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Prudential Financial’s Gibraltar Life: Adjusted Operating Income

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Mar. 6 2018, Updated 7:31 a.m. ET

Adjusted operating income

The adjusted operating income for Prudential Financial’s (PRU) Gibraltar Life and other operations was $1.7 billion in 2017 compared to $1.6 billion in 2016. This YoY (year-over-year) rise was due to the negative effect of currency fluctuations, which amounted to $8 million. In 2017, because of annual reviews and changes made in assumptions and other items, there was a net benefit of $21 million. In 2016, for the same reasons, there was a net charge of $34 million.

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If the impact of both items is not considered, then adjusted operating income for Gibraltar Life and other operations rose $80 million in 2017 YoY, mainly due to positive momentum in the business. That includes increased earnings with respect to its AFP Habitat investment. This indirect investment rewarded the business with a full year of income in 2017, whereas in 2016, the income was for only ten months. Positive momentum in mortality and policyholder experiences was also a major contributor to the $80 million rise YoY.

Revenues and expenses

Gibraltar Life and other operations generated revenues of $10.9 billion in 2017 compared to $11 billion in 2016. However, these operations had benefits and expenses of $9.2 billion in 2017 compared to $9.4 billion in 2016.

The International Insurance division had total benefits and expenses of $18.3 billion in 2017 compared to $17.8 billion in 2016.

Prudential Financial has a price-to-sales ratio of 0.76x on an LTM (last-12-month) basis. The ratios for Reinsurance Group of America (RGA), MetLife (MET), and CNO Financial Group (CNO) are 0.80x, 0.79x, and 0.90x, respectively, on an LTM basis.

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