- Net income attributable to Prudential Financial, Inc. of $1.138
billion or $3.12 per Common share versus net income of $1.462
billion or $3.93 per share for the year-ago quarter.
- After-tax adjusted operating income of $1.141 billion or $3.12
per Common share versus $1.004 billion or $2.70 per share for the
year-ago quarter.
- Book value per Common share of $75.00 versus $85.33 per share
for the year-ago quarter; adjusted book value per Common share of
$97.03 versus $97.29 per share for the year-ago quarter.
- Parent company highly liquid assets(1) of $4.2 billion versus
$4.6 billion for the year-ago quarter.
- Assets under management(2) of $1.496 trillion versus $1.417
trillion for the year-ago quarter.
- Capital returned to shareholders of $726 million in the first
quarter, including $250 million of share repurchases and $476
million of dividends, versus $718 million in the year-ago quarter.
Dividends paid in the first quarter were $1.30 per Common share,
representing a 5% yield on adjusted book value.
Charles Lowrey, Chairman and CEO, commented on results:
“During the first quarter, we made substantial progress
executing on our strategy to become a higher growth, more capital
efficient and nimble company, by expanding our market leading
businesses.
We are pleased with the momentum across our businesses,
including significant positive net flows in PGIM, our global asset
manager and strong sales growth in our U.S. and International
Businesses. These positive fundamentals are supported by a rock
solid balance sheet as well as a mutually reinforcing business
system and distinct strategy that positions us to deliver long-term
growth on behalf of our stakeholders.
We've entered the second quarter with confidence in our strategy
to be a global leader in expanding access to investing, insurance,
and retirement security for people around the world.”
Prudential Financial, Inc. (NYSE: PRU) today reported first
quarter results. Net income attributable to Prudential Financial,
Inc. was $1.138 billion ($3.12 per Common share) for the first
quarter of 2024, compared to $1.462 billion ($3.93 per Common
share) for the first quarter of 2023. After-tax adjusted operating
income was $1.141 billion ($3.12 per Common share) for the first
quarter of 2024, compared to $1.004 billion ($2.70 per Common
share) for the first quarter of 2023.
Consolidated adjusted operating income and adjusted book value
are non-GAAP measures. A discussion of these measures, including
definitions thereof, how they are useful to investors, and certain
limitations thereof, is included later in this press release under
“Non-GAAP Measures” and reconciliations to the most comparable GAAP
measures are provided in the tables that accompany this
release.
RESULTS OF ONGOING OPERATIONS
The Company’s ongoing operations include PGIM, U.S. Businesses,
International Businesses, and Corporate & Other. In the
following business-level discussion, adjusted operating income
refers to pre-tax results.
PGIM
PGIM, the Company’s global investment management
business, reported adjusted operating income of $169 million for
the first quarter of 2024, compared to $151 million in the year-ago
quarter. This increase primarily reflects higher asset management
fees and higher other related revenues, driven by higher incentive
fees and seed and co-investment income, partially offset by higher
expenses.
PGIM assets under management of $1.341 trillion were up 6% from
the year-ago quarter, primarily resulting from equity market
appreciation and positive third-party net flows. Third-party net
inflows of $26.6 billion in the current quarter reflect
institutional inflows of $26.1 billion, including a large fixed
income mandate, and retail inflows of $0.5 billion, driven by
public fixed income flows. Affiliated net inflows were $7.1
billion, driven by strong Retirement Strategies sales.
U.S. Businesses
U.S. Businesses reported adjusted operating income of
$839 million for the first quarter of 2024, compared to $760
million in the year-ago quarter. This increase primarily reflects
higher net investment spread results and more favorable
underwriting results, partially offset by higher expenses and lower
net fee income.
Retirement Strategies, consisting of Institutional
Retirement Strategies and Individual Retirement Strategies,
reported adjusted operating income of $915 million for the first
quarter of 2024, compared to $837 million in the year-ago
quarter.
Institutional Retirement Strategies:
- Reported adjusted operating income of $441 million in the
current quarter, compared to $396 million in the year-ago quarter.
This increase primarily reflects higher net investment spread
results, partially offset by higher expenses.
- Account values of $265 billion, a record high, increased 5%
from the year-ago quarter, reflecting the benefits of business
growth and market appreciation, partially offset by the reinsurance
of a block of structured settlements. Sales in the current quarter
of $11 billion included two large pension risk transfer
transactions totaling nearly $9 billion.
