At June 30, 2013, gross unrealized losses on general account fixed maturity investments of the Financial Services Businesses amounted to $4.446 billion, including $4.154 billion on high and highest quality securities based on NAIC or equivalent ratings. Gross unrealized losses include $207 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 amounted to $2.146 billion at December 31, 2012. Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses amounted to $15.993 billion at June 30, 2013, compared to $18.606 billion at December 31, 2012.
The net loss for the current quarter reflects pre-tax decreases of $471 million in recorded asset values and $471 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 a pre-tax loss of $84 million from divested businesses, primarily relating to long term care insurance and largely driven by changes in market value of derivatives used in investment duration management for this business.
Net income of the Financial Services Businesses for the year-ago quarter included $2.030 billion of pre-tax net realized investment gains and related charges and adjustments, primarily driven by net changes in value relating to foreign currency exchange rates, and pre-tax increases of $4 million in recorded assets and pre-tax decreases of $54 million in recorded liabilities representing changes in value which are expected to ultimately accrue to contractholders.
Closed Block BusinessPrudential’s Class B Stock, which is not traded on any exchange, reflects the performance of its Closed Block Business. The Closed Block Business includes our in-force participating life insurance and annuity policies, and assets that are being used for the payment of benefits and policyholder dividends on these policies, as well as other assets and equity that support these policies. We have ceased offering these participating policies.
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