Prudential Financial ( PRU ) operates three major businesses: U.S. retirement solutions, U.S. life insurance and group insurance, and international insurance solutions. The U.S. retirement solutions business consists of three sub-divisions: individual annuities, retirement and asset management. The company primarily earns revenue from fees charged on the basis of account values from these product lines, which are driven by sales and market movements. Prudential is the eighth-largest seller of individual annuities in the U.S., with a market share of 3.9%, and the fourth-largest seller of variable annuities, with a market share of close to 8%. The table below provides a breakdown of the company's performance by segment so far this year.
The retirement segment offers retirement income products and services to employers in the U.S. During the first nine months of 2016, operating income from this segment declined by 5% y-o-y to $2.6 billion, driven by lower investment returns as well as higher expenses. However, as Prudential continues to make a slew of pension risk transfer deals, we expect the business to see some growth going forward.
U.S. Life & Group Insurance
Total revenues from the U.S. Life and Group Insurance business grew 3% in the first three quarters of 2016, led by better sales in group insurance products. However, operating income from the division was down 83%, primarily due to lower operating margins in the individual life business, partially offset by gains in the group insurance line.
Prudential has established operations in 20 countries across the Americas, Asia Pacific and EMEA. The company reported adjusted operating income of $2.4 billion during the first nine months of 2016 compared to $2.5 billion in the same period last year. A sizable portion of the company's international premiums come from operations in Japan, where earnings were impacted by foreign currency fluctuations.
Please refer to our complete analysis for Prudential Financial here .
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