Individual Retirement Strategies:
- Reported adjusted operating income of $474 million in the
current quarter, compared to $441 million in the year-ago quarter.
This increase primarily reflects higher net investment spread
results, partially offset by lower fee income, net of distribution
expenses and other associated costs.
- Account values of $123 billion were slightly higher than the
year-ago quarter driven by market appreciation, partially offset by
the reinsurance of a block of legacy variable annuities and net
outflows. Sales of $3.3 billion in the current quarter increased
98% from the year-ago quarter, reflecting continued momentum from
our FlexGuard products and increased sales of fixed annuity
products.
Group Insurance:
- Reported adjusted operating income of $45 million in the
current quarter, compared to $25 million in the year-ago quarter.
This increase primarily reflects more favorable underwriting
results in group life and higher net investment spread results,
partially offset by higher expenses.
- Reported earned premiums, policy charges, and fees of $1.5
billion increased 4% from the year-ago quarter, reflecting growth
in both disability and life.
Individual Life:
- Reported a loss, on an adjusted operating basis, of $121
million in the current quarter, compared to a loss of $102 million
in the year-ago quarter. This higher loss reflects one-time costs
and lower net investment spread from closing the Guaranteed
Universal Life reinsurance transaction, partially offset by more
favorable underwriting results.
- Sales of $167 million in the current quarter increased 12% from
the year-ago quarter, driven by Variable Life and Term sales,
reflecting our pivot to more capital efficient products.
International Businesses
International Businesses, consisting of Life Planner and
Gibraltar Life & Other, reported adjusted operating income of
$896 million for the first quarter of 2024, compared to $840
million in the year-ago quarter. This increase primarily reflects
higher net investment spread results and higher joint venture
earnings, partially offset by less favorable underwriting
results.
Life Planner:
- Reported adjusted operating income of $545 million in the
current quarter, compared to $522 million in the year-ago quarter.
This increase reflects higher net investment spread results,
partially offset by less favorable underwriting results and a net
unfavorable impact from foreign currency exchange rates.
- Constant dollar basis sales(3) of $291 million in the current
quarter increased 10% from the year-ago quarter, driven by growth
in both Japan and Brazil.
Gibraltar Life & Other:
- Reported adjusted operating income of $351 million in the
current quarter, compared to $318 million in the year-ago quarter.
This increase primarily reflects higher joint venture earnings,
higher net investment spread results, and lower expenses, partially
offset by less favorable underwriting results.
- Constant dollar basis sales(3) of $229 million in the current
quarter were relatively consistent with the year-ago quarter.
Corporate & Other
Corporate & Other reported a loss, on an adjusted
operating income basis, of $435 million for the first quarter of
2024, compared to a loss of $471 million in the year-ago quarter.
This lower loss primarily reflects lower expenses.
NET INCOME
Net Income in the current quarter included $97
million of pre-tax net realized investment losses and related
charges and adjustments, including $83 million of pre-tax net
impairment and credit-related losses, $38 million of pre-tax losses
from divested and run-off businesses, including a loss from
Assurance IQ based on the decision to exit the business offset by
earnings from Long-Term Care, $32 million of pre-tax losses related
to market experience updates, and $123 million of pre-tax gains
related to net change in value of market risk benefits.
Net income for the year-ago quarter included $369 million of
pre-tax net realized investment gains and related charges and
adjustments, including $180 million of pre-tax net impairment and
credit-related losses, $88 million of pre-tax earnings from
divested and run-off businesses driven by Long-Term Care, $75
million of pre-tax gains related to net change in value of market
risk benefits, and $48 million of pre-tax gains related to market
experience updates.
EARNINGS CONFERENCE CALL
Members of Prudential’s senior management will host a conference
call on Wednesday, May 1, 2024, at 11:00 a.m. ET to discuss with
the investment community the Company’s first quarter results. The
conference call will be broadcast live over the Company’s Investor
Relations website at investor.prudential.com. Please log on 15
minutes early in the event necessary software needs to be
downloaded. Institutional investors, analysts, and other interested
parties are invited to listen to the call by dialing one of the
following numbers: (877) 407-8293 (domestic) or (201) 689-8349
(international). A replay will also be available on the Investor
Relations website through May 15. To access a replay via phone
starting at 3:00 p.m. ET on May 1 through May 15, dial (877)
660-6853 (domestic) or (201) 612-7415 (international) and use
replay code 13742768.
