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Prudential (PRU) Q3 Earnings Surpass, Revenues Fall Y/Y
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Prudential Financial, Inc. (PRU - Free Report) reported third-quarter 2023 adjusted operating income of $3.44 per share, which beat the Zacks Consensus Estimate by 8.9%. Moreover, the bottom line rose 45% year over year.
Total revenues of $10.1 billion decreased 52% year over year and missed the Zacks Consensus Estimate by 21.5%. The decline in revenues was due to lower premiums, policy charges and fee income, asset management fees, commissions and other income.
Prudential Financial's third-quarter results reflect lower expenses and higher net investment spread results, partially offset by lower agency and seed and co-investment income and a decline in income from pension as well as other employee benefit plans.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Total benefits and expenses amounted to $8.5 billion, which declined 57.2% year over year in the third quarter. This decrease was due to lower insurance and annuity benefits and amortization of acquisition costs. The figure was lower than our estimate of $11.2 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $211 million in the reported quarter decreased 3.6% year over year. This decrease primarily reflects lower other related revenues, primarily due to lower agency and seed and co-investment income and higher expenses. The figure was higher than our estimate of $198.8 million.
PGIM assets under management of $1.219 trillion increased 1% year over year. The increase was due to equity market appreciation and spread compression, partially offset by net outflows and the impact of higher interest rates.
The U.S. Businesses delivered an adjusted operating income of $1.088 billion, which increased 77% year over year. The figure was higher than our estimate of $985.9 million. This increase primarily reflects higher net investment spread results and lower expenses, partially offset by lower net fee income.
International Businesses adjusted operating income increased 8.4% year over year to $811 million in the third quarter. The figure was lower than our estimate of $816 million. This increase primarily reflects higher net investment spread results.
Corporate and Other incurred an adjusted operating loss of $504 million, wider than a loss of $415 million reported a year ago. The figure was higher than our estimate of a loss of $459.3 million. This higher loss primarily reflects higher expenses, less favorable foreign exchange rate impacts and lower income from pension and other employee benefit plans. It was partially offset by higher net investment income and lower debt interest costs.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $461 million in the third quarter.
Financial Update
PRU exited the third quarter with cash and cash equivalents of $16.9 billion, which decreased 16% from 2022-end.
Total debt balance of $19.5 billion decreased 5.7% from 2022-end.
As of Sep 30, 2023, Prudential Financial’s assets under management and administration increased 2.5% year over year to $1.5 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $94.19, which decreased 2.3% year over year.
Operating return on average equity was 14.5% in the second quarter, which improved 470 basis points year over year.
Everest Group, Ltd.’s (EG - Free Report) third-quarter 2023 operating income per share of $14.14 beat the Zacks Consensus Estimate by 39%. The bottom line rebounded from the year-ago loss of $5.28. Everest Group’s total operating revenues of nearly $4 billion increased 25.6% year over year. The top line beat the consensus mark by 4.9%. Gross written premiums improved 19.3% year over year to $4.4 billion, driven by 32.7% growth in Reinsurance and 3.5% growth in Insurance. Our estimate was $4.1 billion.
Net investment income was $406 million, more than double year over year. Our estimate was $238.5 million. The Zacks Consensus Estimate was pegged at $339 million. Total claims and expenses decreased 6% to $3.3 billion. Our estimate was $3.5 billion. Pre-tax underwriting income was $301 million, rebounding from the year-ago loss of $367 million. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $170 million, narrower than $730 million in the year-ago quarter. The combined ratio improved 2,050 basis points year over year to 91.4 in the reported quarter. The Zacks Consensus Estimate was 95, while our estimate was 95.6.
Assurant, Inc. (AIZ - Free Report) reported third-quarter 2023 net operating income of $4.29 per share, which beat the Zacks Consensus Estimate by 73%. The bottom line surged more than fourfold from the year-ago quarter. The results reflected an increase in the Connected Living business from growth in North American mobile subscribers, the absence of catastrophe reinstatement premiums, an improvement in the Homeowners business and higher net investment income.
Total revenues increased 8.5% year over year to $2.8 billion due to higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 4.5%. Net investment income was up 50.2% year over year to $125.5 million and beat the Zacks Consensus Estimate of $111 million. The figure was higher than our estimate of $101.2 million. Total benefits, loss and expenses increased 0.2% to $2.5 billion, mainly on account of an increase in underwriting, selling, general and administrative expenses and interest expense. The figure was higher than our estimate of $2.4 billion.
MGIC Investment Corporation (MTG - Free Report) reported third-quarter 2023 operating net income per share of 6 cents, which beat the Zacks Consensus Estimate by 12.3%. However, the bottom line declined 25.6% year over year. MGIC Investment recorded total operating revenues of $297 million, which increased 0.3% year over year on higher net investment income, partially offset by a decrease in net premiums earned. The top line missed the consensus mark by 0.5%. Insurance in force increased 0.2% from the prior-year quarter to $294.3 billion. The Zacks Consensus Estimate was $301 billion. Our estimate was $300.7 billion.
The insurer witnessed a 4.5% decrease in primary delinquency to 24,720 loans. Net premiums written increased 3.2% year over year to $234.5 million. The figure was lower than our estimate of $249.32 million. Net investment income increased 30.4% year over year to $55.4 million. Our estimate was $43.1 million. The Zacks Consensus Estimate was pegged at $48.8 million. Persistency — the percentage of insurance remaining in force from one year prior — was 86.3% as of Sep 30, 2023, up from 78.3% in the year-ago quarter. New insurance written was $14.6 billion, down 25.5% year over year. Net underwriting and other expenses totaled $52.9 million, down 14.3% year over year.
