is complete and no impairment is recorded. If this assertion cannot be made, a quantitative analysis must be performed. A reporting unit may bypass the qualitative analysis and begin their impairment analysis with the quantitative calculation. This option is unconditional and a reporting unit may resume performing the qualitative assessment in any subsequent period.                                           94

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  The quantitative analysis consists of two steps. Step 1 requires that the fair value of the reporting unit be calculated and compared to the reporting unit's carrying value. If the fair value is greater than the carrying value, it is concluded there is no impairment and the analysis is complete. If the fair value is less than the carrying value, Step 2 of the process is completed to determine the amount of impairment, if any. Step 2 utilizes business combination acquisition accounting guidance and requires the fair value calculation of all individual assets and liabilities of the reporting unit (excluding goodwill, but including any unrecognized intangible assets). The net fair value of assets less liabilities is then compared to the reporting unit's total fair value as calculated in Step 1. The excess of fair value over the net asset value equals the implied fair value of goodwill. The implied fair value of goodwill is then compared to the carrying value of goodwill to determine the reporting unit's goodwill impairment loss, if any.    A qualitative assessment was performed by International Insurance'sGibraltar business. After consideration of the relevant macro economic factors, as well as conditions specific to the insurance industry and the reporting unit, it was determined that the fair value of the reporting unit was not more likely than not below its carrying value and accordingly, there was no impairment of goodwill.    The International Insurance's Life Planner business and the Asset Management segment elected to bypass the qualitative assessment and complete their impairment analysis using an earnings multiple approach. The earnings multiple approach indicates the value of a business based on comparison to publicly-traded comparable companies in similar lines of business. Each comparable company is analyzed based on various factors, including, but not limited to, financial risk, size, geographic diversification, profitability, adequate financial data, and an actively traded stock price. A multiple of price to earnings is developed for the comparable companies using independent analysts' consensus estimates for each company's 2012 forecasted earnings. The multiples are then aggregated and a mean and median multiple is calculated for the group. The lower of the mean or median multiple is then applied to the 2012 forecasted earnings of the reporting unit to develop a value. A control premium is then added to determine a total estimated fair value for the reporting unit.    The Retirement Full Service business also elected to bypass the qualitative assessment and complete their impairment analysis using a discounted cash flow approach. The discounted cash flow approach calculates the value of a business by applying a discount rate reflecting the market expected weighted average rate of return to the projected future cash flows of the reporting unit. These projected future cash flows were based on our internal forecasts, an expected growth rate and a terminal value. The weighted average rate of return, or WARR, represents the required rate of return on total capitalization. It is comprised of a required rate of return on equity of a company and the current tax-affected cost of debt, which are then weighted by the relative percentages of equity and debt assumed in the capital structure. To estimate the return on equity, we applied the Capital Asset Pricing Model, or CAPM. The CAPM is a generally accepted method for estimating an equity investor's return requirement, and hence a company's cost of equity capital. CAPM is determined by beginning with the long-term risk-free rate of return then applying adjustments that consider the equity risk premium required for large company common stock investments as well as company specific adjustments to address volatility, small company premiums and other risks particular to a specific company. The WARR calculation is applied to a group of companies considered peers of the reporting unit to develop a weighted average rate of return for the peer group which is then used to estimate the market expected weighted average rate of return for the reporting unit. This process resulted in a discount rate of 12% which was then applied to the expected future cash flows of the Retirement Full Service business to estimate its fair value.    After completion of Step 1 of the quantitative tests, it was determined that fair values exceeded the carrying amounts for each of the three reporting units and it was concluded there was no impairment as of December 31, 2011. The Asset Management, International Insurance's Life Planner and Retirement Full Service businesses had estimated fair values that exceeded their carrying amounts by 425%, 27% and 5%, respectively.    Estimating the fair value of reporting units is a subjective process that involves the use of estimates and judgments. The Retirement Full Service business' quantitative test is sensitive to a number of key assumptions. For example, a decline in its forecasted cash flows of 4%, an increase in the discount rate above 12.5%, or an increase in the equity attributed to support this business (representing the carrying value) of 5% could result in failing Step 1 of the quantitative test and therefore require a Step 2 assessment. Regarding all four reporting units                                           95

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tested, further market declines or other events impacting the fair value of these businesses, including discount rates, interest rates and growth rate assumptions or increases in the level of equity required to support these businesses, could result in goodwill impairments, resulting in a charge to income.

    As of December 31, 2011, the Company experienced a market capitalization that was below its consolidated book value. An analysis was performed in order to confirm the reasonableness of the reporting unit fair values calculated in the goodwill impairment tests discussed above. The Company considered the fact that certain reporting units that do not contain goodwill have lower estimated fair values due to the nature of the risks in their businesses and also considered the negative impact of our Corporate & Other operations on the overall fair value of the Company. The Company also considered the amount of control premium necessary to estimate a fair value equal to book value. When comparing this control premium to actual control premiums experienced in recent insurance company acquisitions, as well as the impact of the lower market environment which can increase industry control premiums, the Company concluded that the calculated control premium reflected an amount which we believe is within a range of reasonableness. Based on these factors, the Company concluded that the reporting unit fair values calculated in the goodwill impairment test were reasonable.    

Valuation of Investments, Including Derivatives, and the Recognition of Other-than-Temporary Impairments

    Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, equity securities, other invested assets, and derivative financial instruments. Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the values of securities or commodities. Derivative financial instruments we generally use include swaps, futures, forwards and options and may be exchange-traded or contracted in the over-the-counter market. We are also party to financial instruments that contain derivative instruments that are "embedded" in the financial instruments. Management believes the following accounting policies related to investments, including derivatives, are most dependent on the application of estimates and assumptions. Each of these policies is discussed further within other relevant disclosures related to the investments and derivatives, as referenced below.      •   Valuation of investments, including derivatives       •   Recognition of other-than-temporary impairments    

• Determination of the valuation allowance for losses on commercial mortgage

        and other loans     We present our investments classified as available-for-sale, including fixed maturity and equity securities, our investments classified as trading, such as our trading account assets supporting insurance liabilities, our derivatives, and our embedded derivatives at fair value in the statements of financial position. For additional information regarding the key estimates and assumptions surrounding the determination of fair value of fixed maturity and equity securities, as well as derivative instruments, embedded derivatives and other investments, see Note 20 to the Consolidated Financial Statements and "-Valuation of Assets and Liabilities-Fair Value of Assets and Liabilities."    For our investments classified as available-for-sale, the impact of changes in fair value is recorded as an unrealized gain or loss in "Accumulated other comprehensive income (loss), net," a separate component of equity. For our investments classified as trading, the impact of changes in fair value is recorded within "Asset management fees and other income." In addition, investments classified as available-for-sale, as well as those classified as held-to-maturity, are subject to impairment reviews to identify when a decline in value is other-than-temporary. For a discussion of our policies regarding other-than-temporary declines in investment value and the related methodology for recording other-than-temporary impairments of fixed maturity and equity securities, see Note 2 to the Consolidated Financial Statements, "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Fixed Maturity Securities-Other-than-Temporary Impairments of Fixed Maturity Securities" and "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Equity Securities-Other-than-Temporary Impairments of Equity Securities."    Commercial mortgage and other loans are carried primarily at unpaid principal balances, net of unamortized deferred loan origination fees and expenses and unamortized premiums or discounts and a valuation allowance for losses. For a discussion of our policies regarding the valuation allowance for commercial mortgage and other loans see "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality."                                           96

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Future Policy Benefit Reserves, other than Unpaid Claims and Claim Adjustment Expenses

    We establish reserves for future policy benefits to, or on behalf of, policyholders in the same period in which the policy is issued. These reserves relate primarily to the traditional participating whole life policies of our Closed Block Business and the non-participating whole life, term life, and life contingent structured settlement and group annuity products of our Financial Services Businesses.    The future policy benefit reserves for the traditional participating life insurance products of our Closed Block Business, which as of December 31, 2011, represented 31% of our total future policy benefit reserves are determined using the net level premium method as prescribed by U.S. GAAP. Under this method, the future policy benefit reserves are accrued as a level proportion of the premium paid by the policyholder. In applying this method, we use mortality assumptions to determine our expected future benefits and expected future premiums, and apply an interest rate to determine the present value of both the expected future benefit payments and the expected future premiums. The mortality assumptions used are based on data from the standard industry mortality tables that were used to determine the cash surrender value of the policies, and the interest rates used are the contractually guaranteed interest rates used to calculate the cash surrender value of the policies. Gains or losses in our results of operations resulting from deviations in actual experience compared to the experience assumed in establishing our reserves for this business are recognized in the determination of our annual dividends to these policyholders. These gains or losses generally have not created significant volatility in our results of operations since, during most years, the Closed Block has recognized a cumulative policyholder dividend obligation expense in "Policyholders' dividends," for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization. However, if actual cumulative earnings fall below expected cumulative earnings in future periods, thereby eliminating the cumulative policyholder dividend obligation expense, these gains or losses could result in greater volatility in the Closed Block Business results of operations. As of December 31, 2011, the excess of actual cumulative earnings over the expected cumulative earnings was $762 million.    The future policy benefit reserves for our International Insurance segment and Individual Life segment, which as of December 31, 2011, represented 55% of our total future policy benefit reserves combined, relate primarily to non-participating whole life and term life products and endowment contracts, and are determined in accordance with U.S. GAAP as the present value of expected future benefits to, or on behalf of, policyholders plus the present value of future maintenance expenses less the present value of future net premiums. The expected future benefits and expenses are determined using assumptions about mortality, lapse, and maintenance expense. Reserve assumptions are based on best estimate assumptions as of the date the policy is issued or acquired with provisions for the risk of adverse deviation. After our reserves are initially established, we perform premium deficiency tests using best estimate assumptions as of the testing date without provisions for adverse deviation. If reserves determined based on these best estimate assumptions are greater than the net U.S. GAAP liabilities (i.e., reserves net of any DAC asset), the existing net U.S. GAAP liabilities are adjusted by first reducing the DAC asset by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than the DAC balance, we then increase the reserve by the excess, by means of a charge to current period earnings. Our best estimate assumptions are determined by product group. Mortality assumptions are generally based on the Company's historical experience or standard industry tables, as applicable; our expense assumptions are based on current levels of maintenance costs, adjusted for the effects of inflation; and our interest rate assumptions are based on current and expected net investment returns. Unless a material change in mortality experience is observed in an interim period that we feel is indicative of a long term trend, we generally update our mortality assumptions annually in the third quarter of each year. Generally, we do not expect our mortality trends to change significantly in the short-term and to the extent these trends may change we expect such changes to be gradual over the long-term.    The reserves for future policy benefits of our Retirement segment, which as of December 31, 2011 represented 10% of our total future policy benefit reserves, relate to our non-participating life contingent group annuity and structured settlement products. These reserves are generally determined as the present value of expected future benefits and expenses based on assumptions about mortality, retirement, maintenance expense, and interest rates. Reserves are based on best estimate assumptions as of the date the contract is issued with provisions for the risk of adverse deviation. After our reserves are initially established, we perform premium                                           97

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  deficiency testing by product group using best estimate assumptions as of the testing date without provisions for adverse deviation. If reserves determined based on these assumptions are greater than the existing reserves, the existing reserves are adjusted to the greater amount. Our best estimate assumptions are determined by product group. Our mortality and retirement assumptions are based on Company or industry experience; our expense assumptions are based on current levels of maintenance costs, adjusted for the effects of inflation; and our interest rate assumptions are based on current and expected net investment returns. Although we review our mortality and retirement assumptions on an ongoing basis throughout the year, we generally only update these assumptions annually during the third quarter unless a material change in mortality or retirement experience is observed in an interim period that we feel is indicative of a long term trend. Generally, we do not expect our actual mortality or retirement trends to change significantly in the short-term and to the extent these trends may change we expect such changes to be gradual over the long-term.    The remaining 4% of the reserves for future policy benefits as of December 31, 2011 represented reserves for the guaranteed minimum death benefit ("GMDB") and optional living benefit features of the variable annuity products in our Individual Annuities segment, and group life and disability and long-term care benefits in our Group Insurance segment. The optional living benefits are primarily accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. For additional information regarding the valuation of these optional living benefit features, see Note 20 to the Consolidated Financial Statements and "-Valuation of Assets and Liabilities-Fair Value of Assets and Liabilities-Variable Annuity Optional Living Benefit Features."    In establishing reserves for GMDBs and guaranteed minimum income benefits ("GMIB"s) related to variable annuity contracts, we must make estimates and assumptions about the timing of annuitization, contract lapses and contractholder mortality, as well as interest rates and equity market returns. Assumptions relating to contractholder behavior, such as the timing of annuitization and contract lapses, are based on our experience by contract group, and vary by product type and year of issuance. Our dynamic lapse rate assumption applies a different lapse rate on a contract by contract basis based on a comparison of the GMDB or GMIB and the current policyholder account value as well as other factors such as the applicability of any surrender charges. In-the-money contracts are those with a GMDB or GMIB in excess of the current policyholder account value. Since in-the-money contracts are less likely to lapse, we apply a lower lapse rate assumption to these contracts. As an example, the lapse rate assumptions for contracts that are not in-the-money and are out of their surrender charge period average between 7% and 20% per year, and the lapse rate assumptions for contracts that are in-the-money and are out of their surrender charge period average between 0% and 20% per year. Mortality assumptions are generally based on our historical experience or standard industry tables, and also vary by contract group. Unless a material change in contractholder behavior or mortality experience that we feel is indicative of a long term trend is observed in an interim period, we generally update assumptions related to contractholder behavior and mortality in the third quarter of each year by considering the actual results that have occurred during the period from the most recent update to the expected amounts. Over the last several years, the Company's most significant assumption updates that have resulted in changes to our reserves for GMDBs and GMIBs have been related to lapse experience and other contractholder behavior assumptions and revisions to expected future rates of returns on investments. The Company expects these assumptions to be the ones most likely to cause significant changes in the future. Changes in these assumptions can be offsetting and can also impact our DAC and other balances as discussed above. Generally, we do not expect our actual mortality trends to change significantly in the short-term, and to the extent these trends may change we expect such changes to be gradual over the long-term.    The future rate of return assumptions used in establishing reserves for GMDBs and GMIBs related to variable annuity contracts are derived using a reversion to the mean approach, a common industry practice. For additional information regarding our future expected rate of return assumptions and our reversion to the mean approach see, "-Deferred Policy Acquisition and Other Costs." The following table provides a demonstration of the sensitivity of the reserves for GMDBs and GMIBs related to variable annuity contracts relative to our future rate of return assumptions by quantifying the adjustments to these reserves that would be required assuming both a 100 basis point increase and decrease in our future rate of return. The sensitivity includes an increase and decrease of 100 basis points to both the near-term future rate of return assumptions used over the next four years, and the long-term expected rate of return used thereafter. While the information below is for illustrative purposes                                           98

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  only and does not reflect our expectations regarding future rate of return assumptions, it is a near-term, reasonably likely change that illustrates the potential impact of such a change. This information considers only the direct effect of changes in our future rate of return on operating results due to the change in the reserve balance and not changes in any other assumptions such as persistency, mortality, or expenses included in our evaluation of the reserves, or any changes on DAC or other balances, discussed above in "-Deferred Policy Acquisition and Other Costs."                                                                          December 31, 2011                                                                    Increase/(Reduction) in                                                                      GMDB/GMIB Reserves                                                                         (in millions) Decrease in future rate of return by 100 basis points             $                     114 Increase in future rate of return by 100 basis points             $                     (96 )     For a discussion of adjustments to the reserves for GMDBs and GMIBs related to our Individual Annuities segment for the years ended December 31, 2011, 2010 and 2009, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities."   

Unpaid claims and claim adjustment expenses

    Our liability for unpaid claims and claim adjustment expenses of $2.7 billion as of December 31, 2011 is reported as a component of "Future policy benefits" and relates primarily to the group long-term disability products of our Group Insurance segment. This liability represents our estimate of future disability claim payments and expenses as well as estimates of claims that we believe have been incurred, but have not yet been reported as of the balance sheet date. We do not establish loss liabilities until a loss has occurred. As prescribed by U.S. GAAP, our liability is determined as the present value of expected future claim payments and expenses. Expected future claim payments are estimated using assumed mortality and claim termination factors and an assumed interest rate. The mortality and claim termination factors are based on standard industry tables and the Company's historical experience. Our interest rate assumptions are based on factors such as market conditions and expected investment returns. Of these assumptions, our claim termination assumptions have historically had the most significant effect on our level of liability. We review our claim termination assumptions compared to actual terminations annually. These studies review actual claim termination experience over a number of years with more weight placed on the actual experience in the more recent years. Recently, our claim termination experience has been impacted by increased volatility driven by the economic downturn. If actual experience results in a different assumption, we adjust our liability for unpaid claims and claims adjustment expenses accordingly with a charge or credit to current period earnings.    

Unearned revenue reserves for universal life and investment contracts

    Our unearned revenue reserve, or URR, reported as a component of "Policyholders' account balances," is $1.7 billion as of December 31, 2011. This reserve primarily relates to variable and universal life products within our Individual Life segment and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized over the expected life of the contract in proportion to the product's estimated gross profits, similar to DAC as discussed above.    For the variable and universal life policies of our Individual Life segment, a significant portion of our gross profits is derived from mortality margins. As a result, our estimates of future gross profits are significantly influenced by our mortality assumptions. Our mortality assumptions represent our expected claims experience over the life of these policies and are developed based on Company experience or standard industry tables. Unless a material change in mortality experience that we feel is indicative of a long term trend is observed in an interim period, we generally update our mortality assumptions annually in the third quarter. Updates to our mortality assumptions in future periods could have a significant adverse or favorable effect on the results of our operations in the Individual Life segment.    The URR balance associated with the variable and universal life policies of our Individual Life segment as of December 31, 2011 was $1.0 billion. The following table provides a demonstration of the sensitivity of that                                           99

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  URR balance relative to our future mortality assumptions by quantifying the adjustments that would be required, assuming both an increase and decrease in our future mortality rate by 1%. While the information below is for illustrative purposes only and does not reflect our expectations regarding future mortality assumptions, it is a near-term, reasonably likely hypothetical change that illustrates the potential impact of such a change on the URR balance and does not reflect the offsetting impact of such a change on the DAC balance as discussed above in "-Deferred Policy Acquisition and Other Costs." This information considers only the direct effect of changes in our mortality assumptions on the URR balance and not changes in any other assumptions such as persistency, future rate of return, or expenses included in our evaluation of URR.                                                      December 31, 2011                                              Increase/(Reduction) in URR                                                     (in millions)        Decrease in future mortality by 1%   $                          28        Increase in future mortality by 1%   $                         (28 )     For a discussion of URR adjustments related to our Individual Life segment for the years ended December 31, 2011, 2010, and 2009, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Individual Life and Group Insurance Division-Individual Life."    

Pension and Other Postretirement Benefits

    We sponsor pension and other postretirement benefit plans covering employees who meet specific eligibility requirements. Our net periodic costs for these plans consider an assumed discount (interest) rate, an expected rate of return on plan assets and expected increases in compensation levels and trends in health care costs. Of these assumptions, our expected rate of return assumptions, and to a lesser extent our discount rate assumptions, have historically had the most significant effect on our net period costs associated with these plans.    We determine our expected rate of return on plan assets based upon a building block approach that considers inflation, real return, term premium, credit spreads, equity risk premium and capital appreciation as well as expenses, expected asset manager performance and the effect of rebalancing for the equity, debt and real estate asset mix applied on a weighted average basis to our pension asset portfolio. See Note 18 to our Consolidated Financial Statements for our actual asset allocations by asset category and the asset allocation ranges prescribed by our investment policy guidelines for both our pension and other postretirement benefit plans. Our assumed long-term rate of return for 2011 was 7.00% for our pension plans and 7.00% for our other postretirement benefit plans. Given the amount of plan assets as of December 31, 2010, the beginning of the measurement year, if we had assumed an expected rate of return for both our pension and other postretirement benefit plans that was 100 basis points higher or 100 basis points lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below. The information provided in the table below considers only changes in our assumed long-term rate of return given the level and mix of invested assets at the beginning of the measurement year, without consideration of possible changes in any of the other assumptions described above that could ultimately accompany any changes in our assumed long-term rate of return.                                                             For the year ended December 31, 2011                                                                                      Increase/(Decrease) in Net                                      Increase/(Decrease) in Net                    Periodic Other  Postretirement                                        Periodic Pension Cost                                    Cost                                                                     (in millions) Increase in expected rate of return by 100 basis points                              $                       (101 )                $                            (14 ) Decrease in expected rate of return by 100 basis points                              $                        101                  $                             14                                           100 

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  We determine our discount rate, used to value the pension and postretirement benefit obligations, based upon rates commensurate with current yields on high quality corporate bonds. See Note 18 to our Consolidated Financial Statements for information regarding the December 31, 2010 methodology we employed to determine our discount rate for 2011. Our assumed discount rate for 2011 was 5.60% for our pension plans and 5.35% for our other postretirement benefit plans. Given the amount of pension and postretirement obligation as of December 31, 2010, the beginning of the measurement year, if we had assumed a discount rate for both our pension and other postretirement benefit plans that was 100 basis points higher or 100 basis points lower than the rates we assumed, the change in our net periodic costs would have been as shown in the table below. The information provided in the table below considers only changes in our assumed discount rate without consideration of possible changes in any of the other assumptions described above that could ultimately accompany any changes in our assumed discount rate.                                                            For the year ended December 31, 2011                                                                                      Increase/(Decrease) in Net                                     Increase/(Decrease) in Net                     Periodic Other  Postretirement                                       Periodic Pension Cost                                     Cost                                                                     (in millions) Increase in discount rate by 100 basis points           $                         (2 )                  $                            (5 ) Decrease in discount rate by 100 basis points           $                         49                    $                             3     Given the application of the authoritative guidance for accounting for pensions, and the deferral and amortization of actuarial gains and losses arising from changes in our assumed discount rate, the change in net periodic pension cost arising from an increase in the assumed discount rate by 100 basis points would not be expected to equal the change in net periodic pension cost arising from a decrease in the assumed discount rate by 100 basis points.    

For a discussion of our expected rate of return on plan assets and discount rate for our qualified pension plan in 2011, see "-Results of Operations for Financial Services Businesses by Segment-Corporate and Other."

    For purposes of calculating pension income from our own qualified pension plan for the year ended December 31, 2012, we will decrease the discount rate to 4.85% from 5.60% in 2011. The expected rate of return on plan assets will decrease to 6.75% in 2012 from 7.00% in 2011, and the assumed rate of increase in compensation will remain unchanged at 4.5%.    In addition to the effect of changes in our assumptions, the net periodic cost or benefit from our pension and other postretirement benefit plans may change due to factors such as actual experience being different from our assumptions, special benefits to terminated employees, or changes in benefits provided under the plans.   

At December 31, 2011, the sensitivity of our pension and postretirement obligations to a 100 basis point change in discount rate was as follows:

December 31, 2011                                                                                           Increase/(Decrease) in                                           Increase/(Decrease) in                        Accumulated Postretirement                                        Pension Benefits Obligation                         Benefits  Obligation

Increase in discount rate by 100 basis points                                               (10 )%                                         (9 )% Decrease in discount rate by 100 basis points                                                11 %                                          10 %     Taxes on Income    Our effective tax rate is based on income, non-taxable and non-deductible items, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities and expectations about future outcomes. The Company does not provide U.S. income taxes on unremitted foreign earnings of its non-U.S. Operations, other than its operations in Japan and certain operations in India, Germany, and Taiwan.                                          101

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  Tax regulations require items to be included in the tax return at different times from when the items are reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements is different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in our tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which we have already recorded the tax benefit in our income statement. Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred, or expenditures for which we have already taken a deduction in our tax return but have not yet been recognized in our financial statements.    The application of U.S. GAAP requires us to evaluate the recoverability of our deferred tax assets and establish a valuation allowance if necessary to reduce our deferred tax assets to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance we consider many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that we would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.    An increase or decrease in our effective tax rate by one percent of income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures, would have resulted in an increase or decrease in our consolidated income from continuing operations before equity in earnings of operating joint ventures in 2011 of $51 million.    U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process, the first step being recognition. We determine whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. We measure the tax position as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date.    Our liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to our liability for income taxes. The Federal statute of limitations for the 2002 tax year expired on April 30, 2009. The Federal statute of limitations for the 2003 tax year expired on July 31, 2009. The Federal statute of limitations for the 2004 through 2007 tax years will expire in June 2012, unless extended. Tax years 2008 through 2010 are still open for IRS examination. See Note 19 to the Consolidated Financial Statements for a discussion of the impact in 2009 and 2011 of changes to our total unrecognized tax benefits. We do not anticipate any significant changes within the next 12 months to our total unrecognized tax benefits related to tax years for which the statute of limitations has not expired.    

The Company's affiliates in Japan and Korea file separate tax returns and are subject to audits by the local taxing authority. The general statute of limitations for Japan and Korea are five years from when the return is filed.

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  Table of Contents  Reserves for Contingencies    A contingency is an existing condition that involves a degree of uncertainty that will ultimately be resolved upon the occurrence of future events. Under U.S. GAAP, reserves for contingencies are required to be established when the future event is probable and its impact can be reasonably estimated, such as in connection with an unresolved legal matter. The initial reserve reflects management's best estimate of the probable cost of ultimate resolution of the matter and is revised accordingly as facts and circumstances change and, ultimately, when the matter is brought to closure.    

Adoption of New Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements.

Future Adoption of New Accounting Pronouncements

    In October 2010, the FASB issued authoritative guidance to address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. The Company adopted this guidance effective January 1, 2012, and will apply the retrospective method of adoption. We estimate that if the new guidance were adopted as of December 31, 2011, retrospective adoption would reduce deferred policy acquisition costs by approximately $3.6 billion to $4.4 billion for the Financial Services Businesses and by approximately $0.2 billion for the Closed Block Business, increase policy reserves for certain limited pay contracts by approximately $0.2 billion to $0.3 billion for the Financial Services Businesses, and reduce total equity by approximately $2.6 billion to $3.0 billion for the Financial Services Businesses and approximately $0.1 billion for the Closed Block Business. Subsequent to the adoption of the guidance, the lower level of costs qualifying for deferral may be only partially offset by a lower level of amortization of deferred policy acquisition costs, and, as such, may initially result in lower earnings in future periods, primarily within the International Insurance and Individual Annuities segments. The impact to the International Insurance segment largely reflects lower deferrals of allocated costs of its proprietary distribution system, while the impact to the Individual Annuities segment mainly reflects lower deferrals of its wholesaler costs. While the adoption of this amended guidance changes the timing of when certain costs are reflected in the Company's results of operations, it has no effect on the total acquisition costs to be recognized over time and will have no impact on the Company's cash flows.    See Note 2 to our Consolidated Financial Statements for a complete discussion of newly issued accounting pronouncements, including further discussion of the new authoritative guidance addressing which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral.                                          103

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  Table of Contents                         Consolidated Results of Operations   

The following table summarizes net income (loss) for the Financial Services Businesses and the Closed Block Business for the periods presented.

                                                                   Year ended December 31,                                                            2011          2010          2009                                                                      (in millions) Financial Services Businesses by segment: Individual Annuities                                     $  2,018      $  1,019      $     621 Retirement                                                    956           687            376 Asset Management                                              756           529              9  Total U.S. Retirement Solutions and Investment Management Division                                         3,730         2,235          1,006  Individual Life                                               496           461            696 Group Insurance                                               265           193             97  Total U.S. Individual Life and Group Insurance Division                                                      761           654            793  International Insurance                                     2,986         1,644          1,095  Total International Insurance Division                      2,986         1,644          1,095  Corporate and Other                                        (2,557 )        (866 )         (890 )  Income from continuing operations before income taxes and equity in earnings of operating joint ventures for Financial Services Businesses                               4,920         3,667          2,004 Income tax expense                                          1,537         1,058            131 

Income from continuing operations before equity in earnings of operating joint ventures for Financial Services Businesses

                                         3,383         

2,609 1,873 Equity in earnings of operating joint ventures, net of taxes

                                                         185           

84 1,523

  Income from continuing operations for Financial Services Businesses                                         3,568         

2,693 3,396 Income (loss) from discontinued operations, net of taxes

                                                          35            32            (19 )  Net income-Financial Services Businesses                    3,603         

2,725 3,377 Less: Income (loss) attributable to noncontrolling interests

                                                      72            11            (34 )  Net income of Financial Services Businesses attributable to Prudential Financial, Inc.               $  3,531      $  

2,714 $ 3,411

  Basic income from continuing operations attributable to Prudential Financial, Inc. per share-Common Stock     $   7.23      $   5.75      $    7.72 Diluted income from continuing operations attributable to Prudential Financial, Inc. per share-Common Stock     $   7.14      $   5.68      $    7.67 Basic net income attributable to Prudential Financial, Inc. per share-Common Stock                              $   7.31      $   5.82      $    7.68 Diluted net income attributable to Prudential Financial, Inc. per share-Common Stock                   $   7.22      $   5.75      $    7.63 Closed Block Business: Income (loss) from continuing operations before income taxes for Closed Block Business                          $    197      $    725      $    (480 ) Income tax expense (benefit)                                   62           245           (193 )  

Income (loss) from continuing operations for Closed Block Business

                                                135           480           (287 ) Income from discontinued operations, net of taxes               0             1              0  Net income (loss)-Closed Block Business                       135           481           (287 ) Less: Income attributable to noncontrolling interests           0             0              0  Net income (loss) of Closed Block Business attributable to Prudential Financial, Inc.               $    135      $    

481 $ (287 )

Basic and diluted income (loss) from continuing operations attributable to Prudential Financial, Inc. per share-Class B Stock

                                  $  55.50      $ 222.00      $ (165.00 ) Basic and diluted net income (loss) attributable to Prudential Financial, Inc.per share-Class B Stock        $  55.50      $ 222.50      $ (165.00 ) Consolidated:  

Net income attributable to Prudential Financial, Inc.$ 3,666$ 3,195$ 3,124

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Results of Operations-Financial Services Businesses

    2011 to 2010 Annual Comparison.  Income from continuing operations for the Financial Services Businesses increased $875 million, from $2,693 million in 2010 to $3,568 million in 2011. Results for 2011 compared to 2010 reflect the following:   

• Higher net pre-tax earnings resulting from the impact of foreign currency

        exchange rate movements on certain non-yen denominated assets and         liabilities within our Japanese insurance operations, for which we         economically hedge the foreign currency exposure, driven by the         strengthening of the yen during 2011;    

• Higher net pre-tax gains associated with our general account portfolio,

        excluding the impact of the hedging program associated with certain         variable annuities as described below, primarily reflecting higher gains         from changes in the market value of derivatives used to manage the

investment portfolio duration resulting from declining interest rates in

        2011, and higher gains from changes in the market value of currency         derivatives due to foreign currency exchange rate movements;    

• A $237 million pre-tax benefit in 2011 compared to a $66 million pre-tax

        benefit in 2010 on sales of portions of our indirect interest in China         Pacific Insurance (Group) Co., Ltd;    

• A $96 million pre-tax gain on the sale of our investment in Afore XXI, an

         operating joint venture in our International Insurance segment; and         •   A net increase in premiums and policy charges and fee income, net of an

increase in policyholders' benefits, including changes in reserves,

reflecting business growth, as well as the impact of favorable currency

        fluctuations, in our International Insurance operations.    

Partially offsetting these increases in income from continuing operations were the following items:

• A $722 million unfavorable variance, before taxes, reflecting the net

impact from the mark-to-market of our embedded derivatives, including the

impact of non-performance risk, and related hedge positions associated with

certain variable annuities, the impact on amortization of deferred policy

acquisition and other costs and the impact of temporarily hedging to an

        amount that differs from our hedge target definition;    

• A $580 million unfavorable variance, before taxes, from adjustments to

deferred policy acquisition and other costs and the reserves for guaranteed

minimum death and income benefit features of our variable annuity products,

reflecting updates to the estimated profitability of the business primarily

resulting from market performance and the impact of an annual review and

         update of assumptions; and         •   A $93 million pre-tax expense for estimated payments arising from use of

        new Social Security Master Death File matching criteria to identify         deceased policy and contract holders.     On a diluted per share basis, income from continuing operations attributable to the Financial Services Businesses for 2011 of $7.14 per share of Common Stock increased from $5.68 per share of Common Stock for 2010. We analyze the operating performance of the segments included in the Financial Services Businesses using "adjusted operating income" as described in "-Segment Measures," below. For a discussion of our segment results on this basis, see "-Results of Operations for Financial Services Businesses by Segment," below. In addition, for a discussion of the realized investment gains (losses), net attributable to the Financial Services Businesses, see "-Realized Investment Gains and Losses and General Account Investments-Realized Investment Gains and Losses," below. For additional information regarding investment income, excluding realized investment gains (losses) see "-Realized Investment Gains and Losses and General Account Investments-General Account Investments," below.    The direct equity adjustment increased income from continuing operations available to holders of the Common Stock for earnings per share purposes by $24 million for 2011, compared to $36 million for 2010. As described more fully in Note 16 to the Consolidated Financial Statements, the direct equity adjustment modifies earnings available to holders of the Common Stock and the Class B Stock for earnings per share purposes. The holders of the Common Stock will benefit from the direct equity adjustment as long as reported administrative expenses of the Closed Block Business are less than the cash flows for administrative expenses determined by the policy servicing fee arrangement that is based upon insurance and policies in force and statutory cash premiums.                                          105

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  Generally, as statutory cash premiums and policies in force in the Closed Block Business decline, we expect the benefit to the Common Stock holders from the direct equity adjustment to decline accordingly. If the reported administrative expenses of the Closed Block Business exceed the cash flows for administrative expenses determined by the policy servicing fee arrangement, the direct equity adjustment will reduce income available to holders of the Common Stock for earnings per share purposes.    2010 to 2009 Annual Comparison.  Income from continuing operations for the Financial Services Businesses decreased $703 million, from $3,396 million in 2009 to $2,693 million in 2010. Results for 2009 include a $1,457 million after tax gain on the sale of our minority joint venture interest in Wachovia Securities to Wells Fargo. Absent the effect of this item, income from continuing operations for the Financial Services Businesses for 2010 increased $754 million from 2009 reflecting the following:    

• Net pre-tax gains in 2010 compared to net pre-tax losses in 2009 associated

        with our general account portfolio and hedging programs, reflecting the         impact of financial market conditions in each period;    

• A net increase in premiums and policy charges and fee income, net of an

increase in policyholders' benefits, including changes in reserves,

reflecting business growth, as well as the impact of currency fluctuations,

in our International Insurance operations and higher life-contingent

structured settlement and single premium annuity sales in our retirement

        business; and    

• Increases in other income and benefits and expenses due to changes in value

of recorded assets and liabilities that are expected to ultimately accrue

        to contractholders.     On a diluted per share basis, income from continuing operations attributable to the Financial Services Businesses for 2010 of $5.68 per share of Common Stock decreased from $7.67 per share of Common Stock for 2009.    

The direct equity adjustment, as described above, increased income from continuing operations available to holders of the Common Stock for earnings per share purposes by $36 million for 2010 compared to $43 million for 2009.

Results of Operations-Closed Block Business

    2011 to 2010 Annual Comparison.  Income from continuing operations for the Closed Block Business for 2011, was $135 million, or $55.50 per share of Class B Stock, compared to $480 million, or $222.00 per share of Class B Stock, for 2010. The direct equity adjustment decreased income from continuing operations available to the Class B Stock holders for earnings per share purposes by $24 million for 2011, compared to $36 million for 2010. For a discussion of the results of operations for the Closed Block Business, see "-Results of Operations of Closed Block Business," below.    2010 to 2009 Annual Comparison.  Income (loss) from continuing operations for the Closed Block Business for 2010, was $480 million, or $222.00 per share of Class B Stock, compared to a loss of $287 million, or $(165.00) per share of Class B Stock, for 2009. The direct equity adjustment decreased income from continuing operations available to the Class B Stock holders for earnings per share purposes by $36 million for 2010 compared to $43 million for 2009. For a discussion of the results of operations for the Closed Block Business, see "-Results of Operations of Closed Block Business," below.    Segment Measures    In managing our business, we analyze operating performance separately for our Financial Services Businesses and our Closed Block Business. For the Financial Services Businesses, we analyze our segments' operating performance using "adjusted operating income." Results of the Closed Block Business for all periods are evaluated and presented only in accordance with U.S. GAAP. Adjusted operating income does not equate to "income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures" or "net income" as determined in accordance with U.S. GAAP but is the measure of segment profit or loss we use to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is our measure of segment performance. The adjustments to derive adjusted operating income are important to an                                          106 

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  understanding of our overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and our definition of adjusted operating income may differ from that used by other companies. However, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability of the Financial Services Businesses.    See Note 22 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating income.           Results of Operations for Financial Services Businesses by Segment   

U.S. Retirement Solutions and Investment Management Division

   Individual Annuities    Operating Results   

The following table sets forth the Individual Annuities segment's operating results for the periods indicated.

                                                                   Year ended December 31,                                                              2011         2010         2009                                                                      (in millions) Operating results: Revenues                                                   $  3,638      $ 3,195      $ 2,515 Benefits and expenses                                         2,925        2,149        1,758  Adjusted operating income                                       713        1,046          757 Realized investment gains (losses), net, and related adjustments(1)                                                3,136          120          416 Related charges(2)                                           (1,831 )       (147 )       (552 ) 

Income from continuing operations before income taxes and equity in earnings of operating joint ventures $ 2,018$ 1,019$ 621

     (1)   Revenues exclude Realized investment gains (losses), net, and related

adjustments, which include the net impact of embedded derivatives related to

our living benefit features and related hedge positions as described below.

      See "-Realized Investment Gains and Losses and General Account       Investments-Realized Investment Gains and Losses."   (2)   Revenues exclude related charges which represent payments related to the       market value adjustment features of certain of our annuity products.       Benefits and expenses exclude related charges which represent the       unfavorable (favorable) impact of Realized investment gains (losses), net,

on changes in reserves and the amortization of deferred policy acquisition

      costs, deferred sales inducements and value of business acquired.     Adjusted Operating Income    2011 to 2010 Annual Comparison.  Adjusted operating income decreased $333 million, from $1,046 million in 2010 to $713 million in 2011. The decrease in adjusted operating income was driven by the impacts of a $232 million net charge in the current year, and a $348 million net benefit in the prior year, from adjustments to amortization of deferred policy acquisition costs ("DAC") and other costs and to the reserves for the guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") features of our variable annuity products, primarily driven by the impact to the estimated profitability of the business of quarterly adjustments to reflect current period market performance and experience, as well as the impact of annual reviews and updates of the assumptions used in estimating the profitability of our business. Results for both years include the impact of these items which are discussed in more detail below.    Excluding the items discussed above, adjusted operating income increased $247 million. The increase was driven by higher fee income, net of distribution costs, due to higher average variable annuity account values invested in separate accounts primarily driven by positive net flows. See "-Account Values" below for a further discussion of our account values and sales. The higher fee income was partially offset by higher general and administrative expenses, net of capitalization, reflecting higher costs to support business growth and higher financing expenses, and the impact of a $25 million benefit in 2010 from refinements based on a review and settlement of reinsurance contracts related to acquired business.                                          107 

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  As shown in the following table, adjusted operating income for 2011 included $232 million of net charges from adjustments to the amortization of DAC and other costs and to the reserves for the GMDB and GMIB features of our variable annuity products, compared to $348 million of net benefits included in 2010.                                                  Year ended December 31, 2011                                 Year ended December 31, 2010                                   Amortization of           Reserves for                        Amortization of         Reserves for                                    DAC and Other               GMDB/                             DAC and Other              GMDB/                                      Costs(1)                 GMIB(2)            Total             Costs(1)                GMIB(2)           Total                                                                                    (in millions) Quarterly market performance adjustments                      $            (118 )       $         (170 )      $ (288 )      $              36        $          67        $  103 Annual review/assumption updates                                        (45 )                   65            20                      165                   12           177 Quarterly adjustments for current period experience and other updates(3)                            31                      5            36                       23                   45            68  Total                            $            (132 )       $         (100 )      $ (232 )      $             224        $         124        $  348     

(1) Amounts reflect (charges) or benefits for (increases) or decreases,

respectively, in the amortization of DAC and other costs resulting from

adjustments to our estimate of total gross profits.

(2) Amounts reflect (charges) or benefits for reserve (increases) or decreases,

respectively, related to the GMDB / GMIB features of our variable annuity

      products.   (3)   Represents the impact of differences between actual gross profits for the

period and the previously estimated expected gross profits for the period,

as well as updates for current and future expected claims costs associated

      with the GMDB / GMIB features of our variable annuity products.     The $288 million of charges and $103 million of benefits in 2011 and 2010, respectively, relating to the quarterly market performance adjustments shown in the table above are attributable to changes to our estimate of total gross profits to reflect actual fund performance. The following table shows the actual quarterly rates of return on variable annuity account values compared to our previously expected quarterly rates of return used in our estimate of total gross profits for the periods indicated.                                                              2011                                                             2010                                  First          Second           Third           Fourth           First          Second            Third          Fourth                                 Quarter         Quarter         Quarter          Quarter         Quarter         Quarter          Quarter         Quarter Actual rate of return                3.7 %           0.8 %          (9.8 )%           4.9 %           3.4 %          (5.2 )%           8.1 %           6.0 % Expected rate of return              1.7 %           1.7 %           1.7 %            2.2 %           2.0 %           1.9 %            2.1 %           1.9 %     Overall lower than expected returns in 2011 decreased our estimate of total gross profits used as a basis for amortizing DAC and other costs and increased our estimate of future expected claims costs associated with the GMDB and GMIB features of our variable annuity products, by establishing a new, lower starting point for the variable annuity account values used in estimating those items for future periods. This change results in a higher required rate of amortization and higher required reserve provisions, which are applied to all prior periods. The resulting cumulative adjustment to prior amortization and reserve provisions are recognized in the current period. Overall higher than expected returns in 2010 had opposite impacts, resulting in an increase to our estimate of total gross profits used as a basis for amortizing DAC and other costs and a decrease to our estimate of future expected claims costs associated with the GMDB and GMIB features of our variable annuity products. This change resulted in a lower required rate of amortization and lower required reserve provisions, which were applied to all prior periods.    As discussed and shown in the table above, results for both years include the impact of the annual reviews performed in the third quarter of the assumptions used in the reserves for the GMDB and GMIB features of our variable annuity products and in our estimate of total gross profits used as a basis for amortizing DAC and other costs. The third quarter of 2011 included $20 million of net benefits from these annual reviews, primarily related to a reduction of the assumption of the percentage of contracts with a GMIB feature that will annuitize based on the guaranteed value, partially offset by a reduction of the weighted average future return assumption to 4.3% on fixed rate portfolios. The reduction in the weighted average future return assumption on fixed rate portfolios was driven by a refinement to our rate-setting methodology to reflect a lower interest rate assumption for the next five years to reflect current market conditions, and use the long-term assumed rate thereafter in determining the blended future return on fixed rate investments of 4.3%. The third quarter of 2010 included $177 million of benefits from these annual reviews, primarily related to reductions in lapse rate assumptions and more favorable assumptions relating to fee income.                                          108 

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  For a further discussion of the assumptions, including our current near-term and long-term projected rates of return, used in estimating total gross profits used as the basis for amortizing DAC and other costs, and for estimating future expected claims costs associated with the GMDB and GMIB features of our variable annuity products, see "-Accounting Policies and Pronouncements-Application of Critical Accounting Estimates."    The $36 million and $68 million of benefits in 2011 and 2010, respectively, shown in the table above, reflect the quarterly adjustments for current period experience and other updates, also referred to as experience true-up adjustments. The experience true-up adjustments for 2011 include reductions to both the amortization of DAC and other costs and the reserves related to the GMDB and GMIB features of our variable annuity products. The reduction to the amortization of DAC and other costs was driven by higher than expected gross profits primarily from lower than expected lapses, higher than expected fee income and higher than expected general account spreads. The reduction to the reserves related to the GMDB and GMIB features of our variable annuity products was driven by lower than expected actual contract guarantee claim costs, higher than expected fee income and higher than expected general account spreads, partially offset by lower than expected lapses. The experience true-up adjustments for 2010 included a reduction in the amortization of DAC and other costs driven by higher than expected gross profits primarily from higher than expected fee income, and a reduction to the reserves related to the GMDB and GMIB features of our variable annuity products driven by lower than expected actual contract guarantee claim costs, more favorable lapse experience and higher than expected fee income.    As noted previously, the quarterly adjustments to reflect current period market performance and experience and other updates, and the annual reviews and updates of assumptions impact the estimated profitability of our business. Therefore, in addition to the current period impacts discussed above, these items will also drive changes in our GMDB and GMIB reserves and the amortization of DAC and other costs in future periods. Additionally, in the third and fourth quarters of 2011, we evaluated the results of our living benefits hedging program and determined the difference between the change in the value of the hedge target liability and the change in the fair value of the hedge assets to be other-than-temporary. As a result, we included these amounts in our best estimate of total gross profits used for setting amortization rates, which will also drive changes in the amortization of DAC and other costs in future periods. The table above excludes the impacts of resetting the amortization rates for this item, as both the hedge results and related amortization of DAC and other costs are excluded from adjusted operating income. However, adjusted operating income in the fourth quarter of 2011 includes the subsequent impact to base amortization from resetting the amortization rates at the end of the third quarter. Base amortization is calculated by applying the new rates to actual gross profits for the quarter. See "-Net impact of embedded derivatives related to our living benefit features and related hedge positions" for additional details on the impact of our hedge results that are excluded from adjusted operating income.    2010 to 2009 Annual Comparison.  Adjusted operating income increased $289 million, from $757 million in 2009 to $1,046 million in 2010. The increase in adjusted operating income was primarily due to an increase in fee income, net of higher distribution costs, driven by higher average variable annuity account values invested in separate accounts due to positive net flows and net market appreciation.    Partially offsetting the increase in adjusted operating income was a $31 million lower benefit related to adjustments to the reserves for the GMDB and GMIB features of our variable annuity products and to our estimate of total gross profits used as a basis for amortizing DAC and other costs. As shown in the following table, adjusted operating income for 2010 included $348 million of benefits from these adjustments, compared to $379 million of benefits included in 2009. This variance is discussed in more detail below.                                                  Year ended December 31, 2010                                  Year ended December 31, 2009                                    Amortization of         Reserves for                       Amortization of             Reserves for                                     DAC and Other              GMDB/                           DAC and Other                 GMDB/                                       Costs(1)                GMIB(2)           Total             Costs(1)                  GMIB(2)              Total                                                                                       (in millions) Quarterly market performance adjustments                       $              36        $          67        $  103       $               54          $          277          $  331 Annual review/assumption updates                                         165                   12           177                      (30 )                   (19 )           (49 ) Quarterly adjustments for current period experience and other updates(3)                                 23                   45            68                       63                      34              97  Total                             $             224        $         124        $  348       $               87          $          292          $  379     

(1) Amounts reflect (charges) or benefits for (increases) or decreases,

respectively, in the amortization of DAC and other costs resulting from

      adjustments to our estimate of total gross profits.                                           109 

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Table of Contents (2) Amounts reflect (charges) or benefits for reserve (increases) or decreases,

respectively, related to the GMDB / GMIB features of our variable annuity

      products.   (3)   Represents the impact of differences between actual gross profits for the

period and the previously estimated expected gross profits for the period,

as well as updates for current and future expected claims costs associated

      with the GMDB / GMIB features of our variable annuity products.     The $103 million and $331 million of benefits for 2010 and 2009, respectively, relating to the quarterly market performance adjustments shown in the table above are attributable to changes to our estimate of total gross profits to reflect actual fund performance. The following table shows the actual quarterly rates of return on variable annuity account values compared to our previously expected quarterly rates of return used in our estimate of total gross profits for the periods indicated.                                                               2010                                                                 2009                                  First           Second             Third           Fourth            First            Second            Third           Fourth                                 Quarter          Quarter           Quarter          Quarter          Quarter           Quarter          Quarter          Quarter Actual rate of return                3.4 %           (5.2 )%            8.1 %            6.0 %           (4.5 )%           12.7 %           10.6 %            3.0 % Expected rate of return              2.0 %            1.9 %             2.1 %            1.9 %            2.5 %             2.5 %            2.4 %            2.1 %     Actual returns exceeded our expected returns for 2010 which increased our estimates of total gross profits and decreased our estimate of future expected claims costs associated with the GMDB and GMIB features of our variable annuity products, by establishing a new, higher starting point for the variable annuity account values used in estimating those items for future periods. The expected rates of return in 2010 for some contract groups were based upon our maximum future rate of return under the reversion to the mean approach. The overall increase in our estimate of total gross profits and decrease in our estimate of future expected claims costs results in a lower required rate of amortization and lower required reserve provisions, which are applied to all prior periods. The resulting cumulative adjustment to prior amortization and reserve provisions was a $103 million benefit for 2010 as shown in the table above.    The $331 million of benefits for 2009 relating to the quarterly market performance adjustments is attributable to a similar impact on gross profits of market value increases in the underlying assets associated with our variable annuity products, reflecting financial market conditions during the period. The benefit in 2009 is higher than that in 2010 due to a greater difference in 2009 between the actual rates of return and the expected rates of return. Also, the $54 million decrease in amortization of DAC and other costs in 2009 is net of a $73 million charge to impair the entire remaining balance of value of business acquired, or VOBA, related to the variable annuity contracts acquired from The Allstate Corporation, or Allstate, in the second quarter of 2006. The additional charge was required in the first quarter of 2009, as the declines in estimated future gross profits related to market performance caused the present value of estimated gross profits for these contracts to fall below zero. Since the VOBA balance was completely amortized for these contracts, it cannot be reestablished for market value appreciation in subsequent periods.    As discussed and shown in the table above, results for both periods also include the impact of the annual reviews performed in the third quarter of the assumptions used in the reserves for the GMDB and GMIB features of our variable annuity products and in our estimate of total gross profits used as a basis for amortizing DAC and other costs. 2010 included $177 million of benefits from these annual reviews, primarily related to reductions in lapse rate assumptions and more favorable assumptions relating to fee income. 2009 included $49 million of charges from these annual reviews, primarily related to reductions in the future rate of return assumptions applied to the underlying assets associated with our variable annuity products. Partially offsetting the impact of the updated future rate of return assumptions for 2009 were benefits related to the impact of lower mortality and higher investment spread assumptions.    The $68 million benefit for 2010 and the $97 million benefit for 2009 for the quarterly adjustments for current period experience and other updates shown in the table above primarily reflect the impact of differences between actual gross profits for the period and the previously estimated expected gross profits for the period, as well as an update for current and future expected claims costs associated with the GMDB and GMIB features of our variable annuity products. To the extent each period's actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change, and a cumulative adjustment to previous periods' amortization, also referred to as an experience true-up adjustment, may be required in the current period.                                          110

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  This adjustment to previous periods' amortization is in addition to the direct impact of actual gross profits on current period amortization and the market performance related adjustment to our estimates of gross profits for future periods. The experience true-up adjustments for deferred policy acquisition and other costs for 2010 reflect a reduction in amortization due to better than expected gross profits, resulting primarily from higher than expected fee income. The adjustment for the reserves for the guaranteed minimum death and income benefit features of our variable annuity products in 2010 primarily reflects a reserve decrease driven by lower than expected actual contract guarantee claim costs, more favorable lapse experience, and higher than expected fee income. The experience true-up adjustments for deferred policy acquisition and other costs for 2009 reflect a reduction in amortization due to better than expected gross profits. The adjustment for the reserves for the GMDB and GMIB features of our variable annuity products in 2009 primarily reflects higher than expected fee income due to market value increases, partially offset by higher than expected actual contract guarantee claims costs due to lower than expected lapses.    Revenues    2011 to 2010 Annual Comparison.  Revenues, as shown in the table above under "-Operating Results," increased $443 million, from $3,195 million in 2010 to $3,638 million in 2011. Policy charges and fees and asset management fees and other income increased $576 million driven by higher average variable annuity account values invested in separate accounts due to positive net flows and net transfers of balances from the general account to the separate accounts primarily driven by an automatic rebalancing element, also referred to as an asset transfer feature, in some of our optional living benefit features. Partially offsetting the increase in revenues was a decrease in net investment income of $88 million, reflecting lower average annuity account values in the general account also resulting from transfers from the general account to the separate accounts. Premiums also decreased $45 million, reflecting a decline in annuitizations of our variable annuity contracts.    2010 to 2009 Annual Comparison.  Revenues increased $680 million, from $2,515 million in 2009 to $3,195 million in 2010. Policy charges and fees and asset management fees and other income increased $703 million primarily due to higher average variable annuity account values invested in separate accounts. The increase in average separate account asset balances was due to positive net flows, net market appreciation, and net transfers of balances from the general account to the separate accounts during 2010. Premiums also increased $78 million driven by an increase in annuitizations primarily from contracts with the GMIB feature. Partially offsetting the increase in revenues was a decrease in net investment income of $101 million, reflecting lower average annuity account values in the general account also resulting from transfers from the fixed-rate account in the general account to the separate accounts as discussed above.    See "-Account Values" below for a further discussion of our account values and sales, and "-Variable Annuity Net Amount at Risk" below for a further discussion of the automatic rebalancing element in some of our optional living benefit features.    Benefits and Expenses    2011 to 2010 Annual Comparison.  Benefits and expenses, as shown in the table above under "-Operating Results," increased $776 million, from $2,149 million in 2010 to $2,925 million in 2011. Absent the net $580 million increase related to the adjustments to the reserves for the GMDB and GMIB features of our variable annuity products and to our estimate of total gross profits used as a basis for amortizing DAC and other costs, discussed above, benefits and expenses increased $196 million. General and administrative expenses, net of capitalization, increased $199 million, driven by higher distribution and asset management costs, reflecting business and account value growth. The amortization of DAC increased $97 million primarily reflecting the impact of higher gross profits used as a basis for amortization driven by higher fee income. Interest expense also increased $46 million driven by higher borrowings to fund costs related to new business sales. Interest credited to policyholders' account balances decreased $107 million primarily due to lower average annuity account values in the fixed-rate account of the general account partially offset by higher amortization of deferred sales inducements reflecting the impact of higher gross profits. Insurance and annuity benefits also decreased $39 million, primarily driven by the decrease in premiums noted above.                                          111

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  2010 to 2009 Annual Comparison  Benefits and expenses increased $391 million, from $1,758 million in 2009 to $2,149 million in 2010. Absent the net $31 million increase related to the adjustments to the reserves for the GMDB and GMIB features of our variable annuity products and to our estimate of total gross profits used as a basis for amortizing DAC and other costs, benefits and expenses increased $360 million. General and administrative expenses, net of capitalization, increased $240 million primarily driven by higher distribution and asset management costs, reflecting higher average variable annuity asset balances invested in separate accounts and higher variable annuity sales. Interest expense also increased $53 million driven by higher intercompany borrowings to fund operating costs and new business sales. The amortization of DAC increased $36 million reflecting the impact of higher gross profits used as a basis for amortization driven by higher fee income. Insurance and annuity benefits increased $34 million driven by an increase in annuitizations primarily from contracts with the GMIB feature partially offset by lower reserves on the GMDB and GMIB features due to the impact of favorable markets on account values during 2010. Lower interest credited to policyholders' account balances driven by lower average annuity account values in the fixed-rate accounts of the general account was mostly offset by higher amortization of deferred sales inducements, reflecting the impact of higher gross profits primarily from fee income.    Account Values    The following table sets forth changes in account values for the individual annuity business, for the periods indicated. For our individual annuity business, assets are reported at account value, and net sales (redemptions) are gross sales minus redemptions or surrenders and withdrawals, as applicable. Gross sales do not correspond to revenues under U.S. GAAP, but are used as a relevant measure of business activity.                                                                   Year ended December 31,                                                          2011            2010            2009                                                                     (in millions) Variable Annuities(1): Beginning total account value                          $ 102,348       $  80,519       $ 60,007 Sales                                                     20,224          21,651         16,117 Surrenders and withdrawals                                (7,049 )        (6,923 )       (5,776 )  Net sales                                                 13,175          14,728         10,341 Benefit payments                                          (1,092 )          (981 )         (988 )  Net flows                                                 12,083          13,747          9,353 Change in market value, interest credited and other activity(2)                                               (2,450 )         9,748         12,220 Policy charges                                            (2,238 )        (1,666 )       (1,061 )  Ending total account value(3)                          $ 109,743       $ 102,348       $ 80,519  Fixed Annuities: Beginning total account value                          $   3,837       $   3,452       $  3,295 Sales                                                         69             103            179 Surrenders and withdrawals                                  (183 )          (215 )         (258 )  Net redemptions                                             (114 )          (112 )          (79 ) Benefit payments                                            (276 )          (267 )         (160 )  Net flows                                                   (390 )          (379 )         (239 ) Interest credited and other activity(2)                      346             766            397 Policy charges                                                (1 )            (2 )           (1 )  Ending total account value                             $   3,792       $   3,837       $  3,452  Total Individual Annuities-Ending total account value                                                  $ 113,535       $ 106,185       $ 83,971     

(1) Variable annuities include only those sold as retail investment products.

Investments sold through defined contribution plan products are included

      with such products within the Retirement segment.   (2)   Includes cumulative reclassifications of $267 million in 2010 and $259       million in 2009 from variable annuity to fixed annuity account values to

conform presentation of certain contracts in annuitization status to current

reporting practices.

(3) As of December 31, 2011, variable annuity account values are invested in

equity portfolios ($50 billion or 46%), bond portfolios ($43 billion or

39%), market value adjusted or fixed-rate accounts ($9 billion or 8%), and

      other ($8 billion or 7%).                                           112 

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  2011 to 2010 Annual Comparison.  Total account values for variable and fixed annuities amounted to $113.5 billion as of December 31, 2011, representing an increase of $7.4 billion from December 31, 2010. The increase was driven by positive variable annuity net flows, partially offset by decreases in the market value of customers' variable annuities due to unfavorable equity markets and higher policy charges driven by the growing account value base. Gross sales of our variable annuities decreased $1.4 billion, driven by the impacts of modifications we implemented in the first quarter of 2011 to scale back benefits and increase pricing, and increased competition as certain of our competitors became more aggressive in product design and pricing. Despite these impacts, we believe that our current product offerings remain competitively positioned and expect our living benefit features will provide us an attractive risk and profitability profile, as all of our currently-sold optional living benefit features include an automatic rebalancing element. Our automatic rebalancing element occurs at the contractholder level, rather than at the fund level, which we believe enhances our risk management capabilities. Individual variable annuity surrenders and withdrawals were relatively flat despite the increase in account values, as the newly acquired business experienced lower lapse rates. See "-Variable Annuity Net Amount at Risk" for a more detailed discussion of our automatic rebalancing element.    2010 to 2009 Annual Comparison.  Total account values for fixed and variable annuities amounted to $106.2 billion as of December 31, 2010, representing an increase of $22.2 billion from December 31, 2009. The increase was driven by positive variable annuity net flows and increases in the market value of customers' variable annuities due to favorable equity markets for 2010. Individual variable annuity gross sales increased $5.5 billion, from $16.1 billion in 2009 to $21.6 billion in 2010. The increase reflects our product strength, customer value proposition, and position as the primary provider of living benefit guarantees based on highest daily customer account value as well as the further expansion of our distribution networks. Additionally, we benefited from some of our competitors implementing product modifications to increase pricing and scale back product features due to market disruptions in late 2008 and the first half of 2009. Individual variable annuity surrenders and withdrawals increased by $1.1 billion, from $5.8 billion in 2009 to $6.9 billion in 2010, reflecting the overall impact of higher account values in 2010 due to market appreciation during that period.    

