UPDATE: Prudential 4Q Profit Soars On Investments, Insurance

Prudential Financial Inc.'s (PRU) fourth-quarter earnings soared in its financial services business, driven by improved investment results and higher profits at its international unit and U.S. annuity segment.

The profit of $606 million, or $1.26 a share, was up from $213 million, or 45 cents a share, a year earlier. Adjusted operating income, which excludes one-time items and some investment results, rose to $1.97 a share, beating the average estimate of Wall Street analysts by 21 cents.

Prudential's international insurance operations reported an 18% increase in pre-tax adjusted operating income to $692 million, in part because the company acquired two overseas life-insurance units from American International Group Inc. (AIG) last February.

The unit had $94 million in costs tied to integrating the units, and a benefit of $96 million from the sale of a Mexican pension-fund manager.

Its individual annuity unit in the U.S. saw profit rise 13% to $391 million as Prudential pulled funds from its reserves to reflect a decrease in the company's estimate of meeting its obligations to customers. Fees collected by the unit rose as well, as customer accounts rose in value.

Higher fees also helped Prudential's asset-management arm, which reported adjusted operating income of $155 million, a 17% increase.

Sales of annuities fell sharply. The 32% decline to net sales of $2.85 billion came as rival MetLife Inc. (MET) was offering a variable annuity that became an unexpectedly hot seller because of its relatively generous product features. MetLife executives said they were replacing it with a new, less-generous version early this year.

Prudential also reported a 38% drop in realized investment losses, which fell to $568 million before taxes. The investment losses included some that hit derivatives the company uses to hedge its portfolio.

The fourth-quarter results exclude Prudential's closed block of business, representing life-insurance and annuity policies offered when Prudential was owned by its policyholders.

Assets under management reached $901 billion at Dec. 31, up 3.4% from the end of the third quarter.

Shares rose 0.6% to $60.88 in after-hours trading. The stock has climbed more than 20% so far this year.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

--Leslie Scism and Drew FitzGerald contributed to this article.

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