Life insurer and annuity provider Prudential Financial Inc. Wednesday posted a 7 percent profit increase in the third quarter as its retirement and investment businesses improved.
The Newark, N.J.-based company said net income in its financial services business rose to $1.17 billion, or $2.46 per share, up from $1.04 billion, or $2.35 per share, in the year-ago period.
Adjusted earnings, excluding a pretax benefit related to its individual annuities business and other gains and charges from actuarial reviews, came to $2.12 per share.
Revenue rose 16 percent to $7.88 billion, from $6.8 billion last year.
Analysts surveyed by Thomson Reuters, on average, were expecting profit of $1.43 per share, on revenue of $7.45 billion. The estimates typically exclude items.
In its retirement and investment management division, adjusted operating income leaped to $855 million from $461 million last year.
The biggest gain in the segment came from individual annuity performance. Individual annuity gross sales slipped to $5.4 billion, from $5.9 billion last year. Asset management operating income more than quadrupled to $148 million, mainly because of better results from commercial mortgage and proprietary investing activities, along with higher asset management fees
Prudential’s U.S. insurance business saw adjusted operating income slip to $251 million, from $307 million last year. Both the individual life and group insurance segment saw declines, reflecting higher claims.
The international insurance and investments division reported a 5 percent gain in adjusted operating income to $531 million, from $507 million in the year-ago quarter.
Chairman and CEO John Strangfeld said the company sees “substantial growth opportunities” in international insurance, and noted that the company expects to close its purchase of two Japanese life insurance businesses from American International Group Inc. in the first quarter of 2011.
Assets under management rose 17 percent to $750 billion, from $641 billion a year ago.
The company’s “closed block” book of business — life insurance and annuity policies issued before the company went public in December 2001 but still in force — reported net income of $77 million for the quarter, reversing a year-ago net loss of $8 million. The Class B shares that reflect performance of the closed block business do not trade.
Prudential said consolidated quarterly net income, which includes results from its financial services businesses and the closed block business, totaled $1.24 billion, up 15 percent from $1.08 billion a year ago.
The company booked $278 million of pretax net realized investment gains, reversing net losses a year ago of $377 million.
In aftermarket electronic trading, Prudential shares slipped 24 cents to $53.87, from their Wednesday close in the regular session at $54.11.
