Prudential’s US Individual Fell on Higher Claims, Reserves

Prudential Financial’s (PRU) operating income for its US Individual Life and Group Insurance fell to $173.0 million in 3Q16, compared to $227.0 million in 3Q15. The fall was mainly due to a fall in its US Individual Life segment.

Prudential’s Individual Life segment reported a fall in adjusted operating income to $111.0 million in 3Q16, compared to adjusted operating income of $183.0 million in the previous year’s quarter. The fall was mainly due to higher claims, higher expenses, and reserve refinements, partially offset by a greater contribution from net investment results.

The results included $20.0 million in reserve refinements. Claim experience, reserve updates, and reinsurance costs were $30.0 million less favorable compared to $25.0 million favorable in the prior year’s quarter.

Prudential’s Group Insurance segment’s adjusted operating income rose to $62.0 million in 3Q16 compared to $44.0 million in the prior year’s quarter. The rise was helped by $13.0 million higher contribution from net investment results. It also included a favorable underwriting result. Both divisions included $10.0 million in returns on non-coupon investments and prepayment fees, which were higher than the company’s expectation.

Prudential Financial’s book value per share rose to $128.37 per share in 3Q16, which ended September 30, 2016, compared to $92.39 as of December 31, 2015. Book value per share rose ~6.0% for both MetLife (MET) and Allstate (ALL) and ~8.0% for Chubb (CB) in the last fiscal year.

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