FORWARD-LOOKING STATEMENTS
Certain of the statements included in this release, including
those regarding our strategy to become a higher growth, more
capital efficient and nimble company and to be a global leader in
expanding access to investing, insurance, and retirement security,
and other business strategies, constitute forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are made
based on management’s current expectations and beliefs concerning
future developments and their potential effects upon Prudential
Financial, Inc. and its subsidiaries. Prudential Financial, Inc.’s
actual results may differ, possibly materially, from expectations
or estimates reflected in such forward-looking statements. Certain
important factors that could cause actual results to differ,
possibly materially, from expectations or estimates reflected in
such forward-looking statements can be found in the “Risk Factors”
and “Forward-Looking Statements” sections included in Prudential
Financial, Inc.’s Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q. The forward-looking statements herein are subject to
the risk, among others, that we will be unable to execute our
strategy because of market or competitive conditions or other
factors. Prudential Financial, Inc. does not undertake to update
any particular forward-looking statement included in this
document.
NON-GAAP MEASURES
Consolidated adjusted operating income and adjusted book value
are non-GAAP measures. Reconciliations to the most directly
comparable GAAP measures are included in this release.
We believe that our use of these non-GAAP measures helps
investors understand and evaluate the Company’s performance and
financial position. The presentation of adjusted operating income
as we measure it for management purposes enhances the understanding
of the results of operations by highlighting the results from
ongoing operations and the underlying profitability of our
businesses. Trends in the underlying profitability of our
businesses can be more clearly identified without the fluctuating
effects of the items described below. Adjusted book value augments
the understanding of our financial position by providing a measure
of net worth that is primarily attributable to our business
operations separate from the portion that is affected by capital
and currency market conditions, and by isolating the accounting
impact associated with insurance liabilities that are generally not
marked to market and the supporting investments that are marked to
market through accumulated other comprehensive income under GAAP.
However, these non-GAAP measures are not substitutes for income and
equity determined in accordance with GAAP, and the adjustments made
to derive these measures are important to an understanding of our
overall results of operations and financial position. The schedules
accompanying this release provide reconciliations of non-GAAP
measures with the corresponding measures calculated using GAAP.
Additional historic information relating to our financial
performance is located on our website at
investor.prudential.com.
Adjusted operating income is a non-GAAP measure used by the
Company to evaluate segment performance and to allocate resources.
Adjusted operating income excludes “Realized investment gains
(losses), net, and related charges and adjustments”. A significant
element of realized investment gains and losses are impairments and
credit-related and interest rate-related gains and losses.
Impairments and losses from sales of credit-impaired securities,
the timing of which depends largely on market credit cycles, can
vary considerably across periods. The timing of other sales that
would result in gains or losses, such as interest rate-related
gains or losses, is largely subject to our discretion and
influenced by market opportunities as well as capital and other
factors.
Realized investment gains (losses) within certain businesses for
which such gains (losses) are a principal source of earnings, and
those associated with terminating hedges of foreign currency
earnings and current period yield adjustments, are included in
adjusted operating income. Adjusted operating income generally
excludes realized investment gains and losses from products that
contain embedded derivatives, and from associated derivative
portfolios that are part of an asset-liability management program
related to the risk of those products. Adjusted operating income
also excludes gains and losses from changes in value of certain
assets and liabilities relating to foreign currency exchange
movements that have been economically hedged or considered part of
our capital funding strategies for our international subsidiaries,
as well as gains and losses on certain investments that are
designated as trading. Adjusted operating income also excludes
investment gains and losses on assets supporting experience-rated
contractholder liabilities and changes in experience-rated
contractholder liabilities due to asset value changes, because
these recorded changes in asset and liability values are expected
to ultimately accrue to contractholders. Additionally, adjusted
operating income excludes the changes in fair value of equity
securities that are recorded in net income.
