$43.3 million in 2011 compared to $34.1 million in 2010.
The Retail segment represented 13% and 15% of the Company’s total net sales in 2011 and 2010, respectively.
The Retail segment’s operating income was $4.7 billion, $3.2 billion, and $2.3 billion during 2012, 2011, and 2010 respectively.
These year-over-year increases in Retail operating income were primarily attributable to higher overall net sales that resulted in significantly higher average revenue per store during the respective years.
Gross Margin Gross margin for 2012, 2011 and 2010 are as follows (in millions, except gross margin percentages):
## Table 0 ##
The gross margin percentage in 2012 was 43.9%, compared to 40.5% in 2011.
This year-over-year increase in gross margin was largely driven by lower commodity and other product costs, a higher mix of iPhone sales, and improved leverage on fixed costs from higher net sales.
The increase in gross margin was partially offset by the impact of a stronger U. S.  dollar.
The gross margin percentage during the first half of 2012 was 45.9% compared to 41.4% during the second half of 2012.
The primary drivers of higher gross margin in the first half of 2012 compared to the second half are a higher mix of iPhone sales and improved leverage on fixed costs from higher net sales.
Additionally, gross margin in the second half of 2012 was also affected by the introduction of new products with flat pricing that have higher cost structures and deliver greater value to customers, price reductions on certain existing products, higher transition costs associated with product launches, and continued strengthening of the U. S.  dollar; partially offset by lower commodity costs.
The gross margin percentage in 2011 was 40.5%, compared to 39.4% in 2010.
This year-over-year increase in gross margin was largely driven by lower commodity and other product costs.
The Company expects to experience decreases in its gross margin percentage in future periods, as compared to levels achieved during 2012, and the Company anticipates gross margin of about 36% during the first quarter of 2013.
Expected future declines in gross margin are largely due to a higher mix of new and innovative products with flat or reduced pricing that have higher cost structures and deliver greater value to customers and anticipated component cost and other cost increases.
Future strengthening of the U. S.  dollar could further negatively impact gross margin.
The foregoing statements regarding the Company’s expected gross margin percentage in future periods, including the first quarter of 2013, are forward-looking and could differ from actual results because of several factors including, but not limited to those set forth above in Part I, Item 1A of this Form 10-K under the heading “Risk Factors” and those described in this paragraph.
In general, gross margins and margins on individual products will remain under downward pressure due to a variety of factors, including continued industry wide global product pricing pressures, increased competition, compressed product life cycles, product transitions and potential increases in the cost of components, as well as potential increases in the costs of outside manufacturing services and a potential shift in the Company’s sales mix towards products with lower gross margins.
In response to competitive pressures, the Company expects it will continue to take product pricing actions, which would adversely affect gross margins.
Gross margins could also be affected by the Company’s ability to manage product quality and warranty costs effectively and to stimulate demand for certain of its products.
Due to the Company’s significant international operations, financial results can be significantly affected in the short-term by fluctuations in exchange rates.
PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements The Company’s liability for future policy benefits is also inclusive of liabilities for guaranteed benefits related to certain long-duration life and annuity contracts.
Liabilities for guaranteed benefits with embedded derivative features are primarily in “other contract liabilities” in the table above.
The remaining liabilities for guaranteed benefits are primarily reflected with the underlying contract.
See Note 11 for additional information regarding liabilities for guaranteed benefits related to certain long-duration life and annuity contracts.
Premium deficiency reserves included in “Future policy benefits” are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses.
Premium deficiency reserves have been recorded for the group single premium annuity business, which consists of limited-payment, long-duration traditional, non-participating annuities; structured settlements; single premium immediate annuities with life contingencies; long-term care; and for certain individual health policies.
Unpaid claims and claim adjustment expenses primarily reflect the Company’s estimate of future disability claim payments and expenses as well as estimates of claims incurred but not yet reported as of the balance sheet dates related to group disability products.
Unpaid claim liabilities that are discounted use interest rates ranging from 3.0% to 6.4%.
