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Prudential Rose on International Insurance and Asset Management

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Nov. 28 2016, Published 5:05 p.m. ET

Prudential beat estimates

On November 2, 2016, Prudential Financial (PRU) reported its 3Q16 earnings. Its adjusted operating income per share was $2.66. That figure was higher than estimates of $2.49 and higher than $2.40 reported in 3Q15.

The rise was mainly due to significant growth in its international business, a flow of assets in retirement, and asset management.

Estimates

In 3Q16, Prudential’s revenue rose year-over-year to $15.1 billion compared to $11.1 billion in 3Q15. It reported net income of $1.8 billion, or $4.07 per share, compared to net income of $1.5 billion, or $3.16 per share, in 3Q15.

On a constant dollar basis, the company saw a rise in both its US Retirement Solutions and US Individual Life segments. The International Insurance segment saw sales of $5.4 billion in 3Q16, a rise of 13.0% on a year-over-year basis.

In a company press release, John Strangfeld, chairman and CEO (chief executive officer) stated, “We are pleased with our solid core results and continued business momentum, including the steady sales growth delivered by our international businesses and strong net flows in Retirement and Asset Management. The combination of our strong cash flows, capital position and recently completed structural changes in our Annuities business enabled us to return approximately $930 million to shareholders through repurchases and dividends in the quarter. And while we continue to face macro environment challenges in both our U.S. and international operations, we remain confident in our ability to deliver solid performance and differentiated returns.”

Insurance and asset management

Prudential had ~$1.1 trillion worth of assets under management as of September 30, 2016. It has operations in the United States, Europe, Asia, and Latin America. The company’s product offerings include life insurance, retirement-related services, investment management, mutual funds, and annuities. It offers these products and services to institutional and individual customers through proprietary and third-party distribution networks.

In the United States, Prudential’s competitors include MetLife (MET), Chubb (CB), and Allstate (ALL). Together, these companies form 0.70% of the iShares MSCI ACWI (ACWI).

In the following parts of this series, we’ll take a look at Prudential’s asset management, capital structure, various segments, strategies, dividends, and valuations.

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