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(Reuters) - Prudential Financial Inc (N:PRU), the second-largest U.S. life insurer, reported a quarterly profit that fell short of market estimates by a wide margin, mainly due to losses tied to its derivatives programme.
Overall charges and losses during the quarter totalled $1.13 billion, with derivatives-linked losses forming the majority.
Nearly half of the losses stemmed from a stronger dollar, particularly against the Japanese yen. Japan accounts for about a third of the company's international premiums.
The dollar rose 5.2 percent against the yen in the third quarter from a year earlier.
Prudential, like other insurers, is heavily exposed to persistently low interest rates and wild swings in foreign exchange rates. But it has long had a substantial derivatives programme designed to smooth out that risk.
The company reported operating earnings on an adjusted basis of $2.20 per share, well below the average analyst estimate of $2.41 per share.
Operating income from the individual annuities business halved to $367 million. Profit in its U.S. life insurance business fell 88 percent to $24 million (15.03 million pounds) in the quarter ended Sept. 30, hurt by one-time charges.
Net profit in the financial services businesses attributable to the company was $465 million, or 99 cents per share, for the quarter ended Sept. 30, from $966 million, or $2.04 per share, a year earlier.
The company's financial services business includes individual annuities, retirement services and investment management businesses.
Prudential's shares were little changed post-market after closing at $89.91 on Wednesday. Up to Tuesday's close, the stock had lost about 4 percent this year.
(Reporting By Neha Dimri in Bangalore; Editing by Rodney Joyce)