|Bid||78.76 x 800|
|Ask||80.27 x 1100|
|Day's Range||78.71 - 81.96|
|52 Week Range||75.61 - 106.64|
|Beta (3Y Monthly)||1.48|
|PE Ratio (TTM)||8.04|
|Earnings Date||Oct 30, 2019|
|Forward Dividend & Yield||4.00 (4.87%)|
|1y Target Est||102.94|
The bond-rating firm said it expects more charges against earnings for the long-germ-care insurance industry, which also affects reinsurer General Electric.
(Bloomberg Opinion) -- Negative mortgage rates in Denmark. Sub-zero yields on 10-year corporate bonds from Nestle SA. A 100-year Austria bond trading at more than twice its face value. Record low yields on 30-year Treasuries. For fund managers trying to navigate the fixed-income universe, the bond market’s reaction to the prospect of a recession makes life more treacherous every day.Investors see a second Federal Reserve interest-rate cut at its next meeting on Sept. 18 as a certainty, based on prices in the interest-rate futures market. But it’s the European Central Bank that appears to be facing the more difficult policy decision, given that its key interest rate is stuck at -0.4%.As the chart above shows, futures contracts in the euro zone have dramatically repriced since the beginning of the month. Traders are anticipating that borrowing costs will drop even further into negative territory and that the ECB will resume its quantitative easing program.But some investors are questioning how effective the central bank’s effort to gobble up more of the outstanding debt in the government bond market can be when yields have already reached record lows.For Philipp Hildebrand, vice-chairman of BlackRock Inc., the ECB is already out of ammunition – which means investors should indulge in some more magical thinking about what comes next in the list of unconventional policy measures.“We’re going to see a regime change in monetary policy that’s as big a deal as the one we saw between pre-crisis and post-crisis, a blurring of fiscal and monetary activities and responsibilities,” Hildebrand told Bloomberg Television’s Francine Lacqua last week.BlackRock has just published a paper detailing what it expects the guardians of monetary stability to do next. Here’s the key recommendation from the paper, which is entitled “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy coordination.”An unprecedented response is needed when monetary policy is exhausted and fiscal policy alone is not enough. That response will likely involve “going direct”: Going direct means the central bank finding ways to get central bank money directly in the hands of public and private sector spenders.What’s incredible about the BlackRock policy prescription is that three of the paper’s four authors are former central bankers who now work for the asset manager. Hildebrand is the former head of the Swiss Central Bank, Stanley Fischer did stints at the Federal Reserve and the Bank of Israel, while Jean Boivin is ex-deputy governor of the Bank of Canada.Think about that for a second. Three former central bankers – not academics, not professors, not theoreticians – are saying that central bankers are out of ammunition, and that politicians won’t be able to muster enough fiscal firepower to resuscitate growth. These are people who’ve been at the coalface of implementing monetary policy. So the rest of us need to pay attention.QuicktakeHelicopter MoneyAs my Bloomberg Opinion colleague Brian Chappatta points out, BlackRock’s publication is timed to coincide with the annual Kansas City Fed’s Economic Policy Symposium that kicks off on Thursday in Jackson Hole, Wyoming. While that gathering has the anodyne title of “Challenges for Monetary Policy,” the size of the task currently facing the world’s central bankers suggests the meeting could be one of the most important in recent years.Concern about the outlook for growth is mounting. Even the German government, which has resisted the temptation to take advantage of ultra-cheap money to boost spending, is readying a package of fiscal measures to counter a deep recession, my colleague Birgit Jennen at Bloomberg News reported Monday. But improving energy efficiency, encouraging hiring and increasing social welfare payments may prove too little, too late.In the euro zone, BlackRock suggests the ECB could adopt a plan first proposed in 2016 by Eric Lonergan, a fund manager at M&G Prudential, in which the central bank offers zero-coupon loans to each adult citizen. While Lonergan is explicitly in favor of helicopter money, the BlackRock paper sees a risk of it creating runaway inflation:History is littered with examples of how central bank money printing leads to runaway inflation or hyperinflation. Yet there is little experience in using helicopter money to generate just-enough inflation to achieve price stability. History as well as theory suggests large-scale injections of money are simply not a tool that can be fine tuned for a modest increase in inflation.BlackRock’s tweak to the helicopter money proposal, popularized by former Fed Chairman Ben Bernanke in a 2002 speech, involves establishing a permanent “standing emergency fiscal facility” that would only used in extremis, and in combination with monetary and fiscal policy becoming “jointly responsible for achieving the inflation target.” It would come with “a predefined exit point and an explicit inflation objective.”Both of those latter constraints are likely to prove as problematic for BlackRock’s proposal as they have for the current unconventional policies pursued by central banks. Exiting quantitative easing and returning interest rates to more normal levels have both turned out to be far more difficult than expected; and explicit inflation objectives are useless when prices stubbornly refuse to rise.Nevertheless, bond investors have definitely caught wind of something shifting in the monetary-policy air, and have reacted by extending the list of never-seen-before happenings in the debt market. Maybe the next thing will turn out to be a helicopter dropping money – with Christine Lagarde, the incoming president of the ECB, in the pilot’s seat.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
For those looking to retire in the next five years, market volatility is extra unsettling. Retirement expert Ed Slott has advice about what investors should be doing to protect themselves in these tumultuous times.
