Home
Login Register
Others   

Prudential becomes latest insurer to warn - NEW

 Post Reply 1-2 of 2
 
zhenxian
    10-Oct-2008 17:32  
Contact    Quote!
Prudential Asset Management (Singapore) Limited (PAMS)

PAMS was set up as a company in 1994. As of end June 2008, PAMS has approximately S$60.70 billion of assets under management of which approximately S$34.37 billion are discretionary funds managed in Singapore.

PAMS is an ultimately wholly owned subsidiary of Prudential plc of UK. PAMS and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
 
 
ruanlai
    10-Oct-2008 16:02  
Contact    Quote!
 By Juan Lagorio and Bill Rigby

 NEW YORK (Reuters) - Prudential Financial Inc is the latest major
insurer  to warn its quarterly profits would miss forecasts, as the
shares of  rivals were pummeled on concern they would need to raise
capital.

 The second-largest U.S. life insurer said on Thursday that
third-quarter  profit would be cut sharply by losses on poorly
performing annuity and  investment products and a charge for a legal
settlement.

 That followed recent profit warnings at U.S. life and property insurer
Hartford Financial Services Group Inc and MetLife Inc, the largest life
insurer in the United States.

 The latter sold new shares at a discount on Wednesday to bolster its
capital, raising $2 billion, while Hartford earlier this week received a
 $2.5 billion capital injection from Allianz SE, Europe's biggest
insurer.


 "Insurers made big investments in mortgage-related securities and are
also big holders of stocks and bonds in financial firms that have been
wiped out or badly damaged by the credit crisis, such as Lehman Brothers
and Washington Mutual, said Alan Rambaldini, a life insurance analyst at
investment research firm Morningstar.

 "On top of that, bigger life insurers like Prudential get fees on the
size of stock investments behind annuity products they sell to
customers,  which will drop sharply as the broader market plummets," he
said.

 'TRADING ON FEAR'

 Among other life insurers, Lincoln National Corp, fell 35 percent to
$18.31, Principal Financial Group Inc lost 27 percent to $15.79 a share
and Unum Group fell 30 percent to $14.77.

 Life insurance, as measured by the sectoral S&P Life & Health Insurance
index, was down 17 percent, making it the second-worst performing sector
after automakers.

 Even beyond life, XL Capital Inc, a large Bermuda-based reinsurer, fell
 54 percent to $4.01.

 "The group (insurers) are trading on fear right now," said Bret
Howlett,  Standard & Poor's life insurance analyst. "A lot of investors
are worried  about capital positions in this unfavorable operating
environment.

 "People are worried about whether these companies are going to need to
raise additional capital. In this environment, it's going to be
difficult  to raise that capital."

 American International Group Inc shares fell 25 percent to $2.39, one
day  after the company said it would get more liquidity from the
government.

 AIG, once the world's largest insurer, got an $85 billion loan from the
government three weeks ago when it was on the brink of collapse. Under
the new plan, the Federal Reserve Bank of New York will take up to $37.8
billion in investment-grade, fixed-income securities from AIG in
exchange  for cash.

 "The government has effectively provided them support for $110 billion.
I  think they have exhausted that avenue and so I think as they move
forward  their options have diminished," said Keith Wirtz, president and
chief  investment officer of Fifth Third Asset Management.

 UNDER PRESSURE

 Citing market volatility and extraordinary events affecting financial
markets, Prudential has suspended all purchases of its own stock.

 It said it has liquidity to meet requirements at the parent company and
at all operating subsidiaries and, unless it enters into any strategic
deals, its need to access the capital markets before the end of the year
would be modest.

 "We are comfortable with our risk profile and believe that we are in a
strong position to manage through the current environment," said
Prudential Chief Executive John Strangfeld, in a statement.

 Prudential did not say when it would report third-quarter earnings.

 Insurers have been under pressure to keep solid capital positions to
maintain their ratings after their investments lost value as financial
markets sank in recent weeks.

 Keeping high ratings is essential for insurers because lower ratings
can  mean higher costs and, in some cases, even a loss of business.

 (Editing by Toni Reinhold and Andre Grenon)
 
Important: Please read our Terms and Conditions and Privacy Policy .