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Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2017 adjusted net income of $2.69 per share beat the Zacks Consensus Estimate of $2.60 by 3.46%. The bottom line also improved about 9.3% year over year.
Improved performances at Total U.S. Individual Solutions, Total Investment Management Division and Total International Insurance aided the above upside.
Behind the Headlines
Total revenues rose 13.6% year over year to $15.3 billion on the back of 19.5% growth in policy charges and fee income, 4.9% increase in policy charges and fee income, 5% higher net investment income and a 12.7% rise in asset management fees, commissions and other income. Also, the top line surpassed the Zacks Consensus Estimate of $12.9 billion.
Total benefits and expenses of nearly $13.7 billion increased 14.4% year over year in the quarter. This increase in expenses is mainly attributable to higher insurance and annuity benefits plus improved general and administrative expenses.
Full-Year Highlights
Adjusted net income of $10.58 per share beat the Zacks Consensus Estimate of $10.49. The bottom line also improved about 15.9% year over year.
Total revenues improved 4% year over year to $53.6 billion. The top line was almost in line with the Zacks Consensus Estimate.
Quarterly Segment Update
Total U.S. Individual Solutions reported adjusted operating income of $639 million, up 14.1% year over year. This upside was driven by higher contribution from Individual Annuities.
Total U.S. Workplace Solutions adjusted operating income was $313 million, down nearly 13.3% from the year-ago quarter, attributable to lower contribution from both Retirement and Group Insurance.
Total Investment Management Division adjusted operating income surged 36.6% to $306 million.
Total International Insurance reported adjusted operating income of $777 million, up 2.9% year over year.
Corporate and Other Operations reported adjusted operating loss of $463 million, wider than the loss of $441 million in the year-ago quarter.
Financial Update
Cash and cash equivalents of $14.5 billion at 2017-end increased from $14.1 billion at 2016-end.
As of Dec 31, 2017, Prudential Financial’s assets under management increased 10.3% to $1.4 trillion from $1.3 trillion as of Dec 31, 2016. Adjusted book value, a measure of the company’s net worth, was $88.28 per share as of Dec 31, 2017, up 11.8% year over year.
Operating return on average equity was 12.6%, flat year over year.
Debt balance totaled $18.6 billion as of Dec 31, 2017, down from $19.2 billion as of Dec 31, 2016.
Among other firms from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corp. (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
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Prudential (PRU) Q4 Earnings, Revenues Beat Estimates
Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2017 adjusted net income of $2.69 per share beat the Zacks Consensus Estimate of $2.60 by 3.46%. The bottom line also improved about 9.3% year over year.
Improved performances at Total U.S. Individual Solutions, Total Investment Management Division and Total International Insurance aided the above upside.
Behind the Headlines
Total revenues rose 13.6% year over year to $15.3 billion on the back of 19.5% growth in policy charges and fee income, 4.9% increase in policy charges and fee income, 5% higher net investment income and a 12.7% rise in asset management fees, commissions and other income. Also, the top line surpassed the Zacks Consensus Estimate of $12.9 billion.
Total benefits and expenses of nearly $13.7 billion increased 14.4% year over year in the quarter. This increase in expenses is mainly attributable to higher insurance and annuity benefits plus improved general and administrative expenses.
Full-Year Highlights
Adjusted net income of $10.58 per share beat the Zacks Consensus Estimate of $10.49. The bottom line also improved about 15.9% year over year.
Total revenues improved 4% year over year to $53.6 billion. The top line was almost in line with the Zacks Consensus Estimate.
Quarterly Segment Update
Total U.S. Individual Solutions reported adjusted operating income of $639 million, up 14.1% year over year. This upside was driven by higher contribution from Individual Annuities.
Total U.S. Workplace Solutions adjusted operating income was $313 million, down nearly 13.3% from the year-ago quarter, attributable to lower contribution from both Retirement and Group Insurance.
Total Investment Management Division adjusted operating income surged 36.6% to $306 million.
Total International Insurance reported adjusted operating income of $777 million, up 2.9% year over year.
Corporate and Other Operations reported adjusted operating loss of $463 million, wider than the loss of $441 million in the year-ago quarter.
Financial Update
Cash and cash equivalents of $14.5 billion at 2017-end increased from $14.1 billion at 2016-end.
As of Dec 31, 2017, Prudential Financial’s assets under management increased 10.3% to $1.4 trillion from $1.3 trillion as of Dec 31, 2016. Adjusted book value, a measure of the company’s net worth, was $88.28 per share as of Dec 31, 2017, up 11.8% year over year.
Operating return on average equity was 12.6%, flat year over year.
Debt balance totaled $18.6 billion as of Dec 31, 2017, down from $19.2 billion as of Dec 31, 2016.
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 that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corp. (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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