Prudential takes 4Q loss on forex charges

Prudential Financial posts 4th-quarter loss as weaker yen impacts earnings

Associated Press

NEWARK, N.J. (AP) -- Life insurer Prudential Financial Inc. on Wednesday posted a loss for the fourth quarter after absorbing hefty charges related to the declining value of the Japanese yen.

Prudential lost $214 million, or 48 cents per share, in the three months ended Dec. 31. A year ago it reported profit of $522 million, or $1.08 per share. Net income amounted to $1.69 per share when currency charges and other one-time items are excluded.

Revenue surged to $46.14 billion from $10.14 billion, as it bought large pension funds from General Motors Co. and Verizon Communications Inc. During the quarter Prudential received $25 billion from GM after buying a group annuity contract and $7.5 billion from Verizon.

Analysts expected the company to report earnings of $1.74 per share and $19.11 billion in revenue, according to FactSet.

Prudential's International Insurance segment provides life insurance products for affluent and middle-income markets in Japan, Korea, and other countries. The segment's fourth-quarter operating income was $332 million, up from $300 million a year ago. The insurer logged pre-tax losses of $1.53 billion in foreign-currency exchange rates, mainly from changes in the Japanese yen's value versus other currencies.

During the second quarter Prudential reported a gain of almost $2 billion related to the strong yen, which increased the value of its derivatives. Now the yen is around three-year lows relative to the U.S. dollar. At the start of the fourth quarter a dollar bought about 78 yen. By the end of the quarter it bought 86 yen, and it now is worth 94 yen.

Prudential shares lost $1.55, or 2.7 percent, to $56.96 in afternoon trading.

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