Prudential Financial Inc (PRU.N), the second-largest U.S. life insurer, reported a third-quarter loss after losing money on derivatives and writing down some of its insurance businesses.
Prudential posted a net loss of $618 million, or $1.41 per share, compared to a profit of $1.52 billion, or $3.06 per share, a year earlier.
The net loss figure includes a $684 million pre-tax loss on derivatives and a charge of $521 million from changes in foreign currency valuations, the company said.
Larger rival Metlife Inc (MET.N) also reported a loss in the third quarter on a large goodwill impairment charge and derivatives tied to its credit spreads.
Insurers, who use derivatives to hedge against fluctuations in interest rates, are being squeezed as the U.S. Federal Reserve keeps rates at rock-bottom levels to stimulate the economy.
Rating agency Moody's last month warned that years of low interest rates would erode life insurers' earnings and force them into increasingly large writedowns.
Prudential wrote down the values of its Individual Annuities, Retirement and Individual Life insurance business related to the impact of actuarial assumptions.
Moody's had cautioned that writedowns will become "larger and more frequent" as insurers are forced to acknowledge that their assumptions about rates of return have become unrealistic.
On an adjusted operating basis, the company earned $1.53 per share. Analysts on average expected earnings of $1.68 per share, according to Thomson Reuters I/B/E/S.
This is the third time in a row that Prudential has missed analysts' estimates.
Prudential also faces potentially greater regulatory oversight with the U.S. risk council moving closer to deciding whether the insurer is "systemically important.
Shares of the Newark, New Jersey-based Prudential were down 1 percent in trading after the bell. They closed at $55.39 on Wednesday on the New York Stock Exchange.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Sriraj Kalluvila)