PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements 8.
POLICYHOLDERS’ LIABILITIES Future Policy Benefits Future policy benefits at December 31, are as follows:
## Table 0 ##
Life insurance liabilities include reserves for death and endowment policy benefits, terminal dividends and certain health benefits.
Individual and group annuities and supplementary contracts liabilities include reserves for life contingent immediate annuities and life contingent group annuities.
Other contract liabilities include unearned revenue and certain other reserves for group and individual life and health products.
Future policy benefits for individual participating traditional life insurance are based on the net level premium method, calculated using the guaranteed mortality and nonforfeiture interest rates which range from 2.5% to 7.5%.
Participating insurance represented 20% and 23% of domestic individual life insurance in force at December 31, 2006 and 2005, respectively, and 89%, 90% and 91% of domestic individual life insurance premiums for 2006, 2005 and 2004, respectively.
Future policy benefits for individual non-participating traditional life insurance policies, group and individual long-term care policies and individual health insurance policies are equal to the aggregate of (1) the present value of future benefit payments and related expenses, less the present value of future net premiums, and (2) any premium deficiency reserves.
Assumptions as to mortality, morbidity and persistency are based on the Company’s experience, and in certain instances, industry experience, when the basis of the reserve is established.
Interest rates used for the aggregate reserves range from 0% to 9.5%; less than 2% of the reserves are based on an interest rate in excess of 8%.
Future policy benefits for individual and group annuities and supplementary contracts are equal to the aggregate of (1) the present value of expected future payments, and (2) any premium deficiency reserves.
Assumptions as to mortality are based on the Company’s experience, and in certain instances, industry experience, when the basis of the reserve is established.
The interest rates used in the determination of the aggregate reserves range from 1.1% to 14.8%; less than 2% of the reserves are based on an interest rate in excess of 8%.
Future policy benefits for other contract liabilities are generally equal to the present value of expected future payments based on the Company’s experience (except for certain group insurance coverages for which future policy benefits are equal to gross unearned premium reserves).
The interest rates used in the determination of the present values range from 0% to 6.7%.
Premium deficiency reserves 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 and to recover any unamortized policy acquisition costs.
Premium deficiency reserves have been recorded for the group single premium annuity business, which consists of limited-payment, long-duration traditional and non-participating annuities; structured settlements and single premium immediate annuities with life contingencies; and for certain individual health policies.
Liabilities of $2,658 million and $3,034 million are included in “Future policy benefits” with respect to these deficiencies at December 31, 2006 and 2005, respectively.
The Company’s liability for future policy benefits is also inclusive of liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 9.
2006 to 2005 Annual Comparison.
The total cash value of surrenders increased $46 million, from $698 million in 2005 to $744 million in 2006, reflecting an increase in surrenders of variable corporate-owned life insurance in 2006 compared to the prior year.
The level of surrenders as a percentage of mean future policy benefit reserves, policyholders’ account balances and separate account balances remained flat.2005 to 2004 Annual Comparison.
The total cash value of surrenders increased $65 million, from $633 million in 2004 to $698 million in 2005, reflecting an increase in variable life surrenders in 2005.
The level of surrenders as a percentage of mean future policy benefit reserves, policyholders’ account balances and separate account balances increased from 2004 to 2005, reflecting a higher level of surrenders in 2005 associated with variable life insurance account values due to less favorable market performance compared to the prior year.
Individual Annuities Operating Results The following table sets forth the Individual Annuities segment’s operating results for the periods indicated.
## Table 1 ##
(1) Revenues exclude Realized investment gains (losses), net, and related charges and adjustments.
The related charges represent payments related to the market value adjustment features of certain of our annuity products.
See “—Realized Investment Gains and General Account Investments—Realized Investment Gains.
” (2) Benefits and expenses exclude related charges which represent the unfavorable (favorable) impact of Realized investment gains (losses), net, on change in reserves and the amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired.
