NU Online News Service, Nov. 4, 2003, 6:07 p.m. EST – Prudential Financial Inc., Newark, N.J., says the move to put its securities unit in a joint venture with Wachovia Corp., Charlotte, N.C., paid off in the third quarter.
The company is reporting $307 million in net income for the quarter on $6.7 billion in revenue, up from $302 million in net income on $6.6 billion in revenue for the third quarter of 2002.
Net income figures for both quarters include the effects of income taxes and a variety of special gains and charges. Prudential says its financial services operating income, which excludes the special gains and charges and the contributions of what it calls a “closed block” of business left over from before its demutualization, increased to $361 million, from $303 million.
At Prudential’s individual life unit, sales of corporate-owned life insurance plummeted to $2 million, from $21 million, as a result of regulatory turmoil, while a decrease in variable life sales and increases in universal life sales and term life sales left Prudential with $66 million in new, ordinary life sales, down from $68 million for the third quarter of 2002.
Annuity revenue increased to $1.5 billion, from $563 million, thanks to the acquisition of American Skandia Inc., Shelton, Conn., from Skandia Insurance Company Ltd., Stockholm. Prudential completed that deal in May.
A second major strategic move involved folding the Prudential Securities unit into Wachovia Securities L.L.C. Prudential gets a 38% share of any profits. Prudential has retained $28 million in obligations in connection with the deal, but, excluding the retained obligations, the venture generated $47 million in profits in the third quarter, Prudential says.
In 2002, Prudential’s financial advisory unit reported $15 million in third-quarter losses.