Prudential Financial Inc. (NYSE:PRU) will be taking about $700 million in charges related to its long-term care insurance (LTCI) business.
John Nadel and other analysts at Sterne, Agee & Leach have discussed the charges in a comment on Prudential’s latest earnings report.
When Prudential demutualized, it began to report separate results for a closed block of pre-demutualization business and for the company’s Financial Services Businesses. The Financial Services Businesses section of the financial reports includes a section on the performance of divested businesses. The divested businesses results affect the company’s net income and book value but not the company’s adjusted operating results.
Prudential decided to discontinue individual LTCI sales earlier this year and then decided to discontinue group LTCI sales. When Prudential dropped LTCI sales, it moved LTCI results into a category for divested businesses, the analysts said.
The Prudential Financial Services Businesses are reporting $722 million in after-tax adjusted operating income for the third quarter on $13 billion in revenue, up from $406 million in after-tax adjusted operating income on $9.8 billion in revenue for the third quarter of 2011.
The company as a whole is reporting a $661 million net loss for the quarter on $13 billion in revenue, compared with $1.6 billion in net income on $15 billion in revenue for the comparable quarter in 2011.