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Prudential (PRU) Q3 Earnings Surpass, Revenues Fall Y/Y
Prudential Financial, Inc. (PRU - Free Report) reported third-quarter 2023 adjusted operating income of $3.44 per share, which beat the Zacks Consensus Estimate by 8.9%. Moreover, the bottom line rose 45% year over year.
Total revenues of $10.1 billion decreased 52% year over year and missed the Zacks Consensus Estimate by 21.5%. The decline in revenues was due to lower premiums, policy charges and fee income, asset management fees, commissions and other income.
Prudential Financial's third-quarter results reflect lower expenses and higher net investment spread results, partially offset by lower agency and seed and co-investment income and a decline in income from pension as well as other employee benefit plans.
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 $8.5 billion, which declined 57.2% year over year in the third quarter. This decrease was due to lower insurance and annuity benefits and amortization of acquisition costs. The figure was lower than our estimate of $11.2 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $211 million in the reported quarter decreased 3.6% year over year. This decrease primarily reflects lower other related revenues, primarily due to lower agency and seed and co-investment income and higher expenses. The figure was higher than our estimate of $198.8 million.
PGIM assets under management of $1.219 trillion increased 1% year over year. The increase was due to equity market appreciation and spread compression, partially offset by net outflows and the impact of higher interest rates.
The U.S. Businesses delivered an adjusted operating income of $1.088 billion, which increased 77% year over year. The figure was higher than our estimate of $985.9 million. This increase primarily reflects higher net investment spread results and lower expenses, partially offset by lower net fee income.
International Businesses adjusted operating income increased 8.4% year over year to $811 million in the third quarter. The figure was lower than our estimate of $816 million. This increase primarily reflects higher net investment spread results.
Corporate and Other incurred an adjusted operating loss of $504 million, wider than a loss of $415 million reported a year ago. The figure was higher than our estimate of a loss of $459.3 million. This higher loss primarily reflects higher expenses, less favorable foreign exchange rate impacts and lower income from pension and other employee benefit plans. It was partially offset by higher net investment income and lower debt interest costs.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $461 million in the third quarter.
Financial Update
PRU exited the third quarter with cash and cash equivalents of $16.9 billion, which decreased 16% from 2022-end.
Total debt balance of $19.5 billion decreased 5.7% from 2022-end.
As of Sep 30, 2023, Prudential Financial’s assets under management and administration increased 2.5% year over year to $1.5 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $94.19, which decreased 2.3% year over year.
Operating return on average equity was 14.5% in the second quarter, which improved 470 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 Multi-Line Insurers
Everest Group, Ltd.’s (EG - Free Report) third-quarter 2023 operating income per share of $14.14 beat the Zacks Consensus Estimate by 39%. The bottom line rebounded from the year-ago loss of $5.28. Everest Group’s total operating revenues of nearly $4 billion increased 25.6% year over year. The top line beat the consensus mark by 4.9%. Gross written premiums improved 19.3% year over year to $4.4 billion, driven by 32.7% growth in Reinsurance and 3.5% growth in Insurance. Our estimate was $4.1 billion.
Net investment income was $406 million, more than double year over year. Our estimate was $238.5 million. The Zacks Consensus Estimate was pegged at $339 million. Total claims and expenses decreased 6% to $3.3 billion. Our estimate was $3.5 billion. Pre-tax underwriting income was $301 million, rebounding from the year-ago loss of $367 million. Pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums were $170 million, narrower than $730 million in the year-ago quarter. The combined ratio improved 2,050 basis points year over year to 91.4 in the reported quarter. The Zacks Consensus Estimate was 95, while our estimate was 95.6.
Assurant, Inc. (AIZ - Free Report) reported third-quarter 2023 net operating income of $4.29 per share, which beat the Zacks Consensus Estimate by 73%. The bottom line surged more than fourfold from the year-ago quarter. The results reflected an increase in the Connected Living business from growth in North American mobile subscribers, the absence of catastrophe reinstatement premiums, an improvement in the Homeowners business and higher net investment income.
Total revenues increased 8.5% year over year to $2.8 billion due to higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 4.5%. Net investment income was up 50.2% year over year to $125.5 million and beat the Zacks Consensus Estimate of $111 million. The figure was higher than our estimate of $101.2 million. Total benefits, loss and expenses increased 0.2% to $2.5 billion, mainly on account of an increase in underwriting, selling, general and administrative expenses and interest expense. The figure was higher than our estimate of $2.4 billion.
MGIC Investment Corporation (MTG - Free Report) reported third-quarter 2023 operating net income per share of 6 cents, which beat the Zacks Consensus Estimate by 12.3%. However, the bottom line declined 25.6% year over year. MGIC Investment recorded total operating revenues of $297 million, which increased 0.3% year over year on higher net investment income, partially offset by a decrease in net premiums earned. The top line missed the consensus mark by 0.5%. Insurance in force increased 0.2% from the prior-year quarter to $294.3 billion. The Zacks Consensus Estimate was $301 billion. Our estimate was $300.7 billion.
The insurer witnessed a 4.5% decrease in primary delinquency to 24,720 loans. Net premiums written increased 3.2% year over year to $234.5 million. The figure was lower than our estimate of $249.32 million. Net investment income increased 30.4% year over year to $55.4 million. Our estimate was $43.1 million. The Zacks Consensus Estimate was pegged at $48.8 million. Persistency — the percentage of insurance remaining in force from one year prior — was 86.3% as of Sep 30, 2023, up from 78.3% in the year-ago quarter. New insurance written was $14.6 billion, down 25.5% year over year. Net underwriting and other expenses totaled $52.9 million, down 14.3% year over year.