Closed Block

3 Months Ended

Mar. 31, 2024

CLOSED BLOCK

On December 18, 2001, the date of demutualization, The Prudential Insurance Company of America (“PICA”) established a closed block for certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders’ dividends on these products, (collectively the “Closed Block”), and ceased offering these participating products. The recorded assets and liabilities were allocated to the Closed Block at their historical carrying amounts. The Closed Block forms the principal component of the Closed Block division. For additional information regarding the Closed Block, see Note 16 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

As of March 31, 2024 and December 31, 2023, the Company recognized a policyholder dividend obligation of $2,807 million and $2,873 million, respectively, to Closed Block policyholders for the excess of actual cumulative earnings over expected cumulative earnings. Additionally, accumulated net unrealized investment gains (losses) were reflected as a policyholder dividend obligation of $(2,399) million and $(2,081) million at March 31, 2024 and December 31, 2023, respectively, with a corresponding amount reported in AOCI.

As of March 31, 2024, the Closed Block has sufficient funds to make guaranteed policy benefit payments and there is no expectation that assets outside of the Closed Block will be needed to fund future payments. The excess of Closed Block liabilities over Closed Block assets as of the end of the reporting period shown in the table below is a reasonable measure of the margin in the reported liabilities compared to best estimate liabilities assuming the current dividend scale. Closed Block liabilities and assets designated to the Closed Block, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:


	March 31, 2024		December 31, 2023
	(in millions)
Closed Block liabilities
Future policy benefits	$	43,244	$	43,587
Policyholders’ dividends payable	663		648
Policyholders’ dividend obligation	408		792
Policyholders’ account balances	4,464		4,500
Other Closed Block liabilities	3,902		3,605
Total Closed Block liabilities	52,681		53,132
Closed Block assets
Fixed maturities, available-for-sale, at fair value	29,909		30,314
Fixed maturities, trading, at fair value	849		887
Equity securities, at fair value	1,818		1,970
Commercial mortgage and other loans	7,681		7,769
Policy loans	3,441		3,479
Other invested assets	4,432		4,513
Short-term investments	743		232
Total investments	48,873		49,164
Cash and cash equivalents	801		993
Accrued investment income	435		421
Other Closed Block assets	172		138
Total Closed Block assets	50,281		50,716
Excess of reported Closed Block liabilities over Closed Block assets	2,400		2,416
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	(2,562)		(2,241)
Allocated to policyholder dividend obligation	2,399		2,081
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,237	$	2,256

Information regarding the policyholder dividend obligation is as follows:


	Three Months Ended March 31, 2024
	(in millions)
Balance, December 31, 2023	$	792

Impact from earnings allocable to policyholder dividend obligation	(66)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	(318)
Balance, March 31, 2024	$	408

Closed Block revenues and benefits and expenses are as follows for the periods indicated:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Revenues
Premiums		$	409	$	406
Net investment income		513		479
Realized investment gains (losses), net		(125)		(17)
Other income (loss)		164		100
Total Closed Block revenues		961		968
Benefits and Expenses
Policyholders’ benefits		584		572
Interest credited to policyholders’ account balances		30		30
Dividends to policyholders		275		302
General and administrative expenses		67		73
Total Closed Block benefits and expenses		956		977
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes		5		(9)
Income tax expense (benefit)		(15)		(32)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes		$	20	$	23