On June 1, 2006, we acquired the variable annuity business of The Allstate Corporation, or Allstate, through a reinsurance transaction for $635 million of total consideration, consisting primarily of a $628 million ceding commission.
Our initial investment in the business is approximately $600 million, consisting of the total consideration, offset by the related tax benefits, plus an additional contribution of $94 million to meet regulatory capital requirements.
See Note 3 to the Consolidated Financial Statements for further discussion of this acquisition.
Adjusted Operating Income 2006 to 2005 Annual Comparison.
Adjusted operating income increased $81 million, from $505 million in 2005 to $586 million in 2006.
Adjusted operating income for 2006 includes a $37 million benefit from a reduction in amortization of deferred policy acquisition costs and other costs due to an increased estimate of total gross profits used as a basis for amortizing deferred policy acquisition costs, based on an annual review, primarily reflecting improved net interest spread from increased investment yields.
Adjusted operating income for 2005 included a net $87 million benefit from a net reduction in amortization of deferred policy acquisition and other costs and a decrease in our reserves for the guaranteed minimum death benefit and guaranteed minimum income benefit features of our variable annuity products, due to an increased estimate of total gross profits used as a basis for amortizing deferred policy acquisition and other costs reflecting improved net interest spread from increased yields, decreased costs of actual and expected death claims and modeling refinements implemented, based on an annual review.
Absent the effect of these items, adjusted operating income for 2006 increased $131 million from the prior year, including a $54 million contribution in 2006 from the variable annuity business acquired from Allstate.
The contribution of the acquired Allstate business to adjusted operating income for 2006 consists of revenues of $221 million and benefits and expenses of $167 million.
Allstate’s revenues consisted primarily of policy charges and fees of $143 million, net investment income of $46 million and asset management fees and other income of $28 million.
Benefits and expenses consisted primarily of general and administrative expenses, net of capitalization, of $107 million and policyholders’ benefits, including interest credited to policyholders’ account balances, of $59 million.
The remainder of the $131 million increase came primarily from higher fee income driven by higher average asset balances from market appreciation and net flows in our variable annuity account values.
Partially offsetting these items was an increase in distribution costs charged to expense associated with increased variable annuity sales and account values and increased general expenses related to expansion initiatives.
In addition, results for 2005 benefited $6 million, net of related amortization of deferred policy acquisition costs, from the collection of investment income on a previously defaulted bond.
Private Fixed Maturities—Credit Quality The following table sets forth our private fixed maturity portfolios by NAIC rating attributable to the Financial Services Businesses as of the dates indicated.
## Table 2 ##
(1) Reflects equivalent ratings for investments of the international insurance operations that are not rated by U. S.  insurance regulatory authorities.
(2) Includes, as of December 31, 2006 and December 31, 2005, respectively, 221 securities with amortized cost of $3,465 million (fair value, $3,537 million) and 187 securities with amortized cost of $3,494 million (fair value, $3,542 million) that have been categorized based on expected NAIC designations pending receipt of SVO ratings.
(3) Includes $2 million of gross unrealized gains and $6 million of gross unrealized losses as of December 31, 2006, compared to $1 million of gross unrealized gains and zero million of gross unrealized losses as of December 31, 2005 on securities classified as held to maturity that are not reflected in other comprehensive income.
The following table sets forth our private fixed maturity portfolios by NAIC rating attributable to the Closed Block Business as of the dates indicated.
## Table 3 ##
(1) Includes, as of December 31, 2006 and December 31, 2005, respectively, 119 securities with amortized cost of $1,386 million (fair value, $1,421 million) and 111 securities with amortized cost of $1,479 million (fair value, $1,543 million) that have been categorized based on expected NAIC designations pending receipt of SVO ratings.
Credit Derivative Exposure to Public Fixed Maturities In addition to the credit exposure from public fixed maturities noted above, we sell credit derivatives to enhance the return on our investment portfolio by creating credit exposure similar to an investment in public fixed maturity cash instruments.
