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Prudential Financial, Inc. Announces 2012 Results

Stocks in this article: PRU

The U.S. Individual Life and Group Insurance division reported adjusted operating income of $87 million for the fourth quarter of 2012, compared to $180 million in the year-ago quarter.

The Individual Life segment reported adjusted operating income of $99 million for the current quarter, compared to $138 million in the year-ago quarter. Current quarter results include a charge of $15 million, primarily representing transaction costs, related to the Company’s acquisition of The Hartford’s individual life insurance business which was completed in January 2013. Excluding this charge, adjusted operating income decreased $24 million from the year-ago quarter. This decrease reflected higher expenses in the current quarter, including certain non-deferred policy acquisition costs due to higher sales, and a benefit to year-ago quarter results of approximately $10 million from adjustments of amortization of deferred policy acquisition and other costs as a result of separate account performance more favorable than our assumptions.

The Group Insurance segment reported a loss, on an adjusted operating income basis, of $12 million in the current quarter, compared to adjusted operating income of $42 million in the year-ago quarter. Current quarter results include a charge of $20 million to increase legal reserves. Excluding this charge, adjusted operating income decreased $34 million from the year-ago quarter. This decrease reflected less favorable group life claims experience and a higher level of expenses, including approximately $18 million of current quarter costs for items including business process improvements that we estimate are in excess of a baseline level relative to current business volume.

The International Insurance segment reported adjusted operating income of $647 million for the fourth quarter of 2012, compared to $502 million in the year-ago quarter.

Adjusted operating income of the segment’s Life Planner insurance operations was $332 million for the current quarter, compared to $300 million in the year-ago quarter. The $32 million increase in adjusted operating income reflected continued business growth, partly offset by higher current quarter expenses including costs associated with technology enhancements. In addition, current quarter results reflect a favorable impact of $13 million in comparison to the year-ago quarter from foreign currency exchange rates including the impact of the Company’s currency hedging programs.

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