Prudential’s stock has risen by 16% in the past six months, mainly due to expectations of improved fundamentals and higher investment and underwriting income.
Prudential Financial has been very consistent with dividend payouts to shareholders, which makes it a very strong prospect for long-term value investors.
Prudential Financial (PRU) reported its 2Q16 earnings results on August 3, 2016. It reported adjusted operating income per share of $1.84 in the quarter.
Prudential Financial (PRU) has been very consistent with dividend payouts to shareholders, which makes the stock a very strong prospect for long-term value investors.
In 1Q16, Prudential’s revenues fell 4.4% year-over-year to $11.3 billion. On a constant dollar basis, the company saw a decline in its international insurance and US retirement solutions businesses.
As AIG continues to decline, there are suggestions as well as speculation of an AIG sale. These speculations, although they seem unlikely to happen, can push AIG’s stock prices.
In 4Q15, AIG repurchased 53 million shares for an aggregate purchase price of $3.2 billion. It made additional repurchases of $2.5 billion through the end of February 11, 2016.
In 2015, AIG continued its simplification process for its balance sheet. In 2016, AIG is expected to strengthen its balance sheet with higher operating cash flows.
AIG reported a pre-tax operating loss of $2.1 billion for its commercial insurance business in 4Q15 compared to a pre-tax operating income of $1.2 billion in 4Q14.
AIG is expected to report EPS of $1.08 compared to operating loss per share of $1.10 in the December quarter. The company is looking to exit its hedge funds and continue stock buybacks.
American International Group (AIG) has announced that it will spend $500 million on restructuring initiatives for organizational simplification, operational efficiency, and business rationalization.
Prudential is trading at 7.2x compared to the industry’s 8.8x earnings multiple for the same period. The stock is currently trading at multiyear low valuations.
Prudential Financial’s stock is currently trading at a price-to-earnings multiple of 9.9x as compared to the 12x–14x ratios of other major insurance players.
ACE stock returned ~15% to investors over the past three months. It focuses on serving retail and corporate clients in insurance and reinsurance products.
Banking stocks are expected to benefit from higher interest rates, but not immediately. Also, rising interest rates would be countered by higher existing liquidity.
Prudential Financial’s international insurance segment reported a fall in its adjusted operating income to $812 million, compared to $845 million in 3Q14.
Prudential Financial’s 2Q15 revenue rose by 12% year-over-year to $12.5 billion, exceeding consensus estimates of $11.2 billion. Its net income was $1.4 billion, up by 29% compared with 2Q14.
During 2Q15, AIG worked to simplify its balance sheet and reduce risk. Its exposure to super senior corporate debt and collateralized loan obligations was reduced to zero, compared with $2.5 billion as of December 31, 2014.
AIG’s leverage was on the lower side of the target range, and its operating return on equity stood at 9.3% for 2Q15. Normalized return on equity was at 6.7%.
ACE is a leading international property and casualty insurer Headquartered in Zurich, Switzerland, ACE Limited offers commercial insurance products and service offerings such as risk management programs, loss control, and engineering and complex claims management. ACE Limited operates under five segments: North American Property and Casualty, North American Agriculture, Insurance–General Overseas, Global Reinsurance, and Life. North […]
Chubb’s Property and Casualty Group consists of several domestic and international subsidiaries. It offers personal insurance, standard commercial insurance, and specialty commercial insurance.
The biggest rationale for the ACE–Chubb merger is the potential for cost-cutting. By combining with Chubb, ACE Limited is creating a leading player in property and casualty insurance.
Accretion of earnings per share ACE (ACE) will benefit immediately from the transaction with Chubb (CB). The acquisition will be accretive to the company’s per-share earnings and book value per share. Accretion to EPS (earnings per share) will be in the double digits, and there will be accretion to ROE (return on equity) by the end of […]
With the acquisition of Chubb, ACE will be better positioned to compete with rivals including Warren Buffett’s Berkshire Hathaway and Allstate, among others.
The Financial Sector Select SPDR ETF (XLF) was up 1.52% during the trading session ending on July 1, largely driven by insurance stocks, which rose 2.7%.
The underwriting cycle moves between hard and soft market conditions, which have different sets of characteristics that determine the profitability of the insurance industry.
The property and casualty insurance business is cyclical in nature. The underwriting cycle alternates between two phases: the hard market and the soft market.
AIG reported a net income dip from $2.0 billion in 4Q13 to $655 million in 4Q14, due to an after-tax charge of ~$800 million for debt retirement activities.
Insurance ETFs are poised to gain from industry growth. As interest rates improve, insurers should see better earnings due to higher investment returns.
Financial market movements not only impact income from invested assets, but also the value of assets carried at fair value on an insurer’s balance sheet.
The impact of interest rate movements is lower in the P&C segment, as their products can be repriced annually to keep in line with interest rate movements.
As customers use Internet-based aggregators to purchase insurance policies, insurers use online sales to interact directly with customers and reduce costs.
An underwriting loss is not unusual for an insurance company. In a soft pricing environment, pricing of P&C products is low due to intense competition.
P&C products have commoditized characteristics, resulting in sharp competition in the market and business cycles. AIG and ACE are key players in this space.