In a credit derivative we sell credit protection on an identified name, or a basket of names in a first to default structure, and in return receive a quarterly premium.
With single name credit default derivatives, this premium or credit spread generally corresponds to the difference between the yield on the referenced name’s public fixed maturity cash instruments and swap rates, at the time the agreement is executed.
With first-to-default baskets, because of the additional credit risk inherent in a basket of named credits, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket.
If there is an event of default by the referenced name or one of the referenced names in a basket, as defined by the agreement, then we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced defaulted security or similar security.
Subsequent defaults on the remaining names within such instruments require no further payment to counterparties.
We believe that the cash flows from our insurance and annuity operations are adequate to satisfy the current liquidity requirements of these operations, including under reasonably foreseeable stress scenarios.
The continued adequacy of this liquidity will depend upon factors such as future securities market conditions, changes in interest rate levels and policyholder perceptions of our financial strength, each of which could lead to reduced cash inflows or increased cash outflows.
Our domestic insurance operations’ cash flows from investment activities result from repayments of principal, proceeds from maturities and sales of invested assets and investment income, net of amounts reinvested.
The primary liquidity risks with respect to these cash flows are the risk of default by debtors, our counterparties’ willingness to extend repurchase and/or securities lending arrangements and market volatility.
We closely manage these risks through our credit risk management process and regular monitoring of our liquidity position.
In managing the liquidity of our domestic insurance operations, we also consider the risk of policyholder and contractholder withdrawals of funds earlier than our assumptions in selecting assets to support these contractual obligations.
We use surrender charges and other contract provisions to mitigate the extent, timing and profitability impact of withdrawals of funds by customers from annuity contracts and deposit liabilities.
The following table sets forth withdrawal characteristics of our general account annuity reserves and deposit liabilities (based on statutory liability values) as of the dates indicated.
## Table 4 ##
Individual life insurance policies are less susceptible to withdrawal than our annuity reserves and deposit liabilities because policyholders may incur surrender charges and be subject to a new underwriting process in order to obtain a new insurance policy.
Annuity benefits under group annuity contracts are generally not subject to early withdrawal.
Gross account withdrawals for our domestic insurance operations’ products amounted to $21.2 billion and $18.9 billion for the years ended December 31, 2006 and 2005, respectively.
Because these withdrawals were consistent with our assumptions in asset/liability management, the associated cash outflows did not have a material adverse impact on our overall liquidity.
Liquid Assets Liquid assets include cash, cash equivalents, short-term investments, fixed maturities that are not designated as held to maturity, and public equity securities.
As of December 31, 2006 and 2005, our domestic insurance operations had liquid assets of $140.9 billion and $136.9 billion, respectively.
The portion of liquid assets comprised of cash and cash equivalents and short-term investments was $8.4 billion and $8.0 billion as of December 31, 2006 and 2005, respectively.
As of December 31, 2006, $114.9 billion, or 90%, of the fixed maturity investments that are not designated as held to maturity within our domestic insurance company general account portfolios were rated investment grade.
The remaining $13.3 billion, or 10%, of these fixed maturity investments were rated non-investment grade.
We consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures in order to evaluate the adequacy of our domestic insurance operations’ liquidity under a variety of stress scenarios.
We believe that the liquidity profile of our assets is sufficient to satisfy current liquidity requirements, including under foreseeable stress scenarios.
Given the size and liquidity profile of our investment portfolios, we believe that claim experience varying from our projections does not constitute a significant liquidity risk.
Our asset/liability management process takes into account the expected maturity of investments and expected claim payments as well as the specific nature and risk profile of the liabilities.
Historically, there has been no significant variation between the expected maturities of our investments and the payment of claims.
Our domestic insurance companies’ liquidity is managed through access to substantial investment portfolios as well as a variety of instruments available for funding and/or managing short-term cash flow mismatches, including from time to time those arising from claim levels in excess of projections.
