Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

46K characters. Original on sec.gov · Markdown

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:


		Page
1.	Financial Statements—Item 8. Financial Statements and Supplementary Data	155
2.	Financial Statement Schedules:
	Schedule I—Summary of Investments Other Than Investments in Related Parties as of December 31, 2021	310
	Schedule II—Condensed Financial Information of Registrant as of December 31, 2021 and 2020, and for the years ended December 31, 2021, 2020 and 2019	311
	Schedule III—Supplementary Insurance Information as of and for the years ended December 31, 2021, 2020 and 2019	316
	Schedule IV—Reinsurance as of and for the years ended December 31, 2021, 2020 and 2019	319
	Any remaining schedules provided for in the applicable SEC regulations are omitted because they are either inapplicable or the relevant information is provided elsewhere within this Form 10-K.

Exhibits:

See the accompanying Exhibit Index.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule I

Summary of Investments Other Than Investments in Related Parties

As of December 31, 2021

(in millions)


Type of Investment	Amortized Cost or Cost(1)		Fair Value		Amount Shown in the Balance Sheet
Fixed maturities, available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	26,231	$	32,158	$	32,158
Obligations of U.S. states and their political subdivisions	10,445		12,218		12,218
Foreign governments	83,363		94,669		94,669
Asset-backed securities	11,402		11,525		11,525
Residential mortgage-backed securities	2,749		2,858		2,858
Commercial mortgage-backed securities	12,490		13,099		13,099
Public utilities	26,993		30,436		30,436

All other corporate bonds	159,363		174,973		174,973
Redeemable preferred stock	423		474		474
Total fixed maturities, available-for-sale	$	333,459	$	372,410	$	372,410
Fixed maturities, held-to-maturity:
Bonds:
Foreign governments	$	833	$	1,054	$	833
Residential mortgage-backed securities	191		205		191

All other corporate bonds	495		544		490
Total fixed maturities, held-to-maturity	$	1,519	$	1,803	$	1,514
Equity securities:
Common stocks:
Other common stocks	$	3,909	$	5,850	$	5,850
Mutual funds	1,635		2,366		2,366
Nonredeemable preferred stocks	105		146		146
Perpetual preferred stocks	166		212		212
Total equity securities, at fair value	$	5,815	$	8,574	$	8,574
Fixed maturities, trading	$	8,741	$	8,823	$	8,823
Assets supporting experience-rated contractholder liabilities	2,861				3,358
Commercial mortgage and other loans(2)	58,666				58,666
Policy loans	10,386				10,386
Short-term investments	6,635				6,635
Other invested assets	21,833				21,833
Total investments(3)	$	449,915			$	492,199

(1)See Note 3 to the Consolidated Financial Statements for the composition of the Company’s “Assets supporting experience-rated contractholder liabilities, at fair value.”

(2)Includes collateralized commercial mortgage and other loans of $58,109 million and uncollateralized loans of $557 million.

(3)Excludes “Assets held-for-sale” of $40,669 million as of December 31, 2021.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule II

Condensed Financial Information of Registrant

Condensed Statements of Financial Positions as of December 31, 2021 and 2020

(in millions)


	2021		2020
ASSETS
Investment contracts from subsidiaries	$	1	$	1
Fixed maturities, available for sale, at fair value (amortized cost: 2021- $1,052; 2020- $1,529)	1,072		1,648
Equity securities, at fair value (cost: 2021- $25; 2020- $25)	25		25
Other invested assets	1,958		3,876
Total investments	3,056		5,550
Cash and cash equivalents	1,251		1,062
Due from subsidiaries	3,458		2,023
Loans receivable from subsidiaries	7,876		8,027
Investment in subsidiaries	73,097		78,345
Property, plant and equipment	428		446
Income taxes receivable	178		467
Other assets	112		116
TOTAL ASSETS	$	89,456	$	96,036
LIABILITIES AND EQUITY
LIABILITIES
Due to subsidiaries	$	3,899	$	3,290
Loans payable to subsidiaries	5,396		5,526
Short-term debt	25		424
Long-term debt	17,673		18,561

Other liabilities	587		810
Total liabilities	27,580		28,611
EQUITY
Preferred Stock ($0.01 par value; 10,000,000 shares authorized; none issued)	0		0
Common Stock ($0.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of December 31, 2021 and December 31, 2020)	6		6

