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Prudential Financial, Inc. (PRU - Free Report) reported fourth-quarter 2023 adjusted operating income of $2.58 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 3.6% year over year.
Total revenues of $13 billion increased 6.7% year over year. The increase in revenues was due to higher premiums and net investment income. However, it missed the Zacks Consensus Estimate by 0.3%.
Prudential's fourth-quarter results reflect improved expenses, less favorable underwriting results, net outflows, lower incentive fees and agency income, partially offset by higher asset management fees.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Total benefits and expenses amounted to $11.7 billion, which increased 7.2% year over year in the fourth quarter. This improvement was due to higher insurance and annuity benefits, interest credited to policyholders' account balances, amortization of acquisition costs, general and administrative expenses. The figure was higher than our estimate of $11.4 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $172 million in the reported quarter decreased 25.2% year over year. This decrease primarily reflects higher expenses and lower other related revenues, mainly due to lower incentive fees and agency income, partially offset by improved asset management fees. The figure was lower than our estimate of $200.6 million.
PGIM’s assets under management of $1.298 trillion increased 6% year over year. The increase was due to equity market appreciation, partially offset by net outflows.
The U.S. Businesses delivered an adjusted operating income of $988 million, which increased 39.1% year over year. The figure was higher than our estimate of $512.4 million. This increase primarily reflects higher net investment spread results and lower expenses, partially offset by lower net fee income.
International Businesses’ adjusted operating income decreased 8.1% year over year to $748 million in the fourth quarter. This decrease primarily reflects less favorable underwriting results, including unfavorable policyholder behavior, partially offset by lower expenses.
Corporate and Other incurred an adjusted operating loss of $656 million, wider than a loss of $525 million reported a year ago. This higher loss primarily reflects improved expenses, driven by a $200 million restructuring charge in the current quarter.
Capital Deployment
Prudential managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $458 million in the fourth quarter.
Financial Update
PRU exited the fourth quarter with cash and cash equivalents of $19.4 billion, which increased 12.5% from 2022-end.
Total debt balance of $19.5 billion decreased 5.7% from 2022-end.
As of Dec 31, 2023, Prudential’s assets under management and administration increased 6.3% year over year to $1.63 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $96.64, which increased 2% year over year.
Operating return on average equity was 10.9% in the fourth quarter, which improved 40 basis points year over year.
Full-Year Update
For 2023, the adjusted operating income of Prudential was $11.62 per share. The bottom line increased 12.7% from the 2022 figure. The bottom line missed the Zacks Consensus Estimate by 12.8%.
Revenues for the year totaled $50.9 billion, which decreased 15% from the 2022 level. The top line missed the Zacks Consensus Estimate by 6%.
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $3.06 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line climbed 32% year over year. Operating revenues of HIG amounted to $4.3 billion, which improved 7.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker.
Earned premiums of Hartford Financial rose 8.2% year over year to $5.43 billion in the fourth quarter, higher than the Zacks Consensus Estimate of $5.41 billion and our estimate of $5.35 billion. Pre-tax net investment income of $653 million grew 2% year over year and beat the consensus mark of $623 million but missed our estimate of $697.6 million. Net investment income witnessed year-over-year growth in each of the segments barring Group Benefits. Total benefits, losses and expenses increased 3.2% year over year to $5.5 billion in the quarter under review, which came higher than our estimate of $5.4 billion.
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The bottom line improved 4.7% year over year. MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%. Insurance in force declined 0.6% from the prior-year quarter to $293.5 billion. The company missed our estimate of $300.7 billion. The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans. Net premiums written declined 5.3% year over year to $219.1 million. The figure was lower than our estimate of $235 million.
Net investment income increased 24.7% year over year to $57.8 million. The company beat our estimate of $56.1 million. Persistency, the percentage of insurance remaining in force from one year prior, was 86.1% as of Dec 31, 2023, up from 82.2% in the year-ago quarter. New insurance written was $10.9 billion, down 15.5% year over year due to a decline in origination markets. Net underwriting and other expenses totaled $54.7 million, down 25.5% year over year. For the quarter under review, the loss ratio was negative 4.2% compared with negative 12.8% for the fourth quarter of 2023.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $1.93 per share, which fell short of the Zacks Consensus Estimate by 1%. The bottom line improved 21% year over year. Adjusted operating revenues of MET climbed 21.5% year over year to $18.7 billion in the quarter under review. The top line outpaced the consensus mark by 3.6%. Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11.8 billion. The figure rose 8% year over year.
Adjusted net investment income of $5 billion grew 11% year over year in the fourth quarter on the back of increased returns from the private equity portfolio and asset growth. Total expenses escalated 33.2% year over year to $18.1 billion. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, improved 60 basis points (bps) year over year to 20.6% in the quarter under review. Net income of $574 million dropped 63% year over year. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, improved 170 bps year over year to 13.8%.
