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Prudential Financial, Inc. Announces 2012 Results

Stocks in this article: PRU

Prudential Financial, Inc. (NYSE:PRU):

 

After-tax adjusted operating income for the Financial Services Businesses for year 2012 of $2.958 billion, or $6.27 per Common share, compared to $5.83 per Common share for 2011.

   

Fourth quarter 2012 after-tax adjusted operating income for the Financial Services Businesses of $798 million, or $1.69 per Common share, compared to $1.78 per Common share in the year-ago quarter.

 

Significant items included in current quarter adjusted operating income:

 

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Pre-tax net benefit of $48 million in Individual Annuities, including release of reserves for guaranteed death and income benefits and reduced amortization of deferred policy acquisition and other costs reflecting market performance, and charge for impairment of capitalized software costs.

 

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Pre-tax benefit of $78 million in Retirement from recovery, under a settlement, of previously recorded losses attributed to certain client investment funds managed by a third party.

 

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Pre-tax net benefit of $32 million in Asset Management, including gain from sale of a real estate related investment and charge for impairment of capitalized software costs.

 

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Pre-tax charge of $15 million in Individual Life for costs incurred related to the Company’s acquisition of The Hartford’s individual life insurance business which was completed in January 2013.

 

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Pre-tax charge of $20 million in Group Insurance to increase legal reserves.

 

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Pre-tax charge of $10 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 $69 million in Corporate and Other operations, including increase in recorded employee benefits liabilities reflecting completion of a review and writeoff of issuance costs on debt securities redeemed prior to maturity.

 

Several of our U.S. businesses incurred costs in the current quarter, as discussed below, for items such as business process improvements, fund start-up costs, and reserves for costs associated with certain client contracts, which we estimate are in excess of a baseline level relative to current business volume, with an estimated negative impact of approximately $100 million on pre-tax adjusted operating income.

 

An update of the effective tax rate applicable to adjusted operating income based on full year results contributed approximately 7 cents per Common share to current quarter results.

 

Net income of Financial Services Businesses attributable to Prudential Financial, Inc. for year 2012 of $428 million, or 94 cents per Common share, compared to $6.99 per Common share for 2011.

 

Fourth quarter 2012 net loss of Financial Services Businesses of $214 million, or 48 cents per Common share.

 

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The current quarter net loss reflects pre-tax charges of approximately $1.5 billion from net changes in value relating to foreign currency exchange rates 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.

 

Other financial highlights:

 

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GAAP book value for Financial Services Businesses, $37.1 billion or $79.19 per Common share at December 31, 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, $57.86 at December 31, 2012 compared to $58.39 at December 31, 2011.

 

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Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses of $18.6 billion at December 31, 2012 compared to $10.5 billion at December 31, 2011; gross unrealized losses of $2.1 billion at December 31, 2012, compared to $4.3 billion at December 31, 2011.

 

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During 2012, the Company acquired 11.5 million shares of its Common Stock at a total cost of $650 million, for an average price of $56.43 per share. These repurchases included 2.7 million Common shares acquired at a total cost of $150 million in the third quarter under an authorization in June 2012 by Prudential’s Board of Directors to repurchase at management’s discretion up to $1.0 billion of the Company’s outstanding Common Stock through June 2013, with the remainder acquired under an earlier authorization. From the commencement of share repurchases in July 2011 through December 31, 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 $2.958 billion ($6.27 per Common share) for the year ended December 31, 2012, compared to $2.845 billion ($5.83 per Common share) for 2011. Net income for the Financial Services Businesses attributable to Prudential Financial, Inc. was $428 million (94 cents per Common share) for 2012, compared to $3.420 billion ($6.99 per Common share) for 2011. Information regarding adjusted operating income, a non-GAAP measure, is provided below.

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