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Prudential Financial (PRU) Beats on Q4 Earnings, Hikes Dividend

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Prudential Financial, Inc. (PRU - Free Report) reported fourth-quarter 2021 adjusted operating income of $3.18 per share, which surpassed the Zacks Consensus Estimate by 33.1%. The bottom line improved 13.6% year over year.

Prudential Financial's results were driven by solid contributions from U.S. Businesses and International Businesses coupled with lower benefits and expenses. However, a year-over-year decline in revenues partly dampened PRU’s results.

Operational Update

Total revenues of $13.7 billion declined 5.8% year over year but beat the Zacks Consensus Estimate by 2.3%. The fall in revenues was due to lower premiums, and reduced asset management fees, commissions and other income.

Total benefits and expenses amounted to $12.2 billion, which fell 7.4% year over year in the fourth quarter. This decrease was on account of lower insurance and annuity benefits, interest credited to policyholders' account balances, interest expense, and general and administrative expenses.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote

Quarterly Segment Update

Prudential Global Investment Management’s (PGIM) adjusted operating income of $350 million slumped 13.4% year over year. Reduced seed and co-investment income, lower incentive fees and, elevated costs led to a fall in Other Related Revenues, which dampened the segment’s results.

PGIM assets under management attained a record high of $1.5 trillion in the reported quarter, which rose 2% year over year. The improvement came on the back of market appreciation, positive third-party net flows, private originations and solid investment performance.

U.S. Businesses delivered adjusted operating income of $895 million, which climbed 12.7% year over year. The upside can be attributed to improved variable investment income and higher net fee income. However, escalating costs and less favorable underwriting results partly offset the segment’s performance.

Assurance IQ incurred an adjusted operating loss of $10 million, narrower than the prior-year quarter’s loss of $19 million. The improvement was driven by 15% revenue growth.

International Businesses’ adjusted operating income grew 4.9% year over year to $829 million in the fourth quarter, courtesy of reduced expenses, business growth and improved net investment spread results.

Corporate and Other incurred an adjusted operating loss of $489 million, narrower than the loss of $521 million reported a year ago. Increased income from pension and other employee benefit plans, reduced interest expense and higher net investment income benefited the segment’s results.

Capital Deployment

Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $375 million and dividends worth $443 million in the fourth quarter.

Dividend Hike Announced

Concurrent with fourth-quarter results, Prudential Financial’s board of directors approved a 4% hike in the quarterly dividend. With this, the dividend payout now stands at $1.20 per share compared with the prior payout of $1.15. The increased dividend will be paid on Mar 11, 2022 to shareholders of record as on Feb 15.

Financial Update

PRU exited the fourth quarter with cash and cash equivalents of $12.9 billion, which declined 5.9% from the 2020-end level.

Total debt balance of $19.3 billion fell 6.3% from the figure at 2020-end.

As of Dec 31, 2021, Prudential Financial’s assets under management inched up 1.2% year over year to $1.7 trillion.

Adjusted book value per common share, a measure of the company’s net worth, came in at $108.72, which increased 14.7% year over year.

Operating return on average equity was 11.8% in the fourth quarter, which contracted 10 basis points (bps) year over year.

Full-Year Update

For 2021, the adjusted operating income of Prudential Financial was $14.58 per share. The bottom line surged 50% from the 2020 figure. Revenues for the year totaled $59.8 billion, which climbed 14% from the 2020 level.

In 2021, PRU returned capital worth $4.3 billion to shareholders (via $2.5 billion in share buybacks and $1.8 billion through dividends).

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 Some Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, AXIS Capital Holdings Limited (AXS - Free Report) , RLI Corp. (RLI - Free Report) and Aflac Incorporated (AFL - Free Report) beat the Zacks Consensus Estimate for earnings.

AXIS Capital reported adjusted fourth-quarter 2021 earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 58% and rebounded from the year-ago loss of 20 cents. AXS’ total operating revenues of $1.4 billion outpaced the Zacks Consensus Estimate by 11.2% and rose 15% year over year. Gross premiums written increased 16% year over year to $1.6 billion. The combined ratio of AXIS Capital improved 1650 bps year over year to 93.1.

RLI’s fourth-quarter 2021 operating earnings of $1.26 per share beat the Zacks Consensus Estimate by 35.9% and improved 38% from the prior-year quarter. Operating revenues of RLI for the reported quarter were $275.9 million, up 14.2% year over year but missed the consensus mark by a whisker. Gross premiums written increased 12.2% year over year to $337.2 million. RLI’s combined ratio improved 730 bps year over year to 80.7.

Aflac reported fourth-quarter 2021 adjusted earnings per share of $1.28, which surpassed the Zacks Consensus Estimate by 2.4%. The bottom line improved 19.6% year over year. AFL’s total revenues of $5.4 billion fell 8.1% year over year but outpaced the consensus mark by 4.2%. Adjusted net investment income of Aflac declined 5.1% year over year to $893 million in the fourth quarter.