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Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2020 operating net income of $2.93 per share beat the Zacks Consensus Estimate by 17.2% on the back of higher earnings in Prudential Global Investment Management (PGIM), International Businesses and U.S. Workplace Solutions segments. Moreover, the bottom line increased 30.8% year over year.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Total revenues of $15.1 billion were down 10.7% year over year due to lower premiums. However, the top line beat the Zacks Consensus Estimate by 7.9%.
Total benefits and expenses of $13.5 billion decreased 13.8% year over year in the quarter. This decrease in expenses was mainly attributable to lower insurance and annuity benefits, interest credited to policyholders' account balances and amortization of acquisition costs.
Quarterly Segment Update
PGIM reported record high adjusted operating income of $404 million, up 40.3% year over year. This upside was owing to higher asset management fees, driven by an increase in average account values, and higher Other Related Revenue, driven by record high agency revenue and the impact of investment performance on incentive fees and co- and seed investment earnings, partially offset by higher expenses.
PGIM assets under management were $1.4 trillion (a record high) at the end of the reported quarter, up 13% year over year on the back of market appreciation and public fixed income inflows.
U.S. Workplace Solutions’ adjusted operating income was $451 million, up 31.9% from the year-ago quarter on higher contribution from the Retirement segment.
U.S. Individual Solutions reported adjusted operating income of $375 million, down 26.2% from the prior-year quarter, due to reduced earnings from Individual Life and Individual Annuity business.
International Businesses delivered adjusted operating income of $790 million, up 5.6% from the year-earlier period, thanks lower expenses, business growth, and favorable underwriting results, partially offset by lower net investment spread.
Corporate and Other Operations incurred adjusted operating loss of $486 million, narrower than loss of $738 million incurred a year ago. The lower loss reflects lower expenses, driven by the absence of costs related to the company’s Voluntary Separation Program in the year-ago quarter, partially offset by lower net investment income.
Share Repurchase and Dividend Update
In the quarter under review, the company returned capital worth $442 million to its shareholders.
It also declared a quarterly dividend of $1.15 per share, to be paid out on Mar 11, 2021 to its shareholders of record as of Feb 16, 2021.
Financial Update
Cash and cash equivalents of $13.7 billion at quarter end was down 16.1% year over year.
Debt totaled $20.5 billion as of Dec 31, 2020, down 0.3% from the level as of 2019 end.
As of Dec 31, 2020, Prudential Financial’s assets under management increased 10.9% year over year to $1.7 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $94.79 as of Dec 31, 2020, up 6.2% year over year.
Operating return on average equity was 12.5% in the fourth quarter, expanding 310 basis points year over year.
Full-Year Update
Operating net income for the year was $10.21 per share, down 9.2% from the 2019 level. Revenues for the year totaled $54.1 billion, down 3% from the 2019 level.
Fourth-quarter earnings of Markel Corporation (MKL - Free Report) , American Financial Group, Inc. (AFG - Free Report) , and Chubb Limited (CB - Free Report) beat the respective Zacks Consensus Estimate.
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Prudential (PRU) Q4 Earnings & Revenues Surpass Estimates
Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2020 operating net income of $2.93 per share beat the Zacks Consensus Estimate by 17.2% on the back of higher earnings in Prudential Global Investment Management (PGIM), International Businesses and U.S. Workplace Solutions segments. Moreover, the bottom line increased 30.8% year over year.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Behind the Headlines
Total revenues of $15.1 billion were down 10.7% year over year due to lower premiums. However, the top line beat the Zacks Consensus Estimate by 7.9%.
Total benefits and expenses of $13.5 billion decreased 13.8% year over year in the quarter. This decrease in expenses was mainly attributable to lower insurance and annuity benefits, interest credited to policyholders' account balances and amortization of acquisition costs.
Quarterly Segment Update
PGIM reported record high adjusted operating income of $404 million, up 40.3% year over year. This upside was owing to higher asset management fees, driven by an increase in average account values, and higher Other Related Revenue, driven by record high agency revenue and the impact of investment performance on incentive fees and co- and seed investment earnings, partially offset by higher expenses.
PGIM assets under management were $1.4 trillion (a record high) at the end of the reported quarter, up 13% year over year on the back of market appreciation and public fixed income inflows.
U.S. Workplace Solutions’ adjusted operating income was $451 million, up 31.9% from the year-ago quarter on higher contribution from the Retirement segment.
U.S. Individual Solutions reported adjusted operating income of $375 million, down 26.2% from the prior-year quarter, due to reduced earnings from Individual Life and Individual Annuity business.
International Businesses delivered adjusted operating income of $790 million, up 5.6% from the year-earlier period, thanks lower expenses, business growth, and favorable underwriting results, partially offset by lower net investment spread.
Corporate and Other Operations incurred adjusted operating loss of $486 million, narrower than loss of $738 million incurred a year ago. The lower loss reflects lower expenses, driven by the absence of costs related to the company’s Voluntary Separation Program in the year-ago quarter, partially offset by lower net investment income.
Share Repurchase and Dividend Update
In the quarter under review, the company returned capital worth $442 million to its shareholders.
It also declared a quarterly dividend of $1.15 per share, to be paid out on Mar 11, 2021 to its shareholders of record as of Feb 16, 2021.
Financial Update
Cash and cash equivalents of $13.7 billion at quarter end was down 16.1% year over year.
Debt totaled $20.5 billion as of Dec 31, 2020, down 0.3% from the level as of 2019 end.
As of Dec 31, 2020, Prudential Financial’s assets under management increased 10.9% year over year to $1.7 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $94.79 as of Dec 31, 2020, up 6.2% year over year.
Operating return on average equity was 12.5% in the fourth quarter, expanding 310 basis points year over year.
Full-Year Update
Operating net income for the year was $10.21 per share, down 9.2% from the 2019 level. Revenues for the year totaled $54.1 billion, down 3% from the 2019 level.
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
Fourth-quarter earnings of Markel Corporation (MKL - Free Report) , American Financial Group, Inc. (AFG - Free Report) , and Chubb Limited (CB - Free Report) beat the respective Zacks Consensus Estimate.
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Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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