Allstate beats Street, derivatives hurt Prudential

Wed May 2, 2012 4:53pm EDT

(Reuters) - Two of the largest insurers in the United States reported diverging fortunes on Wednesday, as Allstate (ALL.N) handily beat earnings expectations on better margins and lower disaster losses, while currency fluctuations pushed Prudential Financial (PRU.N) to a substantial net loss of nearly $1 billion.

Allstate, the largest publicly traded home and auto insurer in the country, posted a profit of $766 million or $1.53 per share, compared with a year-earlier profit of $524 million or 98 cents per share.

On an operating basis Allstate earned $1.42. Analysts on average expected earnings of $1.12 per share in the quarter.

The company previously said it lost $260 million in the first quarter on natural disasters, less than some analysts had expected amid a relatively mild winter. Allstate said Wednesday it was also doing better in its long-suffering homeowners business, with higher premiums and stronger margins.

Allstate shares rose 2.9 percent in after-hours trading on the news.

Prudential, the second-largest life insurer in the United States, said it was hurt by charges for value changes in derivatives tied to the weakening of the Japanese yen. Prudential's peer MetLife (MET.N) was also hurt in the first quarter by derivatives, though in its case on interest rates.

Prudential reported a loss of $988 million, or $2.09 per share, compared with a year-earlier profit of $539 million, or $1.10 per share.

On an operating basis, the company earned $1.56. Analysts polled by Thomson Reuters I/B/E/S expected earnings of $1.71 per share.

Prudential said it reached new record values for annuities, retirement accounts and assets under management in its asset management business. Operating income in U.S. individual life insurance rose as fewer people died, but the group life business swung to a loss on higher claims.

Shares fell 4.5 percent in after-hours trading on the news.

In addition to Prudential and Allstate, insurer Hartford Financial (HIG.N) reported results as well.

The Hartford, which is in the middle of a breakup, earned $96 million, or 18 cents per share, in the quarter versus $501 million or 99 cents per share a year earlier.

On an operating basis the company earned $1.25 per share. Analysts expected earnings of 91 cents per share.

Amid pressure from its largest shareholder, hedge fund manager John Paulson, to take action and improve its industry-low valuation, the company said in March it would shut down its annuity business and sell off some of its life operations.

Hartford said pricing rose in its commercial segment, mirroring gains made by competitors, but worsening trends in workers compensation dragged on results, as did the need to add to reserves for prior years in the commercial business.

Shares fell 1.1 percent in after-hours trading.

(Reporting by Ben Berkowitz; Editing by Leslie Gevirtz)

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