Additional paid-in capital	25,732		25,584
Common Stock held in treasury, at cost (290,018,851 and 269,867,738 shares as of December 31, 2021 and 2020, respectively)	(21,838)		(19,652)
Accumulated other comprehensive income (loss)	21,324		30,738
Retained earnings	36,652		30,749
Total equity	61,876		67,425
TOTAL LIABILITIES AND EQUITY	$	89,456	$	96,036

See Notes to Condensed Financial Information of Registrant

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule II

Condensed Financial Information of Registrant

Condensed Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019

(in millions)


	2021		2020		2019
REVENUES
Net investment income	$	62	$	97	$	203
Realized investment gains (losses), net	90		(262)		(250)
Affiliated interest revenue	358		345		362
Other income (loss)	18		110		21
Total revenues	528		290		336
EXPENSES
General and administrative expenses	166		273		92
Interest expense	1,088		1,157		1,161
Total expenses	1,254		1,430		1,253
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES	(726)		(1,140)		(917)
Total income tax expense (benefit)	(130)		(357)		(223)
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES	(596)		(783)		(694)
Equity in earnings of subsidiaries	8,320		409		4,880
NET INCOME (LOSS)	$	7,724	$	(374)	$	4,186
Other Comprehensive Income (loss)	(9,414)		6,699		13,126
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(1,690)	$	6,325	$	17,312

See Notes to Condensed Financial Information of Registrant

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule II

Condensed Financial Information of Registrant

Condensed Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019

(in millions)


	2021		2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	7,724	$	(374)	$	4,186
Adjustments to reconcile net income to cash provided by operating activities:
Equity in earnings of subsidiaries	(8,320)		(409)		(4,880)
Realized investment (gains) losses, net	(90)		262		250
Dividends received from subsidiaries	3,239		4,042		2,269
Property, plant and equipment	(4)		(1)		0
Change in:
Due to/from subsidiaries, net	(513)		649		669
Other, operating	63		359		(229)
Cash flows from (used in) operating activities	2,099		4,528		2,265
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity of:
Fixed maturities, available-for-sale	969		412		371



Short-term investments	15,718		18,489		21,700
Payments for the purchase of:


Fixed maturities, available for sale	(500)		(298)		(660)
Short-term investments	(13,795)		(20,039)		(20,486)
Capital contributions to subsidiaries	(874)		(386)		(593)
Returns of capital contributions from subsidiaries	430		813		1,013
Acquisition of Assurance IQ	0		0		(1,758)
Loans to subsidiaries, net of maturities	151		(876)		(108)
Other, investing	7		0		0
Cash flows from (used in) investing activities	2,106		(1,885)		(521)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on Common Stock	(1,814)		(1,766)		(1,641)
Common Stock acquired	(2,500)		(500)		(2,500)
Common Stock reissued for exercise of stock options	200		153		133
Proceeds from the issuance of debt (maturities longer than 90 days)	0		2,768		2,465
Repayments of debt (maturities longer than 90 days)	(1,308)		(2,467)		(1,114)
Repayments of loans from subsidiaries	151		(1,023)		(7)
Proceeds from loans payable to subsidiaries	1,411		166		818
Net change in financing arrangements (maturities of 90 days or less)	0		0		9

Other, financing	(156)		(74)		(72)
Cash flows from (used in) financing activities	(4,016)		(2,743)		(1,909)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	189		(100)		(165)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	1,062		1,162		1,327
CASH AND CASH EQUIVALENTS, END OF YEAR	$	1,251	$	1,062	$	1,162

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest	$	1,050	$	1,088	$	1,084
Cash paid (refunds received) during the period for taxes	$	(330)	$	(482)	$	(103)

NON-CASH TRANSACTIONS DURING THE YEAR
Non-cash capital contributions to subsidiaries	$	(3,607)	$	(1)	$	(596)
Non-cash dividends/returns of capital from subsidiaries	$	4,582	$	470	$	1
Treasury Stock shares issued for stock-based compensation programs	$	0	$	0	$	197

Acquisitions:
Assets Acquired	$	0	$	0	$	2,428
Liabilities assumed	0		0		216
Treasury Stock shares issued	0		0		454
Net cash paid on acquisition	$	0	$	0	$	1,758

See Notes to Condensed Financial Information of Registrant

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule II

Condensed Financial Information of Registrant

Notes to Condensed Financial Information of Registrant

1. ORGANIZATION AND PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) was incorporated on December 28, 1999, as a wholly-owned subsidiary of The Prudential Insurance Company of America (“PICA”). On December 18, 2001, PICA converted from a mutual life insurance company to a stock life insurance company and became an indirect, wholly-owned subsidiary of Prudential Financial.

