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Prudential (PRU) Q1 Earnings Miss, Down Y/Y on Low Revenues

Prudential Financial, Inc.PRU reported first-quarter 2016 after tax adjusted operating income of $2.18 per share that missed the Zacks Consensus Estimate by 8.4%. Earnings also plunged 21.9% year over year.

Including the impact of one-time items, net income came in at $2.93 per share, down 33% year over year.

Total revenue decreased 4.4% year over year to $11.3 billion due to 5.7% lower premiums, 2.8% decline in policy charges and fee income, and 11.1% less asset management fees, commissions and other income.

Total benefits and expenses were $9.9 billion in the quarter, down 0.9% year over year. The decrease was due to 3.7% lower insurance and annuity benefits.

Quarterly Segment Update

U.S. Retirement Solutions and Investment Management reported adjusted operating income of $712 million, down 30.1% year over year. The downside can be attributed to a lower contribution from Retirement business, Individual Annuities as well as Asset Management businesses.

U.S. Individual Life and Group Insurance reported adjusted operating income of $146 million, flat year over year. Lower income in Group Insurance segment resulted in the underperformance.

International Insurance reported adjusted operating income of $779 million, down 6.6% year over year. The decline was due to lower contribution from Life Planner, Gibraltar Life, and Other operations.

Corporate and Other Operations reported adjusted operating loss of $312 million, wider than a loss of $253 million in the year-ago quarter.

As of Mar 31, 2016, Prudential's assets under management increased 2.9% to $1.218 trillion from $1.184 trillion as of Dec 31, 2015. Book value, a measure of the company's net worth, was $75.46 per share as of Mar 31 2016, up 2.5% from $73.59 per share as of Dec 31, 2015.

Share Repurchase and Update

During the fourth quarter, Prudential spent $375 million to buy back 5.4 million shares. From Jul 2011 through Mar 2016, the company has bought back 70.4 million shares for $4.8 billion.

Further, the company returned about $700 million through share buyback and dividends in the first quarter.

Zacks Rank and Performance of Other Multi-Line Insurers

Prudential holds a Zacks Rank #2 (Buy). Among other multi line insurers that have reported their first-quarter earnings so far, the bottom line at Assurant, Inc. AIZ and Radian Group Inc. RDN beat their respective Zack Consensus Estimate, while MGIC Investment Corp. MTG missed the same.

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RADIAN GRP INC (RDN): Free Stock Analysis Report

ASSURANT INC (AIZ): Free Stock Analysis Report

MGIC INVSTMT CP (MTG): Free Stock Analysis Report

PRUDENTIAL FINL (PRU): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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