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Prudential's (PRU) Q4 Earnings Miss, Revenues Increase Y/Y
Prudential Financial, Inc. (PRU - Free Report) reported fourth-quarter 2023 adjusted operating income of $2.58 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 3.6% year over year.
Total revenues of $13 billion increased 6.7% year over year. The increase in revenues was due to higher premiums and net investment income. However, it missed the Zacks Consensus Estimate by 0.3%.
Prudential's fourth-quarter results reflect improved expenses, less favorable underwriting results, net outflows, lower incentive fees and agency income, partially offset by higher asset management fees.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Operational Update
Total benefits and expenses amounted to $11.7 billion, which increased 7.2% year over year in the fourth quarter. This improvement was due to higher insurance and annuity benefits, interest credited to policyholders' account balances, amortization of acquisition costs, general and administrative expenses. The figure was higher than our estimate of $11.4 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $172 million in the reported quarter decreased 25.2% year over year. This decrease primarily reflects higher expenses and lower other related revenues, mainly due to lower incentive fees and agency income, partially offset by improved asset management fees. The figure was lower than our estimate of $200.6 million.
PGIM’s assets under management of $1.298 trillion increased 6% year over year. The increase was due to equity market appreciation, partially offset by net outflows.
The U.S. Businesses delivered an adjusted operating income of $988 million, which increased 39.1% year over year. The figure was higher than our estimate of $512.4 million. This increase primarily reflects higher net investment spread results and lower expenses, partially offset by lower net fee income.
International Businesses’ adjusted operating income decreased 8.1% year over year to $748 million in the fourth quarter. This decrease primarily reflects less favorable underwriting results, including unfavorable policyholder behavior, partially offset by lower expenses.
Corporate and Other incurred an adjusted operating loss of $656 million, wider than a loss of $525 million reported a year ago. This higher loss primarily reflects improved expenses, driven by a $200 million restructuring charge in the current quarter.
Capital Deployment
Prudential managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $458 million in the fourth quarter.
Financial Update
PRU exited the fourth quarter with cash and cash equivalents of $19.4 billion, which increased 12.5% from 2022-end.
Total debt balance of $19.5 billion decreased 5.7% from 2022-end.
As of Dec 31, 2023, Prudential’s assets under management and administration increased 6.3% year over year to $1.63 trillion.
Adjusted book value per common share, a measure of the company’s net worth, was $96.64, which increased 2% year over year.
Operating return on average equity was 10.9% in the fourth quarter, which improved 40 basis points year over year.
Full-Year Update
For 2023, the adjusted operating income of Prudential was $11.62 per share. The bottom line increased 12.7% from the 2022 figure. The bottom line missed the Zacks Consensus Estimate by 12.8%.
Revenues for the year totaled $50.9 billion, which decreased 15% from the 2022 level. The top line missed the Zacks Consensus Estimate by 6%.
Zacks Rank
Prudential currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multi-Line Insurers
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $3.06 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line climbed 32% year over year. Operating revenues of HIG amounted to $4.3 billion, which improved 7.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker.
Earned premiums of Hartford Financial rose 8.2% year over year to $5.43 billion in the fourth quarter, higher than the Zacks Consensus Estimate of $5.41 billion and our estimate of $5.35 billion. Pre-tax net investment income of $653 million grew 2% year over year and beat the consensus mark of $623 million but missed our estimate of $697.6 million. Net investment income witnessed year-over-year growth in each of the segments barring Group Benefits. Total benefits, losses and expenses increased 3.2% year over year to $5.5 billion in the quarter under review, which came higher than our estimate of $5.4 billion.
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The bottom line improved 4.7% year over year. MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%.
Insurance in force declined 0.6% from the prior-year quarter to $293.5 billion. The company missed our estimate of $300.7 billion. The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans. Net premiums written declined 5.3% year over year to $219.1 million. The figure was lower than our estimate of $235 million.
Net investment income increased 24.7% year over year to $57.8 million. The company beat our estimate of $56.1 million. Persistency, the percentage of insurance remaining in force from one year prior, was 86.1% as of Dec 31, 2023, up from 82.2% in the year-ago quarter. New insurance written was $10.9 billion, down 15.5% year over year due to a decline in origination markets. Net underwriting and other expenses totaled $54.7 million, down 25.5% year over year. For the quarter under review, the loss ratio was negative 4.2% compared with negative 12.8% for the fourth quarter of 2023.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $1.93 per share, which fell short of the Zacks Consensus Estimate by 1%. The bottom line improved 21% year over year. Adjusted operating revenues of MET climbed 21.5% year over year to $18.7 billion in the quarter under review. The top line outpaced the consensus mark by 3.6%. Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11.8 billion. The figure rose 8% year over year.
Adjusted net investment income of $5 billion grew 11% year over year in the fourth quarter on the back of increased returns from the private equity portfolio and asset growth. Total expenses escalated 33.2% year over year to $18.1 billion. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, improved 60 basis points (bps) year over year to 20.6% in the quarter under review. Net income of $574 million dropped 63% year over year. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, improved 170 bps year over year to 13.8%.