XML 92 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Statutory Net Income and Surplus and Dividend Restrictions (text)
12 Months Ended
Dec. 31, 2012
StatutoryDisclosure[Abstract]  
StatutoryDisclosureTextBlock

8.       STATUTORY NET INCOME AND SURPLUS AND DIVIDEND RESTRICTIONS

The Company is required to prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the State of Connecticut Insurance Department. Prescribed statutory accounting practices include publications of the NAIC, as well as state laws, regulations and general administrative rules. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes and certain assets on a different basis.


Statutory net income of the Company amounted to
$217 million, $177 million and $348 million, for the years ended December 31, 2012, 2011 and 2010, respectively. Statutory surplus of the Company amounted to $448 million and $672 million at December 31, 2012 and 2011, respectively.

 

Without prior approval of its domiciliary commissioner, dividends to shareholders are limited by the laws of the Company's state of incorporation, Connecticut. The State of Connecticut restricts dividend payments to the greater of 10% of the prior year's surplus or net gain from operations from the prior year. Net gain from operations is defined as income after taxes but prior to realized capital gains, as reported on the Summary of Operations. Dividends may only be paid out of unassigned surplus, adjusted for a portion of cumulative unrealized capital gains. There is a capacity to pay a dividend of $41 million after December 11, 2013, without prior approval.

On December 11, 2012 and June 29, 2012, the Company paid extra-ordinary dividends of $160 million and $248 million, respectively, to our ultimate parent, Prudential Financial. On November 29, 2011 and June 30, 2011, the Company paid an ordinary dividend of $318 million and an extra-ordinary dividend of $270 million, respectively, to Prudential Financial.