Prudential Financial Inc
) core operating earnings for the fourth quarter of 2012 came in
at $1.69 per share, lower than the Zacks Consensus Estimate of
$1.74. Results were also down 6.0% on a year-over-year
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Full year 2012 operating income was $6.27 per share up 7.5% year
over year and also above the Zacks Consensus Estimate of $6.18.
In the quarter under review, Prudential reported a net loss (a
GAAP measure of earnings) of 48 cents per share against net
income of $1.08 per share a year ago.
Total revenue reported was $46.1 billion, up more than three-fold
year over year, attributable to higher premium, policy charges
and fee income, net investment income, as well as higher asset
Total benefits and expenses increased to $45.11 billion from
$8.97 billion in the year ago quarter.
Full year 2012 total revenue of $81.13 billion more than doubled
from $38.93 billion in 2011.
The U.S. Retirement Solutions and Investment Management division,
which houses Individual Annuities, Retirement, and Asset
Management, represents approximately 27% of the company's total
revenue. The segment reported adjusted operating income of $668
million, down 13% year over year.
Operating income at the U.S. Individual Life and Group Insurance
division declined 52.0% year over year to $87 million. The
muted performance was mainly due to less favorable group life
The International Insurance and Investments division's operating
income increased 29% year over year to $647 million, attributable
to higher contribution from both Gibraltar Life and Life Planners
Prudential's assets under management as of Dec 31, 2012 increased
18% year over year to $1.060 trillion, rising from $901 billion
at Dec 31, 2011.
Prudential's Closed Block Business posted net loss of $18
million, compared with a net income of $123 million in the
year-ago quarter. This segment consists of life insurance
and annuity policies that were issued before the company went
public in Dec 2001 and are still in force. Currently however,
Prudential has stopped offering such policies.
Adjusted book value, which measures the net worth of a company,
decreased to $57.86 per share as of Dec 31, 2012, from $58.39 as
of Dec 31, 2011.
During the year 2012, the company bought back 11.5 million shares
at a total cost of $650 million.
During the fourth quarter the company completed some significant
deals which included purchase of individual life business of
The Hartford Financial Services Group, Inc.
) The company also undertook pension liability of
General Motors Co.
Verizon Communications Inc.
Though the quarter's results suffered from unfavorable foreign
exchange movements, we expect the company to show a favorable
performance over the long term, given its strong brand value and
a significant presence in U.S as well as an expanding presence
Prudential's stock retains a Zacks Rank #3 (Hold).