How Will Prudential Financial Perform In Its First Quarter?

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PRU: Prudential Financial logo
PRU
Prudential Financial

Prudential Financial (NYSE: PRU) is scheduled to announce first-quarter earnings on May 2. We expect Prudential to report another robust quarter driven by solid performance from the Individual Annuities and Retirement businesses. Additionally, International Insurance, the company’s largest segment, continues to deliver solid results and we expect this trend to continue in the upcoming quarter. Below we take a look at some of the key trends that we will be watching when the company reports earnings. You can also use our interactive dashboard to see our expectations for the quarter, and see how changes in our forecasts can impact the company’s earnings and valuation.

Growth In Retirement Business And Individual Annuities Will Likely Continue

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Prudential is one of the leading companies in the Pension Risk Transfer (PRT) market, and has over $65 billion in funded pension account values. Also, the company has significant penetration in the U.K. PRT market. The company realized over $9 billion of positive net flows in 2017. With plan sponsors getting increasingly interested in PRT transactions, we expect that Prudential’s expertise in such transactions will fetch high-level deposits. Moreover, efficient pricing will likely drive the growth in the Individual Annuities business. PGIM, the company’s investment management division, has outperformed many of its contemporaries in the past. AUM for the division has been on an upward trajectory, and this trend will likely fuel the growth in management fees.

Robust International Insurance Business

The International Insurance Segment is Prudential’s largest segment, contributing about 40% to the Total Revenue. Although sales in Japan, the largest market for Prudential in Asia, have saturated, the company’s effort to increase sales of USD-denominated products has reduced the volatility. We expect this strategy to boost the sales of Gibraltar Life products. Also, the company continues to expand in China, Malaysia, and Brazil. With lower life insurance penetration in markets such as Malaysia, there is potential for growth. Moreover, Prudential will continue to benefit from the Joint Venture with CT Corp in Indonesia.

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