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PRU Q3 Earnings Beat Estimates on PGIM and U.S. Protection Strength
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Key Takeaways
PRU's Q3 earnings beat estimates by 13.9%, despite a 6.9% profit decline and a 14.3% revenue drop.
PGIM earnings rose 7.8%, while Individual Life and Group Insurance profits grew 30.1% and 12.2%, respectively.
Prudential's Japan earnings fell 25.5%, while the company returned $741 million to shareholders in Q3.
Prudential Financial, Inc. (PRU - Free Report) reported third-quarter 2026 adjusted operating income of $3.77 per share, beating the Zacks Consensus Estimate of $3.31 by 13.9%. The bottom line declined 6.9% year over year.
Total adjusted operating revenues declined 14.3% year over year to $13.49 billion, missing the consensus estimate by 3.4%. The results benefited from strength in PGIM and U.S. protection businesses, partially offset by the sales suspension at Prudential of Japan. Assets under management increased marginally to $1.62 trillion.
PRU Faces Revenue Pressure Despite Higher Investment Income
Premiums declined 29.4% year over year to $5.89 billion. However, policy charges and fee income increased 2% to $1.15 billion.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Net investment income increased 8.8% year over year to $5.19 billion, while asset management fees, commissions and other income decreased 15.7% to $1.26 billion.
Total benefits and expenses declined 14.8% year over year to $11.85 billion. Operating expenses increased 3.6% to $1.62 billion, while interest credited to policyholders' account balances rose 18.8% to $1.44 billion. Adjusted operating income before taxes declined 10% to $1.65 billion.
Prudential's PGIM Benefits From Higher Asset Management Fees
PGIM adjusted operating income increased 7.8% year over year to $263 million. The improvement reflected lower expenses from the absence of a prior-year reorganization charge and higher asset management fees, supported by equity market appreciation and strong investment performance.
Lower seed and co-investment earnings, along with agency earnings, partially offset these gains due to higher interest rates. PGIM assets under management remained relatively unchanged at $1.47 trillion.
Total net inflows reached $7.4 billion, supported by third-party institutional inflows of $7.7 billion and retail inflows of $1.3 billion. Affiliated outflows totaled $1.6 billion.
PRU's Retirement Business Sees Mixed Results
Retirement adjusted operating income declined 2.7% year over year to $620 million. Higher sales-related expenses, lower Habitat joint venture earnings and unfavorable mortality and run-off experience in the pension risk transfer business weighed on results.
Higher net investment spread income, primarily supported by business growth, partially offset these headwinds. Retirement account values increased 3% year over year to $364 billion, benefiting from equity market appreciation and interest credited to policyholders.
Quarterly sales totaled $8.2 billion, including $3.9 billion in retail annuity sales. The business recorded its highest quarterly retail annuity sales since 2013, supported by record registered index-linked annuity sales.
Group Insurance adjusted operating income increased 12.2% year over year to $101 million. Improved life underwriting, reflecting favorable mortality experience and continued growth in supplemental health products, supported earnings. Higher growth-related expenses partially offset the improvement.
Year-to-date Group Insurance sales climbed 22.9% to $682 million, driven by continued momentum in the Premier middle-market segment.
Individual Life adjusted operating income increased 30.1% year over year to $199 million. Favorable underwriting results, supported by a reserve refinement and higher investment spreads, drove the improvement.
However, quarterly Individual Life sales declined 6.9% to $230 million, primarily reflecting fluctuations in large-case sales.
PRU's Legacy Products Face Continued Run-Off Pressure
U.S. Legacy Products adjusted operating income declined 17.9% year over year to $253 million. Lower fee income from the continued run-off of traditional variable annuities and unfavorable guaranteed universal life underwriting weighed on results.
Equity market appreciation partially offset the pressure. Legacy annuity account values declined 12.1% year over year to $71.82 billion, as net outflows from the run-off portfolio outweighed market-related gains.
Prudential's Japan Earnings Decline on Sales Suspension
Japan Business's adjusted operating income decreased 25.5% year over year to $559 million. Higher expenses and unfavorable underwriting related to the sales suspension at Prudential of Japan hurt profitability.
Lower investment spread income, primarily driven by reduced alternative investment income, added pressure. Constant-dollar sales declined 35.9% year over year to $291 million.
Corporate and Other recorded an adjusted operating loss of $349 million compared with a loss of $353 million in the year-ago. Prudential estimated the third-quarter impact of the Japan sales suspension at approximately $140 million, including compensation-related and regulatory expenses.
