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Prudential (PRU) Q2 Earnings Beat, Revenues Miss Estimates
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Prudential Financial, Inc.’s (PRU - Free Report) second-quarter 2021 operating net income of $3.79 per share beat the Zacks Consensus Estimate by 24.7%. Moreover, the bottom line increased two-fold year over year owing to higher contributions from U.S. Businesses and International Businesses.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Total revenues of $13.1 billion increased 1.3% year over year on higher net investment income, asset management fees, commissions and other income. However, the top line missed the Zacks Consensus Estimate by 5.3%.
Total benefits and expenses of $11.2 billion decreased 6.7% year over year in the quarter. This decline was mainly on lower insurance and annuity benefits, interest credited to policyholders' account balances, interest expense, amortization of acquisition costs, general and administrative expenses
Quarterly Segment Update
Prudential Global Investment Management (PGIM) reported adjusted operating income of $315 million, which declined 2.8% year over year. The results reflect higher asset management fees due to an increase in average account values that were more than offset by lower other related revenues, driven by a decrease in seed and co-investment income as well as higher expenses.
PGIM assets under management improved 8% year over year to a record high of $1.511 trillion at the end of the reported quarter. The upside was driven by market appreciation, positive third-party net flows and a strong investment performance.
U.S. Businesses’ adjusted operating income was $1.088 billion, which increased more than two-fold from the year-ago quarter’s level. The upside reflects higher net investment spread results, driven by higher variable investment income and higher net fee income, backed primarily by equity market appreciation. It was partially offset by less favorable underwriting results.
Assurance IQ incurred an adjusted operating loss of $38 million, wider than the loss of $16 million in the year-ago quarter. This reflects a 92% increase in revenues, which was more than offset by escalated expenses to support business growth.
International delivered an adjusted operating income of $803 million, up 16.2% from the year-earlier period’s figure. This increase was owing to net favorable comparative impact from annual assumption update and other refinements of $80 million. Excluding this item, the upside was due toadied by higher net investment spread results, business growth and lower expenses, partially offset by lower earnings from joint venture investments and less favorable underwriting results.
Corporate and Other incurred an adjusted operating loss of $300 million, narrower than the loss of $541 million reported a year ago. This improvement reflects lower expenses.
Financial Update
Cash and cash equivalents of $15.1 billion at the quarter end increased 10.5% from the 2020-end level.
Total debt balance of $20.6 billion on Jun 30, 2021 dipped 0.3% from the level as of 2020 end.
As of Jun 30, 2021, Prudential’s assets under management increased 7.8% year over year to $1.7 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $104.39 as of Jun 30, 2021, up 13.4% year over year.
Operating return on average equity was 14.9% in the second quarter, expanding 710 basis points year over year.
Of the insurance industry players that have reported second-quarter results so far, the earnings results of Everest Re Group, Ltd. , Cincinnati Financial (CINF - Free Report) and American Financial Group (AFG - Free Report) beat the respective Zacks Consensus Estimate.
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Prudential (PRU) Q2 Earnings Beat, Revenues Miss Estimates
Prudential Financial, Inc.’s (PRU - Free Report) second-quarter 2021 operating net income of $3.79 per share beat the Zacks Consensus Estimate by 24.7%. Moreover, the bottom line increased two-fold year over year owing to higher contributions from U.S. Businesses and International Businesses.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Operational Update
Total revenues of $13.1 billion increased 1.3% year over year on higher net investment income, asset management fees, commissions and other income. However, the top line missed the Zacks Consensus Estimate by 5.3%.
Total benefits and expenses of $11.2 billion decreased 6.7% year over year in the quarter. This decline was mainly on lower insurance and annuity benefits, interest credited to policyholders' account balances, interest expense, amortization of acquisition costs, general and administrative expenses
Quarterly Segment Update
Prudential Global Investment Management (PGIM) reported adjusted operating income of $315 million, which declined 2.8% year over year. The results reflect higher asset management fees due to an increase in average account values that were more than offset by lower other related revenues, driven by a decrease in seed and co-investment income as well as higher expenses.
PGIM assets under management improved 8% year over year to a record high of $1.511 trillion at the end of the reported quarter. The upside was driven by market appreciation, positive third-party net flows and a strong investment performance.
U.S. Businesses’ adjusted operating income was $1.088 billion, which increased more than two-fold from the year-ago quarter’s level. The upside reflects higher net investment spread results, driven by higher variable investment income and higher net fee income, backed primarily by equity market appreciation. It was partially offset by less favorable underwriting results.
Assurance IQ incurred an adjusted operating loss of $38 million, wider than the loss of $16 million in the year-ago quarter. This reflects a 92% increase in revenues, which was more than offset by escalated expenses to support business growth.
International delivered an adjusted operating income of $803 million, up 16.2% from the year-earlier period’s figure. This increase was owing to net favorable comparative impact from annual assumption update and other refinements of $80 million. Excluding this item, the upside was due toadied by higher net investment spread results, business growth and lower expenses, partially offset by lower earnings from joint venture investments and less favorable underwriting results.
Corporate and Other incurred an adjusted operating loss of $300 million, narrower than the loss of $541 million reported a year ago. This improvement reflects lower expenses.
Financial Update
Cash and cash equivalents of $15.1 billion at the quarter end increased 10.5% from the 2020-end level.
Total debt balance of $20.6 billion on Jun 30, 2021 dipped 0.3% from the level as of 2020 end.
As of Jun 30, 2021, Prudential’s assets under management increased 7.8% year over year to $1.7 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $104.39 as of Jun 30, 2021, up 13.4% year over year.
Operating return on average equity was 14.9% in the second quarter, expanding 710 basis points year over year.
Zacks Rank & Performance of Other Insurers
Prudential carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of the insurance industry players that have reported second-quarter results so far, the earnings results of Everest Re Group, Ltd. , Cincinnati Financial (CINF - Free Report) and American Financial Group (AFG - Free Report) beat the respective Zacks Consensus Estimate.