Retirement, annuities boost Pru’s third quarter

By BenefitsPro

By Dan Berman

Spurred by gains in its retirement investment and annuities business, Prudential Financial, the second largest life insurer in the U.S., reported a third quarter profit of $981 million and per share earnings of $2.07.

“Our strong results for the third quarter and first nine months reflect solid underlying performance across our businesses,” said John Strangfeld, Prudential’s chairman and CEO in a statement. “In the U.S., our retirement solutions and investment management benefits are continuing to benefit from the growth of our base of quality business, with the landmark pension risk transfer transactions we completed last year contributing to our results.”

The profits marked a turnaround from the same quarter in 2012, when Prudential, based in Newark, N.J., posted a loss of $627 million, or $1.34 per share. For the year to date, the company reported that the net loss for its financial services businesses attributable to Prudential was $264 million, or 57 cents per share, compared to net income of $642 million, or $1.40 per share, for the first nine months of 2012.

The individual annuities segment had adjusted operating income of $821 million, up from $201 million year over year. Third-quarter results include a $451 million benefit based on an updated estimate of profitability. Without these one-time items, operating income for the segment was up $115 million over last year. That increase in the individual annuities business was because of higher asset-based fees generated by growth in variable annuity accounts.

The retirement portion of Prudential business was up $82 million over a year ago attributable to the pension risk transfers mentioned by Strangfeld.

For the third quarter, the insurance giant, reported that its retirement and investment management division had an adjusted profit of $1.26 billion for the quarter, compared to $506 million a year ago.

The company took a pre-tax charge of $24 million related to costs of integrating The Hartford’s life insurance business after purchasing it in January.

Meanwhile, Prudential last month dropped its opposition to a decision by the government that it belongs in the category of financial companies that are too big to fail. The designation brings with it government oversight designed to ensure such institutions can weather final storms like those that toppled industry giants in 2008. Prudential has more than $1 trillion in assets under management.

Prudential’s stock was trading at $86.46 at midday Friday. Its 52-week low was $48.17.

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