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Prudential’s Gibraltar Life Division’s Adjusted Operating Income Rose

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Adjusted operating income

Prudential Financial’s (PRU) Gibraltar Life and Other operations reported a rise in adjusted operating income from $389.0 million in 3Q16 to $426.0 million in 3Q17. This trend implies an increase of $37.0 million, which includes the net positive effect related to currency fluctuations.

When this effect is excluded, adjusted operating income rose $36.0 million. This increase was due to favorable momentum in the business and a decline in its net expenses.

However, positive momentum reflected in the policyholder experience is another major reason for the rise.

The EBITDA[1. earnings before interest, tax, depreciation, and amortization] margin of Prudential Financial stood at ~12.3% on an LTM (last-12-months) basis. Among its industry (XLF) peers, CNO Financial Group (CNO), Reinsurance Group of America (RGA), and Aflac (AFL) reported ~28.9%, ~23.0%, and ~25.2%, respectively, of EBITDA margin on an LTM basis.

Revenues and expenses

Prudential’s Gibraltar Life and Other operations witnessed a marginal decline in its revenues from ~$2.9 billion in 3Q16 to ~$2.8 billion in 3Q17. These operations saw a decline in its benefits and expenses of $139.0 million in 3Q17 compared to 3Q16, which includes the net positive effect in relation to currency fluctuations.

These benefits and expenses saw a decline of $38.0 million when the net effect related to the currency fluctuations is excluded. Gibraltar Life and Other operations saw a decline of $27.0 million in policyholder benefits, which is mainly due to improved policyholder experience.

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