Variable Annuity Net Amount at Risk

    The net amount at risk is generally defined as the present value of the guaranteed minimum benefit amount in excess of the contractholder's current account balance. Changes in the global financial markets can create volatility in the net amounts at risk embedded in our variable annuity products that include optional living benefit and GMDB features. As part of our risk management strategy, we hedge or limit our exposure to certain of the risks associated with these products, primarily through a combination of product design elements, such as an automatic rebalancing element, and externally purchased hedging instruments. Our hedging program is discussed below in "-Net impact of embedded derivatives related to our living benefit features and related hedge positions." The rate of return we realize from our variable annuity contracts can vary by contract based on our risk management strategy, including the impact of any capital market movements that we may hedge, the impact on that portion of our variable annuity contracts that benefit from the automatic rebalancing element, the impact of risks we have deemed suitable to retain and the impact of risks that are not able to be hedged.    The automatic rebalancing element, also referred to as an asset transfer feature, included in the design of certain optional living benefits, transfers assets between certain variable investments selected by the annuity contractholder and, depending on the benefit feature, the fixed-rate account in the general account or a bond portfolio within the separate accounts. The automatic rebalancing element associated with currently-sold products transfers assets between certain variable investments selected by the annuity contractholder and a designated bond portfolio within the separate accounts. The transfers are based on the static mathematical formula used with the particular benefit which considers a number of factors, including, but not limited to, the impact of investment performance on the contractholder's total account value. In general, negative investment performance may result in transfers to either the fixed-rate account in the general account or a bond portfolio within the separate accounts, and positive investment performance may result in transfers back to contractholder-selected variable investments. Overall, the automatic rebalancing element helps to mitigate our exposure to equity market risk and market volatility. Beginning in 2009, all offerings of optional living benefit features associated with currently-sold variable annuity products include an automatic rebalancing element, and in 2009 we discontinued any new sales of optional living benefit features without an automatic rebalancing element.                                          113

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  The following table sets forth the account values of our variable annuities with living benefit features and the net amount at risk of the living benefit features split between those that include an automatic rebalancing element and those that do not, as of the dates indicated.                                             December 31, 2011                              December 31, 2010                              December 31, 2009                                                           Net Amount                                     Net Amount                                     Net Amount                                  Account Value             at Risk              Account Value             at Risk              Account Value             at Risk                                                                                          ($ in millions) Automatic rebalancing element(1)                     $          70,341         $      4,238         $          57,336         $      1,217         $          34,901         $      1,061 No automatic rebalancing element                                   15,300                2,361                    17,735                1,825                    17,570                2,785  Total variable annuity account values with living benefit features        $          85,641         $      6,599         $          75,071         $      3,042         $          52,471         $      3,846                                                                                             (% of total) Automatic rebalancing element                                       82 %                 64 %                      76 %                 40 %                      67 %                 28 % No automatic rebalancing element                                       18                   36                        24                   60                        33                   72  Total variable annuity account values with living benefit features                      100 %                100 %                     100 %                100 %                     100 %                100 %     

(1) As of December 31, 2011, 2010 and 2009, asset values that have rebalanced to

the general account or a separate account bond portfolio due to the

automatic rebalancing element represent 30% or $20.9 billion of the $70.3

billion total account value, 12% or $6.7 billion of the $57.3 billion total

account value and 23% or $8.2 billion of the $34.9 billion total account

      value, respectively.     The increase in account values that include an automatic rebalancing element as of December 31, 2011 compared to prior periods primarily reflects sales of our latest product offerings which include this feature. The increase in the net amount at risk for these contracts as of December 31, 2011 compared to prior periods reflects overall growth in our variable annuity business and account value performance during 2011.    Our GMDBs guarantee a minimum return on the contract value or an enhanced value, if applicable, to be used solely for purposes of determining benefits payable in the event of death. The net amount at risk associated with the GMDBs provided by our variable annuity contracts includes risk we have deemed suitable to retain. However, certain of these account values are affected by an automatic rebalancing element because the contractholder selected a living benefit feature which includes an automatic rebalancing element. All of the variable annuity account values with living benefit features shown in the table above also contain GMDBs. An additional $21.1 billion, $24.0 billion and $24.4 billion of variable annuity account values, as of December 31, 2011, 2010 and 2009, respectively, contain GMDBs, but no living benefit features. The following table sets forth the account values of our variable annuities with GMDBs and the net amount at risk of these benefits split between those that are affected by an automatic rebalancing element and those that are not, as of the dates indicated.                                            December 31, 2011                             December 31, 2010                              December 31, 2009                                                         Net Amount                                     Net Amount                                     Net Amount                                 Account Value            at Risk              Account Value             at Risk              Account Value             at Risk                                                                                         ($ in millions) Automatic rebalancing element                        $        70,341         $      2,154         $          57,336         $        592         $          34,901         $        800 No automatic rebalancing element                                 36,407                5,628                    41,693                4,867                    41,975                7,798  Total variable annuity account values with death benefit features               $       106,748         $      7,782         $          99,029         $      5,459         $          76,876         $      8,598                                                                                            (% of total) Automatic rebalancing element                                     66 %                 28 %                      58 %                 11 %                      45 %                  9 % No automatic rebalancing element                                     34                   72                        42                   89                        55                   91  Total variable annuity account values with death benefit features                           100 %                100 %                     100 %                100 %                     100 %                100 %      The increase in account values that include an automatic rebalancing element as of December 31, 2011 compared to prior periods primarily reflects sales of our latest product offerings which include this feature. The increase in the net amount at risk for these contracts as of December 31, 2011 compared to 2010 reflects overall growth in our variable annuity business and account value performance during 2011.                                          114 

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Net impact of embedded derivatives related to our living benefit features and related hedge positions

    As mentioned above, in addition to our automatic rebalancing element, we also manage certain risks associated with our variable annuity products through our hedging programs. In our living benefit hedging program, we purchase interest rate swaps, swaptions, floors and caps as well as equity options and futures to hedge certain living benefit features accounted for as embedded derivatives against changes in certain capital market assumptions such as interest rates, equity markets and market volatility. Prior to the third quarter of 2010, our hedging strategy sought to generally match certain capital market sensitivities of the embedded derivative liability as defined by U.S. GAAP, excluding the impact of the market's perception of our own non-performance risk ("NPR"), with capital market derivatives. In the third quarter of 2010, we revised our hedging strategy as, in a low interest rate environment, we do not believe that the U.S. GAAP value of the embedded derivative liability is an appropriate measure for defining the hedge target. Our current hedge target definition is grounded in a U.S. GAAP/capital markets valuation framework but incorporates two modifications to the U.S. GAAP valuation assumptions. We add a credit spread to the U.S. GAAP risk-free rate of return assumption used to estimate future growth of bond investments in the customer separate account funds to account for the fact that the underlying customer separate account funds which support these living benefits are invested in assets that contain risk. We also adjust our volatility assumption to remove certain risk margins embedded in the valuation technique used to determine the fair value of the embedded derivative liability under U.S. GAAP, as we believe the impact on the liability driven by these margins is temporary and does not reflect the economic value of the liability. This hedging strategy results in differences each period between the change in the value of the embedded derivative liability as defined by U.S. GAAP and the change in the value of the hedge positions, potentially increasing volatility in U.S. GAAP earnings.    In addition, we evaluate hedge levels versus our hedge target based on the overall capital considerations of the Company and prevailing capital market conditions, and may decide to temporarily hedge to an amount that differs from our hedge target definition. Based on these considerations, beginning in the latter half of 2010, we decided to temporarily hedge to an amount less than our hedge target definition to be consistent with our long-term economic view. From the inception of this decision through December 31, 2011, we have experienced cumulative increases in the hedge target liability of approximately $1.4 billion related to the under-hedged risk, with no corresponding hedge asset increase. This cumulative impact includes $1.7 billion of losses attributable to 2011, partially offset by $0.3 billion of gains attributable to 2010. Because this decision is based on the overall capital considerations of the Company as a whole, the impact on results from temporarily hedging to an amount that differs from our hedge target definition is reported within Corporate and Other operations, as described in "-Corporate and Other."    As of December 31, 2011, the fair value of the living benefit embedded derivative under U.S. GAAP was a $2.8 billion liability. Excluding the impact of the cumulative adjustment for NPR of $5.5 billion, the value of the living benefit embedded derivative was an $8.3 billion liability. As of December 31, 2011, the value of our hedge target, based on our hedge target definition, was a $7.1 billion liability. The difference between the value of the hedge target and the value of the living benefit embedded derivative under U.S. GAAP, excluding NPR, as of December 31, 2011 is primarily attributable to the impact of the margins and return assumptions as discussed above.    As described above, our hedging strategy uses capital markets instruments to generally match certain capital market sensitivities of the portion of the hedge target liability we choose to hedge. As of December 31, 2011, the fair value of our hedge positions was a net asset position of $5.3 billion. Due to cash flow timing differences between our hedging instruments and the corresponding hedge target, as well as our decision to temporarily hedge to an amount that differs from our hedge target definition and other factors, the amount of hedge assets compared to our hedge target measured as of any specific point in time will be different, and is not expected to be fully offsetting.    

For additional information regarding the Capital Protection Framework we use to evaluate and support the risks of our hedging program, see "-Liquidity and Capital Resources-Liquidity and Capital Resources of Subsidiaries-Domestic Insurance Subsidiaries-Capital."

    The net impact of both the change in the value of the embedded derivative liabilities associated with our living benefit features and the change in fair value of the related derivative hedge positions are included in "Realized investment gains (losses), net, and related adjustments" and the related impact to the amortization of                                          115 

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  DAC and other costs is included in "Related charges," both of which are excluded from adjusted operating income. The following table shows the net impact of changes in the embedded derivative liability and related hedge positions, as well as the related amortization of DAC and other costs, for the years ended December 31, 2011, 2010 and 2009 for the Individual Annuities segment.                                                                    Year Ended December 31,                                                            2011          2010           2009                                                                           (1)                                                                      (in millions) Change in fair value of hedge positions                  $  3,873       $  

(224 ) $ (2,715 ) Change in value of hedge target liability, excluding unhedged portions and assumption updates(2)

                (5,170 )         

364 3,049

Net hedging impact, excluding unhedged portions and assumption updates

                                         (1,297 )         140            334 

Change in portions of embedded derivative liability, before NPR, excluded from hedge target definition(3) (457 ) 387

              0 Impact of assumption updates on hedge target liability                                                     (17 )        (902 )         (110 ) Change in the NPR adjustment(4)                             4,786           412            312  Net benefit from changes in embedded derivative liability and hedge positions reported in the Individual Annuities segment                                3,015            37            536  Related charge to amortization of DAC and other costs(5)                                                   (1,736 )         

(4 ) (410 )

Net benefit from changes in embedded derivative liability and hedge positions, after the impact of NPR, DAC and other costs, reported in the Individual Annuities segment

$  1,279       $   

33 $ 126

Change in value of unhedged portion of hedge target liability-reported in Corporate & Other operations(6) $ (1,662 ) $ 306 $ 0

      (1)   Positive amount represents income; negative amount represents a loss.   

(2) Beginning with the third quarter of 2010, represents the change in value

based on our hedge target definition as described above, excluding the

impacts of temporarily hedging to an amount that differs from our hedge

target definition and assumption updates. Prior to the third quarter of

2010, our hedging strategy sought to generally match the sensitivities of

      the embedded derivative liability as defined by U.S. GAAP, excluding the       impact of NPR.  

(3) Represents the impact attributable to the difference between the value of

the hedge target liability, based on our hedge target definition, and the

value of the embedded derivative liability as defined by U.S. GAAP, before

      adjusting for NPR.   (4)   To reflect NPR, we incorporate an additional spread over LIBOR into the

discount rate used in the valuation of those individual living benefit

contracts in a liability position and not to those in a contra-liability

position. As of December 31, 2011, the value of the embedded derivatives,

before the adjustment for NPR, was a net liability of $8.3 billion. This net

liability was comprised of $8.5 billion of individual living benefit

contracts in a liability position, net of $0.2 billion of individual living

      benefit contracts in a contra-liability position.   (5)   Related charge to amortization of DAC and other costs is excluded from

adjusted operating income and included in operating results in "Related

charges."

(6) Represents the impact of temporarily hedging to an amount that differs from

our hedge target definition. This amount is not reported in the Individual

      Annuities segment. See "-Corporate and Other" for details.    

As shown in the table above, the net impacts from changes in the embedded derivative liability and hedge positions, after the impact of DAC and other costs, reported in the Individual Annuities segment were net benefits of $1,279 million, $33 million and $126 million for 2011, 2010 and 2009, respectively.

    The net benefit of $1,279 million in 2011 included a net charge of $1,297 million resulting from the net impact of hedging, excluding the unhedged portions and assumption updates, driven by significant capital markets volatility in the second half of 2011. Also included in the net benefit of $1,279 million was a net charge of $457 million attributable to the difference between the valuation of the embedded derivative liability as defined by U.S. GAAP and the valuation of the hedge target liability, which we choose not to hedge. These charges were offset by a $4,786 million adjustment to the embedded derivative liability to reflect NPR, primarily from a higher base of embedded derivative liabilities, driven by significant declines in risk-free interest rates and the impact of account value performance, as well as an overall widening of the credit spreads used in valuing NPR, which reflect the financial strength ratings of our insurance subsidiaries. Partially offsetting these items was a net charge of $1,736 million from the inclusion of these items in current period gross profits used in calculating the amortization of DAC. In the third and fourth quarters of 2011, we also determined that the cumulative difference between the change in the value of the hedge target liability, excluding the unhedged portions and assumption updates, and the change in the fair value of the hedge assets was other-than-temporary.                                          116

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As a result, we included the cumulative differences in our best estimate of total gross profits, which resulted in an increase in our DAC amortization rates. For a further discussion of the assumptions used in estimating total gross profits used as the basis for amortizing DAC and other costs, see "-Accounting Policies and Pronouncements-Application of Critical Accounting Estimates."

    The net benefit of $33 million in 2010 included a net benefit of $140 million resulting from the net impact of hedging, excluding the unhedged portions and assumption updates, driven by differences in the actual performance of the underlying separate accounts funds relative to the performance of the market indices we utilized as a basis for developing our hedging strategy. Also included in the net benefit of $33 million was a net benefit of $387 million attributable to the difference between the valuation of the embedded derivative liability as defined by U.S. GAAP and the valuation of the hedge target liability, which we choose not to hedge, and a net charge of $902 million related to reductions in the expected lapse rate assumption based on actual experience. These items were partially offset by a $412 million adjustment to the embedded derivative liability to reflect NPR, primarily resulting from an increase in the value of embedded derivatives in a liability position, reflecting an increase in the present value of future expected benefit payments driven by lower interest rates and a reduction in the expected lapse rate assumption. Partially offsetting these items was a net charge of $4 million from the inclusion of these items in current period gross profits used in calculating the amortization of DAC.    The net benefit of $126 million in 2009 included a net benefit of $334 million resulting from the net impact of hedging, excluding assumption updates, driven by differences in the actual performance of the underlying separate accounts funds relative to the performance of the market indices we utilized as a basis for developing our hedging strategy. Also included in the net benefit of $126 million was a net charge of $110 million from updates to the expected lapse rate and equity volatility assumptions based on actual experience. These items were partially offset by a $312 million adjustment to the embedded derivative liability to reflect NPR, reflecting the initial incorporation of an additional spread over LIBOR to reflect NPR in the valuation of the embedded derivative liability in 2009. Partially offsetting these items was a net charge of $410 million from the inclusion of these items in current period gross profits used in calculating the amortization of DAC.    For additional information regarding the methodologies used in determining the fair value of the embedded derivative liability associated with our living benefit features as defined by U.S. GAAP, and for calculating the impact of NPR, see Note 20 to the Consolidated Financial Statements and "-Valuation of Assets and Liabilities-Fair Value of Assets and Liabilities-Variable Annuity Optional Living Benefit Features."    Capital hedge program    In the second quarter of 2009, we began the expansion of our hedging program to include a portion of the market exposure related to the overall capital position of our variable annuity business, including the impact of certain statutory reserve exposures. These capital hedges, which primarily consisted of equity-based total return swaps, were designed to partially offset changes in our capital position resulting from market driven changes in certain living and death benefit features of our variable annuity products. During the second quarter of 2010, we removed the equity component of our capital hedge within the Individual Annuities segment by terminating the equity-based total return swaps, as part of a new program to more broadly address the equity market exposure of the statutory capital of the Company as a whole, under stress scenarios. Since the new program incorporates capital implications across a number of businesses, the results of that program are reported within Corporate and Other operations. Consequently, see "-Corporate and Other" for a discussion of the results of the current program. See "-Liquidity and Capital Resources-Liquidity and Capital Resources of Subsidiaries-Domestic Insurance Subsidiaries" for a further discussion of the capital hedge program. The results of the Individual Annuities segment included $21 million and $180 million for 2010 and 2009, respectively, of mark-to-market losses on these capital hedges prior to their termination, driven by favorable market conditions which resulted in an increase in our capital position. The results of these hedges are included in "Realized investment gains (losses), net and related adjustments" and have been excluded from adjusted operating income. We continue to assess the composition of the hedging program on an ongoing basis.                                          117

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  Table of Contents  Retirement    Operating Results    The following table sets forth the Retirement segment's operating results for the periods indicated.                                                                     Year ended December 31,                                                              2011         2010         2009                                                                       (in millions) Operating results: Revenues                                                    $ 4,871      $ 5,183      $ 4,659 Benefits and expenses                                         4,273        4,611        4,165  Adjusted operating income                                       598        

572 494 Realized investment gains (losses), net, and related adjustments(1)

                                                  269          262         (825 ) Related charges(2)                                              (11 )       

(17 ) 5 Investment gains (losses) on trading account assets supporting insurance liabilities, net(3)

                        383         

468 1,533 Change in experience-rated contract holder liabilities due to asset value changes(4)

                                  (283 )       

(598 ) (831 )

Income from continuing operations before income taxes and equity in earnings of operating joint ventures

              $   956      $   687      $   376      (1)   Revenues exclude Realized investment gains (losses), net, and related

adjustments. See "-Realized Investment Gains and Losses and General Account

Investments-Realized Investment Gains and Losses" and "-Experience-Rated

Contractholder Liabilities, Trading Account Assets Supporting Insurance

      Liabilities and Other Related Investments."   (2)   Benefits and expenses exclude related charges which represent the       unfavorable (favorable) impact of Realized investment gains (losses), net,

on changes in reserves and the amortization of deferred policy acquisition

costs.

(3) Revenues exclude net investment gains and losses on trading account assets

supporting insurance liabilities. See "-Experience-Rated Contractholder

      Liabilities, Trading Account Assets Supporting Insurance Liabilities and       Other Related Investments."  

(4) Benefits and expenses exclude changes in contractholder liabilities due to

      asset value changes in the pool of investments supporting these       experience-rated contracts. See "-Experience-Rated Contractholder       Liabilities, Trading Account Assets Supporting Insurance Liabilities and       Other Related Investments."     Adjusted Operating Income    2011 to 2010 Annual Comparison.  Adjusted operating income increased $26 million, from $572 million in 2010 to $598 million in 2011. The increase primarily reflects higher asset-based fee income, partially offset by lower net investment spread results and higher general and administrative expenses, net of capitalization. Also offsetting the increase in adjusted operating income is an unfavorable impact from annual reviews performed in the third quarter of the assumptions used in our estimate of total gross profits which forms the basis for amortizing deferred policy acquisition costs and value of business acquired, as well as the impact of our quarterly adjustments to total gross profits for current period experience.   

Higher asset-based fee income was driven by an increase in fee-based investment-only stable value account values in our institutional investment products business driven by net additions, and higher average full service fee-based retirement account values primarily driven by market appreciation. For further discussion of our sales and account values, see "-Sales Results and Account Values."

    Lower net investment spread results were driven by lower reinvestment rates, and the unfavorable impact of changes in the market values of alternative investments and equity investments in certain separate accounts. Partially offsetting these declines were the impact of lower crediting rates driven by rate resets in the first quarter of 2011 and higher general account stable value account values in our full service business. The impact of higher structured settlement product balances in our institutional investment products business was essentially offset by lower balances from guaranteed investment product scheduled withdrawals.    Higher general and administrative expenses, net of capitalization, were driven by costs related to legal matters and strategic initiatives. These increases in expenses were partially offset by a decline in charges related to certain cost reduction initiatives.    Results for both 2011 and 2010 include the impact of annual reviews performed in the third quarter of the assumptions used in our estimate of total gross profits which forms the basis for amortizing deferred policy                                          118

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  acquisition costs and value of business acquired, as well as the impact of our quarterly adjustments to total gross profits for current period experience. Adjusted operating income for 2011 and 2010 included charges of $24 million and $18 million, respectively, from the annual reviews. The quarterly adjustments for current period experience had no net impact on 2011 earnings and resulted in an $11 million benefit in 2010, reflecting the cumulative impact on amortization of differences between actual gross profits and previously estimated expected gross profits. Together, these items resulted in a net charge of $24 million in 2011 and a net charge of $7 million in 2010. The net charge of $24 million in 2011 was driven by changes to expense and net cash flow assumptions which decreased expected future gross profits, while the net charge of $7 million in 2010 was driven by changes in lapse rate and fee-based profit margin assumptions which also decreased expected future gross profits.    2010 to 2009 Annual Comparison.  Adjusted operating income increased $78 million, from $494 million in 2009 to $572 million in 2010, primarily reflecting higher asset-based fee income and improved net investment spread results partially offset by an increase in general and administrative expenses, net of capitalization, and a less favorable benefit from reserve refinements.    

Higher asset-based fees were driven by an increase in average full service fee-based retirement account values due to market appreciation and net additions, and higher fee-based investment-only stable value account values in our institutional investment products business driven by net additions.

    Improved net investment spread results were driven by lower crediting rates on general account liabilities in our full service business and increased income from alternative investments. Lower crediting rates on general account liabilities in our full service business resulted from rate resets in the third quarter of 2009 and first quarter of 2010. Also contributing to the increase in net investment spread results were increased net settlements on floating-rate to fixed-rate interest rate swaps used to manage the duration of the investment portfolio. The increase in net swap settlements resulted from the generally favorable impact of lower interest rates on the swaps used to manage the duration of the investment portfolio primarily for our institutional investment products business. Partially offsetting the improvement in net investment spread results was the negative impact of a lower base of invested assets in our general account reflecting scheduled withdrawals from guaranteed investment products in our institutional investment products business partially offset by the positive impact of net additions in our structured settlement product and increases in balances in our full service general account stable value products.    Partially offsetting these increases in adjusted operating income was an increase in general and administrative expenses, net of capitalization, driven by expenses incurred in 2010 related to certain cost reduction initiatives. Also partially offsetting these increases in adjusted operating income was a less favorable benefit from reserve refinements, primarily due to a benefit in 2009 related to updates of client census data on our group annuity blocks of business.    Results for both 2010 and 2009 also include the impact of annual reviews of the assumptions used in our estimate of total gross profits used as a basis for amortizing deferred policy acquisition costs and value of business acquired, as well as the impact of our quarterly adjustments to total gross profits for current period experience. Adjusted operating income for 2010 and 2009 included charges of $18 million and $3 million, respectively, from the annual reviews. The quarterly adjustments for current period experience resulted in an $11 million benefit in 2010 compared to a $5 million charge in 2009, reflecting the cumulative impact on amortization of differences between actual gross profits for the period and the previously estimated expected gross profits for the period. Together, these items resulted in net charges included in adjusted operating income of $7 million for 2010 and $8 million in 2009. The net charge of $7 million in 2010 was driven by changes in lapse rate and fee-based profit margin assumptions which both decreased expected future gross profits.    Revenues    2011 to 2010 Annual Comparison.  Revenues, as shown in the table above under "-Operating Results," decreased $312 million, from $5,183 million in 2010 to $4,871 million in 2011. Premiums decreased $286 million, driven by lower life-contingent structured settlement and single premium annuity sales, partially offset by higher sales of non-participating group annuity separate accounts. The decrease in premiums resulted in a corresponding decrease in policyholders' benefits, including the change in policy reserves, as discussed below. Net investment income decreased $60 million primarily reflecting lower portfolio yields and the unfavorable                                          119

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  impact of changes in the market values of equity method alternative investments and equity investments in certain separate accounts. Policy charges and fee income and asset management fees and other income increased $34 million, primarily driven by an increase in asset-based fees due to an increase in fee-based investment-only stable value account values in our institutional investment products business, and an increase in average full service fee-based retirement account values. These increases were partially offset by the unfavorable impact of changes in the market values of certain alternative investments accounted for under the fair value option.    2010 to 2009 Annual Comparison.  Revenues increased $524 million, from $4,659 million in 2009 to $5,183 million in 2010. Premiums increased $464 million, driven by higher life-contingent structured settlement and single premium annuity sales which resulted in a corresponding increase in policyholders' benefits, including the change in policy reserves, as discussed below. Policy charges and fee income and asset management fees and other income increased $131 million, primarily driven by an increase in asset-based fees due to an increase in average full service fee-based retirement account values and an increase in fee-based investment-only stable value account values in our institutional investment products business, as well as increased income from net settlements on interest rate swaps, as discussed above.    Partially offsetting these increases was a $71 million decrease in net investment income, primarily reflecting a smaller base of invested assets resulting from scheduled withdrawals of our general account guaranteed investment products in our institutional investment products business, and lower portfolio yields, including lower interest rates on floating rate investments due to rate resets. Partially offsetting these declines were increases in net investment income from an increase in income on equity method alternative investments as discussed above.    Benefits and Expenses    2011 to 2010 Annual Comparison.  Benefits and expenses, as shown in the table above under "-Operating Results," decreased $338 million, from $4,611 million in 2010 to $4,273 million in 2011. Absent the impact of the annual reviews and other adjustments to the amortization of deferred policy acquisition costs and value of business acquired discussed above, which account for a $17 million increase, benefits and expenses decreased $355 million. Policyholders' benefits, including the change in policy reserves, decreased $254 million, primarily reflecting a decrease in change in policy reserves associated with the decrease in premiums as discussed above. Interest credited to policyholders' account balances decreased $119 million including a refinement to the methodology applied in calculating reserves for certain structured settlement contracts, with an equally offsetting impact to amortization of deferred policy acquisition costs. Also contributing to the decrease were lower crediting rates on full service general account stable value account values due to rate resets and the impact of scheduled withdrawals on account values of our general account guaranteed investment products in our institutional investment products business, partially offset by the impact of higher account values from our full service general account stable value products and our structured settlement products. The amortization of deferred policy acquisition costs increased $24 million primarily driven by a refinement to the methodology applied in calculating the amortization of deferred policy acquisition costs for certain structured settlement contracts, as mentioned above. Also, general and administrative expenses, net of capitalization, decreased $3 million, driven by lower commission expenses due to a decline in life contingent structured settlement sales and lower charges related to certain cost reduction initiatives, partially offset by higher costs related to legal matters and strategic initiatives. In addition, interest expense decreased $3 million, reflecting lower interest rates.    2010 to 2009 Annual Comparison.  Benefits and expenses increased $446 million, from $4,165 million in 2009 to $4,611 million in 2010. Policyholders' benefits, including the change in policy reserves, increased $468 million, primarily reflecting an increase in change in policy reserves associated with the increase in premiums and a less favorable benefit from reserve refinements, as discussed above. Also, general and administrative expenses, net of capitalization, increased $67 million primarily driven by higher commission expenses, net of capitalization, higher asset management costs due to an increase in average full service fee-based retirement account values, and expenses incurred in 2010 related to certain cost reduction initiatives. These increases were partially offset by a decrease in interest credited to policyholders' account balances of $73 million, primarily reflecting a smaller base of account values resulting from scheduled withdrawals of our general account guaranteed investment products in our institutional investment products business, lower crediting rates on floating rate guaranteed investment products, and lower crediting rates on full service stable value account values due to rate resets. In addition, interest expense decreased $12 million reflecting lower interest rates and lower borrowings used to support investments.                                          120

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Sales Results and Account Values

    The following table shows the changes in the account values and net additions (withdrawals) of Retirement segment products for the periods indicated. Net additions (withdrawals) are deposits and sales or additions, as applicable, minus withdrawals and benefits. These concepts do not correspond to revenues under U.S. GAAP, but are used as a relevant measure of business activity.                                                                   Year ended December 31,                                                         2011            2010            2009                                                                     (in millions) Full Service(1): Beginning total account value                         $ 141,313       $ 126,345       $  99,738 Deposits and sales                                       16,821          19,266          23,188 Withdrawals and benefits                                (19,160 )       (16,804 )       (14,438 ) Change in market value, interest credited, interest income and other activity(2)                       456          12,506          17,857  Ending total account value                            $ 139,430       $ 141,313       $ 126,345  Net additions (withdrawals)                           $  (2,339 )     $   2,462       $   8,750  Institutional Investment Products(3): Beginning total account value                         $  64,183       $  51,908       $  50,491 Additions(4)                                             27,773          15,298           7,786 Withdrawals and benefits(5)                              (6,150 )        (6,958 )        (7,817 ) Change in market value, interest credited and interest income                                           4,581           3,370           2,287 Other(6)                                                   (298 )           565            (839 )  Ending total account value(7)                         $  90,089       $  

64,183 $ 51,908

  Net additions (withdrawals)(7)                        $  21,623       $   8,340       $     (31 )     

(1) Ending total account value for the full service business includes assets of

Prudential's retirement plan of $5.8 billion, $5.8 billion and $5.4 billion</p>

as of December 31, 2011, 2010 and 2009, respectively.

(2) Other activity includes $469 million in 2011 representing the addition of

Prudential's non-qualified pension plan transferred from a third party

      administrator.   (3)   Ending total account value for the institutional investment products

business includes assets of Prudential's retirement plan of $5.8 billion,

$5.4 billion and $5.2 billion as of December 31, 2011, 2010 and 2009,

respectively. Ending total account value for the institutional investment

products business also includes $1.5 billion as of December 31, 2011, 2010

and 2009 related to collateralized funding agreements issued to the Federal

Home Loan Bank of New York (FHLBNY), and $0.5 billion, $1.0 billion and $1.8

      billion as of December 31, 2011, 2010 and 2009, respectively, related to       affiliated funding agreements issued using the proceeds from the sale of

Prudential Financial retail medium-term notes. For additional information

      regarding the FHLBNY and the retail medium-term notes program see,       "-Liquidity and Capital Resources."   (4)   Additions include $500 million in 2009 representing transfers of

externally-managed client balances to accounts we manage. These additions

are offset within Other, as there is no net impact on ending account values

for these transfers.

(5) Withdrawals and benefits include $(78) million, $(752) million and $(488)

million for 2011, 2010 and 2009, respectively, representing transfers of

client balances from accounts we manage to externally-managed accounts.

      These withdrawals are offset within Other, as there is no net impact on       ending account values for these transfers.  

(6) Other includes transfers from (to) the Asset Management segment of $(415)

million, $(164) million and $(11) million for 2011, 2010 and 2009,

respectively. Other also includes $78 million, $752 million and $(12)

million for 2011, 2010 and 2009, respectively, representing net transfers of

externally-managed client balances from/(to) accounts we manage. These

transfers are offset within Additions or Withdrawals and benefits, as there

is no net impact on ending account values for this transfer. Remaining

amounts for all periods presented primarily represent changes in asset

      balances for externally-managed accounts.   (7)   Ending total account value for the institutional investment products

business includes investment-only stable value account values of $41.3

billion, $17.7 billion and $4.8 billion as of December 31, 2011, 2010 and

2009, respectively. Net additions (withdrawals) for the institutional

investment products business include investment-only stable value account

value additions of $23.9 billion, $12.6 billion and $4.8 billion for 2011,

      2010 and 2009, respectively.     2011 to 2010 Annual Comparison.  Account values in our full service business amounted to $139.4 billion as of December 31, 2011 representing a decrease of $1.9 billion from December 31, 2010. The decrease was primarily driven by net withdrawals over the last twelve months. Net additions (withdrawals) decreased $4.8 billion, from net additions of $2.5 billion in 2010 to net withdrawals of $2.3 billion in 2011, primarily reflecting lower new plan sales and higher plan lapses. New plan sales in 2011 included five client sales over $100 million totaling $922 million compared to twelve client sales over $100 million in 2010 totaling $3.3 billion. The increase in plan lapses was primarily driven by higher account values and a higher volume of large plan lapses in 2011.                                          121

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  Account values in our institutional investment products business amounted to $90.1 billion as of December 31, 2011, representing an increase of $25.9 billion from December 31, 2010. The increase was driven by additions of our fee-based investment-only stable value and structured settlements products, as well as sales of our longevity reinsurance product, which we introduced in 2011. To a lesser extent, the increase in account values was also driven by increases in the market value of customer funds primarily from declines in fixed income yields, partially offset by decreases in account values from declines in general account guaranteed investment product account values due to scheduled withdrawals and benefit payments. Net additions increased $13.3 billion, from $8.3 billion in 2010 to $21.6 billion in 2011 primarily reflecting higher sales of our fee-based investment-only stable value and longevity reinsurance products, and lower general account guaranteed investment product scheduled withdrawals.    2010 to 2009 Annual Comparison.  Account values in our full service business amounted to $141.3 billion as of December 31, 2010, an increase of $15.0 billion from December 31, 2009 primarily driven by an increase in the market value of customer funds due to favorable equity markets and, to a lesser extent, net additions in 2010. Net additions decreased $6.3 billion, from $8.8 billion in 2009 to $2.5 billion in 2010, primarily reflecting lower new plan sales, as 2009 included significant large plan sales, and, to a lesser extent, higher plan lapses. New plan sales in 2010 included twelve client sales over $100 million totaling $3.3 billion compared to twelve client sales over $100 million in 2009, which totaled $7.5 billion.    Account values in our institutional investment products business amounted to $64.2 billion as of December 31, 2010, an increase of $12.3 billion from December 31, 2009. The increase in account values was primarily driven by additions of fee-based investment-only stable value products and increases in the market value of customer funds, primarily from a decline in fixed income market yields and interest credited on general account liabilities. These increases were partially offset by declines in general account guaranteed investment product account values due to scheduled withdrawals. Net additions (withdrawals) increased $8.4 billion, from net withdrawals of $31 million in 2009 to net additions of $8.3 billion in 2010 primarily reflecting higher sales of fee-based investment-only stable value products and lower general account guaranteed investment product scheduled withdrawals.    Asset Management    Operating Results    The following table sets forth the Asset Management segment's operating results for the periods indicated.                                                                    Year ended December 31,                                                              2011         2010        2009                                                                      (in millions) Operating results: Revenues                                                    $ 2,311      $ 1,888     $ 1,257 Expenses                                                      1,652        1,401       1,202  Adjusted operating income                                       659        

487 55 Realized investment gains (losses), net, and related adjustments(1)

                                                   (1 )       

13 (32 ) Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(2)

             98         

29 (14 )

Income from continuing operations before income taxes and equity in earnings of operating joint ventures

              $   756      $   529     $     9      (1)   Revenues exclude Realized investment gains (losses), net, and related

adjustments. See "-Realized Investment Gains and Losses and General Account

Investments-Realized Investment Gains and Losses."

(2) Equity in earnings of operating joint ventures are included in adjusted

operating income but excluded from income from continuing operations before

income taxes and equity in earnings of operating joint ventures as they are

reflected on a U.S. GAAP basis on an after-tax basis as a separate line in

our Consolidated Statements of Operations. Earnings attributable to

noncontrolling interests are excluded from adjusted operating income but

included in income from continuing operations before income taxes and equity

in earnings of operating joint ventures as they are reflected on a U.S. GAAP

basis as a separate line in our Consolidated Statements of Operations.

Earnings attributable to noncontrolling interests represent the portion of

       earnings from consolidated entities that relate to the equity interests of       minority investors.                                           122 

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  Table of Contents  Adjusted Operating Income    2011 to 2010 Annual Comparison.  Adjusted operating income increased $172 million, from $487 million in 2010 to $659 million in 2011. Results in 2011 reflect an increase in asset management fees, before associated expenses, of $194 million primarily from retail and institutional customer assets as a result of higher asset values due to positive net asset flows primarily into fixed income accounts as well as market appreciation. In addition, results from the segment's commercial mortgage activities increased $77 million primarily driven by lower net credit and valuation-related charges on interim loans of $64 million resulting primarily from loan payoffs in 2011 and $20 million of higher gains on sales of foreclosed commercial real estate assets in 2011. Also contributing to the increase in adjusted operating income was an increase in results of the segment's strategic investing activities of $68 million primarily due to a $64 million gain resulting from the partial sale of a real estate seed investment in 2011.   

These increases were partially offset by increased operating expenses, primarily related to compensation as well as other costs supporting the business.

    2010 to 2009 Annual Comparison.  Adjusted operating income increased $432 million, from $55 million in 2009 to $487 million in 2010 primarily reflecting more favorable results from commercial mortgage activities and more favorable investment results from strategic investing activities, as well as increased asset management fees. Asset management fees increased $224 million, before associated expenses, primarily from retail and institutional customer assets as a result of higher asset values due to market appreciation and positive net asset flows. Results from the segment's commercial mortgage activities increased primarily driven by lower net credit and valuation-related charges on interim loans of $190 million.    Results from strategic investing activities increased $103 million, from a loss of $70 million in 2009 to income of $33 million in 2010, primarily due to improved results in real estate and fixed income investments. Real estate strategic investing results in 2009 reflect losses of $70 million, compared to income of $16 million in 2010, primarily reflecting the impact of declines in real estate values on co-investments and seed investments in the prior year. Results in 2009 also reflect losses of $11 million in a fixed income fund compared to zero in 2010. The Asset Management segment redeemed its entire investment in the fixed income fund as of June 30, 2009. In addition, strategic investing fixed income investment results in 2009 included impairments of $10 million on collateralized debt obligations, which as of December 31, 2010, have an amortized cost of zero.   

Results in 2010 also reflect an increase in performance-based incentive fees primarily related to institutional real estate funds. These increases were partially offset by an increase in compensation expenses and lower income related to securities lending activities.

   Revenues   

The following tables set forth the Asset Management segment's revenues, presented on a basis consistent with the table above under "-Operating Results," by type and asset management fees by source for the periods indicated.

                                                                    Year ended December 31,                                                               2011       2010(4)      2009(4)                                                                       (in millions) Revenues by type: Asset management fees by source: Institutional customers                                     $    714     $    626     $    511 Retail customers(1)                                              426          353          268 General account                                                  327          294          270  Total asset management fees                                    1,467        1,273        1,049  Incentive fees                                                    50           71           49 Transaction fees                                                  35           23           27 Strategic investing                                              118           49          (41 ) Commercial mortgage(2)                                           136           67         (114 ) 

Total incentive, transaction, strategic investing and commercial mortgage revenues

                                     339        

210 (79 )

  Service, distribution and other revenues(3)                      505          405          287  Total revenues                                              $  2,311     $  1,888     $  1,257                                            123 

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   (1)   Consists of fees from: (a) individual mutual funds and both variable       annuities and variable life insurance asset management revenues from our

separate accounts; (b) funds invested in proprietary mutual funds through

our defined contribution plan products; and (c) third-party sub-advisory

relationships. Revenues from fixed annuities and the fixed-rate accounts of

      both variable annuities and variable life insurance are included in the       general account.  

(2) Includes mortgage origination and spread lending revenues of our commercial

mortgage origination and servicing business.

(3) Includes payments from Wells Fargo under an agreement dated as of July 30,

2004 implementing arrangements with respect to money market mutual funds in

connection with the combination of our retail securities brokerage and

clearing operations with those of Wells Fargo. The agreement extends for ten

years after termination of the Wachovia Securities joint venture, which

occurred on December 31, 2009. The revenue from Wells Fargo under this

agreement was $74 million in 2011, $66 million in 2010 and $61 million in

2009.

(4) Reflects reclassifications to conform to current year presentation.

     2011 to 2010 Annual Comparison.  Revenues, as shown in the table above under "-Operating Results," increased $423 million, from $1,888 million in 2010 to $2,311 million in 2011. Asset management fees increased $194 million primarily from institutional and retail customer assets as a result of higher asset values from positive net asset flows and market appreciation. Service, distribution and other revenues increased $100 million from higher mutual fund service fees, a portion of which are offset with a corresponding increase in expenses. Service, distribution and other revenues also includes higher revenues from certain consolidated funds, which were fully offset by higher expenses related to noncontrolling interest in these funds. Commercial mortgage revenues increased $69 million primarily reflecting lower net credit and valuation-related charges on interim loans and higher gains on sales of foreclosed real estate assets, as discussed above. Strategic investing revenues increased $69 million resulting from a $64 million gain on a partial sale of a real estate seed investment in 2011.    Partially offsetting these increases was a decrease in performance-based incentive fees of $21 million primarily driven by lower net asset values of institutional real estate funds reflecting the impact of foreign currency fluctuations on these funds in the prior year, a portion of which has been hedged since late 2010, as well as a decline in real estate values in 2011. A portion of these incentive-based fees are offset in incentive compensation expense in accordance with the terms of the contractual agreements. Certain of our incentive fees continue to be subject to positive or negative future adjustment based on cumulative fund performance in relation to specified benchmarks. As of December 31, 2011, $92 million of cumulative incentive fee revenue, net of compensation, is subject to future adjustment, compared to $146 million as of December 31, 2010. Future incentive, transaction, strategic investing and commercial mortgage revenues will be impacted by the level and diversification of our strategic investments, the commercial real estate market conditions, and other domestic and international market conditions.    2010 to 2009 Annual Comparison.  Revenues increased $631 million, from $1,257 million in 2009 to $1,888 million in 2010. Asset management fees increased $224 million primarily from institutional and retail customer assets as a result of higher asset values from market appreciation and positive net asset flows. Commercial mortgage revenues increased $181 million primarily reflecting lower net credit and valuation-related charges on interim loans, as discussed above. Service, distribution and other revenues increased $118 million primarily from higher mutual fund service fees and assets under management, with a corresponding increase in expense. Also contributing to the increase were higher revenues in certain consolidated real estate funds, which were fully offset by higher expenses related to noncontrolling interests in these funds. Strategic investing revenues increased $90 million reflecting improved results in real estate and fixed income investments, as discussed above. In addition, incentive fees increased $22 million primarily related to institutional real estate funds. A portion of these incentive-based fees are offset in incentive compensation expense in accordance with the terms of the contractual agreements. Certain of our incentive fees continue to be subject to positive or negative future adjustment based on cumulative fund performance in relation to specified benchmarks. As of December 31, 2010, $146 million of cumulative incentive fee revenue, net of compensation, is subject to future adjustment, compared to $150 million as of December 31, 2009.    Expenses    2011 to 2010 Annual Comparison.  Expenses, as shown in the table above under "-Operating Results," increased $251 million, from $1,401 million in 2010 to $1,652 million in 2011 primarily driven by increased compensation costs, from increased revenues, as discussed above, and increased headcount, as well as increases in other costs supporting the business. In addition, expenses related to revenues associated with certain consolidated funds and mutual funds services increased, as discussed above.                                          124

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  2010 to 2009 Annual Comparison.  Expenses increased $199 million, from $1,202 million in 2009 to $1,401 million in 2010 primarily driven by increased compensation costs due to higher incentive compensation, from increased revenues, as discussed above. In addition, expenses related to revenues associated with certain consolidated real estate funds and mutual funds services increased, as discussed above.    Assets Under Management    The following tables set forth assets under management by asset class and source as of the dates indicated and net additions, excluding money market activity, by source for the periods indicated. In managing our business, we analyze assets under management, which do not correspond to U.S. GAAP assets, because the principal source of revenues are fees based on assets under management.                                                                   December 31,                                                        2011        2010        2009                                                                (in billions)

    Assets Under Management (at fair market value):     Institutional customers:     Equity                                            $  44.2     $  51.3     $  47.9     Fixed income                                        197.2       160.4       120.3     Real estate                                          27.7        23.6        20.2      Institutional customers(1)(2)                       269.1       235.3       188.4      Retail customers:     Equity                                               70.8        72.7        58.2     Fixed income                                         45.7        27.0        24.6     Real estate                                           1.4         1.5         1.6      Retail customers(3)                                 117.9       101.2        84.4      General account:     Equity                                                4.2         4.1         3.7     Fixed income                                        226.6       195.8       179.3     Real estate                                           1.3         0.9         1.0      General account                                     232.1       200.8       184.0      Total assets under management                     $ 619.1     $ 537.3     $ 456.8                                                                       Year ended December 31,                                                              2011          2010          2009                                                                       (in 

billions)

 Net additions, excluding money market activity: Third party: Institutional customers(4)                                 $   16.7       $  28.6       $  13.0 Retail customers                                                3.5           6.4           6.1 Affiliated: Institutional customers                                        (2.8 )        (1.5 )        (0.6 ) Retail customers                                               14.4           1.9          (1.4 ) General account                                                14.3           0.5          (5.1 ) 

Total net additions, excluding money market activity $ 46.1 $

 35.9       $  12.0

(1) Consists of third party institutional assets and group insurance contracts.

(2) As of December 31, 2011, 2010, and 2009, includes $29.7 billion, $17.7

billion, and $4.0 billion, respectively, of assets under management related

      to investment-only stable value products.   (3)   Consists of: (a) individual mutual funds and both variable annuities and

variable life insurance assets in our separate accounts; (b) funds invested

in proprietary mutual funds through our defined contribution plan products;

and (c) third-party sub-advisory relationships. Fixed annuities and the

fixed-rate accounts of both variable annuities and variable life insurance

are included in the general account.

(4) As of December 31, 2011, 2010, and 2009, includes $10.0 billion, $10.2

      billion, and $0.7 billion, respectively, of net additions related to       investment-only stable value products.                                           125 

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  2011 to 2010 Annual Comparison.  Assets under management were $619.1 billion at December 31, 2011, an increase of $81.8 billion from December 31, 2010. Institutional assets under management increased $33.8 billion from 2010 to 2011 driven by market appreciation of $19.7 billion, as well as net additions of $16.7 billion from third party clients, primarily from positive flows into fixed income accounts, including $10.0 billion of net additions associated with investment-only stable value products. Retail assets under management increased $16.7 billion from 2010 to 2011 primarily from a net increase in affiliated assets under management of $14.1 billion, primarily from variable annuity assets rebalancing into a fixed income fund, as well as net additions of $3.5 billion from third party clients. General account assets increased $31.3 billion primarily driven by $15.2 billion in net additions from the acquisition of the Star and Edison Businesses and fixed income market appreciation of $17.2 billion.    2010 to 2009 Annual Comparison.  Assets under management were $537.3 billion at December 31, 2010, an increase of $80.5 billion from December 31, 2009. Institutional assets under management increased $46.9 billion from 2009 to 2010 driven by market appreciation of $20.6 billion, as well as net additions of $28.6 billion from third party clients, primarily from positive flows into fixed income accounts, including $10.2 billion of net additions associated with investment-only stable value products. Retail assets under management increased $16.8 billion from 2009 to 2010 driven primarily by market appreciation of $10.9 billion, as well as third-party net additions of $6.4 billion, primarily from positive net flows into equity accounts from existing clients. General account assets increased $16.8 billion driven by market appreciation.    Strategic Investments    The following table sets forth the strategic investments of the Asset Management segment at carrying value (including the value of derivative instruments used to mitigate equity market and currency risk) by asset class and source as of the dates indicated.                                                                        December 31,                                                                   2011        2010                                                                     (in millions)   Co-Investments:   Real Estate                                                    $   464     $   361   Fixed Income                                                        30          29   Seed Investments:   Real Estate                                                         19         251   Public Equity                                                      189         119   Fixed Income                                                       200         102

Loans Secured by Investor Equity Commitments or Fund Assets:

   Real Estate secured by Investor Equity                              50    

2

   Private Equity secured by Investor Equity                           61    

14

   Real Estate secured by Fund Assets                                  99         198    Total                                                          $ 1,112     $ 1,076     

Commercial Mortgage Interim Loan Portfolio

    The following table sets forth information regarding the interim loan portfolio of the Asset Management segment's commercial mortgage operations as of the dates indicated.                                                                  December 31,                                                            2011         2010                                                             ($ in millions)

Interim Loan Portfolio:

Principal balance of loans outstanding(1) $ 648$ 1,336

Allowance for credit or valuation-related losses $ 44$ 168

       Weighted average loan-to-value ratio(2)(3)              93 %       

108 %

Weighted average debt service coverage ratio(2) 1.52 1.24

(1) As of December 31, 2011 and 2010, excludes $10 million and $29 million,

      respectively, of commitments for future fundings that would need to be       disbursed if borrowers meet the conditions for these fundings and $44       million and $69 million, respectively, of commercial real estate held for       sale related to foreclosed interim loans.                                           126 

--------------------------------------------------------------------------------   Table of Contents (2)   A stabilized value and projected net operating income are used in the       calculation of the loan-to-value and debt service coverage ratios.  

(3) For those loans where the loan amount is greater than the collateral value,

the excess of the loan amount over the collateral value was $42 million and

$171 million as of December 31, 2011 and 2010, respectively.    

U.S. Individual Life and Group Insurance Division

   Individual Life    Operating Results    The following table sets forth the Individual Life segment's operating results for the periods indicated.                                                                     Year ended December 31,                                                              2011         2010         2009                                                                       (in millions) Operating results: Revenues                                                    $ 2,900      $ 2,815      $ 2,768 Benefits and expenses                                         2,383        2,315        2,206  Adjusted operating income                                       517        

500 562 Realized investment gains (losses), net, and related adjustments(1)

                                                  (21 )       

(39 ) 134

Income from continuing operations before income taxes and equity in earnings of operating joint ventures

              $   496      $   461      $   696      (1)   Revenues exclude Realized investment gains (losses), net, and related

adjustments. See "-Realized Investment Gains and Losses and General Account

      Investments-Realized Investment Gains and Losses."     Adjusted Operating Income    2011 to 2010 Annual Comparison.  Adjusted operating income increased $17 million, from $500 million in 2010 to $517 million in 2011. Results for both periods include a benefit from lower amortization of deferred policy acquisition costs, net of related unearned revenue reserves and net decreases in insurance reserves, reflecting updates of our actuarial assumptions based on annual reviews. The annual reviews cover assumptions used in our estimates of total gross profits which form the basis for amortizing deferred policy acquisition costs and unearned revenue reserves, as well as the reserve for the guaranteed minimum death benefit feature in certain contracts. Results in 2011 included a $75 million benefit from the annual reviews, primarily reflecting updates to our persistency assumptions as a result of more favorable lapse experience on variable life policies, and improved mortality based on experience. Adjusted operating income for 2010 included a $52 million benefit from the annual reviews, primarily reflecting methodology refinements to the treatment of certain investment income in our assumptions, as well as improved mortality based on experience.    Absent the effect of these items, adjusted operating income for 2011 decreased $6 million from 2010 including a $23 million increase in amortization of deferred policy acquisition costs net of related amortization of unearned revenue reserves, resulting from changes in our estimates of total gross profits arising from separate account fund performance, which is described in more detail below. This increase in amortization largely reflects the impact of equity markets on separate account fund performance in the respective periods. The decrease in adjusted operating income also reflects the decline in earnings from our variable products primarily due to the runoff of variable policies in force. These decreases to adjusted operating income were partially offset by higher net investment spread income driven by higher asset balances supporting growth in our universal life insurance products, as well as the impact from mortality experience, net of reinsurance, which was $12 million less unfavorable relative to expected levels, compared to 2010.    

The changes in our estimates of total gross profits arising from separate account fund performance, as discussed above, reflects the impact on our estimates of total gross profits of the difference between our actual quarterly rate of return on separate accounts compared to our previously expected quarterly rate of return. The

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following table shows the actual quarterly rate of return on separate accounts for the four quarters of 2011 and 2010 compared to our previously expected quarterly rate of return used in our estimates of total gross profits.

                                                              2011                                                                2010                                  First           Second           Third            Fourth            First           Second             Third           Fourth                                 Quarter          Quarter         Quarter           Quarter          Quarter          Quarter           Quarter          Quarter Actual rate of return                4.4 %            0.4 %         (11.6 )%            7.0 %            3.8 %           (7.4 )%            8.3 %            7.3 % Expected rate of return              2.2 %            2.0 %           2.1 %             2.5 %            2.6 %            2.6 %             2.6 %            2.5 %     The overall lower than expected market returns in 2011 resulted in a decrease in total future gross profits by establishing a lower starting point for the fund balances used in estimating those profits in future periods. The decrease in our estimates of total gross profits resulted in a $9 million net expense in 2011 reflecting a higher required rate of amortization of deferred policy acquisition costs, partially offset by a higher required rate of amortization of unearned revenue reserves. The overall actual rate of return on separate account funds for 2010 was higher than our expected rate of return which resulted in an increase in total future gross profits by establishing a higher starting point for the fund balances used in estimating those profits in future periods. The increase in our estimates of total gross profits resulted in a $14 million net benefit in 2010 reflecting a lower required rate of amortization of deferred policy acquisition costs, partially offset by a lower required rate of amortization of unearned revenue reserves. For a further discussion of the assumptions, including our current near-term and long-term projected rates of return, used in estimating total gross profits used as the basis for amortizing deferred policy acquisition costs and unearned revenue reserves, see "-Accounting Policies & Pronouncements-Application of Critical Accounting Estimates."    2010 to 2009 Annual Comparison. Adjusted operating income decreased $62 million, from $562 million in 2009 to $500 million in 2010. Results in 2010 included a $52 million benefit from lower amortization of net deferred policy acquisition costs and unearned revenue reserves, as well as a decrease in reserves for the guaranteed minimum death benefit feature in certain contracts, reflecting updates of our actuarial assumptions based on an annual review, compared to a $55 million benefit from the annual review in 2009. The annual reviews cover assumptions used in our estimates of total gross profits which form the basis for amortizing deferred policy acquisition costs and unearned revenue reserves, as well as the reserve for the guaranteed minimum death benefit feature in certain contracts. Results in 2009 also included a $30 million benefit from compensation received based on multi-year profitability of third-party products we distribute. These compensation arrangements are subject to renegotiations periodically which will affect the amount of additional compensation we are eligible to receive. The largest of these arrangements was renegotiated in 2008 and the profit opportunities were reduced significantly in 2010 and beyond resulting in a benefit of less than $1 million in 2010.    Absent the effect of these items, adjusted operating income in 2010 decreased $29 million, including $33 million from mortality experience, net of reinsurance, which was slightly unfavorable relative to expected levels in 2010, compared to favorable mortality experience in 2009. The decrease in adjusted operating income also reflects a $17 million increase in amortization of deferred policy acquisition costs net of related amortization of unearned revenue reserves, reflecting a net expense of $1 million in 2010 compared to a net benefit of $16 million in 2009, resulting from changes in our estimates of total gross profits primarily from variable products arising from separate account fund performance and policyholder experience. This increase in amortization largely reflects the impact of equity markets on separate account fund performance in the respective periods, partially offset by the impact of policyholder persistency which in 2010 returned to levels that are more consistent with expectations. The decline in our in force block of variable life business also contributed to the decrease in adjusted operating income. Partially offsetting the decrease in adjusted operating income was higher net investment income from an increase in assets supporting our term and universal life products, growth in universal life policyholder account balances and the impact of gains in 2010 on investments in real property separate account funds compared to losses in 2009.    Revenues    2011 to 2010 Annual Comparison. Revenues, as shown in the table above under "-Operating Results," increased $85 million, from $2,815 million in 2010 to $2,900 million in 2011. Net investment income increased $75 million reflecting higher asset balances supporting growth in our universal life insurance products including higher account balances resulting from increased policyholder deposits and higher regulatory capital requirements. Policy charges and fees and asset management fees and other income increased $8 million. This                                          128

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  increase included a $24 million reduction in amortization of unearned revenue reserves due to annual reviews of assumptions. Absent this item, policy charges and fees and asset management fees and other income increased $32 million driven by an increase in current period amortization of unearned revenue reserves due to changes in our estimates of total gross profits primarily reflecting the impact of less favorable market conditions on separate account fund performance in 2011 compared to 2010, as well as the impact of higher actual gross profits during the period. These increases were partially offset by a decline in revenue from our variable insurance products, primarily due to the runoff of variable policies in force.    2010 to 2009 Annual Comparison. Revenues increased $47 million, from $2,768 million in 2009 to $2,815 million in 2010. Net investment income increased $94 million, due to an increase in assets supporting our term and universal life products and growth in universal life and variable policyholder account balances due to increased policyholder deposits, as well as gains in 2010 on investments in real property separate account funds compared to losses in 2009. Premiums increased $28 million, primarily due to growth of our in force block of term insurance. Policy charges and fees and asset management fees and other income decreased $75 million including a $31 million decrease in amortization of unearned revenue reserves due to annual reviews of assumptions, and a $30 million decrease in compensation received based on multi-year profitability of third-party products we distribute, as discussed above. Absent these items policy charges and fees and asset management fees and other income decreased $14 million, driven by a decrease in amortization of unearned revenue reserves reflecting the impact of policyholder persistency which, in 2010, returned to levels more consistent with expectations and mortality experience, partially offset by an increase in the amortization of unearned revenue reserves from the impact of less favorable market conditions on separate account fund performance in 2010. The decrease in policy charges and fees and asset management fees and other income also reflected higher costs on net settlements of interest rate swaps associated with our floating rate debt due to lower interest rates in 2010, offset by lower interest expense, as discussed below, partially offset by an increase in asset management fees resulting from higher separate account fund balances.    Benefits and Expenses    2011 to 2010 Annual Comparison. Benefits and expenses, as shown in the table above under "-Operating Results," increased $68 million, from $2,315 million in 2010 to $2,383 million in 2011. Absent the impact of annual reviews conducted in both periods, benefits and expenses increased $115 million, from $2,468 million in 2010 to $2,583 million in 2011. On this basis, amortization of deferred policy acquisition costs increased $26 million driven by changes in estimated total gross profits primarily reflecting the impact of less favorable market conditions on separate account fund performance in 2011 compared to 2010, as well as the impact of higher actual gross profits on current period amortization. Absent the impact of the annual reviews, policyholders' benefits, including interest credited to policyholders' account balances, increased $15 million primarily reflecting an increase in interest credited to policyholders from higher universal life account balances from increased policyholder deposits and increases in policyholder reserves driven by growth in our term and universal life blocks of business. Partially offsetting the increase in policyholders' benefits, including interest credited to policyholders' account balances, was less unfavorable mortality experience of $12 million in 2011 compared to 2010. Interest expense increased $52 million primarily reflecting higher borrowings related to the financing of regulatory capital requirements associated with statutory reserves for certain term and universal life insurance policies.    2010 to 2009 Annual Comparison. Benefits and expenses increased $109 million, from $2,206 million in 2009 to $2,315 million in 2010. Absent the net $28 million decrease from the impacts of the annual reviews conducted in both periods, benefits and expenses increased $137 million, from $2,331 million in 2009 to $2,468 million in 2010. Absent the impact of the annual reviews, policyholders' benefits, including interest credited to policyholders, increased $141 million due to growth in universal life and variable policyholder account balances, increases in policyholder reserves, and growth in our in force block of term and universal life business. In addition, mortality experience was slightly unfavorable, relative to expected levels in 2010, compared to favorable mortality experience in 2009 contributing $33 million to the increase in policyholder benefits. Also absent the impact of the annual reviews, amortization of deferred policy acquisition costs increased $23 million primarily due to the less favorable impact of equity markets on separate account fund performance, partially offset by both the impact of policyholder persistency which in 2010 returned to levels more consistent with expectations, as well as mortality experience. Partially offsetting these items was a decrease in interest expense of $19 million primarily driven by a decline in interest rates on floating rate debt. This floating rate debt is swapped to a fixed rate using interest rate swaps.                                          129 

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  Table of Contents  Sales Results    The following table sets forth individual life insurance annualized new business premiums for the periods indicated. In managing our individual life insurance business, we analyze annualized new business premiums, which do not correspond to revenues under U.S. GAAP, because annualized new business premiums measure 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, in addition to current sales. Annualized new business premiums include 10% of first year excess premiums and deposits.                                                                   Year ended December 31,                                                             2011           2010        2009                                                                     (in millions) Annualized New Business Premiums(1): Variable Life                                             $     25       $     23      $  20 Universal Life                                                  95             77        113 Term Life                                                      158            160        226  Total                                                     $    278       $    260      $ 359  Annualized new business premiums by distribution channel(1): Prudential Agents                                         $     84       $     84      $  95 Third party                                                    194            176        264  Total                                                     $    278       $    260      $ 359     

(1) Annualized scheduled premiums plus 10% of excess (unscheduled) and single

      premiums from new sales. Excludes corporate-owned life insurance.     2011 to 2010 Annual Comparison. Sales of new life insurance, measured as described above, increased $18 million, from $260 million in 2010 to $278 million in 2011, primarily driven by increased sales in the third party distribution channel reflecting a $18 million increase in sales of universal life insurance products driven by a change in the competitive position of our products due to pricing.    2010 to 2009 Annual Comparison. Sales of new life insurance, measured as described above, decreased $99 million, from $359 million in 2009 to $260 million in 2010. The decrease in sales is primarily due to a $66 million decrease in term life product sales and a $36 million decrease in sales of universal life products driven by lower third party distribution sales. Sales from the third party distribution channel were $88 million lower than 2009 due to lower sales of universal life and term life products, both of which were impacted by price increases implemented in 2009. Sales by Prudential Agents were $11 million lower than 2009 primarily due to lower sales of both universal life products and term life products.    Policy Surrender Experience    The following table sets forth the individual life insurance business' policy surrender experience for variable and universal life insurance, measured by cash value of surrenders, for the periods indicated. These amounts do not correspond to expenses under U.S. GAAP. In managing this business, we analyze the cash value of surrenders because it is a measure of the degree to which policyholders are maintaining their in force business with us, a driver of future profitability. Generally, our term life insurance products do not provide for cash surrender values.                                                                   Year ended December 31,                                                            2011           2010        2009                                                                    ($ in millions) Cash value of surrenders                                  $   778        $  

697 $ 855

  Cash value of surrenders as a percentage of mean future benefit reserves, policyholders' account balances, and separate account balances                       3.3 %         3.0 %       4.2 %                                            130 

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  2011 to 2010 Annual Comparison. The total cash value of surrenders increased $81 million, from $697 million in 2010 to $778 million in 2011, driven by the surrenders of three large variable corporate-owned life insurance policies during 2011. The level of surrenders as a percentage of mean future policy benefit reserves, policyholders' account balances and separate account balances increased from 3.0% in 2010 to 3.3% in 2011 as a result of these large surrenders.    2010 to 2009 Annual Comparison. The total cash value of surrenders decreased $158 million$855 million in 2009 to $697 million in 2010, as surrenders in 2010 returned to levels that are more consistent with expectations compared to 2009. 2009 reflects a greater volume of surrenders, including lapses to extended term, of variable life insurance, due primarily to market conditions at the time and policyholders electing to surrender their policies rather than make premium payments or the contractually required deposits needed to keep the policies in force. The level of surrenders as a percentage of mean future policy benefit reserves, policyholders' account balances and separate account balances decreased from 4.2% in 2009 to 3.0% in 2010, driven by a decrease in the total cash value of surrenders as described above, as well as higher average account balances primarily driven by market appreciation during 2010.    Group Insurance    Operating Results    The following table sets forth the Group Insurance segment's operating results for the periods indicated.                                                                     Year ended December 31,                                                              2011         2010         2009                                                                       (in millions) Operating results: Revenues                                                    $ 6,068      $ 5,458      $ 5,285 Benefits and expenses                                         5,860        5,243        4,954  Adjusted operating income                                       208          215          331 Realized investment gains (losses), net, and related adjustments(1)                                                   59          (21 )       (227 ) Related charges(2)                                               (2 )         (1 )         (7 ) 

Income from continuing operations before income taxes and equity in earnings of operating joint ventures

              $   265      $   193      $    97      (1)   Revenues exclude Realized investment gains (losses), net, and related

adjustments. See "-Realized Investment Gains and Losses and General Account

      Investments-Realized Investment Gains and Losses."   (2)   Benefits and expenses exclude related charges which represent the       unfavorable (favorable) impact of Realized investment gains (losses), net,       on interest credited to policyholders' account balances.     Adjusted Operating Income    2011 to 2010 Annual Comparison. Adjusted operating income decreased $7 million, from $215 million in 2010 to $208 million in 2011. Reserve refinements in both group life and group disability businesses, including the impact of annual reviews, contributed a $26 million benefit to adjusted operating income in 2011 compared to a benefit of $28 million in 2010. Excluding these reserve refinements, adjusted operating income decreased $5 million primarily from less favorable group disability underwriting results in 2011 primarily related to an increase in the number and severity of long-term disability claims reflecting the continued economic downturn. In addition, the decrease in adjusted operating income reflects higher operating expenses in 2011 resulting from business growth and strategic initiatives as well as a decrease in investment results in 2011 due to less favorable results from alternative investments and the impact of the current low interest rate environment on portfolio yields. These decreases were partially offset by more favorable underwriting results in 2011 in our group life business related to favorable claims experience and growth in our non-retrospectively experience-rated business. In addition, 2011 included a $14 million benefit from cumulative premium adjustments relating to prior periods on two large group life non-retrospectively experience-rated cases.                                          131

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  2010 to 2009 Annual Comparison. Adjusted operating income decreased $116 million, from $331 million in 2009 to $215 million in 2010. Results reflected a net benefit of $28 million in 2010, from reserve refinements in both the group life and group disability businesses, including the impact of annual reviews, compared to a net benefit of zero in 2009. Excluding this item, adjusted operating income decreased $144 million primarily reflecting less favorable underwriting results in 2010 on group life non-retrospectively experience-rated business largely due to the lapse of certain business and repricing of other business up for renewal with favorable claims experience in 2009, reflecting the competitive market, as well as less favorable claims experience due to an increase in the number and severity of claims. In addition, underwriting results reflect less favorable long-term disability claims experience in 2010 consistent with the economic downturn. Also contributing to the decrease in adjusted operating income were higher operating expenses primarily to support disability operations and expansion into the group dental market, and an unfavorable impact from the refinement of a premium tax estimate.    Revenues    2011 to 2010 Annual Comparison. Revenues, as shown in the table above under "-Operating Results," increased $610 million, from $5,458 million in 2010 to $6,068 million in 2011. Group life premiums and policy charges and fee income increased $526 million, from $3,539 million in 2010 to $4,065 million in 2011. This increase primarily reflects higher premiums from non-retrospectively experience-rated contracts reflecting growth in the business from new sales and continued strong persistency of 95.8% in 2011 compared to 92.1% in 2010, as well as higher premiums from retrospectively experience-rated contracts resulting from the increase in policyholder benefits on these contracts, as discussed below. 2011 also includes an increase of $14 million from premium adjustments on two large group life non-retrospectively experience-rated cases, as discussed above. In addition, group disability premiums and policy charges and fee income, which include long-term care and dental products, increased by $71 million, from $1,146 million in 2010 to $1,217 million in 2011 primarily reflecting growth of business in force and from new sales partially offset by higher premiums in 2010 associated with the assumption of existing liabilities from third parties, which is offset in policyholders' benefits, as discussed below. Also, contributing to the increase in revenue is higher investment income in 2011 primarily from higher invested assets due to growth in the businesses offset by lower portfolio yields and lower income on alternative investments in 2011.    2010 to 2009 Annual Comparison. Revenues increased by $173 million, from $5,285 million in 2009 to $5,458 million in 2010. Group life premiums and policy charges and fee income increased by $125 million, from $3,414 million in 2009 to $3,539 million in 2010, primarily reflecting higher premiums from retrospectively experience-rated group life business resulting from the increase in policyholder benefits on these contracts as discussed below. Also contributing to the increase were higher premiums from non-retrospectively experience-rated group life business primarily reflecting growth of business in force resulting from new sales, partially offset by a decrease in premiums associated with the assumption of existing liabilities from third parties, which is offset in policyholders' benefits, as discussed below, as well as the lapse of certain business and repricing of other business up for renewal, as discussed above. Group disability premiums and policy charges and fee income, which include long-term care and dental products, increased by $25 million, from $1,121 million in 2009 to $1,146 million in 2010. This increase primarily reflects higher premiums due to growth of business in force resulting from new sales, and continued strong persistency of 92.1% in 2010 compared to 90.9% in 2009, partially offset by a decrease in premiums associated with the assumption of existing liabilities from third parties, which is offset in policyholders' benefits, as discussed below.                                          132 

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  Table of Contents  Benefits and Expenses   

The following table sets forth the Group Insurance segment's benefits and administrative operating expense ratios for the periods indicated.

