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Prudential Financial (PRU) Q2 Earnings Miss, Revenues Down Y/Y
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Prudential Financial, Inc. (PRU - Free Report) reported second-quarter 2023 adjusted operating income of $2.94 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 25.6% year over year.
Total revenues of $12,644 million decreased 2.4% year over year and missed the Zacks Consensus Estimate by 0.3%. The decline in revenues was due to lower asset management fees, commissions and other income.
Prudential Financial's second-quarter results were affected by declining income from the asset management business. Improving premiums, policy charges, fee income and net investment income partially offset the negatives.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Total benefits and expenses amounted to $11,252 million, which declined 4.7% year over year in the second quarter. This decrease was due to lower insurance and annuity benefits and a change in estimates of liability for future policy benefits. However, the figure surpassed our estimate by 3.6%.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $179 million declined 13.1% year over year. The metric missed our estimate by 10.1%. The decrease primarily reflects lower asset management fees due to net outflows and higher rates in the quarter. The negatives were partially offset by higher other-related revenues.
PGIM assets under management of $1.3 trillion in the reported quarter were up 1% year over year due to appreciation in equity markets, partially offset by higher interest rates and net outflows.
The U.S. Businesses delivered an adjusted operating income of $956 million, which increased 66.8% year over year. The metric beat our estimate by 11.2%. The upside was due to higher net investment spread results and lower net fee income. This segment also benefited from more favorable underwriting results.
International Businesses adjusted operating income increased 13.3% year over year to $784 million in the second quarter. The metric beat our estimate by 10.6%. This increase primarily reflects improving emerging market earnings and business growth.
Corporate and Other incurred an adjusted operating loss of $527 million, wider than $321 million reported a year ago. The metric was higher than our estimate of a loss of $363.1 million. This higher loss was due to higher expenses, negative foreign exchange impact and lower net investment income.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $463 million in the second quarter.
Financial Update
PRU exited the second quarter with cash and cash equivalents of $14,652 million, which decreased from $17,251 million at 2022-end.
Total debt balance of $19.6 billion decreased from $20.7 billion at 2022-end.
As of Jun 30, 2023, Prudential Financial’s assets under management and administration increased 1.7% year over year to $1.6 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $97.38, which decreased 0.5% year over year.
Operating return on average equity was 12.2% in the second quarter, which improved 280 basis points year over year.
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.
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Prudential Financial (PRU) Q2 Earnings Miss, Revenues Down Y/Y
Prudential Financial, Inc. (PRU - Free Report) reported second-quarter 2023 adjusted operating income of $2.94 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 25.6% year over year.
Total revenues of $12,644 million decreased 2.4% year over year and missed the Zacks Consensus Estimate by 0.3%. The decline in revenues was due to lower asset management fees, commissions and other income.
Prudential Financial's second-quarter results were affected by declining income from the asset management business. Improving premiums, policy charges, fee income and net investment income partially offset the negatives.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Operational Update
Total benefits and expenses amounted to $11,252 million, which declined 4.7% year over year in the second quarter. This decrease was due to lower insurance and annuity benefits and a change in estimates of liability for future policy benefits. However, the figure surpassed our estimate by 3.6%.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $179 million declined 13.1% year over year. The metric missed our estimate by 10.1%. The decrease primarily reflects lower asset management fees due to net outflows and higher rates in the quarter. The negatives were partially offset by higher other-related revenues.
PGIM assets under management of $1.3 trillion in the reported quarter were up 1% year over year due to appreciation in equity markets, partially offset by higher interest rates and net outflows.
The U.S. Businesses delivered an adjusted operating income of $956 million, which increased 66.8% year over year. The metric beat our estimate by 11.2%. The upside was due to higher net investment spread results and lower net fee income. This segment also benefited from more favorable underwriting results.
International Businesses adjusted operating income increased 13.3% year over year to $784 million in the second quarter. The metric beat our estimate by 10.6%. This increase primarily reflects improving emerging market earnings and business growth.
Corporate and Other incurred an adjusted operating loss of $527 million, wider than $321 million reported a year ago. The metric was higher than our estimate of a loss of $363.1 million. This higher loss was due to higher expenses, negative foreign exchange impact and lower net investment income.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $463 million in the second quarter.
Financial Update
PRU exited the second quarter with cash and cash equivalents of $14,652 million, which decreased from $17,251 million at 2022-end.
Total debt balance of $19.6 billion decreased from $20.7 billion at 2022-end.
As of Jun 30, 2023, Prudential Financial’s assets under management and administration increased 1.7% year over year to $1.6 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $97.38, which decreased 0.5% year over year.
Operating return on average equity was 12.2% in the second quarter, which improved 280 basis points year over year.
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
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.