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Prudential Financial's Q4 Earnings Miss Estimates, Down Y/Y

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Prudential Financial Inc. (PRU - Free Report) reported fourth-quarter 2015 after tax adjusted operating income of $1.94 per share that missed the Zacks Consensus Estimate by 14.5%. Earnings also decreased 8.5% year over year due to lower revenues.

Prudential Financial Inc. (PRU - Free Report) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Including the impact of one-time items, net income came in at $1.60 per share. The company had posted a loss of $2.69 million in the year-ago quarter.

Total revenue decreased 16.3% year over year to $13.2 billion due to lower premiums (down 24.2%), policy charges and fee income (down 4.2%), net investment income (down 1.9%) and asset management fees, commissions and other income (down 4.9%). Nonetheless, the top line surpassed the Zacks Consensus Estimate of $11.6 billion.

Total benefits and expenses were $12.1 billion in the quarter, down 16.7% year over year. The decrease was due to lower insurance and annuity benefits (down 23%), interest credited to policyholders' account balances (down 4.4%), interest expense (down 1.8%) and other expenses (down 0.41%)

Full-Year Highlights

Prudential Financial’s adjusted operating income for 2015 came in at $10.04 per share, up 9.01% year over year.
Total revenues climbed 2.04% year over year to $48.6 billion.

Quarterly Segment Update

U.S. Retirement Solutions and Investment Management reported adjusted operating income of $776 million, down 5.7% year over year. The downside can be attributed to a lower contribution from Retirement business.

U.S. Individual Life and Group Insurance reported adjusted operating income of $126 million, down 22.2% from year-ago quarter. Lower income in both Group Insurance and Individual Life segment resulted in the underperformance.
International Insurance reported adjusted operating income of $738 million, up 7.6% year over year. The increase was due to higher profits at Gibraltar Life, and Other operations.

Corporate and Other Operations reported adjusted operating loss of $458 million, wider than a loss of $326 million in the year-ago quarter.

Prudential Financial’s assets under management inched up 0.7% from year-end 2014 to $1.184 trillion as of Dec 31, 2015. Book value, a measure of the company’s net worth, was $73.59 at Dec 31 2015 compared with $64.75 as of Dec 31, 2014.

Share Repurchase and Dividend Update

During the fourth quarter, Prudential spent $250 million to buy back 3.1 million shares. From Jul 2011 through Dec 2015, the company bought back 65 million shares for $4.4 billion.


The company’s board of directors approved a 21% hike of its quarterly dividend to 70 cents per share.

Performance of Other Multi-Line Insurers

The bottom line at CNO Financial Group, Inc. (CNO - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) beat their respective Zacks Consensus Estimate, while Assurant, Inc. (AIZ - Free Report) missed the same in the fourth quarter.

Zacks Rank

Prudential carries a Zacks Rank #3 (Hold).

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