Policyholders’ Account Balances Policyholders’ account balances at December 31 for the years indicated are as follows:
## Table 1 ##
Policyholders’ account balances primarily represent an accumulation of account deposits plus credited interest less withdrawals, expense charges and mortality charges, if applicable.
These policyholders’ account balances also include provisions for benefits under nonlife contingent payout annuities.
Included in “Funding agreements” at December 31, 2015 and 2014 are $2,957 million and $2,705 million, respectively, related to the Company’s FANIP.
Under this program, which has a maximum authorized amount of $15 billion, a Delaware statutory trust issues medium-term notes to investors that are secured by funding agreements issued to the trust by Prudential Insurance.
The outstanding notes have fixed or floating interest rates that range from 0.5% to 2.6% and original maturities ranging from two to ten years.
Included in the amounts at December 31, 2015 and 2014 is the medium-term note liability, which is carried at amortized cost, of $2,958 million and $2,705 million, respectively.
For additional details on the FANIP, see Note 5.
Also included in “Funding agreements” are collateralized funding agreements issued to the Federal Home Loan Bank of New York (“FHLBNY”) of $1,001 million and $1,947 million, as of December 31, 2015 and 2014, respectively.
These obligations, which are carried at amortized cost, have fixed or floating interest rates that range from 0.8% to 1.7% and original maturities ranging from four to seven years.
For additional details on the FHLBNY program, see Note 14.
Interest crediting rates range from 0% to 7.5% for interest-sensitive life contracts and from 0% to 12.5% for contracts other than interest-sensitive life.
Less than 1% of policyholders’ account balances have interest crediting rates in excess of 8%.11.
CERTAIN LONG-DURATION CONTRACTS WITH GUARANTEES The Company issues variable annuity contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder.
The Company also issues variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract adjusted for any partial withdrawals (“return of net deposits”).
In certain of these variable annuity contracts, the Company also contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract adjusted for any partial withdrawals plus a minimum return (“minimum return”), and/or (2) the highest contract value on a specified date adjusted for any withdrawals (“contract value”).
These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods.
The Company also issues annuity contracts with market value adjusted investment options (“MVAs”), which provide for a return of principal plus a fixed rate of return if held-to-maturity, or, alternatively, a “market adjusted value” if surrendered prior to maturity or if funds are reallocated to other investment options.
The market value adjustment may result in a gain or loss to the Company, depending on crediting rates or an indexed rate at surrender, as applicable.
The Company also issues fixed deferred annuity contracts without MVA that have a guaranteed credited rate and annuity benefit.
In addition, the Company issues certain variable life, variable universal life and universal life contracts where the Company contractually guarantees to the contractholder a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse (no-lapse guarantee).
Variable life and variable universal life contracts are offered with general and separate account options.
Operating Results The following table sets forth the Individual Annuities segment’s operating results for the periods indicated.
## Table 2 ##
Adjusted Operating Income 2015 to 2014 Annual Comparison.
Adjusted operating income increased $330 million.
Excluding the impacts of changes in the estimated profitability of the business, discussed below, adjusted operating income increased $39 million.
The increase was driven by higher asset-based fee income due to growth in average variable annuity account values, net of a related increase in asset-based commissions, a decline in interest expense driven by lower debt, and a decline in amortization costs.
Partially offsetting this net increase were costs for contract cancellations in connection with remediation of an error in an illustration contained in certain product marketing materials, higher operating expenses and a decline in net investment income driven by lower income on non-coupon investments.
The impacts of changes in the estimated profitability of the business include adjustments to the amortization of DAC and other costs and to the reserves for the GMDB and GMIB features of our variable annuity products.
These adjustments resulted in a net benefit of $162 million and a net charge of $129 million in 2015 and 2014, respectively.
The $162 million net benefit in 2015 primarily reflected the net impact of equity market performance on contractholder accounts relative to our assumptions, as well as a net benefit resulting from our annual review and update of assumptions.
The $129 million net charge in 2014 primarily reflected the impact of lower expected rates of return on fixed income investments within contractholder accounts and on future expected claims relative to our assumptions, which more than offset a net favorable impact from equity market performance.
