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New reporting standards translate to big losses for Prudential Financial

New accounting standards translate into big losses for Prudential.

Insurance giant Prudential Financial recently reported significant losses for the first quarter of 2012 - losses it attributes to new accounting standards.

The company experienced a net loss of roughly $988 million - a significant difference from one year ago, when Prudential reported net income of $539 million. Pre-tax charges of roughly $1.5 billion were included in the loss. Those charges were due primarily to shifting foreign currency exchange rates, most notably a weakening yen against the dollar.

According to the company, the results reflect newly implemented accounting standards mandated by the Financial Accounting Standards Board. On January 1, Prudential retroactively adopted a 2010 FASB standard regarding which costs of new or renewal contracts were eligible for deferral.

"As a result of the retrospective adoption of this guidance, attributed equity as of December 31, 2011, was reduced by $2.8 billion, or $5.97 per common share, for the Financial Services Businesses and by $0.2 billion, or $68.50 per share of Class B Stock, for the Closed Block Business," the company said.

More FASB reporting changes could soon be in store for insurance companies. At its most recent meeting in April, FASB discussed issues regarding reinsurance, policy loans and contract modifications.

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