Life insurer Prudential Financial Inc. (PRU), Wednesday reported a third-quarter loss from a profit last year, hurt mainly by hefty derivative losses and foreign exchange fluctuations.
On a consolidated basis, which includes both the financial services and the closed block business, Prudential Financial reported a net loss of $618 million, compared to net income of $1.59 billion last year.
New Jersey-based Prudential's third-quarter net loss for its financial services business was $661 million or $1.41 per share, compared to net income of $1.56 billion $3.18 per share last year.
For the quarter, Prudential recorded realized investment losses and charges of $1.30 billion, compared to gains of $1.82 billion last year.
Prudential recorded pre-tax losses of $684 million from changes in value of derivatives, and a pre-tax charge of $521 million from changes in foreign currency exchange rates values, primarily due to fluctuation of Japanese yen.
The net loss for the quarter also reflects pre-tax losses of $685 million from divested businesses, including a $698 million charge related to long-term care insurance to reflect updates of actuarial assumptions based on annual review.
Adjusted operating income, which excludes special items, improved to $1.53 per share from $0.84 per share last year.
On average, 18 analysts polled by Thomson Reuters expected earnings of $1.68 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total revenues for the third quarter grew to $13.25 billion from $9.77 billion in the year-ago quarter.
Eight analysts on a consensus estimated revenues of $10.77 billion for the quarter.
Prudential's financial services business consist of U.S. Retirement Solutions and Investment Management; U.S. Individual Life and Group Insurance; and International Insurance divisions.
U.S. Retirement Solutions and Investment Management division's adjusted operating income for the quarter rose to $504 million from $42 million, while U.S. Individual Life and Group Insurance dropped to $147 million from $156 million last year.
International Insurance division's adjusted operating income advanced to $783 million from $660 million last year.
In August, Prudential agreed to buy Hartford Financial Services Group Inc.'s (HIG) individual life insurance business for $615 million in cash, as the company expands its life insurance business. Meanwhile, Hartford trimmed its operations to focus more on property and casualty, group benefits and mutual fund businesses.
Among others in the industry, MetLife Inc. (MET) last week reported a loss as the life insurer took a goodwill impairment charge at its U.S. retail annuity business as well as derivative losses.
Separately, Prudential Prudential declared an annual dividend of $1.60 per share, payable on December 14 to shareholders as of November 20. The dividend represents an increase of 10 percent from last year. The company plans to make quarterly dividend payments from first quarter 2013.
PRU closed Wednesday's trading at $55.39, down $2.64 or 4.55%, on a volume of 6.1 million shares on the NYSE. In after hours, the stock rose $0.42 or 0.77%.
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