Prudential Beats Q3 Estimates On Solid U.S. Retirement Business Results

Prudential Financial (NYSE:PRU) reported solid results for the third quarter Wednesday, November 2. The company’s revenue increased 36% year-over-year (y-o-y) to over $15 billion driven by a 69% surge in premiums earned and higher income from asset management services. Total realized investment gains, reported as an adjustment figure, increased 48% y-o-y to $649 million in the third quarter. The aforementioned factors resulted in the company’s adjusted operating earnings increasing by about 7% y-o-y to $1.2 billion or $2.66 a share in Q3 2016, which beat analysts’ estimates of $2.48 a share.

International Operations

During the third quarter of 2016, Prudential’s international revenues grew 13% y-o-y to about $5.4 billion, 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 over 6% y-o-y to 3.4 million by the end of this quarter. However, operating income from the international segment decreased 4% y-o-y to $780 million owing to a 261-basis point decline in operating margins.

U.S. Operations

In the U.S. market, Prudential’s retirement division’s revenues increased 87% to over $7.1 billion and operating income before taxes grew 39% y-o-y to over $1 billion driven primarily by strong top line growth in the retirement business and robust bottom line growth in the individual annuities business. In contrast to the robust increase in the U.S. retirement and investment business, operating income of Prudential’s U.S. individual life and group insurance business reported a decline of 24% to $174 million in the quarter owing to a 220-basis point decline in operating margins.

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