                                                           Year ended December 31,                                                      2011         2010        2009       Benefits ratio(1):       Group life                                       89.5 %      89.7 %      88.4 %       Group disability                                 97.5 %      94.7 %      88.9 %       Administrative operating expense ratio(2):       Group life                                        8.3 %       8.8 %       9.0 %       Group disability                                 21.4 %      21.3 %      18.3 %     (1)   Ratio of policyholder benefits to earned premiums, policy charges and fee 

income. Group disability ratios include long-term care and dental products.

(2) Ratio of administrative operating expenses (excluding commissions) to gross

premiums, policy charges and fee income. Group disability ratios include

      long-term care and dental products.     2011 to 2010 Annual Comparison. Benefits and expenses, as shown in the table above under "-Operating Results," increased $617 million, from $5,243 million in 2010 to $5,860 million in 2011. This increase reflects a $566 million increase in policyholders' benefits, including the change in policy reserves, from $4,259 million in 2010 to $4,825 million in 2011. Our group life business reflected an increase in policyholders' benefits primarily from growth in the business, including an increase in benefits on retrospectively experience-rated business that resulted in increased premiums, as discussed above. Our group disability business reflected an increase in policyholders' benefits primarily from an increase in the number and severity of disability claims, as well as growth in the business, partially offset by the effect of the assumption of existing liabilities from third parties in 2010, which is offset in premiums, as discussed above. Also contributing to the increase in benefits and expenses were higher operating expenses primarily related to business growth and strategic initiatives.    The group life benefits ratio improved 0.2 percentage points from 2010 to 2011, primarily due to favorable claims experience, partially offset by an unfavorable variance from the impact of reserve refinements, including the impact of annual reviews, in 2011, as discussed above. The group disability benefits ratio deteriorated 2.8 percentage points from 2010 to 2011 primarily due to unfavorable long-term disability claims experience, partially offset by a favorable variance from the impact of reserve refinements, including the impact of annual reviews, in 2011, as discussed above. The group life administrative operating expense ratio improved 0.5 percentage points from 2010 to 2011 due to business growth without a commensurate increase in expenses and a favorable impact from the refinement of a premium tax estimate. The group disability administrative operating expense ratio was relatively unchanged from 2010 to 2011 as the impact from higher expenses in 2011 primarily from business growth and strategic initiatives was offset by a favorable impact from the refinement of a premium tax estimate.    2010 to 2009 Annual Comparison. Benefits and expenses, as shown in the table above under "-Operating Results," increased by $289 million, from $4,954 million in 2009 to $5,243 million in 2010. This increase reflects a $243 million increase in policyholders' benefits, including the change in policy reserves, from $4,016 million in 2009 to $4,259 million in 2010, from both group life and group disability businesses. Our group life business reflected an increase in policyholders' benefits from less favorable claims experience, including an increase in benefits on retrospectively experience-rated business that resulted in increased premiums, partially offset by the benefit of reserve refinements in 2010 and a decrease in policyholder benefits associated with the assumption of existing liabilities from third parties, which is offset in premiums, as discussed above. Our group disability business also reflected less favorable claims experience, partially offset by a decrease in policyholder benefits associated with the assumption of existing liabilities from third parties, which is offset in premiums, as discussed above. Also contributing to the increase in benefits and expenses were higher operating expenses, as discussed above.    The group life benefits ratio deteriorated 1.3 percentage points from 2009 to 2010, due to less favorable claims experience due to an increase in the number and severity of claims, as well as the lapse of certain business and repricing of other business up for renewal with favorable claims experience in 2009, reflecting the                                          133 

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  competitive market, partially offset by the favorable impact of the reserve refinements. The group disability benefits ratio deteriorated 5.8 percentage points from 2009 to 2010, primarily due to less favorable long-term disability claims experience combined with an unfavorable impact from reserve refinements, including the impact of the annual reviews. The group life administrative operating expense ratio was relatively unchanged from 2009 to 2010. The group disability administrative operating expense ratio deteriorated 3.0 percentage points from 2009 to 2010, primarily due to higher costs to support disability operations and expansion into the group dental market, lower premiums associated with the assumption of existing liabilities from third parties, as well as an unfavorable impact from the refinement of a premium tax estimate.    Sales Results    The following table sets forth the Group Insurance segment's annualized new business premiums for the periods indicated. In managing our group insurance business, we analyze annualized new business premiums, which do not correspond to revenues under U.S. GAAP, because annualized new business premiums measure the current sales performance of the business unit, while revenues primarily reflect the renewal persistency and aging of in force policies written in prior years and net investment income, in addition to current sales.                                                         Year ended December 31,                                                   2011           2010       2009                                                           (in millions)          Annualized new business premiums(1):          Group life                             $    486       $    446     $ 339          Group disability(2)                         204            161       238           Total                                  $    690       $    607     $ 577     

(1) Amounts exclude new premiums resulting from rate changes on existing

policies, from additional coverage under our Servicemembers' Group Life

      Insurance contract and from excess premiums on group universal life       insurance that build cash value but do not purchase face amounts, and       include premiums from the takeover of claim liabilities.  

(2) Includes long-term care and dental products.

     2011 to 2010 Annual Comparison. Total annualized new business premiums increased $83 million, from $607 million in 2010 to $690 million in 2011. Group life sales increased $40 million driven by higher large case sales to new customers. Group disability sales, which include long-term care and dental products, increased $43 million primarily due to higher sales across all products.    2010 to 2009 Annual Comparison.Total annualized new business premiums increased $30 million, from $577 million in 2009 to $607 million in 2010. Group life sales increased $107 million driven primarily by increased large case sales to new customers, partially offset by lower premiums associated with the assumption of existing liabilities from third parties during 2010. Group disability sales decreased $77 million primarily due to lower sales of large case disability products to both new and existing customers, as well as a decrease in long-term care sales.   

International Insurance Division

Foreign Currency Exchange Rate Movements and Related Hedging Strategies

    As a U.S.-based company with significant business operations outside the U.S., particularly in Japan, we are subject to foreign currency exchange rate movements that could impact our U.S. dollar-equivalent earnings or our equity in foreign subsidiaries. We seek to mitigate this impact through various hedging strategies, including the use of derivative contracts and through holding U.S. dollar-denominated assets in certain of our foreign subsidiaries.    The operations of our International Insurance Division are subject to currency fluctuations that can materially affect their U.S. dollar-equivalent earnings from period to period even if earnings on a local currency basis are relatively constant. We enter into forward currency derivative contracts, and hold "dual currency" and "synthetic dual currency" investments, as part of our strategy to effectively fix the currency exchange rates for a                                          134

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  portion of our prospective non-U.S. dollar-denominated earnings streams, thereby reducing earnings volatility from foreign currency exchange rate movements. The forward currency hedging program is primarily associated with our insurance operations in Japan including Star and Edison net of expected integration-related costs, as well as Korea and Taiwan. In addition, our Japanese insurance operations offer a variety of non-yen denominated products which are supported by investments in corresponding currencies. While these non-yen denominated assets and liabilities are economically hedged, the accounting for changes in the value of these assets and liabilities due to changes in foreign currency exchange rate movements differs, resulting in volatility in reported U.S. GAAP earnings. For further information on the various hedging strategies used to mitigate the risks of foreign currency exchange rate movements on earnings, see "-Impact of foreign currency exchange rate movements on earnings."    We also seek to mitigate the impact of foreign currency exchange rate movements on our U.S. dollar-equivalent equity in foreign subsidiaries through various hedging strategies. In our Japanese insurance subsidiaries, we hedge a portion of the estimated available economic capital of the business using a variety of instruments, including U.S. dollar-denominated assets financed by the combination of U.S. GAAP equity and yen-denominated liabilities. We may also hedge using instruments held in our U.S. domiciled entities, such as U.S. dollar-denominated debt that has been swapped to yen. We are evaluating the hedging strategy related to our Japanese insurance subsidiaries to consider the Japanese operations' relative contribution to the Company's overall return on equity which may result in a change in the amount of yen exposure we hedge. In our Taiwan insurance operation, the U.S. GAAP equity exposure is mitigated by holding a variety of instruments, including U.S. dollar-denominated investments. During 2009 and 2010, we terminated our hedges of the U.S. GAAP equity exposure of our other foreign operations, excluding our Japan and Taiwan insurance operations, due to a variety of considerations including a desire to limit the potential for cash settlement outflows that would result from strengthening foreign currencies. For further information on the various instruments used to mitigate the risks of foreign currency exchange rate movements on our U.S. dollar-equivalent equity in foreign subsidiaries, see "-Impact of foreign currency exchange rate movements on equity."    The table below presents the aggregate amount of instruments that serve to hedge the impact of foreign currency exchange movements on our U.S. dollar-equivalent earnings and U.S. dollar-equivalent equity in our Japanese insurance subsidiaries for the periods indicated.                                                                             December 31,                                                                        2011        2010                                                                         (in billions)

Instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent earnings: Forward currency hedging program(1)

                                   $   2.5     $  2.5 Dual currency and synthetic dual currency investments(2)                  1.0        0.9                                                                            3.5        3.4 

Instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent equity: U.S. dollar-denominated assets held in yen-based entities(3)

              6.9        6.2 Yen-denominated liabilities held in U.S.-based entities(4)                0.8        0.8                                                                            7.7        7.0  Total hedges                                                          $  11.2     $ 10.4  Total U.S. GAAP equity of Japanese insurance subsidiaries, as adjusted(5)                                                           $  10.7     $  5.7    

(1) Represents the notional amount of forward currency contracts outstanding.

  (2)   Represents the present value of future cash flows, on a U.S.       dollar-denominated basis.  

(3) Excludes $24.5 billion and $10.2 billion as of December 31, 2011 and 2010,

respectively, of U.S. dollar assets supporting U.S. dollar liabilities

related to U.S. dollar-denominated products issued by our Japanese insurance

      operations, of which $11.7 billion as of December 31, 2011 supports U.S.       dollar-denominated products issued by Star and Edison.   (4)   The yen-denominated liabilities are reported in Corporate and Other       operations.   (5)   Excludes "Accumulated other comprehensive income (loss)" components of       equity and certain other adjustments.     The U.S. dollar-denominated investments that hedge the U.S. GAAP equity exposure in our Japanese insurance operations pay a coupon, which is reflected within "Net investment income," and, therefore, included in adjusted operating income, which is generally higher than what a similar yen-based investment would pay.                                          135 

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  The incremental impact of this higher yield of our U.S. dollar-denominated investments, as well as our dual currency and synthetic dual currency investments discussed below, will vary over time, and is dependent on the duration of the underlying investments, as well as interest rate environments in the U.S. and Japan at the time of the investments. See "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Investment Results" for a discussion of the investment yields generated by our Japanese insurance operations.    

Impact of foreign currency exchange rate movements on earnings

Forward currency hedging program

    The financial results of our International Insurance segment for all periods presented reflect the impact of an intercompany arrangement with Corporate and Other operations pursuant to which the segment's non-U.S. dollar-denominated earnings in certain countries are translated at fixed currency exchange rates. The fixed rates are determined in connection with a foreign currency income hedging program designed to mitigate the impact of exchange rate changes on the segment's U.S. dollar-equivalent earnings. Pursuant to this program, Corporate and Other operations execute forward currency contracts with third parties to sell the net exposure of projected earnings from the hedged currency in exchange for U.S. dollars at specified exchange rates. The maturities of these contracts correspond with the future periods in which the identified non-U.S. dollar-denominated earnings are expected to be generated. In establishing the level of non-U.S. dollar-denominated earnings that will be hedged through this program, we exclude the anticipated level of U.S. dollar-denominated earnings that will be generated by dual currency and synthetic dual currency investments, as well as the anticipated level of U.S. dollar-denominated earnings that will be generated by U.S. dollar-denominated products and investments, both of which are discussed in greater detail below. As a result of this intercompany arrangement, our International Insurance segment results for 2011 reflect the impact of translating yen and Korean won-denominated earnings at fixed currency exchange rates of 92 yen per U.S. dollar and 1190 Korean won per U.S. dollar. Results for 2012 will reflect the impact of translating yen and Korean won-denominated earnings at fixed currency exchange rates of 85 yen per U.S. dollar and 1180 Korean won per U.S. dollar.    Results of Corporate and Other operations include any differences between the translation adjustments recorded by the segment at the fixed rate and the gains or losses recorded from the forward currency contracts that settled during the period, which includes the impact of any over or under hedging of actual earnings that differ from projected earnings. The table below presents, for the periods indicated, the increase (decrease) to revenues and adjusted operating income for the International Insurance segment and for Corporate and Other operations, reflecting the impact of this intercompany arrangement.                                                                     Year ended December 31,                                                               2011          2010        2009                                                                       (in millions) International Insurance Segment: Impact of intercompany arrangement(1)                       $   (221 )      $ (99 )     $ (35 ) Corporate and Other operations: Impact of intercompany arrangement(1)                            221           99          35 Settlement gains/(losses) on forward currency contracts         (176 )      

(93 ) (32 )

  Net benefit to Corporate and Other operations                     45            6           3  

Net impact on revenues and adjusted operating income $ (176 ) $ (93 ) $ (32 )

(1) Represents the difference between non-U.S. dollar-denominated earnings

translated on the basis of weighted average monthly currency exchange rates

      versus fixed currency exchange rates determined in connection with the       forward currency hedging program.     As of both December 31, 2011 and 2010, the notional amounts of these forward currency contracts were $3.0 billion, of which $2.5 billion were related to our Japanese insurance operations.    

Dual currency and synthetic dual currency investments hedging program

    In addition, our Japanese insurance operations hold dual currency investments in the form of fixed maturities and loans. The principal of these dual currency investments are yen-denominated while the related                                          136

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  interest income is U.S. dollar-denominated. These investments are the economic equivalent of exchanging what would otherwise be fixed streams of yen-denominated interest income for fixed streams of U.S. dollar-denominated interest income. Our Japanese insurance operations, excluding Star and Edison, also hold yen-denominated investments that have been coupled with cross-currency coupon swap agreements, creating synthetic dual currency investments. The yen/U.S. dollar exchange rate is effectively fixed, as we are obligated in future periods to exchange fixed amounts of Japanese yen interest payments generated by the yen-denominated investments for fixed amounts of U.S. dollar interest payments at the yen/U.S. dollar exchange rates specified by the cross-currency coupon swap agreements. As of December 31, 2011 and 2010, the notional amount of these investments was ¥280 billion, or $2.5 billion, and ¥357 billion, or $3.2 billion, respectively, based upon the foreign currency exchange rates applicable at the time these investments were acquired. The weighted average yields generated by these investments were 3.0%, 2.8% and 2.9% for the years ended December 31, 2011, 2010 and 2009, respectively.    Below is the fair value of these instruments as reflected on our balance sheet for the periods indicated.                                                                             December 31,                                                                        2011        2010                                                                         (in millions) Cross-currency coupon swap agreements                                 $ (105 )    $ (132 ) Foreign exchange component of interest on dual currency investments     (128 )      (114 )  Total                                                                 $ (233 )    $ (246 )      The table below presents as of December 31, 2011, the yen-denominated earnings subject to our dual currency and synthetic dual currency investments and the related weighted average exchange rates applicable at the time these investments were acquired.                                          Cross-currency coupon             Interest component           swap element of           Total 

yen-denominated Weighted average

             of dual currency        synthetic dual currency        earnings subject to        forward exchange rate Year          investments(1)               investments               these investments            per U.S. Dollar                                           (in billions)                                             (yen per $) 2012                        3.5                           2.9                         6.4                        82.3 2013                        3.3                           2.4                         5.7                        79.6 2014                        3.2                           2.4                         5.6                        79.6 2015-2034                  27.6                          48.1                        75.7                        78.4  Total                     ¥37.6                         ¥55.8                       ¥93.4                        78.8     

(1) Yen amounts are imputed from the contractual U.S. dollar-denominated

      interest cash flows.    

The present value of the earnings reflected in the table above, on a U.S. dollar-denominated basis, is $1.0 billion as of December 31, 2011.

U.S. GAAP earnings impact of products denominated in non-local currencies

    Our international insurance operations primarily offer products denominated in local currency. However, our Japanese insurance operations also offer products denominated in non-local currencies, primarily comprised of U.S. and Australian dollar-denominated products. The non-yen denominated insurance liabilities related to these products are supported by investments denominated in corresponding currencies, including a significant portion designated as available-for-sale, and other related non-yen denominated net assets, including accrued investment income, to support these products. These assets and liabilities are impacted by foreign currency exchange rate movements, as they are non-yen denominated items on the books of yen-based entities. While these non-yen denominated assets and liabilities are economically hedged, the accounting for changes in the value of these assets and liabilities due to changes in foreign currency exchange rate movements differs, resulting in volatility in U.S. GAAP earnings. For example, available-for-sale investments under U.S. GAAP are carried at fair value with changes in fair value (except as described below for impairments), including those from changes in foreign currency exchange rate movements, recorded as unrealized gains or losses in "Accumulated other                                          137 

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  comprehensive income (loss)," whereas the non-yen denominated liabilities are remeasured for foreign currency exchange rate movements, and the related change in value is recorded in earnings within "Asset management fees and other income." Investments designated as held-to-maturity under U.S. GAAP, are recorded at amortized cost on the balance sheet, but are remeasured for foreign currency exchange rate movements, with the related change in value recorded in earnings within "Asset management fees and other income." Due to this non-economic volatility that is reflected in U.S. GAAP, the change in value due to changes in foreign currency exchange rate movements, or remeasurement, of these non-yen denominated assets and related liabilities associated with these products is excluded from adjusted operating income and included in "Realized investment gains (losses), net, and related adjustments." For the years ended December 31, 2011 and 2010, "Realized investment gains (losses), net, and related adjustments" includes net gains of $784 million and $85 million, respectively, reflecting the remeasurement of these non-yen denominated insurance liabilities, which are presented in the table below, and the remeasurement of certain non-yen denominated related assets, and were primarily driven by the strengthening of the yen against the U.S. and Australian dollar.    

The table below presents the carrying value of insurance liabilities related to products offered in non-local currencies within our Japanese insurance operations as of the periods indicated.

                                                              December 31,                                                          2011        2010                                                           (in billions)             U.S. dollar-denominated products(1)         $  23.3     $  9.7             Australian dollar-denominated products(2)       5.7        2.0             Euro-denominated products                       0.2        0.1              Total                                       $  29.2     $ 11.8     

(1) As of December 31, 2011, includes $11.3 billion of insurance liabilities for

      U.S. dollar-denominated products issued by Star and Edison, which are       supported by U.S. dollar-denominated assets.  

(2) As of December 31, 2011, includes $2.7 billion of insurance liabilities for

Australian dollar-denominated products issued by Star and Edison, which are

      supported by Australian dollar-denominated assets.     As of December 31, 2011 and 2010, $4.5 billion and $3.5 billion, respectively, of insurance liabilities for U.S. dollar-denominated products presented in the table above are associated with Prudential of Japan and coinsured to our U.S. domiciled insurance operations. These U.S. dollar-denominated liabilities are supported by U.S. dollar-denominated assets and are not subject to the remeasurement mismatch described above.    

Impact of foreign currency exchange rate movements on equity

The table below presents the composition of instruments that serve to hedge the impact of foreign currency exchange movements on our U.S. dollar-equivalent equity in our Japanese insurance subsidiaries for the periods indicated.

December 31,                                                                        2011        2010                                                                         (in billions)

Available-for-sale U.S. dollar-denominated investments, at amortized cost

                                                       $    6.5      $ 5.6 Held-to-maturity U.S. dollar-denominated investments, at amortized cost                                                            0.3        0.5 Other(1)                                                                  0.1        0.1  U.S. dollar-denominated assets held in yen-based entities(2)              6.9        6.2 Yen-denominated liabilities held in U.S.-based entities(3)                

0.8 0.8

Total instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent equity

                                     $    

7.7 $ 7.0

  Total U.S. GAAP equity of Japanese insurance subsidiaries, as adjusted(4)                                                          $   10.7      $ 5.7    

(1) Primarily reflects accrued investment income on U.S. dollar-denominated

investments.

(2) Excludes $24.5 billion and $10.2 billion as of December 31, 2011 and 2010,

respectively, of U.S. dollar assets supporting U.S. dollar liabilities

related to U.S. dollar-denominated products issued by our Japanese insurance

      operations.   (3)   The yen-denominated liabilities are reported in Corporate and Other       operations.   (4)   Excludes "Accumulated other comprehensive income (loss)" components of       equity and certain other adjustments.                                           138 

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  Available-for-sale investments under U.S. GAAP are carried at fair value with unrealized changes in fair value (except as described below for impairments), including those from changes in foreign currency exchange rate movements, recorded as unrealized gains or losses in "Accumulated other comprehensive income (loss)." Changes in the U.S. GAAP equity of our Japanese insurance operations due to foreign currency exchange rate movements are also recorded in "Accumulated other comprehensive income (loss)" as a "Foreign currency translation adjustment," and can serve as an offset to the unrealized changes in fair value of the available-for-sale investments. For the portion of available-for-sale investments that support our Japanese insurance operations' U.S. GAAP equity, this offset creates a "natural equity hedge." If U.S. dollar-denominated investments, including available-for-sale investments, supporting the hedge are in excess of our U.S. GAAP equity, then there is no offsetting impact to equity. In addition, the impact of foreign currency exchange rate movements on the U.S. GAAP equity of our Japanese insurance operations is partially offset by foreign currency exchange related changes in designated yen-denominated debt and other hedging instruments held in our U.S. domiciled entities and recorded in "Accumulated other comprehensive income (loss)" as a "Foreign currency translation adjustment."    The investments designated as held-to-maturity under U.S. GAAP are recorded at amortized cost on the balance sheet, but are remeasured for foreign currency exchange rate movements, with the related change in value recorded within "Asset management fees and other income." The remeasurement related to the change in value for foreign currency exchange rate movements for these investments is excluded from adjusted operating income.    We also incorporate the impact of foreign currency exchange rate movements on the remaining U.S. dollar-denominated net asset position of our Japanese insurance operations, which primarily relates to accrued investment income, as part of our overall application of the hedge strategy. These U.S. dollar-denominated assets and liabilities are remeasured for foreign currency exchange rate movements, as they are non-yen denominated items on the books of yen-based entities, and the related change in value is recorded within "Asset management fees and other income." The remeasurement related to the change in value for foreign currency exchange rate movements for these items is excluded from adjusted operating income.    For U.S. dollar-denominated investments recorded on the books of yen-based entities, foreign currency exchange movements will impact their value. To the extent the value of the yen strengthens as compared to the U.S. dollar, the value of these U.S. dollar-denominated investments will decrease. Upon the ultimate sale or maturity of the U.S. dollar-denominated investments, any realized change in value related to changes in the foreign currency exchange rates will be included in "Realized investment gains (losses), net" within the income statement and excluded from adjusted operating income. Similarly, changes in the foreign currency exchange rates that result in other-than-temporary impairments on these investments will be included in "Realized investment gains (losses), net" within the income statement and, as such, excluded from adjusted operating income. See "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Fixed Maturity Securities-Other-than-Temporary Impairments of Fixed Maturity Securities" for a discussion of our policies regarding impairments. We seek to mitigate the risk that future unfavorable foreign currency exchange rate movements will decrease the value of our U.S. dollar-denominated investments and negatively impact the equity of our yen-based entities by employing internal hedging strategies between a subsidiary of Prudential Financial and certain of our yen-based entities. See "-Liquidity and Capital Resources-Liquidity and Capital Resources of Subsidiaries-International Insurance and Investments Subsidiaries" for a discussion of our internal hedging strategies.    International Insurance    Operating Results    The results of our International Insurance operations are translated on the basis of weighted average monthly exchange rates, inclusive of the effects of the intercompany arrangement discussed above. To provide a better understanding of operating performance within the International Insurance segment, where indicated below, we have analyzed our results of operations excluding the effect of the year over year change in foreign currency exchange rates. Our results of operations excluding the effect of foreign currency fluctuations were derived by translating foreign currencies to U.S. dollars at uniform exchange rates for all periods presented,                                          139 

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  including for constant dollar information discussed below. The exchange rates used were Japanese yen at a rate of 85 yen per U.S. dollar and Korean won at a rate of 1180 won per U.S. dollar, both of which were determined in connection with the foreign currency income hedging program discussed above. In addition, for constant dollar information discussed below, activity denominated in U.S. dollars is reported based on the amounts as transacted in U.S. dollars. Annualized new business premiums presented on a constant exchange rate basis in the "Sales Results" section below reflect translation based on these same uniform exchange rates.    

The following table sets forth the International Insurance segment's operating results for the periods indicated.

                                                                  Year ended December 31,                                                           2011           2010           2009                                                                     (in millions) Operating results: Revenues: Life Planner operations                                 $  8,214       $  7,266       $  6,443 Gibraltar Life and Other operations                       11,574          4,954          4,149                                                            19,788         12,220         10,592  Benefits and expenses: Life Planner operations                                    6,845          5,997          5,222 Gibraltar Life and Other operations                       10,238          4,138          3,502                                                            17,083         10,135          8,724  Adjusted operating income: Life Planner operations                                    1,369          1,269          1,221 Gibraltar Life and Other operations                        1,336            816            647                                                             2,705          2,085          1,868 

Realized investment gains (losses), net, and related adjustments(1)

                                               575           (317 )         (790 ) Related charges(2)                                           (17 )          (15 )           56 

Investment gains (losses) on trading account assets supporting insurance liabilities, net(3)

                    (160 )           33             68 Change in experience-rated contractholder liabilities due to asset value changes(4)                    160            

(33 ) (68 ) Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(5) (277 ) (109 ) (39 )

  Income from continuing operations before income taxes and equity in earnings of operating joint ventures                                                $  2,986       $  1,644       $  1,095      (1)   Revenues exclude Realized investment gains (losses), net, and related       adjustments. Realized investment gains (losses), net, and related

adjustments includes gains and losses from changes in value of certain

assets and liabilities relating to foreign currency exchange movements that

have been economically hedged, as discussed above. See "-Realized Investment

Gains and Losses and General Account Investments-Realized Investment Gains

and Losses."

(2) Revenues exclude related charges resulting from payments related to market

value adjustment features of certain of our annuity products and the impact

of Realized investment gains (losses), net, on the amortization of unearned

revenue reserves. Benefits and expenses exclude related charges that

represent the element of "Dividends to policyholders" that is based on a

portion of certain realized investment gains required to be paid to

policyholders and the impact of Realized investment gains (losses), net, on

the amortization of deferred policy acquisition costs.

(3) Revenues exclude net investment gains and losses on trading account assets

supporting insurance liabilities. See "-Experience-Rated Contractholder

      Liabilities, Trading Account Assets Supporting Insurance Liabilities and       Other Related Investments."  

(4) Benefits and expenses exclude changes in contractholder liabilities due to

      asset value changes in the pool of investments supporting these       experience-rated contracts. See "-Experience-Rated Contractholder       Liabilities, Trading Account Assets Supporting Insurance Liabilities and       Other Related Investments."  

(5) Equity in earnings of operating joint ventures are included in adjusted

operating income but excluded from income from continuing operations before

income taxes and equity in earnings of operating joint ventures as they are

reflected on a U.S. GAAP basis on an after-tax basis as a separate line in

our Consolidated Statements of Operations. Earnings attributable to

noncontrolling interests are excluded from adjusted operating income but

included in income from continuing operations before taxes and equity

earnings of operating joint ventures as they are reflected on a U.S. GAAP

basis as a separate line in our Consolidated Statements of Operations.

Earnings attributable to noncontrolling interests represent the portion of

       earnings from consolidated entities that relates to the equity interests of       minority investors.                                           140 

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  On April 6, 2011, the Company entered into a stock and asset purchase agreement to sell all of the issued and outstanding shares of capital stock of the Company's subsidiaries that conduct its Global Commodities Business and certain assets that are primarily used in connection with the Global Commodities Business. As a result, we have reflected the results of the Global Commodities Business as discontinued operations for all periods presented. This sale was completed on July 1, 2011.   

Acquisition of AIG Star Life Insurance Co., Ltd., AIG Edison Life Insurance Company and Related Entities

    On February 1, 2011, Prudential Financial completed the acquisition from American International Group, Inc., or AIG, of AIG Star Life Insurance Co., Ltd., or Star, AIG Edison Life Insurance Company, or Edison, and certain other AIG subsidiaries (collectively, the "Star and Edison Businesses") pursuant to the stock purchase agreement dated September 30, 2010 between Prudential Financial and AIG. The total purchase price was $4,709 million, comprised of $4,213 million in cash and $496 million in assumed third party debt, substantially all of which is expected to be repaid, over time, with excess capital of the acquired entities. All acquired entities are Japanese corporations and their businesses are in Japan.    The addition of these operations increases our scale in the Japanese insurance market and provides complementary distribution opportunities. We also expect these businesses to provide attractive returns primarily driven from in force business and cost synergies. Star and Edison's bank channel distribution will be transferred and integrated with the bank channel operations of Prudential Gibraltar. The Star and Edison companies were merged into Gibraltar Life on January 1, 2012. We expect pre-tax integration costs of approximately $500 million to be incurred over a five-year period. We incurred $174 million of integration costs during 2011 and expect to incur approximately $200 million during 2012. After the integration is completed, we expect annual cost savings of approximately $250 million, and expect to achieve approximately two-thirds of the annual savings by the end of 2012. Actual integration costs may exceed, and actual costs savings may fall short of, such expectations.    The Gibraltar Life operations, including the Star and Edison Businesses, use a November 30 fiscal year end for purposes of inclusion in the Company's Consolidated Financial Statements. Therefore, operating results presented in the table above includes results for Gibraltar Life for the twelve months ended November 30, 2011, 2010 and 2009, and include earnings for the Star and Edison Businesses from the February 1, 2011 acquisition date through November 30, 2011.    Acquisition of Yamato Life    On May 1, 2009, our Gibraltar Life operations acquired Yamato Life, a Japanese life insurance company that declared bankruptcy in October 2008. Gibraltar Life served as the reorganization sponsor for Yamato and under the reorganization agreement acquired Yamato by contributing $72 million of capital to Yamato. Concurrent with our acquisition, substantially all of Yamato's insurance liabilities were restructured under a plan of reorganization to include special surrender penalties on existing policies. These surrender charges were 20% in the first year and decline by 2% each year thereafter. Subsequent to the acquisition, we renamed the acquired company The Prudential Gibraltar Financial Life Insurance Company, Ltd., or Prudential Gibraltar.    Adjusted Operating Income    2011 to 2010 Annual Comparison. Adjusted operating income from Life Planner operations increased $100 million, from $1,269 million in 2010 to $1,369 million in 2011, including a net favorable impact of $6 million from currency fluctuations. Excluding the impact of currency fluctuations, adjusted operating income increased $94 million primarily reflecting the growth of business in force driven by sales and continued strong persistency in our Japanese Life Planner operations and, to a lesser extent, lower administrative expenses due in part to the absence of certain costs incurred in 2010. Partially offsetting these favorable variances were charges of $12 million associated with claims and expenses arising from the March 2011 earthquake and tsunami in Japan, and less favorable mortality experience in Japan and Korea.    Adjusted operating income from our Gibraltar Life and Other operations increased $520 million, from $816 million in 2010 to $1,336 million in 2011, including a favorable impact of $29 million from currency                                          141

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  fluctuations. Results for 2011 benefited from $354 million of earnings from the acquired Star and Edison Businesses, excluding the impact of estimated claims associated with the earthquake and tsunami in Japan. Adjusted operating income for both 2011 and 2010 reflect the impact of partial sales of our investment, through a consortium, in China Pacific Group, which contributed a $237 million benefit to 2011 results compared to a $66 million benefit to 2010 results. Also contributing to the increase in adjusted income was a $96 million gain on sale of our investment in an operating joint venture, Afore XXI, a private pension fund manager in Mexico. These favorable items were partially offset by transaction and integration costs of $213 million in 2011 relating to the Star and Edison acquisition and $49 million of charges associated with claims and expenses arising from the March 2011 earthquake and tsunami in Japan.    Excluding the effect of the items discussed above, adjusted operating income from our Gibraltar Life and Other operations increased $132 million, reflecting business growth, including expanding sales of protection products, and improved investment results, including a greater contribution from our fixed annuity products reflecting growth of that business and lower amortization of deferred policy acquisition costs. The lower amortization of deferred policy acquisition costs associated with our fixed annuity products was primarily driven by lower amortization rates reflecting an increase in prior period investment results included in total gross profits used as a basis for determining amortization rates. Partially offsetting these favorable variances were higher development costs supporting bank and agency distribution channel growth and unfavorable results from our insurance joint venture in India and our asset management-related joint venture in China.    2010 to 2009 Annual Comparison. Adjusted operating income from our Life Planner operations increased $48 million, from $1,221 million in 2009 to $1,269 million in 2010, including a net favorable impact of $11 million from currency fluctuations. Excluding the impact of currency fluctuations, adjusted operating income increased $37 million primarily reflecting the growth of business in force and continued strong persistency in our Japanese Life Planner operation, partially offset by an unfavorable variance of $27 million, reflecting the impact of a $6 million net charge in 2010 and a $21 million net benefit in 2009 from reserve refinements related to the implementation of a new policy valuation system. Also impacting adjusted operating income is a $6 million lower benefit in 2010 from a reduction in amortization of deferred policy acquisition costs primarily reflecting improved mortality assumptions, which benefited both periods, associated with our annual review of estimated gross profits used to amortize deferred policy acquisition costs.    Adjusted operating income from our Gibraltar Life and Other operations increased $169 million, from $647 million in 2009 to $816 million in 2010, including a favorable impact of $22 million from currency fluctuations. In December 2010, a consortium of investors including Prudential that holds a minority interest in China Pacific Insurance (Group) Co., Ltd sold approximately 16% of its holdings, which contributed a pre-tax benefit of $66 million to results. Absent the effect of this item and the impact of currency fluctuations, adjusted operating income increased $81 million, primarily reflecting the continued growth in our fixed annuity products, which are primarily denominated in U.S. dollars, and growth in protection products driven by expanding bank channel distribution, as well as a higher contribution from non-coupon investments. Results for 2010 also include $11 million of expenses associated with the acquisition of the Star and Edison Businesses which were more than offset by a lower level of benefits and expenses including the absence of net charges of $5 million related to a 2009 guaranty fund assessment and net charges of $8 million in 2009 from unfavorable reserve refinements related to the implementation of a new policy valuation system.    Revenues    2011 to 2010 Annual Comparison. Revenues, as shown in the table above under "-Operating Results," increased $7,568 million, from $12,220 million in 2010 to $19,788 million in 2011, including a net favorable impact of $1,024 million relating to currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $6,544 million, from $12,633 million in 2010 to $19,177 million in 2011.    Revenues from our Life Planner operations increased $948 million, from $7,266 million in 2010 to $8,214 million in 2011, including a net favorable impact of $401 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $547 million, from $7,436 million in 2010 to $7,983 million in 2011. This increase in revenues came primarily from increases in premiums and policy charges and fee income of $393 million, from $6,080 million in 2010 to $6,473 million in 2011. Premiums and policy charges and fee                                          142 

