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How Prudential’s US Workplace Solutions Division Fared in 1Q18

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Retirement segment

Prudential Financial’s (PRU) US Workplace Solutions division is further divided into two segments:

  • Retirement
  • Group Insurance

The Retirement segment’s adjusted operating income was $317 million in 1Q18, while in 1Q17 it was $397 million. This decline was mainly the result of increased general and administrative costs as well as a decline in the net investment spread. However, this decline was partially offset by fewer claims.

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The rise in the general and administrative costs was mainly because of a rise in operating expenses. The retirement segment’s revenues amounted to $2.1 billion in 1Q18, while in 1Q17 they were $1.9 billion. However, between 1Q17 and 1Q18, premiums rose by $223 million mainly due to the pension risk transfer business.

Group Insurance

The Group Insurance division of Prudential Financial (PRU) reported adjusted operating income of $55 million in 1Q18, while in 1Q17 it reported $34 million. The division also witnessed a rise in revenues from $1.38 billion in 1Q17 to $1.41 billion in 1Q18 mainly because of a rise in premiums, fee income, and policy charges.

The Group Insurance division’s benefits and expenses amounted to $1.36 billion in 1Q18 compared to $1.34 billion in 1Q17. This rise was due to general and administrative costs. The segment saw annualized new business premiums of $383 million in 1Q18 compared to $301 million in 1Q17.

The market capitalization of Prudential Financial is $42.1 billion, and peers (XLF) Reinsurance Group of America (RGA), Hartford Financial Services (HIG), and MetLife (MET) have market capitalizations of $9.7 billion, $18.8 billion, and $47.7 billion, respectively.

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