(Bloomberg Opinion) -- General Electric Co. is learning the price of its credibility shortcomings.Shares of the embattled industrial giant plunged more than 15% at one point on Thursday after Bernie Madoff whistle-blower Harry Markopolos published a damning critique of the company’s accounting. Markopolos is working on behalf of an unidentified hedge fund that is betting GE shares will decline. The company calls his claims “meritless,” and CEO Larry Culp deemed the report “market manipulation” in an e-mailed statement. I read the report (all 170-plus pages of it), and my first instinct was that none of the allegations — which range from GE’s need to immediately bolster its long-term care insurance reserves with $18.5 billion in cash to looming writedowns on its stake in Baker Hughes to the generally confusing way the company represents its finances — are particularly new, at least not for those who have been paying close attention. The scale of the potential problems is bigger than any others have estimated, and the person making the claims has a track record of exposing fraud, having warned the U.S. Securities and Exchange Commission about Madoff’s Ponzi scheme years before it became public. But the line from the report that stood out to me the most was this one: “Who’s being transparent — them or us?”The market is giving its verdict. A series of broken promises, presentation “errors” that later have to be corrected, a continuing tendency to micromanage Wall Street expectations to orchestrate optical “beats” and an unwillingness to do away with heavily engineered earnings adjustments have cost GE dearly in the credibility department. Regardless of the truth of Markopolos’s report — and again, there’s plenty to debate there — GE has surrendered the high ground in its defense.Just this week, Steve Winoker, GE’s head of investor relations, issued an update on the company’s power unit and sought to clarify “confusion” about the number of 7F gas turbines it has installed. GE says it has 900 units in service, which is up relative to the year-end total of 2017 and 2018. But marketing materials from those years put GE’s 7F installed base at more than 1,100 units. Winoker says those materials lumped other types of units into the 7F tally. But there was really no room for that kind of interpretation in the wording of the brochure. This disclosure follows outgoing CFO Jamie Miller’s acknowledgment in May of the “confusion” created when she referenced an industry data firm’s calculation of power-equipment orders on an earnings call in a way that made GE’s business appear more robust than it was. At the Paris Air Show in June, in response to a question from JPMorgan Chase & Co. analyst Steve Tusa, Jean Lydon-Rodgers, CEO of GE Aviation’s services arm, said the company’s CF34 and CF6 engines account for “slightly less” than half of repair shop visits, raising questions about how exposed that business may be to a drop in profitability once those older models are replaced. In a follow-up e-mail to investors, Winoker clarified the number is actually just less than a third.Maybe these are all inadvertent errors. But for a company that clearly needs to do more to bolster its transparency and credibility, it’s a troubling fact pattern and puts it on the back foot when countering Markopolos’s allegations.The primary focus of Markopolos’s analysis is GE’s long-term care insurance business, which he argues needs an immediate $18.5 billion cash influx with a $10.5 billion non-cash GAAP charge looming over the next few years because of tougher accounting rules. That’s on top of the $15 billion reserve shortfall GE disclosed in January 2018. GE’s argument that insurance reserves are “well-supported for our portfolio characteristics” runs up against the contrast between what appears to be a deeply researched, numbers-heavy analysis by Markopolos and its own opaque commentary and financial presentations.Is Markopolos’s estimate correct? He bases it off an analysis of loss ratios and reserves for comparable policies at insurers such as Prudential Financial Inc. and Unum Group. His numbers seem dire, but GE itself warned in its annual filing that a more sober outlook for investment yields and the rate at which insurance claimants get healthier could force the company to put up additional pretax GAAP reserves, with some scenarios demanding a $12 billion increase. Estimating the appropriate reserve amount is a careful dance of assumptions of various puts and takes, and you’d need a crystal ball to accurately predict what’s required here. But the underlying point is that GE isn’t being nearly as conservative as it should be with this business, especially given looming accounting rule changes. I made that argument in February.He also argues that GE shouldn’t consolidate