HomeMarket NewsPrudential Financial Reports Strong Q3 Earnings and Revenue Growth Year-Over-Year

Prudential Financial Reports Strong Q3 Earnings and Revenue Growth Year-Over-Year

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Prudential Financial Reports Strong Q3 Results Despite Yearly Decline

Prudential Financial, Inc. PRU announced its third-quarter 2024 adjusted operating income of $3.48 per share, surpassing the Zacks Consensus Estimate by 0.2%. However, this figure represents a 3.8% decline from the same period last year.

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In a notable turn, total revenues reached $19.5 billion, marking a significant 94% increase year over year and exceeding the Zacks Consensus Estimate by 33.7%. The revenue growth was mainly driven by rising premiums, policy charges and fee income, as well as net investment income.

Prudential Financial’s third-quarter outcomes reflect increased asset management fees and favorable underwriting performance, although these gains were partially offset by elevated expenses.

Prudential Financial Price Movements and Earnings Surprises

Prudential Financial, Inc. Price, Consensus and EPS Surprise

Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote

Operational Insights

Total benefits and expenses surged to $17.8 billion, doubling year over year in the third quarter. This increase is attributed to rising insurance and annuity benefits, changes in estimates of future policy liabilities, interest credited to policyholders’ accounts, interest expenses, along with acquisition cost amortization and administrative expenditures. This total surpassed our estimate of $11.8 billion.

Segment Performance Overview

Prudential Global Investment Management (PGIM) reported an adjusted operating income of $241 million, reflecting a 14.2% year-over-year growth. This increase primarily stemmed from higher asset management fees, although it was somewhat counterbalanced by rising expenses. This figure exceeded our estimate of $221.4 million and slightly surpassed the Zacks Consensus Estimate of $223 million.

PGIM’s assets under management climbed to $1.400 trillion, which is a 15% rise from the previous year, propelled by equity market gains, lower interest rates, investment performance, and net inflows.

In contrast, the U.S. Businesses generated an adjusted operating income of $1.108 billion, up 1.8% from the prior year. This performance exceeded both the Zacks Consensus Estimate and our internal estimate of $1 billion, driven by improved underwriting conditions and higher net investment spreads. However, this was partially offset by lower net fee income and increased costs.

For the International Businesses, adjusted operating income fell by 5.5% year over year, settling at $766 million for the third quarter, which did not meet our estimate of $791.7 million. The decline was largely due to less favorable underwriting results and higher expenses, albeit slightly improved by higher joint venture earnings and net investment spreads.

Lastly, the Corporate and Other segment recorded an adjusted operating loss of $487 million, widening from a loss of $438 million seen a year earlier. This outcome was less favorable than our loss estimate of $474.7 million and was attributed to rising expenses.

Capital Allocation Strategy

Prudential Financial successfully returned capital to shareholders through $250 million in share repurchases and $471 million in dividends during the third quarter.

Financial Position Update

At the end of the third quarter, PRU reported cash and cash equivalents of $20.2 billion, which is a 19.6% increase compared to the end of 2023.

The total debt balance also rose by 2.7% from the end of 2023, amounting to $20 billion.

As of September 30, 2024, Prudential Financial’s assets under management and administration grew 14.5% year over year to reach $1.74 trillion.

The adjusted book value per common share, an indicator of the company’s net worth, stood at $98.71, indicating a 4.8% year-over-year increase.

However, operating return on average equity was 14.2% in the third quarter, reflecting a decline of 100 basis points compared to the previous year.

Zacks Ranking

Prudential Financial currently holds a Zacks Rank #3 (Hold). For a complete list of today’s Zacks #1 Rank (Strong Buy) stocks, click here.

Peer Insurance Performance

Chubb Limited CB reported a core operating income of $5.72 per share for the third quarter, exceeding the Zacks Consensus Estimate by 16%, marking a 15.6% year-over-year increase. Net premiums written rose 5.5% to $13.8 billion, while both our estimate and the Zacks Consensus Estimate stood at $14.3 billion.

Pre-tax net investment income climbed to $1.5 billion, up 14.7% year over year, exactly matching both estimates. Revenues totaled $15 billion, slightly missing the consensus estimate by 1.5%, but reflecting a 6.5% year-over-year growth. Property and casualty underwriting income hit $1.4 billion, an 11.7% annual increase, surpassing the Zacks Consensus Estimate of $1.1 billion.

Kinsale Capital Group KNSL delivered net operating earnings of $4.20 per share, also outperforming the Zacks Consensus Estimate by 13.5%, and increased 26.9% year over year. Operating revenues soared 33.1% to $418 million, mainly due to higher premiums, fee income, and net investment income, beating the consensus estimate by 4.2%.

Gross written premiums rose 18.8% year over year to $448.6 million, although it fell short of our estimate of $475.1 million. Net written premiums climbed 18.9% to $349.9 million, also below our estimate of $370.2 million. Net investment income surged 46.4% to $39.6 million, exceeding our estimate of $38.6 million and the Zacks Consensus Estimate of $37.7 million.

Selective Insurance Group, Inc. SIGI expressed an operating income of $1.40 per share for the third quarter, missing the Zacks Consensus Estimate by 17.1%. This showed a 7% decrease from the prior year. Total revenues grew by 13.9% to $1.2 billion but also fell short of the consensus estimate by 0.4%. Year-over-year, net premiums written climbed by 9% to $1.15 billion, surpassing our estimate of $1.2 billion.

Net investment income, before tax, experienced a 17% year-over-year rise, reaching $117.8 million, which was above our estimate of $117.3 million and the Zacks Consensus Estimate of $114 million. However, after-tax net underwriting income dropped drastically by 83% year over year to $4.1 million, driven by a more than doubling of pre-tax catastrophe losses to $148.8 million.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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