Filed Under:Life Insurance, Life Products

Prudential Financial records $489M loss in Q2

Prudential Financial Inc. posted losses for the second quarter and first half of 2013, the company disclosed in an earnings release today.

For the three months ended June 30, Prudential’s financial services businesses recorded a loss of $489 million, a significant reversal from the $2.2 billion in net income the company enjoyed in the second quarter of 2012. For the six months ended June 30, the financial services businesses suffered a $1.2 billion loss, down from the $1.3 billion in net income for the year-ago period.

Prudential Financial’s consolidated losses (including results of the financial services businesses and Prudential’s closed block of business) were still higher: $524 million and $1.2 billion for the first three and six months of 2013, respectively. This compares with net income of $2.2 billion and $1.3 billion, respectively, for the year-ago period.

“The net loss for the current quarter reflects-pre-tax decreases of $471 million in recorded asset values and $471 million in recorded liabilities representing changes in value which are expected to accrue to contract holders,” Prudential declares in a press statement. These changes primarily represent interest rate-related mark-to-market adjustments.

“The net loss for the current quarter also reflects a pre-tax loss of $84 million from divested businesses, primarily related to long-term care insurance and largely driven by changes in market value of derivatives used investment duration management for this business."

Turning to the (consolidated) net loss of the financial services business attributable to Prudential Financial Inc., the company notes the results reflects in part “pre-tax charges of about $1.6 billion from net changes in relating to foreign currency exchange rates.”

The financial services business after-tax adjusted operating income — a measure of after-tax operating profit for all investors, including shareholders and debt holders; the benchmark is equivalent to earnings before interest after taxes (EBIAT) — was much better, totaling $1.1 billion, up from the $648 million posted in the second quarter of 2012. After tax operating income for the six months ended June 30 was $2.2 billion, up from $1.4 billion recorded in the year prior.

Prudential Financial additionally reported these results at the close of the second quarter:

  • Revenues of $11.2 billion, down from the $11.7 billion posted in the first three months of 2012;
  • Revenues of $23.5 billion for the six months ended June 30, up from the $21.7 billion recorded in the year-ago period;
  • A $69 million increase in the U.S. individual life and group insurance earnings, reflecting “improved individual life mortality and [the] contribution from in-force business” acquired from Hartford Life in January 2013;
  • U.S individual life annualized business premiums of $184 million, compared to $91 million a year ago. Expanded distribution from Hartford Life contributed $58 million to quarterly sales;
  • Retirement account values totaling $301.8 billion, a 23 percent increase from a year earlier;
  • Asset management retail and institutional net flows (excluding money market funds) of $5.6 billion, up 10 percent from a year earlier;
  • Individual annuity account values of $141.5 billion, up 14 percent from a year earlier.
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