Prudential sees charges for Lehman, AIG

NEW YORK (Reuters) - Prudential Financial Inc said it expects a third-quarter charge for its exposure to Lehman Brothers Holdings Inc and may take another charge for its exposure to American International Group Inc.

The Newark, New Jersey-based insurance and investment company said on Wednesday it expects a charge on about $117 million of Lehman fixed-income securities that have lost about two-thirds of their value.

It said it also expects an additional charge related to $90 million of exposure related to derivatives transactions involving Lehman, and that some additional Lehman investments have lost $16 million of value in the quarter.

Separately, Prudential said it may take a charge on about $195 million of AIG fixed-income securities that have lost about 57 percent of their value.

It also said it may have to reduce earnings in connection with $55 million of credit protection it sold and which relates to AIG, and said some additional AIG investments have lost $7 million of value in the quarter.

Some of the amounts are in a "closed block" book of life insurance and annuity policies that were issued before the company went public in 2001, but which remain in force.

Prudential disclosed the exposures in a U.S. Securities and Exchange Commission filing.

Lehman, the Wall Street investment bank, filed for bankruptcy protection on Monday. AIG, the insurer, obtained a $85 billion government bailout on Tuesday. Both companies were hurt by exposure to mortgages and the U.S. housing downturn.

Shares of Prudential closed Wednesday down $5.22, or 6.6 percent, at $73.96 on the New York Stock Exchange. The company made its filing after U.S. markets closed.

(Reporting by Jonathan Stempel, editing by Richard Chang)