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  income from our Japanese Life Planner operation increased $337 million, from $4,635 million in 2010 to $4,972 million in 2011, primarily reflecting growth of business in force and continued strong persistency. Net investment income increased $118 million, from $1,268 million in 2010 to $1,386 million in 2011, primarily due to investment portfolio growth, partially offset by lower yields in our investment portfolio compared to the prior year.    Revenues from our Gibraltar Life and Other operations increased $6,620 million, from $4,954 million in 2010 to $11,574 million in 2011, including a favorable impact of $623 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues for Gibraltar Life increased $5,997 million, from $5,197 million in 2010 to $11,194 million in 2011. This increase reflects a $4,714 million increase in premiums and policy charges and fee income, from $3,652 million in 2010 to $8,366 million in 2011, of which $2,920 million was associated with the acquired Star and Edison Businesses. Excluding Star and Edison, the increase in premiums and policy charges and fee income was primarily driven by growth in protection products within the bank distribution channel including $1,062 million higher sales of single premium whole life. Also contributing to the increase in revenues is favorable investment income primarily reflecting $816 million of income on the acquired assets from Star and Edison and continued growth of our fixed annuity products, as well as higher other income reflecting the impact of the partial sales of our indirect investment in China Pacific Group and the sale of the investment in Afore XXI, discussed above.    In some of the markets in which we operate, it is difficult to find appropriate long-duration assets to match the characteristics of our long-duration product liabilities. In Japan, we have historically sought to increase the duration of our Japanese yen investment portfolio by employing various strategies, including investing in longer-term securities or by entering into long-duration floating-to-fixed interest rate swaps. These strategies better support the characteristics of our long-dated product liabilities and have resulted in higher portfolio yields. Based on an evaluation of market conditions, beginning in the fourth quarter of 2008 and continuing into the first quarter of 2009, we terminated or offset many of these interest rate swaps in consideration of, among other things, the interest rate environment. The resulting realized investment gains from terminating or offsetting these interest rate swaps will be recognized in adjusted operating income over periods that generally approximate the expected terms of the derivatives. For 2011, 2010 and 2009, we recognized gains of $55 million, $38 million, and $30 million, respectively, in adjusted operating income related to these realized investment gains (losses). As of December 31, 2011, $657 million of deferred gains remain to be recognized in adjusted operating income over a weighted average period of 29 years. We continue to manage the interest rate risk profile of our businesses in the context of market conditions and relative opportunities, and may implement these hedging strategies to lengthen the duration of our Japanese investment portfolio as our assessment of market conditions dictates. As we do so, the impact to our portfolio yields will depend on the interest rate environment at that time.    2010 to 2009 Annual Comparison. Revenues increased $1,628 million, from $10,592 million in 2009 to $12,220 million in 2010, including a net favorable impact of $491 million relating to currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $1,137 million, from $11,496 million in 2009 to $12,633 million in 2010.    Revenues from our Life Planner operations increased $823 million, from $6,443 million in 2009 to $7,266 million in 2010, including a net favorable impact of $296 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $527 million, from $6,909 million in 2009 to $7,436 million in 2010. This increase in revenues came primarily from increases in premiums and policy charges and fee income of $363 million, from $5,717 million in 2009 to $6,080 million in 2010. Premiums and policy charges and fee income from our Japanese Life Planner operation increased $274 million, from $4,361 million in 2009 to $4,635 million in 2010, primarily reflecting growth of business in force and continued strong persistency, partially offset by a benefit recognized in the prior year from the migration to a new policy valuation system discussed above. Net investment income increased $132 million, from $1,136 million in 2009 to $1,268 million in 2010, primarily due to investment portfolio growth, partially offset by lower yields in our Japanese investment portfolio compared to the prior year.    Revenues from our Gibraltar Life and Other operations increased $805 million, from $4,149 million in 2009 to $4,954 million in 2010, including a favorable impact of $195 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues for Gibraltar Life increased $610 million, from $4,587 million in                                          143 </pre>
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  2009 to $5,197 million in 2010. This increase reflects a $417 million increase in premiums, from $3,150 million in 2009 to $3,567 million in 2010, as premiums benefited from $50 million of renewal premiums from the acquisition of Yamato, higher first year premiums of $229 million due to stronger sales of protection products primarily through our bank distribution channels, as well as $173 million in higher sales of single premium whole life products. Partially offsetting these favorable variances in premiums was a decrease of $101 million, reflecting the completion of the special dividend arrangement in the second quarter of 2010 established as part of Gibraltar Life's reorganization in 2001. Substantially all of the premiums recognized as additional face amounts of insurance issued pursuant to the special dividend arrangement were offset by a corresponding charge to increase reserves for the affected policies. Also contributing to the increase in revenues is favorable investment income reflecting the continued growth of our fixed annuity products and higher other income primarily reflecting the pre-tax benefit of $66 million related to the partial sale of our indirect investment in China Pacific Group discussed above.    Benefits and Expenses    2011 to 2010 Annual Comparison. Benefits and expenses, as shown in the table above under "-Operating Results," increased $6,948 million, from $10,135 million in 2010 to $17,083 million in 2011, including a net unfavorable impact of $989 million related to currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $5,959 million, from $10,326 million in 2010 to $16,285 million in 2011.    Benefits and expenses of our Life Planner operations increased $848 million, from $5,997 million in 2010 to $6,845 million in 2011, including a net unfavorable impact of $395 million from currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $453 million, from $6,076 million in 2010 to $6,529 million in 2011. Benefits and expenses of our Japanese Life Planner operation increased $373 million, from $4,438 million in 2010 to $4,811 million in 2011, primarily reflecting an increase in policyholder benefits due to changes in reserves driven by the growth in business in force and, to a lesser extent, reflecting the impact of the charges associated with claims resulting from the Japanese earthquake and tsunami and less favorable mortality experience.    Benefits and expenses of our Gibraltar Life and Other operations increased $6,100 million, from $4,138 million in 2010 to $10,238 million in 2011, including an unfavorable impact of $594 million from currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $5,506 million, from $4,250 million in 2010 to $9,756 million in 2011. Policyholder benefits, including changes in reserves, increased $3,697 million and was primarily driven by the acquisition of the Star and Edison Businesses, higher single premium whole life sales in 2011 and $37 million of charges associated with claims resulting from the March 2011 earthquake and tsunami in Japan. General and administrative expenses, net of capitalization, increased $1,225 million primarily driven by the impact of the Star and Edison acquisition including $213 million of transaction and integration costs related to the acquisition, higher development costs supporting bank and agency distribution channel growth and $12 million of expenses resulting from the earthquake and tsunami discussed above. Also contributing to the increase in benefits and expenses is higher amortization of deferred policy acquisition costs and interest credited to policyholders' account balances primarily reflecting the impact of the Star and Edison acquisition.    2010 to 2009 Annual Comparison. Benefits and expenses increased $1,411 million, from $8,724 million in 2009 to $10,135 million in 2010, including a net unfavorable impact of $458 million related to currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $953 million, from $9,373 million in 2009 to $10,326 million in 2010.    Benefits and expenses of our Life Planner operations increased $775 million, from $5,222 million in 2009 to $5,997 million in 2010, including a net unfavorable impact of $285 million from currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $490 million, from $5,586 million in 2009 to $6,076 million in 2010. Benefits and expenses of our Japanese Life Planner operation increased $356 million, from $4,082 million in 2009 to $4,438 million in 2010, primarily reflecting an increase in policyholder benefits due to changes in reserves, which was driven by the growth in business in force. Included in 2010 general and administrative expenses for the Life Planner operations is $4 million of expenses, a                                          144
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decrease of $8 million from the prior year, related to a recently completed initiative in  to enhance our information processes and technology systems in order to improve efficiency and lower costs.
    Benefits and expenses of our Gibraltar Life and Other operations increased $636 million, from $3,502 million in 2009 to $4,138 million in 2010, including an unfavorable impact of $173 million from currency fluctuations. Excluding the impact of currency fluctuations, benefits and expenses increased $463 million, from $3,787 million in 2009 to $4,250 million in 2010. This increase reflects an increase in policyholder benefits, including changes in reserves, of $371 million reflecting higher single premium whole life sales in 2010 and the acquisition of Yamato, offset by the effects of the special dividend arrangement discussed above. Also contributing to the increase in benefits and expenses is higher amortization of deferred policy acquisition costs related to growth of our protection products and the increase in single premium whole life sales, as well as higher general and administrative expenses including $11 million of expenses associated with the acquisition of the Star and Edison Businesses. Included in general and administrative expenses for Gibraltar Life is $18 million of expenses, unchanged from the prior year, related to the recently completed information processes and technology systems initiative discussed above.    Sales Results    In managing our international insurance business, we analyze revenues, as well as annualized new business premiums, which do not correspond to revenues under U.S. GAAP. Annualized new business premiums measure the current sales performance of the segment, while revenues primarily reflect the renewal persistency of policies written in prior years and net investment income, in addition to current sales. Annualized new business premiums include 10% of first year premiums or deposits from single pay products. No other adjustments are made for limited pay contracts. The following table sets forth annualized new business premiums on an actual and constant exchange rate basis for the periods indicated.                                                       Year ended December 31,                                                  2011        2010        2009                                                         (in millions)           Annualized new business premiums:           On an actual exchange rate basis:           Life Planner operations              $  1,150     $   964     $   833           Gibraltar Life(1)                       2,042         874         568            Total                                $  3,192     $ 1,838     $ 1,401            On a constant exchange rate basis:           Life Planner operations              $  1,097     $   973     $   883           Gibraltar Life(1)                       1,943         897         612            Total                                $  3,040     $ 1,870     $ 1,495      (1)   The year ended December 31, 2011 includes ten months of annualized new 
      business premiums for the Star and Edison Businesses, acquired February 1,
      2011.     With a diversified product mix supporting the growing demand for retirement and savings products, our international insurance operations offer various traditional whole life, term, endowment policies (which provide for payment on the earlier of death or maturity) and retirement income life insurance products that combine an insurance protection element similar to that of term life policies with a retirement income feature. In most of our operations, we also offer certain health products with fixed benefits, some of which include a high savings element, as well as annuity products, which are primarily represented by U.S. and Australian dollar-denominated fixed annuities in our Gibraltar Life operations.    Our Life Planners' primary objective is to sell protection-oriented life insurance products on a needs basis to mass affluent and affluent customers, as well as to small businesses, whereas Gibraltar'sLife Advisors have primarily sold individual protection products to the broad middle income market in Japan, particularly through relationships with affinity groups. Supplementing our core Life Planner and Life Advisor distribution channels, bank distribution channel sales primarily consist of products intended to provide premature death protection and retirement income, as well as fixed annuity products primarily denominated in U.S. dollars, and increasingly,                                          145
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  Australian dollars. The addition of the Star and Edison Businesses, with historical product offerings primarily comprised of individual life insurance, fixed annuities and certain health products with fixed benefits, significantly increases our scale in the Japanese insurance marketplace and also provides complementary distribution capabilities through an increased captive agency force, expanded bank channel distribution, as well as the addition of an established independent agency channel.    Historically, growth in annualized new business premiums was closely correlated to growth of our Life Planner and Life Advisor distribution force. Recently, growth in annualized new business premiums is being driven by increased average premium per new policy resulting in part from the growing demand for retirement-oriented products, as well as expanded distribution through third party channels, especially banks. As noted in the table below, bank channel sales contain a disproportionate number of single pay or limited pay contracts which tend to be larger policies and therefore have higher average premiums per policy. Our expectation is that this trend will continue.    
The table below present annualized new business premiums on a constant exchange rate basis, by product and distribution channel, for the periods indicated.
                                                            Year Ended December 31, 2011                                          Year Ended December 31, 2010                                                   Accident                                                             Accident                                                       &           Retirement                                               &           Retirement                                       Life        Health(1)          (2)           Annuity       Total      Life       Health(1)          (2)           Annuity       Total                                                                                                   (in millions) Life Planners                        $   425     $       174     $        448     $      50     $ 1,097     $ 417     $       163     $        360     $      33     $   973 Gibraltar Life: Life Advisors                            415             194              127           192         928       266              70               66           103         505 Banks(3)                                 373              43               22           142         580       185              43               36            72         336 Independent Agency                       172             178               17            68         435         4              48                2             2          56  Subtotal                                 960             415              166           402       1,943       455             161              104           177         897  Total                                $ 1,385     $       589     $        614     $     452     $ 3,040     $ 872     $       324     $        464     $     210     $ 1,870     
(1)   Includes medical insurance, cancer insurance and accident & sickness riders.
      The years ended December 31, 2011 and 2010 include $305 million and $211
      million, respectively, of annualized new business premiums from cancer
      insurance products.
(2)   Includes retirement income, endowment and savings variable universal life.
(3)   Single pay life annualized new business premiums, which include 10% of first
      year premiums, and 3-year limited pay annualized new business premiums,
      which include 100% of new business premiums, represented 30% and 50%,
      respectively, of total bank distribution channel annualized new business
      premiums, excluding annuity products, for the year ended December 31, 2011,
      and 1% and 64%, respectively, of total bank distribution channel annualized
      new business premiums, excluding annuity products, for the year ended       December 31, 2010.     2011 to 2010 Annual Comparison.  On a constant exchange rate basis, annualized new business premiums increased $1,170 million, from $1,870 million in 2010 to $3,040 million in 2011.    Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $124 million, from $973 million in 2010 to $1,097 million in 2011, including $78 million of higher sales in Japan driven by growth in average premium per policy reflecting the increasing demand for both yen and U.S. dollar-denominated retirement income products. Sales in Korea increased $21 million driven by growth in average premium per policy resulting from increased sales of retirement income products and variable annuity products. In Brazil, sales increased $13 million primarily driven by sales of whole life products due in part to an increase in the number of Life Planners.    Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life operations increased $1,046 million, from $897 million in 2010 to $1,943 million in 2011, with Star and Edison contributing $728 million to this increase. Annualized new business premiums for Star include approximately $120 million of sales from an increasing term product that was discontinued upon completion of the merger with Gibraltar. Excluding Star and Edison, the increase in annualized new business premiums was driven by higher bank channel sales of $220 million, primarily due to increased sales of protection products including $129 million                                          146 
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  from single premium whole life sales due in part to increased sales in advance of a premium increase on our yen-denominated product effective early February, 2011, and $55 million in whole life products. Historically, a significant amount of sales through our bank channel distribution was derived through a single Japanese mega-bank; however, certain of our other bank channel relationships are also contributing to the more recent sales growth. Excluding Star and Edison, independent agency distribution sales increased $81 million with the vast majority from sales of cancer insurance products and Life Advisor sales increased $17 million, primarily reflecting higher sales of retirement income and annuity products.    The number of Life Planners increased by 227 from 6,565 as of December 31, 2010 to 6,792 as of December 31, 2011, driven by an increase of 84 in Brazil due to stronger recruitment, as well as increases of 62 in Korea, 32 in Poland, 31 in Italy and 15 in Japan. Over the past twelve months, there were 35 Japanese Life Planners transferred to Gibraltar Life, primarily in support of our efforts to expand our bank channel distribution and to service orphaned policyholders. Prior to December 31, 2010, an additional 396 Japanese Life Planners were transferred to Gibraltar Life.    The number of Life Advisors increased by 6,510 from 6,281 as of December 31, 2010 to 12,791 as of December 31, 2011, primarily driven by the Star and Edison acquisition. As of December 31, 2011, 6,550 Life Advisors were associated with the acquired businesses of Star and Edison, reflecting a decrease of 719 from the 7,269 Life Advisors as of the February 1, 2011 date of acquisition as recruitments were more than offset by terminations and resignations.    
The table below present annualized new business premiums on a constant exchange rate basis, by product and distribution channel, for the periods indicated.
                                                      Year Ended December 31, 2010                                              Year Ended December 31, 2009                                            Accident                                                                  Accident                                                &            Retirement                                                   &            Retirement                                Life        Health(1)           (2)            Annuity        Total       Life        Health(1)           (2)            Annuity        Total                                                                                                (in millions)
Life Planners                  $ 417      $       163      $        360      $      33      $   973      $ 402      $       136      $        310      $      35      $   883 Gibraltar Life: Life Advisors                    266               70                66            103          505        251               68                56            100          475 Banks(3)                         185               43                36             72          336         53                0                33             51          137 Independent Agency                 4               48                 2              2           56          0                0                 0              0            0  Subtotal                         455              161               104            177          897        304               68                89            151          612  Total                          $ 872      $       324      $        464      $     210      $ 1,870      $ 706      $       204      $        399      $     186      $ 1,495     
(1)   Includes medical insurance, cancer insurance and accident & sickness riders.
      The years ended December 31, 2010 and 2009 includes $211 million and $89
      million, respectively, of annualized new business premiums from cancer
      insurance products.
(2)   Includes retirement income, endowment and savings variable universal life.
(3)   Single pay life annualized new business premiums, which include 10% of first
      year premiums, and 3-year limited pay annualized new business premiums,
      which include 100% of new business premiums, represented 1% and 64%,
      respectively, of total bank distribution channel annualized new business
      premiums, excluding annuity products, for the year ended December 31, 2010,
      and 1% and 48%, respectively, of total bank distribution channel annualized
      new business premiums, excluding annuity products, for the year ended       December 31, 2009.     2010 to 2009 Annual Comparison.  On a constant exchange rate basis, annualized new business premiums increased $375 million, from $1,495 million in 2009 to $1,870 million in 2010.    Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $90 million, primarily due to higher sales of retirement income and cancer whole life products in Japan.    Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life operation increased $285 million, primarily due to higher sales of protection products in our bank distribution channels and sales related to a recently introduced cancer whole life product, a portion of which were sold through the independent agency channel.                                          147
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  The number of Life Planners decreased by 44, or 1%, from 6,609 as of December 31, 2009 to 6,565 as of December 31, 2010, driven by decreases of 76 in Taiwan, 53 in Poland and 31 in Argentina, partially offset by increases of 43 in Italy, 36 in Brazil and 28 in Japan. Over the past twelve months, we transferred 92 Japanese Life Planners to Gibraltar, primarily in support of our efforts to expand our bank channel distribution and to service orphaned policyholders. Factoring in these transfers, the number of Japanese Life Planners would have increased 4%, from December 31, 2009 to December 31, 2010. Prior to December 31, 2009, an additional 304 Japanese Life Planners were transferred to Gibraltar.    The number of Life Advisors decreased by 117, from 6,398 as of December 31, 2009 to 6,281 as of December 31, 2010, as new hires and 22 Life Planners transferred to Gibraltar as Life Advisors over the last twelve months were offset by resignations and terminations due in part to failure to meet minimum sales production standards. The remaining Life Planners transferred to Gibraltar, as discussed above, are not considered Life Advisors.    
Investment Margins and Other Profitability Factors
    Many of our insurance products sold in international markets provide for the buildup of cash values for the policyholder at mandated guaranteed interest rates. Authorities in some jurisdictions regulate interest rates guaranteed in our insurance contracts. The regulated guaranteed interest rates do not necessarily match the actual returns on our underlying investments that support these products. The spread between the actual investment returns and these guaranteed rates of return to the policyholder is an element of the profit or loss that we will experience on these products. With regulatory approval, guaranteed rates may be changed on new business which enhances our ability to set rates commensurate with available investment returns. However, the major sources of profitability for many of our products, particularly those sold by Prudential of Japan, are margins on mortality, morbidity and expense charges rather than investment spreads.    We base premiums and cash values in most countries in which we operate on mandated mortality and morbidity tables. Our mortality and morbidity experience in the International Insurance segment on an overall basis in the years ended December 31, 2011, 2010 and 2009 was well within our pricing assumptions and below the guaranteed levels reflected in the premiums we charge.    Corporate and Other    Corporate and Other includes corporate operations, after allocations to our business segments.                                                                    Year ended December 31,                                                             2011          2010          2009                                                                      (in millions) Operating results: Net investment income, net of interest expense, excluding capital debt interest expense                   $    (24 )     $  (63 )     $    (54 ) Capital debt interest expense                                 (621 )       (554 )         (495 ) Pension income and employee benefits                           173          204            211 Other corporate activities(1)                                 (655 )       (510 )         (441 )  Adjusted operating income                                   (1,127 )       (923 )         (779 )  Realized investment gains (losses), net, and related adjustments(2)                                              (1,496 )         98            108 Related charges(3)                                              25            2              6 Divested businesses(4)                                          54         
(25 )        2,086 Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(5)
           (13 )        
(18 )       (2,311 )
Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures
                                                  $ (2,557 )     $ (866 )     $   (890 )     
(1)   Includes consolidating adjustments.
(2)   Revenues exclude Realized investment gains (losses), net, and related
      adjustments. See "-Realized Investment Gains and Losses and General Account
      Investments-Realized Investment Gains and Losses."
(3)   Benefits and expenses exclude related charges which represent consolidating
      adjustments.   (4)   See "-Divested Businesses."                                           148 
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  Table of Contents (5)   Equity in earnings of operating joint ventures are included in adjusted
      operating income but excluded from income from continuing operations before
      income taxes and equity in earnings of operating joint ventures as they are
      reflected on a U.S. GAAP basis on an after-tax basis as a separate line in
      our Consolidated Statements of Operations. Earnings attributable to
      noncontrolling interests are excluded from adjusted operating income but
      included in income from continuing operations before income taxes and equity
      in earnings of operating joint ventures as they are reflected on a U.S. GAAP
      basis as a separate line in our Consolidated Statements of Operations.
      Earnings attributable to noncontrolling interests represent the portion of
      earnings from consolidated entities that relates to the equity interests of
      minority investors.     2011 to 2010 Annual Comparison.  The loss from Corporate and Other operations, on an adjusted operating income basis, increased $204 million, from $923 million in 2010 to $1,127 million in 2011. Corporate and Other operations recorded a $93 million increase in expenses for estimated payments arising from use of new Social Security Master Death File matching criteria to identify deceased policy and contract holders. See Note 23 to the Notes to Consolidated Financial Statements for further details regarding this matter. Corporate and Other operations also recorded a $20 million charge related to a voluntary contribution to an insurance industry insolvency fund, related to Executive Life Insurance Company of New York. Greater net charges from other corporate activities, primarily reflecting increased retained corporate expenses, including corporate advertising, contributed to the increased loss. The increase in net charges from other corporate activities was partially offset by more favorable results from corporate foreign currency hedging activities and reduced charges compared to the prior period for certain retained obligations relating to pre-demutualization policyholders to whom we had previously agreed to provide insurance for reduced or no premium in accordance with contractual settlements related to prior individual life insurance sales practices remediation. Capital debt interest expense increased $67 million due to a greater level of capital debt, which includes the issuance in November 2010 of $1 billion of debt for the acquisition of the Star and Edison Businesses. Investment income, net of interest expense, excluding capital debt interest expense, increased $39 million due to higher income in our corporate investment portfolio including higher income on equity method investments. Higher levels of short-term liquidity have been maintained throughout 2010 and into 2011 to provide additional flexibility to address our cash needs in view of changing financial market conditions. On February 1, 2011, we used a portion of cash and short-term investments in Corporate and Other operations to partially fund the purchase price related to our recent acquisition of the Star and Edison Businesses. Also, in June 2011, Prudential Financial's Board of Directors authorized the Company to repurchase, at management's discretion, up to $1.5 billion of its outstanding Common Stock through June 2012. During 2011, the Company made share repurchases of $999.5 million. See "-Liquidity and Capital Resources" for additional details.    Results from Corporate and Other operations pension income and employee benefits decreased $31 million primarily due to a decrease in income from our qualified pension plan. Income from our qualified pension plan decreased $31 million, from $321 million in 2010 to $290 million in 2011, due to a decrease in the expected rate of return on plan assets from 7.50% in 2010 to 7.00% in 2011, partially offset by the effect on expected return due to the growth in plan assets.    For purposes of calculating pension income from our own qualified pension plan for the year ended December 31, 2012, we will decrease the discount rate to 4.85% from 5.60% in 2011. The expected rate of return on plan assets will decrease to 6.75% in 2012 from 7.00% in 2011, and the assumed rate of increase in compensation will remain unchanged at 4.5%. We determined our expected rate of return on plan assets based upon a building block approach that considers inflation, real return, term premium, credit spreads, equity risk premium and capital appreciation as well as expenses, expected asset manager performance and the effect of rebalancing for the equity, debt and real estate asset mix applied on a weighted average basis to our pension asset portfolio. Giving effect to the foregoing assumptions and other factors, we expect, on a consolidated basis, income from our own qualified pension plan will continue to contribute to adjusted operating income in 2012, but at a level of about $55 million to $65 million lower than in 2011. Other postretirement benefit expenses will increase in a range of $15 million to $25 million. The increase is driven primarily by demographic updates, a decrease in the discount rate to 4.60% from 5.35% and the effect of a decrease in plan assets. In 2012, pension and other postretirement benefit service costs related to active employees will continue to be allocated to our business segments.    2010 to 2009 Annual Comparison.  The loss from Corporate and Other operations, on an adjusted operating income basis, increased $144 million, from $779 million in 2009 to $923 million in 2010. Capital debt interest expense increased $59 million due to a greater level of capital debt, which includes the issuance in                                          149 
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September 2009 of $500 million of exchangeable surplus notes, and reflects the use of a portion of the proceeds from prior sales of retail medium-term notes for general corporate purposes beginning in the second quarter of 2009, as well as the deployment of additional corporate borrowings for capital purposes. Investment income, net of interest expense, excluding capital debt interest expense, decreased $9 million. Net investment income, net of interest expense, excluding capital debt interest expense was also impacted by our repurchase of substantially all of our convertible senior notes during 2009. Also contributing to the greater loss from corporate operations in 2010 compared to the prior year are greater net charges from other corporate activities, primarily reflecting less favorable results from corporate hedging activities, increased corporate advertising expenses and other retained corporate expenses.    Results from Corporate and Other operations pension income and employee benefits decreased $7 million. The decrease reflects increases in employee benefits costs partially offset by an increase in income from our qualified pension plan. Income from our qualified pension plan increased $13 million, from $308 million in 2009 to $321 million in 2010.    Capital Protection Framework    Corporate and Other operations includes the results of our Capital Protection Framework, which includes, among other things, the capital hedge program. The capital hedge program broadly addresses the equity market exposure of the statutory capital of the Company as a whole, under stress scenarios, as described under "-Liquidity and Capital Resources-Liquidity and Capital Resources of Subsidiaries-Domestic Insurance Subsidiaries." This hedge program resulted in charges for amortization of derivative costs of $21 million and $8 million for the years ended December 31, 2011 and 2010, respectively. The market value changes of these derivatives included in "Realized investment gains (losses), net and related adjustments" was a gain of $9 million and a loss of $7 million for the years ended December 31, 2011 and 2010, respectively.    In addition, we manage certain risks associated with our variable annuity products through our living benefit hedging program, which is described under "-U.S. Retirement Solutions and Investment Management Division-Individual Annuities." We evaluate hedge levels versus our hedge target based on the overall capital considerations of the Company and prevailing capital market conditions. The GAAP/capital markets valuation framework underlying our hedge target assumes that current interest rate levels remain for the full projection period with no reversion to longer term averages. Due to the recent low interest rate environment, we decided to temporarily hedge to an amount that differs from our hedge target definition to be consistent with our long-term economic view. Because this decision was based on the overall capital considerations of the Company as a whole, the impact on results from temporarily hedging to an amount that differs from our hedge target definition is reported within Corporate and Other operations. For the years ended December 31, 2011 and 2010, "Realized investment gains (losses), net, and related adjustments" includes a loss of $1,662 million and a gain of $306 million, respectively, resulting from our decision to temporarily hedge to a different target and the change in interest rates during the years. Through our Capital Protection Framework, we have access to on-balance sheet capital and contingent sources of capital that is available to meet capital needs arising from our decision to temporarily hedge to an amount that differs from our hedge target definition, including funding of the after-tax realized investment losses incurred in 2011. For more information on the Company's Capital Protection Framework, see "-Liquidity and Capital Resources."    
We assess the composition of our hedging program on an ongoing basis, and we may change it from time to time based on our evaluation of the Company's risk position or other factors.
                    Results of Operations of Closed Block Business    We established the Closed Block Business effective as of the date of demutualization. The Closed Block Business includes our in force traditional domestic participating life insurance and annuity products and assets that are used for the payment of benefits and policyholder dividends on these policies, as well as other assets and equity and related liabilities that support these policies. We no longer offer these traditional domestic participating policies. See "-Overview-Closed Block Business" for additional details.                                          150
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  Each year, the Board of Directors of Prudential Insurance determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains, mortality experience and other factors. Although Closed Block experience for dividend action decisions is based upon statutory results, at the time the Closed Block was established, we developed, as required by U.S. GAAP, an actuarial calculation of the timing of the maximum future earnings from the policies included in the Closed Block. If actual cumulative earnings in any given period are greater than the cumulative earnings we expected, we will record this excess as a policyholder dividend obligation. We will subsequently pay this excess to Closed Block policyholders as an additional dividend unless it is otherwise offset by future Closed Block performance that is less favorable than we originally expected. The policyholder dividends we charge to expense within the Closed Block Business will include any change in our policyholder dividend obligation that we recognize for the excess of actual cumulative earnings in any given period over the cumulative earnings we expected in addition to the actual policyholder dividends declared by the Board of Directors of Prudential Insurance.    As of December 31, 2011, the excess of actual cumulative earnings over the expected cumulative earnings was $762 million, which was recorded as a policyholder dividend obligation. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. Additionally, the accumulation of net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block have been reflected as a policyholder dividend obligation of $3,846 million at December 31, 2011, to be paid to Closed Block policyholders unless offset by future experience, with an offsetting amount reported in "Accumulated other comprehensive income (loss)."    Operating Results    Management does not consider adjusted operating income to assess the operating performance of the Closed Block Business. Consequently, results of the Closed Block Business for all periods are presented only in accordance with U.S. GAAP. The following table sets forth the Closed Block Business U.S. GAAP results for the periods indicated.                                                                    Year ended December 31,                                                               2011        2010        2009                                                                      (in millions) U.S. GAAP results: Revenues                                                    $  7,015     $ 7,086     $ 5,245 Benefits and expenses                                          6,818       6,361       5,725 
Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures    $    197     $
 725     $  (480 )     
Income (Loss) from Continuing Operations Before Income Taxes and Equity in Earnings of Operating Joint Ventures
    2011 to 2010 Annual Comparison.  Income from continuing operations before income taxes and equity in earnings of operating joint ventures decreased $528 million from $725 million in 2010 to $197 million in 2011. Results for 2011 include a $636 million policyholder dividend obligation expense as actual cumulative earnings were higher than expected cumulative earnings. This expense was $510 million higher than the policyholder dividend obligation expense of $126 million in 2010. As noted above, as of December 31, 2011, the excess of actual cumulative earnings over the expected cumulative earnings was $762 million. If actual cumulative earnings fall below expected cumulative earnings in future periods, earnings volatility in the Closed Block Business, which is primarily due to changes in investment results, may not be offset by changes in the cumulative earnings policyholder dividend obligation. Results also included a $40 million increase in reserves for estimated payments arising from use of new Social Security Master Death File matching criteria to identify deceased policy and contract holders. See Note 23 to the Notes to Consolidated Financial Statements for further details regarding this matter. Partially offsetting these items, was an increase of $51 million in net realized investment gains, from $794 million in 2010 to $845 million in 2011, primarily resulting from higher trading gains as part of a change in asset allocation of the portfolios and lower impairment losses, partially offset by lower investment gains from the                                          151 
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  change in value of derivatives, including interest rate swaps and futures. For a discussion of Closed Block Business realized investment gains (losses), net, see "-Realized Investment Gains and Losses and General Account Investments-Realized Investment Gains and Losses."    2010 to 2009 Annual Comparison.  Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures increased $1,205 million, from a loss of $480 million in 2009 to income of $725 million in 2010. Results for 2010 include an increase of $2,079 million in net realized investment gains (losses), from losses of $1,285 million in 2009 to gains of $794 million in 2010, primarily due to lower impairments and credit losses, as well as a net increase in the market value of derivatives used in duration management programs. For a discussion of Closed Block Business realized investment gains (losses), net, see "-Realized Investment Gains and Losses and General Account Investments-Realized Investment Gains and Losses." Net investment income, net of interest expense, increased $67 million, primarily due to an increase in income on joint ventures and limited partnership investments accounted for under the equity method, partially offset by lower portfolio yields. In addition, dividends paid and accrued to policyholders decreased primarily due to a decrease in the 2010 dividend scale. The impact of these items contributed to the actual cumulative earnings which, when compared to the expected cumulative earnings, resulted in an increase in the cumulative earnings policyholder dividend obligation expense of $977 million, from 2009 compared to 2010. As of December 31, 2010, the excess of actual cumulative earnings over the expected cumulative earnings was $126 million.    Revenues    2011 to 2010 Annual Comparison.  Revenues, as shown in the table above under "-Operating Results," decreased $71 million, from $7,086 million in 2010 to $7,015 million in 2011, principally driven by a $89 million decrease in premiums, with a related decrease in changes in reserves, primarily due to the expected in force decline as policies terminate and the $33 million decrease in net investment income primarily due to lower portfolio yields. Partially offsetting these items was an increase of $51 million in net realized investment gains, as discussed above.    2010 to 2009 Annual Comparison.  Revenues, as shown in the table above under "-Operating Results," increased $1,841 million, from $5,245 million in 2009 to $7,086 million in 2010, principally driven by the $2,079 million increase in net realized investment gains (losses) and an increase of $69 million in net investment income, as discussed above. Partially offsetting these items was a decline in premiums, with a related decrease in changes in reserves, primarily due to a lower amount of dividends available for policyholders to purchase additional insurance, as a result of the 2010 dividend scale reduction, and to a lesser extent, the expected in force decline as policies terminate.    Benefits and Expenses    2011 to 2010 Annual Comparison.  Benefits and expenses, as shown in the table above under "-Operating Results," increased $457 million, from $6,361 million in 2010 to $6,818 million in 2011. This increase included a $500 million increase in dividends to policyholders reflecting an increase in the policyholder dividend obligation expense of $510 million, from $126 million in 2010 to $636 million in 2011, partially offset by a decrease in dividends paid and accrued to policyholders of $10 million, primarily due to a decline in policies in force. Partially offsetting this increase was a decrease in policyholders' benefits, including changes in reserves of $30 million primarily due to the impact of the decline in premiums, partially offset by an increase in reserves for estimated payments arising from use of new Social Security Master Death File matching criteria to identify deceased policy and contract holders, as discussed above. Also, amortization of deferred policy acquisition costs decreased $13 million reflecting the impact of lower investment gains in the calculation of actual gross profits for the period compared to the prior period.    2010 to 2009 Annual Comparison.  Benefits and expenses, as shown in the table above under "-Operating Results," increased $636 million, from $5,725 million in 2009 to $6,361 million in 2010. This increase included an $849 million increase in dividends to policyholders reflecting an increase in the cumulative earnings policyholder dividend obligation expense of $977 million, representing an $851 million reduction in the cumulative earnings policyholder dividend obligation in 2009, compared to a $126 million increase in the cumulative earnings policyholder dividend obligation in 2010. This increase was partially offset by a decrease in                                          152 
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  dividends paid and accrued to policyholders of $128 million, primarily due to a decrease in the 2010 dividend scale. Policyholders' benefits, including changes in reserves, decreased $250 million driven by a decline in premiums, as discussed above.                                      Income Taxes    Shown below is our income tax provision for the years ended December 31, 2011, 2010 and 2009, separately reflecting the impact of certain significant items. Also presented below is the income tax provision that would have resulted from application of the statutory 35% federal income tax rate in each of these periods.                                                                     Year ended December 31,                                                             2011          2010           2009                                                                       (in millions) Tax provision                                             $  1,599       $ 1,303       $    (62 ) Impact of: Reversal of acquisition opening balance sheet deferred tax items                                                     (252 )          (6 )           (6 ) Non-taxable investment income                                  247           214            177 Uncertain tax positions and interest                            57            (9 )          286 Low income housing and other tax credits                        45            58             68 Foreign taxes at other than U.S. rate                           34            51             15 Change in tax rate                                             (29 )         (69 )            0 Non-deductible expenses                                        (17 )         (10 )            3 Change in valuation allowance                                   (8 )         (29 )            0 Other                                                          115            34             52  Tax provision excluding these items                       $  1,791       $ 
1,537       $    533
  Tax provision at statutory rate                           $  1,791       $ 1,537       $    533      Our income tax provision amounted to an income tax expense of $1,599 million in 2011 compared to $1,303 million in 2010. The increase in income tax expense reflects the increase in pre-tax income from continuing operations before income taxes and equity in earnings of operating joint ventures for the year ended December 31, 2011. In addition, our 2011 income tax expense includes an additional U.S. tax expense of $246 million related to the realization of a portion of the local deferred tax assets existing on the opening balance sheet for the Star and Edison Businesses. The local utilization of the deferred tax asset coupled with the repatriation assumption for the applicable earnings of our Japanese entities, creates the effect of a "double tax" for U.S. GAAP purposes. In addition, 2011 income tax expense includes a charge for the remeasurement of the deferred tax liabilities in the amount of $28 million related to a tax rate increase in Korea. These increases in annual tax expense were partially offset by a 2011 tax benefit of $42 million for the reversal of the valuation allowance against deferred tax assets for loss carryforwards of a Japanese insurance subsidiary and a $70 million tax benefit for the release of a liability for unrecognized tax benefits related to the conclusion of the federal tax audit for tax years 2004 through 2006. Furthermore, income tax expense for 2010 included a charge for the reduction of deferred tax assets in the amount of $94 million related to the Medicare Part D subsidy. In 2010, the Company recognized a higher tax expense of $21 million reflecting an increased valuation allowance against the state and local deferred tax assets of certain non-insurance subsidiaries.    
We employ various tax strategies, including strategies to minimize the amount of taxes resulting from realized capital gains.
For additional information regarding income taxes, see Note 19 to the Consolidated Financial Statements.
                               Discontinued Operations    Included within net income are the results of businesses which are reflected as discontinued operations under U.S. GAAP. Income (loss) from discontinued operations, net of taxes, was $35 million, $33 million and $(19) million for the years ended December 31, 2011, 2010 and 2009, respectively.                                          153
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For additional information regarding discontinued operations see Note 3 to the Consolidated Financial Statements.
                                 Divested Businesses    Our income from continuing operations includes results from several businesses that have been or will be sold or exited that do not qualify for "discontinued operations" accounting treatment under U.S. GAAP. The results of these divested businesses are reflected in our Corporate and Other operations, but excluded from adjusted operating income. For a further description of these divested businesses, see "Business-Corporate and Other." A summary of the results of these divested businesses that have been excluded from adjusted operating income is as follows for the periods indicated:                                                                   Year ended December 31,                                                          2011            2010          2009                                                                     (in millions) Financial Advisory                                      $    (7 )      $    (19 )     $ 2,167 Real Estate and Relocation Services Business                 81              47           (30 ) Property and Casualty Insurance                              (8 )           (33 )         (21 ) Individual Health Insurance                                 (15 )           (17 )         (15 ) Other(1)                                                      3              (3 )         (15 )  Total divested businesses excluded from adjusted operating income                                        $    54        $    (25 )     $ 2,086     
(1)   Primarily represents commercial mortgage securitization operations and
Prudential Securities Capital Markets and exchange traded shares previously
      held by Prudential Equity Group.     Financial Advisory    In 2008, we classified our Financial Advisory business as a divested business, reflecting our intention to exit this business. This business consists of our former investment in the Wachovia Securities joint venture, in addition to expenses relating to obligations and costs we retained in connection with the businesses we contributed to the joint venture, primarily for litigation and regulatory matters. On December 31, 2009, we completed the sale of our minority joint venture interest in Wachovia Securities, which includes Wells Fargo Advisors, to Wells Fargo. At the closing, we received $4.5 billion in cash as the purchase price of our joint venture interest and de-recognized the carrying value related to our investment in the joint venture. Results for 2009 include the associated pre-tax gain on the sale of $2.247 billion, which is reflected in "Equity in earnings of operating joint ventures, net of taxes" in our Consolidated Statements of Operations. Results for 2009 also include certain one-time costs related to the sale of the joint venture interest of $104 million, for pre-tax compensation costs and costs related to increased contributions to our charitable foundation.    
Real Estate and Relocations Services Business
    On December 6, 2011, we sold our real estate brokerage franchise and relocation services business which was comprised of PRERS to Brookfield Asset Management, Inc. We retained ownership of PREFSA, a finance subsidiary of PRERS with debt and equity investments in a limited number of real estate brokerage franchises. The results of these operations, inclusive of PREFSA, are reflected as a divested business for all periods presented. The proceeds from the sale, before transaction related expenses, were $108 million and resulted in a pre-tax gain of approximately $49 million.                      Experience-Rated Contractholder Liabilities, 
   Trading Account Assets Supporting Insurance Liabilities and Other Related
                                   Investments    Certain products included in the Retirement and International Insurance segments are experience-rated in that investment results associated with these products are expected to ultimately accrue to contractholders. The                                          154
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  majority of investments supporting these experience-rated products are classified as trading and are carried at fair value. These trading investments are reflected on the statements of financial position as "Trading account assets supporting insurance liabilities, at fair value" ("TAASIL"). Realized and unrealized gains and losses for these investments are reported in "Asset management fees and other income." Interest and dividend income for these investments is reported in "Net investment income." To a lesser extent, these experience-rated products are also supported by derivatives and commercial mortgage and other loans. The derivatives that support these experience-rated products are reflected on the statement of financial position as "Other long-term investments" and are carried at fair value, and the realized and unrealized gains and losses are reported in "Realized investment gains (losses), net." The commercial mortgage and other loans that support these experience-rated products are carried at unpaid principal, net of unamortized discounts and an allowance for losses, and are reflected on the statements of financial position as "Commercial mortgage and other loans." Gains and losses on sales and changes in the valuation allowance for commercial mortgage and other loans are reported in "Realized investment gains (losses), net."    Our Retirement segment has two types of experience-rated products that are supported by TAASIL and other related investments. Fully participating products are those for which the entire return on underlying investments is passed back to the policyholders through a corresponding adjustment to the related liability. The adjustment to the liability is based on changes in the fair value of all of the related assets, including commercial mortgage and other loans, which are carried at amortized cost, less any valuation allowance. Partially participating products are those for which only a portion of the return on underlying investments is passed back to the policyholders over time through changes to the contractual crediting rates. The crediting rates are typically reset semiannually, often subject to a minimum crediting rate, and returns are required to be passed back within ten years.    In our International Insurance segment, the experience-rated products are fully participating. As a result, the entire return on the underlying investments is passed back to policyholders through a corresponding adjustment to the related liability.    Adjusted operating income excludes net investment gains and losses on TAASIL, related derivatives and commercial mortgage and other loans. This is consistent with the exclusion of realized investment gains and losses with respect to other investments supporting insurance liabilities managed on a consistent basis. In addition, to be consistent with the historical treatment of charges related to realized investment gains and losses on investments, adjusted operating income also excludes the change in contractholder liabilities due to asset value changes in the pool of investments (including changes in the fair value of commercial mortgage and other loans) supporting these experience-rated contracts, which are reflected in "Interest credited to policyholders' account balances." The result of this approach is that adjusted operating income for these products includes net fee revenue and interest spread we earn on these experience-rated contracts, and excludes changes in fair value of the pool of investments, both realized and unrealized, that we expect will ultimately accrue to the contractholders.                                          155 
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The following tables set forth the impact of these items on results that are excluded from adjusted operating income for the periods indicated:
                                                                    Year ended December 31,                                                             2011          2010          2009                                                                       (in millions) Retirement Segment: Investment gains (losses) on: Trading account assets supporting insurance liabilities, net                                           $   383       $   468       $ 1,533 Derivatives                                                   (160 )          50          (131 ) Commercial mortgages and other loans                             9             6           (44 ) 
Change in experience-rated contractholder liabilities due to asset value changes(1)(2)
                              (283 )        (598 )        (831 )  Net gains (losses)                                         $   (51 )     $   (74 )     $   527 
International Insurance Segment: Investment gains (losses) on trading account assets supporting insurance liabilities, net
                      $  (160 )     $    33       $    68 Change in experience-rated contractholder liabilities due to asset value changes                                     160           (33 )         (68 )  Net gains (losses)                                         $     0       $     0       $     0  Total: Investment gains (losses) on: Trading account assets supporting insurance liabilities, net                                           $   223       $   501       $ 1,601 Derivatives                                                   (160 )          50          (131 ) Commercial mortgages and other loans                             9             6           (44 ) 
Change in experience-rated contractholder liabilities due to asset value changes(1)(2)
                              (123 )        (631 )        (899 )  Net gains (losses)                                         $   (51 )     $   (74 )     $   527     
(1)   Decreases to contractholder liabilities due to asset value changes are
      limited by certain floors and therefore do not reflect cumulative declines
      in recorded asset values of $7 million, $9 million and $35 million as of
December 31, 2011, 2010 and 2009, respectively. We have recovered and expect
      to recover in future periods these declines in recorded asset values through
      subsequent increases in recorded asset values or reductions in crediting
      rates on contractholder liabilities.   (2)   Included in the amounts above related to the change in the liability to       contractholders as a result of commercial mortgage and other loans are
      increases of $55 million, $108 million and $105 million for the years ended
December 31, 2011, 2010 and 2009, respectively. As prescribed by U.S. GAAP,
      changes in the fair value of commercial mortgage and other loans held for
      investment in our general account, other than when associated with
      impairments, are not recognized in income in the current period, while the
      impact of these changes in fair value are reflected as a change in the
      liability to fully participating contractholders in the current period.
     As shown in the table above, the net impacts for the Retirement segment of changes in experience-rated contractholder liabilities and investment gains and losses on trading account assets supporting insurance liabilities and other related investments were net losses of $51 million and $74 million and net gains of $527 million for the years ended December 31, 2011, 2010 and 2009, respectively. These impacts primarily reflect timing differences between the recognition of the mark-to-market adjustments and the recognition of the recovery of these adjustments in future periods through subsequent increases in asset values or reductions in crediting rates on contractholder liabilities for partially participating products. These impacts also reflect the difference between the fair value of the underlying commercial mortgage and other loans and the amortized cost, less any valuation allowance, of these loans, as described above.    As shown in the table above, the International Insurance segment includes offsetting impacts, in all periods, from changes in investment gains and losses on trading account assets supporting insurance liabilities and experience-rated contractholder liabilities.                          Valuation of Assets and Liabilities   
Fair Value of Assets and Liabilities
    The authoritative guidance related to fair value established a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within                                          156 
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which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. See Note 20 to the Consolidated Financial Statements for a description of these levels.
    The tables below present the balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2011 and 2010, split between the Financial Services Businesses and Closed Block Business, by fair value hierarchy level. See Note 20 to the Consolidated Financial Statements for the balances of assets and liabilities measured at fair value on a recurring basis presented on a consolidated basis.                                                     Financial Services
Businesses as of December 31, 2011
                                       Level 1          Level 2        Level 3(1)      Netting(2)         Total                                                                      (in millions) Fixed maturities, available-for-sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies              $        0       $   9,524      $         43     $                $   9,567 Obligations of U.S. states and their political subdivisions                   0           2,277                 0                          2,277 Foreign government bonds                       0          76,401                13                         76,414 Corporate securities                          12          96,090             1,016                         97,118 Asset-backed securities                        0           4,654             1,867                          6,521 Commercial mortgage-backed securities                                     0           8,220               145                          8,365 Residential mortgage-backed securities                                     0           7,856                14                          7,870  Subtotal                                      12         205,022             3,098                        208,132 Trading account assets supporting insurance liabilities: U.S. Treasury securities and obligations of U.S. government authorities and agencies                       0             177                 9                            186 Obligations of U.S. states and their political subdivisions                   0             284                 0                            284 Foreign government bonds                       0             655                 0                            655 Corporate securities                           0          10,927               109                         11,036 Asset-backed securities                        0           1,010               357                          1,367 Commercial mortgage-backed securities                                     0           2,226                21                          2,247 Residential mortgage-backed securities                                     0           1,842                 2                          1,844 Equity securities                            769             122                20                            911 Short-term investments and cash equivalents                                  684             267                 0                            951  Subtotal                                   1,453          17,510               518                         19,481 Other trading account assets: U.S. Treasury securities and obligations of U.S. government authorities and agencies                       0              31                 0                             31 Obligations of U.S. states and their political subdivisions                   0               0                 0                              0 Foreign government bonds                       2              45                 0                             47 Corporate securities                          14             383                39                            436 Asset-backed securities                        0             523                59                            582 Commercial mortgage-backed securities                                     0              96                14                            110 Residential mortgage-backed securities                                     0              94                 2                             96 Equity securities                            300              40             1,153                          1,493 All other(3)                                  15          13,547                93         (11,222 )        2,433  Subtotal                                     331          14,759             1,360         (11,222 )        5,228 Equity securities, available-for-sale                         1,909           2,171               333                          4,413 Commercial mortgage and other loans            0             514                86                            600 Other long-term investments                  192            (195 )           1,110                          1,107 Short-term investments                     5,035           3,197                 0                          8,232 Cash equivalents                           2,595           5,797                 0                          8,392 Other assets                                   3             (25 )               9                            (13 )  Subtotal excluding separate account assets                                    11,530         248,750             6,514         (11,222 )      255,572 Separate account assets(4)                40,319         158,703            19,358                        218,380  Total assets                          $   51,849       $ 407,453      $     25,872     $  (11,222)      $ 473,952  Future policy benefits                $        0       $       0      $      2,886     $                $   2,886 Other liabilities                              0           8,013               285          (7,854 )          444  Total liabilities                     $        0       $   8,013      $      3,171     $    (7,854 )    $   3,330                                            157 
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  Table of Contents                                                      Closed Block Business as of December 31, 2011                                          Level 1        Level 2       Level 3(1)       Netting(2)       Total                                                                      (in millions) Fixed maturities, available-for-sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies                $       0       $  5,514     $         23     $                $  5,537 Obligations of U.S. states and their political subdivisions                          0            778                0                           778 Foreign government bonds                        0            561               12                           573 Corporate securities                            0         29,321              434                        29,755 Asset-backed securities                         0          3,511              661                         4,172 Commercial mortgage-backed securities           0          3,715                0                         3,715 Residential mortgage-backed securities                                      0          1,984                2                         1,986  Subtotal                                        0         45,384            1,132                        46,516 Trading account assets supporting insurance liabilities                           0              0                0                             0 Other trading account assets: U.S. Treasury securities and obligations of U.S. government authorities and agencies                        0              0                0                             0 Obligations of U.S. states and their political subdivisions                          0              0                0                             0 Foreign government bonds                        0              0                0                             0 Corporate securities                            0            119                0                           119 Asset-backed securities                         0             70                0                            70 Commercial mortgage-backed securities           0              0                0                             0 Residential mortgage-backed securities                                      0              0                0                             0 Equity securities                               5              0              123                           128 All other(3)                                    0              0                0                             0  Subtotal                                        5            189              123                           317 Equity securities, available-for-sale       3,095              0               27                         3,122 Commercial mortgage and other loans             0              0                0                             0 Other long-term investments                     1            184                0                           185 Short-term investments                        471             57                0                           528 Cash equivalents                               72            965                0                         1,037 Other assets                                    0            111                0                           111  Subtotal excluding separate account assets                                      3,644         46,890            1,282                        51,816 Separate account assets(4)                      0              0                0                             0  Total assets                            $   3,644       $ 46,890     $      1,282     $                $ 51,816  Future policy benefits                  $       0       $      0     $          0     $                $      0 Other liabilities                               0              0                0                             0  Total liabilities                       $       0       $      0     $          0     $                $      0     
(1)   The amount of Level 3 assets taken as a percentage of total assets measured
      at fair value on a recurring basis totaled 5% and 2% for Financial Services
      Businesses and Closed Block Business, respectively. Excluding separate
      account assets for which the risk is borne by the policyholder, the amount
      of Level 3 assets taken as a percentage of total assets measured at fair
      value on a recurring basis totaled 3% for our Financial Services Businesses.
      The amount of Level 3 liabilities was immaterial to our balance sheet.
(2)   "Netting" amounts represent cash collateral and the impact of offsetting
      asset and liability positions held with the same counterparty.   (3)   Primarily represents derivative assets.   (4)   Separate account assets represent segregated funds that are invested for
      certain customers. Investment risks associated with market value changes are
      borne by the customers, except to the extent of minimum guarantees made by
      us with respect to certain accounts. Separate account assets classified as
      Level 3 consist primarily of real estate and real estate investment funds.
      Separate account liabilities are not included in the above table as they are
       reported at contract value and not fair value in our Consolidated Statement       of Financial Position.                                           158 
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Financial Services
Businesses as of December 31, 2010(4)
                                        Level 1           Level 2           
Level 3(1)        Netting(2)         Total
                                                                         (in 
millions)
 Fixed maturities, available-for-sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies              $        0       $      5,264       $          0      $                 $   5,264 Obligations of U.S. states and their political subdivisions                   0              1,574                  0                            1,574 Foreign government bonds                       0             49,549                 13                           49,562 Corporate securities                           5             69,843                694                           70,542 Asset-backed securities                        0              5,713              1,348                            7,061 Commercial mortgage-backed securities                                     0              8,128                130                            8,258 Residential mortgage-backed securities                                     0              7,525                 20                            7,545  Subtotal                                       5            147,596              2,205                          149,806 Trading account assets supporting insurance liabilities: U.S. Treasury securities and obligations of U.S. government authorities and agencies                       0                266                  0                              266 Obligations of U.S. states and their political subdivisions                   0                182                  0                              182 Foreign government bonds                       0                569                  0                              569 Corporate securities                           0             10,036                 82                           10,118 Asset-backed securities                        0                804                226                            1,030 Commercial mortgage-backed securities                                     0              2,402                  5                            2,407 Residential mortgage-backed securities                                     0              1,345                 18                            1,363 Equity securities                            935                200                  4                            1,139 Short-term investments and cash equivalents                                  606                 91                  0                              697  Subtotal                                   1,541             15,895                335                           17,771 Other trading account assets: U.S. Treasury securities and obligations of U.S. government authorities and agencies                       0                 96                  0                               96 Obligations of U.S. states and their political subdivisions                 118                  0                  0                              118 Foreign government bonds                       1                 24                  0                               25 Corporate securities                          14                151                 35                              200 Asset-backed securities                        0                574                 50                              624 Commercial mortgage-backed securities                                     0                 84                 19                              103 Residential mortgage-backed securities                                     0                163                 18                              181 Equity securities                            392                142                 26                              560 All other(3)                                  33              7,899                134            (5,904 )        2,162  Subtotal                                     558              9,133                282            (5,904 )        4,069 Equity securities, available-for-sale                         1,038              2,788                322                            4,148 Commercial mortgage and other loans            0                136                212                              348 Other long-term investments                   37                169                768                              974 Short-term investments                     2,171              1,641                  0                            3,812 Cash equivalents                           2,332              6,359                  0                            8,691 Other assets                               2,785               (107 )               (2 )                          2,676  Subtotal excluding separate account assets                                    10,467            183,610              4,122            (5,904 )      192,295 Separate account assets(4)                43,273            148,711             15,792                          207,776  Total assets                          $   53,740       $    332,321       $     19,914      $     (5,904 )    $ 400,071  Future policy benefits                $        0       $          0       $       (204 )    $                 $    (204 ) Other liabilities                              1              6,736                  2            (5,712 )        1,027  Total liabilities                     $        1       $      6,736       $       (202 )    $     (5,712 )    $     823                                            159 
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  Table of Contents                                                       Closed Block Business as of December 31, 2010(5)                                          Level 1          Level 2          Level 3(1)       Netting(2)       Total                                                                        (in millions) Fixed maturities, available-for-sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies                $       0       $     6,034       $          0     $                $  6,034 Obligations of U.S. states and their political subdivisions                          0               657                  0                           657 Foreign government bonds                        0               663                 14                           677 Corporate securities                            0            27,182                493                        27,675 Asset-backed securities                         0             3,525                405                         3,930 Commercial mortgage-backed securities           0             3,779                  0                         3,779 Residential mortgage-backed securities                                      0             2,422                  3                         2,425  Subtotal                                        0            44,262                915                        45,177 Trading account assets supporting insurance liabilities                           0                 0                  0                             0 Other trading account assets: U.S. Treasury securities and obligations of U.S. government authorities and agencies                        0                 0                  0                             0 Obligations of U.S. states and their political subdivisions                          0                 0                  0                             0 Foreign government bonds                        0                 0                  0                             0 Corporate securities                            0               118                  0                           118 Asset-backed securities                         0                33                  4                            37 Commercial mortgage-backed securities           0                 0                  0                             0 Residential mortgage-backed securities                                      0                 0                  0                             0 Equity securities                               1                 0                  0                             1 All other(3)                                    0                 0                  0                             0  Subtotal                                        1               151                  4                           156 Equity securities, available-for-sale       3,420               140                 33                         3,593 Commercial mortgage and other loans             0                 0                  0                             0 Other long-term investments                     0               (40 )                0                           (40 ) Short-term investments                      1,136                28                  0                         1,164 Cash equivalents                              143               302                  0                           445 Other assets                                    0               107                 11                           118  Subtotal excluding separate account assets                                      4,700            44,950                963                        50,613 Separate account assets(4)                      0                 0                  0                             0  Total assets                            $   4,700       $    44,950       $        963     $                $ 50,613  Future policy benefits                  $       0       $         0       $          0     $                $      0 Other liabilities                               0                 0                  1                             1  Total liabilities                       $       0       $         0       $          1     $                $      1     
(1)   The amount of Level 3 assets taken as a percentage of total assets measured
      at fair value on a recurring basis totaled 5% and 2% for the Financial
      Services Businesses and Closed Block Business, respectively. Excluding
      separate account assets for which the risk is borne by the policyholder, the
      amount of Level 3 assets taken as a percentage of total assets measured at
      fair value on a recurring basis totaled 2% for the Financial Services
      Businesses. The amount of Level 3 liabilities was immaterial to our balance
      sheet.
(2)   "Netting" amounts represent cash collateral and the impact of offsetting
      asset and liability positions held with the same counterparty.   (3)   Primarily represents derivative assets.   (4)   Separate account assets represent segregated funds that are invested for
      certain customers. Investment risks associated with market value changes are
      borne by the customers, except to the extent of minimum guarantees made by
      us with respect to certain accounts. Separate account assets classified as
      Level 3 consist primarily of real estate and real estate investment funds.
      Separate account liabilities are not included in the above table as they are
      reported at contract value and not fair value in our Consolidated Statement
      of Financial Position.   (5)   Includes reclassifications to conform to current period presentation.    
For additional information regarding the balances of assets and liabilities measured at fair value by hierarchy level see Note 20 to the Consolidated Financial Statements.
    The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on our results of operations. As discussed in more detail below, the determination of fair value for certain assets and liabilities may require the application of a greater degree of judgment depending on market conditions, as the ability to value assets and liabilities can be significantly impacted by a decrease in market activity or a lack of transactions executed in an orderly manner.                                          160 
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  For a description of the key estimates and assumptions used in our determination of fair value, see Note 20 to the Consolidated Financial Statements. The following sections provide additional information regarding certain assets and liabilities of our Financial Services Businesses and our Closed Block Business which are valued using Level 3 inputs and could have a significant impact on our results of operations. Information regarding separate account assets is excluded as the risk of assets for these categories is primarily borne by our customers and policyholders.   
Fixed Maturity and Equity Securities
    Public fixed maturity securities are generally valued using the price provided by independent pricing services under our normal pricing protocol. Securities with prices based on validated quotes from pricing services are generally reflected within Level 2. Public fixed maturity securities included in Level 3 in our fair value hierarchy are generally priced based on internally-developed valuations or non-binding broker quotes. For certain private fixed maturity and equity securities, the discounted cash flow or other valuation model uses significant unobservable inputs, and accordingly, such securities are included in Level 3 in our fair value hierarchy.    Level 3 fixed maturity securities included approximately $3.2 billion as of December 31, 2011 and $2.1 billion as of December 31, 2010 of public fixed maturities, with values primarily based on non-binding broker-quotes, and approximately $1.6 billion as of December 31, 2011 and $1.4 billion as of December 31, 2010 of private fixed maturities, with the majority of values based on internally-developed models. Significant unobservable inputs used included: issue specific credit adjustments, material non-public financial information, management judgment, estimation of future earnings and cash flows, default rate assumptions, liquidity assumptions and non-binding quotes from market makers. These inputs are usually considered unobservable, as not all market participants will have access to this data.    The impact our determination of fair value for fixed maturity and equity securities has on our results of operations is dependent on our classification of the security as either trading, available-for-sale, or held-to-maturity. For our investments classified as trading, the impact of changes in fair value is recorded within "Asset management fees and other income." For our investments classified as available-for-sale, the impact of changes in fair value is recorded as an unrealized gain or loss in "Accumulated other comprehensive income (loss)," a separate component of equity. Our investments classified as held-to-maturity are carried at amortized cost.    
Other Long-Term Investments
    The fair value of real estate held in consolidated investment funds is determined through an independent appraisal process. The appraisals generally utilize a discounted cash flow model, following an income approach that incorporates various assumptions including rental revenue, operating expenses and discount rates. The appraisals also include replacement cost estimates and recent sales data as alternate methods of fair value. These appraisals and the related assumptions are updated at least annually, and incorporate historical property experience and any observable market data, including any market transactions. Since many of the assumptions utilized are unobservable and are considered to be significant inputs to the valuation, the real estate investments within other long-term investments have been reflected within Level 3 in our fair value hierarchy. Consolidated real estate investment funds classified as Level 3 totaled approximately $0.4 billion as of both December 31, 2011 and December 31, 2010. Our direct investment in these funds is not material, and the majority of the assets recorded as a result of the consolidation of these funds are offset by a noncontrolling interest reflected as a separate component of equity. The noncontrolling interest is not considered to be fair valued and therefore is not included in fair value reporting above. The fair value of fund investments, where the fair value option has been elected, is primarily determined by the fund managers. Since the valuations may be based on unobservable market inputs and cannot be validated by the Company, these investments have also been included within Level 3 in our fair value hierarchy. Investments in these funds included in Level 3 totaled approximately $0.4 billion as of December 31, 2011 and $0.3 billion as of December 31, 2010.    Derivative Instruments    Derivatives are recorded at fair value either as assets, within "Other trading account assets," or "Other long-term investments," or as liabilities, within "Other liabilities," except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts are determined based on quoted                                          161 
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  prices in active exchanges or through the use of valuation models, and are affected by changes in market factors including non-performance risk. The majority of our derivative positions are traded in the over the counter (OTC) derivative market and are classified within Level 2 in our fair value hierarchy since their significant inputs have bid and ask prices that are actively quoted or can be readily obtained from external market data providers. Our policy is to use mid-market pricing consistent with our best estimate of fair value.    Derivatives classified as Level 3 include first-to-default credit basket swaps, look-back equity options and other structured products. These derivatives are valued based upon models with some significant unobservable market inputs or inputs from less actively traded markets. Derivatives classified within Level 3 are validated through periodic comparison of our fair values to broker-dealer values. The fair values of OTC derivative assets and liabilities classified as Level 3 totaled approximately $84 million and $3 million, respectively, as of December 31, 2011 and $126 million and $3 million, respectively, as of December 31, 2010, without giving consideration to the impact of netting.    
For additional information regarding embedded derivatives in our annuity and retirement products classified as Level 3, see "-Variable Annuity Optional Living Benefit Features" below.
    All realized and unrealized changes in fair value of derivatives, with the exception of the effective portion of qualifying cash flow hedges and hedges of net investments in foreign operations, are recorded in current earnings. Generally, the changes in fair value of non-dealer related derivatives, excluding those that qualify for hedge accounting, are recorded in "Realized investment gains (losses), net." For additional information regarding the impact of changes in fair value of derivative instruments on our results of operations see "-Realized Investment Gains and Losses and General Account Investments-Realized Investment Gains and Losses." Dealer related derivative activity related to the Company's former global commodities group is reported in "Income (loss) from discontinued operations, net of taxes."    
Variable Annuity Optional Living Benefit Features
    Our liability for future policy benefits includes general account liabilities for guarantees on variable annuity contracts, including guaranteed minimum accumulation benefits ("GMAB"), guaranteed minimum withdrawal benefits ("GMWB") and guaranteed minimum income and withdrawal benefits ("GMIWB"). While these guarantees primarily relate to the optional living benefit features of our Individual Annuities segment, they are also included in certain variable annuities in our International Insurance segment and certain retirement account based group variable annuities in our Retirement segment. These benefits are accounted for as embedded derivatives and are carried at fair value with changes in fair value included in "Realized investment gains (losses), net."    The fair values of the GMAB, GMWB and GMIWB liabilities are calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various policyholder behavior assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. Because there are significant assumptions utilized in the valuation of the embedded derivatives associated with our optional living benefit features that are primarily unobservable, the liability included in future policy benefits has been reflected within Level 3 in our fair value hierarchy.    We are also required to incorporate the market-perceived risk of our own non-performance ("NPR") in the valuation of the embedded derivatives associated with our optional living benefit features. Since insurance liabilities are senior to debt, we believe that reflecting the financial strength ratings of our insurance subsidiaries in the valuation of the liability appropriately takes into consideration our NPR. To reflect the NPR, we incorporate an additional credit spread over LIBOR rates into the discount rate used in the valuations of the embedded derivative liability. The additional credit spread over LIBOR rates incorporated into the discount rate as of December 31, 2011 generally ranged from 150 to 250 basis points for the portion of the interest rate curve most relevant to these liabilities. This additional spread is applied at an individual contract level and only to those individual living benefit contracts in a liability position and not to those in a contra-liability position. We also adjust these spreads to remove any illiquidity risk premium, subject to a floor based on a percentage of the credit spread.                                          162
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  As of December 31, 2011, the value of the embedded derivatives associated with the optional living benefit features of the Individual Annuities segment, before the adjustment for NPR, was a net liability of $8,341 million. This net liability was comprised of $8,555 million of individual living benefit contracts in a liability position, net of $214 million of individual living benefit contracts in a contra-liability position. As of December 31, 2011, our adjustment for NPR resulted in a $5,509 million cumulative decrease to the embedded derivative liability for the Individual Annuities segment, reflecting the additional credit spread over LIBOR rates we incorporated into the discount rate used in the valuations of those individual living benefit contracts in a liability position. This adjustment for NPR represents an increase of $4,786 million in 2011 for the Individual Annuities segment primarily resulting from a higher base of embedded derivative liabilities, driven by significant declines in risk-free interest rates and the impact of account value performance, as well as an overall widening of the spreads used in valuing NPR, which reflect the financial strength ratings of our insurance subsidiaries. Partially offsetting these items was a $506 million charge relating to a refinement to the calculation of the NPR that we implemented in the fourth quarter of 2011, which incorporates a floor to the illiquidity risk premium reduction at a percentage of the credit spread.    The change in fair value of the GMAB, GMWB and GMIWB resulted in a net liability of $2,886 million as of December 31, 2011, compared to a net contra-liability of $204 million as of December 31, 2010. The change primarily reflects a higher base of embedded derivative liabilities driven by significant declines in risk-free interest rates and the impact of account value performance, as well as an overall widening of the spreads used in valuing NPR, as noted above, which were primarily in our Individual Annuities segment as described in more detail under "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities."          Realized Investment Gains and Losses and General Account Investments   
Realized Investment Gains and Losses
    Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for other-than-temporary impairments. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, recoveries of principal on previously impaired securities, net changes in the allowance for losses, as well as gains and losses on sales, certain restructurings and foreclosures on commercial mortgage and other loans, fair value changes on commercial mortgage loans carried at fair value, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment, except those derivatives used in our capacity as a broker or dealer.    For a further discussion of our policies regarding other-than-temporary declines in investment value and the related methodology for recording fixed maturity other-than-temporary impairments, see "-General Account Investments-Fixed Maturity Securities-Other-Than-Temporary Impairments of Fixed Maturity Securities" below. For a further discussion of our policies regarding other-than-temporary declines in investment value and the related methodology for recording equity impairments, see "-General Account Investments-Equity Securities-Other-than-Temporary Impairments of Equity Securities" below. For a further discussion of our policy regarding commercial mortgage and other loans, see "-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality" below.    The level of other-than-temporary impairments generally reflects economic conditions and is expected to increase when economic conditions worsen and to decrease when economic conditions improve. Historically, the causes of other-than-temporary impairments have been specific to each individual issuer and have not directly resulted in impairments to other securities within the same industry or geographic region. As discussed in more detail below, certain of the other-than-temporary impairments recognized for the year ended December 31, 2011 related to foreign currency translation losses on securities that are approaching maturity, as well as adverse financial conditions of the respective issuer on asset-backed securities collateralized by sub-prime mortgages and Japanese commercial mortgage-backed securities. Other-than-temporary impairments recognized for the year ended December 31, 2010 were primarily related to asset-backed securities collateralized by sub-prime                                          163 
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mortgages and Japanese commercial mortgage-backed securities that reflect adverse financial conditions of the respective issuers, foreign currency translation losses related to foreign denominated securities that are approaching maturity, and the intent to sell securities, primarily related to asset-backed securities collateralized by sub-prime mortgages.
    We may realize additional credit and interest rate related losses through sales of investments pursuant to our credit risk and portfolio management objectives. Other-than-temporary impairments, interest rate related losses and credit related losses on sales (other than those related to certain of our businesses which primarily originate investments for sale or syndication to unrelated investors) are excluded from adjusted operating income.    
