Post Earnings Coverage as Prudential’s Operating Income Gained Approximately 27%

Upcoming AWS Coverage on Manulife Financial Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 28, 2017 / Active Wall St. announces its post-earnings coverage on Prudential Financial, Inc. (NYSE: PRU). The Company posted its fourth quarter fiscal 2016 financial results on February 08, 2017. The second-largest US life insurer surpassed earnings expectations. Register with us now for your free membership at:

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One of Prudential Financial’s competitors within the Life Insurance space, Manulife Financial Corp. (NYSE: MFC), reported its financial results on February 09, 2017. AWS will be initiating a research report on Manulife Financial in the coming days.

Today, AWS is promoting its earnings coverage on PRU; touching on MFC. Get our free coverage by signing up to:

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Earnings Reviewed

For the period ended December 31, 2016, Prudential’s total revenue inched up 1.3% on y-o-y basis to $13.42 billion. For FY16, the Company’s revenue gained 6.1% to $51.57 billion.

For Q4 2016, net income attributable to Prudential was $284 million, or $0.65 per common share, compared to $735 million, or $1.60 per Common share, for Q4 2015. After-tax adjusted operating income was $1.090 billion, or $2.46 per common share, for the reported quarter, compared to $891 million, or $1.94 per Common share, for the year ago same period. The Company’s operating income number exceeded analysts’ estimates of $2.31 per share.

Net income attributable to Prudential for FY16 was $4.368 billion, $9.71 per common share, compared to $5.642 billion, or $12.17 per common share, for FY1. After-tax adjusted operating income was $4.107 billion, or $9.13 per common share, for FY16 compared to $4.649 billion, or $10.04 per common share, for FY15.

Operating Results

Prudential’s ongoing operations include the US Retirement Solutions and Investment Management, US Individual Life and Group Insurance, and International Insurance divisions, as well as Corporate and Other Operations.

For Q4 2016, Prudential’s US Retirement Solutions and Investment Management division reported adjusted operating income of $964 million, up 24% compared to the $776 million from last year’s comparable quarter. The Individual Annuities segment reported adjusted operating income of $422 million in the reported quarter compared to $410 million in the year earlier same quarter. Excluding the effect of the foregoing items, results for the Individual Annuities segment increased $19 million from the year ago same quarter. This increase came primarily from a greater contribution from net investment results which included current quarter returns on non-coupon investments and prepayment fees approximately $10 million above the Company’s average expectations and from a higher contribution from policy fees.

During the reported quarter, the Retirement segment reported adjusted operating income of $318 million compared to $168 million in Q4 2015. The results for Q4 2016 include a benefit of $20 million from settlement of legal matters. Excluding the effect of this item, results for the Retirement segment increased $130 million from the year-ago same quarter. This increase reflected greater contributions from net investment results and case experience as well as lower expenses. The contribution from net investment results was $98 million above the year ago same quarter, reflecting current quarter returns on non-coupon investments and prepayment fees about $30 million above our average expectations in comparison to returns $20 million below average expectations in the year-ago comparable quarter as well as growth of spread-based account values. The Asset Management segment reported adjusted operating income of $224 million for Q4 2016 compared to $198 million in Q4 2015, driven by higher asset management fees reflecting growth in fixed income assets under management and fee rate modifications within certain real estate funds.

For Q4 2016, Prudential’s US Individual Life and Group Insurance division reported adjusted operating income of $181 million compared to $126 million in Q4 2015. The Individual Life segment reported adjusted operating income of $138 million for the reported quarter compared to $99 million in the year ago same quarter. The increase reflected a greater contribution from net investment results and more favorable claims experience, partly offset by a negative impact of approximately $25 million from current quarter updates of reserves and related items and by higher expenses.

The Group Insurance segment reported adjusted operating income of $43 million in Q4 2016 compared to $27 million in the year ago corresponding quarter. The increase reflected lower expenses and a greater contribution from net investment results, partly offset by less favorable underwriting results. The International Insurance segment reported adjusted operating income of $755 million for Q4 2016 compared to $738 million in the year ago same quarter. Adjusted operating income of the segment’s Life Planner operations was $395 million for the reported quarter compared to $367 million in the year earlier comparable quarter. Adjusted operating income of the segment’s Gibraltar Life and Other operations was $360 million for Q4 2016 compared to $371 million in Q4 2015. Foreign currency exchange rates, including the impact of the Company’s currency hedging programs, had an unfavorable impact of $26 million in comparison to Q4 2015. Excluding this impact, results increased $15 million from the year-ago comparable quarter. This increase was driven by a greater contribution from net investment results and by business growth including a contribution from the Company’s indirect investment in AFP Habitat acquired on March 02, 2016, partly offset by less favorable policy benefits experience.

Corporate and Other operations resulted in a loss, on an adjusted operating income basis, of $441 million in Q4 2016 compared to a loss of $458 million in the year ago same quarter.

Assets under Management

Prudential’s Assets under management amounted to $1.264 trillion at December 31, 2016, compared to $1.184 trillion a year earlier. Excluding holdings of the Closed Block division, gross unrealized losses on general account fixed maturity investments at December 31, 2016 amounted to $3.809 billion, including $3.506 billion on high and highest quality securities based on NAIC or equivalent ratings, and amounted to $3.398 billion a year earlier. Net unrealized gains on these investments amounted to $27.585 billion at December 31, 2016, compared to $23.739 billion a year earlier.

Stock Performance

On Monday, February 27, 2017, the stock closed the trading session at $110.95, slightly climbing 0.90% from its previous closing price of $109.96. A total volume of 1.40 million shares have exchanged hands. Prudential Financial’s stock price surged 10.99% in the last three months, 45.54% in the past six months, and 71.01% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 7.34%. The stock is trading at a PE ratio of 11.46 and has a dividend yield of 2.70%.

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