Why Prudential’s Top Line Is Likely To Shrink Nearly $1 Billion In 2019

by Trefis Team
Prudential Financial
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Prudential Financial (NYSE:PRU) is a global financial company with operations in the United States, Asia, Europe, and Latin America. Trefis details the key components of Prudential Financial’s Revenues in an interactive dashboard, along with our forecast for 2019-2020. While the company’s Total Revenue has jumped 7% from $58.8 billion in 2016 to almost $63 billion in 2018, we expect it to drop 1% (roughly $900 million) to $62.1 billion in 2019 primarily due to a $1.6-billion reduction in revenues for its U.S. Workspace solutions division. This decrease would be partially offset by growth in other divisions like International Insurance ($400 million), U.S Individual Solutions ($100 million), Corporate & Closed Block ($100 million) and Global Investment Management ($100 million).

Notably, we expect Prudential’s International Insurance segment to contribute the biggest chunk of revenues (36% of the total) for 2019 – surpassing the U.S. Workspace solutions division as the company’s largest operating segment. You can make changes to our forecast for individual revenue streams in the dashboard to arrive at your own forecast for Travelers’ Revenues.

What To Expect From Prudential Financial’s Revenues?

  • Prudential Financial’s revenues have jumped approximately $4.2 billion over the last two years, from $58.8 billion in 2016 to $63 billion in 2018.
  • We expect a revenue drop of about $900 million in 2019, which would be driven by U.S. Workspace Solutions ($1.6 billion), partially offset by growth in all other divisions.
  • Thereafter, revenues will likely increase 2% and cross $63.2 billion by 2020.

Details about how trends in Prudential Financial revenues compare with peers MetLife, AIG and Hartford Financial are available in our interactive dashboard.


(A) International Insurance revenues would cross $23.2 billion by 2020

  • This segment provides individual life insurance, retirement and related products to the mass affluent and affluent markets in Japan, Korea and other countries
  • International Insurance revenues have grown 6% over the last 2 years from $21 billion in 2016 to $22.2 billion in 2018.
  • This growth was mainly driven by International Insurance Premiums & Policy Fees, which is expected to grow 3% over 2019-2020 – from $17 billion in 2018 to $17.4 billion by 2020.
  • The segment’s net investment income is on a growth trajectory and is expected to sustain its momentum over 2019-2020. It grew 10% over the last 2 years from $4.8 billion in 2016 to $5.2 billion by 2018 and will likely hover around $5.8 billion by 2020.
  • Taken together, these 2 components will help the segment’s revenues grow at an average annual rate of 2% to cross $23.2 billion by 2020.


(B) U.S. Workspace Solutions grew 24% over the last 2 years from $18.2 billion in 2016 to $22.5 billion in 2018.

  • This segment could be divided into two units:
    1. U.S. Group Insurance: provides a full range of group life, long-term and short-term group disability, long-term care, and group corporate, bank- and trust-owned life insurance in the U.S.
    2. U.S. Retirement Solutions: offers retirement income products and services to employers who set up retirement plans like the 401(k) for the benefit of their employees.
  • Although segment revenues increased $4.3 billion over the last 2 years, it is expected to decrease 7% to $20.9 billion in 2019.
  • Thereafter, the revenues would improve by 3% in the subsequent year and cross $21.5 billion.
  • The decrease in 2019 would mainly be driven by 10% drop in U.S Retirement Solutions division due to lower premiums and policy fees. Further, we expect the Retirement revenues to improve in 2020 and cross $15.6 billion.
  • U.S. Group Insurance has grown at an average annual rate of 3% over the last 2 years, and the same trend is expected to continue over 2019-2020. This would enable the revenues to increase 4% from $5.7 billion in 2018 to $5.9% by 2020.


(C) U.S Individual Solutions would cross $11 billion by 2020, although it would grow at a slower pace.

  • This segment could be further divided into two sub-divisions:
    1. U.S. Individual Annuities: offers variable and fixed annuity products to individual customers across the U.S., targeting mass affluent customers, with household income over $100,000
    2. U.S. Life Insurance: It provides individual variable life, term life and universal life insurance products primarily to the U.S. mass middle, mass affluent and affluent markets.
  • Segment revenues have grown 8% over the last 2 years, from $10 billion in 2016 to $10.8 billion by 2018.
  • We expect segment revenues to grow at an average annual rate of 1% and cross $11 billion by 2020.


(D) Although Corporate & Closed Block revenues have decreased 37% over the last 2 years, it would increase 4% in 2019.

  • The Closed Block business represents assets from participating individual life insurance and annuity products. Similarly, corporate operations consist of investment returns on capital not deployed in any business segments, capital debt, corporate-level income etc.
  • The segment revenues decreased 37% over the last 2 years mainly due to decline in in-force closed block policies, as payment was made to the policyholders in full.
  • We expect the segment to grow 4% in 2019, mainly driven by 8% growth in Closed Block revenues. Thereafter, the revenues are expected to reduce 6% to $4.1 billion by 2020.


(E) Global Investment Management revenues are expected to hover around $3.4 billion by 2020.

  • It provides asset management services related to public and private fixed income, equity, real estate, commercial mortgage, and mutual funds.
  • The segment revenues have fluctuated over the last 2 years from $3 billion in 2016 to $3.4 billion in 2017, before coming down to $3.3 billion in 2018.
  • We expect revenues to increase 3% over 2019-2020 – from $3.3 billion in 2018 to $3.4 billion by 2020, mainly due to higher Assets under Management.

Our interactive dashboard for Prudential Financial details what is driving changes in revenues for Prudential Financial’s U.S Individual Solutions, Corporate & Closed Block and Global Investment Management.


Trefis estimates Prudential Financial’s stock (shows cash and valuation analysis) to have a fair value of $108, which is roughly 15% higher than the current market price (Our price estimate takes into account Prudential Financial’s earnings release for the third quarter).


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