the Baker Hughes results in its numbers and that it’s avoiding a writedown on that deal. I’m less troubled by this because GE has disclosed the size of the potential impairment once its stake in Baker Hughes drops below 50%, and it does clearly break out the earnings and cash flow contribution from the business. What could end up being most problematic for GE is Markopolos’s brief allusion to the disconnect between the aviation unit’s $4.2 billion in 2018 free cash flow and engine partner Safran SA’s disclosure that it loses money on each Leap engine produced and won’t recover cost of goods sold until the end of the decade at best. The true underlying financials of that business have been a fixation for critics who contend it’s not as solid as GE makes it out to be.Markopolos obviously has a vested interest in pushing down GE’s share price. But the company would be wise to focus less on his motivations and more on refuting the specifics of his claims with hard numbers of its own. That would go a long way toward rebuilding investors’ trust.To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
It looks like Prudential Financial, Inc. (NYSE:PRU) is about to go ex-dividend in the next 4 days. Ex-dividend means...
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.U.S. stocks halted a two-day slide and Treasuries tumbled after the Trump administration de-escalated its trade war with China. Oil surged and gold fell.The S&P 500 Index jumped as much as 2% after trade officials granted a grace period before tariffs take effect on a broad swath of consumer goods Americans shoppers covet at the holidays. Makers and sellers of consumer electronics, toys and apparel led the advance.Apple surged more than 4% to pace gains among hardware makersBest Buy rose the most in the S&P 500, while Target added 3%Gap and L Brands jumped more than 3%; Hasbro surgedSoybeans rose 1.5%, oil added 3.8% Gold lost more than $50 an ounce from its highThe trade headlines sparked demand for risk assets that had been under pressure for more than a week as investors grew increasingly concerned the spat with China would slam global growth. President Donald Trump said he delayed the tariffs to spare the Christmas shopping season after his representatives had a “productive” call with China.“This news creates a lot of this upside volatility,” said Bruce Bittles, chief investment strategist at Robert W. Baird. “If the news is sustainable and indeed they are moving to a trade agreement, this is a very important development and we can go to new highs.”Before the trade headlines landed, fresh inflation data showed an unexpectedly hot reading, denting arguments for cutting interest rates and flattening the Treasury yield toward inversion. The spread between two- and 10-year yields hit the narrowest since 2007. The tariff detente did halt the bond rally, pushing the 10-year rate toward 1.7%.Some investors also remained cautious about the prospects for a trade truce as signs of the war’s impact grow. Singapore’s government cut its forecast for economic growth this year to almost zero. In Europe, Henkel was among the worst-performing stocks after missing quarterly profit estimates, which the detergents maker blamed on the trade conflict and a competitive retail environment.“It’s an encouraging first steps but it’s difficult to speculate how far it will go,” Peter Jankovskis, co-chief investment officer at Oakbrook Investments. “We’ve certainly gotten into these situations before where the market believed we were headed toward a deal and then it was derailed by comments from various officials.”Meanwhile, the situations in Hong Kong and Argentina remained unstable. The South American nation’s peso tumbled anew amid rising concern the nation will default on its debt, while Hong Kong equities slumped after its airport canceled flights for a second day as protesters clashed with police.Here are some key events coming up:Companies releasing results include China’s JD.com, Tencent and Alibaba; Cisco, Walmart and Nvidia of the U.S.; the U.K.’s Prudential; Australia’s Telstra; Europe’s Swisscom and brewer Carlsberg.Wednesday brings data on China retail sales, industrial production and the jobless rate.Thursday sees the release of U.S. jobless claims, industrial production and retail sales data.These are the main moves in markets:StocksThe S&P 500 Index rose 1.4% as of 4 p.m. New York time.The Dow Jones Industrial Average rose 1.2%. Nasdaq Composite Index gained 2%, while the Nasdaq 100 Index rose 2.2%.The Stoxx Europe 600 Index rose 0.5%.The MSCI Asia Pacific Index decreased 1.4%.The MSCI Emerging Market Index decreased 0.3%.CurrenciesThe Bloomberg Dollar Spot Index advanced 0.2%.The euro fell 0.4% at $1.1174.The British pound slipped 0.2% at $1.2057.The Japanese yen fell 1.3% to 106.678.The Argentine peso slumped 4.8% to 55.55 per dollar.BondsThe yield on 10-year Treasuries rose four basis points to 1.68%.The two-year rate rose eight basis points to 1.66%.Germany’s 10-year yield fell two basis points to -0.609%.CommoditiesGold futures fell 0.1% to $1,515 an ounce.West Texas Intermediate crude rose 3.8% to $57.04 a barrel.