The condensed financial information of Prudential Financial, Inc. (the “Parent Company”) should be read in conjunction with the consolidated financial statements of Prudential Financial, Inc. and its subsidiaries and the notes thereto (the “Consolidated Financial Statements”). The condensed financial statements of Prudential Financial reflect its direct wholly-owned subsidiaries using the equity method of accounting.

In June 2021, Prudential International Insurance Holdings, Ltd. (“PIIH”), a subsidiary of Prudential Financial, completed the sale of The Prudential Life Insurance Company of Taiwan Inc. (“POT”) to Taishin Financial Holding Co, Ltd. (the “Buyer”) for cash consideration of approximately NT5.5 billion, equal to approximately $200 million at then current exchange rates, and contingent consideration with a fair value of approximately $80 million as of December 31, 2021.

In March 2021, Prudential International Insurance Holding, Ltd. (“PIIH”), a subsidiary of Prudential Financial, successfully completed the sale of Pramerica SGR (Italy Investment JV), to UBI Banca for cash consideration of approximately €427 million, equal to approximately $503 million.

In August 2020, Prudential International Insurance Holding, Ltd. (“PIIH”), a subsidiary of Prudential Financial, successfully completed the sale of the Prudential Life Company of Korea, Ltd. (“POK”) to KB Financial Group Inc., for cash consideration of approximately ₩2.3 trillion, equal to approximately $1.9 billion. The Company recognized an approximate $800 million after-tax loss on the transaction in 2020.

In October 2019, the Company completed the acquisition of Assurance IQ, Inc. (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs, for approximately $1,758 million in cash, net of transaction expenses, and restricted Prudential Financial Common Stock and equity awards with a market value of approximately $454 million as of the closing date. Assurance IQ is reported as a wholly-owned subsidiary of Prudential.

2. OTHER INVESTMENTS

Prudential Financial’s other investments as of December 31, 2021 and 2020 consisted primarily of highly liquid debt investments and intercompany enterprise liquidity account funds.

3. DEBT

A summary of Prudential Financial’s short- and long-term debt is as follows:


			December 31,
	Maturity Dates	Rate(1)	2021		2020
			($ in millions)
Short-term debt:
Commercial paper(2)			$	25	$	25
Current portion of long-term debt			0		399
Total short-term debt			$	25	$	424
Long-term debt:
Fixed rate senior notes	2023-2051	1.50%-6.63%	$	10,109	$	11,007

Junior subordinated notes	2042-2060	3.70%-5.88%	7,564		7,554

Total long-term debt			$	17,673	$	18,561

(1)Ranges of interest rates are for the year ended December 31, 2021.

(2)The weighted average interest rate on outstanding commercial paper was 0.12% at both December 31, 2021 and 2020.

Table of Contents

Long-term Debt

In order to manage exposure to interest rate movements, Prudential Financial utilizes derivative instruments, primarily interest rate swaps, in conjunction with some of its debt issues. The impact of these derivative instruments is not reflected in the rates presented in the table above. For those derivatives that qualify for hedge accounting treatment, interest expense was $0.0 million, $0.4 million, and $0.3 million for each of the years ended December 31, 2021, 2020 and 2019, respectively.

Schedule of Long-term Debt Maturities

The following table presents Prudential Financial’s contractual maturities for long-term debt as of December 31, 2021:


	Calendar Year
	2023		2024		2025		2026		2027 and thereafter		Total
	(in millions)
Long-term debt	$	0	$	0	$	0	$	500	$	17,173	$	17,673

4. DIVIDENDS AND RETURNS OF CAPITAL

For the years ended December 31, Prudential Financial received cash dividends and/or returns of capital from the following subsidiaries:


	2021		2020		2019
	(in millions)
Prudential Annuities Holding Company	$	73	$	120	$	163
International Insurance and Investments Holding Companies(1)(2)	838		3,061		1,065
The Prudential Insurance Company of America	1,100		500		600
PGIM Holding Company(2)	540		399		462
Prudential Annuities Life Assurance Corporation	1,057		760		978
Other Holding Companies	62		14		14
Total	$	3,670	$	4,854	$	3,282

(1)2020 includes $1,627 million of net proceeds from the sale of POK that were distributed to PFI.

(2)2021 includes $450 million of net proceeds from the sale of Pramerica SGR (Italy Investment JV) and $198 million of net proceeds from the sale of POT that were distributed to PFI.

