November 3, 2010

Prudential Reports Q3 Growth in Retirement, Investment Management

Insurance segments also performed well

Prudential Financial Inc. announced Wednesday net income of $1.2 billion for its Financial Services Business in the third quarter or $2.46 per common share. This is up from $798 million in the second quarter, and $1.1 billion in the third quarter of 2009.

Prudential reported that its net income year-to-date is over $2.5 billion. Assets under management totaled $750 billion.

"We are pleased with our strong third quarter results, which were driven by our U.S. Retirement Solutions and Investment Management and International Insurance businesses, where we see substantial growth opportunities," John Strangfeld, chairman and CEO, said in a statement.

"Solid value propositions for clients focused on financial security, coupled with expanding distribution, are fueling sustained organic growth," he added.

Prudential has amended its definition of adjusted operating income to exclude mark-to-market adjustments on embedded derivatives from living benefit guarantees, a change that is reflected in the 2010 third quarter report. The exclusion totals a pre-tax gain of $89 million. The new definition, according to Prudential, is a "more meaningful presentation of its results for purposes of analyzing the operating performance of its business segments."

The individual annuities segment reported income of $588 million, up from $315 million one year ago. Current results include a benefit of $245 million from reductions in amortization of deferred policy acquisition and other costs, and a benefit of $167 million from reductions in guaranteed benefit reserves.

The asset management segment reported income of $148 million, compared with $29 million one year ago. Here, the increase reflected "favorable results from commercial mortgage and proprietary investing activities," as well as increased asset management fees.

In the retirement segment, operating income totaled $119 million, up from $117 million one year ago.

The life insurance division reported $251 million in income, down from $307 million in 2009. Income for the individual insurance segment fell from $243 million to $190 million on less favorable "mortality experience" for the current quarter. Income for the group insurance segment fell as well, but not as drastically, dropping from $64 million to $61 million.

In the international investments division, income was $1 million, down from $7 million as a result of poor performance in the segment's global commodities operations.

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