Prudential Financial is a large, diversified insurance company offering annuities, life insurance, retirement plan services, and asset management products. While it operates in a number of countries, the vast majority of revenue is generated in the United States and Japan. The company's investment management business, PGIM, contributes approximately 10% of its earnings and has around $1.3 trillion in assets under management. The US businesses are responsible for about 50% of earnings and can be classified into Institutional Retirement Strategies, Individual Retirement Strategies, Group Insurance, Individual Life Insurance, and Assurance IQ. Finally, the international business segment of the company contributes approximately 40% of earnings with a strong market position in Japan.
Performance Overview
Prudential Financial Inc (PRU, Financial) reported net income attributable to the company of $1.198 billion or $3.28 per common share for the second quarter of 2024, compared to $511 million or $1.38 per share for the same period last year. The current quarter included a net after-tax benefit from the annual assumption update and other refinements of $679 million or $1.86 per common share, versus a charge of $314 million or $0.85 per share in the year-ago quarter.
After-tax adjusted operating income was $1.234 billion or $3.39 per common share, compared to $1.142 billion or $3.09 per share for the year-ago quarter. Despite these gains, the reported EPS of $3.39 fell short of the analyst estimate of $3.44.
Financial Achievements and Challenges
Prudential Financial Inc (PRU, Financial) achieved several financial milestones in the second quarter of 2024:
- Book value per common share was $77.51, slightly down from $77.65 per share in the year-ago quarter.
- Adjusted book value per common share increased to $98.42 from $97.38 per share in the year-ago quarter.
- Assets under management rose to $1.482 trillion, up from $1.415 trillion in the year-ago quarter.
- Capital returned to shareholders totaled $725 million, including $250 million of share repurchases and $475 million of dividends.
However, the company faced challenges, particularly in its International Businesses segment, which reported a decrease in adjusted operating income to $702 million from $784 million in the year-ago quarter. This was primarily due to less favorable underwriting results and lower net investment spread results.
Segment Performance
PGIM, the company's global investment management business, reported adjusted operating income of $206 million for the second quarter of 2024, compared to $179 million in the year-ago quarter. This increase was driven by higher asset management fees and other related revenues.
U.S. Businesses reported adjusted operating income of $1.070 billion, up from $956 million in the year-ago quarter. This increase was attributed to higher net investment spread results, more favorable underwriting, and lower expenses.
International Businesses reported adjusted operating income of $702 million, down from $784 million in the year-ago quarter. This decrease was due to less favorable underwriting results and lower net investment spread results.
Income Statement Highlights
| Segment | Q2 2024 | Q2 2023 |
|---|---|---|
| PGIM | $206 million | $179 million |
| U.S. Businesses | $1.070 billion | $956 million |
| International Businesses | $702 million | $784 million |
| Corporate & Other | ($371 million) | ($472 million) |
Analysis
Prudential Financial Inc (PRU, Financial) demonstrated strong performance in several key areas, particularly in its U.S. Businesses and PGIM segments. However, the challenges faced in the International Businesses segment highlight the need for continued focus on improving underwriting results and investment spreads. The company's ability to return significant capital to shareholders and maintain a robust asset management portfolio underscores its financial strength and strategic focus.
Overall, Prudential Financial Inc (PRU, Financial) remains well-positioned to address the growing needs of its customers with its integrated investment, insurance, and retirement capabilities.
Explore the complete 8-K earnings release (here) from Prudential Financial Inc for further details.
