The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements, cash collateral, and NPR.



	June 30, 2019							December 31, 2018
Primary Underlying Risk/Instrument Type			Fair Value							Fair Value
Primary Underlying Risk/Instrument Type	Gross Notional		Assets		Liabilities			Gross Notional		Assets		Liabilities
	(in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Currency/Interest Rate
Foreign Currency Swaps	$	751,074	$	43,962	$	(15,484	)	$	719,476	$	38,333	$	(16,638	)
Total Derivatives Designated as Hedge Accounting Instruments	$	751,074	$	43,962	$	(15,484	)	$	719,476	$	38,333	$	(16,638	)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	596,925	$	31,580	$	(4,511	)	$	246,925	$	15,665	$	(3,174	)
Foreign Currency
Foreign Currency Forwards	27,935		262		(100		)	23,043		277		(20		)
Credit
Credit Default Swaps	0		0		0			756		0		(9		)
Currency/Interest Rate
Foreign Currency Swaps	128,088		7,836		(1,244		)	98,363		6,303		(2,109		)
Equity
Equity Options	2,306,848		98,700		(32,489		)	1,981,693		17,312		(4,912		)
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	3,059,796	$	138,378	$	(38,344	)	$	2,350,780	$	39,557	$	(10,224	)
Total Derivatives(1)(2)	$	3,810,870	$	182,340	$	(53,828	)	$	3,070,256	$	77,890	$	(26,862	)

The fair value of the embedded derivatives, included in "Future policy benefits," was a net liability of $8,477 million and $5,589 million as of June 30, 2019 and December 31, 2018, respectively. The fair value of the related reinsurance recoverables, included in "Reinsurance recoverables" or "Other liabilities," was a net asset of $8,486 million and $5,600 million as of June 30, 2019 and December 31, 2018, respectively. Of these reinsurance recoverables, the fair value related to the living benefits guarantee from Prudential Annuities Life Assurance Corporation ("PALAC") and Prudential Insurance was a net asset of $8,398 million and $5,585 million and the fair value related to the Prudential Premier® Retirement Variable Annuity with Highest Daily Lifetime Income ("HDI") v.3.0 from Union Hamilton Reinsurance, Ltd. ("Union Hamilton"), an external counterparty, was a net asset of $88 million and $15 million as of June 30, 2019 and December 31, 2018, respectively. See Note 6 for additional information on these reinsurance agreements.

The fair value of the embedded derivatives, included in "Policyholders' account balances," was a net liability of $787 million and $13 million as of June 30, 2019 and December 31, 2018, respectively. There were no related reinsurance recoverables at each respective period.

The following table presents recognized derivative instruments (excluding embedded derivatives and associated reinsurance recoverables), and repurchase and reverse repurchase agreements that are offset in the Unaudited Interim Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Unaudited Interim Consolidated Statements of Financial Position.



	June 30, 2019
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts Presented in the Consolidated Statements of Financial Position		Financial Instruments/ Collateral (1)			Net Amount
	(in thousands)
Offsetting of Financial Assets:
Derivatives(1)	$	182,336	$	(163,984	)	$	18,352	$	(18,352	)	$	0
Securities purchased under agreements to resell	16,000		0			16,000		(16,000		)	0
Total Assets	$	198,336	$	(163,984	)	$	34,352	$	(34,352	)	$	0
Offsetting of Financial Liabilities:
Derivatives(1)	$	53,828	$	(53,828	)	$	0	$	0		$	0
Securities sold under agreements to repurchase	0		0			0		0			0
Total Liabilities	$	53,828	$	(53,828	)	$	0	$	0		$	0



	December 31, 2018
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts Presented in the Consolidated Statements of Financial Position		Financial Instruments/ Collateral (1)			Net Amount
	(in thousands)
Offsetting of Financial Assets:
Derivatives(1)	$	77,887	$	(27,078	)	$	50,809	$	(7,307	)	$	43,502
Securities purchased under agreements to resell	143,000		0			143,000		(143,000		)	0
Total Assets	$	220,887	$	(27,078	)	$	193,809	$	(150,307	)	$	43,502
Offsetting of Financial Liabilities:
Derivatives(1)	$	26,862	$	(26,862	)	$	0	$	0		$	0
Securities sold under agreements to repurchase	0		0			0		0			0
Total Liabilities	$	26,862	$	(26,862	)	$	0	$	0		$	0

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above see “Credit Risk” below and Note 9. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information on the Company’s accounting policy for securities repurchase and resale agreements, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The primary derivative instruments used by the Company in its cash flow hedge accounting relationships are currency swaps. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, equity or embedded derivatives in any of its cash flow hedge accounting relationships.