5. COMMITMENTS AND GUARANTEES

Prudential Financial has issued a subordinated guarantee covering a subsidiary’s domestic commercial paper program. As of December 31, 2021, there was $395 million outstanding under this commercial paper program.

Prudential Financial has provided guarantees of the payment of principal and interest on intercompany loans between affiliates. As of December 31, 2021, Prudential Financial had issued guarantees of outstanding loans totaling $4.0 billion between international insurance subsidiaries and other affiliates.

In 2013, Prudential Financial entered into a $500 million indemnity and guarantee agreement with Wells Fargo Bank Northwest, N.A. Under this agreement, Prudential Financial guaranteed obligations with respect to an affiliated loan from PICA to an affiliate. The loan proceeds were utilized to construct the Prudential Tower home office in Newark, New Jersey.

Prudential Financial is also subject to other financial guarantees, net worth maintenance agreements and indemnity arrangements, including those made in the normal course of business guaranteeing the performance of, or representations made by, Prudential Financial subsidiaries. Prudential Financial has provided indemnities and guarantees related to acquisitions and dispositions, investments, debt issuances and other transactions, including those provided as part of its ongoing operations that are triggered by, among other things, breaches of representations, warranties or covenants provided by Prudential Financial or its subsidiaries. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, it is not possible to determine the maximum potential amount due under these guarantees. At December 31, 2021, Prudential Financial has no accrued liabilities associated with other financial guarantees or indemnity arrangements.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule III

Supplementary Insurance Information

As of and for the Year Ended December 31, 2021

(in millions)


Segment	Deferred Policy Acquisition Costs		Future Policy Benefits, Losses, Claims Expenses		Unearned Premiums		Other Policy Claims and Benefits Payable		Premiums, Policy Charges and Fee Income		Net Investment Income		Benefits, Claims, Losses and Settlement Expenses		Amortization of DAC		Other Operating Expenses
PGIM	$	0	$	0	$	0	$	0	$	0	$	157	$	0	$	6	$	2,772
U.S Businesses:
Retirement	43		70,105		0		16,601		10,830		3,946		12,899		14		219
Group Insurance	146		5,532		254		6,306		5,580		513		5,654		5		1,013
Individual Annuities(1)	3,627		11,040		0		7,028		2,489		929		561		600		1,811
Individual Life	6,898		21,508		0		30,056		3,255		2,533		3,863		352		1,979
Assurance IQ	0		0		0		0		0		2		0		0		1,799
Total U.S. Businesses	10,714		108,185		254		59,991		22,154		7,923		22,977		971		6,821
International Businesses	7,658		127,574		87		49,545		15,980		5,400		15,014		1,149		2,725
Corporate and Other(2)	(368)		9,087		1		8,448		848		2,307		1,348		(50)		2,013
Total PFI excluding Closed Block division	18,004		244,846		342		117,984		38,982		15,787		39,339		2,076		14,331
Closed Block division	188		45,596		0		13,380		1,789		2,500		5,475		21		311
Total	$	18,192	$	290,442	$	342	$	131,364	$	40,771	$	18,287	$	44,814	$	2,097	$	14,642

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule III

Supplementary Insurance Information

As of and for the Year Ended December 31, 2020

(in millions)


Segment	Deferred Policy Acquisition Costs		Future Policy Benefits, Losses, Claims Expenses		Unearned Premiums		Other Policy Claims and Benefits Payable		Premiums, Policy Charges and Fee Income		Net Investment Income		Benefits, Claims, Losses and Settlement Expenses		Amortization of DAC		Other Operating Expenses
PGIM	$	0	$	0	$	0	$	0	$	0	$	304	$	0	$	8	$	2,637
U.S Businesses:
Retirement(3)	39		68,764		0		18,806		6,297		3,470		8,429		8		228
Group Insurance	149		5,176		246		7,470		5,171		516		4,870		8		924
Individual Annuities	4,689		21,325		0		12,383		2,399		898		664		481		1,771
Individual Life	6,196		21,062		0		29,099		3,347		2,279		4,261		406		2,259
Assurance IQ	0		0		0		0		0		2		0		0		533
Total U.S. Businesses	11,073		116,327		246		67,758		17,214		7,165		18,224		903		5,715
International Businesses	7,668		128,682		94		51,476		16,155		4,973		14,676		1,239		2,809
Corporate and Other(3)	77		14,231		1		37,677		1,818		2,728		3,889		45		2,421
Total PFI excluding Closed Block division	18,818		259,240		341		156,911		35,187		15,170		36,789		2,195		13,582
Closed Block division	209		46,762		0		14,295		1,982		2,240		4,433		26		331
Total	$	19,027	$	306,002	$	341	$	171,206	$	37,169	$	17,410	$	41,222	$	2,221	$	13,913

