International Insurance segment
On a constant dollar basis, Prudential Financial’s (PRU) International Insurance segment reported a 7% rise in revenues in 4Q15. On a nominal basis, it reported a fall in its adjusted operating income to $738 million compared to $686 million in 4Q14.
Foreign currency exchange rates resulted in an impact of -$14 million in 4Q15 compared to the prior year. The International Insurance segment forms 45% of the company’s total adjusted operating income.
The dollar is expected to remain stable in 2016 despite an expected rise in interest rates. A weakening or stable dollar could boost Prudential’s revenues from international operations.
Life Planner Operations
Prudential’s Life Planner Operations business saw a fall in 4Q15, with an adjusted operating income of $367 million compared to $374 million in 4Q14. 4Q14 included a net charge of $8 million to strengthen reserves for certain underwriting classes. The continued business growth was partially offset by higher expenses, including costs related to distribution system development and technology.
Gibraltar Life and other operations
Gibraltar Life continues to see stabilization in its life consultant count at higher productivity levels. The segment reported adjusted operating income of $371 million in 4Q15 compared to $312 million in 4Q14. 4Q14 included charges totaling $73 million, primarily to strengthen reserves for certain underwriting classes.
Prudential Financial expects an improved growth scenario for its international insurance segment in the upcoming quarters, backed by continued growth in the Eurozone.
The Financial Select Sector SPDR ETF (XLF) invests 1.3% of its portfolio in Prudential Financial, whereas ACE (ACE), Chubb (CB), and Allstate (ALL) have weights of 1.1%, 0.73%, and 2.7%, respectively, in XLF.
Since 2010, Prudential Financial (PRU) has returned approximately $10 billion to shareholders in the form of dividends and buybacks.
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