Prudential says still buying subprime loans | News | Market News | Reuters: "Prudential says still buying subprime loans
Thu Aug 2, 2007 1:33PM EDT
NEW YORK, Aug 2 (Reuters) - Officials of Prudential Securities Inc (PRU.N: Quote, Profile, Research), the second largest U.S. life insurer, said on Thursday they will continue to purchase subprime loans in the higher and safer end of the market.
'We are still buying subprime paper,' said Prudential Chief Financial Officer Richard Carbone at the company's earnings call.
Investors and analysts have been concerned because of a plunge in the subprime lending market, the most risky sector of real estate. Insurers often have large portfolios of real estate loans, generally bundled as collateralized debt obligations.
Prudential has about $8.5 billion collateralized by subprime loans, the company has said, with 90 percent having the highest credit ratings of AAA or AA.
Carbone said that, in the 'worst case analysis,' Prudential could lose $150 million over the next five years from its subprime exposure, but only "
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