To the extent we need to pay claims in excess of projections, we may borrow temporarily or sell investments sooner than anticipated to pay these claims, which may result in realized investment gains or losses or increased borrowing costs affecting results of operations.
For a further discussion of realized investment gains or losses, see “—Realized Investment Gains and General Account Investments—Realized Investment Gains.
” We believe that borrowing temporarily or selling investments earlier than anticipated will not have a material impact on the liquidity of our domestic insurance companies.
Payment of claims and sale of investments earlier than anticipated would have an impact on the reported level of cash flow from operating and investing activities, respectively, in our financial statements.
## Table 5 ##
CAPITAL EXPENDITURES Our rail network requires significant annual capital investments for replacement, improvement, and expansion.
These investments enhance safety, support the transportation needs of our customers, and improve our operational efficiency.
Additionally, we add new locomotives and freight cars to our fleet to replace older, less efficient equipment, to support growth and customer demand, and to reduce our impact on the environment through the acquisition of more fuel-efficient and low-emission locomotives.2014 Capital Program – During 2014, our capital program totaled $4.1 billion.
(See the cash capital expenditures table in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Financial Condition, Item 7. )2015 Capital Plan – In 2015, we expect our capital plan to be approximately $4.3 billion, which will include expenditures for PTC of approximately $450 million and may include non-cash investments.
We may revise our 2015 capital plan if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments.
(See discussion of our 2015 capital plan in Management’s Discussion and Analysis of Financial Condition and Results of Operations – 2015 Outlook, Item 7. )
OTHER Equipment Encumbrances – Equipment with a carrying value of approximately $2.8 billion and $2.9 billion at December 31, 2014, and 2013, respectively served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements utilized to acquire or refinance such railroad equipment.
As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR on January 1, 1997, and pursuant to the underlying indentures for the MPRR mortgage bonds, UPRR must maintain the same value of assets after the merger in order to comply with the security requirements of the mortgage bonds.
As of the merger date, the value of the MPRR assets that secured the mortgage bonds was approximately $6.0 billion.
In accordance with the terms of the indentures, this collateral value must be maintained during the entire term of the mortgage bonds irrespective of the outstanding balance of such bonds.
Environmental Matters – Certain of our properties are subject to federal, state, and local laws and regulations governing the protection of the environment.
(See discussion of environmental issues in Business – Governmental and Environmental Regulation, Item 1, and Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Environmental, Item 7. )
Item 3.
Legal Proceedings From time to time, we are involved in legal proceedings, claims, and litigation that occur in connection with our business.
We routinely assess our liabilities and contingencies in connection with these matters based upon the latest available information and, when necessary, we seek input from our third-party advisors when making these assessments.
Consistent with SEC rules and requirements, we describe below material pending legal proceedings (other than ordinary routine litigation incidental to our business), material proceedings known to be contemplated by governmental authorities, other proceedings arising under federal, state, or local environmental laws and regulations (including governmental proceedings involving potential fines, penalties, or other monetary sanctions in excess of $100,000), and such other pending matters that we may determine to be appropriate.

