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Prudential’s International Insurance Falls on Strong Dollar

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International Insurance segment

Prudential Financial’s (PRU) international insurance segment reported a fall in its adjusted operating income to $812 million, compared with $845 million in 3Q14. This division forms 56% of the company’s total adjusted operating income.

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Life Planner operations

Prudential Financial’s Life Planner Operations’ business fell in 3Q15, compared with the previous year. The segment reported adjusted operating income of $398 million in 3Q15, compared to $414 million in 3Q14. The prior year’s quarter included a net benefit of $17 million from refinements of reserves and related items reflecting an annual review of actuarial assumptions. The continued business growth was partially offset by higher expenses including costs related to distribution system development and technology.

Also, the foreign currency exchange rates resulted in a negative impact of $14 million in 3Q15 when compared to 3Q14.

Gibraltar Life and Other operations

Gibraltar Life was the only segment to report a year-over-year fall in its operations. The segment reported adjusted operating results of $414 million in 3Q15, compared with $431 million in 3Q14. Excluding the charge of $15 million in the prior year’s quarter, income fell by $32 million mainly due to a lower net contribution from investment results in 3Q15, driven by lower returns on non-coupon investments. The operations were also impacted by unfavorable foreign exchange rates resulting in an impact of $19 million in 3Q15.

Prudential Financial expects an improved growth scenario for its international insurance segment in the upcoming quarters, backed by continued growth in the Eurozone.

The Financial Select Sector SPDR ETF (XLF) invests 1.3% of its portfolio in Prudential Financial, whereas Ace (ACE), Chubb (CB), and Allstate (ALL) have weights of 1.1%, 0.73%, and 2.7%, respectively, in the XLF ETF.

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