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Prudential Financial Inc. Reports Operating Results (10-Q)

August 03, 2012 | About:
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10qk

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Prudential Financial Inc. (PRU) filed Quarterly Report for the period ended 2012-06-30.

Prudential Financial Inc has a market cap of $22.45 billion; its shares were traded at around $52.03 with a P/E ratio of 7.6 and P/S ratio of 0.6. The dividend yield of Prudential Financial Inc stocks is 3%.

Highlight of Business Operations:

The gross unrealized losses at June 30, 2012 and December 31, 2011, are composed of $2,673 million and $3,535 million, respectively, related to high or highest quality securities based on NAIC or equivalent rating and $1,220 million and $1,819 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. At June 30, 2012, $2,376 million of the gross unrealized losses represented declines in value of greater than 20%, $318 million of which had been in that position for less than six months, as compared to $3,478 million at December 31, 2011, that represented declines in value of greater than 20%, $871 million of which had been in that position for less than six months. At June 30, 2012, the $3,246 million of gross unrealized losses of twelve months or more were concentrated in asset-backed securities, and in the manufacturing, public utilities, and finance sectors of the Companys corporate securities. At December 31, 2011, the $3,900 million of gross unrealized losses of twelve months or more were concentrated in asset-backed securities, and in the manufacturing, finance, and public utilities sectors of the Companys corporate securities. In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for other-than-temporary impairments for these securities was not warranted at June 30, 2012 or December 31, 2011. These conclusions are based on a detailed analysis of the underlying credit and cash flows on each security. The gross unrealized losses are primarily attributable to foreign currency movements, credit spread widening and increased liquidity discounts. At June 30, 2012, the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the anticipated recovery of its remaining amortized cost basis.

Revenues from our Life Planner operations increased $248 million, from $1,944 million in the second quarter of 2011 to $2,192 million in the second quarter of 2012, including a net unfavorable impact of $2 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $250 million, from $1,901 million in the second quarter of 2011 to $2,151 million in the second quarter of 2012. This increase in revenues came primarily from increases in premiums and policy charges and fee income of $192 million, from $1,535 million in the second quarter of 2011 to $1,727 million in the second quarter of 2012, driven by growth of business in force and continued strong persistency. Net investment income increased $40 million, from $332 million in the second quarter of 2011 to $372 million in the second quarter of 2012, primarily due to investment portfolio growth, partially offset by lower yields in our investment portfolio compared to the prior year period.

Revenues from our Gibraltar Life and Other operations increased $1,135 million, from $3,104 million in the second quarter of 2011 to $4,239 million in the second quarter of 2012, including a favorable impact of $69 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $1,066 million, from $3,035 million in the second quarter of 2011 to $4,101 million in the second quarter of 2012. This increase reflects a $1,015 million increase in premiums and policy charges and fee income, from $2,363 million in the second quarter of 2011 to $3,378 million in the second quarter of 2012. The increase in premiums and policy charges and fee income reflects growth in protection products within the bank distribution channel including $814 million higher premiums from sales of single premium whole life policies, and also reflects higher renewal premiums of $124 million in the Life Consultant distribution channel. Also contributing to the increase in revenues is higher net investment income of $47 million primarily reflecting investment portfolio growth. Asset management fees and other income increased compared to the prior year period primarily driven by the $33 million benefit related to the distribution received in the current year quarter from the Japan Financial Stability Fund.

Revenues from our Life Planner operations increased $468 million, from $4,041 million in the first six months of 2011 to $4,509 million in the first six months of 2012, including a net favorable impact of $37 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $431 million, from $3,967 million in the first six months of 2011 to $4,398 million in the first six months of 2012. This increase in revenues came primarily from increases in premiums and policy charges and fee income of $339 million, from $3,226 million in the first six months of 2011 to $3,565 million in the first six months of 2012, driven by growth of business in force and continued strong persistency. Net investment income increased $71 million, from $672 million in the first six months of 2011 to $743 million in the first six months of 2012, primarily due to investment portfolio growth, partially offset by lower yields in our investment portfolio compared to the prior year period.

Revenues from our Gibraltar Life and Other operations increased $2,443 million, from $5,328 million in the first six months of 2011 to $7,771 million in the first six months of 2012, including a favorable impact of $267 million from currency fluctuations. Excluding the impact of currency fluctuations, revenues increased $2,176 million, from $5,253 million in the first six months of 2011 to $7,429 million in the first six months of 2012. This increase reflects a $2,063 million increase in premiums and policy charges and fee income, from $3,948 million in the first six months of 2011 to $6,011 million in the first six months of 2012. The increase in premiums and policy charges and fee income reflects growth in the bank distribution channel, including $1,155 million of higher premiums from sales of single premium whole life policies, as well as higher renewal premiums of $690 million in the Life Consultant distribution channel. Also contributing to the increase in revenues is higher net investment income of $240 million primarily reflecting investment portfolio growth, partially offset by lower investment portfolio yields and the impact of unfavorable results from our equity method investments. Asset management fees and other income declined compared to the prior year period primarily driven by the absence of a $153 million benefit recognized in the prior year from the partial sale of our indirect investment in China Pacific Group, partially offset by the $33 million benefit related to the distribution received in the current year period from the Japan Financial Stability Fund.

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