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Prudential Financial is a Leading Life Insurer in the US

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Mar. 25 2015, Updated 11:06 a.m. ET

US market

The United States is Prudential Financial’s (PRU) most important market, as it contributed over 60% of the company’s pre-tax adjusted operating income in 2014. It also provided a ~50% share of the equity at the end of the 2014 financial year.

In the US, Prudential competes with insurers like MetLife (MET), Principal Financial (PFG), Aflac (AFL), and other life insurers held by the Financial Select Sector SPDR ETF (XLF).

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Product portfolio

In the US, Prudential operates in both the individual insurance market and the group insurance market, providing life insurance, annuities, and other savings-oriented products to customers. As shown in the above chart, such products contribute around 80% of the earnings in the US. The Asset Management business contributes the remaining 20% earnings.

Key drivers

Performance of the US business segment was driven by several factors. Recently, Prudential’s earnings development has been helped by higher fees from annuity businesses, a larger pool of assets under management in the Asset Management division, and longevity reinsurance and pension risk transfer transactions. Prudential is a leading player in the pension risk transfer market, as we discussed in our overview of MetLife.

Apart from this, Prudential’s bottom line has received a boost from rising equity markets, as well as mergers and acquisitions such as the acquisition of the life insurance business of Hartford Financial Services Group (HIG).

In the next article, we will explore Prudential’s sales channels for the US.

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