What To Expect From Prudential’s Q2 Results

Prudential Financial (NYSE:PRU) is scheduled to release its second quarter earnings on Wednesday, August 3. In the first quarter, Prudential reported revenues of $11.3 billion, which beat consensus estimates of $11.2 billion but were short of the $11.8 billion reported a year ago. This year-over-year (y-o-y) decline was attributable to a 6% decline in premiums earned, lower policy charges and fee income as well as lower income from asset management services.

In the upcoming Q2 results, we expect Prudential’s revenues to decline in mid to high single digits and earnings to decline in double digits, in line with consensus estimates compiled by Reuters.

Factors Driving Results:

• Interest rates: Interest rates have remained low this year, and economic uncertainty because of Britain’s exit from the EU has pushed government bond yields to extremely low levels, with German and Japanese bond yields entering into negative territory. The risk of persistent lower interest rates will definitely impact Prudential’s investment gains in Q2 2016 as well, considering fixed maturity securities have contributed almost 67% of Prudential’s net investment income in the last two years.

• Strong Yen: We expect the company’s results to be positively impacted by a stronger Japanese Yen, considering Japan contributes about 40-45% of the company’s international premiums. International markets contributed about 45% of Prudential’s revenues and 59% of its operating income in the first quarter this year.

See our full analysis of Prudential

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research