We require most issuers of private fixed maturity securities to pay us make-whole yield maintenance payments when they prepay the securities. Prepayments are driven by factors specific to the activities of our borrowers as well as the interest rate environment.
    We use interest rate and currency swaps and other derivatives to manage interest and currency exchange rate exposures arising from mismatches between assets and liabilities, including duration mismatches. We use derivative contracts to mitigate the risk that unfavorable changes in currency exchange rates will reduce U.S. dollar equivalent earnings generated by certain of our non-U.S. businesses. We also use equity-based and interest rate derivatives to hedge the risks embedded in some of our annuity products. Derivative contracts also include forward purchases and sales of to-be-announced mortgage-backed securities primarily related to our dollar roll program. Many of these derivative contracts do not qualify for hedge accounting, and consequently, we recognize the changes in fair value of such contracts from period to period in current earnings, although we do not necessarily account for the related assets or liabilities the same way. Accordingly, realized investment gains and losses from our derivative activities can contribute significantly to fluctuations in net income.    Adjusted operating income generally excludes "Realized investment gains (losses), net," subject to certain exceptions (realized investment gains or losses within certain of our businesses for which such gains or losses are a principal source of earnings and those associated with terminating hedges of foreign currency earnings and current period yield adjustments), and related charges and adjustments.                                          164 
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  The following tables set forth "Realized investment gains (losses), net," by investment type for the Financial Services Businesses and Closed Block Business, as well as related charges and adjustments associated with the Financial Services Businesses, for the periods indicated. For additional details regarding adjusted operating income, which is our measure of performance for the segments of our Financial Services Businesses, see Note 22 to the Consolidated Financial Statements.                                                                 Year Ended December 31,                                                       2011             2010            2009                                                                   (in millions) Realized investment gains (losses), net: Financial Services Businesses                       $   1,986       $      256       $  (1,612 ) Closed Block Business                                     845              794          (1,285 )  Consolidated realized investment gains (losses), net                                                 $   2,831       $    
1,050       $  (2,897 )
  Financial Services Businesses: Realized investment gains (losses), net: Fixed maturity securities                           $    (125 )     $     (361 )     $    (823 ) Equity securities                                        (120 )             11            (402 ) Commercial mortgage and other loans                        89               35            (517 ) Derivative instruments                                  2,095              601             171 Other                                                      47              (30 )           (41 )  Total                                               $   1,986       $      256       $  (1,612 )  Related adjustments(1)                                    535             (140 )           396  Realized investment gains (losses), net, and related adjustments                                     2,521              116          (1,216 )  Related charges(2)                                     (1,836 )           (178 )          (492 )  Realized investment gains (losses), net, and related charges and adjustments                     $     685       $      
(62 )     $  (1,708 )
  Closed Block Business: Realized investment gains (losses), net: Fixed maturity securities                           $     355       $      117       $    (381 ) Equity securities                                         265              174            (473 ) Commercial mortgage and other loans                        33               18             (85 ) Derivative instruments                                    199              489            (298 ) Other                                                      (7 )             (4 )           (48 )  Total                                               $     845       $      794       $  (1,285 )     
(1)   Related adjustments include that portion of "Realized investment gains
      (losses), net," that are included in adjusted operating income, including
      those pertaining to certain derivative contracts, as well as those within
      certain of our businesses for which such gains (losses) are a principal
      source of earnings. Related adjustments also include that portion of "Asset
      management fees and other income" and "Net investment income" that are
      excluded from adjusted operating income, including the change in value due
      to the impact of changes in foreign currency exchange rates during the
      period on certain assets and liabilities for which we economically hedge the
      foreign currency exposure, realized and unrealized gains and losses on
      certain general account investments classified as "Other trading account
      assets," as well as counterparty credit losses on derivative positions. See
      Note 22 to the Consolidated Financial Statements for additional information
      on these related adjustments.   (2)   Reflects charges that are excluded from adjusted operating income, as
      described more fully in Note 22 to the Consolidated Financial Statements.
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2011 to 2010 Annual Comparison
Financial Services Businesses
    The Financial Services Businesses' net realized investment gains in 2011 were $1,986 million, compared to net realized investment gains of $256 million in 2010.    Net realized losses on fixed maturity securities were $125 million in 2011, compared to net realized losses of $361 million in 2010, as set forth in the following table:                                                                  Year Ended December 31,                                                             2011                  2010                                                                    (in millions) Realized investment gains (losses), net-Fixed Maturity Securities-Financial Services Businesses Gross realized investment gains: Gross gains on sales and maturities(1)                   $       527           $       380 Private bond prepayment premiums                                  36                    37  Total gross realized investment gains                            563                   417  
Gross realized investment losses: Net other-than-temporary impairments recognized in earnings(2)
                                                     (431 )                (564 ) Gross losses on sales and maturities(1)                         (250 )                (173 ) Credit related losses on sales                                    (7 )                 (41 )  Total gross realized investment losses                          (688 )      
          (778 )
  Realized investment gains (losses), net-Fixed Maturity Securities                                      $      (125 )      
   $      (361 )
  Net gains (losses) on sales and maturities-Fixed Maturity Securities(1)                                   $       277           $       207     
(1)   Amounts exclude prepayment premiums, other-than-temporary impairments, and
      credit related losses through sales of investments pursuant to our credit
      risk and portfolio management objectives.
(2)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.     Net trading gains on sales and maturities of fixed maturity securities of $277 million in 2011 were primarily due to sales within our Retirement and Individual Annuities segments. Included in the gross gains on sales and maturities of fixed maturity securities were $35 million of gross gains related to the sale of asset-backed securities collateralized by sub-prime mortgages. Net trading gains on sales and maturities of fixed maturity securities of $207 million in 2010 were primarily due to sales within our Retirement and Individual Annuities segments. Included in the gross gains on sales and maturities of fixed maturity securities were $4 million of gross gains related to the sale of asset-backed securities collateralized by sub-prime mortgages. Sales of fixed maturity securities in our Individual Annuities segment in both years were primarily due to transfers of investments out of our general account and into separate accounts relating to an automatic rebalancing element associated with certain living benefit features of some of our variable annuity products. See below for additional information regarding the other-than-temporary impairments of fixed maturity securities in 2011 and 2010.    Net realized losses on equity securities were $120 million in 2011, of which other-than-temporary impairments were $94 million and net trading losses on sales of equity securities were $26 million. Net trading losses in 2011 were primarily due to public equity sales within our International Insurance operations. Net realized gains on equity securities were $11 million in 2010, of which net trading gains on sales of equity securities were $89 million, partially offset by other-than-temporary impairments of $78 million. Net trading gains in 2010 were primarily due to private equity sales within our Corporate and Other and International Insurance operations. See below for additional information regarding the other-than-temporary impairments of equity securities in 2011 and 2010.    Net realized gains on commercial mortgage and other loans in 2011 were $89 million, primarily related to a net decrease in the loan loss reserves of $169 million, which was largely offset by $139 million of realized losses on related restructurings and sales within our Asset Management and International Insurance businesses. In addition, there were $32 million of mark-to-market gains on our interim loan portfolio. Net realized gains on                                          166
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  commercial mortgage and other loans in 2010 were $35 million and primarily related to a net decrease in the loan loss reserves of $103 million and mark-to-market net gains on our interim loan portfolio. These net gains were partially offset by net realized losses on loan modifications, payoffs, and foreclosures within our Asset Management business. For additional information regarding our commercial mortgage and other loan loss reserves see "-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality."    Net realized gains on derivatives were $2,095 million in 2011, compared to net realized gains of $601 million in 2010. The net derivative gains in 2011 include net gains of $1,375 million related to product embedded derivatives and related hedge positions primarily associated with certain variable annuity contracts. See "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities" for additional information. Also, contributing to the net derivative gains were net mark-to-market gains of $498 million on interest rate derivatives used to manage duration as interest rates declined during 2011, and net gains of $214 million on foreign currency forward contracts used in our Star and Edison businesses to hedge portfolio assets primarily due to the strengthening of the Japanese yen against the U.S. dollar and Australian dollar. The net derivative gains in 2010 primarily reflect net gains of $521 million on interest rate derivatives used to manage duration as interest rates declined and net gains of $325 million primarily related to embedded derivatives and related hedge positions associated with certain variable annuity contracts. See "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities" for additional information. Also contributing to the 2010 gains are net derivative gains of $99 million on currency derivatives used to hedge foreign-denominated investments and net gains of $43 million on embedded derivatives associated with certain externally-managed investments in the European market. Partially offsetting the 2010 gains were net derivative losses of $319 million on foreign currency forward contracts used to hedge the future income of non-U.S. businesses primarily in Japan and net losses of $75 million on credit derivatives as credit spreads tightened.    Net realized gains on other investments were $47 million in 2011, which included a $64 million gain on the partial sale of a real estate seed investment, partially offset by $33 million of other other-than-temporary impairments on joint ventures and partnerships and real estate investments. Net realized losses on other investments were $30 million in 2010, which reflected $30 million of other other-than-temporary impairments on joint ventures and partnerships and real estate investments.    Related adjustments include that portion of "Realized investment gains (losses), net" that are included in adjusted operating income and that portion of "Asset management fees and other income" and "Net investment income" that are excluded from adjusted operating income. The adjustments are made to arrive at "Realized investment gains (losses), net, and related adjustments" which are excluded from adjusted operating income. Related adjustments to realized investment gains (losses) were a net positive adjustment of $535 million in 2011. Adjustments for that portion of "Realized investment gains (losses), net" that are included in adjusted operating income were a net negative adjustment of $240 million, driven by $154 million of gains that represent a principal source of earnings for certain of our businesses, including $64 million from the partial sale of a real estate seed investment, as well as $259 million of gains primarily from settlements on interest rate and currency swaps, partially offset by $175 million of losses related to the settlements of swaps used to hedge foreign-denominated earnings. Adjustments for that portion of "Asset management fees and other income" and "Net investment income" that are excluded from adjusted operating income were a net positive adjustment of $775 million, primarily driven by the impact of changes in foreign currency exchange rates on certain assets and liabilities for which we economically hedge the foreign currency exposure.    Related adjustments to realized investment gains (losses) were a net negative adjustment of $140 million in 2010. Adjustments for that portion of "Realized investment gains (losses), net" that are included in adjusted operating income were a net negative adjustment of $167 million, driven by $243 million of gains primarily from settlements on interest rate and currency swaps, partially offset by $93 million of losses related to the settlements of swaps used to hedge foreign-denominated earnings. Adjustments for that portion of "Asset management fees and other income" and "Net investment income" that are excluded from adjusted operating income were a net positive adjustment of $27 million, primarily driven by the impact of changes in foreign currency exchange rates on certain assets and liabilities for which we economically hedge the foreign currency exposure.                                          167 
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  Charges that relate to "Realized investment gains (losses), net" are also excluded from adjusted operating income. Related charges were net negative adjustments of $1,836 million and $178 million in 2011 and 2010, respectively. The $1,836 million in 2011 was primarily driven by that portion of amortization of deferred policy acquisition and other costs relating to the net gain (loss) on embedded derivatives and related hedge positions associated with certain variable annuity contracts. The $178 million in 2010 was primarily driven by payments associated with the market value adjustment features related to certain variable annuity products we sell.    During 2011, we recorded other-than-temporary impairments of $558 million in earnings, compared to other-than-temporary impairments of $672 million recorded in earnings in 2010. The following tables set forth, for the periods indicated, the composition of other-than-temporary impairments recorded in earnings attributable to the Financial Services Businesses by asset type, and for fixed maturity securities, by reason.                                                                   Year Ended December 31,                                                              2011                  2010                                                                     (in millions) Other-than-temporary impairments recorded in earnings-Financial Services Businesses(1) Public fixed maturity securities                          $       314           $       422 Private fixed maturity securities                                 117                   142  Total fixed maturity securities                                   431                   564 Equity securities                                                  94                    78 Other invested assets(2)                                           33                    30  Total                                                     $       558           $       672     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair
      value of the impaired debt security and the net present value of its
      projected future cash flows at the time of impairment.
(2)   Includes other-than-temporary impairments relating to investments in joint
       ventures and partnerships and real estate investments.                                                                  Year Ended December 31, 2011                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                  Maturity                                         Sub-Prime Mortgages                 Securities                Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Financial Services Businesses(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                     106           $             117           $         223 Due to other accounting guidelines(3)                                               12                         196                     208  Total                                $                     118           $             313           $         431                                                                Year Ended December 31, 2010                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                  Maturity                                         Sub-Prime Mortgages                 Securities                Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Financial Services Businesses(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                     140           $             185           $         325 Due to other accounting guidelines(3)                                               69                         170                     239  Total                                $                     209           $             355           $         564     
(1)   Excludes the portion of other-than-temporary impairment recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.  
(2)   Represents circumstances where we believe credit events or other adverse
      conditions of the respective issuers have caused, or will lead to, a
      deficiency in the contractual cash flows related to the investment. The
      amount of the impairment recorded in earnings is the difference between the
      amortized cost of the debt security and the net present value of its       projected future cash flows discounted at the effective interest rate       implicit in the debt security prior to impairment.  
(3)   Primarily represents circumstances where securities with foreign currency
      translation losses approach maturity or where we intend to sell the security
      or more likely than not will be required to sell the security before       recovery of its amortized cost basis.                                           168 
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  Fixed maturity other-than-temporary impairments in 2011 were concentrated in asset-backed securities collateralized by sub-prime mortgages, Japanese commercial mortgage-backed securities, and the retail and wholesale, services, and manufacturing sectors of our corporate securities. The 2011 other-than-temporary impairments were primarily related to securities with unrealized foreign currency translation losses that are approaching maturity or related to securities with liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers, which have caused, or we believe will lead to, a deficiency in the contractual cash flows related to the investment. Our Japanese insurance operations hold foreign currency-denominated investments which in some cases, due primarily to the strengthening of the yen, are currently in an unrealized loss position. As they approach maturity and remain in an unrealized loss position, it becomes less likely that the exchange rates will recover and more likely that losses will be realized upon maturity and therefore we record an other-than-temporary impairment. During 2011, we recorded other-than-temporary impairments of $184 million in earnings related to securities with an unrealized foreign currency translation loss that are approaching maturity. As of December 31, 2011, gross unrealized losses related to those securities maturing between January 1, 2012 and December 31, 2014 are $625 million. Based on December 31, 2011 fair values, absent a change in currency rates, impairments of approximately $191 million would be recorded in earnings in 2012 and approximately $142 million in 2013 on these securities. Fixed maturity other-than-temporary impairments in 2010 were concentrated in asset-backed securities collateralized by sub-prime mortgages, Japanese commercial mortgage-backed securities, and the services, manufacturing, and finance sectors of our corporate securities. The 2010 other-than-temporary impairments were primarily driven by asset-backed securities collateralized by sub-prime mortgages that reflect adverse financial conditions of the respective issuers, the impact of the rising forward LIBOR curve and the intent to sell securities. Additionally, other-than-temporary impairments were driven by Japanese commercial mortgage-backed securities that reflect adverse financial conditions of the respective issuers, and foreign currency translation losses related to foreign denominated securities that are approaching maturity.    Equity security other-than-temporary impairments in 2011 and 2010 were primarily driven by circumstances where the decline in value was maintained for one year or greater or where we intend to sell the security and were primarily in our Japanese insurance operations.    Closed Block Business   
For the Closed Block Business, net realized investment gains in 2011 were $845 million, compared to net realized investment gains of $794 million in 2010.
    Net realized gains on fixed maturity securities were $355 million in 2011, compared to net realized gains of $117 million in 2010, as set forth in the following table:                                                                  Year Ended December 31,                                                             2011                   2010                                                                    (in millions) Realized investment gains (losses), net-Fixed Maturity Securities-Closed Block Business Gross realized investment gains: Gross gains on sales and maturities(1)                   $       516            $       273 Private bond prepayment premiums                                  21                     24  Total gross realized investment gains                            537                    297  
Gross realized investment losses: Net other-than-temporary impairments recognized in earnings(2)
                                                     (104 )                 (168 ) Gross losses on sales and maturities(1)                          (75 )                  (10 ) Credit related losses on sales                                    (3 )                   (2 )  Total gross realized investment losses                          (182 )                 (180 )  Realized investment gains (losses), net-Fixed Maturity Securities                                      $       355        
    $       117
  Net gains (losses) on sales and maturities-Fixed Maturity Securities(1)                                   $       441            $       263     
(1)   Amounts exclude prepayment premiums, other-than-temporary impairments, and
      credit related losses through sales of investments pursuant to our credit
      risk and portfolio management objectives.
(2)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.                                           169 
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  Net trading gains on sales and maturities of fixed maturity securities were $441 million in 2011 and $263 million in 2010. See below for additional information regarding the other-than-temporary impairments of fixed maturity securities in 2011 and 2010.    Net realized gains on equity securities were $265 million in 2011, which included net trading gains on sales of equity securities of $283 million, partially offset by other-than-temporary impairments of $18 million. Net realized gains on equity securities were $174 million in 2010, which included net trading gains on sales of equity securities of $208 million, partially offset by other-than-temporary impairments of $34 million. See below for additional information regarding the other-than-temporary impairments of equity securities in 2011 and 2010.    Net realized gains on commercial mortgage and other loans in 2011 were $33 million related to a net decrease in the loan loss reserve of $42 million, partially offset by net realized losses on related foreclosures. Net realized gains on commercial mortgage and other loans in 2010 were $18 million related to a net decrease in the loan loss reserve of $22 million, partially offset by net realized losses on related foreclosures. For additional information regarding our loan loss reserves see "-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality."    Net realized gains on derivatives were $199 million in 2011 compared to net realized gains of $489 million in 2010. The net derivative gains in 2011 primarily reflect net gains of $135 million on interest rate derivatives used to manage duration as interest rates declined, and $53 million on "to be announced" ("TBA") forward contracts as interest rates declined. Also, contributing to these gains are net derivative gains of $23 million on currency derivatives used to hedge foreign denominated investments as the U.S. dollar strengthened against the euro. Partially offsetting these gains were net derivative losses of $11 million on embedded derivatives associated with certain externally-managed investments in the European market. Derivative gains in 2010 primarily reflect net mark-to-market gains of $404 million on interest rate derivatives used to manage duration as interest rates declined and net derivative gains of $74 million on currency derivatives used to hedge foreign denominated investments. Also, contributing to the net derivative gains in 2010 were net realized gains of $17 million on embedded derivatives associated with certain externally-managed investments in the European market.    During 2011, we recorded other-than-temporary impairments of $127 million in earnings, compared to other-than-temporary impairments of $208 million recorded in earnings in 2010. The following tables set forth, for the periods indicated, the composition of other-than-temporary impairments recorded in earnings attributable to the Closed Block Business by asset type, and for fixed maturity securities, by reason.                                                                   Year Ended December 31,                                                              2011                  2010                                                                     (in millions) Other-than-temporary impairments recorded in earnings-Closed Block Business(1) Public fixed maturity securities                          $        90           $       158 Private fixed maturity securities                                  14                    10  Total fixed maturity securities                                   104                   168 Equity securities                                                  18                    34 Other invested assets(2)                                            5                     6  Total                                                     $       127           $       208     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair
      value of the impaired debt security and the net present value of its
      projected future cash flows at the time of impairment.
(2)   Includes other-than-temporary impairments relating to investments in joint
      ventures and partnerships.                                           170 
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   Table of Contents                                                              Year Ended December 31, 2011                                       Asset-Backed Securities            All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                 Maturity                                         Sub-Prime Mortgages                 Securities               Securities                                                                     (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Closed Block Business(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                      61           $             36           $          97 Due to other accounting guidelines(3)                                                6                          1                       7  Total                                $                      67           $             37           $         104                                                                Year Ended December 31, 2010                                       Asset-Backed Securities            All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                 Maturity                                         Sub-Prime Mortgages                 Securities               Securities                                                                     (in millions)
Other-than-temporary
 impairments on fixed maturity securities recorded in earnings-Closed Block Business(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                      66           $             28           $          94 Due to other accounting guidelines(3)                                               67                          7                      74  Total                                $                     133           $             35           $         168     
(1)   Excludes the portion of other-than-temporary impairment recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.  
(2)   Represents circumstances where we believe credit events or other adverse
      conditions of the respective issuers have caused, or will lead to, a
      deficiency in the contractual cash flows related to the investment. The
      amount of the impairment recorded in earnings is the difference between the
      amortized cost of the debt security and the net present value of its       projected future cash flows discounted at the effective interest rate       implicit in the debt security prior to impairment.  
(3)   Primarily represents circumstances where we intend to sell the security or
      more likely than not will be required to sell the security before recovery
      of its amortized cost basis.     Fixed maturity other-than-temporary impairments of $104 million in 2011 were concentrated in asset-backed securities collateralized by sub-prime mortgages, and the public utilities and services sectors of our corporate securities and were primarily driven by liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers, which have caused, or we believe will lead to, a deficiency in the contractual cash flows related to the investment. Fixed maturity other-than-temporary impairments in 2010 were concentrated in asset-backed securities collateralized by sub-prime mortgages that reflect adverse financial conditions of the respective issuers as well as our intent to sell certain asset-backed securities collateralized by sub-prime mortgages.    Equity security other-than-temporary impairments in 2011 and 2010 were primarily due to circumstances where the decline in value was maintained for one year or greater.                                          171 
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2010 to 2009 Annual Comparison
Financial Services Businesses
    The Financial Services Businesses' net realized investment gains in 2010 were $256 million, compared to net realized investment losses of $1,612 million in 2009.    Net realized losses on fixed maturity securities were $361 million in 2010, compared to net realized losses of $823 million in 2009, as set forth in the following table:                                                                  Year Ended December 31,                                                               2010                2009                                                                    (in millions) Realized investment gains (losses), net-Fixed Maturity Securities-Financial Services Businesses Gross realized investment gains: Gross gains on sales and maturities(1)                     $      380           $     788 Private bond prepayment premiums                                   37                  19  Total gross realized investment gains                             417       
          807
Gross realized investment losses: Net other-than-temporary impairments recognized in earnings(2)
                                                      (564 )            (1,174 ) Gross losses on sales and maturities(1)                          (173 )              (319 ) Credit related losses on sales                                    (41 )     
         (137 )
  Total gross realized investment losses                           (778 )     
       (1,630 )
  Realized investment gains (losses), net-Fixed Maturity Securities                                        $     (361 )     
    $    (823 )
  Net gains (losses) on sales and maturities-Fixed Maturity Securities(1)                                     $      207           $     469     
(1)   Amounts exclude prepayment premiums, other-than-temporary impairments, and
      credit related losses through sales of investments pursuant to our credit
      risk and portfolio management objectives.
(2)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.     Net trading gains on sales and maturities of fixed maturity securities of $207 million in 2010 were primarily due to sales within our Retirement and Individual Annuities segments. Net trading gains on sales and maturities of fixed maturity securities of $469 million in 2009 were primarily due to sales of government bonds in our International Insurance business and sales within our Individual Annuities segment. Sales of fixed maturity securities in our Individual Annuities segment were primarily due to transfers of investments out of our general account and into separate accounts relating to an automatic rebalancing element embedded in the living benefit features of some of our variable annuity products. See below for additional information regarding the other-than-temporary impairments of fixed maturity securities in 2010 and 2009.    Net realized gains on equity securities were $11 million in 2010, of which net trading gains on sales of equity securities were $89 million, partially offset by other-than-temporary impairments of $78 million. Net trading gains in 2010 were primarily due to private equity sales within our Corporate and Other business and sales within our International Insurance business. Net realized losses on equity securities were $402 million in 2009, of which other-than-temporary impairments were $389 million and net trading losses on sales of equity securities were $13 million. Net trading losses in 2009 were primarily due to sales within our International Insurance business. See below for additional information regarding the other-than-temporary impairments of equity securities in 2010 and 2009.    Net realized gains on commercial mortgage and other loans in 2010 were $35 million and primarily related to a net decrease in the loan loss reserves of $103 million and mark-to-market net gains on our interim loan portfolio of $17 million. These net gains were partially offset by net realized losses on loan modifications, payoffs, and foreclosures within our Asset Management business. Net losses on commercial mortgage and other loans in 2009 were $517 million primarily related to a net increase in the loan loss reserve of $317 million and mark-to-market losses on mortgage loans within our Asset Management business. For additional information regarding our commercial mortgage and other loan loss reserves see "-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality."                                          172
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  Net realized gains on derivatives were $601 million in 2010, compared to net realized gains of $171 million in 2009. The net derivative gains in 2010 primarily reflect net gains of $521 million on interest rate derivatives used to manage duration as interest rates declined during 2010, and net gains of $325 million primarily related to embedded derivatives and related hedge positions associated with certain variable annuity contracts. See "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities" for additional information. Also contributing to these gains are net derivative gains of $99 million on currency derivatives used to hedge foreign denominated investments and net gains of $43 million on embedded derivatives associated with certain externally-managed investments in the European market. Partially offsetting these gains were net derivative losses of $319 million on foreign currency forward contracts used to hedge the future income of non-U.S. businesses primarily in Japan and net losses of $75 million on credit derivatives as credit spreads tightened. The net derivative gains in 2009 primarily reflect net gains of $376 million on embedded derivatives and related hedge positions associated with certain variable annuity contracts. Also contributing to the net derivative gains in 2009 were net gains of $196 million on embedded derivatives associated with certain externally-managed investments in the European market and net gains of $87 million on mark-to-market adjustments from credit derivatives. Partially offsetting these gains were net mark-to-market losses of $376 million on interest rate derivatives used to manage duration and net losses of $121 million on currency derivatives used to hedge foreign denominated investments.    Net realized losses on other investments were $30 million in 2010, which reflected $30 million of other other-than-temporary impairments on joint ventures and partnerships and real estate investments. Net realized losses on other investments were $41 million in 2009, which included $48 million of other-than-temporary impairments on joint ventures and partnerships and losses on investment real estate in our asset management operations.    During 2010 we recorded other-than-temporary impairments of $672 million in earnings, compared to total other-than-temporary impairments of $1,611 million recorded in earnings in 2009. The following tables set forth, for the periods indicated, the composition of other-than-temporary impairments recorded in earnings attributable to the Financial Services Businesses by asset type, and for fixed maturity securities, by reason.                                                                   Year Ended December 31,                                                              2010                2009                                                                     (in millions) Other-than-temporary impairments recorded in earnings-Financial Services Businesses(1) Public fixed maturity securities                           $     422         $       1,022 Private fixed maturity securities                                142                   152  Total fixed maturity securities                                  564                 1,174 Equity securities                                                 78                   389 Other invested assets(2)                                          30                    48  Total                                                      $     672         $       1,611     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair
      value of the impaired debt security and the net present value of its
      projected future cash flows at the time of impairment.
(2)   Includes other-than-temporary impairments relating to investments in joint
       ventures and partnerships and real estate investments.                                                                  Year Ended December 31, 2010                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                  Maturity                                         Sub-Prime Mortgages                 Securities                Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Financial Services Businesses(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                     140           $             185           $         325 Due to other accounting guidelines(3)                                               69                         170                     239  Total                                $                     209           $             355           $         564                                            173 
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  Table of Contents                                                              Year Ended December 31, 2009                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                    Maturity                 Maturity                                         Sub-Prime Mortgages                  Securities               Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Financial Services Businesses(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                      653          $              321          $         974 Due to other accounting guidelines(3)                                                15                         185                    200  Total                                $                      668          $              506          $       1,174     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.  
(2)   Represents circumstances where we believe credit events or other adverse
      conditions of the respective issuers have caused, or will lead to, a
      deficiency in the contractual cash flows related to the investment. The
      amount of the impairment recorded in earnings is the difference between the
      amortized cost of the debt security and the net present value of its       projected future cash flows discounted at the effective interest rate       implicit in the debt security prior to impairment.  
(3)   Primarily represents circumstances where we intend to sell the security or
      more likely than not will be required to sell the security before recovery
      of its amortized cost basis.     Fixed maturity other-than-temporary impairments in 2010 were concentrated in asset-backed securities collateralized by sub-prime mortgages, Japanese commercial mortgage-backed securities, and the services, manufacturing, and finance sectors of our corporate securities. These other-than-temporary impairments were primarily driven by asset-backed securities collateralized by sub-prime mortgages that reflect adverse financial conditions of the respective issuers, the impact of the rising forward LIBOR curve and the intent to sell securities. Additionally, other-than-temporary impairments were driven by Japanese commercial mortgage-backed securities that reflect adverse financial conditions of the respective issuers, and foreign currency translation losses related to foreign denominated securities that are approaching maturity. Our Japanese insurance operations hold U.S. dollar-denominated investments which in some cases, due primarily to the strengthening of the yen, are currently in an unrealized loss position. As they approach maturity and remain in an unrealized loss position, it becomes less likely that the exchange rates will recover and more likely that losses will be realized upon maturity and therefore we record an other-than-temporary impairment. During 2010, we recorded other-than-temporary impairments of $143 million in earnings related to securities with an unrealized foreign currency translation loss that are approaching maturity. As of December 31, 2010, gross unrealized losses related to those securities maturing between January 1, 2011 and December 31, 2012 are $201 million. Based on December 31, 2010 fair values, absent a change in currency rates, impairments of approximately $169 million would be recorded in earnings in 2011. Fixed maturity other-than-temporary impairments in 2009 were concentrated in asset-backed securities collateralized by sub-prime mortgages, and the manufacturing and services sectors of our corporate securities, and were primarily driven by liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers, which have caused, or we believe will lead to, a deficiency in the contractual cash flows related to the investment.    Equity security other-than-temporary impairments in 2010 and 2009 were primarily driven by circumstances where the decline in value was maintained for one year or greater or where we intend to sell the security. Equity security other-than-temporary impairments in 2010 were primarily in our Japanese insurance operations equity portfolios. Equity security other-than-temporary impairments in 2009 were primarily driven by declines in value of fund shares representing our interest in high yield bond funds of certain of our separate account investments supporting corporate owned life insurance and circumstances where we lack the ability or intent to retain the security to recovery.    Closed Block Business   
For the Closed Block Business, net realized investment gains in 2010 were $794 million, compared to net realized investment losses of $1,285 million in 2009.
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  Net realized gains on fixed maturity securities were $117 million in 2010, compared to net realized losses of $381 million in 2009, as set forth in the following table:                                                                  Year Ended December 31,                                                             2010                  2009                                                                    (in millions) Realized investment gains (losses), net-Fixed Maturity Securities-Closed Block Business Gross realized investment gains: Gross gains on sales and maturities(1)                   $       273           $       199 Private bond prepayment premiums                                  24                    19  Total gross realized investment gains                            297                   218  
Gross realized investment losses: Net other-than-temporary impairments recognized in earnings(2)
                                                     (168 )                (520 ) Gross losses on sales and maturities(1)                          (10 )                 (72 ) Credit related losses on sales                                    (2 )                  (7 )  Total gross realized investment losses                          (180 )      
          (599 )
  Realized investment gains (losses), net-Fixed Maturity Securities                                      $       117        
   $      (381 )
  Net gains (losses) on sales and maturities-Fixed Maturity Securities(1)                                   $       263           $       127     
(1)   Amounts exclude prepayment premiums, other-than-temporary impairments, and
      credit related losses through sales of investments pursuant to our credit
      risk and portfolio management objectives.
(2)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.    
Net trading gains on sales and maturities of fixed maturity securities were $263 million in 2010. See below for additional information regarding the other-than-temporary impairments of fixed maturity securities in 2010 and 2009.
    Net realized gains on equity securities were $174 million in 2010. Net trading gains on sales of equity securities were $208 million, partially offset by other-than-temporary impairments of $34 million. Net realized losses on equity securities were $473 million in 2009, of which other-than-temporary impairments were $613 million, partially offset by net trading gains on sales of equity securities of $140 million. Net trading gains reflect improved equity markets throughout 2010 and 2009 coupled with the current equity trading strategy which produced gains as the years progressed. See below for additional information regarding the other-than-temporary impairments of equity securities in 2010 and 2009.    Net realized gains on commercial mortgage and other loans in 2010 were $18 million related to a net decrease in the loan loss reserve of $22 million, partially offset by net realized losses. Net realized losses on commercial mortgage and other loans in 2009 were $85 million related to a net increase in the loan loss reserve of $82 million and other net realized losses. For additional information regarding our loan loss reserves see "-General Account Investments-Commercial Mortgage and Other Loans-Commercial Mortgage and Other Loan Quality."    Net realized gains on derivatives were $489 million in 2010, compared to net realized losses of $298 million in 2009. Derivative gains in 2010 primarily reflect net mark-to-market gains of $404 million on interest rate derivatives used to manage duration as interest rates declined and net derivative gains of $74 million on currency derivatives used to hedge foreign denominated investments as the US dollar strengthened versus the euro. Also, contributing to the net derivative gains were net realized gains of $17 million on embedded derivatives associated with certain externally-managed investments in the European market. Derivative losses in 2009 primarily reflect net mark-to-market losses of $218 million on interest rate derivatives used to manage the duration of the fixed maturity investment portfolio and net losses of $149 million related to currency derivatives used to hedge foreign denominated investments. Partially offsetting these losses were net gains of $52 million on embedded derivatives associated with certain externally-managed investments in the European market.                                          175 
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Net realized losses on other investments were $4 million in 2010, which included $6 million of other-than-temporary impairments on joint ventures and partnerships investments. Net realized losses on other investments were $48 million in 2009 of which $51 million was related to other-than-temporary impairments on joint ventures and partnerships investments.
    During 2010 we recorded other-than-temporary impairments of $208 million in earnings, compared to other-than-temporary impairments of $1,184 million recorded in earnings in 2009. The following tables set forth, for the periods indicated, the composition of other-than-temporary impairments recorded in earnings attributable to the Closed Block Business by asset type, and for fixed maturity securities, by reason.                                                                   Year Ended December 31,                                                              2010                2009                                                                     (in millions) Other-than-temporary impairments recorded in earnings-Closed Block Business(1) Public fixed maturity securities                           $     158         $         465 Private fixed maturity securities                                 10                    55  Total fixed maturity securities                                  168                   520 Equity securities                                                 34                   613 Other invested assets(2)                                           6                    51  Total                                                      $     208         $       1,184     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair
      value of the impaired debt security and the net present value of its
      projected future cash flows at the time of impairment.
(2)   Includes other-than-temporary impairments relating to investments in joint
       ventures and partnerships.                                                                  Year Ended December 31, 2010                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                  Maturity                                         Sub-Prime Mortgages                 Securities                Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Closed Block Business(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                      66           $              28           $          94 Due to other accounting guidelines(3)                                               67                           7                      74  Total                                $                     133           $              35           $         168                                                                Year Ended December 31, 2009                                       Asset-Backed Securities             All Other Fixed             Total Fixed                                          Collateralized By                   Maturity                  Maturity                                         Sub-Prime Mortgages                 Securities                Securities                                                                      (in millions) Other-than-temporary impairments on fixed maturity securities recorded in earnings-Closed Block Business(1) Due to credit events or adverse conditions of the respective issuer(2)                 $                     319           $             189           $         508 Due to other accounting guidelines(3)                                                3                           9                      12  Total                                $                     322           $             198           $         520     
(1)   Excludes the portion of other-than-temporary impairments recorded in "Other
      comprehensive income (loss)," representing any difference between the fair       value of the impaired debt security and the net present value of its       projected future cash flows at the time of impairment.  
(2)   Represents circumstances where we believe credit events or other adverse
      conditions of the respective issuers have caused, or will lead to, a
      deficiency in the contractual cash flows related to the investment. The
      amount of the impairment recorded in earnings is the difference between the
      amortized cost of the debt security and the net present value of its       projected future cash flows discounted at the effective interest rate       implicit in the debt security prior to impairment.  
(3)   Primarily represents circumstances where we intend to sell the security or
      more likely than not will be required to sell the security before recovery
      of its amortized cost basis.    
Fixed maturity other-than-temporary impairments in 2010 were concentrated in asset-backed securities collateralized by sub-prime mortgages that reflect adverse financial conditions of the respective issuers as well as
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  our intent to sell certain asset-backed securities collateralized by sub-prime mortgages. Fixed maturity other-than-temporary impairments in 2009 were concentrated in asset-backed securities collateralized by sub-prime mortgages, and the manufacturing and services sectors of our corporate securities and were primarily driven by liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers, which have caused, or we believe will lead to, a deficiency in the contractual cash flows related to the investment.    Equity security other-than-temporary impairments in 2010 and 2009 were primarily due to circumstances where the decline in value was maintained for one year or greater.    General Account Investments    We maintain diversified investment portfolios in our insurance companies to support our liabilities to customers in our Financial Services Businesses and the Closed Block Business, as well as our other general liabilities. Our general account does not include: (1) assets of our trading and banking operations; (2) assets of our asset management operations, including assets managed for third parties; and (3) those assets classified as "Separate account assets" on our balance sheet.    The general account portfolio is managed pursuant to the distinct objectives and investment policy statements of the Financial Services Businesses and the Closed Block Business. The primary investment objectives of the Financial Services Businesses include:    
    •   matching the liability characteristics of the major products and other
        obligations of the Company;    
  •   maximizing the portfolio book yield within risk constraints over time; and
    •   for certain portfolios, maximizing total return, including both investment
        yield and capital gains, and preserving principal, within risk constraints,
        while matching the liability characteristics of their major products.
     Our strategies for maximizing the portfolio book yield of the Financial Services Businesses over time include: (1) the investment of proceeds from investment sales, repayments and prepayments, and operating cash flows, into investments with competitive yields, and (2) where appropriate, the sale of the portfolio's lower yielding investments, either to meet various cash flow needs or to manage the portfolio's duration, credit, currency and other risk constraints, all while minimizing the amount of taxes on realized capital gains.    
The primary investment objectives of the Closed Block Business include:
    •   providing for the reasonable dividend expectations of the participating
        policyholders within the Closed Block Business and the Class B         shareholders; and    
    •   maximizing total return, including both investment yield and capital gains,
        and preserving principal, within risk constraints, while matching the         liability characteristics of the major products in the Closed Block         Business.     While we continue to look to maximize book yield and match the liability characteristics of our major products, our portfolio management approach also reflects a consideration of the capital and tax implications of portfolio activity, our assertions regarding our ability and intent to hold equity securities to recovery, and our lack of any intention or requirement to sell debt securities before anticipated recovery. In consideration of the potential impact on capital and tax positions, beginning in the fourth quarter of 2008 we temporarily curtailed the active trading policy previously employed in the Closed Block Business and certain portfolios of the Financial Services Businesses. Starting in the second quarter of 2009, we resumed a more restricted trading program in these portfolios, and continue to evaluate trading strategies for these portfolios. For a further discussion of our policies regarding other-than-temporary impairments, including our assertions regarding our ability and intent to hold equity securities to recovery and any intention or requirement to sell debt securities before anticipated recovery, see "-Fixed Maturity Securities-Other-than-Temporary Impairments of Fixed Maturity Securities" and "-Equity Securities-Other-than-Temporary Impairments of Equity Securities," below.                                          177 
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  Table of Contents  Management of Investments    We design asset mix strategies and derivative strategies for our general account to match the characteristics of our products and other obligations and seek to closely approximate the interest rate sensitivity, but not necessarily the exact cash flow characteristics, of the assets with the estimated interest rate sensitivity of the product liabilities. In certain markets, primarily outside the U.S., capital market limitations hinder our ability to acquire assets that closely approximate the duration of some of our liabilities. We achieve income objectives through asset/liability management, strategic and tactical asset allocations and derivative strategies within a disciplined risk management framework. Derivative strategies are employed within our risk management framework to help manage duration gaps, currency, and other risks between assets and liabilities. For a discussion of our risk management process see "Quantitative and Qualitative Disclosures About Market Risk-Risk Management, Market Risk and Derivative Instruments, and-Other Than Trading Activities-Insurance and Annuity Products Asset/Liability Management."    Our asset allocation also reflects our desire for broad diversification across asset classes, sectors and issuers. The Asset Management segment manages virtually all of our investments, other than those managed by our International Insurance segment, under the direction and oversight of the Asset Liability Management and Risk Management groups. Our International Insurance segment manages the majority of its investments locally, within enterprise risk constraints, in most cases using our international and domestic asset management capabilities.    The Investment Committee of our Board of Directors oversees our proprietary investments. It also reviews performance and risk positions periodically. Our portfolio management groups work with our Risk Management group to develop the investment policies for the general account assets of our domestic and international insurance subsidiaries, oversee the investment process for our general account and have the authority to initiate tactical shifts within exposure ranges approved annually by the Investment Committee.    The portfolio management groups, which are integrated within our businesses, work closely with Risk Management to ensure that the specific characteristics of our products are incorporated into their processes and to develop investment objectives, including performance factors and measures and asset allocation ranges. We adjust this dynamic process as products change, as customer behavior changes and as changes in the market environment occur. We develop asset strategies for specific classes of product liabilities and attributed or accumulated surplus, each with distinct risk characteristics. Most of our products can be categorized into the following three classes:    
    •   interest-crediting products for which the rates credited to customers are
        periodically adjusted to reflect market and competitive forces and actual
        investment experience, such as fixed annuities and universal life         insurance;    
    •   participating individual and experience-rated group products in which
        customers participate in actual investment and business results through
         annual dividends, interest or return of premium; and         •   guaranteed products for which there are price or rate guarantees for the
        life of the contract, such as traditional whole life and endowment         products, guaranteed investment contracts and funding agreements.     We determine a target asset mix for each product class, which we reflect in our investment policies. Our asset/liability management process has permitted us to manage interest-sensitive products successfully through several market cycles.    Portfolio Composition    Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, equity securities and other invested assets. The composition of our general account reflects, within the discipline provided by our risk management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our Asset Management segment. The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.    
On February 1, 2011, Prudential Financial completed the acquisition from AIG of the Star and Edison Businesses. Our Financial Services Businesses' general account portfolio as of December 31, 2011 includes
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$44,843 million of invested assets at carrying value of the Star and Edison Businesses, which consists of $40,257 million of fixed maturity securities, $1,526 million of other long-term investments, $938 million of equity securities, $790 million of commercial mortgage and other loans, $570 million of policy loans, $542 million of trading account assets, primarily supporting insurance liabilities, and $220 million of short-term investments. Since completing the acquisition, we have been repositioning the portfolios for the Star and Edison Businesses in order to improve the interest rate exposure profile relative to liabilities, diversify credit and risk asset exposures, and reduce unhedged currency positions. We substantially completed that repositioning by year-end 2011 and, as of January 1, 2012, the Star and Edison portfolios have been integrated with the Gibraltar portfolio.    The following tables set forth the composition of the investments of our general account apportioned between the Financial Services Businesses and the Closed Block Business as of the dates indicated.                                                                     December 31, 2011                                          Financial                                           Services          Closed Block                                          Businesses           Business            Total          % of Total                                                                   ($ in millions) Fixed Maturities: Public, available-for-sale, at fair value                                   $    179,086       $       30,211       $ 209,297               60.6 % Public, held-to-maturity, at amortized cost                                 3,743                    0           3,743                1.1 Private, available-for-sale, at fair value                                    26,938               16,305          43,243               12.5 Private, held-to-maturity, at amortized cost                                 1,364                    0           1,364                0.4 Trading account assets supporting insurance liabilities, at fair value                                         19,481                    0          19,481                5.6 Other trading account assets, at fair value                                     2,104                  317           2,421                0.7 Equity securities, available-for-sale, at fair value              4,401                3,122           7,523                2.2 Commercial mortgage and other loans, at book value                          25,073                9,040          34,113                9.9 Policy loans, at outstanding balance                                        6,263                5,296          11,559                3.3 Other long-term investments(1)                 4,481                1,990           6,471                1.9 Short-term investments(2)                      5,609                  528           6,137                1.8  Total general account investments            278,543               66,809         345,352              100.0 %  Invested assets of other entities and operations(3)                             10,895                    0          10,895  Total investments                       $    289,438       $       66,809       $ 356,247                                                                    December 31, 2010                                          Financial                                           Services          Closed Block                                          Businesses           Business            Total          % of Total                                                                   ($ in millions) Fixed Maturities: Public, available-for-sale, at fair value                                   $    124,577       $       30,499       $ 155,076               56.3 % Public, held-to-maturity, at amortized cost                                 3,940                    0           3,940                1.4 Private, available-for-sale, at fair value                                    23,108               14,678          37,786               13.7 Private, held-to-maturity, at amortized cost                                 1,286                    0           1,286                0.5 Trading account assets supporting insurance liabilities, at fair value                                         17,771                    0          17,771                6.5 Other trading account assets, at fair value                                     1,220                  156           1,376                0.5 Equity securities, available-for-sale, at fair value              4,135                3,593           7,728                2.8 Commercial mortgage and other loans, at book value                          21,901                8,507          30,408               11.0 Policy loans, at outstanding balance                                        5,290                5,377          10,667                3.9 Other long-term investments(1)                 2,988                1,582           4,570                1.6 Short-term investments(2)                      3,698                1,164           4,862                1.8  Total general account investments            209,914               65,556         275,470              100.0 %  Invested assets of other entities and operations(3)                              8,442                    0           8,442  Total investments                       $    218,356       $       65,556       $ 283,912     
(1)   Other long-term investments consist of real estate and non-real
      estate-related investments in joint ventures and partnerships, investment
      real estate held through direct ownership and other miscellaneous       investments. For additional information regarding these investments, see       "-Other Long-Term Investments" below.                                           179 
--------------------------------------------------------------------------------   Table of Contents (2)   Short-term investments have virtually no sub-prime exposure.   
(3)   Includes invested assets of trading and banking operations, real estate and
      relocation services and asset management operations. Excludes assets of our
      asset management operations managed for third parties and those assets
      classified as "Separate account assets" on our balance sheet. For additional
      information regarding these investments, see "-Invested Assets of Other
      Entities and Operations" below.     As of December 31, 2011, the average duration of our general account investment portfolio attributable to the domestic Financial Services Businesses, including the impact of derivatives, is between 4 and 5 years. The general account investments attributable to the Financial Services Businesses increased in 2011 primarily due to the acquisition of the Star and Edison Businesses, portfolio growth as a result of reinvestment of net investment income, and a net increase in fair value driven by a decrease in interest rates. The general account investments attributable to the Closed Block Business increased in 2011 primarily due to portfolio growth as a result of reinvestment of net investment income and an increase in fair value driven by a decrease in interest rates, partially offset by net operating outflows. For information regarding the methodology used in determining the fair value of our fixed maturities, see Note 20 to the Consolidated Financial Statements.    We have substantial insurance operations in Japan, with 50% and 38% of our Financial Services Businesses' general account investments relating to our Japanese insurance operations as of December 31, 2011 and December 31, 2010, respectively. The following table sets forth the composition of the investments of our Japanese insurance operations' general account as of the dates indicated.                                                                          December 31,                                                                    2011           2010                                                                       (in millions) Fixed Maturities: Public, available-for-sale, at fair value                        $ 111,857      $ 60,115 Public, held-to-maturity, at amortized cost                          3,743  
       3,940
 Private, available-for-sale, at fair value                           5,020  
       3,304
 Private, held-to-maturity, at amortized cost                         1,364  
       1,286
Trading account assets supporting insurance liabilities, at fair value
                                                           1,732  
       1,518
 Other trading account assets, at fair value                          1,496  
         702
 Equity securities, available-for-sale, at fair value                 1,932  
       1,612
 Commercial mortgage and other loans, at book value                   5,672  
       4,202
 Policy loans, at outstanding balance                                 2,873  
       2,083
 Other long-term investments(1)                                       2,892  
       1,320
 Short-term investments                                                 702  
         211
  Total Japanese general account investments(2)                    $ 139,283      $ 80,293     
(1)   Other long-term investments consist of real estate and non-real
      estate-related investments in joint ventures and partnerships, investment
      real estate held through direct ownership, derivatives, and other       miscellaneous investments.  
(2)   Excludes assets classified as "Separate accounts assets" on our balance
      sheet.     As of December 31, 2011, the average duration of our general account investment portfolio related to our Japanese insurance operations, including the impact of derivatives, was approximately 10 years. The increase in general account investments related to our Japanese insurance operations in 2011 was primarily attributable to the impact of the acquisition of the Star and Edison Businesses, gains on foreign currency exchange rates on yen assets, portfolio growth as a result of business inflows and the impact of declining interest rates, partially offset by yen strengthening on non-yen assets.    
Our Japanese insurance operations use the yen as their functional currency, as it is the currency in which they conduct the majority of their operations. Although the majority of the Japanese general account is invested in yen-denominated investments, our Japanese insurance operations also hold significant investments denominated in U.S. and Australian dollars.
    As of December 31, 2011, our Japanese insurance operations had $38.4 billion, at fair value, of investments denominated in U.S. dollars, including $4.4 billion that were hedged to yen through third party derivative contracts and $25.9 billion that support liabilities denominated in U.S. dollars. As of December 31, 2010, our Japanese insurance operations had $18.9 billion, at fair value, of investments denominated in U.S. dollars,                                          180
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  including $0.7 billion that were hedged to yen through third party derivative contracts and $10.7 billion that support liabilities denominated in U.S. dollars. The $19.5 billion increase of U.S. dollar investments at fair value from December 31, 2010 is primarily driven by $14.6 billion from the Star and Edison Businesses' U.S. dollar-denominated assets supporting U.S. dollar liabilities.    
For additional information regarding U.S. dollar investments held in our Japanese insurance operations, see "-Results of Operations for Financial Services Businesses by Segment-International Insurance Division."
    As of December 31, 2011, our Japanese insurance operations had $6.4 billion, at fair value, of investments denominated in Australian dollars that support liabilities denominated in Australian dollars. As of December 31, 2010, our Japanese insurance operations had $1.8 billion, at fair value, of investments denominated in Australian dollars that support liabilities denominated in Australian dollars. The $4.6 billion increase of Australian dollar investments at fair value from December 31, 2010 is primarily driven by $2.6 billion from the Star and Edison Businesses' Australian dollar-denominated assets supporting Australian dollar liabilities.    Eurozone Exposure    Our investment portfolio includes direct investment exposure to the Eurozone region. We define this region as consisting of those countries within the European Union that have adopted the euro as their sole legal currency. The Eurozone region currently consists of seventeen countries, including Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. Included in this region are peripheral countries, which we currently define as consisting of Portugal, Italy, Ireland, Greece and Spain. Specific country exposure is determined based on the issuer's country of incorporation.    The following tables set forth the composition of our gross direct exposure to the Eurozone region, by country of incorporation, attributable to our general account, as of December 31, 2011.    
Eurozone Gross Direct Exposure-Financial Services Businesses
                                                                                                         December 31, 2011                                                           Amortized Cost                                                                 Fair Value                                                                                      All             Total                                                        All           Total                                                                Financial            Other          Amortized                                Financial            Other           Fair              Country                   Sovereigns(6)        Institutions(7)        Exposure          Cost           Sovereigns(6)       
Institutions(7)        Exposure        Value
                                                                                                         (in millions) Non-peripheral countries: France                                $           555      $             692      $    1,959      $     3,206      $           542      $             616      $    2,060      $  3,218 Netherlands                                         0                  1,191           1,727            2,918                    0                  1,180           1,725         2,905 Germany                                           125                    924             786            1,835                  125                    879             788         1,792 Luxembourg                                          0                    157           1,388            1,545                    0                    154           1,366         1,520 Other non-peripheral(1)                            32                    269             399              700                   31                    265             404           700  Total non-peripheral exposure                     712                  3,233           6,259           10,204                  698                  3,094           6,343        10,135 Peripheral countries: Italy(2)                                          478                     50             171              699                  414                     44             152           610 Ireland                                             0                     77             521              598                    0                     75             530           605 Spain                                              49                     34             259              342                   45                     29             227           301 Other peripheral(3)                                 0                      0              89               89                    0                      0              94            94  Total peripheral exposure                         527                    161           1,040            1,728                  459                    148           1,003         1,610 International agencies(4)                           0                  1,341               0            1,341                    0                  1,315               0         1,315  Total exposure(5)                     $         1,239      $           4,735      $    7,299      $    13,273      $         1,157      $           4,557      $    7,346      $ 13,060                                            181 
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Eurozone Gross Direct Exposure-Closed Block Business
                                                                                                            December 31, 2011                                                          Amortized Cost                                                                         Fair Value                                                                                       All               Total                                                              All             Total                                                               Financial              Other            Amortized                                    Financial              Other            Fair            Country                  Sovereigns(6)          Institutions(7)          Exposure            Cost             Sovereigns(6)          Institutions(7)          Exposure          Value                                                                                                            (in millions) Non-peripheral countries: France                             $            52        $             110        $      766        $       928        $            53        $             103        $      840        $   996 Netherlands                                      5                      293               622                920                      5                      289               702            996 Germany                                          8                       17               623                648                      8                       15               646            669 Luxembourg                                       4                       35               488                527                      4                       37               515            556 Other non-peripheral(1)                          2                      132               197                331                      2                      128               205            335  Total non-peripheral exposure                   71                      587             2,696              3,354                     72                      572             2,908          3,552 Peripheral countries: Italy                                            6                       33                57                 96                      6                       28                55             89 Ireland                                          0                       69               295                364                      0                       54               323            377 Spain                                            0                       29                96                125                      0                       25                88            113 Other peripheral(3)                              0                        2                20                 22                      0                        2                21             23  Total peripheral exposure                        6                      133               468                607                      6                      109               487            602 International agencies(4)                        0                        0                 0                  0                      0                        0                 0              0  Total exposure(5)                  $            77        $             720        $    3,164        $     3,961        $            78        $             681        $    3,395        $ 4,154     
(1)   Other non-peripheral countries include Austria, Belgium, Cyprus, Estonia,
      Finland, Malta, Slovakia, and Slovenia.
(2)   Principally represents Italian government securities owned by our Italian
      insurance operations.   (3)   Other peripheral countries include Greece and Portugal.   (4)   International agencies include agencies such as Eurofima, European
Investment Bank, Council of Europe Development, and Nordic Investment Bank,
      where a single country of incorporation could not be determined.
(5)   For the Financial Services Businesses, of the $13,273 million of amortized
      cost represented above, 86% is related to fixed maturities, 7% is related to
      trading account assets supporting insurance liabilities, and the remaining
      7% is related to all other asset types. For the Closed Block Business, of
      the $3,961 million of amortized cost represented above, 93% is related to
      fixed maturities, and the remaining 7% is related to all other asset types.
  (6)   Sovereigns include local governments.  
(7)   Financial institutions include banking, brokerage, non-captive consumer and
      diversified finance, health insurance, life insurance, property and casualty
      insurance, other finance and real estate investment trusts.                                           182 
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  Table of Contents  Investment Results    The following tables set forth the income yield and investment income, excluding realized investment gains (losses) and non-hedge accounting derivative results, for each major investment category of our general account for the periods indicated.                                                                  Year Ended December 31, 2011                                      Financial Services              Closed Block                                          Businesses                    Business                      Combined                                    Yield(1)        Amount        Yield(1)       Amount        Yield(1)        Amount                                                                     ($ in millions) Fixed maturities                        3.83 %     $ 7,063            5.67 %    $ 2,232            4.16 %    $  9,295 Trading account assets supporting insurance liabilities        4.23           776            0.00            0            4.23           776 Equity securities                       5.93           240            2.75           75            4.65           315 Commercial mortgage and other loans                                   5.62         1,295            6.47          553            5.85         1,848 Policy loans                            4.71           277            6.22          322            5.41           599 Short-term investments and cash equivalents                             0.36            46            0.72            4            0.37            50 Other investments                       3.64           246            8.82          174            4.83           420  Gross investment income before investment expenses                     3.90         9,943            5.78        3,360            4.24        13,303 Investment expenses                    (0.11 )        (230 )         (0.25 )       (146 )         (0.14 )        (376 )  Investment income after investment expenses                     3.79 %       9,713            5.53 %      3,214            4.10 %      12,927  Investment results of other entities and operations(2)                             197                            0                           197  Total investment income                            $ 9,910                      $ 3,214                      $ 13,124                                                                 Year Ended December 31, 2010                                      Financial Services              Closed Block                                          Businesses                    Business                      Combined                                    Yield(1)        Amount        Yield(1)       Amount        Yield(1)        Amount                                                                     ($ in millions) Fixed maturities                        4.33 %     $ 5,927            5.91 %    $ 2,326            4.69 %    $  8,253 Trading account assets supporting insurance liabilities        4.51           750            0.00            0            4.51           750 Equity securities                       6.33           212            2.70           74            4.70           286 Commercial mortgage and other loans                                   6.01         1,256            6.61          536            6.18         1,792 Policy loans                            5.00           243            6.38          334            5.71           577 Short-term investments and cash equivalents                             0.29            36            0.56            5            0.30            41 Other investments                       4.71           193            6.66          115            5.28           308  Gross investment income before investment expenses                     4.34         8,617            5.88        3,390            4.69        12,007 Investment expenses                    (0.13 )        (208 )         (0.24 )       (143 )         (0.15 )        (351 )  Investment income after investment expenses                     4.21 %       8,409            5.64 %      3,247            4.54 %      11,656  Investment results of other entities and operations(2)                             209                            0                           209  Total investment income                            $ 8,618                      $ 3,247                      $ 11,865                                            183 
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  Table of Contents                                                               Year Ended December 31, 2009                                      Financial Services              Closed Block                                          Businesses                    Business                      Combined                                    Yield(1)        Amount        Yield(1)       Amount        Yield(1)        Amount                                                                     ($ in millions) Fixed maturities                        4.54 %     $ 5,691            6.07 %    $ 2,382            4.90 %    $  8,073 Trading account assets supporting insurance liabilities        5.11           743            0.00            0            5.11           743 Equity securities                       6.32           225            2.85           77            4.82           302 Commercial mortgage and other loans                                   5.85         1,237            6.68          556            6.08         1,793 Policy loans                            5.19           225            6.54          344            5.93           569 Short-term investments and cash equivalents                             0.52            66            3.02           31            0.68            97 Other investments                       3.16           138           (4.01 )        (72 )          1.06            66  Gross investment income before investment expenses                     4.50         8,325            5.69        3,318            4.78        11,643 Investment expenses                    (0.15 )        (218 )         (0.23 )       (140 )         (0.17 )        (358 )  Investment income after investment expenses                     4.35 %       8,107            5.46 %      3,178            4.61 %      11,285  Investment results of other entities and operations(2)                             112                            0                           112  Total investment income                            $ 8,219                      $ 3,178                      $ 11,397     
(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 fixed maturities and short-term investments
      and cash equivalents are calculated net of liabilities and rebate expenses
      corresponding to securities lending activity. Yields exclude investment
      income on assets other than those included in invested assets. Prior
      period's yields are presented on a basis consistent with the current period
      presentation.
(2)   Includes investment income of trading and banking operations, real estate
      and relocation services and asset management operations.     See below for a discussion of the change in the Financial Services Businesses' yields. The decrease in net investment income yield attributable to the Closed Block Business for 2011 compared to 2010, was primarily due to lower interest rates on floating rate investments due to rate resets and lower fixed income reinvestment rates.    The increase in net investment income yield attributable to the Closed Block Business for 2010 compared to 2009, was primarily due to investments in joint ventures and limited partnerships, driven by appreciation and gains on the underlying assets, partially offset by the impact of lower interest rates on floating rate investments due to rate resets and lower fixed income reinvestment rates.    The following tables set forth the income yield and investment income, excluding realized investment gains (losses) and non-hedge accounting derivative results, for each major investment category of the Financial Services Businesses' general account, excluding the Japanese operations' portion of the general account which is presented separately below, for the periods indicated.                                                                    Year Ended December 31,                                             2011                         2010                         2009                                     Yield(1)       Amount        Yield(1)       Amount        Yield(1)       Amount                                                                     ($ in millions) Fixed maturities                         5.46 %    $ 4,219            5.58 %    $ 4,194            5.74 %    $ 4,172 Trading account assets supporting insurance liabilities         4.45          742            4.73          724            5.38          721 Equity securities                        9.04          167            9.29          168            9.84          167 Commercial mortgage and other loans                                    6.06        1,083            6.32        1,081            6.04        1,070 Policy loans                             5.81          187            5.72          171            5.94          162 Short-term investments and cash equivalents                              0.25           23            0.30           32            0.50           55 Other investments                        4.02           83            3.21           61            0.39            9  Gross investment income before investment expenses                      5.08        6,504            5.16        6,431            5.27        6,356 Investment expenses                     (0.11 )        (88 )         (0.12 )       (102 )         (0.15 )       (116 )  Investment income after investment expenses                      4.97 %      6,416            5.04 %      6,329            5.12 %      6,240  Investment results of other entities and operations(2)                             197                          209                          112  Total investment income                            $ 6,613                      $ 6,538                      $ 6,352     
(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 fixed maturities and short-term                                           184 
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   investments and cash equivalents are calculated net of liabilities and rebate
   expenses corresponding to securities lending activity. Yields exclude
   investment income on assets other than those included in invested assets.
   Prior period's yields are presented on a basis consistent with the current
   period presentation.
(2)   Includes investment income of trading and banking operations, real estate
      and relocation services and asset management operations.     The decrease in net investment income yield attributable to the Financial Services Businesses' general account, excluding the Japanese operations' portfolio, for 2011 compared to 2010 was primarily the result of lower interest rates on floating rate investments due to rate resets and lower fixed maturity reinvestment rates, partially offset by higher income from our joint venture and limited partnerships, driven by appreciation and gains on the underlying assets.    The decrease in net investment income yield attributable to the Financial Services Businesses' general account, excluding the Japanese operations' portfolio, for 2010 compared to 2009 was primarily a result of lower interest rates on floating rate investments from rate resets and lower fixed maturity reinvestment rates, partially offset by an increase in other investment yields driven by favorable joint venture and limited partnership earnings driven by appreciation on the underlying assets.    The following tables set forth the income yield and investment income, excluding realized investment gains (losses) and non-hedge accounting derivative results, for each major investment category of our Japanese operations' general account for the periods indicated.                                                                    Year Ended December 31,                                              2011                          2010                         2009                                    Yield(1)(2)       Amount        Yield(1)       Amount        Yield(1)       Amount                                                                     ($ in millions) Fixed maturities                           2.66 %    $ 2,844            2.81 %    $ 1,733            2.88 %    $ 1,519 Trading account assets supporting insurance liabilities                                1.99           34            1.98           26            1.98           22 Equity securities                          3.33           73            2.84           44            3.13           58 Commercial mortgage and other loans                                      4.10          212            4.63          175            4.85          167 Policy loans                               3.37           90            3.85           72            3.91           63 Short-term investments and cash equivalents                                0.62           23            0.24            4            0.62           11 Other investments                          3.48          163            6.01          132            6.26          129  Gross investment income before investment expenses                        2.70        3,439            2.97        2,186            3.05        1,969 Investment expenses                       (0.11 )       (142 )         (0.14 )       (106 )         (0.15 )       (102 )  Total investment income                    2.59 %    $ 3,297            2.83 %    $ 2,080            2.90 %    $ 1,867     
(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 fixed maturities and short-term investments
      and cash equivalents are calculated net of liabilities and rebate expenses
      corresponding to securities lending activity. Yields exclude investment
      income on assets other than those included in invested assets. Prior
      period's yields are presented on a basis consistent with the current period
      presentation.
(2)   Yields are weighted for ten months of income and assets related to the Star
      and Edison Businesses.     The decrease in yield on the Japanese insurance portfolio for 2011 compared to 2010 is primarily attributable to lower fixed maturity reinvestment rates in both the U.S. and Japan, and the impact from the acquisition of the Star and Edison portfolios.    The decrease in yield on the Japanese insurance portfolio for 2010 compared to 2009 is primarily attributable to lower fixed maturity reinvestment rates and a lower interest rate environment both in the U.S. and Japan, as well as less favorable results in joint ventures and limited partnerships.    Both the U.S. dollar-denominated and Australian dollar-denominated fixed maturities that are not hedged to yen through third party derivative contracts provide a yield that is substantially higher than the yield on comparable yen-denominated fixed maturities. The average amortized cost of U.S. dollar-denominated fixed maturities that are not hedged to yen through third party derivative contracts for the years ended December 31, 2011 and 2010, was approximately $24.2 billion and $12.3 billion, respectively. The majority of U.S. dollar-denominated fixed maturities support liabilities that are denominated in U.S. dollars. The average amortized cost                                          185
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  of Australian dollar-denominated fixed maturities that are not hedged to yen through third party derivative contracts for the years ended December 31, 2011 and 2010, was approximately $4.8 billion and $1.2 billion, respectively. The Australian dollar-denominated fixed maturities support liabilities that are denominated in Australian dollars.    
For additional information regarding U.S. dollar investments held in our Japanese insurance operations see, "-Results of Operations for Financial Services Businesses by Segment-International Insurance Division."
Fixed Maturity Securities    Investment Mix    Our fixed maturity securities portfolio consists of publicly-traded and privately-placed debt securities across an array of industry categories. The fixed maturity securities relating to our international insurance operations are primarily comprised of foreign government securities.    We manage our public portfolio to a risk profile directed or overseen by the Asset Liability Management and Risk Management groups and to a profile that also reflects the local market environments impacting both our domestic and international insurance portfolios. The investment objectives for fixed maturity securities are consistent with those described above. The total return that we earn on the portfolio will be reflected both as investment income and also as realized gains or losses on investments.    We use our private placement and asset-backed portfolios to enhance the diversification and yield of our overall fixed maturity portfolio. Within our domestic portfolios, we maintain a private fixed income portfolio that is larger than the industry average as a percentage of total fixed income holdings. Over the last several years, our investment staff has originated the majority of our annual private placement originations through direct borrower relationships. Our origination capability offers the opportunity to lead transactions and gives us the opportunity for better terms, including covenants and call protection, and to take advantage of innovative deal structures.    
Fixed Maturity Securities by Contractual Maturity Date