Tables referenced above, in order (Table 0 first):
<table><tr><td></td><td> 2006</td><td> 2005</td></tr><tr><td></td><td colspan="2"> (in millions)</td></tr><tr><td>Life insurance</td><td>$83,847</td><td>$80,429</td></tr><tr><td>Individual and group annuities and supplementary contracts</td><td>17,639</td><td>16,346</td></tr><tr><td>Other contract liabilities</td><td>3,414</td><td>3,115</td></tr><tr><td>Subtotal future policy benefits excluding unpaid claims and claim adjustment expenses</td><td>104,900</td><td>99,890</td></tr><tr><td>Unpaid claims and claim adjustment expenses</td><td>2,051</td><td>1,982</td></tr><tr><td>Total future policy benefits</td><td>$106,951</td><td>$101,872</td></tr></table>
<table><tr><td></td><td colspan="3">Year ended December 31,</td></tr><tr><td></td><td>2006</td><td>2005</td><td>2004</td></tr><tr><td></td><td colspan="3">(in millions)</td></tr><tr><td> Operating results:</td><td></td><td></td><td></td></tr><tr><td>Revenues</td><td>$2,101</td><td>$1,717</td><td>$1,578</td></tr><tr><td>Benefits and expenses</td><td>1,515</td><td>1,212</td><td>1,151</td></tr><tr><td>Adjusted operating income</td><td>586</td><td>505</td><td>427</td></tr><tr><td>Realized investment gains (losses), net, and related adjustments(1)</td><td>-72</td><td>3</td><td>-2</td></tr><tr><td>Related charges-1(2)</td><td>25</td><td>-5</td><td>-34</td></tr><tr><td>Income from continuing operations before income taxes, equity in earnings of operating joint ventures, extraordinary gain on acquisition andcumulative effect of accounting change acquisition and cumulative effect of accounting change</td><td>$539</td><td>$503</td><td>$391</td></tr></table>
<table><tr><td> -1 (2)</td><td></td><td colspan="4"> December 31, 2006</td><td colspan="4"> December 31, 2005</td></tr><tr><td> NAIC Designation</td><td> Rating AgencyEquivalent</td><td> Amortized Cost</td><td> Gross Unrealized Gains-3</td><td> Gross Unrealized Losses-3</td><td> Fair Value</td><td> Amortized Cost</td><td> Gross Unrealized Gains-3</td><td> Gross Unrealized Losses-3</td><td> Fair Value</td></tr><tr><td></td><td></td><td colspan="8"> (in millions)</td></tr><tr><td>1</td><td>Aaa, Aa, A</td><td>$6,214</td><td>$248</td><td>$49</td><td>$6,413</td><td>$5,596</td><td>$269</td><td>$27</td><td>$5,838</td></tr><tr><td>2</td><td>Baa</td><td>9,463</td><td>377</td><td>73</td><td>9,767</td><td>9,437</td><td>522</td><td>63</td><td>9,896</td></tr><tr><td></td><td>Subtotal Investment Grade</td><td>15,677</td><td>625</td><td>122</td><td>16,180</td><td>15,033</td><td>791</td><td>90</td><td>15,734</td></tr><tr><td>3</td><td>Ba</td><td>1,422</td><td>50</td><td>11</td><td>1,461</td><td>1,105</td><td>44</td><td>7</td><td>1,142</td></tr><tr><td>4</td><td>B</td><td>645</td><td>12</td><td>7</td><td>650</td><td>507</td><td>33</td><td>5</td><td>535</td></tr><tr><td>5</td><td>C and lower</td><td>321</td><td>18</td><td>4</td><td>335</td><td>339</td><td>23</td><td>2</td><td>360</td></tr><tr><td>6</td><td>In or near default</td><td>139</td><td>11</td><td>1</td><td>149</td><td>70</td><td>8</td><td>2</td><td>76</td></tr><tr><td></td><td>Subtotal Below Investment Grade</td><td>2,527</td><td>91</td><td>23</td><td>2,595</td><td>2,021</td><td>108</td><td>16</td><td>2,113</td></tr><tr><td></td><td>Total Private Fixed Maturities</td><td>$18,204</td><td>$716</td><td>$145</td><td>$18,775</td><td>$17,054</td><td>$899</td><td>$106</td><td>$17,847</td></tr></table>
