A loss in Prudential's individual life insurance business and lower operating income in its asset management unit were among the factors that drove the company's fourth-quarter performance.
The No. 1 U.S. life insurer by assets reported adjusted operating income, which excludes realized gains and losses from investments, of $1 billion (£772 million), or $2.44 per share, compared with $1.2 billion, or $2.69 per share, in the year-ago quarter.
Analysts had expected $2.78 per share, according to IBES data from Refinitiv.
Adjusted operating income for PGIM, Prudential's asset management arm, fell 20.6 percent to $243 million from $306 million a year earlier, the company said.
PGIM managed $1.16 trillion in assets as of Dec. 31, $6 billion more than at the end of the year-ago quarter.
Prudential's U.S. individual life insurance segment reported a $26 million adjusted operating income loss, compared with $98 million in income a year ago. Prudential's annuity segment reported an 18 percent drop in its individual annuities business to $445 million, driven by lower policy fees because of a decrease in variable annuity account values.
Stock and bond markets went into a spiral during the 2018 fourth quarter, catching many insurers' massive investment portfolios in the tumult.
The S&P 500 index fell 13.7 percent during the final three months of 2018, marking the worst performance for stocks in more than seven years. Global indices also felt the pain. For example, the MSCI All-World Index fell 13 percent, its worst quarterly performance since the 2011 third quarter.
Prudential also reported a 20 percent drop in adjusted operating income for its workplace retirement and group insurance unit, to $249 million.
Adjusted operating income for Prudential's international businesses dropped 5 percent to $736 million, driven partly by low interest rates in Japan and a 7 percent sales decrease at Gibraltar Life, one of Prudential's Japan units, due to competition from banks in the region, the company said.
Prudential Financial shares were up slightly, by 0.07 percent, to $93.48 in after-hours trading.
(This story corrects the 11th paragraph of an earlier version to say 5 percent, not 9 percent.)
(Reporting by Suzanne Barlyn in New York; Editing by Bill Rigby and Peter Cooney)
By Suzanne Barlyn