    The following table sets forth the breakdown of the amortized cost of our fixed maturity securities portfolio in total by contractual maturity as of December 31, 2011.                                                                       December 31, 2011                                          Financial Services Businesses                 Closed Block Business                                         Amortized                                  Amortized                                            Cost               % of Total              Cost             % of Total                                                                     ($ in millions) Corporate & government securities: Maturing in 2012                     $          6,229                  3.1 %      $      2,028                 4.8 % Maturing in 2013                               10,676                  5.3               2,577                 6.0 Maturing in 2014                               10,751                  5.4               1,513                 3.6 Maturing in 2015                                9,045                  4.5               1,584                 3.7 Maturing in 2016                                9,458                  4.7               1,758                 4.1 Maturing in 2017                                9,323                  4.6               1,610                 3.8 Maturing in 2018                                9,311                  4.6               2,083                 4.9 Maturing in 2019                                9,947                  5.0               1,462                 3.4 Maturing in 2020                                9,580                  4.8               1,445                 3.3 Maturing in 2021                                8,606                  4.3               2,007                 4.7 Maturing in 2022                                4,421                  2.2                 953                 2.2 Maturing in 2023 and beyond                    79,453                 39.4              13,246                31.1  Total corporate & government securities                                    176,800                 87.9              32,266                75.6 Asset-backed securities                         8,319                  4.2               4,935                11.6 Commercial mortgage-backed securities                                      8,197                  4.1               3,559                 8.4 Residential mortgage-backed securities                                      7,569                  3.8               1,880                 4.4  Total fixed maturities               $        200,885                100.0 %      $     42,640               100.0 %                                            186 
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Fixed Maturity Securities and Unrealized Gains and Losses by Industry Category
The following table sets forth the composition of the portion of our fixed maturity securities portfolio by industry category attributable to the Financial Services Businesses as of the dates indicated and the associated gross unrealized gains and losses.
Fixed Maturity Securities-Financial Services Businesses
                                                           December 31, 2011                                              December 31, 2010                                                      Gross            Gross                                         Gross            Gross                                    Amortized       Unrealized       Unrealized        Fair        Amortized       Unrealized       Unrealized        Fair           Industry(1)                 Cost          Gains(2)        Losses(2)         Value          Cost          Gains(2)        Losses(2)         Value                                                                                          (in millions) Corporate securities: Manufacturing                      $   28,091     $      2,412     $        715     $  29,788     $   21,590     $      1,538     $        539     $  22,589 Utilities                              14,356            1,454              517        15,293         11,153              851              179        11,825 Finance                                20,245              494              766        19,973         11,213              385              331        11,267 Services                               12,134              861              406        12,589         10,170              612              333        10,449 Energy                                  7,304              564              208         7,660          5,356              364              168         5,552 Retail and Wholesale                    5,256              382              131         5,507          4,110              214              138         4,186 Transportation                          5,078              368               76         5,370          3,625              240               62         3,803 Other                                   1,551               57               64         1,544          1,359               62               62         1,359  Total corporate securities             94,015            6,592            2,883        97,724         68,576            4,266            1,812        71,030 Foreign government(3)                  73,209            4,796              204        77,801         48,016            2,915               86        50,845 Residential mortgage-backed             7,569              425               59         7,935          7,504              397               51         
7,850
 Asset-backed securities(4)              8,319              150              988         7,481          8,790              168              969         
7,989
 Commercial mortgage-backed              8,197              573              104         8,666          8,142              592               63         8,671 U.S. Government                         7,592            1,920               17         9,495          4,807              464               67         5,204 State & Municipal(5)                    1,984              293                1         2,276          1,601               24               52         1,573  Total(6)(7)                        $  200,885     $     14,749     $      4,256     $ 211,378     $  147,436     $      8,826     $      3,100     $ 153,162      (1)   Investment data has been classified based on standard industry 
      categorizations for domestic public holdings and similar classifications by
      industry for all other holdings.
(2)   Includes $345 million of gross unrealized gains and $98 million of gross
      unrealized losses as of December 31, 2011, compared to $319 million of gross
      unrealized gains and $68 million of gross unrealized losses as of       December 31, 2010 on securities classified as held-to-maturity.   (3)   As of December 31, 2011 and 2010, based on amortized cost, 84% and 83%,
      respectively, represent Japanese government bonds held by our Japanese
      insurance operations, with no other individual country representing more       than 6% and 8%, respectively of the balance.   (4)   Includes securities collateralized by sub-prime mortgages. See       "-Asset-Backed Securities" below.   (5)   Includes securities related to the Build America Bonds program.  
(6)   Excluded from the above are securities held outside the general account in
      other entities and operations. For additional information regarding
      investments held outside the general account, see "-Invested Assets of Other
      Entities and Operations" below.
(7)   The table above excludes fixed maturity securities classified as trading.
      See "-Trading Account Assets Supporting Insurance Liabilities" and "-Other
      Trading Account Assets" for additional information.    
The change in net unrealized gains and losses from December 31, 2010 to December 31, 2011, was primarily due to a decrease in interest rates in both the U.S. and Japan.
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  The following table sets forth the composition of the portion of our fixed maturity securities portfolio by industry category attributable to the Closed Block Business as of the dates indicated and the associated gross unrealized gains and losses.   
Fixed Maturity Securities-Closed Block Business
                                                          December 31, 2011                                                  December 31, 2010                                                      Gross             Gross                                            Gross             Gross                                   Amortized        Unrealized        Unrealized         Fair         Amortized        Unrealized        Unrealized         Fair          Industry(1)                Cost             Gains             Losses          Value           Cost             Gains             Losses          Value                                                                                             (in millions) Corporate securities: Manufacturing                    $     8,325      $      1,167      $         40      $  9,452      $     7,940      $        754      $         66      $  8,628 Utilities                              5,630               907                55         6,482            5,566               510                42         6,034 Services                               4,731               578                35         5,274            4,562               377                35         4,904 Finance                                3,088               151                74         3,165            2,723               125                53         2,795 Energy                                 1,806               259                 4         2,061            1,887               184                 6         2,065 Retail and Wholesale                   1,525               255                 8         1,772            1,641               166                21         1,786 Transportation                         1,347               153                13         1,487            1,349               102                19         1,432 Other                                     49                13                 0            62               29                 2                 0            31  Total corporate securities            26,501             3,483               229        29,755           25,697             2,220               242        27,675 Asset-backed securities(2)             4,935                56               819         4,172            4,570                60               701         3,929 Commercial mortgage-backed             3,559               158                 2         3,715            3,615               170                 6         3,779 U.S. Government                        4,594               943                 0         5,537            6,066               197               228         6,035 Residential mortgage-backed            1,880               125                19         1,986            2,311               129                15         2,425 Foreign government(3)                    492                86                 5           573              596                90                 9           677 State & Municipal                        679               100                 1           778              651                19                13           657  Total(4)                         $    42,640      $      4,951      $      1,075      $ 46,516      $    43,506      $      2,885      $      1,214      $ 45,177      (1)   Investment data has been classified based on standard industry 
      categorizations for domestic public holdings and similar classifications by
      industry for all other holdings.   (2)   Includes securities collateralized by sub-prime mortgages. See       "-Asset-Backed Securities" below.   (3)   As of both December 31, 2011 and 2010, based on amortized cost, no       individual foreign country represented more than 8% of the balance.  
(4)   The table above excludes fixed maturity securities classified as trading.
      See "-Other Trading Account Assets" for additional information.    
The change in net unrealized gains and losses from December 31, 2010 to December 31, 2011, was primarily due to a decrease in interest rates.
Asset-Backed Securities    Included within asset-backed securities attributable to the Financial Services Businesses are securities collateralized by sub-prime mortgages. While there is no market standard definition, we define sub-prime mortgages as residential mortgages that are originated to weaker quality obligors as indicated by weaker credit scores, as well as mortgages with higher loan-to-value ratios, or limited documentation. The significant deterioration of the U.S. housing market, high interest rate resets, higher unemployment levels, and relaxed underwriting standards for some originators of sub-prime mortgages have led to higher delinquency rates, particularly for those mortgages issued in 2006 and 2007. Recently there has been significant attention given to potential deficiencies in lenders' foreclosure documentation, causing delays in the foreclosure process. Many lenders have indicated that the issues are administrative and they do not expect significant delays in their foreclosure proceedings. From the perspective of an investor in securities backed by sub-prime collateral, any significant delays in foreclosure proceedings could result in increased servicing costs which could negatively affect the value of the impacted securities. Separately, as an investor in sub-prime securities, we are evaluating our legal options with respect to potential remedies arising from any potential deficiencies related to the original lending and securitization practices. The following tables set forth the amortized cost and fair value of our asset-backed securities attributable to the Financial Services Businesses as of the dates indicated, by credit quality, and for asset-backed securities collateralized by sub-prime mortgages, by year of issuance (vintage).                                          188
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Asset-Backed Securities at Amortized Cost-Financial Services Businesses
                                                                December 31, 2011                                                 Lowest Rating Agency Rating                                                                                                 Total            Total                                                                                  BB and       Amortized      December 31, Vintage                               AAA         AA          A        BBB        below         Cost             2010                                                                         (in millions) Collateralized by sub-prime mortgages: Enhanced short-term portfolio(1): 2011-2008                           $     0     $     0     $   0     $    0     $     0     $         0     $           0 2007                                      0           0         0          5         272             277               338 2006                                      0           2         2         13         220             237               424 2005                                      0           0         0          0           7               7                 9 2004 & Prior                              0           0         0          0           0               0                 0  Total enhanced short-term portfolio                                 0           2         2         18         499             521               771 All other portfolios: 2011-2008                                 0           0         0          0           0               0                 0 2007                                      2           0         0          0         218             220               266 2006                                      9          63        36         12         662             782             1,066 2005                                      0          13        25         39         259             336               436 2004 & Prior                             19          29        65         55         607             775               885  Total all other portfolios               30         105       126        106       1,746           2,113             2,653  Total collateralized by sub-prime mortgages(2)                             30         107       128        124       2,245           2,634             3,424 Other asset-backed securities: Externally-managed investments in the European market                       0           0         0        452           0             452               588 Collateralized by auto loans            839           0         0          2           0             841               931 Collateralized by credit cards          488           0         8        265           0             761             1,014 Collateralized by non-sub-prime mortgages                             1,547         110         4         31          15           1,707             1,373 
Other asset-backed securities(3)        701         935       165         45          78
           1,924             1,460  
Total asset-backed securities(4)    $ 3,605$ 1,152$ 305$  919$ 2,338$     8,319     $       8,790
(1)   Our enhanced short-term portfolio is used primarily to invest cash proceeds
      of securities lending and repurchase activities, commercial paper issuances
      and cash generated from certain trading and operating activities. The
      investment policy statement of this portfolio requires that securities
      purchased for this portfolio have a remaining expected average life of 2       years or less when acquired.  
(2)   Included within the $2.6 billion of asset-backed securities collateralized
      by sub-prime mortgages as of December 31, 2011 are $60 million of securities
      collateralized by second-lien exposures.   (3)   As of December 31, 2011, includes collateralized debt obligations with
      amortized cost of $115 million, with none secured by sub-prime mortgages.
      Also includes asset-backed securities collateralized by education loans,
      equipment leases, franchises, timeshares, and aircraft.
(4)   Excluded from the tables above are asset-backed securities held outside the
      general account in other entities and operations. For additional information
      regarding asset-backed securities held outside the general account, see
      "-Invested Assets of Other Entities and Operations" below. Also excluded
      from the table above are asset-backed securities classified as trading and
      carried at fair value. See "-Trading Account Assets Supporting Insurance
      Liabilities" and "-Other Trading Account Assets" for additional information
      regarding these securities.                                           189 
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Asset-Backed Securities at Fair Value-Financial Services Businesses
                                                                  December 31, 2011                                                  Lowest Rating Agency Rating                                                                                                                     Total                                                                                   BB and         Total          December  31, Vintage                                AAA         AA          A        BBB        below       Fair Value           2010                                                                          (in millions) Collateralized by sub-prime mortgages: Enhanced short-term portfolio(1): 2011-2008                            $     0     $     0     $   0     $    0     $     0     $          0     $             0 2007                                       0           0         0          5         179              184                 255 2006                                       0           2         2         13         153              170                 360 2005                                       0           0         0          0           6                6                   8 2004 & Prior                               0           0         0          0           0                0                   0  Total enhanced short-term portfolio                                  0           2         2         18         338              360                 623 All other portfolios: 2011-2008                                  0           0         0          0           0                0                   0 2007                                       2           0         0          0          97               99                 158 2006                                       7          52        20         11         404              494                 764 2005                                       0          12        22         26         172              232                 338 2004 & Prior                              16          25        52         40         413              546                 671  Total all other portfolios                25          89        94         77       1,086            1,371               1,931  Total collateralized by sub-prime mortgages                                 25          91        96         95       1,424            1,731               2,554 Other asset-backed securities: Externally-managed investments in the European market                        0           0         0        471           0              471                 619 Collateralized by auto loans             840           0         0          2           0              842                 933 Collateralized by credit cards           512           0         8        263           0              783               1,039 Collateralized by non-sub-prime mortgages                              1,616         113         4         29          14            1,776               1,421 
Other asset-backed securities(2)         701         913       142         48          74
            1,878               1,423  
Total asset-backed securities(3)     $ 3,694$ 1,117$ 250$  908$ 1,512     $      7,481     $         7,989
(1)   Our enhanced short-term portfolio is used primarily to invest cash proceeds
      of securities lending and repurchase activities, commercial paper issuances
      and cash generated from certain trading and operating activities. The
      investment policy statement of this portfolio requires that securities
      purchased for this portfolio have a remaining expected average life of 2
      years or less when acquired.
(2)   As of December 31, 2011, includes collateralized debt obligations with fair
      value of $112 million, with none secured by sub-prime mortgages. Also       includes asset-backed securities collateralized by education loans,       equipment leases, franchises, timeshares, and aircraft.  
(3)   Excluded from the tables above are asset-backed securities held outside the
      general account in other entities and operations. For additional information
      regarding asset-backed securities held outside the general account, see
      "-Invested Assets of Other Entities and Operations" below. Also excluded
      from the table above are asset-backed securities classified as trading and
      carried at fair value. See "-Trading Account Assets Supporting Insurance
      Liabilities" and "-Other Trading Account Assets" for additional information
      regarding these securities.     The tables above provide ratings as assigned by nationally recognized rating agencies as of December 31, 2011, including Standard & Poor's, Moody's and Fitch. In making our investment decisions, rather than relying solely on the rating agencies' evaluations, we assign internal ratings to our asset-backed securities based upon our dedicated asset-backed securities unit's independent evaluation of the underlying collateral and securitization structure, including any guarantees from monoline bond insurers.    On an amortized cost basis, asset-backed securities collateralized by sub-prime mortgages attributable to the Financial Services Businesses decreased from $3.424 billion as of December 31, 2010, to $2.634 billion as of December 31, 2011, primarily reflecting sales, principal paydowns and other-than-temporary impairments recognized. Gross unrealized losses related to our asset-backed securities collateralized by sub-prime mortgages attributable to the Financial Services Businesses were $906 million as of December 31, 2011, and $882 million as of December 31, 2010. For additional information regarding other-than-temporary impairments of asset-backed securities collateralized by sub-prime mortgages see "-Realized Investment Gains and Losses" above. For information regarding the methodology used in determining the fair value of our asset-backed securities collateralized by sub-prime mortgages, see Note 20 to the Consolidated Financial Statements.                                          190
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  The weighted average estimated subordination percentage of our asset-backed securities collateralized by sub-prime mortgages attributable to the Financial Services Businesses, excluding those supported by guarantees from monoline bond insurers, was 30% as of December 31, 2011. The subordination percentage represents the current weighted average estimated percentage of the capital structure subordinated to our investment holding that is available to absorb losses before the security incurs the first dollar loss of principal. As of December 31, 2011, based on amortized cost, approximately 63% of the asset-backed securities collateralized by sub-prime mortgages attributable to the Financial Services Businesses have estimated credit subordination percentages of 20% or more, and 41% have estimated credit subordination percentages of 30% or more.    In addition to subordination, certain securities, referred to as front pay or second pay securities, benefit from the prioritization of principal cash flows within the senior tranches of the structure. In most instances, these shorter duration senior securities have priority to principal cash flows over other securities in the structure, including longer duration senior securities. Included within the $2.634 billion of asset-backed securities collateralized by sub-prime mortgages attributable to the Financial Services Businesses as of December 31, 2011 were $549 million of securities, on an amortized cost basis, that represent front pay or second pay securities, depending on the overall structure of the securities.    
Included within asset-backed securities attributable to the Closed Block Business are securities collateralized by sub-prime mortgages, as defined above. The following tables set forth the amortized cost and fair value of our asset-backed securities attributable to the Closed Block Business as of the dates indicated, by credit quality, and for asset-backed securities collateralized by sub-prime mortgages, by year of issuance (vintage).
Asset-Backed Securities at Amortized Cost-Closed Block Business
                                                                December 31, 2011                                                 Lowest Rating Agency Rating                                                                                                Total             Total                                                                                 BB and       Amortized       December  31, Vintage                                AAA        AA         A        BBB        below         Cost              2010                                                                        (in millions) Collateralized by sub-prime mortgages: Enhanced short-term portfolio(1): 2011-2008                            $     0     $   0     $   0     $    0     $     0     $         0     $             0 2007                                       2         0         0          5         202             209                 258 2006                                       0         3         3         16         192             214                 390 2005                                       0         1         0          0           8               9                  12 2004 & Prior                               0         0         0          0           0               0                   0  Total enhanced short-term portfolio                                  2         4         3         21         402             432                 660 All other portfolios: 2011-2008                                  0         0         0          0           0               0                   0 2007                                       5         0        20          7         190             222                 256 2006                                      95         0         0          0         685             780                 868 2005                                      10        51        83         12         131             287                 343 2004 & Prior                               2        37        63         79         388             569                 630  Total all other portfolios               112        88       166         98       1,394           1,858               2,097  Total collateralized by sub-prime mortgages(2)                             114        92       169        119       1,796           2,290               2,757 Other asset-backed securities: Collateralized by credit cards           432         0        36        189           2             659                 642 Collateralized by auto loans             739         0         0          0           0             739                 396 Externally-managed investments in the European market                        0         0         0        199           0             199                 212 
Collateralized by education loans        196       289         0          0
           0             485                 201 
Other asset-backed securities(3)         268       207        54          3
          31             563                 362  
Total asset-backed securities        $ 1,749$ 588$ 259$  510
    $ 1,829     $     4,935     $         4,570     
(1)   Our enhanced short-term portfolio is used primarily to invest cash proceeds
      of securities lending and repurchase activities, and cash generated from
      certain trading and operating activities. The investment policy statement of
      this portfolio requires that securities purchased for this portfolio have a
      remaining expected average life of 2 years or less when acquired.                                           191 
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  Table of Contents (2)   Included within the $2.3 billion of asset-backed securities collateralized
      by sub-prime mortgages as of December 31, 2011 are $7 million of securities
      collateralized by second-lien exposures.   (3)   As of December 31, 2011, includes collateralized debt obligations with
      amortized cost of $50 million, with none secured by sub-prime mortgages.
      Also includes asset-backed securities collateralized by franchises,       timeshares, manufacturing and aircraft.   (4)   Excluded from the table above are asset-backed securities classified as
      trading and carried at fair value. For additional information see "-Other
      Trading Account Assets."    
Asset-Backed Securities at Fair Value-Closed Block Business
                                                                 December 31, 2011                                                 Lowest Rating Agency Rating                                                                                                                   Total                                                                                 BB and         Total          December  31, Vintage                                AAA        AA         A        BBB        below       Fair Value           2010                                                                        (in millions) Collateralized by sub-prime mortgages: Enhanced short-term portfolio(1): 2011-2008                            $     0     $   0     $   0     $    0     $     0     $          0     $             0 2007                                       2         0         0          5         141              148                 202 2006                                       0         3         3         15         139              160                 339 2005                                       0         1         0          0           6                7                  10 2004 & Prior                               0         0         0          0           0                0                   0  Total enhanced short-term portfolio                                  2         4         3         20         286              315                 551 All other portfolios: 2011-2008                                  0         0         0          0           0                0                   0 2007                                       5         0        15          5          94              119                 169 2006                                      81         0         0          0         356              437                 585 2005                                       8        46        64         11          80              209                 276 2004 & Prior                               2        30        48         60         281              421                 509  Total all other portfolios                96        76       127         76         811            1,186               1,539  Total collateralized by sub-prime mortgages                                 98        80       130         96       1,097            1,501               2,090 Other asset-backed securities: Collateralized by credit cards           442         0        36        189           2              669                 649 Collateralized by auto loans             739         0         0          0           0              739                 397 Externally-managed investments in the European market                        0         0         0        233           0              233                 243 
Collateralized by education loans        196       278         0          0
           0              474                 196 
Other asset-backed securities(2)         268       206        55          2
          25              556                 354  
Total asset-backed securities(3)     $ 1,743$ 564$ 221$  520
    $ 1,124     $      4,172     $         3,929     
(1)   Our enhanced short-term portfolio is used primarily to invest cash proceeds
      of securities lending and repurchase activities, and cash generated from
      certain trading and operating activities. The investment policy statement of
      this portfolio requires that securities purchased for this portfolio have a
      remaining expected average life of 2 years or less when acquired.
(2)   As of December 31, 2011, includes collateralized debt obligations with fair
      value of $50 million, with none secured by sub-prime mortgages. Also
      includes asset-backed securities collateralized by franchises, timeshares,
      manufacturing and aircraft.   (3)   Excluded from the table above are asset-backed securities classified as
      trading and carried at fair value. For additional information see "-Other
      Trading Account Assets."     On an amortized cost basis, asset-backed securities collateralized by sub-prime mortgages attributable to the Closed Block Business decreased from $2.757 billion as of December 31, 2010 to $2.290 billion as of December 31, 2011, primarily reflecting sales, principal paydowns and other-than-temporary impairments recognized. Gross unrealized losses related to our asset-backed securities collateralized by sub-prime mortgages attributable to the Closed Block Business were $789 million as of December 31, 2011 and $673 million as of December 31, 2010. For additional information regarding other-than-temporary impairments of asset-backed securities collateralized by sub-prime mortgages see "-Realized Investment Gains and Losses" above. For information regarding the methodology used in determining the fair value of our asset-backed securities collateralized by sub-prime mortgages, see Note 20 to the Consolidated Financial Statements.                                          192 
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  The weighted average estimated subordination percentage of asset-backed securities collateralized by sub-prime mortgages attributable to the Closed Block Business, excluding those supported by guarantees from monoline bond insurers, was 31% as of December 31, 2011. The subordination percentage represents the current weighted average estimated percentage of the capital structure subordinated to our investment holding that is available to absorb losses before the security incurs the first dollar loss of principal. As of December 31, 2011, based on amortized cost, approximately 67% of the asset-backed securities collateralized by sub-prime mortgages attributable to the Closed Block Business have estimated credit subordination percentages of 20% or more, and 43% have estimated credit subordination percentages of 30% or more.    In addition to subordination, certain securities, referred to as front pay or second pay securities, benefit from the prioritization of principal cash flows within the senior tranches of the structure. In most instances, these shorter duration senior securities have priority to principal cash flows over other securities in the structure, including longer duration senior securities. Included within the $2.290 billion of asset-backed securities collateralized by sub-prime mortgages attributable to the Closed Block Business as of December 31, 2011, were $545 million of securities, on an amortized cost basis, that represent front pay or second pay securities, depending on the overall structure of the securities.   
Residential Mortgage-Backed Securities
The following tables set forth the amortized cost of our residential mortgage-backed securities attributable to the Financial Services Businesses and Closed Block Business as of the dates indicated.
Residential Mortgage-Backed Securities at Amortized Cost
                                                                        December 31, 2011                                           Financial Services Businesses                  Closed Block Business                                         Amortized                                    Amortized                                           Cost                 % of Total              Cost             % of Total                                                                      ($ in millions) By security type: Agency pass-through securities(1)                        $         7,339                    97.0 %      $     1,664                 88.5 % Collateralized mortgage obligations(2)(3)                                230                     3.0                216                 11.5  Total residential mortgage-backed securities           $         7,569                   100.0 %      $     1,880                100.0 %  Portion rated AAA(4)                 $         1,890                    25.0 %      $         0                  0.0 % Portion rated AA(4)                  $         5,599                    74.0 %      $     1,664                 88.5 %                                                                         December 31, 2010                                           Financial Services Businesses                  Closed Block Business                                         Amortized                                    Amortized                                           Cost                 % of Total              Cost             % of Total                                                                      ($ in millions) By security type: Agency pass-through securities(1)                        $         7,442                    99.2 %      $     2,055                 88.9 % Collateralized mortgage obligations(2)(3)                                 62                     0.8                256                 11.1  Total residential mortgage-backed securities           $         7,504                   100.0 %      $     2,311                100.0 %  Portion rated AAA(4)                 $         7,413                    98.8 %      $     2,074                 89.7 % Portion rated AA(4)                  $            43                     0.6 %      $        44                  1.9 %    
(1)   As of December 31, 2011, of these securities, for the Financial Services
      Businesses, $5.408 billion are supported by U.S. government and $1.931
      billion are supported by foreign governments. As of December 31, 2010, of
      these securities, for the Financial Services Businesses, $5.954 billion were
      supported by the U.S. government and $1.488 billion were supported by
      foreign governments. For the Closed Block Business all of these securities
      are supported by the U.S. government as of December 31, 2011 and 2010.
(2)   Includes alternative residential mortgage loans of $38 million and $46
      million in the Financial Services Businesses, and $93 million and $108
      million in the Closed Block Business, for 2011 and 2010, respectively.
(3)   As of December 31, 2011, of these collateralized mortgage obligations, for
      the Financial Services Businesses, 68% have credit ratings of A or above, 7%
      have BBB credit ratings and the remaining 25% have below investment grade
      ratings, and as of December 31, 2010, 38% have credit ratings of A or above,
       7% have BBB credit ratings and the remaining 55% have below investment grade       ratings. As of                                           193 
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December 31, 2011, for the Closed Block Business, 16% have A credit ratings or
   above, 34% have BBB credit ratings, and 50% have below investment grade
   ratings, and as of December 31, 2010, 39% have A credit ratings or above, 35%
   have BBB credit ratings, and 26% have below investment grade ratings.
  (4)   Based on lowest external rating agency rating. In August 2011, S&P       downgraded U.S. debt securities from AAA to AA+.    
Commercial Mortgage-Backed Securities
    The commercial real estate market was severely impacted by the financial crisis and the subsequent recession. However, market fundamentals appear to have bottomed and are showing signs of improvement since late 2010. Commercial real estate vacancy rates have declined from their peak, rent growth has turned positive for certain sectors, and prices of commercial real estate appear to be stabilizing and improving in some sectors. Additionally, the elevated delinquency rate on mortgages in the commercial mortgage-backed securities market is slowing and refinancing activity has increased, at least partially reflecting the improvement in these fundamentals. The loans included in new issues seem to reflect better underwriting and lower levels of leverage compared to 2007.    Although there are some positive signs in commercial real estate, there are still some significant challenges for this market, including numerous future loan workouts, a large wave of refinancings for over-leveraged properties and numerous legislative changes. To ensure our investment objectives and asset strategies are maintained, we consider these market factors in making our investment decisions on commercial mortgage-backed securities.    The following tables set forth the amortized cost and fair value of our commercial mortgage-backed securities attributable to the Financial Services Businesses as of the dates indicated, by credit quality and by year of issuance (vintage).    Commercial Mortgage-Backed Securities at Amortized Cost-Financial Services Businesses                                                               December 31, 2011                                              Lowest Rating Agency Rating(1)                                                                                              Total            Total                                                                               BB and       Amortized      December 31, Vintage                               AAA         AA         A       BBB       below         Cost             2010                                                                       (in millions)  2011                               $       0     $   5     $   0     $  0     $     0     $         5     $           0 2010                                       0        99         0        0           0              99                89 2009                                       0       117         0        0           0             117               117 2008                                     170         0         3       17           7             197               263 2007                                   1,798        34        49        0           6           1,887             1,970 2006                                   2,582       310        63        0           0           2,955             3,307 2005                                   1,660        90        54        0           0           1,804             1,643 2004 & Prior                             842       175        85       20          11           1,133               753  Total commercial mortgage-backed securities(2)(3)(4)                $   7,052     $ 830     $ 254     $ 37     $    24     $     8,197     $       8,142     
(1)   The tables above provide ratings as assigned by nationally recognized rating
      agencies as of December 31, 2011, including Standard & Poor's, Moody's,
      Fitch and Realpoint.   (2)   Excluded from the table above are available-for-sale commercial       mortgage-backed securities held outside the general account in other
      entities and operations. For additional information regarding commercial
      mortgage-backed securities held outside the general account, see "-Invested
      Assets of Other Entities and Operations" below. Also excluded from the table
      above are commercial mortgage-backed securities classified as trading and
      carried at fair value. See "-Trading Account Assets Supporting Insurance
      Liabilities" for additional information regarding these securities.
(3)   Included in the table above as of December 31, 2011 are downgraded super
      senior securities with amortized cost of $408 million in AA and $144 million
      in A.
(4)   Included in the table above as of December 31, 2011 are agency commercial
      mortgage-backed securities with amortized cost of $256 million all rated AA.
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Commercial Mortgage-Backed Securities at Fair Value-Financial Services Businesses                                                               December 31, 2011                                             Lowest Rating Agency Rating(1)                                                                                                               Total                                                                              BB and         Total         December 31, Vintage                              AAA         AA         A       BBB       below       Fair Value          2010                                                                       (in millions) 2011                              $       0     $   5     $   0     $  0     $     0     $          5     $           0 2010                                      0       108         0        0           0              108                90 2009                                      0       128         0        0           0              128               118 2008                                    180         0         4       16           6              206               262 2007                                  1,852        38        46        0          22            1,958             2,070 2006                                  2,804       341        69        0           0            3,214             3,567 2005                                  1,799        80        51        0           0            1,930             1,785 2004 & Prior                            844       167        80       17           9            1,117               779  Total commercial mortgage-backed securities(2)     $   7,479     $ 867     $ 250     $ 33     $    37     $      8,666     $       8,671     
(1)   The tables above provide ratings as assigned by nationally recognized rating
      agencies as of December 31, 2011, including Standard & Poor's, Moody's,
      Fitch and Realpoint.   (2)   Excluded from the table above are available-for-sale commercial       mortgage-backed securities held outside the general account in other
      entities and operations. For additional information regarding commercial
      mortgage-backed securities held outside the general account, see "-Invested
      Assets of Other Entities and Operations" below. Also excluded from the table
      above are commercial mortgage-backed securities classified as trading and
      carried at fair value. See "-Trading Account Assets Supporting Insurance
      Liabilities" for additional information regarding these securities.     Included in the table above are commercial mortgage-backed securities collateralized by non-U.S. properties all related to Japanese commercial mortgage-backed securities held by our Japanese insurance operations with an amortized cost of $13 million in AAA, $4 million in A, $17 million in BBB and $13 million in BB and below as of December 31, 2011, and $12 million in AAA, $3 million in A, $18 million in BBB and $104 million in BB and below as of December 31, 2010.    Included in the table above are commercial mortgage-backed securities collateralized by U.S. properties all related to commercial mortgage-backed securities held by the acquired Edison business with an amortized cost of $441 million in AAA, $184 million in AA, $122 million in A and $5 million in BBB as of December 31, 2011.    The weighted average estimated subordination percentage of our commercial mortgage-backed securities attributable to the Financial Services Businesses was 32% as of December 31, 2011. The subordination percentage represents the current weighted average estimated percentage of the capital structure subordinated to our investment holding that is available to absorb losses before the security incurs the first dollar loss of principal. The weighted average estimated subordination percentage includes an adjustment for that portion of the capital structure, which has been effectively defeased by U.S. Treasury securities. As of December 31, 2011, based on amortized cost, approximately 95% of the commercial mortgage-backed securities attributable to the Financial Services Businesses have estimated credit subordination percentages of 20% or more, and 76% have estimated credit subordination percentages of 30% or more. The following tables set forth the weighted average estimated subordination percentage, adjusted for that portion of the capital structure which has been effectively defeased by U.S. Treasury securities, of our commercial mortgage-backed securities collateralized by U.S. and Non-U.S. properties, attributable to the Financial Services Businesses based on amortized cost as of December 31, 2011, by rating and vintage.                                          195
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U.S. Commercial Mortgage-Backed Securities-Subordination Percentages by Rating and Vintage-Financial Services Businesses
                                                  December 31, 2011                                        Lowest Rating Agency Rating(1)(2)                                                                            BB and               Vintage         AAA            AA         A        BBB        below               2011                                       17 %               2010               2009               2008               31 %               2007               30 %                    31 %               2006               33 %          34 %      32 %               2005               33 %          16 %      26 %               2004 & Prior       31 %          26 %      31 %      19 %         27 %    
Non- U.S. Commercial Mortgage-Backed Securities-Subordination Percentages by Rating and Vintage-Financial Services Businesses
                                                 December 31, 2011                                       Lowest Rating Agency Rating(1)(2)                                                                          BB and               Vintage         AAA            AA       A        BBB        below               2011               2010               2009               2008                                     42 %      32 %         57 %               2007                                                            22 %               2006               65 %               2005                                                            11 %               2004 & Prior    
(1)   The tables above provide ratings as assigned by nationally recognized rating
      agencies as of December 31, 2011, including Standard & Poor's, Moody's,
      Fitch, and Realpoint.   (2)   Excludes agency commercial mortgage-backed securities.     The super senior structure was introduced to the U.S. commercial mortgage-backed securities market in late 2004 and was modified in early 2005 to increase subordination from 20% to 30%. With the changes to the commercial mortgage-backed securities structure in 2005, there became three distinct AAA classes for commercial mortgage-backed securities with fixed-rate terms, (1) super senior AAA with 30% subordination, (2) mezzanine AAA with 20% subordination and (3) junior AAA with approximately 14% subordination. The super senior class has priority over the mezzanine and junior classes to all principal cash flows (repayments, prepayments and recoveries on defaulted loans). As a result, all super senior bonds must be completely repaid before the mezzanine or junior bonds receive any principal cash flows. In addition, the super senior bonds will not experience any loss of principal until both the entire mezzanine and junior bonds are written-down to zero. We believe the importance of this additional credit enhancement afforded to the super senior class over the mezzanine and junior classes is limited in a benign commercial real estate cycle with low defaults but becomes more significant in a deep commercial real estate downturn under which expected losses increase substantially.    In addition to enhanced subordination, certain securities within the super senior class benefit from the prioritization of principal cash flows. The super senior class is generally structured such that shorter duration time tranches have priority over longer duration time tranches as to all principal cash flows (repayments, prepayments, and recoveries on defaulted loans) until the deal reaches 30% cumulative net loss, at which point all super senior securities are paid pro rata. As a result, short of reaching 30% cumulative net losses, the "shorter duration super senior" tranches must be completely repaid before the "longest duration super senior" tranche receives any principal cash flows. We have generally focused our purchases of recent vintage commercial mortgage-backed securities on "shorter duration super senior" tranches that we believe have sufficient priority to ensure that in most scenarios our positions will be fully repaid prior to the structure reaching the 30% cumulative net loss threshold. The following table sets forth the amortized cost of our AAA commercial mortgage-backed securities attributable to the Financial Services Businesses as of the dates indicated, by type and by year of issuance (vintage).                                          196 
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AAA Rated Commercial Mortgage-Backed Securities-Amortized Cost by Type and Vintage-Financial Services Businesses
                                                                                          December 31, 2011                                                Super Senior AAA Structures                                Other AAA                                   Super              Super                                   Senior            Senior                                                                                        Total AAA                                  (shorter          (longest                                                                                     Securities at                                  duration          duration                                       Other            Other                          Amortized Vintage                         tranches)          tranches)        Mezzanine       Junior        Senior        Subordinate        Other            Cost                                                                                         (in millions) 2010                           $          0       $         0      $         0      $     0      $      0      $           0      $     0      $             0 2009                                      0                 0                0            0             0                  0            0                    0 2008                                    169                 0                0            0             0                  0            0                  169 2007                                  1,798                 0                0            0             0                  0            0                1,798 2006                                  1,391             1,178                0            0             0                  1           12                2,582 2005                                    553             1,082                0           16             0                  5            5                1,661 2004 & Prior                             30               157                0           63           410                179            3                  842  Total                          $      3,941       $     2,417      $         0      $    79      $    410      $         185      $    20      $         7,052     
The following tables set forth the amortized cost and fair value of our commercial mortgage-backed securities attributable to the Closed Block Business as of the dates indicated, by credit quality and by year of issuance (vintage).
Commercial Mortgage-Backed Securities at Amortized Cost-Closed Block Business                                                                December 31, 2011                                               Lowest Rating Agency Rating(1)                                                                                                Total            Total                                                                                 BB and       Amortized      December 31, Vintage                               AAA            AA        A       BBB       below         Cost             2010                                                                        (in millions) 2011                               $      53       $    0     $  0     $  0     $     0     $        53     $           0 2010                                       0            5        0        0           0               5                 5 2009                                       0            0        0        0           0               0                 0 2008                                       3            0        0        0           0               3                 9 2007                                     799            0       28        0           4             831               705 2006                                     852           70       11        0           0             933               873 2005                                   1,282            0       25        0           0           1,307             1,219 2004 & Prior                             368           34       16        6           3             427               804  Total commercial mortgage-backed securities(2)(3)                   $   3,357       $  109     $ 80     $  6     $     7     $     3,559     $       3,615     
(1)   The tables above provide ratings as assigned by nationally recognized rating
      agencies as of December 31, 2011, including Standard & Poor's, Moody's,
      Fitch, and Realpoint.
(2)   Included in the table above as of December 31, 2011 are downgraded super
      senior securities with amortized cost of $73 million in AA and $64 million
      in A.
(3)   Included in the table above as of December 31, 2011 are agency commercial
      mortgage-backed securities with amortized cost of $5 million all rated AA.
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Commercial Mortgage-Backed Securities at Fair Value-Closed Block Business
                                                               December 31, 2011                                              Lowest Rating Agency Rating(1)                                                                                                                 Total                                                                                BB and         Total         December 31, Vintage                               AAA           AA        A       BBB       below       Fair Value          2010                                                                        (in millions) 2011                               $      57       $   0     $  0     $  0     $     0     $         57     $           0 2010                                       0           5        0        0           0                5                 5 2009                                       0           0        0        0           0                0                 0 2008                                       4           0        0        0           0                4                10 2007                                     818           0       29        0          13              860               731 2006                                     896          78       12        0           0              986               923 2005                                   1,338           0       27        0           0            1,365             1,277 2004 & Prior                             379          34       16        6           3              438               833  Total commercial mortgage-backed securities                         $   3,492       $ 117     $ 84     $  6     $    16     $      3,715     $       3,779     
(1)   The tables above provide ratings as assigned by nationally recognized rating
      agencies as of December 31, 2011, including Standard & Poor's, Moody's,
      Fitch, and Realpoint.     The weighted average estimated subordination percentage of commercial mortgage-backed securities attributable to the Closed Block Business was 32% as of December 31, 2011. See above for a definition of this percentage. As of December 31, 2011, based on amortized cost, approximately 96% of the commercial mortgage-backed securities attributable to the Closed Block Business have estimated credit subordination percentages of 20% or more, and 73% have estimated credit subordination percentages of 30% or more. The following tables set forth the weighted average estimated subordination percentage, adjusted for that portion of the capital structure which has been effectively defeased by U.S. Treasury securities, of our commercial mortgage-backed securities attributable to the Closed Block Business based on amortized cost as of December 31, 2011, by rating and vintage.    Commercial Mortgage-Backed Securities-Subordination Percentages by Rating and Vintage-Closed Block Business                                                   December 31, 2011                                           Lowest Rating Agency Rating                                                                           BB and                Vintage          AAA         AA         A        BBB        below                2011                20 %                2010                2009                2008                31 %                2007                30 %                 30 %                    7 %                2006                32 %       34 %      33 %                2005                33 %                 32 %                2004 & Prior        35 %       34 %      61 %      71 %         69 %     As discussed above, with the changes to the commercial mortgage-backed securities market in late 2004 and early 2005, there are now three distinct AAA classes for commercial mortgage-backed securities with fixed rate terms, (1) super senior AAA with 30% subordination, (2) mezzanine AAA with 20% subordination and (3) junior AAA with approximately 14% subordination. In addition to the enhanced subordination, certain securities within the super senior class benefit from the prioritization of principal cash flows. The following table sets forth the amortized cost our AAA commercial mortgage-backed securities attributable to the Closed Block Business as of the dates indicated, by type and by year of issuance (vintage).                                          198
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AAA Rated Commercial Mortgage-Backed Securities-Amortized Cost by Type and Vintage-Closed Block Business
                                                                                          December 31, 2011                                              Super Senior AAA Structures                                  Other AAA                                Super              Super                               Senior             Senior                                                                                              Total AAA                              (shorter           (longest                                                                                           Securities at                              duration           duration                                          Other             Other                            Amortized Vintage                      tranches)          tranches)         Mezzanine        Junior         Senior         Subordinate         Other             Cost                                                                                         (in millions) 2011                        $        12        $         0       $         0       $     0       $     41       $           0       $     0       $            53 2010                                  0                  0                 0             0              0                   0             0                     0 2009                                  0                  0                 0             0              0                   0             0                     0 2008                                  3                  0                 0             0              0                   0             0                     3 2007                                799                  0                 0             0              0                   0             0                   799 2006                                617                225                 0             0              0                   0            10                   852 2005                                824                458                 0             0              0                   0             0                 1,282 2004 & Prior                         40                 11                 0             0            255                  62             0                   368  Total                       $     2,295        $       694       $         0       $     0       $    296       $          62       $    10       $         3,357     
Fixed Maturity Securities Credit Quality
    The Securities Valuation Office, or SVO, of the NAIC, evaluates the investments of insurers for statutory reporting purposes and assigns fixed maturity securities to one of six categories called "NAIC Designations." In general, NAIC Designations of "1" highest quality, or "2" high quality, include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody's or BBB- or higher by Standard & Poor's. NAIC Designations of "3" through "6" generally include fixed maturities referred to as below investment grade, which include securities rated Ba1 or lower by Moody's and BB+ or lower by Standard & Poor's. However, in the fourth quarter of 2009 the NAIC adopted rules which changed the methodology for determining the NAIC Designations for non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages. Under these rules, rather than being based on the rating of a third party rating agency, as of December 31, 2009 the NAIC Designations for such securities are based on security level expected losses as modeled by an independent third party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized. The modeled results used in determining NAIC Designations as of December 31, 2009 were updated and utilized for reporting as of December 31, 2010. In the fourth quarter of 2010, the NAIC adopted rules which changed the methodology for determining the NAIC Designations for commercial mortgage-backed securities, similar to what was done in the fourth quarter of 2009 for residential mortgage-backed securities. Both methodologies remained unchanged and were utilized for December 31, 2011.    As a result of time lags between the funding of investments, the finalization of legal documents and the completion of the SVO filing process, the fixed maturity portfolio generally includes securities that have not yet been rated by the SVO as of each balance sheet date. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.    Investments of our international insurance companies are not subject to NAIC guidelines. Investments of our Japanese insurance operations are regulated locally by the Financial Services Agency, an agency of the Japanese government. The Financial Services Agency has its own investment quality criteria and risk control standards. Our Japanese insurance companies comply with the Financial Services Agency's credit quality review and risk monitoring guidelines. The credit quality ratings of the investments of our Japanese insurance companies are based on ratings assigned by nationally recognized credit rating agencies, including Moody's, Standard & Poor's, or rating equivalents based on ratings assigned by Japanese credit ratings agencies.    The amortized cost of our public and private fixed maturities attributable to the Financial Services Businesses considered other than high or highest quality based on NAIC or equivalent rating totaled $9.3 billion, or 5%, of the total fixed maturities as of December 31, 2011 and $8.7 billion, or 6%, of the total fixed maturities as of December 31, 2010. Fixed maturities considered other than high or highest quality based on NAIC or                                          199
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  equivalent rating represented 30% and 27% of the gross unrealized losses attributable to the Financial Services Businesses as of December 31, 2011 and 2010, respectively. As of December 31, 2011, the amortized cost of our public and private below investment grade fixed maturities attributable to the Financial Services Businesses, based on the lowest of external rating agency ratings, totaled $10.9 billion, or 5%, of the total fixed maturities, and includes securities considered high or highest quality by the NAIC based on the new rules for residential mortgage-backed securities described above.    The amortized cost of our public and private fixed maturities attributable to the Closed Block Business considered other than high or highest quality based on NAIC or equivalent rating totaled $4.4 billion, or 10%, of the total fixed maturities as of December 31, 2011 and $5.6 billion, or 13%, of the total fixed maturities as of December 31, 2010. Fixed maturities considered other than high or highest quality based on NAIC or equivalent rating represented 51% of the gross unrealized losses attributable to the Closed Block Business as of December 31, 2011, and 44% as of December 31, 2010. As of December 31, 2011, the amortized cost of our public and private below investment grade fixed maturities attributable to the Closed Block Business, based on the lowest of external rating agency ratings, totaled $5.5 billion, or 13%, of the total fixed maturities, and includes securities considered high or highest quality by the NAIC based on the new rules for residential mortgage-backed securities described above.   
Public Fixed Maturities-Credit Quality
The following table sets forth our public fixed maturity portfolios by NAIC designation attributable to the Financial Services Businesses as of the dates indicated.
Public Fixed Maturity Securities-Financial Services Businesses
                (1)(2)                                     December 31, 2011                                              December 31, 2010                                                       Gross            Gross                                         Gross            Gross                                     Amortized       Unrealized       Unrealized        Fair        Amortized       Unrealized       Unrealized        Fair         NAIC Designation               Cost          Gains(3)        Losses(3)         Value          Cost          Gains(3)        Losses(3)         Value                                                                                           (in millions)                 1                   $  151,700     $     11,143     $      1,756     $ 161,087     $  105,068     $      6,278     $      1,240     $ 110,106                 2                       17,017            1,298              797        17,518         14,129              892              585        14,436  Subtotal High or Highest Quality Securities                             168,717           12,441            2,553       178,605        119,197            7,170            1,825       124,542                 3                        3,446               66              574         2,938          2,753              100              208         2,645                 4                        1,328               34              296         1,066          1,067               24              206           885                 5                          443                6              174           275            630               21              211           440                 6                          219               15              105           129            271               28               89           210  Subtotal Other Securities(4)             5,436              121            1,149         4,408          4,721              173              714        
 4,180
Total Public Fixed Maturities       $  174,153$     12,562     $      3,702     $ 183,013$  123,918     $      7,343     $      2,539     $ 128,722
(1)   Reflects equivalent ratings for investments of the international insurance
      operations.
(2)   Includes, as of December 31, 2011 and 2010, 10 securities with amortized
      cost of $2 million (fair value, $12 million) and 17 securities with
      amortized cost of $11 million (fair value, $20 million), respectively, that
      have been categorized based on expected NAIC designations pending receipt of
      SVO ratings.   (3)   Includes $282 million of gross unrealized gains and $97 million gross
      unrealized losses as of December 31, 2011, compared to $272 million of gross
      unrealized gains and $67 million of gross unrealized losses as of       December 31, 2010 on securities classified as held-to-maturity.  
(4)   On amortized cost basis, as of December 31, 2011 includes $185 million in
      emerging markets securities and $70 million in securitized bank loans.
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The following table sets forth our public fixed maturity portfolios by NAIC designation attributable to the Closed Block Business as of the dates indicated.
Public Fixed Maturity Securities-Closed Block Business
                   (1)                                       December 31, 2011                                              December 31, 2010                                                          Gross            Gross                                         Gross            Gross                                        Amortized       Unrealized       Unrealized        Fair        Amortized       Unrealized       Unrealized        Fair          NAIC Designation                Cost            Gains            Losses         Value          Cost            Gains            Losses         Value                                                                                             (in millions)                  1                    $    21,098     $      2,424     $        381     $ 23,141     $    21,965     $      1,075     $        551     $ 22,489                  2                          4,638              629              134        5,133           4,842              423               88        5,177  Subtotal High or Highest Quality Securities                                 25,736            3,053              515       28,274          26,807            1,498              639       27,666                  3                          1,103               59               82        1,080           1,547               73               77        1,543                  4                            808               14              245          577           1,031               27              201          857                  5                            369                5              156          218             527               17              176          368                  6                             66               10               14           62              58               20               13           65  Subtotal Other Securities(2)                2,346               88              497        1,937           3,163              137              467     
  2,833
Total Public Fixed Maturities         $    28,082     $      3,141     $   
  1,012     $ 30,211     $    29,970     $      1,635     $      1,106     $ 30,499     
(1)   Includes, as of December 31, 2011 and 2010, 11 securities with amortized
      cost of $11 million (fair value, $13 million) and 15 securities with
      amortized cost of $9 million (fair value, $10 million), respectively, that
      have been categorized based on expected NAIC designations pending receipt of
      SVO ratings.
(2)   On an amortized cost basis, as of December 31, 2011, includes $290 million
      in securitized bank loans and $182 million in emerging markets securities.
Private Fixed Maturities-Credit Quality
    The following table sets forth our private fixed maturity portfolios by NAIC designation attributable to the Financial Services Businesses as of the dates indicated.   
Private Fixed Maturity Securities-Financial Services Businesses
               (1)(2)                                       December 31, 2011                                                  December 31, 2010                                                        Gross             Gross                                            Gross             Gross                                     Amortized        Unrealized        Unrealized         Fair         Amortized        Unrealized        Unrealized         Fair        NAIC Designation               Cost            Gains(3)         Losses(3)         Value           Cost            Gains(3)         Losses(3)         Value                                                                                             (in millions)                1                   $     7,018      $        730      $         84      $  7,664      $     6,226      $        511      $         90      $  6,647                2                        15,847             1,273               362        16,758           13,264               792               341        13,715  Subtotal High or Highest Quality Securities                      22,865             2,003               446        24,422           19,490             1,303               431        20,362                3                         2,532               134                43         2,623            2,467               104                63         2,508                4                           715                14                20           709              948                26                44           930                5                           490                 5                42           453              518                21                17           522                6                           130                31                 3           158               95                29                 6           118  Subtotal Other Securities(4)             3,867               184               108         3,943            4,028               180               130   
      4,078
Total Private Fixed Maturities     $    26,732      $      2,187      $    
   554      $ 28,365      $    23,518      $      1,483      $        561      $ 24,440     
(1)   Reflects equivalent ratings for investments of the international insurance
      operations.
(2)   Includes, as of December 31, 2011 and 2010, 100 securities with amortized
      cost of $815 million (fair value, $840 million) and 160 securities with
      amortized cost of $1,776 million (fair value, $1,800 million), respectively,
      that have been categorized based on expected NAIC designations pending
      receipt of SVO ratings.
(3)   Includes $63 million of gross unrealized gains and $1 million of gross
      unrealized losses as of December 31, 2011, compared to $47 million of gross
      unrealized gains and $1 million of gross unrealized losses as of       December 31, 2010 on securities classified as held-to-maturity.  
(4)   On an amortized cost basis, as December 31, 2011 includes $419 million in
      securitized bank loans and $244 million in commercial asset finance       securities.                                           201 
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The following table sets forth our private fixed maturity portfolios by NAIC designation attributable to the Closed Block Business as of the dates indicated.
Private Fixed Maturity Securities-Closed Block Business
                 (1)                                         December 31, 2011                                                  December 31, 2010                                                         Gross             Gross                                            Gross             Gross                                      Amortized        Unrealized        Unrealized         Fair         Amortized        Unrealized        Unrealized         Fair         NAIC Designation               Cost             Gains             Losses          Value           Cost             Gains             Losses          Value                                                                                              (in millions)                1                    $     3,651      $        660      $          0      $  4,311      $     3,702      $        447      $         11      $  4,138                2                          8,861             1,069                16         9,914            7,386               711                35         8,062  Subtotal High or Highest Quality Securities                               12,512             1,729                16        14,225           11,088             1,158                46        12,200                3                          1,061                66                10         1,117            1,292                67                21         1,338                4                            618                11                16           613              803                12                23           792                5                            215                 1                18           198              307                 6                16           297                6                            152                 3                 3           152               46                 7                 2            51  Subtotal Other Securities(2)              2,046                81                47         2,080            2,448                92                62         2,478 
Total Private Fixed Maturities      $    14,558      $      1,810      $   
     63      $ 16,305      $    13,536      $      1,250      $        108      $ 14,678     
(1)   Includes, as of December 31, 2011 and 2010, 56 securities with amortized
      cost of $926 million (fair value, $968 million) and 103 securities with
      amortized cost of $1,523 million (fair value, $1,506 million), respectively,
      that have been categorized based on expected NAIC designations pending
      receipt of SVO ratings.
(2)   On an amortized cost basis, as of December 31, 2011, includes $290 million
      in securitized bank loans and $272 million in commercial asset finance
      securities.    
Corporate Securities-Credit Quality
    The following table sets forth both our public and private corporate securities by NAIC designation attributable to the Financial Services Businesses as of the dates indicated.   
Corporate Securities-Financial Services Businesses
                   (1)                                       December 31, 2011                                              December 31, 2010                                                          Gross            Gross                                         Gross            Gross                                        Amortized       Unrealized       Unrealized        Fair        Amortized       Unrealized       Unrealized        Fair          NAIC Designation                Cost            Gains            Losses         Value          Cost            Gains            Losses         Value                                                                                             (in millions)                  1                    $    55,051     $      3,850     $      1,170     $ 57,731     $    36,486     $      2,413     $        645     $ 38,254                  2                         31,355            2,487            1,072       32,770          25,678            1,598              844       26,432  Subtotal High or Highest Quality Securities                                 86,406            6,337            2,242       90,501          62,164            4,011            1,489       64,686                  3                          5,379              185              469        5,095           4,253              150              191        4,212                  4                          1,469               26              109        1,386           1,483               33               99        1,417                  5                            585                9               51          543             546               33               22          557                  6                            176               35               12          199             130               39               11          158  Subtotal Other Securities                   7,609              255              641        7,223           6,412              255              323        6,344 
Total Corporate Fixed Maturities      $    94,015     $      6,592     $   
  2,883     $ 97,724     $    68,576     $      4,266     $      1,812     $ 71,030     
(1)   Reflects equivalent ratings for investments of the international insurance
      operations.                                           202 
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The following table sets forth our corporate securities by NAIC designation attributable to the Closed Block Business as of the dates indicated.
Corporate Securities-Closed Block Business
                                                            December 31, 2011                                                  December 31, 2010                                                        Gross             Gross                                            Gross             Gross                                     Amortized        Unrealized        Unrealized         Fair         Amortized        Unrealized        Unrealized         Fair        NAIC Designation               Cost             Gains             Losses          Value           Cost             Gains             Losses          Value                                                                                             (in millions)                1                   $    10,528      $      1,714      $         62      $ 12,180      $    10,064      $        951      $         65      $ 10,950                2                        12,773             1,631                67        14,337           11,505             1,080                65        12,520  Subtotal High or Highest Quality Securities                      23,301             3,345               129        26,517           21,569             2,031               130        23,470                3                         1,747               106                21         1,832            2,309               115                31         2,393                4                           949                20                41           928            1,320                35                55         1,300                5                           297                 4                26           275              422                19                22           419                6                           207                 8                12           203               77                20                 4            93  Subtotal Other Securities                3,200               138               100         3,238            4,128               189               112         4,205  Total Corporate Fixed Maturities                         $    26,501      $      3,483      $        229      $ 29,755      $    25,697      $      2,220      $        242      $ 27,675     
Credit Derivative Exposure to Public Fixed Maturities
    In addition to the credit exposure from public fixed maturities noted above, we sell credit derivatives to enhance the return on our investment portfolio by creating credit exposure similar to an investment in public fixed maturity cash instruments.    In a credit derivative, we sell credit protection on an identified name, and in return receive a quarterly premium. With single name credit default derivatives, this premium or credit spread generally corresponds to the difference between the yield on the referenced name's public fixed maturity cash instruments and swap rates, at the time the agreement is executed.    The referenced names in the credit derivatives where we have sold credit protection, as well as all the counterparties to these agreements, are investment grade credit quality and our credit derivatives generally have maturities of ten years or less. Credit derivative contracts are recorded at fair value with changes in fair value, including the premium received, recorded in "Realized investment gains (losses), net." The premium received for the credit derivatives we sell attributable to the Financial Services Businesses was $6 million and $7 million for the years ended December 31, 2011 and 2010, respectively, and were included in adjusted operating income as an adjustment to "Realized investment gains (losses), net."    The following table sets forth our exposure where we have sold credit protection through credit derivatives in the Financial Services Businesses by NAIC rating of the underlying credits as of the dates indicated.    
Credit Derivatives, Sold Protection-Financial Services Businesses
                                 December 31, 2011                   December 31, 2010                                  Single Name                         Single Name     NAIC Designation    Notional           Fair Value       Notional           Fair Value                                                   (in millions)            1           $       745         $         3     $       290         $         3            2                    25                   0              25                   0      Subtotal                   770                   3             315                   3       3 through 6                0                   0               0                   0      Total(1)           $       770         $         3     $       315         $         3     
(1)   Excludes a credit derivative related to surplus notes issued by a subsidiary
      of Prudential Insurance and embedded derivatives contained in certain
      externally-managed investments in the European market. See Note 21 to the
      Consolidated Financial Statements for additional information regarding these
      derivatives.                                           203 
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The following table sets forth our exposure where we have sold credit protection through credit derivatives in the Closed Block Business portfolios by NAIC designation of the underlying credits as of the dates indicated.
Credit Derivatives, Sold Protection-Closed Block Business
                                 December 31, 2011                  December 31, 2010                                  Single Name                        Single Name      NAIC Designation   Notional           Fair Value      Notional          Fair Value                                                  (in millions)             1           $      50         $          0     $       5         $         0             2                   0                    0             0                   0       Subtotal                  50                    0             5                   0        3 through 6              0                    0             0                   0       Total(1)           $      50         $          0     $       5         $         0      (1)   Excludes embedded derivatives contained in certain externally-managed       investments in the European market. See Note 21 to the Consolidated 
      Financial Statements for additional information regarding these derivatives.
     In addition to selling credit protection, we have purchased credit protection using credit derivatives in order to hedge specific credit exposures in our investment portfolio, including exposures relating to certain guarantees from monoline bond insurers. As of December 31, 2011 and 2010, the Financial Services Businesses had $1.598 billion and $1.785 billion of outstanding notional amounts, reported at fair value as an asset of $2 million and $2 million, respectively. As of December 31, 2011 and 2010, the Closed Block Business had $381 million and $399 million of outstanding notional amounts, reported at fair value as an asset of less than $1 million and a liability of $1 million, respectively. The premium paid for the credit derivatives we purchase attributable to the Financial Services Businesses was $43 million and $50 million for the years ended December 31, 2011 and 2010, respectively, and was included in adjusted operating income as an adjustment to "Realized investment gains (losses), net." See Note 21 to the Consolidated Financial Statements for additional information regarding credit derivatives and an overall description of our derivative activities.   
Unrealized Losses from Fixed Maturity Securities
    The following table sets forth the amortized cost and gross unrealized losses of fixed maturity securities attributable to the Financial Services Businesses where the estimated fair value had declined and remained below amortized cost by 20% or more for the following timeframes:    Unrealized Losses from Fixed Maturity Securities, Greater than 20%-Financial Services Businesses                                                    December 31, 2011                   December 31, 2010                                                               Gross                               Gross                                           Amortized         Unrealized        Amortized         Unrealized                                            Cost(1)          Losses(1)          Cost(1)          Losses(1)                                                                     (in
millions)
 Less than three months                    $    1,371       $        349       $      622       $        136 Three months or greater but less than six months                                     1,667                399              751                169 Six months or greater but less than nine months                                      864                309            1,094                283 Nine months or greater but less than twelve months                                    745                193              173                 52 Greater than twelve months                     3,809              1,392            2,503                908  Total                                     $    8,456       $      2,642       $    5,143       $      1,548     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      amortized cost by 20% or more, using month-end valuations.     Gross unrealized losses attributable to the Financial Services Businesses where the estimated fair value had declined and remained below amortized cost by 20% or more of $2.642 billion as of December 31, 2011, include                                          204
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$847 million relating to asset-backed securities collateralized by sub-prime mortgages. Gross unrealized losses attributable to the Financial Services Businesses where the estimated fair value had declined and remained below amortized cost by 20% or more as of December 31, 2011, also includes $80 million of gross unrealized losses on securities with amortized cost of $132 million where the estimated fair value had declined and remained below amortized cost by 50% or more, of which, $23 million was included in the less than three months timeframe, $22 million was included in the three months or greater but less than six months timeframe, $1 million was included in the six months or greater but less than nine months timeframe, and $34 million was included in the greater than twelve months timeframe. We have not recognized the gross unrealized losses shown in the tables above as other-than-temporary impairments in earnings based on our detailed analysis of the underlying credit and cash flows on each of these securities. The gross unrealized losses are primarily attributable to foreign currency movements, general credit spread widening in the structured credit marketplace and liquidity discounts, and we believe the recoverable value of these investments based on the expected future cash flows is greater than or equal to our remaining amortized cost. At December 31, 2011, we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the anticipated recovery of its remaining amortized cost basis. See "-Other-Than-Temporary Impairments of Fixed Maturity Securities" for a discussion of the factors we consider in making these determinations.    The following table sets forth the amortized cost and gross unrealized losses of fixed maturity securities attributable to the Closed Block Business where the estimated fair value had declined and remained below amortized cost by 20% or more for the following timeframes:    Unrealized Losses from Fixed Maturity Securities, Greater than 20%-Closed Block Business                                                   December 31, 2011                     December 31, 2010                                                               Gross                                 Gross                                          Amortized          Unrealized         Amortized          Unrealized                                           Cost(1)           Losses(1)           Cost(1)           Losses(1)                                                                     (in
millions)
 Less than three months                  $       122        $         33       $       173        $         37 Three months or greater but less than six months                                 353                  90               149                  43 Six months or greater but less than nine months                                     179                  55                70                  16 Nine months or greater but less than twelve months                              122                  34                73                  22 Greater than twelve months                    1,263                 605             1,518                 559  Total                                   $     2,039        $        817       $     1,983        $        677     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      amortized cost by 20% or more, using month-end valuations.     The gross unrealized losses were primarily concentrated in asset-backed securities as of December 31, 2011 and 2010. Gross unrealized losses attributable to the Closed Block Business where the estimated fair value had declined and remained below amortized cost by 20% or more of $817 million as of December 31, 2011, include $730 million relating to asset-backed securities collateralized by sub-prime mortgages. Gross unrealized losses attributable to the Closed Block Business where the estimated fair value had declined and remained below amortized cost by 20% or more as of December 31, 2011, does not include any gross unrealized losses on securities where the estimated fair value had declined and remained below amortized cost by 50% or more. We have not recognized the gross unrealized losses shown in the tables above as other-than-temporary impairments in earnings based on our detailed analysis of the underlying credit and cash flows on each of these securities. The gross unrealized losses are primarily attributable to general credit spread widening in the structured credit marketplace and liquidity discounts, and we believe the recoverable value of these investments based on the expected future cash flows is greater than or equal to our remaining amortized cost. At December 31, 2011, we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the anticipated recovery of its remaining amortized cost basis. See "-Other-Than-Temporary Impairments of Fixed Maturity Securities" for a discussion of the factors we consider in making these determinations.                                          205
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Other-Than-Temporary Impairments of Fixed Maturity Securities
    We maintain separate monitoring processes for public and private fixed maturities and create watch lists to highlight securities that require special scrutiny and management. Our public fixed maturity asset managers formally review all public fixed maturity holdings on a quarterly basis and more frequently when necessary to identify potential credit deterioration whether due to ratings downgrades, unexpected price variances, and/or company or industry specific concerns.    For private placements, our credit and portfolio management processes help ensure prudent controls over valuation and management. We have separate pricing and authorization processes to establish "checks and balances" for new investments. We apply consistent standards of credit analysis and due diligence for all transactions, whether they originate through our own in-house origination staff or through agents. Our regional offices closely monitor the portfolios in their regions. We set all valuation standards centrally, and we assess the fair value of all investments quarterly. Our private fixed maturity asset managers formally review all private fixed maturity holdings on a quarterly basis and more frequently when necessary to identify potential credit deterioration whether due to ratings downgrades, unexpected price variances, and/or company or industry specific concerns.    Fixed maturity securities classified as held-to-maturity are those securities where we have the intent and ability to hold the securities until maturity. These securities are reflected at amortized cost in our consolidated statements of financial position. Other fixed maturity securities are considered available-for-sale and, as a result, we record unrealized gains and losses to the extent that amortized cost is different from estimated fair value. All held-to-maturity securities and all available-for-sale securities with unrealized losses are subject to our review to identify other-than-temporary impairments in value.   
In evaluating whether a decline in value is other-than-temporary, we consistently consider several factors including, but not limited to, the following:
    •   the reasons for the decline in value (credit event, currency or interest
