Prudential (PRU) Q2 Earnings & Revenues Lag Estimates, Up Y/Y

Prudential Financial, Inc.’s PRU second-quarter 2018 operating net income of $3.01 per share missed the Zacks Consensus Estimate by 2.3%. The bottom line however, improved 44% year over year.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Prudential Financial, Inc. Price, Consensus and EPS Surprise | Prudential Financial, Inc. Quote

Stellar performances at International Insurance and improved results at PGIM drove this upside.

Behind the Headlines

Total revenues of $13 billion inched up 0.1% year over year as decrease in premiums was offset by higher policy charges and fee income, net investment income and asset management fees, commissions and other income. However, the top line lagged the Zacks Consensus Estimate by 8.1%.

Total benefits and expenses of nearly $11.3 billion declined 3.2% year over year in the quarter under review. This reduction in expenses is mainly attributable to lower insurance and annuity benefits, interest credited to policyholders, amortization of acquisition costs plus general and administrative expenses.

Quarterly Segment Update

PGIM — global investment management businesses — reported adjusted operating income of $254 million, up 16.5% year over year. This upside was owing to higher asset management fees, reflecting an increase in assets under management, primarily driven by fixed income net inflows and equity market appreciation. This in turn, is partially offset by rise in expenses.

PGIM assets under management were $1.156 trillion at quarter end.

U.S. Workplace Solutions adjusted operating income was $359 million, down 19.1% from the year-ago quarter on lower contribution from Retirement as well as Group Insurance segment.

International Insurance reported adjusted operating income of $550 million on the back of increased 10-fold year over year, largely because Individual Life segment returned to profitability and International Insurance delivered improved earnings.

Corporate and Other Operations reported adjusted operating loss of $286 million, narrower than $312 million incurred in the year-ago quarter.

Financial Update

Cash and cash equivalents of $14.9 billion at second-quarter end decreased 10.2% year over year.

As of Jun 30, 2018, Prudential Financial’s assets under management increased 4% to $1.39 trillion year over year. Adjusted book value, a measure of the company’s net worth, came in at $92.60 as of Jun 30, up 14.3% year over year.

Operating return on average equity was 13.5%.

Debt balance totaled $18.8 billion as of Jun 30, 2018, down from $19.4 billion as of Jun 30, 2017.

Prudential Financial deployed $760 million in share buybacks and dividends in the reported quarter.

Zacks Rank

Prudential Financial holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other firms from the insurance industry having reported second-quarter earnings so far, the bottom line of Radian Group Inc. RDN, The Hartford Financial Services Group, Inc. HIG and MGIC Investment Corporation MTG surpassed the respective Zacks Consensus Estimate.

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