UPDATE 2-Prudential posts lower third-quarter net

(Adds analyst comment, information on losses)

NEW YORK, Oct 31 (Reuters) - Prudential Financial Inc (PRU.N: Quote, Profile, Research, Stock Buzz), one of the largest U.S. life insurers, said on Wednesday that third-quarter net income fell about 25 percent, hurt by investment losses on foreign exchange and subprime mortgages, but operating earnings beat analysts' expectations.

Net income dropped to $860 million, or $1.88 a share, from $1.15 billion, or $2.38 a share, in the year-earlier quarter.

Newark, New Jersey-based Prudential, a top U.S. writer of annuities, said adjusted operating earnings, which analysts use to measure performance, were $905 million, or $1.97 a share.

That beat the average analyst target of $1.69 a share, according to Reuters Estimates, and was above the year-ago quarter, when it posted $828 million, or $1.72 a share, in operating earnings.

The insurer also raised its outlook for the full year to $7.45 to $7.60 a share in adjusted operating income from a previous forecast of $7.20 to $7.40 a share.

In the most recent third-quarter Prudential was hurt by $44 million of losses from impairments and sales of securities, and $67 million from disposals of asset-backed securities backed by subprime mortgages.

Prudential spokesman Bob DeFillippo said the company also had a loss of $109 million in the most recent third quarter due to a hedge against the yen.

Analysts said the write-downs in assets for Prudential, as well as most other life insurers, do not worry the analysts as long as operating earnings continue to improve.