<table><tr><td> -1</td><td></td><td colspan="4"> December 31, 2006</td><td colspan="4"> December 31, 2005</td></tr><tr><td> NAIC Designation</td><td> Rating Agency Equivalent</td><td> Amortized Cost</td><td> Gross Unrealized Gains</td><td> Gross Unrealized Losses</td><td> Fair Value</td><td> Amortized Cost</td><td> Gross Unrealized Gains</td><td> Gross Unrealized Losses</td><td> Fair Value</td></tr><tr><td></td><td></td><td colspan="8"> (in millions)</td></tr><tr><td>1</td><td>Aaa, Aa, A</td><td>$3,098</td><td>$180</td><td>$26</td><td>$3,252</td><td>$3,079</td><td>$208</td><td>$16</td><td>$3,271</td></tr><tr><td>2</td><td>Baa</td><td>6,620</td><td>355</td><td>47</td><td>6,928</td><td>7,487</td><td>549</td><td>39</td><td>7,997</td></tr><tr><td></td><td>Subtotal Investment Grade</td><td>9,718</td><td>535</td><td>73</td><td>10,180</td><td>10,566</td><td>757</td><td>55</td><td>11,268</td></tr><tr><td>3</td><td>Ba</td><td>1,173</td><td>75</td><td>7</td><td>1,241</td><td>1,195</td><td>69</td><td>8</td><td>1,256</td></tr><tr><td>4</td><td>B</td><td>413</td><td>18</td><td>7</td><td>424</td><td>570</td><td>15</td><td>2</td><td>583</td></tr><tr><td>5</td><td>C and lower</td><td>131</td><td>14</td><td>2</td><td>143</td><td>157</td><td>17</td><td>1</td><td>173</td></tr><tr><td>6</td><td>In or near default</td><td>26</td><td>7</td><td>—</td><td>33</td><td>60</td><td>21</td><td>—</td><td>81</td></tr><tr><td></td><td>Subtotal Below Investment Grade</td><td>1,743</td><td>114</td><td>16</td><td>1,841</td><td>1,982</td><td>122</td><td>11</td><td>2,093</td></tr><tr><td></td><td>Total Private Fixed Maturities</td><td>$11,461</td><td>$649</td><td>$89</td><td>$12,021</td><td>$12,548</td><td>$879</td><td>$66</td><td>$13,361</td></tr></table>
<table><tr><td></td><td colspan="2">December 31, 2006</td><td colspan="2"> December 31, 2005</td></tr><tr><td></td><td> Amount</td><td>% of Total</td><td> Amount</td><td> % of Total</td></tr><tr><td></td><td colspan="4"> ($ in millions)</td></tr><tr><td>Not subject to discretionary withdrawal provisions</td><td>$30,209</td><td>42%</td><td>$24,749</td><td>38%</td></tr><tr><td>Subject to discretionary withdrawal, with adjustment:</td><td></td><td></td><td></td><td></td></tr><tr><td>With market value adjustment</td><td>20,540</td><td>28</td><td>19,346</td><td>30</td></tr><tr><td>At market value</td><td>1,169</td><td>2</td><td>1,235</td><td>2</td></tr><tr><td>At contract value, less surrender charge of 5% or more</td><td>1,953</td><td>3</td><td>2,421</td><td>4</td></tr><tr><td>Subtotal</td><td>53,871</td><td>75</td><td>47,751</td><td>74</td></tr><tr><td>Subject to discretionary withdrawal at contract value with no surrender charge or surrender charge of less than 5%</td><td>18,096</td><td>25</td><td>17,274</td><td>26</td></tr><tr><td>Total annuity reserves and deposit liabilities</td><td>$71,967</td><td>100%</td><td>$65,025</td><td>100%</td></tr></table>
<table><tr><td><i>Highway revenue equipment</i></td><td><i>Owned</i></td><td><i>Leased</i></td><td><i>Total</i></td><td><i>Average</i><i>Age (yrs.)</i></td></tr><tr><td>Containers</td><td>26,629</td><td>28,306</td><td>54,935</td><td>7.1</td></tr><tr><td>Chassis</td><td>15,182</td><td>25,951</td><td>41,133</td><td>8.9</td></tr><tr><td>Total highway revenue equipment</td><td>41,811</td><td>54,257</td><td>96,068</td><td>N/A</td></tr></table>

Question: In the year with the most Aaa, Aa, A for Amortized, what is the growth rate of B of Rating AgencyEquivalent for Amortized?
Answer: 0.21395
Reasoning program: subtract(645,507), divide(#0,645)