PRU Maintains Strong Liquidity and Shareholder Returns
The parent company's highly liquid assets totaled $4 billion, exceeding the company's $3 billion target. Total assets declined 0.6% year over year to $771.38 billion.
Adjusted book value per share increased 3.2% year over year to $102.39 in th. The year-to-date adjusted operating return on equity remained unchanged at 14.5%.
Prudential returned $741 million to shareholders during the third quarter, including $250 million through share repurchases and $491 million in dividends. The quarterly dividend was $1.40 per share.
Willis Towers Watson Public Limited Company (WTW - Free Report) reported third-quarter 2026 adjusted earnings of $3.63 per share, beating the Zacks Consensus Estimate of $3.60 by 0.8%. The bottom line increased 18% year over year. Revenues rose 8% to $2.46 billion but missed the consensus estimate of $2.47 billion by 0.4%. Organic revenues grew 4%, supported by growth across both operating segments.
Reported revenues increased from $2.29 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 4 percentage points to the quarterly revenue change. Adjusted EBITDA increased 12% year over year to $577 million. The related margin expanded 100 basis points to 23.5%, reflecting improved underlying profitability.
Brown & Brown, Inc.’s (BRO - Free Report) third-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 1.9% year over year. Revenues of $1.72 billion missed the consensus mark by 2.3% but increased 7.4% year over year on a reported basis. Acquisition activity supported the top line, while organic revenues increased 1.2%.
Commissions and fees increased 9.7% year over year to $1.70 billion, while investment and other income declined 55.4% to $25 million from $56 million. Adjusted EBITDAC margin contracted 200 basis points (bps) to 34.6%. Adjusted EBITDAC increased 1.7% to $597 million, while adjusted income before taxes rose 1.3% to $479 million.
Arthur J. Gallagher & Co. (AJG - Free Report) reported third-quarter 2026 adjusted earnings of $3 per share, missing the Zacks Consensus Estimate of $3.01 by 0.3%. The bottom line increased 29.9% year over year. Revenues of $3.91 billion also missed the consensus estimate of $3.96 billion by 1.3%.
Reported revenues before reimbursements rose 18.2% year over year to $3.93 billion, driven by acquisitions and organic growth. Combined Brokerage and Risk Management organic revenues increased 5%. Commissions climbed 24.3% year over year to $2.37 billion, while fees advanced 15.7% to $1.22 billion.
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PRU Q3 Earnings Beat Estimates on PGIM and U.S. Protection Strength
Key Takeaways
Prudential Financial, Inc. (PRU - Free Report) reported third-quarter 2026 adjusted operating income of $3.77 per share, beating the Zacks Consensus Estimate of $3.31 by 13.9%. The bottom line declined 6.9% year over year.
Total adjusted operating revenues declined 14.3% year over year to $13.49 billion, missing the consensus estimate by 3.4%. The results benefited from strength in PGIM and U.S. protection businesses, partially offset by the sales suspension at Prudential of Japan. Assets under management increased marginally to $1.62 trillion.
PRU Faces Revenue Pressure Despite Higher Investment Income
Premiums declined 29.4% year over year to $5.89 billion. However, policy charges and fee income increased 2% to $1.15 billion.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Net investment income increased 8.8% year over year to $5.19 billion, while asset management fees, commissions and other income decreased 15.7% to $1.26 billion.
Total benefits and expenses declined 14.8% year over year to $11.85 billion. Operating expenses increased 3.6% to $1.62 billion, while interest credited to policyholders' account balances rose 18.8% to $1.44 billion. Adjusted operating income before taxes declined 10% to $1.65 billion.
Prudential's PGIM Benefits From Higher Asset Management Fees
PGIM adjusted operating income increased 7.8% year over year to $263 million. The improvement reflected lower expenses from the absence of a prior-year reorganization charge and higher asset management fees, supported by equity market appreciation and strong investment performance.
Lower seed and co-investment earnings, along with agency earnings, partially offset these gains due to higher interest rates. PGIM assets under management remained relatively unchanged at $1.47 trillion.
Total net inflows reached $7.4 billion, supported by third-party institutional inflows of $7.7 billion and retail inflows of $1.3 billion. Affiliated outflows totaled $1.6 billion.
PRU's Retirement Business Sees Mixed Results
Retirement adjusted operating income declined 2.7% year over year to $620 million. Higher sales-related expenses, lower Habitat joint venture earnings and unfavorable mortality and run-off experience in the pension risk transfer business weighed on results.
