DOW JONES NEWSWIRES
Prudential Financial Inc.'s (PRU) financial-services business
reported a 4.9% drop in second-quarter earnings, ending a streak of
three quarterly losses, as profit smashed analysts'
expectations.
"Our current quarter results reflect improvements in financial
markets, together with our strengthening competitive position,"
said Chairman and Chief Executive Officer John Strangfeld. "Sales
and net flows were solid across the board," with variable-annuity
sales and flows, along with individual life sales "especially
strong."
In light of the equity-market gains, Prudential is projecting
2009 earnings at the high end of its forecast.
Shares rose 1.3% after hours to $47.51.
Despite being stung by investment losses and weak capital
markets, Prudential declined to take funds under the U.S.
Treasury's Troubled Asset Relief Program. After that decision, the
company bulked up its balance sheet in June, raising $2.4 billion
in stock and debt offerings.
Prudential's financial-services business reported a profit of
$538 million, or $1.25 a share, compared with $556 million, or
$1.32 a share, a year earlier. Excluding investment gains and
losses and other items, earnings declined to $1.88 a share from
$1.96. Financial-services revenue fell 7.5% to $6.34 billion.
Analysts were looking for financial-services earnings of $1.20 a
share on revenue of $6.55 billion, according to a poll by Thomson
Reuters.
Individual-annuities earnings nearly tripled amid reserve
reductions for guaranteed benefits. Because of those guarantees,
there has been concern among annuity sellers whether they had
sufficient capital to cover the minimum payments in light of the
stock market's slump.
However, profit in the asset-management business tumbled 83% on
woes from proprietary investing and commercial-mortgage
activities.
Including the closed-block business, made up of life-insurance
and annuity policies offered when Prudential was a mutual company,
earnings tumbled 72% to $163 million as the closed block business
swung to a loss on $857 million of pretax net realized investment
losses.
Assets under management fell 6.3% to $444.7 billion.
-By Jay Miller and Kevin Kingsbury, Dow Jones Newswires;
212-416-2355; jay.miller@dowjones.com