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Prudential’s 2Q Net Income Soars on One-Time Gain

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NEWARK, N.J. (AP)—Prudential Financial Inc. said Wednesday that its net income jumped nearly threefold in the second quarter, as the life insurer recorded a one-time gain of nearly $2 billion as a stronger Japanese yen drove up the value of the company’s derivatives.

Even so, the company’s earnings adjusted to exclude one-time items fell short of Wall Street expectations.

Derivatives are assets tied to the value of commodities like petroleum or fluctuating economic variables like interest rates or currencies.

A stronger Japanese yen relative to the dollar swelled the market value of Prudential derivatives in the April-June quarter, resulting in a $1.9 billion pre-tax gain, the company said.

That led to net income of $2.2 billion, or $4.64 per share, compared with net income of $779 million, or $1.58 per share, in the same quarter last year.

The company said its operating income, excluding the derivatives gains and other items, was $1.34 per share.

Analysts’ consensus forecast called for adjusted earnings of $1.54 per share, according to FactSet.

Prudential’s premiums, income from policy charges and fees, and investment income, increased during the quarter, offsetting a drop in asset management fees and commissions.

All told, revenue grew to $11.4 billion from $10.1 billion a year earlier. Wall Street had projected $10.3 billion in revenue.

The value of Prudential’s individual annuity accounts stood at $124.1 billion at the end of the quarter, an increase of 7 percent from a year earlier. Retirement account values rose 11 percent to $244.8 billion in the same period. And holdings in the company’s assets under management segment grew 11 percent to $650.2 billion.

Meanwhile, annualized new business premiums in the company’s individual life insurance business vaulted 34 percent to $91 million during the quarter. Annualized new business premiums for Prudential’s group insurance unit climbed 25 percent to $65 million.

Prudential shares ended regular trading down 70 cents, or 1.5 percent, at $47.58. The stock added 3 cents to $47.61 in extended trading.