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Prudential Financial, Inc. Announces Third Quarter 2013 Results

Stocks in this article: PRU

Prudential Financial, Inc. (NYSE:PRU):

   

After-tax adjusted operating income for the Financial Services Businesses of $1.393 billion, or $2.94 per Common share, compared to $1.59 per Common share for year-ago quarter.

     

Financial Services Businesses Third Quarter Highlights

 

Pre-tax adjusted operating income up $919 million or 90% from year-ago quarter.

 

Earnings from operating divisions, before impact of reserve refinements and related items driven by annual actuarial reviews, up 27%.

 

Retirement account values reach record-high $312.5 billion at September 30 for a 24% increase from a year earlier; gross deposits and sales for the quarter of $10.5 billion; net additions $3.4 billion reflecting positive net flows in Institutional Investment Products and Full Service.

 

Asset Management institutional and retail net flows, excluding money market, total $2.7 billion; segment assets under management $848.1 billion at September 30, up 9% from a year earlier.

 

Individual Annuity account values $147.4 billion at September 30, up 11% from a year earlier; gross sales for the quarter of $2.4 billion, net sales $540 million.

 

U.S. Individual Life annualized new business premiums $165 million, compared to $98 million a year ago; expanded distribution from Hartford Life acquisition contributes $53 million to current quarter sales.

 

International Insurance earnings, before reserve refinements and related items driven by annual actuarial reviews, up $105 million or 14% from year-ago quarter.

 

Significant items included in current quarter adjusted operating income:

 

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Pre-tax net benefit of $280 million from reserve refinements and adjustments of amortization of deferred policy acquisition and other costs reflecting annual review of actuarial assumptions, including benefits of $301 million in Individual Annuities, $27 million in Individual Life, $45 million in Group Insurance, and $19 million in International Insurance’s Life Planner operations, and charges of $4 million in Retirement and $108 million in International Insurance’s Gibraltar Life operation.

 

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Pre-tax net benefit of $150 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.

 

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Pre-tax charge of $24 million in Individual Life for integration costs relating to the acquisition of The Hartford’s individual life insurance business.

 

--

Pre-tax charge of $8 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.

 

Net income of Financial Services Businesses attributable to Prudential Financial, Inc. for third quarter 2013 of $981 million, or $2.07 per Common share.

 

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Current quarter net income reflects pre-tax losses of approximately $1.7 billion from changes in value of product embedded derivatives and derivatives used to hedge associated product risks, largely driven by updated lapse assumptions based on an annual actuarial review. Current quarter net income also includes pre-tax gains of $1.2 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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Excluding net changes in value relating to foreign currency exchange rate remeasurement reflected in net income or loss, book value per Common share excluding total accumulated other comprehensive income amounted to $60.12 at September 30, 2013, an increase of $1.88 since December 31 after payment of three quarterly Common Stock dividends totaling $1.20 per share.

 

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GAAP book value for Financial Services Businesses, $32.9 billion or $70.25 per Common share at September 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, $55.77 at September 30, 2013 compared to $57.86 at December 31, 2012.

 

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Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses of $13.6 billion at September 30, 2013 compared to $18.6 billion at December 31, 2012; gross unrealized losses of $4.9 billion at September 30, 2013, compared to $2.1 billion at December 31, 2012.

 

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During the third quarter, the Company acquired 3.2 million shares of its Common Stock at a total cost of $250 million, for an average price of $78.45 per share under the June 2013 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 during the period from July 1, 2013 through June 30, 2014. From the commencement of share repurchases in July 2011 through September 30, 2013, the Company has acquired 38.4 million shares of its Common Stock under its share repurchase authorizations at a total cost of $2.1 billion, for an average price of $56.03 per share.

 

Prudential Financial, Inc. (NYSE:PRU) today reported after-tax adjusted operating income for its Financial Services Businesses of $1.393 billion ($2.94 per Common share) for the third quarter of 2013, compared to $751 million ($1.59 per Common share) for the year-ago quarter. Net income for the Financial Services Businesses attributable to Prudential Financial, Inc. was $981 million ($2.07 per Common share) for the third quarter of 2013, compared to a net loss of $627 million ($1.34 per Common share) for the year-ago quarter. Information regarding adjusted operating income, a non-GAAP measure, is provided below.

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