        rate related, including general credit spread widening);       •   the financial condition of and near-term prospects of the issuer; and       •   the extent and duration of the decline.     In determining whether a decline in value is other-than-temporary, we place greater emphasis on our analysis of the underlying credit versus the extent and duration of a decline in value. Our credit analysis of an investment includes determining whether the issuer is current on its contractual payments, evaluating whether it is probable that we will be able to collect all amounts due according to the contractual terms of the security, and analyzing our overall ability to recover the amortized cost of the investment. We continue to utilize valuation declines as a potential indicator of credit deterioration, and apply additional levels of scrutiny in our analysis as the severity and duration of the decline increases.    In addition, we recognize an other-than-temporary impairment in earnings for a debt security in an unrealized loss position when (a) we have the intent to sell the debt security, or (b) it is more likely than not we will be required to sell the debt security before its anticipated recovery or (c) a foreign currency denominated security with a foreign currency translation loss approaches maturity. For all debt securities in unrealized loss positions that do not meet any of these criteria, we analyze our ability to recover the amortized cost by comparing the net present value of our best estimate of projected future cash flows with the amortized cost of the security. If the net present value is less than the amortized cost of the investment, an other-than-temporary impairment is recorded. The determination of the assumptions used in these projections requires the use of significant management judgment. See Note 2 to the Consolidated Financial Statements for additional information regarding these assumptions and our policies for recognizing other-than-temporary impairments for debt securities.    Other-than-temporary impairments of general account fixed maturity securities attributable to the Financial Services Businesses that were recognized in earnings were $431 million and $564 million for the years ended December 31, 2011 and 2010, respectively. Included in the other-than-temporary impairments of general account fixed maturities attributable to the Financial Services Businesses for the years ended December 31, 2011 and 2010, were $118 million and $209 million, respectively, of other-than-temporary impairments on asset-backed securities collateralized by sub-prime mortgages.                                          206
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  Other-than-temporary impairments of fixed maturity securities attributable to the Closed Block Business that were recognized in earnings were $104 million and $168 million for the years ended December 31, 2011 and 2010, respectively. Included in the other-than-temporary impairments of fixed maturities attributable to the Closed Block Business for the years ended December 31, 2011 and 2010, were $67 million and $133 million, respectively, of other-than-temporary impairments on asset-backed securities collateralized by sub-prime mortgages. For a further discussion of other-than-temporary impairments, see "-Realized Investment Gains and Losses" above.    
Trading account assets supporting insurance liabilities
    Certain products included in the Retirement and International Insurance segments are experience-rated, meaning that we expect the investment results associated with these products will ultimately accrue to contractholders. The investments supporting these experience-rated products, excluding commercial mortgage and other loans, are primarily classified as trading and are reflected on the balance sheet as "Trading account assets supporting insurance liabilities, at fair value." Realized and unrealized gains and losses for these investments are reported in "Asset management fees and other income," and excluded from adjusted operating income. Investment income for these investments is reported in "Net investment income," and is included in adjusted operating income. The following table sets forth the composition of this portfolio as of the dates indicated.                                                      December 31, 2011               December 31, 2010                                                Amortized          Fair         Amortized          Fair                                                   Cost           Value            Cost           Value                                                                     (in millions) Short-term investments and cash equivalents                                   $        951      $    951      $        697      $    697 Fixed maturities: Corporate securities                                10,297        11,036             9,581        10,118 Commercial mortgage-backed securities                2,157         2,247             2,352         2,407 Residential mortgage-backed securities               1,786         1,844             1,350         1,363 Asset-backed securities                              1,504         1,367             1,158         1,030 Foreign government bonds                               644           655               567           569 U.S. government authorities and agencies and obligations of U.S. states                         440           470               467           448  Total fixed maturities                              16,828        17,619            15,475        15,935 Equity securities                                    1,050           911    
         1,156         1,139
  Total trading account assets supporting insurance liabilities                         $     18,829      $ 19,481      $     17,328      $ 17,771      As a percentage of amortized cost, 75% and 76% of the portfolio was publicly traded as of December 31, 2011 and 2010. As of December 31, 2011 and 2010, 92% and 90%, respectively, of the fixed maturity portfolio was considered high or highest quality based on NAIC or equivalent rating. As of December 31, 2011, $1.662 billion of the residential mortgage-backed securities were publicly traded agency pass-through securities, which are supported by implicit or explicit government guarantees all of which have credit ratings of A or higher. Collateralized mortgage obligations, including approximately $91 million secured by "ALT-A" mortgages, represented the remaining $124 million of residential mortgage-backed securities, of which 77% have credit ratings of A or better and 23% are BBB and below. For a discussion of changes in the fair value of our trading account assets supporting insurance liabilities see "-Experience-Rated Contractholder Liabilities, Trading Account Assets Supporting Insurance Liabilities and Other Related Investments," above.                                          207
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The following table sets forth the composition by industry category of the corporate securities included in our trading account assets supporting insurance liabilities portfolio as of the dates indicated.
Corporate Securities by Industry Category-Trading Account Assets Supporting Insurance Liabilities                                           December 31, 2011           December 31, 2010                                     Amortized        Fair       Amortized        Fair        Industry(1)                     Cost         Value          Cost         Value                                                        (in millions)        Corporate Securities:        Manufacturing                $    3,119     $  3,401     $    3,084     $  3,306        Utilities                         1,819        1,996          1,961        2,076        Services                          1,959        2,088          1,700        1,783        Finance                           1,711        1,720          1,270        1,290        Energy                              656          726            704          753        Transportation                      565          599            467          495        Retail and Wholesale                452          490            378          398        Other                                16           16             17           17         Total Corporate Securities   $   10,297     $ 11,036     $    9,581     $ 10,118     
(1)   Investment data has been classified based on standard industry
      categorizations for domestic public holdings and similar classifications by
      industry for all other holdings.    
The following tables set forth our asset-backed securities included in our trading account assets supporting insurance liabilities portfolio as of the dates indicated, by credit quality, and for asset-backed securities collateralized by sub-prime mortgages, by year of issuance (vintage).
Asset-Backed Securities at Amortized Cost-Trading Account Assets Supporting Insurance Liabilities                                                               December 31, 2011                                               Lowest Rating Agency Rating                                                                                            Total            Total                                                                             BB and       Amortized      December 31, Vintage                              AAA        AA        A       BBB       below          Cost             2010                                                                       (in millions) Collateralized by sub-prime mortgages: 2011-2008                           $    0     $   0     $  0     $  0     $      0     $         0     $           0 2007                                     0         0        0        0          120             120               124 2006                                     0         0        0        1           79              80               101 2005                                     0         0        0        0           35              35                50 2004 & Prior                             1         8        4       11           41              65                71  Total collateralized by sub-prime mortgages                                1         8        4       12          275             300               346 Other asset-backed securities: Collateralized by auto loans           274         0        0       18            0             292                36 
Collateralized by credit cards         400         0        0       49     
       0             449               443 
Other asset-backed securities          267       145       21       19     
      11             463               333  
Total asset-backed securities       $  942$ 153$ 25$ 98$    286$     1,504     $       1,158
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Asset-Backed Securities at Fair Value-Trading Account Assets Supporting Insurance Liabilities                                                              December 31, 2011                                              Lowest Rating Agency Rating                                     Total                                                                            BB and       Total Fair       December  31, Vintage                             AAA        AA        A       BBB       below          Value              2010                                                                       (in millions) Collateralized by sub-prime mortgages: 2011-2008                          $    0     $   0     $  0     $  0     $      0     $          0     $             0 2007                                    0         0        0        0           42               42                  56 2006                                    0         0        0        1           45               46                  65 2005                                    0         0        0        0           25               25                  36 2004 & Prior                            1         7        3        8           25               44                  51  Total collateralized by sub-prime mortgages(1)                  1         7        3        9          137              157                 208 Other asset-backed securities: Collateralized by auto loans          274         0        0       19            0              293                  36 
Collateralized by credit cards        412         0        0       49      
      0              461                 460 
Other asset-backed securities(2)      268       144       21       14      
      9              456                 326  
Total asset-backed securities      $  955$ 151$ 24$ 91     $
   146     $      1,367     $         1,030     
(1)   Included within the $157 million of asset-backed securities collateralized
      by sub-prime mortgages at fair value as of December 31, 2011 are $0 million
      of securities collateralized by second-lien exposures at fair value.
(2)   As of December 31, 2011, includes collateralized debt obligations with fair
      value of $31 million, none of which is secured by sub-prime mortgages. Also
      includes asset-backed securities collateralized by timeshares, franchises,
      education loans, and equipment leases.    
The following tables set forth our commercial mortgage-backed securities included in our trading account assets supporting insurance liabilities portfolio as of the dates indicated, by credit quality and by year of issuance (vintage).
Commercial Mortgage-Backed Securities at Amortized Cost-Trading Account Assets Supporting Insurance Liabilities
                                                             December 31, 2011                                              Lowest Rating Agency Rating                                                                                           Total             Total                                                                            BB and       Amortized       December  31, Vintage                              AAA        AA        A       BBB       below         Cost              2010                                                                       (in millions) 2011                               $    16     $  10     $  0     $  0     $     0     $        26     $             0 2010                                     0       103        0        0           0             103                  65 2009                                     0         4        0        0           0               4                  32 2008                                    30         0        0        0           0              30                  30 2007                                   195         0        0        0           0             195                 128 2006                                   578        53        0        0           0             631                 651 2005 & Prior                         1,111         7       22       17          11           1,168               1,446  Total commercial mortgage-backed securities(1)                      $ 1,930     $ 177     $ 22     $ 17     $    11     $     2,157     $         2,352     
(1)   Included in the table above as of December 31, 2011 are downgraded super
      senior securities with amortized cost of $53 million in AA.                                           209 
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Commercial Mortgage-Backed Securities at Fair Value-Trading Account Assets Supporting Insurance Liabilities
                                                             December 31, 2011                                             Lowest Rating Agency Rating                                      Total                                                                            BB and       Total Fair       December  31, Vintage                             AAA         AA        A       BBB       below         Value              2010                                                                       (in millions) 2011                              $     17     $  11     $  0     $  0     $     0     $         28     $             0 2010                                     0       111        0        0           0              111                  64 2009                                     0         5        0        0           0                5                  31 2008                                    31         0        0        0           0               31                  31 2007                                   198         0        0        0           0              198                 130 2006                                   607        55        0        0           0              662                 670 2005 & Prior                         1,164         7       20       12           9            1,212               1,481  Total commercial mortgage-backed securities        $  2,017     $ 189     $ 20     $ 12     $     9     $      2,247     $         2,407     
The following table sets forth our public fixed maturities included in our trading account assets supporting insurance liabilities portfolio by NAIC designation as of the dates indicated.
Public Fixed Maturity Securities-Trading Account Assets Supporting Insurance Liabilities              (1)(2)                                       December 31, 2011                                                      December 31, 2010                                                      Gross              Gross                                               Gross              Gross                                  Amortized         Unrealized         Unrealized          Fair          Amortized         Unrealized         Unrealized          Fair      NAIC Designation              Cost             Gains(3)          Losses(3)          Value            Cost             Gains(3)          Losses(3)          Value                                                                                              (in millions)              1                  $     8,892       $        472       $         92       $  9,272       $     7,836       $        313       $         93       $  8,056              2                        2,560                217                 15          2,762             2,768                160                 44          2,884  Subtotal High or Highest Quality Securities                   11,452                689                107         12,034            10,604                473                137         10,940              3                          283                 11                  9            285               329                 12                 30            311              4                          163                  2                 49            116               178                  3                 35            146              5                           77                  1                 33             45                77                  1                 30             48              6                           82                  0                 50             32                67                  0                 41             26  Subtotal Other Securities               605                 14                141            478               651                 16                136            531  Total Public Fixed Maturities                      $    12,057       $        703       $        248       $ 12,512       $    11,255       $        489       $        273       $ 11,471     
(1)   See "-Fixed Maturity Securities Credit Quality" above for a discussion on
      NAIC designations.
(2)   Reflects equivalent ratings for investments of the international insurance
      operations that are not rated by U.S. insurance regulatory authorities.
  (3)   Amounts are reported in "Asset management fees and other income."                                           210 
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The following table sets forth our private fixed maturities included in our trading account assets supporting insurance liabilities portfolio by NAIC designation as of the dates indicated.
Private Fixed Maturity Securities-Trading Account Assets Supporting Insurance Liabilities                  (1)(2)                                       December 31, 2011                                                 December 31, 2010                                                           Gross             Gross                                           Gross             Gross                                        Amortized        Unrealized        Unrealized        Fair         Amortized        Unrealized        Unrealized        Fair          NAIC Designation                Cost            Gains(3)         Losses(3)         Value          Cost            Gains(3)         Losses(3)         Value                                                                                                 (in millions)                 1                     $       828      $         74      $         10      $   892      $       805      $         66      $         11      $   860                 2                           3,143               262                13        3,392            2,584               187                10        2,761  Subtotal High or Highest Quality Securities                                  3,971               336                23        4,284            3,389               253                21        3,621                 3                             588                33                 2          619              656                27                 6          677                 4                             123                 3                 5          121               98                 4                 5           97                 5                              76                 0                 4           72               54                 1                 4           51                 6                              13                 0                 2           11               23                 1                 6           18      Subtotal Other Securities                 800                36                13          823              831                33                21          843 
Total Private Fixed Maturities        $     4,771      $        372      $ 
       36      $ 5,107      $     4,220      $        286      $         42      $ 4,464     
(1)   See "-Fixed Maturity Securities Credit Quality" above for a discussion on
      NAIC designations.
(2)   Reflects equivalent ratings for investments of the international insurance
      operations that are not rated by U.S. insurance regulatory authorities.
  (3)   Amounts are reported in "Asset management fees and other income."    
Other Trading Account Assets
    "Other trading account assets, at fair value" consist primarily of certain financial instruments that contain an embedded derivative where we elected to classify the entire instrument as a trading account asset rather than bifurcate. These instruments are carried at fair value, with realized and unrealized gains and losses reported in "Asset management fees and other income," and excluded from adjusted operating income. Interest and dividend income from these investments is reported in "Net investment income," and is included in adjusted operating income. The following table sets forth the composition of our other trading account assets as of the dates indicated.                                                      December 31, 2011                                       December 31, 2010                                     Financial Services             Closed Block             Financial Services             Closed Block                                         Businesses                   Business                   Businesses                   Business                                   Amortized        Fair        Amortized       Fair       Amortized        Fair        Amortized       Fair                                     Cost           Value         Cost         Value         Cost           Value         Cost         Value                                                                                 (in millions) Short-term investments and cash equivalents                 $         4      $     4     $         0     $    0     $         3      $     3     $         0     $    0 Fixed maturities: Corporate securities                     116          104             110        119             161          150             110        118 Commercial mortgage-backed               155          111               0          0             143          103               0          0 Residential mortgage-backed              186           96               0          0             301          181               0          0 Asset-backed securities                  598          551              69         70             636          589              36         37 Foreign government                        46           46               0          0              25           25               0          0 U.S. government                            4            4               0          0               0            0               0          0  Total fixed maturities                 1,105          912             179        189           1,266        1,048             146        155 Equity securities(1)                   1,226        1,177             133        128             157          156               1          1 Other                                     11           11               0          0              12           13               0          0  Total other trading account assets                           $     2,346      $ 2,104     $       312     $  317     $     1,438      $ 1,220     $       147     $  156     
(1)   During 2011, perpetual preferred stocks of $1.3 billion ($1.2 billion
      Financial Services Businesses, $0.1 billion Closed Block Business) were
      reclassified from "Equity securities, available-for-sale." Prior periods
      were not restated.                                           211 
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  As of December 31, 2011, on an amortized cost basis 82% of asset-backed securities classified as "Other trading account assets" attributable to the Financial Services Businesses have credit ratings of A or above, 9% have BBB and the remaining 9% have BB and below credit ratings. As of December 31, 2011, on an amortized cost basis 75% of asset-backed securities classified as "Other trading account assets" attributable to the Closed Block Business have credit ratings of A or above and the remaining 25% have BBB credit ratings.    
Commercial Mortgage and Other Loans
   Investment Mix    As of December 31, 2011 and 2010 we held approximately 10% and 11%, respectively, of our general account investments in commercial mortgage and other loans. This percentage is net of a $310 million and $435 million allowance for losses as of December 31, 2011 and 2010, respectively. The following table sets forth the composition of our commercial mortgage and other loans portfolio, before the allowance for losses, as of the dates indicated.                                                          December 31, 2011                  December 31, 2010                                                   Financial          Closed          Financial          Closed                                                   Services           Block           Services           Block                                                  Businesses        
Business        Businesses         Business
                                                                          (in millions) Commercial and agricultural mortgage loans      $      21,988      $    9,100      $      19,796      $    8,608 Uncollateralized loans                                  2,236               0              1,467               0 Residential property loans                              1,033               0                891               1 Other collateralized loans                                 66               0                 80               0  
Total commercial mortgage and other loans(1)    $      25,323      $    9,100      $      22,234      $    8,609
(1)   Excluded from the table above are commercial mortgage loans held outside the
      general account in other entities and operations. For additional information
      regarding commercial mortgage loans held outside the general account, see       "-Invested Assets of Other Entities and Operations" below.     We originate commercial and agricultural mortgage loans using a dedicated investment staff and a network of independent companies through our various regional offices. All loans are underwritten consistently to our standards using a proprietary quality rating system that has been developed from our experience in real estate and mortgage lending.    
Uncollateralized loans primarily represent reverse dual currency loans and corporate loans which do not meet the definition of a security under authoritative accounting guidance.
    Residential property loans primarily include Japanese recourse loans. Upon default of these recourse loans we can make a claim against the personal assets of the property owner, in addition to the mortgaged property. These loans are also backed by third party guarantors.    
Other collateralized loans attributable to the Financial Services Businesses include $63 million and $75 million of collateralized consumer loans and $0 million and $4 million of loans collateralized by aviation assets as of December 31, 2011 and 2010, respectively.
Composition of Commercial and Agricultural Mortgage Loans
    The commercial real estate market was severely impacted by the financial crisis and the subsequent recession, though the flow of capital to commercial real estate has been strong since 2010. Portfolio lenders are actively originating loans on the highest quality properties in primary markets, resulting in an increase in the liquidity and availability of capital in the commercial mortgage loan market. For certain property types, the market fundamentals are stabilizing to slightly improving, while other property types have farther to go in this recovery. In addition, the commercial banks are active and there has been new loan origination activity by securitization lenders. These conditions have led to greater competition for portfolio lenders such as our general                                          212
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  account, though underwriting remains conservative. While there is still weakness in commercial real estate fundamentals that are dependent on employment recovery, delinquency rates on our commercial mortgage loans remain relatively stable. For additional information see "- Realized Investment Gains and Losses."    Our commercial and agricultural mortgage loan portfolio strategy emphasizes diversification by property type and geographic location. The following tables set forth the breakdown of the gross carrying values of our general account investments in commercial and agricultural mortgage loans by geographic region and property type as of the dates indicated.                                                          December 31, 2011                                        December 31, 2010                                        Financial Services              Closed Block             Financial Services              Closed Block                                            Businesses                    Business                   Businesses                    Business                                         Gross                       Gross                        Gross                       Gross                                       Carrying        % of         Carrying       % of         Carrying        % of         Carrying       % of                                         Value         Total         Value         Total          Value         Total         Value         Total                                                                                    ($ in millions) Commercial and agricultural mortgage loans by region: U.S. Regions: Pacific                              $     7,136        32.5 %    $    3,118        34.3 %    $     5,845        29.5 %    $    2,861        33.2 % South Atlantic                             4,568        20.8           1,868        20.5            4,612        23.3           1,739        20.2 Middle Atlantic                            3,221        14.6           2,109        23.2            3,122        15.8           1,959        22.8 East North Central                         1,579         7.2             336         3.7            1,607         8.1             356         4.1 West South Central                         1,858         8.4             688         7.6            1,541         7.8             676         7.9 Mountain                                   1,181         5.4             356         3.9            1,081         5.5             358         4.2 New England                                  637         2.9             257         2.8              623         3.1             269         3.1 West North Central                           576         2.6             185         2.0              516         2.6             183         2.1 East South Central                           307         1.4             152         1.7              317         1.6             156         1.8  Subtotal-U.S.                             21,063        95.8           9,069        99.7           19,264        97.3           8,557        99.4 Asia                                         519         2.4               0         0.0              224         1.1               0         0.0 Other                                        406         1.8              31         0.3              308         1.6              51         0.6  Total commercial and agricultural mortgage loans .                     $    21,988       100.0 %    $    9,100       100.0 %    $    19,796       100.0 %    $    8,608       100.0 %                                                               December 31, 2011                                        December 31, 2010                                           Financial Services              Closed Block             Financial Services              Closed Block                                               Businesses                    Business                   Businesses                    Business                                            Gross                       Gross                        Gross                       Gross                                          Carrying        % of         Carrying       % of         Carrying        % of         Carrying       % of                                            Value         Total         Value         Total          Value         Total         Value         Total                                                                                       ($ in millions) Commercial and agricultural mortgage loans by property type: Industrial buildings                    $     5,234        23.8 %    $    1,804        19.8 %    $     4,627        23.4 %    $    1,910        22.2 % Retail stores                                 4,988        22.7           2,207        24.2            4,276        21.6           1,938        22.5 Office buildings                              4,043        18.4           2,216        24.4            3,676        18.5           1,900        22.1 Apartments/Multi-family                       3,263        14.8           1,254        13.8            3,004        15.2           1,321        15.3 Other                                         2,079         9.5             517         5.7            1,882         9.5             452         5.3 Agricultural properties                       1,363         6.2             674         7.4            1,205         6.1             680         7.9 Hospitality                                   1,018         4.6             428         4.7            1,126         5.7             407         4.7  Total commercial and agricultural mortgage loans                          $    21,988       100.0 %    $    9,100       100.0 %    $    19,796       100.0 %    $    8,608       100.0 %      Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial and agricultural mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% percent indicate that the loan amount is greater than the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service                                          213 
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  coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments.    As of December 31, 2011, our general account investments in commercial and agricultural mortgage loans attributable to the Financial Services Businesses had a weighted average debt service coverage ratio of 1.88 times, and a weighted average loan-to-value ratio of 59%. As of December 31, 2011, approximately 98% of commercial and agricultural mortgage loans attributable to the Financial Services Businesses were fixed rate loans. As of December 31, 2011, our general account investments in commercial and agricultural mortgage loans attributable to the Closed Block Business had a weighted average debt service coverage ratio of 1.90 times, and a weighted average loan-to-value ratio of 55%. As of December 31, 2011, approximately 99% of commercial and agricultural mortgage loans attributable to the Closed Block Business were fixed rate loans. For those general account commercial and agricultural mortgage loans attributable to the Financial Services Businesses that were originated in 2011, the weighted average debt service coverage ratio was 2.09 times and the weighted average loan-to-value ratio was 59%.    The values utilized in calculating these loan-to-value ratios are developed as part of our periodic review of the commercial and agricultural mortgage loan portfolio, which includes an internal evaluation of the underlying collateral value. Our periodic review also includes a quality re-rating process, whereby we update the internal quality rating originally assigned at underwriting based on the proprietary quality rating system mentioned above. As discussed below, the internal quality rating is a key input in determining our allowance for loan losses.    For loans with collateral under construction, renovation or lease-up, a stabilized value and projected net operating income are used in the calculation of the loan-to-value and debt service coverage ratios. Our commercial and agricultural mortgage loan portfolio attributable to the Financial Services Businesses included approximately $0.5 billion of such loans as of December 31, 2011 and $0.6 billion of such loans as of December 31, 2010, and our commercial and agricultural mortgage loan portfolio attributable to the Closed Block Business included approximately $0.2 billion of such loans as of December 31, 2011 and 2010. All else being equal, these loans are inherently more risky than those collateralized by properties that have already stabilized. As of December 31, 2011, there are no loan-specific reserves related to these loans attributable to either the Financial Services Businesses or the Closed Block Business. In addition, these unstabilized loans are included in the calculation of our portfolio reserve as discussed below. For information regarding similar loans we hold as part of our commercial and agricultural mortgage operations, see "-Invested Assets of Other Entities and Operations." The following tables set forth the gross carrying value of our general account investments in commercial and agricultural mortgage loans attributable to the Financial Services Businesses and the Closed Block Business as of the dates indicated by loan-to-value and debt service coverage ratios.    
Commercial and Agricultural Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios-Financial Services Businesses
                                                                             December 31, 2011                                                                      Debt Service Coverage Ratio                                                                                                                     Total                                                                                                                   Commercial                                                                                                                      and                                        Greater       1.8x        1.5x        1.2x        1.0x        Less        Agricultural                                          than         to          to          to          to         than          Mortgage                                          2.0x        2.0x        <1.8x       <1.5x       <1.2x       1.0x           Loans Loan-to-Value Ratio                                                         (in millions) 0%-49.99%                              $  3,346     $ 1,026     $ 1,039     $   854     $   272     $    80     $        6,617 50%-59.99%                                1,268         820       1,016         430         120          58              3,712 60%-69.99%                                1,918       1,032       1,354       1,407         520         166              6,397 70%-79.99%                                  481         201         588       1,350         791         137              3,548 80%-89.99%                                    0           0         115         302         194         351                962 90%-100%                                     19          19           0           0          40         321                399 Greater than 100%                            16           0          17          14          39         267                353  Total commercial and agricultural mortgage loans                         $  7,048     $ 3,098     $ 4,129     $ 4,357     $ 1,976     $ 1,380     $       21,988                                            214 
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Commercial and Agricultural Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios-Closed Block Business
                                                                         December 31, 2011                                                                  Debt Service Coverage Ratio                                                                                                               Total                                                                                                            Commercial                                                                                                                and                                       Greater      1.8x       1.5x        1.2x        1.0x      Less      Agricultural                                         than        to         to          to          to       than        Mortgage                                         2.0x       2.0x       <1.8x       <1.5x      <1.2x      1.0x          Loans Loan-to-Value Ratio                                                     (in millions) 0%-49.99%                             $  1,801     $ 383     $   490     $   407     $  180     $  63     $       3,324 50%-59.99%                                 496       199         359         276        133        35             1,498 60%-69.99%                                 563       388         619         803        186        89             2,648 70%-79.99%                                 118        10         183         524        466        80             1,381 80%-89.99%                                   0         0          18          35         26        51               130 90%-100%                                     0         0           0           0          0        35                35 Greater than 100%                            0         0           0          24          7        53                84  Total commercial and agricultural mortgage loans                        $  2,978     $ 980     $ 1,669     $ 2,069     $  998     $ 406     $       9,100     
The following table sets forth the breakdown of our commercial and agricultural mortgage loans by year of origination as of December 31, 2011.
                                                                       December 31, 2011                                          Financial Services Businesses                 Closed Block Business                                            Gross                                     Gross                                          Carrying                                  Carrying Year of Origination                        Value              % of Total             Value            % of Total                                                                     ($ in millions) 2011                                  $         4,940                 22.5 %      $     1,473                16.2 % 2010                                            3,243                 14.7              1,086                11.9 2009                                            1,507                  6.9                491                 5.4 2008                                            2,861                 13.0              1,120                12.3 2007                                            3,496                 15.9              1,442                15.9 2006 and prior                                  5,941                 27.0              3,488                38.3  Total commercial and agricultural mortgage loans                        $        21,988                100.0 %      $     9,100               100.0 %                                            215 
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Commercial Mortgage and Other Loans by Contractual Maturity Date
The following table sets forth the breakdown of our commercial mortgage and other loan portfolio by contractual maturity as of December 31, 2011.
                                                                       December 31, 2011                                          Financial Services Businesses                 Closed Block Business                                          Amortized                                 Amortized                                            Cost               % of Total             Cost             % of Total                                                                     ($ in millions) Vintage Maturing in 2012                      $         2,297                  9.1 %      $       735                 8.1 % Maturing in 2013                                2,409                  9.5                680                 7.5 Maturing in 2014                                1,540                  6.1                860                 9.4 Maturing in 2015                                2,386                  9.4                878                 9.6 Maturing in 2016                                2,892                 11.4                957                10.5 Maturing in 2017                                2,686                 10.6                635                 7.0 Maturing in 2018                                3,117                 12.3              1,061                11.7 Maturing in 2019                                  742                  2.9                271                 3.0 Maturing in 2020                                1,560                  6.2                850                 9.3 Maturing in 2021                                2,149                  8.5              1,029                11.3 Maturing in 2022                                  803                  3.2                327                 3.6 Maturing in 2023 and beyond                     2,742                 10.8                817                 9.0  Total commercial mortgage and other loans                           $        25,323                100.0 %      $     9,100               100.0 %     
Commercial Mortgage and Other Loan Quality
    Ongoing review of the portfolio is performed and loans are placed on watch list status based on a predefined set of criteria, where they are assigned to one of the following categories. We place loans on early warning status in cases where, based on our analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, we believe a loss of principal or interest could occur. We classify loans as closely monitored when we determine there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans not in good standing are those loans where we have concluded that there is a high probability of loss of principal, such as when the loan is in the process of foreclosure or the borrower is in bankruptcy. In our domestic operations, our workout and special servicing professionals manage the loans on the watch list. As described below, in determining our allowance for losses we evaluate each loan on the watch list to determine if it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. In our international portfolios, we monitor delinquency in consumer loans on a pool basis and evaluate any servicing relationship and guarantees the same way we do for commercial mortgage loans.    We establish an allowance for losses to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for loans that are determined to be impaired as a result of our loan review process, and a portfolio reserve for probable incurred but not specifically identified losses for loans which are not on the watch list. We define an impaired loan as a loan for which we estimate it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan specific portion of the loss allowance is based on our assessment as to ultimate collectability of loan principal and interest. Valuation allowances for an impaired loan are recorded based on the present value of expected future cash flows discounted at the loan's effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The portfolio reserve for incurred but not specifically identified losses considers the current credit composition of the portfolio based on the internal quality ratings mentioned above. The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability, and loss severity factors by property type. These factors are reviewed and updated as appropriate. The valuation allowance for commercial mortgage and other loans can increase or decrease from period to period based on these factors. The following tables set forth the aging schedule of our general account investments in commercial mortgage and other loans, based upon the recorded investment gross of allowance for credit losses, attributable to the Financial Services Businesses and Closed Block Business as of the dates indicated.                                          216
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Commercial Mortgage and Other Loans-Financial Services Businesses
                                                                                        December 31, 2011                                                                                                                                                Total                                                                                           Greater         Greater                            Commercial                                                                                           Than 90         Than 90                             Mortgage                                                     30-59 Days         60-89 Days          Days-         Days-Not         Total Past         and Other                                     Current          Past Due           Past Due         Accruing        Accruing            Due               Loans                                                                                        (in millions) Commercial mortgage loans: Industrial                          $  5,234       $          0       $          0       $       0       $       0       $          0       $      5,234 Retail                                 4,983                  0                  0               0               5                  5              4,988 Office                                 4,022                  5                  0               0              16                 21              4,043 Multi-Family/Apartment                 3,217                  0                  0               0              46                 46              3,263 Hospitality                            1,018                  0                  0               0               0                  0              1,018 Other                                  2,029                 13                 10               0              27                 50              2,079  Total commercial mortgage loans       20,503                 18                 10               0              94                122             20,625  Agricultural property loans            1,331                  1                  1               0              30                 32              1,363 Residential property loans               987                 22                  6               0              18                 46              1,033 Other collateralized loans                66                  0                  0               0               0                  0                 66 Uncollateralized loans                 2,236                  0                  0               0               0                  0              2,236  Total                               $ 25,123       $         41       $         17       $       0       $     142       $        200       $     25,323     
Commercial Mortgage and Other Loans-Closed Block Business
                                                                                      December 31, 2011                                                                                                                                              Total                                                                                       Greater          Greater                             Commercial                                                                                       Than 90          Than 90                              Mortgage                                                30-59 Days         60-89 Days           Days-          Days-Not         Total Past          and Other                                Current          Past Due           Past Due          Accruing         Accruing             Due               Loans                                                                                     (in millions) Commercial mortgage loans: Industrial                     $  1,802        $         0        $         2        $       0        $       0        $         2        $      1,804 Retail                            2,207                  0                  0                0                0                  0               2,207 Office                            2,216                  0                  0                0                0                  0               2,216 Multi-Family/Apartment            1,254                  0                  0                0                0                  0               1,254 Hospitality                         428                  0                  0                0                0                  0                 428 Other                               517                  0                  0                0                0                  0                 517  Total commercial mortgage loans                             8,424                  0                  2                0                0                  2               8,426  Agricultural property loans                               674                  0                  0                0                0                  0                 674 Residential property loans                                 0                  0                  0                0                0                  0                   0 Other collateralized loans                                 0                  0                  0                0                0                  0                   0 Uncollateralized loans                0                  0                  0                0                0                  0                   0  Total                          $  9,098        $         0        $         2        $       0        $       0        $         2        $      9,100                                            217 
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Commercial Mortgage and Other Loans-Financial Services Businesses
                                                                                        December 31, 2010                                                                                                                                                Total                                                                                           Greater         Greater                            Commercial                                                                                           Than 90         Than 90                             Mortgage                                                     30-59 Days         60-89 Days          Days-         Days-Not         Total Past         and Other                                     Current          Past Due           Past Due         Accruing        Accruing            Due               Loans                                                                                        (in millions) Commercial mortgage loans: Industrial                          $  4,627       $          0       $          0       $       0       $       0       $          0       $      4,627 Retail                                 4,213                 58                  0               0               5                 63              4,276 Office                                 3,655                 21                  0               0               0                 21              3,676 Multi-Family/Apartment                 3,003                  0                  0               0               1                  1              3,004 Hospitality                            1,029                 11                 10               0              76                 97              1,126 Other                                  1,829                 17                  0               0              36                 53              1,882  Total commercial mortgage loans       18,356                107                 10               0             118                235             18,591  Agricultural property loans            1,174                  1                  0               0              30                 31              1,205 Residential property loans               847                 20                  3               0              21                 44                891 Other collateralized loans                78                  0                  0               0               2                  2                 80 Uncollateralized loans                 1,467                  0                  0               0               0                  0              1,467  Total                               $ 21,922       $        128       $         13       $       0       $     171       $        312       $     22,234     
Commercial Mortgage and Other Loans-Closed Block Business
                                                                                       December 31, 2010                                                                                                                                                Total                                                                                       Greater          Greater                               Commercial                                                                                       Than 90          Than 90                                Mortgage                                                30-59 Days         60-89 Days           Days-           Days-Not          Total Past          and Other                                Current          Past Due           Past Due          Accruing          Accruing             Due                Loans                                                                                      (in millions) Commercial mortgage loans: Industrial                     $  1,910        $         0        $         0        $       0        $        0        $          0        $      1,910 Retail                            1,934                  4                  0                0                 0                   4               1,938 Office                            1,900                  0                  0                0                 0                   0               1,900 Multi-Family/Apartment            1,321                  0                  0                0                 0                   0               1,321 Hospitality                         399                  0                  0                0                 8                   8                 407 Other                               436                  0                  0                0                16                  16                 452  Total commercial mortgage loans                             7,900                  4                  0                0                24                  28               7,928  Agricultural property loans                               680                  0                  0                0                 0                   0                 680 Residential property loans                                 1                  0                  0                0                 0                   0                   1 Other collateralized loans                                 0                  0                  0                0                 0                   0                   0 Uncollateralized loans                0                  0                  0                0                 0                   0                   0  Total                          $  8,581        $         4        $         0        $       0        $       24        $         28        $      8,609     
The following table sets forth the change in valuation allowances for our commercial mortgage and other loan portfolio as of the dates indicated:
                                                      December 31, 2011                       December 31, 2010                                              Financial             Closed            Financial             Closed                                              Services               Block            Services               Block                                             Businesses            Business          Businesses            Business                                                                         (in millions) Allowance, beginning of year               $         333          $     102        $         410          $     124 Addition to/(release of) allowance for losses                                               (71 )              (42 )                (78 )              (22 ) Charge-offs, net of recoveries                       (15 )                0                   (1 )                0 Change in foreign exchange                             3                  0                    2                  0  Allowance, end of period                   $         250          $      60        $         333          $     102                                            218 
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  As of December 31, 2011, the $250 million valuation allowance for our commercial mortgage and other loan portfolio attributable to the Financial Services Businesses included $91 million related to loan specific reserves and $159 million related to the portfolio reserve for probable incurred but not specifically identified losses. As of December 31, 2010, the $333 million valuation allowance for our commercial mortgage and other loan portfolio attributable to the Financial Services Businesses included $143 million related to loan specific reserves and $190 million related to the portfolio reserve for probable incurred but not specifically identified losses.    As of December 31, 2011, the $60 million valuation allowance for our commercial mortgage and other loan portfolio attributable to the Closed Block Business included $2 million related to loan specific reserves and $58 million related to the portfolio reserve for probable incurred but not specifically identified losses. As of December 31, 2010, the $102 million valuation allowance for our commercial mortgage and other loan portfolio attributable to the Closed Block Business included $17 million related to loan specific reserves and $85 million related to the portfolio reserve for probable incurred but not specifically identified losses. The decrease in the allowance for both the Financial Services Businesses and the Closed Block Business primarily reflects positive credit migration for certain mortgages.    Equity Securities    Investment Mix    The equity securities attributable to the Financial Services Businesses consist principally of investments in common and preferred stock of publicly traded companies, as well as mutual fund shares and perpetual preferred securities, as discussed below. The following table sets forth the composition of our equity securities portfolio attributable to the Financial Services Businesses and the associated gross unrealized gains and losses as of the dates indicated.    
Equity Securities-Financial Services Businesses
                                                        December 31, 2011                                         December 31, 2010                                                   Gross            Gross                                    Gross            Gross                                                 Unrealized       Unrealized       Fair                    Unrealized       Unrealized       Fair                                     Cost          Gains            Losses         Value       Cost          Gains            Losses         Value                                                                                     (in millions) Public Equity Perpetual preferred stocks(1)      $     0     $          0     $          0     $     0     $   249     $         19     $         14     $   254 Non-redeemable preferred stocks          1                1                0           2           9                4                0          13 Mutual fund common stocks(2)         1,708              428                2       2,134       1,592              462                0       2,054 Other common stocks                  2,400               75              272       2,203       1,267              112               44       1,335  Total public equity                  4,109              504              274       4,339       3,117              597               58       3,656   Private Equity Perpetual preferred stocks(1)            0                0                0           0         449               15               16         448 Non-redeemable preferred stocks         18                0                1          17          15                0                5          10 Common stock                            28               17                0          45          12               10                1          21  Total private equity(3)                 46               17                1          62         476               25               22         479  Total equity                       $ 4,155     $        521     $        275     $ 4,401     $ 3,593     $        622     $         80     $ 4,135     
(1)   During 2011, perpetual preferred stocks of $1.2 billion were reclassified to
      "Other trading account assets." Prior periods were not restated.
(2)   Includes mutual fund shares representing our interest in the underlying
      assets of certain of our separate account investments supporting
      corporate-owned life insurance. These mutual funds invest primarily in high
      yield bonds.   (3)   Hedge funds and other alternative investments are included in "Other       long-term investments."                                           219 
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The following table sets forth the composition of our equity securities portfolio attributable to the Closed Block Business and the associated gross unrealized gains and losses as of the dates indicated.
Equity Securities-Closed Block Business
                                                        December 31, 2011                                         December 31, 2010                                                   Gross            Gross                                    Gross            Gross                                                 Unrealized       Unrealized       Fair                    Unrealized       Unrealized       Fair                                     Cost          Gains            Losses         Value       Cost          Gains            Losses         Value                                                                                     (in millions) Public Equity Perpetual preferred stocks(1)      $     0     $          0     $          0     $     0     $   133     $         11     $          4     $   140 Non-redeemable preferred stocks          2                0                0           2           0                0                0           0 Common stock                         2,746              538              173       3,111       2,725              759               37       3,447  Total public equity                  2,748              538              173       3,113       2,858              770               41       3,587  Private Equity Perpetual preferred stocks(1)            0                0                0           0           0                0                0           0 Non-redeemable preferred stocks          9                0                0           9           6                0                0           6 Common stock                             0                0                0           0           0                0                0           0  Total private equity                     9                0                0           9           6                0                0           6  Total equity                       $ 2,757     $        538     $        173     $ 3,122     $ 2,864     $        770     $         41     $ 3,593     
(1)   During 2011, perpetual preferred stocks of $0.1 billion were reclassified to
      "Other trading account assets." Prior periods were not restated.    
Unrealized Losses from Equity Securities
    The following table sets forth the cost and gross unrealized losses of our equity securities attributable to the Financial Services Businesses where the estimated fair value had declined and remained below cost by less than 20% for the following timeframes:    Unrealized Losses from Equity Securities, Less than 20%-Financial Services Businesses                                                  December 31, 2011                    December 31, 2010                                                              Gross                                Gross                                         Amortized          Unrealized        Amortized          Unrealized                                          Cost(1)           Losses(1)          Cost(1)           Losses(1)                                                                   (in millions) Less than three months                 $       508        $         31       $      108        $          2 Three months or greater but less than six months                                551                  54              226                  13 Six months or greater but less than nine months                               191                  24              269                  19 Nine months or greater but less than twelve months                             193                  35               20                   3 Greater than twelve months(2)                    0                   0              302                  18  Total                                  $     1,443        $        144       $      925        $         55     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      cost by less than 20%, using month-end valuations.
(2)   Includes only perpetual preferred stocks as of December 31, 2010. During
      2011, perpetual preferred stocks were reclassified to "Other trading account
      assets." Prior periods were not restated.                                           220 
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  The following table sets forth the cost and gross unrealized losses of our equity securities attributable to the Financial Services Businesses where the estimated fair value had declined and remained below cost by 20% or more for the following timeframes:    Unrealized Losses from Equity Securities, Greater than 20%-Financial Services Businesses                                                  December 31, 2011                        December 31, 2010                                                               Gross                                    Gross                                        Amortized           Unrealized           Amortized            Unrealized                                         Cost(1)             Losses(1)            Cost(1)             Losses(1)                                                                      (in
millions)
 Less than three months                 $      243         $          63        $        13          $          4 Three months or greater but less than six months                               172                    60                 24                     8 Six months or greater but less than nine months                               20                     8                  2                     1 Nine months or greater but less than twelve months                              0                     0                  1                     1 Greater than twelve months(2)                   0                     0                 24                    11  Total                                  $      435         $         131        $        64          $         25     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      cost by 20% or more, using month-end valuations.
(2)   Includes only perpetual preferred stocks as of December 31, 2010. During
      2011, perpetual preferred stocks were reclassified to "Other trading account
      assets." Prior periods were not restated.     The gross unrealized losses as of December 31, 2011, were primarily concentrated in the other, manufacturing, and finance sectors compared to December 31, 2010, where the gross unrealized losses were primarily concentrated in the finance and public utilities sectors. Gross unrealized losses attributable to the Financial Services Businesses where the estimated fair value had declined and remained below cost by 20% or more of $131 million as of December 31, 2011, also include $3 million of gross unrealized losses on securities with amortized cost of $5 million where the estimated fair value had declined and remained below cost by 50% or more. The gross unrealized losses of $3 million were included in the less than three months timeframe. Included in the December 31, 2010 amounts above are perpetual preferred securities. Perpetual preferred securities have characteristics of both debt and equity securities. Since we apply to these securities an impairment model similar to our fixed maturity securities, we have not recognized an other-than-temporary impairment on certain of these perpetual preferred securities that have been in a continuous unrealized loss position for twelve months or more as of December 31, 2010. We have not recognized the gross unrealized losses shown in the table above as other-than-temporary impairments. See "-Other-Than-Temporary Impairments of Equity Securities" for a discussion of the factors we consider in making these determinations.    
The following table sets forth the cost and gross unrealized losses of our equity securities attributable to the Closed Block Business where the estimated fair value had declined and remained below cost by less than 20% for the following timeframes:
    Unrealized Losses from Equity Securities, Less than 20%-Closed Block Business                                                  December 31, 2011                      December 31, 2010                                                              Gross                                  Gross                                        Amortized           Unrealized         Amortized           Unrealized                                         Cost(1)            Losses(1)           Cost(1)            Losses(1)                                                                    (in
millions)
 Less than three months                 $      377         $         23        $      253         $         10 Three months or greater but less than six months                               287                   28                76                    4 Six months or greater but less than nine months                              151                   14               107                    9 Nine months or greater but less than twelve months                             18                    3                56                    4 Greater than twelve months(2)                   0                    0                32                    4  Total                                  $      833         $         68        $      524         $         31     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      cost by less than 20%, using month-end valuations.                                           221 
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  Table of Contents (2)   Includes only perpetual preferred stocks as of December 31, 2010. During
      2011, perpetual preferred stocks were reclassified to "Other trading account
      assets." Prior periods were not restated.     The following table sets forth the cost and gross unrealized losses of our equity securities attributable to the Closed Block Business where the estimated fair value had declined and remained below cost by 20% or more for the following timeframes:    Unrealized Losses from Equity Securities, Greater than 20%-Closed Block Business                                                  December 31, 2011                        December 31, 2010                                                               Gross                                    Gross                                        Amortized           Unrealized           Amortized            Unrealized                                         Cost(1)             Losses(1)            Cost(1)             Losses(1)                                                                      (in
millions)
 Less than three months                 $      164         $          43        $        12          $          3 Three months or greater but less than six months                               166                    59                 11                     3 Six months or greater but less than nine months                                8                     3                 10                     4 Nine months or greater but less than twelve months                              0                     0                  0                     0 Greater than twelve months                      0                     0                  0                     0  Total                                  $      338         $         105        $        33          $         10     
(1)   The aging of amortized cost and gross unrealized losses is determined based
      upon a count of the number of months the estimated fair value remained below
      cost by 20% or more, using month-end valuations.     The gross unrealized losses as of December 31, 2011, were primarily concentrated in the manufacturing and finance sectors compared to December 31, 2010, where the gross unrealized losses were primarily concentrated in the services, manufacturing, and finance sectors. Gross unrealized losses attributable to the Closed Block Business where the estimated fair value had declined and remained below cost by 20% or more of $105 million as of December 31, 2011 does not include any gross unrealized losses on securities where the estimated fair value had declined and remained below cost by 50% or more. Perpetual preferred securities have characteristics of both debt and equity securities. Since we apply to these securities an impairment model similar to our fixed maturity securities, we have not recognized an other-than-temporary impairment on certain of these perpetual preferred securities that have been in a continuous unrealized loss position for twelve months or more as of December 31, 2010. We have not recognized the gross unrealized losses shown in the table above as other-than-temporary impairments. See "-Other-Than-Temporary Impairments of Equity Securities" for a discussion of the factors we consider in making these determinations.   
Other-Than-Temporary Impairments of Equity Securities
For those equity securities classified as available-for-sale, we record unrealized gains and losses to the extent cost is different from estimated fair value. All securities with unrealized losses are subject to our review to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, we consistently consider several factors including, but not limited to, the following:
    •   the extent and the duration of the decline; including, but not limited to,
        the following general guidelines:    
  •   declines in value greater than 20%, maintained for six months or greater;
      •   declines in value maintained for one year or greater; and       •   declines in value greater than 50%;    
    •   the reasons for the decline in value (issuer specific event, currency or
        market fluctuation);    
    •   our ability and intent to hold the investment for a period of time to allow
        for a recovery of value, including certain equity securities managed by
        independent third parties where we do not exercise management discretion
        concerning individual buy or sell decisions; and       •   the financial condition of and near-term prospects of the issuer.                                           222 
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  We generally recognize other-than-temporary impairments for securities with declines in value greater than 50% maintained for six months or greater or with any decline in value maintained for one year or greater. In addition, in making our determinations we continue to analyze the financial condition and near-term prospects of the issuer, including an assessment of the issuer's capital position, and consider our ability and intent to hold the investment for a period of time to allow for a recovery of value.    For those securities that have declines in value that are deemed to be only temporary, we make an assertion as to our ability and intent to retain the security until recovery. Once identified, these securities are restricted from trading unless authorized based upon events that could not have been foreseen at the time we asserted our ability and intent to retain the security until recovery. Examples of such events include, but are not limited to, the deterioration of the issuer's creditworthiness, a major business combination or disposition, a change in regulatory requirements, certain other portfolio actions or other similar events. For those securities that have declines in value for which we cannot assert our ability and intent to retain until recovery, including certain equity securities managed by independent third parties where we do not exercise management discretion concerning individual buy or sell decisions, impairments are recognized as other-than-temporary regardless of the reason for, or the extent of, the decline. For perpetual preferred securities, which have characteristics of both debt and equity securities, we apply an impairment model similar to our fixed maturity securities, factoring in the position of the security in the capital structure and the lack of a formal maturity date. For additional discussion of our policies regarding other-than-temporary impairments of fixed maturity securities, see "-Fixed Maturity Securities-Other-than-Temporary Impairments of Fixed Maturity Securities" above.    When we determine that there is an other-than-temporary impairment, we record a writedown to estimated fair value, which reduces the cost basis and is included in "Realized investment gains (losses), net." See Note 2 to the Consolidated Financial Statements for additional information regarding our policies around other-than-temporary impairments for equity securities. See Note 20 to the Consolidated Financial Statements for information regarding the fair value methodology used for equity securities.    Impairments of equity securities attributable to the Financial Services Businesses were $94 million and $78 million for the years ended December 31, 2011 and 2010, respectively. Impairments of equity securities attributable to the Closed Block Business were $18 million and $34 million for years ended December 31, 2011 and 2010, respectively. For a further discussion of impairments, see "-Realized Investment Gains and Losses" above.    
Other Long-Term Investments
"Other long-term investments" are comprised as follows:
                                                         December 31, 2011                  December 31, 2010                                                   Financial          Closed          Financial          Closed                                                   Services           Block           Services           Block                                                  Businesses        
Business        Businesses         Business
                                                                          (in millions) Joint ventures and limited partnerships: Real estate-related                             $         360      $      413      $         163      $      361 Non-real estate-related                                 1,733           1,284              1,070           1,162 Real estate held through direct ownership(1)            1,956              10              1,141               1 Other(2)                                                  432             283                614              58  Total other long-term investments               $       4,481      $    1,990      $       2,988      $    1,582      (1)   Primarily includes investment in office buildings within our Japanese       insurance operations.   (2)   Primarily includes derivatives and member and activity stock held in the
      Federal Home Loan Banks of New York and Boston. For additional information
      regarding our holdings in the Federal Home Loan Banks of New York and       Boston, see Note 14 to the Consolidated Financial Statements.                                           223 
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Invested Assets of Other Entities and Operations
    The following table sets forth the composition of the investments held outside the general account in other entities and operations as of the dates indicated.                                                                     December 31,                                                                2011        2010                                                                 (in millions)      Fixed Maturities:
     Public, available-for-sale, at fair value               $  2,026     $
2,046
     Private, available-for-sale, at fair value                    82      
   75
     Other trading account assets, at fair value                3,124      
2,849
     Equity securities, available-for-sale, at fair value          12      
   13
     Commercial mortgage and other loans, at book value(1)      1,318       1,423
     Other long-term investments                                1,349      
1,601      Short-term investments                                     2,984         435       Total investments                                       $ 10,895     $ 8,442     
(1)   Book value is generally based on unpaid principal balance net of any
      allowance for losses, the lower of cost or fair value, or fair value,       depending on the loan.     The table above includes the invested assets of our trading, banking, and asset management operations. Assets of our asset management operations managed for third parties and those assets classified as "Separate account assets" on our balance sheet are not included.    Fixed Maturity Securities    Fixed maturity securities primarily include investments related to our non-retail banking operations, where customer deposit liabilities are primarily supported by fixed maturity and short-term investments, in addition to cash and cash equivalents.   
The following table sets forth the composition of the portion of our fixed maturity securities portfolio by industry category attributable to our other entities and operations.
Fixed Maturity Securities-Invested Assets of Other Entities and Operations
                                                                          December 31, 2011                                                      Lowest Rating Agency Rating                   Total         Total                                                                                    BB and       Amortized       Fair Industry(1)                               AAA        AA          A        BBB       below         Cost          Value                                                                          (in millions) Residential Mortgage-Backed              $  10     $   979     $   0     $   6     $    10     $     1,005     $ 1,048 Asset-Backed Securities                    214          42         1        17          31             305         315 Commercial Mortgage-Backed                 123          48         0        15           6             192         197 Corporate Securities                        28          53       219       140           0             440         474 U.S. Government                              0          63         0         0           0              63          72 State & Municipal                            0           0         1         0           0               1           1 Foreign Government                           1           0         0         0           0               1           1  Total                                    $ 376     $ 1,185     $ 221     $ 178     $    47     $     2,007     $ 2,108      (1)   Investment data has been classified based on standard industry 
      categorizations for domestic public holdings and similar classifications by
      industry for all other holdings.     The table above includes the invested assets of our trading, banking, and asset management operations. Assets of our asset management operations managed for third parties and those assets classified as "Separate account assets" on our balance sheet are not included.                                          224
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  Table of Contents  Other Trading Account Assets    Other trading account assets primarily include trading positions held by our derivatives trading operations used in a non-dealer capacity. The positions maintained by our derivatives trading operations are used to manage interest rate, currency, credit and equity exposures in our insurance, investment and international businesses, and treasury operations.    Less than $1 million of commercial mortgage-backed securities held outside the general account are classified as other trading account assets as of December 31, 2011, all of which have AAA credit ratings. An additional $31 million of asset-backed securities held outside the general account as of December 31, 2011 are classified as other trading account assets, and all have AAA credit ratings.   
Commercial Mortgage and Other Loans
    Our asset management operations include our commercial mortgage operations, which provide mortgage origination, asset management and servicing for our general account, institutional clients, and government sponsored entities such as Fannie Mae, the Federal Housing Administration, and Freddie Mac. Through the third quarter of 2008, we had originated shorter-term interim loans for spread lending that are collateralized by assets generally under renovation or lease up. Due to unfavorable market conditions experienced at that time and the inherent risk of these loans, we suspended the origination of interim loans. Our interim loans are generally paid off through refinancing or the sale by the borrower of the underlying collateral. These loans are inherently more risky than those collateralized by properties that have already stabilized. As of December 31, 2011 and December 31, 2010, the interim loans had an unpaid principal balance of $0.6 billion and $1.3 billion, respectively, and an allowance for losses or credit related market value losses totaling $44 million and $168 million, respectively. The weighted average loan-to-value ratio was 93% as of December 31, 2011 and 108% as of December 31, 2010, indicating that, in aggregate, the loan amount was reduced to below the collateral value during the year, and the weighted average debt service coverage ratio was 1.52 times as of December 31, 2011 and 1.24 times as of December 31, 2010. A stabilized value and projected net operating income are used in the calculation of the loan-to-value and debt service coverage ratios. As of December 31, 2011, we also hold $44 million of commercial real estate held for sale related to foreclosed interim loans, which is reported in "Other long-term investments." The mortgage loans of our commercial mortgage operations are included in "Commercial mortgage and other loans," with related derivatives and other hedging instruments primarily included in "Other trading account assets" and "Other long-term investments."    Other Long-Term Investments    Other long-term investments primarily include strategic investments made as part of our asset management operations. We make these strategic investments in real estate, as well as fixed income, public equity and real estate securities, including controlling interests. Certain of these investments are made primarily for purposes of co-investment in our managed funds and structured products. Other strategic investments are made with the intention to sell or syndicate to investors, including our general account, or for placement in funds and structured products that we offer and manage (seed investments). As part of our asset management operations we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds.                            Liquidity and Capital Resources    Overview    Liquidity refers to the ability to generate sufficient cash resources to meet the payment obligations of the Company. Capital refers to the long term financial resources available to support the operation of our businesses, fund business growth, and provide a cushion to withstand adverse circumstances. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein.    Management monitors the liquidity of Prudential Financial and its subsidiaries on a daily basis and projects borrowing and capital needs over a multi-year time horizon through our quarterly planning process. We believe that cash flows from the sources of funds presently available to us are sufficient to satisfy the current liquidity requirements of Prudential Financial and its subsidiaries, including reasonably foreseeable contingencies.                                          225
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  We continue to refine our metrics for capital management. These refinements to the current framework, which is primarily based on statutory risk based capital measures, are designed to more appropriately reflect risks associated with our businesses on a consistent basis across the Company. In addition, we continue to use an economic capital framework for making certain business decisions.    Similar to our planning and management process for liquidity, we ensure the availability of adequate capital under reasonably foreseeable stress scenarios using our "Capital Protection Framework." We use our Capital Protection Framework to assess potential capital needs arising from severe market related distress and sources of capital available to us to meet those needs. Potential sources include on-balance sheet capital, derivatives and other contingent sources of capital.    The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, could result in the imposition of new capital, liquidity and other requirements on Prudential Financial and its subsidiaries. See "Business-Regulation" for information regarding the potential impact of the Dodd-Frank Act on the Company.    
Acquisition of AIG Star Life Insurance Co., Ltd., AIG Edison Life Insurance Company and Related Entities
    On February 1, 2011, we completed the acquisition from American International Group, Inc., or AIG, of AIG Star Life Insurance Co., Ltd., AIG Edison Life Insurance Company and certain other AIG subsidiaries. The total purchase price was approximately $4,709 million, comprising $4,213 million in cash and $496 million in the assumption of third-party debt, substantially all of which is expected to be repaid, over time, with excess capital of the acquired entities. To partially fund the acquisition purchase price, in November 2010, Prudential Financial completed a public offering and sale of 18,348,624 shares of Common Stock and $1.0 billion of medium-term notes, resulting in aggregate proceeds of approximately $2.0 billion. The remainder of the purchase price was funded with approximately $2.2 billion of cash and short-term investments.    
Sale of the Global Commodities Business to Jefferies Group, Inc.
    On July 1, 2011, we completed the sale of our Global Commodities Business to Jefferies Group, Inc., or Jefferies, and received cash proceeds of $422 million, which includes a final purchase price true-up of $2 million received post-closing on October 21, 2011. Of the total sale proceeds, $415 million was received by Prudential Securities Group LLC, a subsidiary of Prudential Insurance and the former parent company of the Global Commodities' U.S. and U.K. based entities. The remaining proceeds were received by Pramerica Hong Kong Holdings Limited, the former parent company of the Bache Hong Kong-based business. In addition, immediately prior to closing, Prudential Bache Commodities, LLC paid a dividend of $112 million to Prudential Securities Group. On September 30, 2011, Prudential Securities Group distributed $500 million to Prudential Insurance.    In the ordinary course of business, Prudential Financial provided guarantees of the obligations of the Global Commodities Business under commodity, financial and foreign exchange futures, swap and forward contracts. As of December 31, 2011, our exposure under these guarantees was approximately $99 million. We have agreed to keep these guarantees outstanding for a period of 18 months following the closing, including with respect to business conducted by the transferred entities with beneficiaries of these guarantees subsequent to the closing date. Jefferies has agreed to indemnify us for any amounts payable under the guarantees and, under certain conditions, to provide collateral for such obligation. In addition, to maintain continuity of funding for the Global Commodities Business, we provided a line of credit to certain of the transferred Global Commodities subsidiaries for a period of 90 days following the closing in an amount of up to $1 billion. This line of credit was paid off and terminated on September 16, 2011. In February 2012, we provided a $100 million unsecured loan to Jefferies for up to one year to provide funding for a temporary regulatory requirement relating to a transferred Global Commodities subsidiary.    
Sale of Prudential Real Estate and Relocation Services to Brookfield Asset Management, Inc.
On December 6, 2011, we sold our real estate brokerage franchise and relocation services business to Brookfield Asset Management, Inc., and received cash proceeds, before transaction related expenses, of $108
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  million. Of the total sale proceeds, $91 million was received by Prudential Financial and the remaining proceeds were received by a related financing subsidiary that the Company continues to own. This financing subsidiary continues to hold debt and equity investments in a limited number of real estate brokerage franchises. In connection with the sale, we agreed to provide certain Brookfield affiliates with transitional financing for the transferred relocation services business pursuant to: a six-month receivables purchase facility of up to $250 million; a six-month credit facility of up to $25 million; and a three-year credit facility of up to $155 million. We expect to fund draws under these credit facilities using cash on hand or proceeds from the alternative sources of liquidity described below. As of December 31, 2011 the amounts drawn under the facilities were $157 million, $15 million and $72 million, respectively.    
Liquidity and Capital Resources of Prudential Financial
    The principal sources of funds available to Prudential Financial, the parent holding company, are dividends, returns of capital and interest income from its subsidiaries, and cash and short-term investments. These sources of funds may be supplemented by Prudential Financial's access to the capital markets and credit facilities, as well as the "-Alternative Sources of Liquidity" described below.    The primary uses of funds at Prudential Financial include servicing our debt, operating expenses, capital contributions and obligations to subsidiaries, and the payment of declared shareholder dividends, as well as repurchases of outstanding shares of Common Stock if executed under Board authority.    As of December 31, 2011, Prudential Financial had cash and short-term investments of $4,944 million, a decrease of $1,728 million from December 31, 2010, primarily resulting from funding a portion of the purchase price for the Star and Edison Businesses. Included in the cash and short-term investments of Prudential Financial is $1,407 million held in an intercompany liquidity account that is designed to optimize the use of cash by facilitating the lending and borrowing of funds between Prudential Financial and its subsidiaries on a daily basis. Also included are short-term investments of $1,098 million, consisting primarily of government agency securities and money market funds.    
The following table sets forth Prudential Financial's principal sources and uses of cash and short-term investments for the period indicated.
                                                                         Year Ended                                                                    December 31, 2011                                                                      (in millions) Sources:
Dividends and/or returns of capital from subsidiaries(1)          $        
    3,242
Proceeds from the issuance of long-term senior debt, net of repayments
    1,157
 Repayment of funding agreements from Prudential Insurance
      468
Proceeds from stock-based compensation and exercise of stock options
      270
 Proceeds from sale of real estate and relocation business                                                                    
       91
 Net receipts under intercompany loan agreements(2)                          
       34
 Proceeds from short-term debt, net of repayments                                   13  Total sources                                                                   5,275  Uses: Capital transactions to fund Star and Edison acquisition                    
    2,922
 Capital contributions to subsidiaries(3)                                        1,176 Share repurchases                                                                 999 Shareholder dividends                                                             704 Net payment under external financing agreement(4)                           
      244
 Repayment of retail medium-term notes                                             154 Payment of income taxes                                                           135 Other, net                                                                        669  Total uses                                                                      7,003  Net decrease in cash and short-term investments                   $             1,728      (1)   Includes dividends and/or returns of capital of $1,592 million from       Prudential Insurance, $478 million from international insurance and       investment subsidiaries, $588 million from Prudential Annuities Life
Assurance Corporation, $468 million from asset management subsidiaries and
$116 million from other subsidiaries.                                           227 
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  Table of Contents (2)   Includes net repayments of $322 million by Prudential Securities Group
      (previously supporting the global commodities business), $282 million by
Prudential Real Estate and Relocation, $169 million by our asset management
      subsidiaries, and $100 million by Prudential Arizona Reinsurance Term
      Company (previously funding statutory reserves required under Regulation
      XXX), partially offset by net borrowings of $336 million by Pruco Life
Insurance Company. The remainder represents net borrowings by other
      subsidiaries as well as net activity in our intercompany liquidity account
      described above.
(3)   Includes capital contributions of $1,005 million to international insurance
$64 million to Pruco Reinsurance, $62 million

