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Prudential (PRU) Q1 Earnings and Revenues Miss Estimates (revised)

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Prudential Financial, Inc.’s (PRU - Free Report) first-quarter 2020 operating net income of $2.32 per share missed the Zacks Consensus Estimate by 18.3%. The bottom line declined 22.7% year over year on lower contributions from Prudential Global Investment Management (PGIM), U.S. Individual Solutions, U.S. Workplace Solutions as well as International Businesses.

Behind the Headlines

Total revenues of $13.3 billion were down 2% year over year due to lower asset premiums, policy charges and fee income and decrease in asset management fees, commissions and other income. The top line missed the Zacks Consensus Estimate by about 10%.

Total benefits and expenses of $12.1 billion were up 1% year over year in the quarter. This increase in expenses was mainly attributable to higher insurance and annuity benefits, deferral of acquisition costs and amortization of acquisition costs.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Quarterly Segment Update

PGIM reported adjusted operating income of $164 million, down nearly 23% year over year. The downside was attributable to lower Other Related revenues as a result of lower strategic investment earnings, and higher expenses, partially offset by higher asset management fees attributable to increase in average assets under management.


U.S. Workplace Solutions’ adjusted operating income was $289 million, down 4.9% from the year-ago quarter on lower contribution from Retirement as well as Group Insurance business.

U.S. Individual Solutions reported adjusted operating income of $353 million, down 38.8% attributable to lower contribution from Individual Annuities and Individual Life.

International delivered adjusted operating income of $751 million, down 18.5% from the year-earlier period, attributable to lower net investment spread results, higher expenses, lower earnings from joint venture investments due to market performance, and less favorable underwriting results. These items were partially offset by business growth.

Corporate and Other Operations incurred adjusted operating loss of $342 million, narrower than $412 million loss a year ago. The improvement reflects lower expenses and higher income from pension and other employee benefit plans, partially offset by lower net investment income.

Share Repurchase Update

Prudential returned capital worth $945 million to its shareholders in the first quarter of 2020.

Financial Update

Cash and cash equivalents of $31.6 billion at quarter end increased 93.8% from 2019 end level.

Debt balance totaled $22.7 billion as of Dec 31, 2019, up 10.1% from the level as of 2019 end.

As of Mar 31, 2020, Prudential Financial’s assets under management increased 2% year over year to $1.481 trillion, up year over year, driven by reflecting market appreciation and fixed income inflows, partially offset by equity outflows.

Adjusted book value per common share, a measure of the company’s net worth, came in at $99.71 as of Mar 31, 2020, up 3% year over year.

Operating return on average equity was 9.3% in the first quarter, contracting 330 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.

Other Insurance Releases

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.

(NOTE: We are reissuing this article to fix a mstake. The original version, published earlier today, May 6, 2020, should no longer be relied upon.)

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