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule III

Supplementary Insurance Information

As of and for the Year Ended December 31, 2019

(in millions)


Segment	Deferred Policy Acquisition Costs		Future Policy Benefits, Losses, Claims Expenses		Unearned Premiums		Other Policy Claims and Benefits Payable		Premiums, Policy Charges and Fee Income		Net Investment Income		Benefits, Claims, Losses and Settlement Expenses		Amortization of DAC		Other Operating Expenses
PGIM	$	0	$	0	$	0	$	0	$	0	$	200	$	0	$	6	$	2,520
U.S. Businesses:
Retirement(3)	35		67,693		0		15,842		9,256		3,385		11,481		19		259
Group Insurance	156		4,865		242		8,587		5,024		623		4,544		7		915
Individual Annuities	4,973		15,151		0		9,529		2,748		854		680		321		1,869
Individual Life	5,836		17,417		0		28,146		3,083		2,268		3,678		699		2,080
Assurance IQ	0		0		0		0		0		0		0		0		151
Total U.S. Businesses	11,000		105,126		242		62,104		20,111		7,130		20,383		1,046		5,274
International Businesses(4)	7,442		117,298		86		49,599		15,604		4,916		14,122		1,144		2,861
Corporate and Other(3)(4)	1,235		23,161		0		35,556		2,258		3,016		4,246		107		2,408
Total PFI excluding Closed Block division	19,677		245,585		328		147,259		37,973		15,262		38,751		2,303		13,063
Closed Block division	235		47,614		0		11,839		2,207		2,323		5,223		29		353
Total	$	19,912	$	293,199	$	328	$	159,098	$	40,180	$	17,585	$	43,974	$	2,332	$	13,416

(1)Includes reclassification of “Assets held-for sale” for Deferred Policy Acquisition Costs of $(1,097) million and “Liabilities held-for-sale” for Future Policy Benefits, Losses, Claims, Expenses of $(4,505) million, and Other Policy Claims and Benefits Payable of $(11,750) million. See Note 1 for details of the assets and liabilities classified as “held-for-sale” as of December 31, 2021.

(2)Includes reclassification of “Assets held-for sale” for Deferred Policy Acquisition Costs of $(100) million and “Liabilities held-for-sale” for Future Policy Benefits, Losses, Claims, Expenses of $(157) million, and Other Policy Claims and Benefits Payable of $(28,164) million. See Note 1 for details of the assets and liabilities classified as “held-for-sale” as of December 31, 2021.

(3)Effective third quarter of 2021, the company is reporting the assets and liabilities of the Full Service Retirement business as "held-for-sale" and has transferred the results of this business to divested and Run-off Businesses within Corporate and Other operations. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(4)Effective second quarter of 2020, the carrying amount of assets of POK are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the carrying amount of assets of POT are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

Table of Contents

PRUDENTIAL FINANCIAL, INC.

Schedule IV

Reinsurance

As of and For the Years Ended December 31, 2021, 2020 and 2019

($ in millions)


	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
2021
Life Insurance Face Amount In Force	$	4,067,801	$	835,774	$	177,089	$	3,409,116	5.2	%
Premiums:
Life Insurance	$	28,637	$	2,289	$	5,581	$	31,929	17.5	%
Accident and Health Insurance	2,986		88		0		2,898		0.0
Total Premiums	$	31,623	$	2,377	$	5,581	$	34,827	16.0	%
2020
Life Insurance Face Amount In Force	$	4,015,943	$	887,028	$	180,343	$	3,309,258	5.4	%
Premiums:
Life Insurance	$	26,197	$	2,199	$	4,336	$	28,334	15.3	%
Accident and Health Insurance	2,894		88		0		2,806		0.0
Total Premiums	$	29,091	$	2,287	$	4,336	$	31,140	13.9	%
2019
Life Insurance Face Amount In Force	$	4,123,019	$	862,460	$	188,576	$	3,449,135	5.5	%
Premiums:
Life Insurance	$	30,333	$	1,990	$	3,022	$	31,365	9.6	%
Accident and Health Insurance	2,927		90		0		2,837		0.0
Total Premiums	$	33,260	$	2,080	$	3,022	$	34,202	8.8	%

Table of Contents

Previous: Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES · Next: Item 16. FORM 10-K SUMMARY