Insurance industry takes a hit
Ravaged by the downturn, MetLife, Hartford and Prudential announced grim results for their latest quarter.
NEW YORK (CNNMoney.com) -- Three major insurance giants reported their third quarter financial results Wednesday after the closing bell and as expected, it wasn't pretty.
Hartford Financial, MetLife, and Prudential Financial all reported a brutal third quarter. Life insurance companies invest the premiums that consumers pay them in order to cover payouts and expenses and make a profit. As Wall Street has cratered, insurance companies have seen a significant chunk of their portfolios crumble away.
MetLife (MET, Fortune 500) reported operating earnings of 88 cents per share, which was in line with the estimate that analysts polled by Thomson Reuters had forecast. In a positive sign, the company said it would continue to pay out its annual dividend.
"Our board of directors has declared an annual common stock dividend of 74 cents per share, which is unchanged from the dividend we paid in 2007," MetLife CEO C. Robert Henrikson said in a written statement.
Shares of MetLife were up slightly, nearly 1%, in after-hours trading after closing down slightly at $29.55 during the regular trading session. In the past year, however, shares of the company have fallen more than 55%.
Prudential (PRU, Fortune 500) reported operating income of 74 cents per share, which was less than the 94 cents per share that analysts had forecast.
Shares of Prudential were down less than 1% after hours, after closing down $1.25 for the regular session at $35.25. In the past year, shares of Prudential have fallen more than 60%.
Prudential's CEO said that negative economic conditions have really taken a hit on the company's investment portfolio.
Hartford (HIG, Fortune 500) announced a loss of $1.40 per share, not quite as terrible as $1.54 the loss that analysts were expecting.
As with the other insurance companies, Hartford took a massive hit from losses in its investment portfolio. "Our holdings in the financial sector weighed heavily on our investment performance in the quarter," said Ramani Ayer, The Hartford's chairman and CEO, in a written statement.
The Hartford remains financially strong and has the liquidity and capital to meet its commitments to customers, Ayer said. Earlier this month the company received a $2.5 billion capital investment from Allianz SE.
Shares of Hartford were down nearly 5% in after-hours trading, after closing at $19.86 during the regular trading session. Shares of Hartford are almost 80% off year-ago levels.
Looking ahead: While the insurance companies made efforts to sooth customers, indicating that they have enough cash on hand to make payments, they also signaled growing market uncertainty by lowering or withdrawing guidance going forward.
Prudential said that market volatility is too great for the company to make accurate guidance estimates. The company "has determined to withdraw its earnings guidance for 2008," it said in a written statement.
Hartford said that it expects earnings per share to be between $4.30 and $4.50 for the full year, significantly lower than the $5.25 that analysts had forecast.
As insurance companies take a beating, rumors swirl about whether the government will extend a lifeline to the industry with the Troubled Asset Relief Program, or TARP.
On Hartford's conference call after its earnings were released, Chief Financial Officer Lizabeth Zlatkus indicated that the company might consider taking advantage of government funding, depending on terms.
"As we stand here today, we feel very well capitalized," Zlatkus said. However she added that the company would examine the terms of any government lifeline that is offered.
"We certainly think there are favorable terms and we would look to do that," she said on the call. 
