Shares of Prudential, Principal Financial Fall

by Lilla Zuill
October 31, 2008

NEW YORK (Reuters) - Shares of Prudential Financial and Principal Financial tumbled on Friday on worries that some life insurers could face capital shortfalls.

Both fell in the wake of rival Hartford Financial Services Group's (HIG) stock plummeting more than 50 percent on Thursday, after it reported massive losses that all but wiped out a recent cash infusion from German insurer Allianz SE (ALVG).

Both Prudential and Principal have said they have sufficient capital, and will not need to raise more to maintain key credit ratings.

But investors are concerned that rocky investment markets could trigger further investment losses for the sector, and push up costs for some of the retirement products they sell, such as variable annuities.

Prudential management, on a Thursday call with investors, declined to give an update on excess capital, as they have done in quarters past, stoking investor concerns.

Wachovia lowered its estimate for Prudential's fourth-quarter earnings per share to $1.67 from $1.97, and cut its 2009 outlook to $7.66 a share from $8.22.

Prudential (PRU) shares fell as much as 20 percent in early trading on Friday. They were recently down 9.7 percent at $26.05.

The No. 2 life insurer on Wednesday reported a quarterly net loss of $108 million, hurt by investment losses.

Principal Financial Group Inc (PFG), which is due to report its quarterly results on Monday, fell 17.6 percent to $16.53 on Friday.

Hartford shares rose 4 percent to $10, after hitting an all-time low of $8.23 on Thursday.

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