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Prudential Misses on Q4 Earnings & Revs

Zacks Equity Research

Life insurer Prudential Financial Inc. (PRU) reported fourth-quarter 2013 adjusted operating earnings of $2.20 per share, missing the Zacks Consensus Estimate of $2.23. Earnings were, however, up 25% year over year. A charge of $1.2 billion during the quarter led to the earnings miss.

Including one-time items, Prudential reported net loss of 94 cents per share, compared with net loss of 42 cents in the year-ago quarter.

Total revenue reported by Prudential was $11.0 billion, down 76% year over primarily due to lower premium. The top line also lagged the Zacks Consensus Estimate of $11.7 billion.

Total benefits and expenses were $9.5 billion in the quarter, down 79% year over year, primarily led by a decline in insurance and annuity benefits.

Full Year Highlights

For full year 2013, Prudential reported earnings of $9.67 per share up 51.1% year over year, but missed the Zacks Consensus Estimate of $9.75 per share.

Total revenue declined 44% year over year to $45.3 billion, primarily led by a decline in premiums. The revenue figure also missed the Zacks Consensus Estimate of $48.1 billion.  

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 $996 million, up 39.5% year over year.

Adjusted operating income at the U.S. Individual Life and Group Insurance division increased 2.5 times year over year to $215 million. The segment reported revenues of $2.6 billion, up 15.6% year over year.

The International Insurance division’s adjusted operating income remained unchanged year over year at $647 million. An increase in operating income from Gibraltar life nullified the decrease in operating earnings from Life Planners.  

The Corporate and Other Operations division’s adjusted loss was $397 million, wider than the loss of $372 million recorded in the year-ago quarter.

Prudential’s Assets under management increased 4.4% year over year to $1.107 trillion as of Dec 31, 2013.

Financial Position

Adjusted book value per share as of Dec 31, 2013, was $60.00, up 3.3% year over year.

During the fourth quarter, Prudential repurchased 2.9 million shares at a total cost of $250 million.

Prudential presently retains a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other stocks like CNO Financial Group, Inc. (CNO) with a Zacks Rank #1 (Strong Buy), and American International Group, Inc. (AIG) and Cigna Corp. (CI), both with a Zacks Rank #2 (Buy) are worth reckoning. All these stocks are due to release their fourth-quarter earnings results soon.

Read the Full Research Report on AIG
Read the Full Research Report on CI
Read the Full Research Report on CNO
Read the Full Research Report on PRU

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