	Three Months Ended June 30, 2019
	Realized Investment Gains (Losses)			Net Investment Income		Other Income		AOCI(1)
	(in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	(88	)	$	2,211	$	1,482	$	13,316
Total cash flow hedges	(88		)	2,211		1,482		13,316
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,682			0		0		0
Currency	343			0		0		0
Currency/Interest Rate	1,673			0		4		0
Credit	0			0		0		0
Equity	12,666			0		0		0
Embedded Derivatives	(72,122		)	0		0		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	(49,758		)	0		4		0
Total	$	(49,846	)	$	2,211	$	1,486	$	13,316



	Six Months Ended June 30, 2019
	Realized Investment Gains (Losses)			Net Investment Income		Other Income			AOCI(1)
	(in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	(248	)	$	4,280	$	(34	)	$	6,662
Total cash flow hedges	(248		)	4,280		(34		)	6,662
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	15,297			0		0			0
Currency	323			0		0			0
Currency/Interest Rate	3,103			0		5			0
Credit	(1		)	0		0			0
Equity	41,529			0		0			0
Embedded Derivatives	(154,326		)	0		0			0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	(94,075		)	0		5			0
Total	$	(94,323	)	$	4,280	$	(29	)	$	6,662



	Three Months Ended June 30, 2018(2)
	Realized Investment Gains (Losses)			Net Investment Income		Other Income		AOCI(1)
	(in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	83		$	1,611	$	5,710	$	31,519
Total cash flow hedges	83			1,611		5,710		31,519
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(3,126		)	0		0		0
Currency	1,221			0		0		0
Currency/Interest Rate	4,844			0		38		0
Credit	0			0		0		0
Equity	7,581			0		0		0
Embedded Derivatives	(44,051		)	0		0		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	(33,531		)	0		38		0
Total	$	(33,448	)	$	1,611	$	5,748	$	31,519



	Six Months Ended June 30, 2018(2)
	Realized Investment Gains (Losses)			Net Investment Income		Other Income		AOCI(1)
	(in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	(433	)	$	3,149	$	5,046	$	8,657
Total cash flow hedges	(433		)	3,149		5,046		8,657
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(12,526		)	0		0		0
Currency	665			0		0		0
Currency/Interest Rate	1,509			0		15		0
Credit	(2		)	0		0		0
Equity	2,824			0		0		0
Embedded Derivatives	(74,678		)	0		0		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	(82,208		)	0		15		0
Total	$	(82,641	)	$	3,149	$	5,061	$	8,657



	(in thousands)
Balance, December 31, 2018	$	22,122
Cumulative-effect adjustment from the adoption of ASU 2017-12(1)	(27		)
Amount recorded in AOCI
Currency/Interest Rate	10,661
Total amount recorded in AOCI	10,661
Amount reclassified from AOCI to income
Currency/Interest Rate	(3,999		)
Total amount reclassified from AOCI to income	(3,999		)
Balance, June 30, 2019	$	28,757

The changes in fair value of cash flow hedges are deferred in AOCI and are included in "Net unrealized investment gains (losses)" in the Unaudited Interim Consolidated Statements of Operations and Comprehensive Income (Loss); these amounts are then reclassified to earnings when the hedged item affects earnings. Using June 30, 2019 values, it is estimated that a pre-tax gain of $8 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending June 30, 2020, offset by amounts pertaining to the hedged items.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging.

The Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio. The Company has outstanding notional amounts of $0.0 million and $1 million reported as of June 30, 2019 and December 31, 2018, respectively with a fair value of $0.0 million for both periods.

The Company is exposed to credit-related losses in the event of non-performance by counterparty to financial derivative transactions with a positive fair value. The Company manages credit risk by entering into derivative transactions with its affiliate, Prudential Global Funding LLC (“PGF”), related to its over-the-counter ("OTC") derivatives. PGF, in turn, manages its credit risk by: (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreement, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single-party credit exposures which are subject to periodic management review.