Partially offsetting this net charge was a net benefit resulting from the annual review and update of assumptions performed in that year.2014 to 2013 Annual Comparison.
Adjusted operating income decreased $618 million.
Excluding the impacts of changes in the estimated profitability of the business, discussed below, adjusted operating income increased $207 million.
The increase was driven by higher asset-based fee income due to growth in average variable annuity account values, net of a related increase in asset-based commissions.
Also contributing to the increase were lower amortization costs and reserve provisions for the GMDB and GMIB features of our variable annuity products.
Adjustments to the amortization of DAC and other costs and to the reserves for the GMDB and GMIB features of our variable annuity products resulted in a net charge of $129 million and a net benefit of $696 million in 2014 and 2013, respectively.
The $129 million net charge in 2014 primarily reflected the impact of lower expected rates of return on fixed income investments within contractholder accounts and on future expected claims relative to our assumptions, which more than offset a net favorable impact from equity market performance.
Partially offsetting this net charge was a net benefit resulting from the annual review and update of assumptions performed in that year.
The $696 million net benefit in 2013 included a $301 million net benefit resulting from the annual review and update of assumptions and other refinements performed in that year.
The remaining net benefit reflected the impact of positive market performance on contractholder accounts relative to our assumptions.
Revenues, Benefits and Expenses 2015 to 2014 Annual Comparison.
Revenues, as shown in the table above under “—Operating Results,” decreased $15 million, primarily driven by a $27 million decrease in net investment income due to lower income on non-coupon investments, partially offset by a $19 million increase in policy charges and fee income due to growth in average variable annuity account values.
Benefits and expenses, as shown in the table above under “—Operating Results,” decreased $345 million.
Absent the $291 million net decrease related to the impacts of certain changes in our estimated profitability of the business discussed above, benefits and expenses decreased $54 million.
Interest expense decreased $38 million driven by lower debt, and interest credited to policyholders’ account balances decreased $26 million driven by lower average account values in the general account.
Partially offsetting these decreases was a $14 million increase in policyholders’ benefits driven by costs for contract cancellations, as discussed above.2014 to 2013 Annual Comparison.
Revenues increased $245 million, primarily driven by a $311 million increase in policy charges and fee income, asset management and service fees and other income, due to growth in average variable annuity account values.
Partially offsetting this increase was a $63 million decline in net investment income, driven by lower reinvestment rates and lower average account values in the general account due to surrenders of legacy general account products.
Benefits and expenses increased $863 million.
Absent the $825 million net increase related to the impacts of certain changes in our estimated profitability of the business discussed above, benefits and expenses increased $38 million.
General and administrative expenses, net of capitalization, increased $111 million, driven by higher asset-based commissions and asset management costs due to account value
The following table sets forth the income yield and investment income for each major investment category of our general account investments, excluding both the Closed Block division and the Japanese insurance operations’ portion of the general account which is presented separately below, for the periods indicated.
The yields are based on net investment income as reported under U. S.  GAAP and as such do not include certain interest related items, such as settlements of duration management swaps which are included in realized gains (losses).
## Table 3 ##
(1) Yields are based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity.
Yields for fixed maturities are based on amortized cost.
Yields for equity securities are based on cost.
Yields for fixed maturities and short-term investments and cash equivalents are calculated net of liabilities and rebate expenses corresponding to securities lending activity.
Yields exclude investment income on assets other than those included in invested assets.
Prior period yields are presented on a basis consistent with the current period presentation.
(2) Includes investment income of our asset management operations and derivative operations, as described below under “—Invested Assets of Other Entities and Operations.
” The decrease in net investment income yield attributable to our general account investments, excluding both the Closed Block division and the Japanese operations’ portfolio, for 2015, compared to 2014, was primarily the result of lower income from non-coupon investments and lower fixed income reinvestment rates.
The increase in net investment income yield attributable to our general account investments, excluding both the Closed Block division and the Japanese operations’ portfolio, for 2014, compared to 2013, was primarily the result of higher income from non-coupon investments and from reinvestments within certain asset portfolios primarily into higher yielding securities, primarily during the second half of 2013.
