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Analyzing Prudential’s Individual Annuities and Retirement Businesses

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Aug. 29 2017, Updated 9:09 a.m. ET

Rise in annuities earnings

The individual annuities business of Prudential Financial (PRU) saw an increase in its earnings in 2Q17 compared to 2Q16. After excluding market-driven and discrete items, earnings from Prudential Financial’s individual annuities stood at $512 million in 2Q17 compared to $375 million in 2Q16. This rise resulted mainly from fee income, policy charges, and net investment results.

In 2Q17, Prudential Financial’s individual annuity sales declined on a YoY (year-over-year) basis. In 2Q17, its individual annuity sales stood at $1.5 billion compared to $2.3 billion in 2Q16. However, individual annuity sales in 2Q17 rise marginally compared to sales in 1Q17. Individual annuity sales in 1Q17 stood at $1.4 billion.

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Retirement earnings

Earnings from Prudential Financial’s (PRU) retirement business rose in 2Q17 compared to 2Q16. In 2Q17, retirement earnings totaled $328 million and in 2Q16, they totaled to $230 million, reflecting an increase of $98 million. This rise in retirement earnings was mostly due to favorable net investment results.

In 2Q17, total gross sales and deposits under Prudential Financial’s retirement business stood at $7.3 billion compared to $8.1 billion in 2Q16. This YoY decline resulted from lower sales in institutional investment products in 2Q17.

Expected revenues

Prudential Financial (PRU) is expected to report revenues of $13.13 billion in 3Q17. Other insurance companies (IYF) are expected to post the following revenues in 3Q17:

  • Chubb Ltd. (CB): ~$7.2 billion
  • Allstate (ALL): ~$8.6 billion
  • MetLife (MET): ~$16.7 billion
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