\--With assistance from Katherine Greifeld, Andreea Papuc, Todd White and Olivia Rinaldi.To contact the reporter on this story: Jeremy Herron in New York at email@example.comTo contact the editors responsible for this story: Samuel Potter at firstname.lastname@example.org, Yakob PeterseilFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- U.S. stocks fell more than 1% as political unrest in Hong Kong and Argentina fueled a rally in global bonds that continues to raise the specter of a looming recession. Gold surged.The S&P 500 Index slumped for a second day and now sits almost 5% below its all-time high as the rally in Treasuries sparked by last week’s escalating trade tensions picked up steam. Risk assets came under pressure after authorities closed Hong Kong’s airport and a Chinese official said the city was at a “critical juncture.” Argentina’s peso and equities sank after voters turned on the president in a primary vote. Corn futures plunged the most since 2013 as more of the grain was planted than analysts had estimated.The weakness in stocks fed demand for haven assets, pushing the 10-year Treasury yield lower by 10 basis points and boosting the yen for a fourth day. China’s central bank fixing continued to signal its determination to manage an orderly depreciation. Italian bonds led gains in European debt after Fitch affirmed the country’s credit rating on Friday. The pound strengthened following three sessions of declines.Monday’s sell-off in risk assets provided another reminder of the fragile mood across markets as it extended the tumultuous start to August. Gains for the safest government bonds show lingering caution by traders who’ve increased bets for central bank easing in recent weeks, as the U.S. and China escalate their trade war and a slew of global data point to slowing growth.“It’s a day with very little news in terms of economic calendar and earnings and a week that’s going to have a lot of earnings that are very important. But it doesn’t look like there’s true sort of resiliency in the sell right now,” said JJ Kinahan, chief market strategist at TD Ameritrade. “The flight to bonds is really the more concerning element only because it flattens the yield curve.”Here are some key events coming up:Companies releasing results include China’s Tencent, JD.com and Alibaba, Cisco, Brazilian utility Eletrobras, the U.K.’s Prudential, Australia’s Telstra, giant retailer Walmart, Nvidia, Swisscom and the Danish brewer Carlsberg.The U.S. consumer price index, out Tuesday, probably picked up to a 1.7% annual pace in July, according to economist estimates. Core prices, which exclude food and energy, are seen rising 2.1%.Wednesday brings data on China retail sales, industrial production and the jobless rate.Thursday sees the release of U.S. jobless claims, industrial production and retail sales data.These are the main moves in markets:StocksThe S&P 500 Index fell 1.2% as of 4 p.m. New York time.The Stoxx Europe 600 Index dipped 0.2%.The MSCI Asia Pacific Index decreased less than 0.05%.Hong Kong’s Hang Seng Index declined 0.4%.CurrenciesThe Bloomberg Dollar Spot Index rose less than 0.1%.The euro climbed 0.1% to $1.1211.The Japanese yen strengthened 0.3% to 105.33 per dollar.BondsThe yield on 10-year Treasuries fell 10 basis points to 1.65%.The two-year rate lost six basis points to 1.5857%.The spread of Italy’s 10-year bonds over Germany’s declined five basis points to 2.33 percentage points.Germany’s 10-year yield decreased two basis points to -0.59%.CommoditiesGold futures rose 1% to $1,524 an ounce.West Texas Intermediate crude added 0.5% to $54.75 a barrel.Corn futures for December delivery fell by the limit of 25 cents to $3.9275 a bushel, down 6%.\--With assistance from Luke Kawa, Adam Haigh and Samuel Potter.To contact the reporters on this story: Sarah Ponczek in New York at email@example.com;Olivia Rinaldi in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeremy Herron at email@example.com, Todd WhiteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Prudential Seguros Mexico, S.A. de C.V. New York, August 08, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Prudential Seguros Mexico, S.A. de C.V. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Prudential Financial, Inc. announced today the declaration of a quarterly dividend of $1.00 per share of Common Stock, payable on September 12, 2019, to shareholders of record at the close of business on August 20, 2019.
