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Prudential Financial, Inc. Announces Third Quarter 2012 Results

Prudential Financial, Inc. (NYSE:PRU)

 

After-tax adjusted operating income for the Financial Services Businesses of $722 million, or $1.53 per Common share, compared to 84 cents per Common share for year-ago quarter.

 

Significant items included in current quarter adjusted operating income:

 

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Pre-tax net charge of $48 million in Individual Annuities to strengthen reserves for guaranteed death and income benefits, net of reduced amortization of deferred policy acquisition and other costs, including impact of annual review of actuarial assumptions.

 

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Pre-tax charges totaling $42 million in Retirement, including writeoff of intangible assets related to an acquired business and impact of annual review of actuarial assumptions.

 

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Pre-tax charge of $27 million in Individual Life, and pre-tax benefit of $7 million in Group Insurance, reflecting annual review of actuarial assumptions.

 

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Pre-tax benefit of $20 million in International Insurance’s Life Planner operations, reflecting annual review of actuarial assumptions.

 

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Pre-tax benefit of $60 million in International Insurance’s Gibraltar Life operation from the partial sale of an investment, through a consortium, in China Pacific Group.

 

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Pre-tax charge of $34 million in International Insurance’s Gibraltar Life operation for integration costs relating to the acquisition of AIG Star Life Insurance Co., Ltd. and AIG Edison Life Insurance Company.

 

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Pre-tax charges totaling $94 million in Corporate and Other operations, reflecting impact of annual review of actuarial assumptions on retained obligations relating to certain pre-demutualization policyholders and writeoff of issuance costs on debt securities redeemed prior to maturity.

 

Net loss of Financial Services Businesses attributable to Prudential Financial, Inc. of $661 million, or $1.41 per Common share.

 

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The net loss reflected pre-tax losses of $684 million from changes in value of product embedded derivatives and derivatives used to hedge associated product risks, as well as mark to market of derivatives under a capital hedge program. The net loss also reflects pre-tax charges of $521 million from net changes in value relating to foreign currency exchange rates and changes in market value of derivatives primarily resulting from changes in value of the Japanese yen in relation to other currencies. These currency-driven value changes were largely offset by corresponding adjustments to accumulated other comprehensive income which are not reflected in net income or loss. In addition, the net loss reflects a pre-tax loss of $685 million from divested businesses, primarily related to long-term care insurance.

 

Other financial highlights:

 

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GAAP book value for Financial Services Businesses, $37.1 billion or $79.51 per Common share at September 30, 2012, compared to $32.8 billion or $69.07 per Common share at December 31, 2011. Book value per Common share excluding total accumulated other comprehensive income, $59.35 at September 30, 2012 compared to $58.02 at December 31, 2011.

 

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Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses of $17.8 billion at September 30, 2012 compared to $10.5 billion at December 31, 2011; gross unrealized losses of $2.4 billion at September 30, 2012, compared to $4.3 billion at December 31, 2011.

 

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During the third quarter, the Company acquired 2.7 million shares of its Common Stock under its current share repurchase authorization at a total cost of $150 million, for an average price of $55.77 per share. From the commencement of share repurchases in July 2011 through September 30, 2012, the Company has acquired 31.3 million shares of its Common Stock under its share repurchase authorizations at a total cost of $1.65 billion, for an average price of $52.72 per share.

 

Prudential Financial, Inc. (NYSE:PRU) today reported after-tax adjusted operating income for its Financial Services Businesses of $722 million ($1.53 per Common share) for the third quarter of 2012, compared to $406 million (84 cents per Common share) for the year-ago quarter. The net loss for the Financial Services Businesses attributable to Prudential Financial, Inc. was $661 million ($1.41 per Common share) for the third quarter of 2012, compared to net income of $1.562 billion ($3.18 per Common share) for the year-ago quarter. Information regarding adjusted operating income, a non-GAAP measure, is provided below.

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