Adjusted operating income excludes “Change in value of market
risk benefits, net of related hedging gains (losses)”, which
reflects the impact from changes in current market conditions, and
market experience updates, reflecting the immediate impacts in
current period results from changes in current market conditions on
estimates of profitability, which we believe enhances the
understanding of underlying performance trends. Adjusted operating
income also excludes the results of Divested and Run-off
Businesses, which are not relevant to our ongoing operations, and
discontinued operations and earnings attributable to noncontrolling
interests, each of which is presented as a separate component of
net income under GAAP. Additionally, adjusted operating income
excludes other items, such as certain components of the
consideration for acquisitions, which are recognized as
compensation expense over the requisite service periods, and
goodwill impairments. Earnings attributable to noncontrolling
interests is presented as a separate component of net income under
GAAP and excluded from adjusted operating income. The tax effect
associated with pre-tax adjusted operating income is based on
applicable IRS and foreign tax regulations inclusive of pertinent
adjustments.
Adjusted operating income does not equate to “Net income” as
determined in accordance with U.S. GAAP. Adjusted operating income
is not a substitute for income determined in accordance with U.S.
GAAP, and our definition of adjusted operating income may differ
from that used by other companies. The items above are important to
an understanding of our overall results of operations. However, we
believe that the presentation of adjusted operating income as we
measure it for management purposes enhances the understanding of
our results of operations by highlighting the results from ongoing
operations and the underlying profitability of our businesses.
Trends in the underlying profitability of our businesses can be
more clearly identified without the fluctuating effects of the
items described above.
Adjusted book value is calculated as total equity (GAAP book
value) excluding accumulated other comprehensive income (loss), the
cumulative change in fair value of funds withheld embedded
derivatives, and the cumulative effect of foreign currency exchange
rate remeasurements and currency translation adjustments
corresponding to realized investment gains and losses. These items
are excluded in order to highlight the book value attributable to
our core business operations separate from the portion attributable
to external and potentially volatile capital and currency market
conditions.
FOOTNOTES
(1)
Highly liquid assets predominantly include
cash, short-term investments, U.S. Treasury securities, obligations
of other U.S. government authorities and agencies, and/or foreign
government bonds. For more information about highly liquid assets,
see the section titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Liquidity and
Capital Resources” included in Prudential Financial, Inc.’s Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q.
(2)
For more information about assets under
management, see the section titled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Results
of Operations – Segment Measures” included in Prudential Financial,
Inc.’s Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q.
(3)
For more information about constant dollar
basis sales, see the section titled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Results
of Operations by Segment – International Businesses” included in
Prudential Financial, Inc.’s Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q.
Prudential Financial, Inc. (NYSE: PRU), a global financial
services leader and premier active global investment manager with
approximately $1.5 trillion in assets under management as of March
31, 2024, has operations in the United States, Asia, Europe, and
Latin America. Prudential’s diverse and talented employees help
make lives better and create financial opportunity for more people
by expanding access to investing, insurance, and retirement
security. Prudential’s iconic Rock symbol has stood for strength,
stability, expertise, and innovation for nearly 150 years. For more
information, please visit news.prudential.com.
Financial Highlights
(in millions, unaudited)
Three Months Ended
March 31,
2024
2023
Adjusted operating income (loss) before
income taxes (1):
PGIM
$
169
$
151
U.S. Businesses
839
760
International Businesses
896
840
Corporate and Other
(435
)
(471
)
Total adjusted operating income before
income taxes
$
1,469
$
1,280
Reconciling Items:
Realized investment gains (losses), net,
and related charges and adjustments
$
(97
)
$
369
Change in value of market risk benefits,
net of related hedging gains (losses)
123
75
Market experience updates
(32
)
48
Divested and Run-off Businesses:
Closed Block division
(3
)
(4
)
Other Divested and Run-off Businesses
(35
)
92
Equity in earnings of joint ventures and
other operating entities and earnings attributable to
noncontrolling interests
(27
)
(5
)
Other adjustments (2)
(8
)
(8
)
Total reconciling items, before income
taxes
(79
)
567
Income before income taxes and equity
in earnings of joint ventures and other operating entities
$
1,390
$
1,847
Income Statement Data:
Net income attributable to Prudential
Financial, Inc.
$
1,138
$
1,462
Income attributable to noncontrolling
interests
13
15
Net income
1,151
1,477
Less: Earnings attributable to
noncontrolling interests
13
15
Income attributable to Prudential
Financial, Inc.
