Prudential Financial fall’s due to economy crisis

Prudential Financial Inc. shares fell to its lowest point since December 2001 the shares fell 40 percent to $25.51 in early trading. The stock regained by midday trading and settled at a decline of 8.6 percent or $3.73 to $39.56. The fall sparks fears that the damaged economy will spread to the insurance industry.

Insurance companies are generally considered to be immune to changeable market trends, but his now may not be the case considering the latest set-back in Prudential Financial along with the announcement from The Hartford Financial Services Group Inc earlier in the week that it will be posting a large third-quarter loss, mainly due to losses in its investment portfolio. Hartford received a $2.5 billion investment from German financial service firm Allianz SE to help shore up its balance sheet.

Analysts say that Prudential of Newark, New Jersey is one of the most vulnerable companies in the insurance sector that may have to raise capital to fend off potential downgrades from rating agencies.

Source: businessweek