The following table sets forth the income yield and investment income for each major investment category of our Japanese insurance operations’ general account for the periods indicated.
The yields are based on net investment income as reported under U. S.  GAAP and as such do not include certain interest related items, such as settlements of duration management swaps which are included in realized gains and losses.
## Table 4 ##
(1) Yields are based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity.
Yields for fixed maturities are based on amortized cost.
Yields for equity securities are based on cost.
Yields for fixed maturities and short-term investments and cash equivalents are calculated net of liabilities and rebate expenses corresponding to securities lending activity.
Yields exclude investment income on assets other than those included in invested assets.
Prior period yields are presented on a basis consistent with the current period presentation.
The increase in net investment income yield on the Japanese insurance portfolio for 2015, compared to 2014, was primarily attributable to a higher allocation into U. S.  dollar-denominated investments.

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2012	2011	2010
Net sales	$156,508	$108,249	$65,225
Cost of sales	87,846	64,431	39,541
Gross margin	$68,662	$43,818	$25,684
Gross margin percentage	43.9%	40.5%	39.4%

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2015	2014
(in millions)
Individual annuities	$37,384	$37,718
Group annuities	27,141	27,200
Guaranteed investment contracts and guaranteed interest accounts	14,122	14,428
Funding agreements	3,997	4,691
Interest-sensitive life contracts	32,502	30,406
Dividend accumulation and other	21,638	21,707
Total policyholders’ account balances	$136,784	$136,150

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Year ended December 31,
2015	2014	2013
(in millions)
Operating results:
Revenues	$4,695	$4,710	$4,465
Benefits and expenses	2,898	3,243	2,380
Adjusted operating income	1,797	1,467	2,085
Realized investment gains (losses), net, and related adjustments	1,588	521	-5,918
Related charges	-624	-137	1,716
Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures	$2,761	$1,851	$-2,117

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Year Ended December 31,
2015	2014	2013
Yield-1	Amount	Yield-1	Amount	Yield-1	Amount
($ in millions)
Fixed maturities	4.67%	$5,686	4.69%	$5,461	4.65%	$5,306
Trading account assets supporting insurance liabilities	3.79	688	3.96	730	3.99	741
Equity securities	6.07	197	6.49	191	7.30	174
Commercial mortgage and other loans	4.62	1,338	4.96	1,271	5.27	1,145
Policy loans	5.52	250	5.66	253	5.45	228
Short-term investments and cash equivalents	0.25	38	0.21	22	0.23	26
Other investments	6.17	356	10.03	598	7.54	383
Gross investment income before investment expenses	4.33	8,553	4.63	8,526	4.52	8,003
Investment expenses	-0.15	-239	-0.15	-209	-0.12	-152
Investment income after investment expenses	4.18%	8,314	4.48%	8,317	4.40%	7,851
Investment results of other entities and operations-2	114	124	113
Total investment income	$8,428	$8,441	$7,964

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Year Ended December 31,
2015	2014	2013
Yield-1	Amount	Yield-1	Amount	Yield-1	Amount
($ in millions)
Fixed maturities	3.23%	$3,190	3.06%	$3,301	2.91%	$3,269
Trading account assets supporting insurance liabilities	1.66	32	1.80	35	1.81	34
Equity securities	4.77	69	5.06	84	4.69	82
Commercial mortgage and other loans	4.45	390	4.20	294	4.21	258
Policy loans	3.93	84	3.93	88	3.70	88
Short-term investments and cash equivalents	0.32	5	0.24	4	0.19	4
Other investments	5.32	133	6.67	155	6.12	170
Gross investment income before investment expenses	3.35	3,903	3.18	3,961	3.02	3,905
Investment expenses	-0.13	-155	-0.12	-153	-0.12	-156
Total investment income	3.22%	$3,748	3.06%	$3,808	2.90%	$3,749

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Question: In the year with the most Equity securities, what is the growth rate of Policy loans? (in %)
Answer: -0.01186