At December 31, 2012, gross unrealized losses on general account fixed maturity investments of the Financial Services Businesses amounted to $2.146 billion, including $1.693 billion on high and highest quality securities based on NAIC or equivalent ratings. Gross unrealized losses include $390 million related to asset-backed securities collateralized by sub-prime mortgages. Gross unrealized losses on general account fixed maturity investments of the Financial Services Businesses at December 31, 2012 include $749 million of declines in value of 20% or more of amortized cost. Gross unrealized losses on general account fixed maturity investments of the Financial Services Businesses amounted to $4.256 billion at December 31, 2011. Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses amounted to $18.606 billion at December 31, 2012, compared to $10.493 billion at December 31, 2011.
The net loss for the current quarter reflects pre-tax increases of $108 million in recorded asset values and $94 million in recorded liabilities representing changes in value which are expected to ultimately accrue to contractholders. These changes primarily represent interest rate related mark-to-market adjustments. The net loss for the current quarter also reflects pre-tax income of $60 million from divested businesses, primarily from reserve refinements related to long term care insurance.
Net income of the Financial Services Businesses for the year-ago quarter included $596 million of pre-tax net realized investment losses and related charges and adjustments, and increases of $53 million in recorded assets and $47 million in recorded liabilities for which changes in value are expected to ultimately accrue to contractholders, in each case before income taxes. Net income for the year-ago quarter also included $52 million of pre-tax income from divested businesses.
Closed Block BusinessPrudential’s Class B Stock, which is not traded on any exchange, reflects the performance of its Closed Block Business.
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