Looking For Prudential’s Intl. Growth In Earnings Wednesday

Prudential Financial (NYSE:PRU) is set to announce its earnings for the first quarter of 2012 on Wednesday, May 2. We expect results similar to those reported in the last year quarter, following the steady performance observed across the insurance sector. The company had reported net income of $589 million or $1.20 per share in Q1 2011. It should benefit from its focus on the Asian insurance market. Prudential is one of the largest financial services organizations in world and competes with MetLife (NYSE:MET), AIG (NYSE:AIG), Hartford Financial (NYSE:HIG) and Manulife (NYSE:MFC).

See our full analysis of Prudential here

Growing Presence in India and China

The emerging markets across Asia, particularly India and China, are seeing an economic boom and rising middle class that seeks better health care coverage. Prudential wants to increase its penetration in these markets by expanding its investment and insurance offerings. (See Prudential Sharpens Focus on Asian Growth Potential). Prudential has a solid base in individual life insurance market in Japan and Korea, and plans to expand in potential markets across South East Asia. The company has emerged as one of the potential buyers of ING’s Asian insurance business, which would help Prudential’s plans of expansion. International Insurance accounts for 33% of our price estimate for Prudential’s stock.

Strong Performance from Retirement Services

Retirement solutions is one of the biggest operations run by Prudential Financial and accounts for 35% of our price estimate for Prudential’s stock. Revenues generated from retirement services have seen a steady increase over the past two years, and we expect the trend to continue, as a growing number of people from the baby boomers generation reach the retirement age. Prudential recently assumed the longevity risk of Rothesay Life covering pension liability values around $665 million. This move helps Prudential counter the mortality risk that it faces in the life insurance market.

Earlier this year, Prudential announced that it would stop sales of individual long-term care coverage products as it seeks to cut down on risks. (See Prudential Exits Individual Long-Term Care Market)

We have a price estimate of $54.02 on Prudential’s stock, about 12% below the current market price.

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