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Prudential Financial, Inc. Announces 2013 Results

Prudential Financial, Inc. (NYSE:PRU):

 

After-tax adjusted operating income for the Financial Services Businesses for year 2013 of $4.586 billion, or $9.67 per Common share, compared to $6.40 per Common share for 2012.

 

Fourth quarter 2013 after-tax adjusted operating income for the Financial Services Businesses of $1.048 billion, or $2.20 per Common share, compared to $1.76 per Common share in the year-ago quarter.

 

Financial Services Businesses Fourth Quarter Highlights

 

Pre-tax adjusted operating income up $385 million or 36% from year-ago quarter.

 

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

 

U.S. Individual Life and Group Insurance earnings up $128 million, reflecting contribution from in force business acquired from The Hartford in January 2013 and improved group insurance claims experience.

 

Retirement account values reach record-high $322.9 billion at year end, for an 11% increase from a year earlier; gross deposits and sales for the quarter of $9.9 billion; net additions $1.4 billion, reflecting positive net flows in Institutional Investment Products and Full Service.

 

Asset Management institutional and retail net flows, excluding money market, total $6.8 billion, marking the 20th consecutive quarter of positive net flows; segment assets under management $869.9 billion at year end, up 5% from a year earlier.

 

Individual Annuity account values surpass $150 billion milestone, reaching $154.1 billion at year end, a 14% increase from a year earlier; gross sales for the quarter of $2.4 billion, net sales $322 million.

 

U.S. Individual Life annualized new business premiums $166 million, compared to $144 million a year ago.

 

International Insurance constant dollar basis annualized new business premiums from captive distribution of $500 million, compared to $483 million a year ago; total annualized new business premiums of $742 million for current quarter.

 

Significant items included in current quarter adjusted operating income:

 

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Pre-tax net benefit of $108 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.

 

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Pre-tax charge of $8 million in Individual Life for integration costs relating to the acquisition of The Hartford’s individual life insurance business.

 

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Pre-tax charges of $101 million in International Insurance, including $78 million in Life Planner operations and $23 million in the Gibraltar Life operation, for reserve refinements and related items.

 

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Pre-tax charge of $11 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.

 
During the year-ago quarter, several of our U.S. businesses incurred costs for items such as business process improvements, fund start-up costs, and reserves for costs associated with certain client contracts, which were estimated to be in excess of a baseline level relative to business volume. These items had an estimated negative impact of approximately $100 million on fourth quarter 2012 pre-tax adjusted operating income including $17 million in the Individual Annuities segment, $16 million in the Retirement segment, $49 million in the Asset Management segment, and $18 million in the Group Insurance segment. In addition, an update of the effective tax rate applicable to adjusted operating income in the fourth quarter of 2012 based on full year results contributed approximately 7 cents per Common share to year-ago quarter results.
 

Net loss of Financial Services Businesses attributable to Prudential Financial, Inc. for year 2013 of $713 million, or $1.55 per Common share.

 

Fourth quarter 2013 net loss of Financial Services Businesses attributable to Prudential Financial, Inc. of $427 million, or 94 cents per Common share.

 

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The current quarter net loss includes pre-tax losses 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 $59.99 at December 31, 2013, an increase of $1.91 from a year earlier after payment of four quarterly Common Stock dividends totaling $1.73 per share.

 

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GAAP book value for Financial Services Businesses, $33.9 billion or $72.30 per Common share at December 31, 2013, compared to $37.0 billion or $79.04 per Common share a year earlier. Book value per Common share excluding total accumulated other comprehensive income, $53.98 at December 31, 2013 compared to $57.70 a year earlier.

 

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Net unrealized gains on general account fixed maturity investments of the Financial Services Businesses of $15.8 billion at December 31, 2013 compared to $18.6 billion a year earlier; gross unrealized losses of $4.0 billion at December 31, 2013, compared to $2.1 billion a year earlier.

 

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During the fourth quarter, the Company acquired 2.9 million shares of its Common Stock at a total cost of $250 million, for an average price of $85.35 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 December 31, 2013, the Company has acquired 41.3 million shares of its Common Stock under its share repurchase authorizations at a total cost of $2.4 billion, for an average price of $58.11 per share.

Prudential Financial, Inc. (NYSE:PRU) today reported after-tax adjusted operating income for its Financial Services Businesses of $4.586 billion ($9.67 per Common share) for the year ended December 31, 2013, compared to $3.019 billion ($6.40 per Common share) for 2012. The net loss for the Financial Services Businesses attributable to Prudential Financial, Inc. was $713 million ($1.55 per Common share) for 2013, compared to net income of $479 million ($1.05 per Common share) for 2012. Information regarding adjusted operating income, a non-GAAP measure, is provided below.

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