Prudential profit beats as annuities business shines

Reuters

* 3rd-qtr net profit $981 mln vs $627 mln loss year earlier

* 3rd-qtr operating earnings/shr $2.94vs est $2.10

Nov 6 (Reuters) - Prudential Financial Inc, thesecond-largest U.S. life insurer, reported higher-than-expectedadjusted quarterly profit, driven its retirement services andannuities business.

The company said operating earnings in its U.S. retirementsolutions and investment management business more than doubledto $1.26 billion in the third quarter from $506 million a yearearlier.

On an adjusted operating basis, income from annuitiesbusiness almost tripled to $821 million for the quarter.

The company, however, booked pre-tax charges of about $1.7billion tied to changes in currency rates and derivatives.

Insurers, who use derivatives to hedge against fluctuationsin interest rates, are being squeezed as the U.S. FederalReserve's monthly bond buying program has kept interest rateslow to boost spending.

Larger rival MetLife Inc reported a third-quarterprofit that narrowly missed analysts' estimates as the largestU.S. life insurer paid more in claims and benefits topolicyholders.

Net income of financial services businesses attributable tothe company was $981 million, or $2.07 per share, for thequarter ended Sept. 30, compared with a loss of $627 million, or$1.34 per share, a year earlier.

On an adjusted operating basis, Prudential earned $2.94 pershare in the three months ended Sept. 30.

Analysts on average had expected earnings of $2.10 per shareon revenue of $12.48 billion, according to Thomson ReutersI/B/E/S.

U.S. regulators voted in September to designate the insureras systemically risky, bringing it under stricter regulatoryoversight.

The insurer said in October that it will not ask a federalcourt to overturn the designation by the U.S. risk council.

Shares of the Newark, New Jersey-based Prudential closed at$81.79 on the New York Stock Exchange on Wednesday.

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