Prudential (PRU) Details Lehman, AIG Exposures
In a Form 8-K, Prudential Financial (NYSE: PRU) disclosed its exposure to Lehman (NYSE: LEH) and AIG (NYSE: AIG), saying it expects to record an other-than-temporary impairment for the quarter ending September 16, 2008.
Lehman:
Amortized cost of the securities as of September 16, 2008 was approximately $99 million for the Financial Services Businesses and approximately $18 million for the Closed Block Business. Fair value at that date was approximately 34% of amortized cost for the Financial Services Businesses and approximately 32% of amortized cost for the Closed Block Business.
The Company’s Financial Services Businesses also have investments with a fair value as of September 16, 2008 of $8 million in debt securities issued by Lehman Brothers or its affiliates. The Company estimates these securities have declined in fair value by approximately $16 million during the quarter ending September 30, 2008, from June 30, 2008 through September 16, 2008, based on fair values as of that date.
The Company estimates that as of September 16, 2008 the Financial Services Businesses had approximately $90 million of additional unsecured counterparty exposure to affiliates of Lehman Brothers in connection with derivatives transactions.
AIG:
As of September 16, 2008, securities issued by AIG or its affiliates included in fixed maturities available for sale amounted to $126 million for the Financial Services Businesses and $69 million for the Closed Block Business based on amortized cost. Fair value at that date was approximately 44% of amortized cost for the Financial Services Businesses and approximately 41% of amortized cost for the Closed Block Business.
The Company’s Financial Services Businesses also have investments with a fair value as of September 16, 2008 of $9 million in debt securities issued by AIG or its affiliates. The Company estimates these securities have declined in fair value by approximately $7 million during the quarter ending September 30, 2008, from June 30, 2008 through September 16, 2008, based on fair values as of that date.
Prudential Financial, Inc., through its subsidiaries, provides various financial products and services principally in the United States, Asia, Europe, and Latin America.
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