NU Online News Service, Feb. 13, 1:45 p.m. – Prudential Financial Inc., Newark, N.J., is reporting a $506 million net loss for the fourth quarter of 2001 on $7.5 billion in revenue, compared with a $268 million net loss on $7.2 billion in revenue for the fourth quarter of 2000.
Net results for the latest quarter include a variety of unusual costs. Among the unusual items are $25 million in losses on businesses Prudential has sold or closed; $402 million in investment losses; and $502 million in costs related to Prudential’s Dec. 13, 2001, demutualization.
Closed Block Business
Holders of annuities and life insurance policies in the closed block business collect dividends based on the performance of a particular class of business.
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Prudential stopped offering the participating products after it demutualized, but it still includes the closed block results when compiling its official, company-wide financial statements.
The unit recorded a $103 million net loss for the fourth quarter on $2.1 billion in revenue, compared with $63 million in net income on $2.3 billion in revenue for the fourth quarter of 2000.
Financial Services Business
Prudential has put what it thinks of as its core insurance and financial services operations in its financial services business.
The financial services business generated a $403 million net loss for the fourth quarter on $5.2 billion in revenue, compared with a $331 million net loss on $4.6 billion in revenue for the fourth quarter of 2000.
Adjusted income for the financial services unit, which excludes $546 million in unusual charges, increased to $105 million, from $41 million, Prudential says.
The financial services business spent $78 million to restructure the individual life insurance unit in the fourth quarter and $21 million to restructure the private client group, which handles investments for wealthy customers.
The unit also lost $196 million invested in Enron Corp., Houston, and it lost at least $70 million more due to credit losses involving other debt issuers, according to company figures.