Higher net investment spread income, primarily supported by business growth, partially offset these headwinds. Retirement account values increased 3% year over year to $364 billion, benefiting from equity market appreciation and interest credited to policyholders.
Quarterly sales totaled $8.2 billion, including $3.9 billion in retail annuity sales. The business recorded its highest quarterly retail annuity sales since 2013, supported by record registered index-linked annuity sales.
Prudential's Protection Businesses Deliver Earnings Growth
Group Insurance adjusted operating income increased 12.2% year over year to $101 million. Improved life underwriting, reflecting favorable mortality experience and continued growth in supplemental health products, supported earnings. Higher growth-related expenses partially offset the improvement.
Year-to-date Group Insurance sales climbed 22.9% to $682 million, driven by continued momentum in the Premier middle-market segment.
Individual Life adjusted operating income increased 30.1% year over year to $199 million. Favorable underwriting results, supported by a reserve refinement and higher investment spreads, drove the improvement.
However, quarterly Individual Life sales declined 6.9% to $230 million, primarily reflecting fluctuations in large-case sales.
PRU's Legacy Products Face Continued Run-Off Pressure
U.S. Legacy Products adjusted operating income declined 17.9% year over year to $253 million. Lower fee income from the continued run-off of traditional variable annuities and unfavorable guaranteed universal life underwriting weighed on results.
Equity market appreciation partially offset the pressure. Legacy annuity account values declined 12.1% year over year to $71.82 billion, as net outflows from the run-off portfolio outweighed market-related gains.
Prudential's Japan Earnings Decline on Sales Suspension
Japan Business's adjusted operating income decreased 25.5% year over year to $559 million. Higher expenses and unfavorable underwriting related to the sales suspension at Prudential of Japan hurt profitability.
Lower investment spread income, primarily driven by reduced alternative investment income, added pressure. Constant-dollar sales declined 35.9% year over year to $291 million.
Corporate and Other recorded an adjusted operating loss of $349 million compared with a loss of $353 million in the year-ago. Prudential estimated the third-quarter impact of the Japan sales suspension at approximately $140 million, including compensation-related and regulatory expenses.
PRU Maintains Strong Liquidity and Shareholder Returns
The parent company's highly liquid assets totaled $4 billion, exceeding the company's $3 billion target. Total assets declined 0.6% year over year to $771.38 billion.
Adjusted book value per share increased 3.2% year over year to $102.39 in th. The year-to-date adjusted operating return on equity remained unchanged at 14.5%.
Prudential returned $741 million to shareholders during the third quarter, including $250 million through share repurchases and $491 million in dividends. The quarterly dividend was $1.40 per share.
Zacks Rank
Prudential Financial currently has a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Willis Towers Watson Public Limited Company (WTW - Free Report) reported third-quarter 2026 adjusted earnings of $3.63 per share, beating the Zacks Consensus Estimate of $3.60 by 0.8%. The bottom line increased 18% year over year. Revenues rose 8% to $2.46 billion but missed the consensus estimate of $2.47 billion by 0.4%. Organic revenues grew 4%, supported by growth across both operating segments.
Reported revenues increased from $2.29 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 4 percentage points to the quarterly revenue change. Adjusted EBITDA increased 12% year over year to $577 million. The related margin expanded 100 basis points to 23.5%, reflecting improved underlying profitability.
Brown & Brown, Inc.’s (BRO - Free Report) third-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 1.9% year over year. Revenues of $1.72 billion missed the consensus mark by 2.3% but increased 7.4% year over year on a reported basis. Acquisition activity supported the top line, while organic revenues increased 1.2%.
Commissions and fees increased 9.7% year over year to $1.70 billion, while investment and other income declined 55.4% to $25 million from $56 million. Adjusted EBITDAC margin contracted 200 basis points (bps) to 34.6%. Adjusted EBITDAC increased 1.7% to $597 million, while adjusted income before taxes rose 1.3% to $479 million.
Arthur J. Gallagher & Co. (AJG - Free Report) reported third-quarter 2026 adjusted earnings of $3 per share, missing the Zacks Consensus Estimate of $3.01 by 0.3%. The bottom line increased 29.9% year over year. Revenues of $3.91 billion also missed the consensus estimate of $3.96 billion by 1.3%.
Reported revenues before reimbursements rose 18.2% year over year to $3.93 billion, driven by acquisitions and organic growth. Combined Brokerage and Risk Management organic revenues increased 5%. Commissions climbed 24.3% year over year to $2.37 billion, while fees advanced 15.7% to $1.22 billion.