DOW JONES NEWSWIRES

Prudential Financial Inc.'s (PRU) second-quarter net income dropped 30% on investment losses and lower insurance and investment revenues.

"Despite unfavorable financial market conditions, the performance of our businesses was strong in the second quarter. We remain confident that our strong balance sheet and diversified mix of businesses position us well to manage through the current environment and achieve our long-term goals," said Chief Executive John R. Strangfeld Jr.

The life insurance and annuity company reported net income of $590 million, down from $846 million a year earlier. The figures include Prudential's closed- block business, made up of life-insurance and annuity policies that it sold while it was a mutual company but no longer offers.

Earnings at Prudential's financial-services business fell 31% to $575 million, or $1.35 a common share, from $835 million, or $1.80 a share, a year earlier.

The latest results included $486 million in pretax net realized investment losses compared with $34 million in investment gains a year earlier. Excluding investment gains and losses and other items, financial-services earnings rose to $2.02 a share from $1.84.

Financial-services revenue rose 3.4% to $6.89 billion.

Analysts' mean estimates were for per-share financial-services earnings of $ 1.85 on revenue of $6.92 billion, according to a poll by Thomson Reuters.

Net realized investment losses included $566 million in write-downs and sales of credit-impaired securities, including $375 million related to asset-backed securities collateralized by subprime mortgages $95 million in write-downs on equity securities.

At the end of the quarter, Prudential had gross unrealized losses on general account fixed-maturity investments of $3.86 billion, including $3.47 billion on investment-grade securities. Gross unrealized losses included $908 million related to asset-backed securities collateralized by subprime mortgages.

The closed-block business reported a 36% increase in net income to $15 million from year-earlier net income of $11 million. Revenue dropped 21% to $1.5 million.

Earnings in the insurance division fell 14% while investment division profit slid 6.1%. International insurance and investment profit grew 5.7%.

Assets under management fell 1.5% to $638 billion.

Prudential reaffirmed its forecast of 2008 financial-services earnings of 7.50 to $7.80 a share. Analysts are looking for $7.45.

Shares were halted at $66.68 after hours before earnings were released.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

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  (END) Dow Jones Newswires
  07-30-08 1709ET
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