US Retirement Solutions segment
Prudential Financial’s (PRU) US Retirement Solutions and Investment Management division is contracted over the past few quarters on lower annuities and asset management income. For the fourth quarter of 2015, the division is expected to see some more contraction on lower business in retirement solutions. This can be partially offset by higher asset management income.
In 3Q15, the division reported adjusted operating income of $732 million, forming 50% of the company’s total adjusted operating income, as compared to $823 million in the prior year’s quarter.
Individual Annuities and Retirement segments
The Individual Annuities segment’s operating income fell by 16% to $310 million in the third quarter of 2015. This was mainly due to a net charge of $76 million driven by adjustments or reserves for guaranteed minimum death and income benefits to reflect market performance. The company’s Retirement segment also experienced a fall in its operations, with adjusted operating income of $242 million in 3Q15 resulting from a lower contribution from investment results, lower fees on full-service business, and higher expenses. However, that was partly offset by more revenue from pension risk transfer as well as a benefit of $20 million from reserve refinements.
Asset Management segment
In 3Q15, Prudential’s Asset Management segment posted adjusted operating income of $180 million as compared to $200 million reported in the prior year’s quarter. The fall in operating income was due to a $14 million lower contribution from the segment’s strategic investing, transaction, incentive, and commercial mortgage activities. This was partially offset by higher asset management fees.
Assets managed by other players
Below are some of Prudential’s peers in asset management that have considerable assets under management:
- The Carlyle Group (CG), managing $193 billion
- KKR & Co. (KKR), managing $98 billion
- BlackRock (BLK), managing $4.5 trillion
- Apollo Global Management (APO), managing $163 billion
Together, these companies form 0.63% of the iShares MSCI ACWI ETF (ACWI).