Related Party

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

13. RELATED PARTY TRANSACTIONS

The Company is a party to numerous transactions and relationships with its affiliate Prudential Insurance and other affiliates. It is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties.

Expense Charges and Allocations

Many of the Company's expenses are allocations or charges from Prudential Insurance or other affiliates.

The Company's general and administrative expenses are charged to the Company using allocation methodologies based on business processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space are provided by Prudential Insurance. General and administrative expenses also include allocations of stock compensation expenses related to a stock option program and a deferred compensation program sponsored by Prudential Financial.

The Company is charged for its share of employee benefits expenses. These expenses include costs for funded and non-funded contributory and non-contributory defined benefit pension plans. Some of these benefits are based on earnings and length of service. Other benefits are based on an account balance, which takes into consideration age, service and earnings during career. The Company's share of net expense for the pension plans was $3 million, $3 million and $4 millionfor the years endedDecember 31, 2012, 2011 and 2010, respectively.

Prudential Insurance sponsors voluntary savings plans for the Company's employees (“401(k) plans”). The 401(k) plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The expense charged to the Company for the matching contribution to the 401(k) plans was $1 million, $1 million and $2 millionfor the years ended December 31, 2012, 2011 and 2010, respectively.

Affiliated Asset Administration Fee Income

In accordance with an agreement with AST Investment Services, Inc., formerly known as American Skandia Investment Services, Inc, the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust, formerly known as American Skandia Trust. Income received from AST Investment Services, Inc. related to this agreement was $226 million, $243 million and $238 million for the years ended December 31, 2012, 2011 and 2010 respectively. These revenues are recorded as “Asset administration fees and other income” in the Statements of Operations and Comprehensive Income.

Affiliated Investment Management Expenses

In accordance with an agreement with Prudential Investment Management, Inc. (“PIMI”), the Company pays investment management expenses to PIMI who acts as investment manager to certain Company general account and separate account assets. Investment management expenses paid to PIMI related to this agreement was $8 million, $9 million and $8 million for the years ended December 31, 2012, 2011 and 2010, respectively. These expenses are recorded as “Net Investment Income” in the Statements of Operations and Comprehensive Income.

Cost Allocation Agreements with Affiliates

Certain operating costs (including rental of office space, furniture, and equipment) have been charged to the Company at cost by Prudential Annuities Information Services and Technology Corporation (“PAIST”), formerly known as American Skandia Information Services and Technology Corporation, an affiliated company. PALAC signed a written service agreement with PAIST for these services executed and approved by the Connecticut Insurance Department in 1995. This agreement automatically continues in effect from year to year and may be terminated by either party upon 30 days written notice.

Allocated lease expense were $4 million for the years ended December 31, 2012, 2011 and 2010. Allocated sub-lease rental income, recorded as a reduction to lease expense was $4 million, $2 million and $4 million, for the years ended December 31, 2012, 2011 and 2010, respectively. Assuming that the written service agreement between PALAC and PAIST continues indefinitely, PALAC's allocated future minimum lease payments and sub-lease receipts per year and in aggregate as of December 31, 2012 are as follows (in thousands):

	Lease	Sub-Lease
2013	$5,974	$1,827
2014	4,938	907
2015	3,894	-
2016	3,790	-
2017	3,716	-
2018 and thereafter	7,122	-
Total	$29,434	$2,734

The Company pays commissions and certain other fees to PAD in consideration for PAD's marketing and underwriting of the Company's products. Commissions and fees are paid by PAD to unaffiliated broker-dealers who sold and service the Company's products. Commissions and fees paid by the Company to PAD were $186 million, $185 million and $409 million during the years ended December 31, 2012, 2011 and 2010, respectively.

Reinsurance Agreements

The Company uses reinsurance as part of its risk management and capital management strategies for certain of its optional living benefit features.

The following table provides information relating to fees ceded under these agreements which are included in “Realized investment gains (losses), net” on the Statement of Operations and Comprehensive Income for the dates indicated:

			Years Ended
				December 31,			December 31,			December 31,
						2012			2011			2010
Pruco Reinsurance
	Effective August 24, 2009
		Highest Daily Lifetime 6 Plus ("HD6 Plus")		$	50,313		$	47,021		$	31,412
		Spousal Highest Daily Lifetime 6 Plus ("SHD6")			21,834			20,137			13,216
	Effective June 30, 2009
		Highest Daily Lifetime 7 Plus ("HD7 Plus")			53,375			50,262			44,530
		Spousal Highest Daily Lifetime 7 Plus ("SHD7 Plus")			28,225			26,354			22,968
	Effective March 17, 2008
		Highest Daily Lifetime 7 ("HD7")			29,968			29,274			28,271
		Spousal Highest Daily Lifetime 7 ("SHD7")			9,185			8,955			8,667
		Guaranteed Return Option Plus ("GRO Plus" & "GRO Plus II") (1)			8,552			8,757			3,829
		Highest Daily Guaranteed Return Option ("HD GRO") (1)			3,311			3,430			3,676
		Highest Daily Guaranteed Return Option ("HD GRO II") (1)			3,365			3,287			1,718
	Effective Since 2006
		Highest Daily Lifetime Five ("HDLT5")			13,208			13,938			14,356
		Spousal Lifetime Five ("SLT5")			10,611			10,998			10,747
	Effective Since 2005
		Lifetime Five ("LT5") (2)			34,607			36,290			35,848
		Guaranteed Return Option ("GRO")			2,149			3,873			5,750
Total Fees Ceded to Pruco Reinsurance				$	268,703		$	262,576		$	224,988
Prudential Insurance
	Effective Since 2004
		Guaranteed Minimum Withdrawal Benefit ("GMWB")			1,433			1,895			2,232
Total Fees Ceded to Prudential Insurance				$	1,433		$	1,895		$	2,232
Total Fees Ceded				$	270,136		$	264,471		$	227,220

• GRO Plus and HD GRO were amended effective January 1, 2010 to include an amended version of the GRO Plus and HD GRO benefit features (GRO Plus II and HD GRO II).
• Effective August 1, 2007, the Company amended this coinsurance agreement to include the reinsurance of business sold prior to May 6, 2005 that was previously reinsured to Prudential Insurance.

The Company's reinsurance recoverables related to the above product reinsurance agreements were $1,733 million and $1,748 millionasof December 31, 2012 and 2011, respectively. The assets are reflected in “Reinsurance recoverables” in the Company's Statements of Financial Position.Realized gains (losses) were ($286) million, $1,297 million and ($81) million for the years ended December 31, 2012, 2011 and 2010, respectively. Changes in realized gains (losses) for the year ended December 31, 2012, 2011 and 2010 periods were primarily due to changes in market conditions in each respective period.

Debt Agreements

Short-term and Long-term Debt

The Company is authorized to borrow funds up to $2 billion from Prudential Financial and its affiliates to meet its capital and other funding needs. The Company had $0 million and $28 million of short-term debt outstanding with Prudential Funding, LLC as of December 31, 2012 and December 31, 2011. Total interest expense on short-term affiliated debt to the Company was $341 thousand, $263 thousand and $438 thousand for the years endedDecember 31, 2012, 2011 and 2010, respectively.

The Company had long-term debt of $400 million and $600million outstanding with Prudential Financial as of December 31, 2012 and December 31, 2011, respectively. This loan has a fixed interest rate of 4.49% and matures on December 29, 2014. In December 2012, a $200 million partial pay down was made on this outstanding debt.The Company paid off a $175 million loan from Prudential Financial with an interest rate of 5.18% on December 14, 2011. Total interest expense on affiliated long-term debt was $27 million, $36 million and $36 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Derivative Trades

In its ordinary course of business, the Company enters into OTC derivative contracts with an affiliate, PGF. For these OTC derivative contracts, PGF has a substantially equal and offsetting position with an external counterparty.

Purchase/sale of fixed maturities and commercial mortgage loans from/to an affiliate

During 2011, the Company sold fixed maturity securities to affiliated companies in various transactions. These securities had an amortized cost of $143 million and a fair value of $151 million. The net difference between historic amortized cost and the fair value was $8 million and was recorded as a realized investment gain on the Company's Statement of Operations and Comprehensive Income.The Company also sold commercial mortgage loans to an affiliated company. These loans had an amortized cost of $49 million and a fair value of $54 million. The net difference between historic amortized cost and the fair value was $5 million and was recorded as a realized gain on the Company's Statement of Operations and Comprehensive Income.

During2012, the Company sold fixed maturity securities to Prudential Financial. These securities had an amortized cost of $123million and a fair value of $141 million. The net difference between historic amortized cost and the fair value was accounted for as an increase of$11 million toadditional paid-in capital, net of taxes. The Company also sold fixed maturity securities to an affiliated company. These securities had an amortized cost of $27 million and a fair value of $28 million. The net difference between historic amortized cost and the fair value was $1 million and was recorded as a realized investment gain on the Company's Statement of Operations and Comprehensive Income.The Company also sold commercial mortgage loans to an affiliated company. These loans had an amortized cost of $27 million and a fair value of $28 million. The net difference between historic amortized cost and the fair value was $1 million and was recorded as a realized investment gain on the Company's Statement of Operations and Comprehensive Income.