      to asset management subsidiaries and $45 million to an investment       subsidiary.  
(4)   Represents payments under the transitional financing arrangements provided
      in connection with the sale of the real estate brokerage franchise and       relocation business.     In June 2011, Prudential Financial's Board of Directors authorized the Company to repurchase at management's discretion up to $1.5 billion of its outstanding Common Stock through June 2012. As of December 31, 2011, 19.8 million shares of our common stock were repurchased under this authorization at a total cost of $999.5 million. The timing and amount of any additional share repurchases will be determined by management based on market conditions and other considerations. Repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Exchange Act. Numerous factors could affect the timing and amount of any future repurchases under the share repurchase program, including increased capital needs of our businesses due to opportunities for growth and acquisitions, as well as adverse market conditions.    On November 8, 2011, Prudential Financial's Board of Directors declared an annual dividend for 2011 of $1.45 per share of Common Stock, representing an increase of approximately 26 percent from the 2010 Common Stock dividend. The table below presents declaration, record, and payment dates, as well as per share and aggregate dividend amounts, for the Common Stock dividend for the last five years.                                                                                    Dividend Amount Declaration Date         Record Date          Payment Date             Per Share                  Aggregate                                                                       (in millions, except per share data) November 8, 2011      November 22, 2011     December 16, 2011     $               1.45         $           689 November 9, 2010      November 23, 2010     December 17, 2010     $               1.15         $           564 November 10, 2009     November 24, 2009     December 18, 2009     $               0.70         $           327 November 11, 2008     November 24, 2008     December 19, 2008     $               0.58         $           246 November 13, 2007     November 26, 2007     December 21, 2007     $               1.15         $           521     The primary components of capitalization for the Financial Services Businesses consist of the equity we attribute to the Financial Services Businesses (excluding accumulated other comprehensive income related to unrealized gains and losses on investments and pension/postretirement benefits), outstanding junior subordinated debt and outstanding capital debt of the Financial Services Businesses. Capital debt consists of borrowings that are used or will be used to meet the capital requirements of Prudential Financial, as well as borrowings invested in equity or debt securities of direct or indirect subsidiaries of Prudential Financial and subsidiary borrowings utilized for capital requirements. As shown in the table below, as of December 31, 2011, the Financial Services Businesses had $42.9 billion in capital, all of which was available to support the aggregate capital requirements of its three divisions and its Corporate and Other operations. Based on our assessment of these businesses and operations, we believe this level of capital was consistent with the "AA" ratings targets of our regulated operating entities as of December 31, 2011.                                                                          December 31,                                                                           2011                                                                      (in millions)
Attributed equity (excluding unrealized gains and losses on investments and pension/postretirement benefits)
                     $      
 31,657
 Junior subordinated debt (i.e. hybrid securities)                             1,519 Capital debt                                                                  9,705  Total capital                                                        $       42,881      We seek to capitalize all of our subsidiaries and businesses in accordance with their ratings targets, and we believe Prudential Financial's capitalization and use of financial leverage are consistent with those ratings targets. Management uses the ratio of capital debt to total capital (as such amounts are reflected in the table                                          228 
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  above) as a primary measure of the use of financial leverage. As of December 31, 2011, our capital debt to total capital ratio was 25.3%. The terms of our outstanding junior subordinated debt have certain features that result in their treatment as hybrid securities by the rating agencies. As a result, for purposes of calculating the capital debt to total capital ratio, 25% of our outstanding junior subordinated debt is treated as equity and the remaining 75% is treated as capital debt, based on Moody's current criteria for these types of hybrid securities. As discussed under "-Accounting Policies & Pronouncements-Future Adoption of New Accounting Pronouncements," the Company adopted amended authoritative guidance regarding the deferral of costs relating to the acquisition of new or renewal insurance contracts effective January 1, 2012, and will apply retrospective method of adoption. We estimate that if the new guidance were adopted as of December 31, 2011, retrospective adoption would reduce total equity by approximately $2.6 billion to $3.0 billion for the Financial Services Businesses and approximately $0.1 billion for the Closed Block Business, resulting in a capital debt to total capital ratio of approximately 27% as of December 31, 2011.    Our long-term senior debt rating targets for Prudential Financial are "A" for Standard & Poor's Rating Services, or S&P, Moody's Investors Service, Inc., or Moody's, and Fitch Ratings Ltd., or Fitch, and "a" for A.M. Best Company, or A.M. Best. Our financial strength rating targets for our domestic life insurance companies are "AA/Aa/AA" for S&P, Moody's and Fitch, respectively, and "A+" for A.M. Best. Currently, some of our ratings are below these targets. For a description of material rating actions that have occurred from the beginning of 2011 through the date of this filing and a discussion of the potential impacts of ratings downgrades, see "-Ratings."    
Restrictions on Dividends and Returns of Capital from Subsidiaries
    Our insurance and various other companies are subject to regulatory limitations on the payment of dividends and other transfers of funds to affiliates. With respect to Prudential Insurance, New Jersey insurance law provides that, except in the case of extraordinary dividends (as described below), all dividends or other distributions paid by Prudential Insurance may be paid only from unassigned surplus, as determined pursuant to statutory accounting principles, less unrealized investment gains and losses and revaluation of assets as of the prior calendar year-end. As of December 31, 2011 and 2010, Prudential Insurance's unassigned surplus was $5,070 million and $4,224 million, respectively, and it recorded applicable adjustments for cumulative unrealized investment gains of $2,184 million and $1,499 million, respectively. Prudential Insurance must give prior notification to the New Jersey Department of Banking and Insurance, or NJDOBI, or the Department, of its intent to pay any dividend or distribution. Also, if any dividend, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the prior calendar year's statutory surplus or (ii) the prior calendar year's statutory net gain from operations excluding realized investment gains and losses, the dividend is considered to be an "extraordinary dividend" and the prior approval of the Department is required for payment of the dividend. Prudential Insurance's statutory surplus as of December 31, 2011 was $8,160 million and its statutory net gain from operations, excluding realized investment gains and losses, for the year ended December 31, 2011 was $584 million. In addition to the regulatory limitations, the terms of the IHC debt contain restrictions potentially limiting dividends by Prudential Insurance applicable to the Financial Services Businesses in the event the Closed Block Business is in financial distress and under certain other circumstances. The laws regulating dividends of the other states and foreign jurisdictions where our other insurance companies are domiciled are similar, but not identical, to New Jersey's.    On May 16, 2011, Prudential Insurance paid an ordinary dividend of $527 million and an extraordinary dividend of $704 million to its parent, Prudential Holdings, LLC. From this amount, Prudential Holdings paid dividends to Prudential Financial of $1,073 million in May 2011 and $19 million in December 2011. On November 18, 2011, Prudential Insurance paid an additional extraordinary dividend of $500 million to Prudential Holdings, all of which was ultimately paid to Prudential Financial. Prudential Annuities Life Assurance Corporation paid a $270 million extraordinary dividend on June 30, 2011 and a $318 million ordinary dividend on November 30, 2011, in each case to Prudential Financial. On December 2, 2011, Prudential Retirement Insurance and Annuity Company paid an ordinary dividend of $270 million and an extraordinary dividend of $105 million to its parent, Prudential Insurance.    On September 20, 2011, Prudential of Japan paid a dividend of ¥16 billion, or $208 million, to its parent, Prudential Holdings of Japan, of which $190 million was ultimately paid to Prudential Financial.                                          229
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  As a result of Gibraltar Life's reorganization in 2001, in addition to regulatory requirements, certain other restrictions precluded Gibraltar Life from paying common stock dividends to Prudential Financial. We anticipate that following the merger of Gibraltar, Star and Edison, the merged entity will be able to pay common stock dividends to Prudential Financial, subject to legal and regulatory restrictions. However, we do not anticipate receiving dividends from the merged entity for several years as it may return capital to Prudential Financial through other means, such as the repayment of subordinated debt or preferred stock obligations held by Prudential Financial or other affiliates. In August 2011, Gibraltar Life repaid ¥24 billion, or $313 million, of subordinated debt held by an intermediate holding company, of which $119 million was used to repay a loan from Prudential Insurance and the remainder was paid to Prudential Financial.   
The ability of our asset management subsidiaries and the majority of our other operating subsidiaries to pay dividends is largely unrestricted from a regulatory standpoint but can be affected by market conditions and other factors.
    See "Liquidity and Capital Resources of Our Subsidiaries" below for additional details on the liquidity of our domestic insurance subsidiaries, international insurance subsidiaries and asset management subsidiaries.    
Alternative Sources of Liquidity
    Prudential Financial maintains an intercompany liquidity account that is designed to optimize the use of cash by facilitating the lending and borrowing of funds between Prudential Financial and its affiliates on a daily basis. Depending on the overall availability of cash, Prudential Financial invests excess cash on a short-term basis or borrows funds in the capital markets. Additional longer term liquidity is available through inter-affiliate borrowing arrangements. Prudential Financial and certain of its subsidiaries also have access to bank facilities, as discussed under "-Credit Facilities," as well as the alternative sources of liquidity described below.    Commercial Paper Programs    Prudential Financial and Prudential Funding, LLC, or Prudential Funding, a wholly-owned subsidiary of Prudential Insurance, have commercial paper programs with an authorized issuance capacity of $3.0 billion and $7.0 billion, respectively. Prudential Financial commercial paper borrowings generally have been used to fund the working capital needs of our subsidiaries. Prudential Funding commercial paper borrowings have generally served as an additional source of financing to meet the working capital needs of Prudential Insurance and its subsidiaries. Prudential Funding also lends to other subsidiaries of Prudential Financial up to limits agreed with the NJDOBI.    While we continue to consider commercial paper one of our alternative sources of liquidity due to the low cost and efficient financing it provides, over the past several years we have significantly reduced our reliance on commercial paper to fund our operations, and have developed plans that would enable us to further reduce, or if necessary eliminate, our commercial paper borrowings by accessing other sources of liquidity.   
The following table sets forth Prudential Financial's and Prudential Funding's outstanding commercial paper borrowings as of the dates indicated.
                                                                           December 31,                                                                       2011        2010                                                                         (in millions) Prudential Financial                                                 $   296     $   283 Prudential Funding                                                       870         874  Total outstanding commercial paper borrowings(1)(2)                  $ 
1,166     $ 1,157
  Portion of above borrowings that were due overnight                  $   
545     $   309 Weighted average maturity of outstanding commercial paper, in days        21          34
(1)   The daily average commercial paper outstanding under these programs during
      2011 and 2010 was $1,368 million and $1,208 million, respectively.   (2)   The weighted average interest rate on borrowings for the years ended       December 31, 2011 and 2010 was 0.37 % and 0.42%, respectively, for
      Prudential Financial and 0.20 % and 0.31%, respectively, for Prudential
      Funding.                                           230 
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Prudential Funding maintains a support agreement with Prudential Insurance whereby Prudential Insurance has agreed to maintain Prudential Funding's positive tangible net worth at all times. Prudential Financial has also issued a subordinated guarantee covering Prudential Funding's commercial paper program.
    As of December 31, 2011, Prudential Financial and Prudential Funding had unsecured committed lines of credit totaling $3.75 billion. These facilities can be used as backup liquidity for our commercial paper programs or for other general corporate purposes. There were no outstanding borrowings under these facilities as of December 31, 2011 or as of the date of this filing. For a further description of these lines of credit, see "-Credit Facilities."    Asset-based Financing    We conduct asset-based or secured financing within our insurance and other subsidiaries, including transactions such as securities lending, repurchase agreements and mortgage dollar rolls, in order to earn spread income, to borrow funds, or to facilitate trading activity. These programs are driven by portfolio holdings of securities that are lendable based on counterparty demand for these securities in the marketplace. The collateral received in connection with these programs is primarily used to purchase securities in the short-term spread portfolios of our domestic insurance entities. Investments held in the short-term spread portfolios include cash and cash equivalents, short-term investments and fixed maturities, including mortgage- and asset-backed securities, with a weighted average life at time of purchase of two years or less. A portion of the asset-backed securities held in our short-term spread portfolios, including our enhanced short-term portfolio, are collateralized by sub-prime mortgages. Floating rate assets comprise the majority of our short-term spread portfolio. See "-Realized Investment Gains and Losses and General Account Investments-General Account Investments-Fixed Maturity Securities" for a further discussion of our asset-backed securities collateralized by sub-prime holdings, including details regarding those securities held in our enhanced short-term portfolio. These short-term portfolios are subject to specific investment policy statements, which among other things, do not allow for significant asset/liability interest rate duration mismatch.    
The following table sets forth our liabilities under asset-based or secured financing programs attributable to the Financial Services Businesses and Closed Block Business as of the dates indicated.
                                                 December 31, 2011                                    December 31, 2010                                Financial          Closed                            Financial          Closed                                 Services          Block                              Services          Block                                Businesses        Business       Consolidated        Businesses        Business       Consolidated                                                                          (in millions) Securities sold under agreements to repurchase      $      3,118      $    3,100      $       6,218      $      2,557      $    3,328      $       5,885 Cash collateral for loaned securities                           2,254             719              2,973             1,614             557              2,171 Securities sold but not yet purchased                            5               0                  5                 1               0                  1  Total(1)                      $      5,377      $    3,819      $       9,196      $      4,172      $    3,885      $       8,057  Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral               $      3,438      $    2,012      $       5,450      $      2,581      $    2,446      $       5,027 Weighted average maturity, in days(2)                              62              72                                   14              24    
(1)   The daily weighted average outstanding during 2011 and 2010 was $4,651
      million and $4,678 million, respectively, for the Financial Services       Businesses and $4,301 million and $3,969 million, respectively, for the       Closed Block Business.   (2)   Excludes securities that may be returned to the Company overnight.     In addition, as of December 31, 2011, our Closed Block Business had outstanding mortgage dollar rolls under which we are committed to repurchase $860 million of mortgage-backed securities, or "to be announced" ("TBA") forward contracts. These repurchase agreements do not qualify as secured borrowings and are accounted for as derivatives. These mortgage-backed securities are considered high or highest quality based on NAIC or equivalent rating.    As of December 31, 2011, our domestic insurance entities had assets eligible for the securities lending program of $81.4 billion, of which $8.9 billion were on loan. Taking into account market conditions and                                          231
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  outstanding loan balances as of December 31, 2011, we believe approximately $28.3 billion of the remaining eligible assets are readily lendable, of which approximately $19.0 billion relates to the Financial Services Businesses; however, these amounts are subject to potential regulatory constraints and to changes in market conditions.    As referenced above, these programs are typically limited to securities in demand that can be loaned at relatively low financing rates. As such, we believe there is unused capacity available through these programs. Holdings of cash and cash equivalent investments in these short-term spread portfolios allow for further flexibility in sizing the portfolio to better match available financing. Current conditions in both the financing and investment markets are continuously monitored in order to appropriately manage the cost of funds, investment spreads, asset/liability duration matching and liquidity.    
Federal Home Loan Bank of New York
Prudential Insurance is a member of the Federal Home Loan Bank of New York, or FHLBNY. Membership allows Prudential Insurance access to the FHLBNY's financial services, including the ability to obtain collateralized loans and to issue collateralized funding agreements that can be used as an alternative source of liquidity. FHLBNY borrowings and funding agreements are collateralized by qualifying mortgage-related assets or U.S. Treasury securities, the fair value of which must be maintained at certain specified levels relative to outstanding borrowings, depending on the type of asset pledged. FHLBNY membership requires Prudential Insurance to own member stock, and borrowings require the purchase of activity-based stock in an amount equal to 4.5% of outstanding borrowings. Under FHLBNY guidelines, if Prudential Insurance's financial strength ratings decline below A/A2/A Stable by S&P/Moody's/Fitch, respectively, and the FHLBNY does not receive written assurances from NJDOBI regarding Prudential Insurance's solvency, new borrowings from the FHLBNY would be limited to a term of 90 days or less. Currently there are no restrictions on the term of borrowings from the FHLBNY.    NJDOBI permits Prudential Insurance to pledge collateral to the FHLBNY in an amount of up to 5% of its prior year-end statutory net admitted assets, excluding separate account assets. Based on Prudential Insurance's statutory net admitted assets as of December 31, 2010, the 5% limitation equates to a maximum amount of pledged assets of $7.4 billion and an estimated maximum borrowing capacity (after taking into account required collateralization levels and purchases of activity-based stock) of approximately $6.1 billion. Nevertheless, FHLBNY borrowings are subject to the FHLBNY's discretion and to the availability of qualifying assets at Prudential Insurance.    As of December 31, 2011, we had pledged qualifying assets with a fair value of $2.8 billion, which supported outstanding collateralized advances of $0.9 billion and collateralized funding agreements of $1.5 billion. The fair value of qualifying assets that were available to Prudential Insurance but not pledged amounted to $5.6 billion as of December 31, 2011.    As of December 31, 2011, $199 million of the FHLBNY outstanding advances is reflected in "Short-term debt" and matures in December 2012 and the remaining $725 million is in "Long-term debt" and matures in December 2015. As of December 31, 2011, $650 million of these proceeds were used to support the operating needs of our businesses and $274 million were used to purchase investments, including the FHLBNY activity-based stock. The funding agreements issued to the FHLBNY, which are reflected in "Policyholders' account balances," have priority claim status above debt holders of Prudential Insurance. These funding agreements currently serve as a substitute funding source for a product of our Retirement segment, which earns investment spread that was previously funded by retail medium-term notes issued by Prudential Financial.    
Federal Home Loan Bank of Boston
Prudential Retirement Insurance and Annuity Company, or PRIAC, is a member of the Federal Home Loan Bank of Boston, or FHLBB. Membership allows PRIAC access to collateralized advances which will be classified in "Short-term debt" or "Long-term debt," depending on the maturity date of the obligation. PRIAC's membership in FHLBB requires the ownership of member stock, and borrowings from FHLBB require the                                          232 
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purchase of activity-based stock in an amount between 3.0% and 4.5% of outstanding borrowings, depending on the maturity date of the obligation. As of December 31, 2011, PRIAC had no advances outstanding under the FHLBB facility.
The Connecticut Department of Insurance, or CTDOI, permits PRIAC to pledge up to $2.6 billion in qualifying assets to secure FHLBB borrowings through December 31, 2011. PRIAC must seek re-approval from CTDOI prior to borrowing additional funds after that date. Based on available eligible assets as of December 31, 2011, PRIAC had an estimated maximum borrowing capacity, after taking into consideration required collateralization levels and required purchases of activity-based FHLBB stock, of approximately $1.2 billion.    
Liquidity and Capital Resources of Our Subsidiaries
Domestic Insurance Subsidiaries
   General Liquidity    We manage the liquidity of our domestic insurance operations to ensure stable, reliable and cost-effective sources of cash flows to meet all of our obligations. Liquidity is provided by a variety of sources, as described more fully below, including portfolios of liquid assets. The investment portfolios of our domestic operations are integral to the overall liquidity of those operations. We segment our investment portfolios and employ an asset/liability management approach specific to the requirements of our product lines. This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities. We use a projection process for cash flows from operations to ensure sufficient liquidity is available to meet projected cash outflows, including claims. The impact of Prudential Funding's financing capacity on liquidity, as discussed more fully under "-Alternative Sources of Liquidity," is considered in the internal liquidity measures of the domestic insurance operations.    Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support. The results are affected substantially by the overall asset type and quality of our investments.    Cash Flow    The principal sources of liquidity for Prudential Insurance and our other domestic insurance subsidiaries are premiums and certain annuity considerations, investment and fee income, and investment maturities and sales associated with our insurance and annuity operations, as well as internal and external borrowings. The principal uses of that liquidity include benefits, claims, dividends paid to policyholders, and payments to policyholders and contractholders in connection with surrenders, withdrawals and net policy loan activity. Other uses of liquidity include commissions, general and administrative expenses, purchases of investments, and payments in connection with financing activities.    We believe that the cash flows from our insurance and annuity operations are adequate to satisfy the current liquidity requirements of these operations, including under reasonably foreseeable stress scenarios. The continued adequacy of this liquidity will depend upon factors such as future securities market conditions, changes in interest rate levels, policyholder perceptions of our financial strength, and the relative safety of competing products, each of which could lead to reduced cash inflows or increased cash outflows. In addition, market volatility can impact the level of capital required to support our businesses, particularly in our annuity business. Our domestic insurance operations' cash flows from investment activities result from repayments of principal, proceeds from maturities and sales of invested assets and investment income, net of amounts reinvested. The primary liquidity risks with respect to these cash flows are the risk of default by debtors or bond insurers, our counterparties' willingness to extend repurchase and/or securities lending arrangements, commitments to invest and market volatility. We closely manage these risks through our credit risk management process and regular monitoring of our liquidity position.    In managing the liquidity of our domestic insurance operations, we also consider the risk of policyholder and contractholder withdrawals of funds earlier than our assumptions when selecting assets to support these                                          233
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  contractual obligations. We use surrender charges and other contract provisions to mitigate the extent, timing and profitability impact of withdrawals of funds by customers from annuity contracts and deposit liabilities. The following table sets forth withdrawal characteristics of our general account annuity reserves and deposit liabilities (based on statutory liability values) as of the dates indicated.                                                   December 31, 2011                      December 31, 2010                                           Amount            % of Total           Amount            % of Total                                                                    ($ in millions) Not subject to discretionary withdrawal provisions                   $    38,896                  47 %      $    37,505                  47 % Subject to discretionary withdrawal, with adjustment: With market value adjustment                 22,211                  27             21,105                  26 At market value                               2,208                   3              1,876                   2 At contract value, less surrender charge of 5% or more                          2,036                   2              2,471                   3  Subtotal                                     65,351                  79             62,957                  78 Subject to discretionary withdrawal at contract value with no surrender charge or surrender charge of less than 5%                                      17,760                  21             17,404                  22  Total annuity reserves and deposit liabilities                             $    83,111                 100 %      $    80,361                 100 %      Individual life insurance policies are less susceptible to withdrawal than our annuity reserves and deposit liabilities because policyholders may incur surrender charges and be subject to a new underwriting process in order to obtain a new insurance policy. Our annuity reserves with guarantee features may be less susceptible to withdrawal than historical experience indicates, due to the perceived value of these guarantee features to policyholders as a result of market declines in recent years. Annuity benefits and guaranteed investment withdrawals under group annuity contracts are generally not subject to early withdrawal. Gross account withdrawals for our domestic insurance operations' products were consistent with our assumptions in asset/liability management, and the associated cash outflows did not have a material adverse impact on our overall liquidity.    Liquid Assets    Liquid assets include cash, cash equivalents, short-term investments, fixed maturities that are not designated as held-to-maturity and public equity securities. As of December 31, 2011 and 2010, our domestic insurance operations had liquid assets of $144.8 billion and $138.5 billion, respectively, which includes a portion financed with asset-based financing. The portion of liquid assets comprised of cash and cash equivalents and short-term investments was $6.6 billion and $5.8 billion as of December 31, 2011 and 2010, respectively. As of December 31, 2011, $124.6 billion, or 92.4%, of the fixed maturity investments that are not designated as held-to-maturity within our domestic insurance company general account portfolios were considered high or highest quality based on NAIC or equivalent rating. The remaining $10.3 billion, or 7.6%, of these fixed maturity investments were considered other than high or highest quality based on NAIC or equivalent rating. We consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures to evaluate the adequacy of our domestic insurance operations' liquidity under a variety of stress scenarios. We believe that the liquidity profile of our assets is sufficient to satisfy current liquidity requirements, including under reasonably foreseeable stress scenarios.    Given the size and liquidity profile of our investment portfolios, we believe that claim experience varying from our projections does not constitute a significant liquidity risk. Our asset/liability management process takes into account the expected maturity of investments and expected claim payments as well as the specific nature and risk profile of the liabilities. Historically, there has been no significant variation between the expected maturities of our investments and the payment of claims.    Our domestic insurance companies' liquidity is managed through access to substantial investment portfolios as well as a variety of instruments available for funding and/or managing cash flow mismatches, including from time to time those arising from claim levels in excess of projections. To the extent we need to pay claims in excess of projections, we may borrow temporarily or sell investments sooner than anticipated to pay these claims, which may result in increased borrowing costs or realized investment gains or losses affecting results of operations. For a further discussion of realized investment gains and losses, see "-Realized Investment Gains                                          234
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  and Losses and General Account Investments-Realized Investment Gains and Losses." We believe that borrowing temporarily or selling investments earlier than anticipated will not have a material impact on the liquidity of our domestic insurance companies. Payment of claims and sale of investments earlier than anticipated would have an impact on the reported level of cash flow from operating, investing, and financing activities, respectively, in our financial statements. Instead of selling investments at depressed market prices externally, in order to preserve economic value (including tax attributes), we may also sell investments from one subsidiary to another at fair market value or transfer investments internally between businesses within the same subsidiary, subject to applicable regulatory constraints.    Capital    The Risk Based Capital, or RBC, ratio is a primary measure by which we evaluate the capital adequacy of Prudential Insurance and our other domestic life insurance subsidiaries, which includes businesses in both the Financial Services Businesses and the Closed Block Business. We manage Prudential Insurance's and our other domestic life insurance subsidiaries' RBC ratios to a level consistent with their ratings targets. RBC is determined by statutory guidelines and formulas that consider, among other things, risks related to the type and quality of the invested assets, insurance-related risks associated with an insurer's products and liabilities, interest rate risks and general business risks. The RBC ratio calculations are intended to assist insurance regulators in measuring the adequacy of an insurer's statutory capitalization. As of December 31, 2011, the RBC ratio for Prudential Insurance was approximately 490%, which exceeded the minimum levels required by applicable insurance regulations. In addition, all of our other domestic life insurance subsidiaries have RBC ratios that exceed the minimum level required by applicable insurance regulations. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.    The level of statutory capital of our domestic life insurance subsidiaries can be materially impacted by interest rate and equity market fluctuations, changes in the values of derivatives, the level of impairments recorded and credit quality migration of the investment portfolio, among other items. Further, the recapture of business subject to reinsurance arrangements due to defaults by, or credit quality migration affecting, the reinsurers could result in higher required statutory capital levels. The level of statutory capital of our domestic life insurance subsidiaries is also affected by statutory accounting rules, which are subject to change by insurance regulators.    During 2010, as part of our Capital Protection Framework, we developed a broad view of the impact of market distress on the statutory capital of the Company. Beginning in the second quarter of 2010, we have entered into equity index-linked derivative transactions that are designed to mitigate the impact of a severe equity market stress event on statutory capital. The program focuses on tail risk to protect our capital in a cost-effective manner under stress scenarios. We assess the composition of our hedging program on an ongoing basis, and we may change it from time to time based on our evaluation of the Company's risk position or other factors.    In addition to hedging equity market exposure, we also manage certain risks associated with our variable annuity products through our hedging programs. In our living benefits hedging program, we purchase interest rate derivatives and equity options and futures to hedge certain optional living benefit features accounted for as embedded derivatives against changes in certain capital market assumptions such as interest rates, equity markets and market volatility. Prior to the third quarter of 2010, our hedging strategy sought to generally match certain capital market sensitivities of the embedded derivative liability as defined by U.S. GAAP, excluding the impact of the market-perceived risk of our own non-performance, with capital market derivatives. In the third quarter of 2010, we revised our hedging strategy as, in a low interest rate environment, we do not believe that the U.S. GAAP value of the embedded derivative liability is an appropriate measure for determining the hedge target. Our new hedge target is grounded in a U.S. GAAP/capital markets valuation framework but incorporates two modifications to the U.S. GAAP valuation assumptions. We add a credit spread to the U.S. GAAP risk-free rate of return assumption used to estimate future growth of bond investments in the customer separate account funds to account for the fact that the underlying customer separate account funds, which support these living benefits, are invested in assets that contain risk. We also adjust our volatility assumptions to remove certain risk margins embedded in the valuation technique used to fair value the embedded derivative liability under U.S. GAAP, as we believe the increase in the liability driven by these margins is temporary and does not reflect the economic                                          235
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  value of the liability. We evaluate hedge levels versus our hedge target based on the overall capital considerations of the Company and prevailing market conditions. The U.S. GAAP/capital markets valuation framework underlying our hedge target assumes that current interest rate levels remain unchanged for the full projection period with no reversion to longer term averages. Due to the recent low interest rate environment, we decided to temporarily hedge to an amount that differs from our hedge target definition to be consistent with our long-term economic view. Because the hedging decision was based on the overall capital considerations of the Company, the corresponding impact on results is reported within Corporate and Other operations. For the years ended December 31, 2011 and 2010, "Realized investment gains (losses), net, and related adjustments" within Corporate and Other operations includes a pre-tax loss of $1,662 million and a pre-tax gain of $306 million, respectively, resulting from our decision to temporarily hedge to a different target and the decline in interest rates during the year. Through our Capital Protection Framework, we have access to on-balance sheet capital and contingent sources of capital that is available to meet capital needs arising from activities such as the after-tax realized investment losses incurred in 2011 from our living benefits hedging program, including our decision to temporarily hedge to an amount that differs from our hedge target definition. For a full discussion of the results of our living benefits hedging program, see "-Results of Operations for Financial Services Businesses by Segment-U.S. Retirement Solutions and Investment Management Division-Individual Annuities."    We reinsure variable annuity living benefit guarantees from certain of our life insurance companies to a captive reinsurance company, Pruco Reinsurance, Ltd. ("Pruco Re"). The variable annuity living benefit hedging program described above is primarily executed within Pruco Re. Effective as of July 1, 2011, Pruco Re re-domiciled from Bermuda to Arizona. As a result, beginning in the third quarter of 2011, our Arizona domiciled life insurance company, Pruco Life Insurance Company, is able to claim reinsurance reserve credit for business ceded to Pruco Re without any need for Pruco Re to collateralize its obligations under the reinsurance arrangement. However, for business ceded to Pruco Re by Prudential Annuities Life Assurance Corporation ("PALAC") and Pruco Life Insurance Company of New Jersey ("PLNJ"), we must continue to collateralize Pruco Re's obligations under the reinsurance arrangement in order for PALAC and PLNJ to claim reinsurance reserve credit for their business ceded. We satisfy this requirement by depositing assets into statutory reserve credit trusts for Pruco Re. Funding needs for the statutory reserve credit trusts are separate and distinct from the capital needs of the captive reinsurance company. However, assets pledged to the statutory reserve credit trusts may include assets supporting the capital of the captive reinsurance company provided that they meet eligibility requirements prescribed by the relevant insurance regulators.    Reinsurance credit reserve requirements can move materially in either direction due to changes in equity markets and interest rates, actuarial assumptions and other factors. Higher reinsurance credit reserve requirements would necessitate depositing additional assets in the statutory reserve credit trusts, while lower reinsurance credit reserve requirements would allow assets to be removed from the statutory reserve credit trusts. Lower interest rates in 2011 led to an increase in our need to fund the captive reinsurance trusts by an amount of $569 million for the year ended December 31, 2011, primarily relating to business sold by PALAC and PLNJ. We satisfied the overall increase in funding requirements in 2011 with available cash and by re-hypothecating assets into the trust that were otherwise pledged by our affiliates under hedging positions related to our living benefit features.    In October 2011, we established a new reinsurance arrangement with our captive reinsurance company domiciled in New Jersey, whereby the New Jersey captive reinsures 90% of the short-term risks under the policies in Prudential Insurance's Closed Block. These short-term risks represent the impact of variations in experience of the Closed Block that are expected to be recovered over time as a result of corresponding adjustments to policyholder dividends. The new reinsurance arrangement is intended to alleviate the short-term surplus volatility within Prudential Insurance resulting from the Closed Block, including volatility caused by the impact of any unrealized mark-to-market losses or realized credit losses within the investment portfolio of the Closed Block.    In connection with the new Closed Block reinsurance arrangement, we entered into a $2 billion letter of credit facility with certain financial institutions, pursuant to which the New Jersey captive can obtain a letter of credit during a 3-year availability period to support its funding obligations under the reinsurance arrangement. Prudential Financial guarantees all obligations of the New Jersey captive under the facility, including its obligation to reimburse any draws made under the letter of credit. Because experience of the Closed Block is ultimately                                          236 
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  passed along to policyholders over time through the annual policyholder dividend, we believe that any draw under the letter of credit is unlikely. Our ability to obtain a letter of credit under the facility is subject to the continued satisfaction of customary conditions, including the maintenance at all times by Prudential Insurance of total adjusted capital of at least $5.5 billion based on statutory accounting principles prescribed under New Jersey law and Prudential Financial's maintenance of consolidated net worth of at least $19.0 billion, based on U.S. GAAP stockholders' equity, excluding "Accumulated other comprehensive income (loss)."   
International Insurance and Investments Subsidiaries
    On February 1, 2011, we completed our acquisition of the Star and Edison Businesses. Gibraltar Life and Prudential of Japan each contributed $400 million to payment of the acquisition purchase price, with the remaining funding provided by Prudential Financial and other subsidiaries. Although these contributions reduced local solvency margin ratios in Gibraltar and Prudential of Japan, the solvency margins for these companies remain in excess of our targets. The contributions did not materially impact Gibraltar Life's or Prudential of Japan's liquidity as their investment portfolios were positioned to provide the funding.    Star and Edison solvency margin ratios at acquisition were in excess of our solvency margin targets and will continue to be managed to capitalization levels consistent with our "AA" ratings targets. We believe the liquidity profiles of Star and Edison are sufficient to meet their obligations, including under reasonably foreseeable stress scenarios. Since completing the acquisition, we have further enhanced the capital profile of Star and Edison by repositioning their asset portfolios to reduce risk and establish an asset profile similar to Gibraltar's. We substantially completed this repositioning by year-end 2011.    Effective January 1, 2012, the Star and Edison entities merged with Gibraltar Life. We believe the solvency margin ratio of the merged entity will continue to be in excess of our solvency margin targets.    In our international insurance operations, liquidity is provided through operating cash flows from ongoing operations as well as portfolios of liquid assets. In managing the liquidity and the interest rate and credit risk profiles of our international insurance portfolios, we employ a discipline similar to the discipline employed for domestic insurance subsidiaries. We monitor liquidity through the use of internal liquidity measures, taking into account the liquidity of the asset portfolios. We also consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures to evaluate the adequacy of our international insurance operations' liquidity under stress scenarios. We believe that ongoing operations and the liquidity profile of our international insurance assets provide sufficient liquidity under reasonably foreseeable stress scenarios.    The following table sets forth our international insurance subsidiaries portfolio of liquid assets, including cash and short-term investments, and fixed maturity investments, other than those designated as held-to-maturity, by NAIC or equivalent rating as of the dates indicated.                                                                December 31, 2011                                                                    Star and                                 Prudential        Gibraltar         Edison            All                       December 31,                                  of Japan           Life          Businesses       Other(1)        Total            2010                                                                         (in billions) Cash and short-term investments                     $       1.1      $       2.4      $      
1.7      $     0.2$   5.4      $          2.7 Fixed maturity investments: High or highest quality(2)
             28.8             43.3             39.5            8.4        120.0                68.2 Other than high or highest quality                                 0.3              0.8              0.8            0.1          2.0                 1.0  Subtotal                               29.1             44.1             40.3            8.5        122.0                69.2  Total                           $      30.2      $      46.5      $      42.0      $     8.7      $ 127.4      $         71.9     
(1)   Represents our international insurance operations, excluding Japan.
(2)   Of the $120 billion of fixed maturity investments that are not designated as
      held-to-maturity and considered high or highest quality as of December 31,
       2011, $77.5 billion, or 65%, were invested in government or government       agency bonds.                                           237 
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  As with our domestic operations, in managing the liquidity of these operations, we consider the risk of policyholder and contractholder withdrawals of funds earlier than our assumptions in selecting assets to support these contractual obligations. The following table sets forth the total general account insurance-related liabilities (other than dividends payable to policyholders) of our international insurance subsidiaries, as of the dates indicated.                                                                            December 31,                                                                       2011        2010                                                                        (in billions) Prudential of Japan(1)                                               $  36.6     $ 32.2 Gibraltar Life                                                          51.9       42.1 Star and Edison Businesses                                              44.7        0.0 All other international insurance subsidiaries(2)                        
8.6       10.1
Total general account insurance-related liabilities (other than dividends payable to policyholders)
$ 141.8$ 84.4      (1)   As of December 31, 2011 and 2010, $4.5 billion and $3.5 billion,
      respectively, of the insurance-related liabilities for Prudential of Japan
      are associated with U.S. dollar-denominated products that are coinsured to
      our U.S. domiciled insurance operations and supported by U.S.       dollar-denominated assets.   (2)   Represents our international insurance operations, excluding Japan.     Our Japanese operations did not have a material amount of general account annuity reserves or deposit liabilities subject to discretionary withdrawal as of December 31, 2011 and 2010. Additionally, we believe that the individual life insurance policies sold by our Japanese operations do not have significant withdrawal risk because policyholders may incur surrender charges and must undergo a new underwriting process in order to obtain a new insurance policy.    Similar to the RBC ratios that are employed by U.S. insurance regulators, regulatory authorities in the international jurisdictions in which we operate generally establish some form of minimum solvency margin requirements for insurance companies. All of our international insurance subsidiaries have solvency margins in excess of the minimum levels required by the applicable regulatory authorities. These solvency margins are also a primary measure by which we evaluate the capital adequacy of our international insurance operations. We manage these solvency margins to a capitalization level consistent with our "AA" ratings target. Maintenance of our solvency ratios at certain levels is also important to our competitive positioning, as in certain jurisdictions, such as Japan, these solvency margins are required to be disclosed to the public and therefore impact the public perception of an insurer's financial strength.    The Financial Services Agency, the insurance regulator in Japan, has implemented revisions to the solvency margin requirements that will revise risk charges for certain assets and change the manner in which an insurance company's core capital is calculated. These changes will be effective for the fiscal year ending March 31, 2012. The following table depicts the solvency margins of our Japanese insurance subsidiaries under the old method as of March 31, 2011 and 2010 and under the new method as of March 31, 2011.                                    "New Method"               "Old Method"                                   March 31,         March 31,        March 31,                                     2011              2011             2010           Prudential of Japan             703 %          1,134 %          1,263 %           Gibraltar Life                  657 %          1,120 %          1,136 %           Star                            979 %          1,779 %            N/A           Edison                          771 %          1,363 %            N/A     We believe that the solvency margins of our Japanese insurance subsidiaries, under the new method, will continue to satisfy regulatory and other requirements and will not negatively impact our competitive positioning. The capital requirements in Korea and Taiwan are also undergoing change. Korean insurance regulators have refined their RBC calculation effective June 2011 with the most significant change related to the interest rate risk charge. The RBC ratio for Prudential of Korea, or POK, will be lower under the new calculation reflective of the long duration of its liabilities and high policy persistency. Nevertheless, we expect that POK's RBC ratio under the new calculation will remain one of the highest in the industry and will continue to exceed a level consistent                                          238 
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  with our "AA" ratings target. Additionally, Taiwanese regulators recently made slight refinements to their RBC calculation effective as of January 2011. The new calculation resulted in a modest increase in the interest rate risk charge and resulted in only a slight decline in Prudential of Taiwan's RBC ratio with no expected corresponding competitive impact.    On March 11, 2011, Japan experienced a massive earthquake followed by a tsunami which caused extensive damage and loss of life. We estimate that the impact of claims as a result of these events will not have a material impact on the capital and liquidity positions of our operating companies. In addition, we have not experienced and do not expect a significant impact to the valuation of our investments or our ability to operate our Japanese businesses as a result of these events.    We employ various hedging strategies to manage potential exposure to foreign currency exchange rate movements, including the strategies discussed in "-Results of Operations for Financial Services Businesses by Segment-International Insurance Division." These hedging strategies include both internal and external hedging programs.    The internal hedges are between a subsidiary of Prudential Financial and certain of our yen-based entities and serve to hedge the value of U.S. dollar-denominated investments held on the books of these yen-based entities. A portion of these U.S. dollar-denominated investments are part of our hedging strategy to mitigate the impact of foreign currency exchange rate movements on our U.S. dollar-equivalent investment in our Japanese subsidiaries. Absent an internal hedge, the changes in market value of these U.S. dollar-denominated investments attributable to changes in the yen-dollar exchange rate would create volatility in the solvency margins of these subsidiaries. In order to minimize this volatility, we enter into inter-company hedges. Cash settlements from these hedging activities result in cash flows between Prudential Financial and these yen-based subsidiaries. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged. During 2011, Prudential Financial funded $306 million of cash settlements related to the internal hedge program, which were paid to the yen-based subsidiaries. As of December 31, 2011, the market value of the internal hedges was a liability of $1,244 million owed to the yen-based subsidiaries of Prudential Financial. Absent any changes in forward exchange rates from those expected as of December 31, 2011, the $1,244 million internal hedge liability represents the present value of the net cash flows from Prudential Financial to these entities over the life of the hedging instruments, up to 30 years, and would require additional liquidity and capital to fund contributions from Prudential Financial to our subsidiaries. A significant yen appreciation over an extended period of time, and in excess of the forward exchange rates, would result in higher capital and liquidity needs to fund the net cash outflows from Prudential Financial.    Our external hedges primarily serve to hedge most of the foreign-denominated future income of our foreign subsidiaries and the equity investments in certain of these subsidiaries. The external hedges are between a subsidiary of Prudential Financial and external parties. Cash settlements on these activities result in cash flows between Prudential Financial and the external parties and are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged. During 2011, Prudential Financial paid $96 million of net cash flows for international insurance-related external hedge settlements. As of December 31, 2011, the net liability related to external foreign currency hedges was $677 million. A significant appreciation in yen and other foreign currencies could result in net cash outflows in excess of our liability. During 2009 and 2010, we terminated our hedges of the U.S. GAAP equity exposure of all of our other foreign operations, excluding our Japan and Taiwan insurance operations, due to a variety of considerations, including a desire to limit the potential for cash settlement outflows that would result from strengthening foreign currencies.    In our international investments operations, liquidity is provided through asset management fees as well as commission revenue. The principal uses of liquidity include general and administrative expenses and distributions of dividends and returns of capital. As with our domestic operations, the primary liquidity risks for our fee-based asset management businesses relate to their profitability, which is impacted by market conditions and our investment management performance. We believe cash flows from our international investments subsidiaries are adequate to satisfy the current liquidity requirements of their operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.                                          239 
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  On July 1, 2011, we completed the sale of our Global Commodities Business to Jefferies Group, Inc. for cash proceeds of $422 million. For more information regarding the transaction, see "-Sale of the Global Commodities Business to Jefferies Group, Inc." above.    
On December 2, 2011, we completed the sale of our 50% stake in Afore XXI, a private pension fund manager in Mexico, to Grupo Financiero Banorte SA for $200 million.
    Asset Management Subsidiaries    Our asset management businesses, which include real estate, public and private fixed income and public equity asset management, as well as commercial mortgage origination and servicing, and retail investment products, such as mutual funds and other retail services, are largely unregulated from the standpoint of dividends and distributions. Our asset management subsidiaries through which we conduct these businesses generally do not have restrictions on the amount of distributions they can make, and the fee-based asset management business can provide a relatively stable source of cash flow to Prudential Financial.    The principal sources of liquidity for our fee-based asset management businesses include asset management fees and commercial mortgage servicing fees. The principal uses of liquidity include general and administrative expenses and distribution of dividends and returns of capital to Prudential Financial. The primary liquidity risks for our fee-based asset management businesses relate to their profitability, which is impacted by market conditions and our investment management performance. We believe the cash flows from our fee-based asset management businesses are adequate to satisfy the current liquidity requirements of these operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.    The principal sources of liquidity for our strategic investments and interim loans held in our asset management businesses are cash flows from investments, the ability to liquidate investments, and available borrowing lines from internal sources, including Prudential Funding and Prudential Financial. The primary liquidity risks include the inability to sell assets in a timely manner, declines in the value of assets and credit defaults.    In April 2009, our commercial mortgage origination and servicing business received approval to participate in a Fannie Mae alternative delivery program known as ASAP Plus ("As Soon as Pooled" delivery). Our approval limit for outstanding balances on ASAP Plus is presently $150 million. This program allows us to assign a qualified Fannie Mae loan trade commitment to Fannie Mae as early as the next business day after a loan closes, and receive 99% of the loan purchase price from Fannie Mae. The program does not eliminate the need to provide temporary warehouse financing, but does significantly reduce the duration of funding requirements for eligible Fannie Mae originated loans from the normal delivery cycle of two to four weeks down to as little as one to two days. There was no balance outstanding on this program as of December 31, 2011.    Certain real estate funds under management are held for the benefit of clients in insurance company separate accounts sponsored by Prudential Insurance. In the normal course of business, Prudential Insurance, on behalf of these separate accounts, may contractually agree to various funding commitments which may include, among other things, commitments to purchase real estate, to invest in real estate partnerships (both existing and to-be-formed) to acquire or develop real estate, and/or to fund additional construction or other expenditures on previously-acquired real estate investments. Certain commitments to purchase real estate are contingent on the developer's development of the property according to plans and specifications outlined in a pre-sale agreement or the completed property achieving a certain level of leasing. These contractual commitments are typically entered into by Prudential Insurance on behalf of the particular separate account. Real estate investments that are acquired for a separate account are titled either in the name of Prudential Insurance or an LLC subsidiary specifically formed to hold title. In certain cases, the commitments specify that Prudential Insurance's recourse liability for the obligation is limited to the assets of the separate account.    At December 31, 2011 and 2010, total outstanding purchase commitments related to such separate account activity were $3.4 billion and $5.3 billion, respectively, which amounts include both off- and on-balance sheet commitments. The decrease in total outstanding purchase commitments during the last twelve months was                                          240
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  primarily driven by the satisfaction of outstanding debt commitments, which were funded from investor capital contributions and property sales. The following is a summary of the outstanding purchase commitments for these separate account portfolios as of December 31, 2011. Off-balance sheet commitments include capital commitments and commitments with respect to properties that have not yet substantially satisfied pre-conditions and are considered contingent liabilities. On-balance sheet commitments represent obligations which have substantially satisfied conditions to funding of the commitments.                                                               Contractual Maturity Date                                                                           After                                                     2012       2013       2013        Total                                                                  (in millions)
 Off-Balance Sheet Commitments:
  Recourse to Prudential Insurance                  $   380     $  17     $  
   0     $   397
 Recourse limited to assets of separate accounts       525       196       
   0         721
   Total Off-Balance Sheet Commitments                   905       213        
   0       1,118
 On-Balance Sheet Commitments:
  Recourse to Prudential Insurance                      701         0        
  17         718
 Recourse limited to assets of separate accounts     1,337       188       
  18       1,543
   Total On-Balance Sheet Commitments                  2,038       188          35       2,261   Total Commitments                                 $ 2,943     $ 401     $    35     $ 3,379      The contractual maturity dates of some of the outstanding purchase commitments may accelerate upon a failure to maintain required loan-to-value ratios, failure of Prudential Insurance to maintain required ratings or failure to satisfy other financial covenants.    Some separate accounts have also entered into syndicated credit facilities providing for borrowings in the aggregate amount of up to $0.8 billion. As of December 31, 2011, there were no outstanding borrowings under these credit facilities. These facilities also include loan-to-value ratio requirements and other financial covenants. Recourse on obligations under these facilities is limited to the assets of the applicable separate account. As of December 31, 2011, these separate account portfolios had combined gross and net asset values of $28 billion and $17 billion, respectively.    At the time of maturity of a funding commitment, Prudential Insurance often endeavors to negotiate extensions, refinancings, or other solutions with counterparties. Management believes that the separate accounts have sufficient resources to ultimately meet their obligations. However, there is a risk that the separate accounts may not be able to timely fund all maturing obligations from regular sources such as asset sales, operating cash flow, deposits from clients, debt refinancings or from the above-mentioned portfolio level credit facilities. In cases where the separate account is not able to fund maturing obligations, Prudential Insurance may be called upon or required to provide interim funding solutions. To date, Prudential Insurance has not been required to provide any such funding.    As of December 31, 2011 and 2010, our asset management subsidiaries had cash and cash equivalents and short-term investments of $1.3 billion and $0.8 billion, respectively.    Financing Activities    Prudential Financial maintains a shelf registration statement with the SEC that permits the issuance of public debt, equity and hybrid securities. As a "Well-Known Seasoned Issuer" under SEC rules, Prudential Financial's shelf registration statement provides for automatic effectiveness upon filing, pay-as-you-go fees and the ability to add securities by filing automatically effective amendments. Also, in accordance with these rules, the shelf registration statement has no stated issuance capacity.    As of December 31, 2011 and 2010, total short- and long-term debt of the Company on a consolidated basis was $27.0 billion and $25.6 billion, respectively, which as shown below, includes $18.6 billion and $17.6 billion, respectively, related to the parent company, Prudential Financial.                                          241
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Prudential Financial Borrowings
    Prudential Financial is authorized to borrow funds from various sources to meet its capital and other funding needs, as well as the capital and other funding needs of its subsidiaries. The following table sets forth the outstanding short- and long-term debt of Prudential Financial, other than debt issued to consolidated subsidiaries, as of the dates indicated.                                                                December 31,                                                           2011         2010                                                             (in millions)          Borrowings:          General obligation short-term debt:          Commercial paper                               $    296     $    283          Current portion of long-term debt                   956          486           Total general obligation short-term debt          1,252          769           General obligation long-term debt:          Senior debt                                      13,236       12,654          Junior subordinated debt (hybrid securities)      1,519        1,519          Retail medium-term notes                          2,545        2,668           Total general obligation long-term debt          17,300       16,841           Total borrowings                               $ 18,552     $ 17,610     
The following table presents, as of December 31, 2011, the contractual maturities of Prudential Financial's general obligation long-term debt.
                                Senior       Junior Subordinated       Retail Medium-       Calendar Year           Debt               Debt                 Term Notes                                                  (in millions)       2013                  $  1,581     $                   0     $            165       2014                     1,473                         0                   80       2015                     2,148                         0                   81       2016                       750                         0                   26       2017 and thereafter      7,284                     1,519                2,193        Total                 $ 13,236     $               1,519     $          2,545      Prudential Financial maintains a Medium-Term Notes, Series D program under its shelf registration statement with an authorized issuance capacity of $20 billion, of which as of December 31, 2011 approximately $8.3 billion remained available. On May 12, 2011 Prudential Financial issued $500 million of 3.0% notes due May 2016 and $300 million of 5.625% notes due May 2041 under the Medium-Term Notes, Series D program, proceeds from which were used to fund operating loans to our businesses and for other general corporate purposes. On November 16, 2011, Prudential Financial issued $400 million of 4.5% notes due November 2021 and $325 million of 5.8% notes due November 2041, the majority of the proceeds from which will be used to refinance maturing capital debt. The weighted average interest rates on Prudential Financial's medium-term and senior notes, including the effect of interest rate hedging activity, were 5.24% and 5.21% for the years ended December 31, 2011 and 2010, respectively, excluding the effect of debt issued to consolidated subsidiaries.    Prudential Financial also maintains a retail medium-term notes program, including the InterNotes® program, under its shelf registration statement with an authorized issuance capacity of $5.0 billion, of which as of December 31, 2011 approximately $2.9 billion remained available. The retail medium-term notes program traditionally has served as a funding source for a product of our Retirement segment for which we earn investment spread; however, the program can also be used for general corporate purposes. Beginning in 2009, we began using a portion of the proceeds from outstanding retail medium-term notes for general corporate purposes and used funding agreements issued to the FHLBNY as a substitute funding source for the asset portfolio within the Retirement segment, as discussed in "-Prudential Financial-Alternative Sources of Liquidity-Federal                                          242 
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Home Loan Bank of New York." The weighted average interest rates on Prudential Financial's retail medium-term notes were 5.89% and 5.74% for the years ended December 31, 2011 and 2010, respectively, excluding the effect of debt issued to consolidated subsidiaries. A decline in demand by retail investors and an increase in borrowing costs versus historical levels have resulted in a halt in new issuances under the retail medium-term notes program. However, if the capital markets improve, we may resume new issuances under the program. As of December 31, 2011, $2.1 billion of the outstanding retail notes were redeemable by the Company at par. The Company may, from time to time, redeem some or all of these retail notes as part of its overall liquidity and capital management.    In 2008, Prudential Financial issued $600 million of 8.875% fixed-to-floating rate junior subordinated notes to institutional investors and $920 million of 9.0% fixed-rate junior subordinated notes to retail investors. Both issuances are considered hybrid capital securities, which receive enhanced equity treatment from the rating agencies. Both series of notes have a scheduled maturity of June 15, 2038 and a final maturity of June 15, 2068. In connection with the issuance of both series of notes, Prudential Financial entered into a replacement capital covenant, or RCC, for the benefit of holders of its 6.625% Senior Notes due 2037. Under the RCC, Prudential Financial agreed that it will not repay, redeem, defease, or purchase these junior subordinated notes prior to June 15, 2048, unless it has received proceeds from the issuance of specified replacement capital securities, which include, but are not limited to, hybrid capital securities and common stock. See Note 14 to our Consolidated Financial Statements for additional information concerning these junior subordinated notes.    Consolidated Borrowings   
Current capital markets activities for the Company on a consolidated basis principally consist of unsecured short-term and long-term borrowings by Prudential Funding and Prudential Financial, unsecured third party bank borrowings, and asset-based or secured financing. As of December 31, 2011, we were in compliance with all debt covenants related to the borrowings in the table below.
    The following table sets forth total consolidated borrowings of the Company as of the dates indicated.                                                                December 31,                                                           2011         2010                                                             (in millions)          Borrowings:
         General obligation short-term debt(1)          $  2,336$  1,982
         General obligation long-term debt:
         Senior debt                                      16,488      
15,517
          Junior subordinated debt (hybrid securities)      1,519        1,519          Surplus notes(2)(3)                               4,140        4,142          Other(4)                                            725          725 
         Total general obligation long-term debt          22,872       21,903
         Total general obligations                        25,208      
23,885
         Limited and non-recourse borrowing:
         Limited and non-recourse long-term debt(5)        1,750        1,750
           Total limited and non-recourse borrowing          1,750        1,750           Total borrowings(6)                              26,958       25,635 
         Total asset-based financing                       9,196       
8,057
         Total borrowings and asset-based financings    $ 36,154$ 33,692
(1)   As of December 31, 2011 and 2010, includes $199 million and $275 million,
      respectively, of short-term debt representing collateralized advances with
      the Federal Home Loan Bank of New York, which are discussed in more detail
      in "-Alternative Sources of Liquidity-Federal Home Loan Bank of New York."
(2)   As of both December 31, 2011 and 2010, includes $3.2 billion of floating
      rate surplus notes issued by subsidiaries of Prudential Insurance to fund
      regulatory reserves, as well as $940 million and $942 million, respectively,
      of fixed rate surplus notes issued by Prudential Insurance.                                           243 
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  Table of Contents (3)   As of December 31, 2011, the $4.1 billion of surplus notes outstanding is
      net of $500 million of assets under set-off arrangements, representing a
      reduction in the amount of surplus notes included in long-term debt,
      relating to an arrangement where valid rights of offset exist and it is the
      intent of both parties to settle on a net basis under legally enforceable
      arrangements.
(4)   Reflects collateralized advances with Federal Home Loan Bank of New York,
      which are discussed in more detail in "-Alternative Sources of       Liquidity-Federal Home Loan Bank of New York."   (5)   As of both December 31, 2011 and 2010, the $1.75 billion of limited and
      non-recourse long-term debt outstanding was attributable to the Closed Block
      Business.
(6)   Does not include $3.2 billion and $3.5 billion of medium-term notes of
      consolidated trust entities secured by funding agreements purchased with the
      proceeds of such notes as of December 31, 2011 and 2010, respectively, or
$1.5 billion of collateralized funding agreements issued to the Federal Home
Loan Bank of New York as of both December 31, 2011 and 2010. These notes and&lt;/p>
      funding agreements are included in "Policyholders' account balances." For
      additional information on the trust notes, see "-Funding Agreement Notes
      Issuance Program" and for additional information on the Federal Home Loan
Bank of New York funding agreements, see "-Alternative Sources of       Liquidity-Federal Home Loan Bank of New York."     Total general debt obligations increased by $1.3 billion from December 31, 2010 to December 31, 2011, primarily reflecting issuances of medium-term notes and the assumption of Star and Edison debt. In conjunction with the acquisition of Star and Edison, the Company assumed ¥47.8 billion of long-term debt, of which ¥32.5 billion and ¥5.3 billion are scheduled to mature in 2014 and 2026, respectively, and ¥10 billion has no stated maturity date. At December 31, 2011, the carrying value of this debt was $520 million.    Our total borrowings consist of capital debt, investment-related debt, securities business-related debt and debt related to specified other businesses. Capital debt consists of borrowings that are used or will be used to meet the capital requirements of Prudential Financial, as well as borrowings invested in equity or debt securities of direct or indirect subsidiaries of Prudential Financial and subsidiary borrowings utilized for capital requirements. Investment-related borrowings consist of debt issued to finance specific investment assets or portfolios of investment assets, including institutional spread lending investment portfolios, real estate and real estate-related investments held in consolidated joint ventures, assets supporting reserve requirements under Regulation XXX and Guideline AXXX as described below, as well as institutional and insurance company portfolio cash flow timing differences. Securities business-related debt consists of debt issued to finance primarily the liquidity of our broker-dealers and our capital markets and other securities business-related operations. Debt related to specified other businesses consists of borrowings associated with our individual annuities business, real estate franchises, and relocation services. Those borrowings where the holder is entitled to collect only against the assets pledged to the debt as collateral, or where the borrower has only very limited rights to collect against other assets, have been classified as limited and non-recourse debt.    The following table summarizes our borrowings, categorized by use of proceeds, as of the dates indicated.                                                               December 31,                                                          2011         2010                                                            (in millions)          General obligations:          Capital debt(1)                               $ 11,224     $  8,763          Investment-related                               8,897        9,569          Securities business-related                      1,518        2,230          Specified other businesses                       3,569        3,323           Total general obligations                       25,208       23,885          Limited and non-recourse debt(2)                 1,750        1,750           Total borrowings                              $ 26,958     $ 25,635           Short-term debt                               $  2,336     $  1,982          Long-term debt                                  24,622       23,653           Total borrowings                              $ 26,958     $ 25,635           Borrowings of Financial Services Businesses   $ 25,208     $ 23,885          Borrowings of Closed Block Business              1,750        1,750           Total borrowings                              $ 26,958     $ 25,635     
(1)   Includes $1,519 million of total outstanding junior subordinated debt. See
      "-Prudential Financial" for additional information on our capital debt to
      total capital ratio, including the equity credit attributed to our
      outstanding junior subordinated debt.
(2)   As of both December 31, 2011 and 2010, the limited and non-recourse debt
      outstanding was attributable to the Closed Block Business.                                           244 
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The following table presents, as of December 31, 2011, the contractual maturities of the Company's long-term debt.
                                               Long-term Debt                                              (in millions)                       Calendar Year:                       2013                  $         1,825                       2014                            2,064                       2015                            3,159                       2016                            1,502                       2017 and thereafter            16,072                        Total                 $        24,622      We may, from time to time, seek to redeem or repurchase our outstanding debt securities through individually negotiated transactions or otherwise. Any such repurchases will depend on prevailing market conditions, our liquidity position, contractual restrictions and other factors.    The states of domicile of our domestic life insurance subsidiaries have in place a regulation entitled "Valuation of Life Insurance Policies," commonly known as "Regulation XXX," and a supporting Guideline entitled "The Application of the Valuation of Life Insurance Policies," commonly known as "Guideline AXXX." The Regulation and supporting Guideline require insurers to establish statutory reserves for term and universal life insurance policies with long-term premium guarantees that are consistent with the statutory reserves required for other individual life insurance policies with similar guarantees. Many market participants believe that this level of reserves is non-economic, and we have implemented reinsurance and capital management actions to mitigate the impact of Regulation XXX and Guideline AXXX on our term and universal life insurance business, including actions that are described in more detail below.    During 2011, a subsidiary of Prudential Insurance entered into agreements providing for the issuance and sale of up to $1 billion of ten-year fixed-rate surplus notes in order to finance reserves required under Regulation XXX. At December 31, 2011, $500 million of surplus notes were outstanding under this facility. Under the agreements, the subsidiary issuer received debt securities, with a principal amount equal to the surplus notes issued, which are redeemable under certain circumstances, including upon the occurrence of specified stress events affecting the subsidiary issuer. Because valid rights of set-off exist, interest and principal payments on the surplus notes and on the debt securities are settled on a net basis, and the surplus notes are reflected in the Company's total consolidated borrowings on a net basis. Prudential Financial has agreed to make capital contributions to the subsidiary issuer in order to reimburse it for investment losses in excess of specified amounts. In addition, during 2011, another subsidiary of Prudential Insurance issued a $1.5 billion surplus note to an affiliate to finance reserves required under Guideline AXXX.    Subsidiaries of Prudential Insurance have outstanding an additional $3.2 billion of surplus notes that were issued in 2006 and 2007 to finance reserves required under Regulation XXX and Guideline AXXX. Prudential Financial has agreed to maintain the capital of these subsidiaries at or above a prescribed minimum level and has entered into arrangements (which are accounted for as derivative instruments) that require it to make certain payments in the event of deterioration in the value of these surplus notes. As of December 31, 2011, there were no collateral postings made under these derivative instruments.    The surplus notes described above are subordinated to policyholder obligations, and the payment of interest and principal on the surplus notes may only be made with prior regulatory approval.    
As we continue to underwrite term and universal life business, we expect to have additional borrowing needs to finance statutory reserves required under Regulation XXX and Guideline AXXX. However, we believe we have sufficient financing resources in place, including those described above, to meet our financing needs under Regulation XXX through 2012 and under Guideline AXXX through the year 2014, assuming that the volume of new business remains consistent with current sales levels.
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Funding Agreement Notes Issuance Program
    In 2003, Prudential Insurance established a Funding Agreement Notes Issuance Program pursuant to which a Delaware statutory trust issues medium-term notes (which are included in our statements of financial position in "Policyholders' account balances" and not included in the foregoing table) secured by funding agreements issued to the trust by Prudential Insurance and included in our Retirement segment. The funding agreements provide cash flow sufficient for the debt service on the related medium-term notes. The medium-term notes are sold in transactions not requiring registration under the Securities Act of 1933. The notes have fixed or floating interest rates and original maturities ranging from five to ten years. As of December 31, 2011 and 2010, the outstanding aggregate principal amount of such notes totaled $3.2 billion and $3.5 billion respectively, out of a total authorized amount of up to $15 billion. Our ability to issue under this program depends on market conditions. The aggregate maturities of these notes over the next 12 months are approximately $1.4 billion. We intend to repay the maturing notes through a combination of cash flows from asset maturities and available cash.    Credit Facilities    In December 2011, we replaced our previously-existing $3.93 billion of revolving credit facilities, by entering into a new $2 billion five-year credit facility with 19 financial institutions that has Prudential Financial as borrower and a new $1.75 billion three-year credit facility with 23 financial institutions that has both Prudential Financial and Prudential Funding as borrowers. There were no outstanding borrowings under these credit facilities as of December 31, 2011 or as of the date of this filing.    Each of the new facilities is available to the applicable borrowers up to the aggregate committed credit and may be used for general corporate purposes, including as backup liquidity for our commercial paper programs. Prudential Financial expects that it may borrow under the five-year credit facility from time to time to fund its working capital needs and those of its subsidiaries. In addition, up to $300 million of the five-year facility may be drawn in the form of standby letters of credit that can be used to meet the Company's operating needs.    The credit facilities contain representations and warranties, covenants and events of default that are customary for facilities of this type; however, borrowings under the facilities are not contingent on our credit ratings nor subject to material adverse change clauses. Borrowings under the credit facilities are conditioned on the continued satisfaction of other customary conditions, including the maintenance at all times of consolidated net worth, relating to the Company's Financial Services Businesses only, of at least $21.25 billion, which for this purpose is calculated as U.S. GAAP equity, excluding "Accumulated other comprehensive income (loss)" and excluding equity of noncontrolling interests. Under the applicable credit agreements, the required minimum level of consolidated net worth will be reduced automatically in the future by an amount equal to 85 percent of the amount of any reduction, on an after-tax basis, in the total U.S. GAAP equity attributable to the Company's Financial Services Businesses, resulting from the Company's expected retrospective application of amended authoritative guidance regarding the deferral of costs relating to the acquisition of new or renewal insurance contracts.    As of December 31, 2011, the consolidated net worth of the Company's Financial Services Businesses exceeded the minimum amount required to borrow under the credit facilities.   
We also use uncommitted lines of credit from financial institutions.
                                       Ratings    Financial strength ratings (which are sometimes referred to as "claims-paying" ratings) and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Nationally Recognized Statistical Ratings Organizations continually review the financial performance and financial condition of the entities they rate, including Prudential Financial and its rated subsidiaries. Our credit ratings are also important for our ability to raise capital through the issuance of debt and for the cost of such financing.   
A downgrade in the credit or financial strength ratings of Prudential Financial or its rated subsidiaries could potentially, among other things, limit our ability to market products, reduce our competitiveness, increase the
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  number or value of policy surrenders and withdrawals, increase our borrowing costs and potentially make it more difficult to borrow funds, adversely affect the availability of financial guarantees, such as letters of credit, cause additional collateral requirements or other required payments under certain agreements, allow counterparties to terminate derivative agreements and/or hurt our relationships with creditors, distributors, or trading counterparties thereby potentially negatively affecting our profitability, liquidity, and/or capital. In addition, we consider our own risk of non-performance in determining the fair value of our liabilities. Therefore, changes in our credit or financial strength ratings may affect the fair value of our liabilities.    Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. The following table summarizes the ratings for Prudential Financial and certain of its subsidiaries as of the date of this filing.                                                        A.M.                                                    Best(1)    S&P(2)    Moody's(3)    Fitch(4) Financial Strength Ratings: The Prudential Insurance Company of America          A+        AA-          A2           A+ Pruco Life Insurance Company                         A+        AA-          A2           A+ Pruco Life Insurance Company of New Jersey           A+        AA-         NR*           A+ 
Prudential Annuities Life Assurance Corporation      A+        AA-          NR
           A+ Prudential Retirement Insurance and Annuity Company                                              A+        AA-          A2           A+ The Prudential Life Insurance Company Ltd. (Prudential of Japan)                                NR        AA-          NR           NR Gibraltar Life Insurance Company, Ltd.               NR        AA-          A2           NR  Credit Ratings: Prudential Financial, Inc.: Short-term borrowings                               AMB-1      A-1         P-2           F2 Long-term senior debt(5)                             a-         A          Baa2         BBB+ Junior subordinated long-term debt                   bbb       BBB+        Baa3         BBB- The Prudential Insurance Company of America: Capital and surplus notes                             a         A          Baa1          A- Prudential Funding, LLC: Short-term debt                                     AMB-1      A-1+        P-2           F1 Long-term senior debt                                a+        AA-          A3           A PRICOA Global Funding I: Long-term senior debt                                aa-       AA-          A2           A+     *   "NR" indicates not rated.  
(1)   A.M. Best Company , which we refer to as A.M. Best, financial strength
      ratings for insurance companies currently range from "A++ (superior)" to "F
      (in liquidation)." A.M. Best's ratings reflect its opinion of an insurance
      company's financial strength, operating performance and ability to meet its
      obligations to policyholders. An A.M. Best long-term credit rating is an
      opinion of the ability of an obligor to pay interest and principal in
      accordance with the terms of the obligation. A.M. Best long-term credit
      ratings range from "aaa (exceptional)" to "d (in default)," with ratings
      from "aaa" to "bbb" considered as investment grade. An A.M. Best short-term
      credit rating reflects an opinion of the issuer's fundamental credit
      quality. Ratings range from "AMB-1+," which represents an exceptional
      ability to repay short-term debt obligations, to "AMB-4," which correlates
      with a speculative ("bb") long-term rating.
(2)   Standard & Poor's Rating Services, which we refer to as S&P, financial
      strength ratings currently range from "AAA (extremely strong)" to "R
      (regulatory supervision)." These ratings reflect S&P's opinion of an
      operating insurance company's financial capacity to meet the obligations of
      its insurance policies in accordance with their terms. A "+" or "-"       indicates relative strength within a category. An S&P credit rating is a       current opinion of the creditworthiness of an obligor with respect to a
      specific financial obligation, a specific class of financial obligations or
      a specific financial program. S&P's long-term issue credit ratings range
      from "AAA (extremely strong)" to "D (default)." S&P short-term ratings range
      from "A-1 (highest category)" to "D (default)."
(3)   Moody's Investors Service, Inc., which we refer to as Moody's, insurance
      financial strength ratings currently range from "Aaa (exceptional)" to "C
      (lowest)." Moody's insurance ratings reflect the ability of insurance
      companies to repay punctually senior policyholder claims and obligations.
      Numeric modifiers are used to refer to the ranking within the group-with 1
      being the highest and 3 being the lowest. These modifiers are used to
      indicate relative strength within a category. Moody's credit ratings
      currently range from "Aaa (highest)" to "C (default)." Moody's credit
      ratings grade debt according to its investment quality. Moody's considers
      "A1," "A2" and "A3" rated debt to be upper medium grade obligations, subject
      to low credit risk. Moody's short-term ratings are opinions of the                                           247 
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   ability of issuers to honor senior financial obligations and contracts. Prime
   ratings range from "Prime-1 (P-1)," which represents a superior ability for
   repayment of senior short-term debt obligations, to "Prime-3 (P-3)," which
   represents an acceptable ability for repayment of such obligations. Issuers
   rated "Not Prime" do not fall within any of the Prime rating categories.
(4)   Fitch Ratings Ltd., which we refer to as Fitch, financial strength ratings
      currently range from "AAA (exceptionally strong)" to "D (distressed)."
      Fitch's ratings reflect its assessment of the likelihood of timely payment
      of policyholder and contractholder obligations. Fitch long-term credit
      ratings currently range from "AAA (highest credit quality)," which denotes
      exceptionally strong capacity for timely payment of financial commitments,
      to "D (default)." Investment grade ratings range between "AAA" and "BBB."
      Short-term ratings range from "F1 (highest credit quality)" to "C (high
      default risk)." Within long-term and short-term ratings, a "+" or a "-" may
      be appended to a rating to denote relative status within major rating       categories.   (5)   Includes the retail medium-term notes program.     The ratings set forth above reflect current opinions of each rating agency. Each rating should be evaluated independently of any other rating. These ratings are not directed toward shareholders and do not in any way reflect evaluations of the safety and security of the Common Stock. These ratings are reviewed periodically and may be changed at any time by the rating agencies. As a result, we cannot assure you that we will maintain our current ratings in the future.    Requirements to post collateral or make other payments as a result of ratings downgrades under certain agreements, including derivative agreements, can be satisfied in cash or by posting permissible securities held by the subsidiaries subject to the agreements. A ratings downgrade of three ratings levels from the ratings levels as of December 31, 2011 (relating to financial strength ratings in certain cases and credit ratings in other cases) would result in estimated additional collateral posting requirements or payments under such agreements of approximately $75 million. The amount of collateral required to be posted for derivative agreements is also dependent on the fair value of the derivative positions as of the balance sheet date. For additional information regarding the potential impacts of a ratings downgrade on our derivative agreements see Note 21 to our Consolidated Financial Statements. In addition, a ratings downgrade by A.M. Best to "A-" for our domestic life insurance companies would require Prudential Insurance to post a letter of credit in the amount of approximately $1.8 billion, based on the level of statutory reserves related to the variable annuity business acquired from Allstate, that we estimate would result in annual cash outflows of approximately $28 million, or collateral posting in the form of cash or securities to be held in a trust. We believe that the posting of such collateral would not be a material liquidity event for Prudential Insurance.    Rating agencies use an "outlook" statement for both industry sectors and individual companies. For an industry sector, a stable outlook generally implies that over the next 12-18 months the rating agency expects ratings to remain unchanged among companies in the sector. Currently, A.M. Best, S&P, Moody's and Fitch all have the U.S. life insurance industry on stable outlook. For a particular company, an outlook generally indicates a medium- or long-term trend (generally six months to two years) in credit fundamentals, which if continued, may lead to a rating change. These indicators are not necessarily a precursor of a rating change nor do they preclude a rating agency from changing a rating at any time without notice. Moody's currently has all of the Company's ratings on positive outlook. Except as noted below, A.M. Best, S&P, and Fitch currently have the Company's ratings on stable outlook.    In view of the difficulties experienced recently by many financial institutions, the rating agencies have heightened the level of scrutiny that they apply to such institutions, have increased the frequency and scope of their credit reviews, have requested additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in the rating agency models for maintenance of certain ratings levels, such as the financial strength ratings currently held by our life insurance subsidiaries. In addition, actions we might take to access third party financing or to realign our capital structure may in turn cause rating agencies to reevaluate our ratings.    The following is a summary of the significant changes in our ratings and rating outlooks that have occurred from the beginning of 2011 through the date of this filing.   
On April 27, 2011, S&P assigned a negative outlook to the ratings of The Prudential Life Insurance Company Ltd. and Gibraltar Life Insurance Company, Ltd. as part of its decision to put the sovereign debt ratings of Japan on negative outlook.
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On June 8, 2011, A.M. Best affirmed the long-term senior debt rating of Prudential Financial at "a-" and the financial strength ratings of our life insurance subsidiaries at "A+."
On June 23, 2011, Moody's affirmed the long-term senior debt rating of Prudential Financial at "Baa2" and the financial strength ratings of our life insurance subsidiaries at "A2," and revised the outlook from stable to positive.
In July 2011, S&P affirmed the long-term senior debt rating of Prudential Financial at "A" and the financial strength ratings of our life insurance subsidiaries at "AA-."
    On October 13, 2011, S&P upgraded the financial strength and long-term counterparty ratings of AIG Edison Life Insurance Company from "A" to "AA-" with a negative outlook. The negative outlook reflects S&P's outlook on the sovereign debt ratings of Japan.   
On December 19, 2011, Fitch affirmed the long-term senior debt rating of Prudential Financial at "BBB+" and the financial strength ratings of our life insurance subsidiaries at "A+."
    On January 4, 2012, Moody's affirmed the financial strength rating of Gibraltar Life Insurance Company, Ltd at "A2." At the same time, Moody's withdrew the "A2" financial strength rating of AIG Edison Life Insurance Company due to its merger with Gibraltar Life Insurance Company, Ltd.
On January 5, 2012, S&P withdrew the financial strength and long-term counterparty ratings of AIG Edison Life Insurance Company due to its merger with Gibraltar Life Insurance Company, Ltd.
                               Contractual Obligations    The table below summarizes the future estimated cash payments related to certain contractual obligations as of December 31, 2011. The estimated payments reflected in this table are based on management's estimates and assumptions about these obligations. Because these estimates and assumptions are necessarily subjective, the actual cash outflows in future periods will vary, possibly materially, from those reflected in the table. In addition, we do not believe that our cash flow requirements can be adequately assessed based solely upon an analysis of these obligations, as the table below does not contemplate all aspects of our cash inflows, such as the level of cash flow generated by certain of our investments, nor all aspects of our cash outflows.                                                              Estimated Payments Due by Period                                                                                                      2017 and                                          Total          2012        
2013-2014       2015-2016       thereafter
                                                                     (in 
millions)
 Short-term and long-term debt obligations(1)                        $    41,048     $  3,616     $     6,223     $     6,619     $     24,590 Operating lease obligations(2)                686          152             257             134              143 Purchase obligations: Commitments to purchase or fund investments(3)                              5,573        4,562             927              47               37 Commercial mortgage loan commitments(4)                              2,139        1,565             459               0              115 Other liabilities: Insurance liabilities(5)                1,136,044       43,690          69,525          72,471          950,358 Other(6)                                   11,563       10,662             249              51              601  Total                                 $ 1,197,053     $ 64,247     $    77,640     $    79,322     $    975,844      (1)   The estimated payments due by period for long-term debt reflects the       contractual maturities of principal, as disclosed in Note 14 to the 
      Consolidated Financial Statements, as well as estimated future interest
      payments. The payment of principal and estimated future interest for       short-term debt are reflected in estimated payments due in less than one       year. The estimate for future interest payments includes the effect of
      derivatives that qualify for hedge accounting treatment. See Note 14 to the
      Consolidated Financial Statements for additional information concerning our
      short-term and long-term debt.
(2)   The estimated payments due by period for operating leases reflect the future
      minimum lease payments under non-cancelable operating leases, as disclosed
      in Note 23 to the Consolidated Financial Statements. We have no significant
      capital lease obligations.                                           249 
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  Table of Contents (3)   As discussed in Note 23 to the Consolidated Financial Statements, we have
      commitments to purchase or fund investments, some of which are contingent
      upon events or circumstances not under our control, including those at the
      discretion of our counterparties. The timing of the fulfillment of certain
      of these commitments cannot be estimated, therefore the settlement of these
      obligations are reflected in estimated payments due in less than one year.
      Commitments to purchase or fund investments include $1.159 billion that we
      anticipate will ultimately be funded from our separate accounts. Of these
      separate account commitments, $0.397 billion have recourse to Prudential
      Insurance if the separate accounts are unable to fund the amounts when due.
      For further discussion of these separate account commitments, see       "-Liquidity and Capital Resources of Subsidiaries-Asset Management       Subsidiaries."  
(4)   As discussed in Note 23 to the Consolidated Financial Statements, loan
      commitments of our commercial mortgage operations, which are legally binding
      commitments to extend credit to a counterparty, have been reflected in the
      contractual obligations table above principally based on the expiration date
      of the commitment; however, it is possible these loan commitments could be
      funded prior to their expiration. In certain circumstances the counterparty
      may also extend the date of the expiration in exchange for a fee.
(5)   The estimated payments due by period for insurance liabilities reflect
      future estimated cash payments to be made to policyholders and others for
      future policy benefits, policyholders' account balances, policyholder's
      dividends, reinsurance payables and separate account liabilities. These
      future estimated cash outflows are based on mortality, morbidity, lapse and
      other assumptions comparable with our experience, consider future premium
      receipts on current policies in force, and assume market growth and interest
      crediting consistent with assumptions used in amortizing deferred
      acquisition costs and value of business acquired. These cash outflows are
      undiscounted with respect to interest and, as a result, the sum of the cash
      outflows shown for all years in the table of $1,136 billion exceeds the
      corresponding liability amounts of $530 billion included in the Consolidated
      Financial Statements as of December 31, 2011. Separate account liabilities
      are legally insulated from general account obligations, and it is generally
      expected these liabilities will be fully funded by separate account assets
      and their related cash flows. We have made significant assumptions to
      determine the future estimated cash outflows related to the underlying
      policies and contracts. Due to the significance of the assumptions used,
      actual cash outflows will differ, possibly materially, from these estimates.
(6)   The estimated payments due by period for other liabilities includes
      securities sold under agreements to repurchase, cash collateral for loaned
      securities, liabilities for unrecognized tax benefits, bank customer       liabilities, and other miscellaneous liabilities.    &lt;/pre>
We also enter into agreements to purchase goods and services in the normal course of business; however, these purchase obligations are not material to our consolidated results of operations or financial position as of December 31, 2011.
                            Off-Balance Sheet Arrangements   
Guarantees and Other Contingencies
    In the course of our business, we provide certain guarantees and indemnities to third parties pursuant to which we may be contingently required to make payments now or in the future. See "Commitments and Guarantees" within Note 23 to the Consolidated Financial Statements for additional information.    Other Contingent Commitments    We also have other commitments, some of which are contingent upon events or circumstances not under our control, including those at the discretion of our counterparties. See "Commitments and Guarantees" within Note 23 to the Consolidated Financial Statements for additional information regarding these commitments. For further discussion of certain of these commitments that relate to our separate accounts, also see "-Liquidity and Capital Resources of Subsidiaries-Asset Management Subsidiaries."    
Other Off-Balance Sheet Arrangements
    We do not have retained or contingent interests in assets transferred to unconsolidated entities, or variable interests in unconsolidated entities or other similar transactions, arrangements or relationships that serve as credit, liquidity or market risk support, that we believe are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or our access to or requirements for capital resources. In addition, we do not have relationships with any unconsolidated entities that are contractually limited to narrow activities that facilitate our transfer of or access to associated assets.                                          250 
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