What happened
Insurance and financial services giant Prudential Financial (NYSE: PRU) reported its second-quarter earnings Wednesday afternoon, and investors aren't happy with the results. As of 3 p.m. EDT Thursday, Prudential's stock price had fallen by more than 11%.
So what
Although Prudential's second-quarter earnings of $3.14 per share represented a nice 4.3% increase over the same quarter a year ago, they didn't quite measure up to Wall Street expectations of $3.23 per share.

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It appears that the miss was due to falling interest rates -- insurers rely on income from their investments, and most of these are of the fixed-income variety. Plus, Prudential's net income included $630 million in pre-tax net realized investment losses, mainly related to derivatives whose losses were the result of interest-rate movements.
Now what
To be perfectly clear, Prudential's earnings report wasn't all bad.
For example, the company's assets under management increased by an impressive 7.9% year over year, and its adjusted book value per share of $97.15 is an all-time high for the company. Return on equity was within the company's target range of 12% to 14% (12.9% year to date). And Prudential's performance within its investment management, retirement, and group insurance business segments looks rather strong.
However, if rates continue to fall, it's fair to expect that the investment-related profitability of Prudential, and other insurers, will remain under pressure as well.
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