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Prudential Financial, Inc. Announces Second Quarter 2013 Results

Stocks in this article: PRU

Prudential Financial, Inc. (NYSE:PRU):

 

After-tax adjusted operating income for the Financial Services Businesses of $1.090 billion, or $2.30 per Common share, compared to $1.38 per Common share for year-ago quarter.

 

Financial Services Businesses Second Quarter Highlights

 

Pre-tax adjusted operating income up $660 million or 77% from year-ago quarter, with increases in each operating division.

 

International Insurance earnings up 25%.

 

Record high earnings in Prudential Retirement, reflecting contribution to results from two significant pension risk transfer transactions in late 2012.

 

Retirement account values surpass $300 billion milestone, reaching $301.8 billion at June 30 for a 23% increase from a year earlier; gross deposits and sales for the quarter of $8.1 billion, net additions $2.0 billion.

 

Asset Management institutional and retail net flows, excluding money market, total $5.6 billion; segment assets under management $826.0 billion at June 30, up 10% from a year earlier.

 

Individual Annuity account values $141.5 billion at June 30, up 14% from a year earlier; gross sales for the quarter of $2.5 billion, net sales $517 million.

 

U.S. Individual Life and Group Insurance earnings up $69 million, reflecting improved individual life mortality and contribution from in force business acquired from The Hartford in January 2013.

 

U.S. Individual Life annualized new business premiums $184 million, compared to $91 million a year ago; expanded distribution from Hartford Life acquisition contributes $58 million to current quarter sales.

 

Significant items included in current quarter adjusted operating income:

 

--

Pre-tax net benefit of $75 million in Individual Annuities, including reduced amortization of deferred policy acquisition and other costs and release of reserves for guaranteed death and income benefits reflecting market performance.

 

--

Pre-tax charge of $11 million in Individual Life for integration costs relating to the acquisition of The Hartford’s individual life insurance business.

 

--

Pre-tax charge of $6 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 charge of $16 million in Corporate and Other operations for writeoff of issuance costs on debt securities redeemed prior to maturity.

 

Net loss of Financial Services Businesses attributable to Prudential Financial, Inc. for second quarter 2013 of $524 million, or $1.13 per Common share.

 

--

The current quarter net loss reflects pre-tax charges of approximately $1.6 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. The current quarter net loss also reflects pre-tax charges of $953 million from changes in market value of derivatives primarily related to the Company’s investment duration management programs.

 

Other financial highlights:

 

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GAAP book value for Financial Services Businesses, $33.7 billion or $71.93 per Common share at June 30, 2013, compared to $37.1 billion or $79.19 per Common share at December 31, 2012. Book value per Common share excluding total accumulated other comprehensive income, $54.18 at June 30, 2013 compared to $57.86 at December 31, 2012.

 

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Excluding net changes in value relating to foreign currency exchange rate remeasurement reflected in net loss, book value per Common share excluding total accumulated other comprehensive income reached $60.14 at June 30, 2013, an increase of $1.90 since December 31 after payment of two quarterly Common Stock dividends totaling 80 cents per share.

 

--

Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses of $16.0 billion at June 30, 2013 compared to $18.6 billion at December 31, 2012; gross unrealized losses of $4.4 billion at June 30, 2013, compared to $2.1 billion at December 31, 2012.

 

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During the second quarter, the Company acquired 3.9 million shares of its Common Stock at a total cost of $250 million, for an average price of $64.45 per share under the June 2012 authorization 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, bringing total repurchases under that authorization to $400 million. From the commencement of share repurchases in July 2011 through June 30, 2013, the Company has acquired 35.2 million shares of its Common Stock under its share repurchase authorizations at a total cost of $1.9 billion, for an average price of $54.00 per share.

 

Prudential Financial, Inc. (NYSE:PRU) today reported after-tax adjusted operating income for its Financial Services Businesses of $1.090 billion ($2.30 per Common share) for the second quarter of 2013, compared to $648 million ($1.38 per Common share) for the year-ago quarter. The net loss for the Financial Services Businesses attributable to Prudential Financial, Inc. was $524 million ($1.13 per Common share) for the second quarter of 2013, compared to net income of $2.229 billion ($4.69 per Common share) for the year-ago quarter. Information regarding adjusted operating income, a non-GAAP measure, is provided below.

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