Analyzing Prudential Financial’s Group Insurance Segment



Benefits ratio

Prudential Financial (PRU) has provided the expected range for its 2017 benefits ratio. Considering that range, the ratio is at the lower end, which is beneficial. A lower benefits ratio is a good thing. In group disability and group life, the segment witnessed positive momentum in underwriting results in 2017.

The Group Insurance segment saw a rise in adjusted operating income, from $220 million in 2016 to $253 million in 2017. The segment generated revenues of $5.5 billion in 2017 compared to $5.3 billion in 2016. Between 2016 and 2017, the segment saw a rise in net investment income of $29 million, mainly due to a rise in income for non-coupon investments.

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The Group Insurance segment saw a decline in earnings from $43 million in 4Q16 to $22 million in 4Q17. However, in 3Q17, the earnings were $61 million. The segment saw a rise in benefits and expenses, from $5.1 billion in 2016 to $5.2 billion in 2017. The segment posted annualized new business premiums of $34 million in 4Q17 compared to $37 million in 4Q16.

Prudential Financial’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin was 14% on an LTM (last-12-month) basis. The EBITDA margins for Reinsurance Group of America (RGA), MetLife (MET), and CNO Financial Group (CNO) are 22.7%, 0.82%, and 24.9%, respectively, on an LTM basis.


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