The HSBC Bank (UK) pension scheme has signed a deal with The Prudential Insurance Company of America to insure around 7 billion pounds ($8.52 billion) of pensioner liabilities. The swap transaction is the second biggest carried out with a British pension scheme, HSBC said on Tuesday, and will insure against the risk that the scheme's members or their named beneficiaries live longer than expected. The Prudential Insurance Company of America is a subsidiary of Prudential Financial.
(Bloomberg Opinion) -- With negative yields becoming commonplace across even the longer maturities in many of the world’s government bond markets, fixed-income managers are letting their imaginations run a little wilder about what might come next. So brace yourself for renewed talk of helicopter money, the implementation of Modern Monetary Theory, and the prospect of the benchmark U.S. Treasury offering less than zero.Bond investors have spent the past few years becoming accustomed to previously inconceivable developments in the markets. So they can be excused for developing an immunity to just how extreme recent shifts in the debt market have been, at the forefront of which is the explosion in the amount of negative-yielding debt. As the chart above shows, the total value of “less than zero” bonds has trebled since October as interest rates on fixed-income securities get lower and lower. The entire suite of German government bonds from three months to 30 years now offers negative yields for the first time, as does the even longer-dated Swiss yield curve. Monday saw Ireland’s 10-year borrowing costs dip below zero for the first time.With central banks poised to continue or resume the bond-buying programs they introduced after the global financial crisis, other government debt markets look set to follow suit in breaching the zero bound. Spain’s benchmark bond yields a smidgen above 0.2%, Portugal’s is a tad below 0.3%. U.K. 10-year yields are at a record low of about 0.5%, half their level of less than three months ago. And while U.S. yields remain at about 1.8%, Joachim Fels, Pimco’s global economic adviser, says it’s “no longer absurd” to speculate that the world’s benchmark rate for 10-year borrowing costs could drop below zero. “We may get there faster than you think,” he says.The problem with pushing down borrowing costs that are already at or near record lows is that you get diminishing returns on how much of an impact it has on the real economy – hence the failure of central banks to lift inflation and meet their targets in recent years.So Eric Lonergan, a fund manager at M&G Prudential, reckons the concept of helicopter money, with central banks creating cash and delivering it to individual citizens to spend, might come back into vogue. “The logic is compelling,” Lonergan wrote in an article for the Financial Times last week. “One problem with this common sense idea is its simplicity, which rarely appeals to economists charged with taking important decisions.”As central bankers run out of ammunition from their conventional armories, a more radical shift may become inevitable, with governments acknowledging that they must play more of a role in combating a global slowdown – and a new-fangled economic experiment called Modern Monetary Theory becoming the next experiment in how to boost growth.MMT, which argues that an expansionary fiscal policy can be financed through cheap debt without risking default, has been criticized for not being modern, not being monetary and not being a theory. That didn’t stop the first textbook on the subject from selling out its initial print run earlier this year, nor the adoption of MMT as a cause celebre by Alexandria Ocasio-Cortez and other left-wingers in the U.S. Democratic party.There’s likely to be a “pro-growth convergence of fiscal and monetary policies,” Pascal Blanque, the chief investment officer of Amundi SA, told me recently. Blanque previously expected only a recession to usher in MMT. Now he sees “an alignment of the planets between the man in the street, politicians, academics, politicians” that may well see it becoming mainstream thinking.In “Through the Looking-Glass,” Lewis Carroll’s Alice says there’s no use trying to believe in impossible things. “I daresay you haven’t had much practice,” the Queen replies. “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Bond investors are starting to understand her thinking.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The Bank of England for the first time is asking British insurers to gauge how global warming might impact the value of the stocks and bonds they hold -- and its potential to upend financial markets.The central bank, which regulates the U.K. financial services industry, included three scenarios related to climate change in a broader stress test of how robust the industry would be in times of strain. It’s asking for answers by Oct. 31.The exercise, which started in June, is part of a broader effort by BOE Governor Mark Carney to focus the attention of investors both on environmental issues and on how those are creating new risks for the financial system. After almost 200 nations backed the 2015 Paris Agreement on climate change agreeing limits on fossil fuel emissions, economies everywhere are adding regulations on pollution from coal and spurring investment in renewables such as wind and solar.