Prudential Back In Black In 3Q; Earnings Target Raised
DOW JONES NEWSWIRES
Prudential Financial Inc.'s (PRU) financial-services business swung to a
third-quarter profit after last year was hurt by more than $1 billion of
investment losses.
The company also boosted its 2009 earnings forecast by 40 cents to $5.40 to $
5.60 a share.
Chairman and Chief Executive Officer John Strangfeld said the quarter's
results "reflect underlying strength in our diversified portfolio of businesses,
as well as continuing improvements in financial markets." Variable-annuity sales
set a company record for the second straight quarter.
Shares rose 1.1% after-hours to $47.09 as earnings handily beat analysts'
expectations.
Despite being stung by investment losses and weak capital markets, Prudential
declined to take funds under the U.S. Treasury's Troubled Asset Relief Program
earlier this year. After that decision, the company bulked up its balance sheet
in June, raising $2.4 billion in stock and debt offerings.
Prudential's financial-services business reported a profit of $1.09 billion,
or $2.35 a share, compared with a year-earlier loss of $118 million, or 25 cents
a share, a year earlier. Excluding investment gains and losses and other items,
earnings rose to $1.59 from $1.02.
Financial-services revenue rose 3.8% to $6.6 billion.
Analysts were looking for financial-services earnings of $1.33 on revenue of $
6.66 billion, according to a poll by Thomson Reuters.
Earnings fell 9.4% in the U.S. insurance segment, while the individual-
annuities segment swung to the black on $185 million of reserve reversals.
Because of guaranteed minimum returns, there has been concern among annuity
sellers whether they had sufficient capital to cover the minimum payments in
light of the stock market's slump.
The asset-management business also returned to profitability.
At the closed-block business, made up of life-insurance and annuity policies
offered when Prudential was a mutual company, its loss narrowed to $8 million
from $58 million while revenue fell 13% to $1.55 billion.
Assets under management rose 6.4% from a year ago to $640.9 million and 11%
from the second quarter.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; kevin.kingsbury@
dowjones.com
(END) Dow Jones Newswires
11-04-091641ET
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