Prudential (PRU) Q2 Earnings Miss Estimates, Revenues Top

Prudential Financial, Inc.’s (NYSE:PRU) second-quarter 2019 operating net income of $3.14 per share missed the Zacks Consensus Estimate by 2.5%. However, the bottom line increased 4.3% year over year.

The PGIM, U.S. Workplace Solutions and International Insurance segments performed well. However, results remained soft at U.S. Individual Solutions.

Behind the Headlines

Total revenues of $14.1 billion grew 8.1% year over year on the back of higher premiums, net investment income and asset management fees, commissions and other income. The top line beat the Zacks Consensus Estimate of $13.6 billion.

Total benefits and expenses of $12.5 billion increased 9.4% year over year in the quarter. This increase in expenses was mainly attributable to higher insurance and annuity benefits, interest credited to policyholders’ account balances, interest expense, general and administrative expenses.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Quarterly Segment Update

PGIM or global investment management businesses reported adjusted operating income of $264 million, up 3.9% year over year. This upside was attributable to higher asset management fees, from an increase in average assets under management, and higher other related revenues, mostly offset by higher expenses.

PGIM assets under management were $1.3 trillion at the end of the reported quarter, up 9% year over year.

U.S. Workplace Solutions’ adjusted operating income was $548 million, up 52.6% from the year-ago quarter on higher contribution from Retirement segment.

U.S. Individual Solutions reported adjusted operating income of $327 million, down 40.5% from the prior-year quarter, attributable to loss at Individual Life and lower earnings from Individual Annuities.

International Insurance delivered adjusted operating income of $849 million, up 8.3% from the year-earlier period owing to higher income at both Life Planner Operations and Gibraltar Life & Other Operations.

Corporate and Other Operations incurred adjusted operating loss of $335 million, wider than loss of $286 million in the year-ago quarter.

Financial Update

Cash and cash equivalents of $15.4 billion at quarter end increased 3.4% year over year.

As of Jun 30, 2019, Prudential Financial’s assets under management and administration increased 7.9% year over year to $1.5 trillion.

Adjusted book value, a measure of the company’s net worth, came in at $97.15 as of Jun 30, 2019, up 4.9% year over year.

Operating return on average equity was 13.1%, within the target of 12-14%.

Debt balance totaled $20.5 billion as of Mar 31, 2019, up 3.4% year over year.

Prudential Financial returned $911 million to its shareholders in the second quarter

Zacks Rank

Prudential Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Second-quarter earnings of Torchmark (NYSE:TMK) and MGIC Investment (NYSE:MTG) beat the respective Zacks Consensus Estimate while that of Reinsurance Group of America (NYSE:RGA) missed expectations.

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