Key Takeaways From Prudential Financial’s Q2 Earnings

by Trefis Team
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Prudential Financial (NYSE:PRU) reported results for the second quarter on Wednesday, August 3. The company’s revenue declined 6% year-over-year (y-o-y) from $12.5 billion to $11.8 billion, exceeding the consensus estimates of $11.4 billion. This decline is attributable to a decline in premiums earned, lower policy charges and fee income, and lower income from asset management services. Total realized investment gains, reported as an adjustment figure, increased 28% y-o-y to $360 million in the second quarter. The aforementioned factors resulted in the company’s adjusted operating earnings dropping by about 40% y-o-y to $829 million or $1.84 a share in Q2 2016, which fell short of analysts’ estimates of $2.52 a share.pru_earn1

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International Operations

During the second quarter of 2016, Prudential’s international revenue grew 18% y-o-y, primarily driven by growth in both Life Planner and Gibraltar operations. Japan contributed a significant portion of this growth, as the total number of individual policies in force in Japan, excluding Gibraltar, increased 6% y-o-y to 3.3 million at the end of this quarter. However, the operating income from the international segment decreased 5% y-o-y to $803 million.

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U.S. Operations

In the U.S. market, Prudential’s retirement division’s operating income before taxes declined 11% y-o-y to $870 million due to higher benefits and expenses incurred during the quarter.  Further, the individual life and group insurance business in the U.S. also posted an operating loss of $201 million.

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