Life insurer Prudential Financial Inc. (PRU) reported third quarter adjusted operating earnings of $2.94 per share, far exceeding the Zacks Consensus Estimate of $2.10. Results also exceeded earnings by 85% year over year. Earnings out performance came on the back of strong contribution from each of the company’s operating segments, headed by its Retirement Solutions and Investment Management, where operating income increased more than double compared to the year-ago quarter.
Including one-time items Prudential reported net income of $2.07 per share, compared with net income of $1.34 per share in the year-ago quarter.
Total revenue reported by Prudential was $10.8 billion, down 18.2% year over primarily due to lower premium. However, reported revenue was lower than the Zacks Consensus Estimate of $12.1 billion.
Total benefits and expenses were $8.9 billion in the quarter, down 27.3% year over year.
Quarterly Segment Update
The U.S. Retirement Solutions and Investment Management division, which houses Individual Annuities, Retirement, and Asset Management, represents approximately 35% of Prudential’s total revenue. The segment reported adjusted operating income of $1.3 billion, up 2.5 times year-over-year.
Adjusted operating income at the U.S. Individual Life and Group Insurance division increased 47% year over year to $216 million. The increase was driven by higher operating income from individual life as well as Group Insurance line of business.
The International Insurance division’s adjusted operating income decreased 0.5% year over year to $778 million, attributable to higher contribution from Life Planners partly offset by decline in contribution from Gibraltar Life operations.
The Corporate and Other operations’ adjusted loss was $312 million which was narrower than the loss of $414 million in the year-ago quarter.
Prudential’s Assets under management increased 1.5% year over year to $1.076 trillion as of Sep 30, 2013.
Prudential’s Closed Block Business posted pretax operating income of $85.0 million compared with operating income of $69.0 million in the year-ago quarter.
Adjusted book value per share as of Sep 30, was $55.77, down 3.6% from $57.86 at year-end 2012.
During the third quarter of 2013, Prudential spent $250 million in buying back 3.2 million shares.
Prudential’s stock retains a Zacks Rank #2 (Buy).
Other players Eastern Insurance Holdings, Inc. (EIHI), Kemper Corporation (KMPR) with Zacks Rank #1 (Strong Buy) and Assurant Inc. (AIZ) with Zacks Rank #2 (Buy) all reported better-than-expected third quarter earnings.