What To Expect From Prudential In 2018?

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PRU: Prudential Financial logo
PRU
Prudential Financial

Prudential Financial (NYSE: PRU) recently reported fairly solid Q4 results, with EPS for the quarter beating expectations. Overall, the company’s revenue grew by 4% year-on-year to $53.6 billion, while Adjusted EPS increased from $9.1o in 2016 to $10.60 in 2017. The top-line growth was primarily driven by growth in Premiums, Investment Income, and Asset Management Fees. The U.S. Workplace Solutions Segment especially delivered a strong performance, on account of greater penetration in the Pension Risk Transfer Business, driving 4.3% growth in premiums.

Driven by the growth potential of the Pension Risk Transfer Business and further expansion in Asia and Latin America, we expect Prudential to post stronger results in 2018. Our EPS estimate for 2018 is about $12. Our interactive dashboard outlines the company’s performance and the outlook for 2018; you can modify key drivers and forecasts to see how changes would impact the company’s results for this year.

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U.S. Workplace Solutions To Continue Its Upward Trend

U.S. Workplace Solutions contributes about 36% to the Prudential’s Total Revenue. Operating Income from the segment saw a 21% growth in 2017 driven by solid growth in Premiums and Net Investment Income. Prudential is one of the leading companies in the Pension Risk Transfer market, and has over $65 billion in funded pension account values. Also, the company has significant penetration in the U.K. PRT market. With plan sponsors getting increasingly interested in PRT transactions, we expect that Prudential’s expertise in such transactions will drive the U.S. Workplace Solutions division’s income.

International Insurance To Expand In Asia And Latin America

The International Insurance Segment is Prudential’s largest segment, contributing about 40% to the Total Revenue. Revenue growth in this division was a modest 2.6% in 2017. While sales in Japan, the largest market for Prudential in Asia, have saturated, the company is expanding in China and Malaysia. With lower life insurance penetration in markets such as Malaysia, there is potential for growth. Prudential will also likely benefit from the Joint Venture with CT Corp in Indonesia.

 

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