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How Market Factors Impacted Prudential’s US Insurance Division Sales

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US Individual Life and Group Insurance division

Prudential Financial’s (PRU) operating income for its US Individual Life and Group Insurance remained stable for 1Q16 at $146 million, unchanged from 1Q15.

The division forms 11% of the company’s total adjusted operating income. In 2Q16, individual life insurance is expected to see strong underwriting, partially offset by weak group insurance.

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Individual Life segment

Prudential’s individual life segment continues to grow on sales, which have benefited from product and distribution actions while maintaining underwriting discipline. In 2Q16, the segment is expected to benefit from sales growth and favorable mortality.

During 1Q16, the segment reported adjusted operating income of $120 million compared to $116 million in 1Q15. Operating income in 1Q15 included a $9 million integration charge.

Group Insurance segment

Prudential is targeting improved margins for its disability underwriting. The Group Insurance segment’s revenues fell in 1Q16 with adjusted operating income of $26 million compared to $30 million in the prior year’s quarter.

The $14 million fall was primarily driven by a lower contribution from investment results and higher expenses in the March quarter, which together more than offset more favorable underwriting results driven by group life.

Prudential Financial’s book value per share rose by ~2.5% in the quarter ended March 31, 2016, compared to the previous quarter. Meanwhile, book value per share rose by ~6% for both Metlife (MET) and Allstate (ALL) and ~8% for Chubb (CB) during the same period.

Prudential Financial competes with other players in the insurance business that are part of the iShares MSCI ACWI ETF (ACWI).

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