“What’s most interesting is the way the stress test will change the way the insurers will think about these particular sectors,” said Mark Lewis, global head of sustainability research at BNP Paribas SA’s asset management unit.The three climate scenarios by the bank’s Prudential Regulation Authority are “exploratory” in nature. They “hypothetical narratives” are designed to “promote discussion on how business models and balance sheets may need to adapt, not about assessing current financial resilience,” it said in a guidelines document published on June 18.Under the most dramatic scenario, rapid global action to halt climate change results in a “disorderly transition.” It suggests “shock parameters” where the shares of oil companies plunge 42% in three years and coal users lose two-thirds of their value. Car makers would also suffer as traditional engines are scrapped in favor of electric vehicles.Another scenario envisions an orderly transition and warming in the atmosphere kept well below 2 degrees Celsius (3.6 degrees Fahrenheit) since pre-industrial levels. The economy would shift toward zero carbon emissions by 2050.A third outlook was for little tightening of environmental regulations, resulting in warming of 4 degrees by 2100 and more significant changes to the climate.The assumptions set out by the PRA are “purposely non-exhaustive as the goal of this scenario analysis is investigatory in nature,” the regulator said. “The PRA recognizes that for different portfolios, the materiality of natural catastrophe perils and asset classes affected will differ.”The exercise may prompt shareholders to see insurers as a more risky prospect, said David Lunsford, co-founder and head of development at Carbon Delta AG, which advises on climate risks and provided input to the PRA as it drew up its request.“The interest of the PRA is to look at the most extreme scenarios,” he said. “While many people think insurers understand natural disasters enough to cope with climate change, the issue will “present many challenges. Some insurance companies might be more exposed than was expected before the tests.”The scenarios chosen by the Bank of England are not necessarily expected outcomes. They reflect a “particularly abrupt change” and seem to take note of how markets work, Edwin Anderson, a partner at management consultant Oliver Wyman.“Potential hits on short-term income could lead to large dips in equity value,” said Anderson, whose firm also fed into the PRA’s thinking. One of Anderson’s specialties is advising insurance regulators on risks within particularly complicated insurers.Aviva Plc, an insurer, said it already has been assessing climate-related risks and promoting a better understanding of the issue within financial markets.“Aviva recently published its Climate-Related Financial Disclosure which provides details of a Climate Value-at-Risk measure, relying on a range of climate warming scenarios, that we are developing to provide a holistic forward-looking view of climate-related transition and physical risks and opportunities to our business,” an official at the insurance company said in a statement. Steven Findlay, head of prudential regulation at industry group the Association of British Insurers in London, welcomed the exercise.“These are encouraging both firms and regulators alike to consider the climate change implications for insurers’ balance sheet, today and into the future, and how these should best be managed,” Findlay said. “We are looking forward to seeing the conclusions next year.”Lewis at BNP said the scenarios might set off some deep thinking about how other investors will react to political developments on the environment in the months and years ahead.“It becomes a sort of game-theory thing. Do you think Insurer X will sell? Do you think Insurer Y will sell?” Lewis said. “All of a sudden you are thinking I don’t want to be the last guy holding this stuff.”The PRA doesn’t intend to disclose the results of the tests for individual insurers and it will publish a summary of the results in the first quarter of 2020.“If a policymaker gives you a guideline as clear as this, it will change the way you think,” Lewis said. “Once you put something out there like this, the market starts to follow its own dynamic. This is a further example of the momentum increasing and accelerating and intensifying.”(Updates with comment from Aviva from the 14th paragraph.)\--With assistance from Silla Brush and Will Hadfield.To contact the reporters on this story: Mathew Carr in London at firstname.lastname@example.org;Lisa Pham in London at email@example.comTo contact the editors responsible for this story: Reed Landberg at firstname.lastname@example.org, Rob VerdonckFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Prudential Retirement®, a business unit of Prudential Financial, Inc. (NYSE: PRU), and The Phoenix Group, Europe’s largest life and pensions consolidator and one of the fastest-growing providers of life and pension insurance in the United Kingdom, have entered into an inaugural longevity reinsurance agreement covering U.K. retirees. “We are excited to be working together with Phoenix,” said Christian Ercole, vice president, Longevity Risk Transfer and transaction lead for the Phoenix deal.
Prudential (PRU) Q2 earnings reflect solid performance at PGIM, U.S. Workplace Solutions and International Insurance, partly offset by weak U.S. Individual Solutions.
Prudential (PRU) delivered earnings and revenue surprises of -2.48% and 3.47%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?