1,138
1,462
Less: Equity in earnings of joint ventures
and other operating entities, net of taxes and earnings
attributable to noncontrolling interests
37
(3
)
Income (after-tax) before equity in
earnings of joint ventures and other operating entities
1,101
1,465
Less: Total reconciling items, before
income taxes
(79
)
567
Less: Income taxes, not applicable to
adjusted operating income
(39
)
106
Total reconciling items, after income
taxes
(40
)
461
After-tax adjusted operating income
(1)
1,141
1,004
Income taxes, applicable to adjusted
operating income
328
276
Adjusted operating income before income
taxes (1)
$
1,469
$
1,280
See footnotes on last page.
Financial Highlights
(in millions, except per share data,
unaudited)
Three Months Ended
March 31,
2024
2023
Earnings per share of Common
Stock:
Net income attributable to Prudential
Financial, Inc.
$
3.12
$
3.93
Less: Reconciling Items:
Realized investment gains (losses), net,
and related charges and adjustments
(0.27
)
1.00
Change in value of market risk benefits,
net of related hedging gains (losses)
0.34
0.20
Market experience updates
(0.09
)
0.13
Divested and Run-off Businesses:
Closed Block division
(0.01
)
(0.01
)
Other Divested and Run-off Businesses
(0.10
)
0.25
Difference in earnings allocated to
participating unvested share-based payment awards
—
(0.01
)
Other adjustments (2)
(0.02
)
(0.02
)
Total reconciling items, before income
taxes
(0.15
)
1.54
Less: Income taxes, not applicable to
adjusted operating income
(0.15
)
0.31
Total reconciling items, after income
taxes
—
1.23
After-tax adjusted operating
income
$
3.12
$
2.70
Weighted average number of outstanding
common shares - basic
359.0
366.5
Weighted average number of outstanding
common shares - diluted
360.5
367.7
For earnings per share of Common Stock
calculation:
Net income attributable to Prudential
Financial, Inc.
$
1,138
$
1,462
Less: Earnings allocated to participating
unvested share-based payment awards
15
18
Net income attributable to Prudential
Financial, Inc. for earnings per share of Common Stock
calculation
$
1,123
$
1,444
After-tax adjusted operating income
(1)
$
1,141
$
1,004
Less: Earnings allocated to participating
unvested share-based payment awards
16
13
After-tax adjusted operating income for
earnings per share of Common Stock calculation (1)
$
1,125
$
991
Prudential Financial, Inc. Equity (as
of end of period):
GAAP book value (total PFI equity) at end
of period
$
27,209
$
31,385
Less: Accumulated other comprehensive
income (AOCI)
(7,661
)
(3,825
)
GAAP book value excluding AOCI
34,870
35,210
Less: Cumulative change in fair value of
funds withheld embedded derivatives
14
—
Less: Cumulative effect of foreign
exchange rate remeasurement and currency translation adjustments
corresponding to realized gains (losses)
(345
)
(575
)
Adjusted book value
$
35,201
$
35,785
End of period number of common shares -
diluted
362.8
367.8
GAAP book value per common share -
diluted
75.00
85.33
GAAP book value excluding AOCI per share -
diluted
96.11
95.73
Adjusted book value per common share -
diluted
97.03
97.29
See footnotes on last page.
Financial Highlights
(in millions, or as otherwise noted,
unaudited)
Three Months Ended
March 31,
2024
2023
PGIM:
PGIM:
Assets Managed by PGIM (in billions, as of
end of period):
Institutional customers
$
616.6
$
561.2
Retail customers
345.4
314.4
General account
379.4
394.2
Total PGIM
$
1,341.4
$
1,269.8
Institutional Customers - Assets Under
Management (in billions):
Gross additions, excluding money
market
$
45.2
$
13.9
Net additions (withdrawals), excluding
money market
$
26.1
$
(10.2
)
Retail Customers - Assets Under Management
(in billions):
Gross additions, excluding money
market
$
15.7
$
12.6
Net additions (withdrawals), excluding
money market
$
0.5
$
(3.8
)
U.S. Businesses:
Retirement Strategies:
Institutional Retirement Strategies:
Gross additions
$
10,990
$
3,828
Net additions (withdrawals)
$
4,573
$
(1,646
)
Total account value at end of period,
net
$
265,451
$
252,952
Individual Retirement Strategies:
Actively-Sold Protected Investment and
Income Solutions and, Discontinued Traditional VA and Guaranteed
Living Benefits:
Gross sales (3)
$
3,305
$
1,667
Sales, net of full surrenders and death
benefits
$
749
$
187
Total account value at end of period,
net
$
123,012
$
122,725
Group Insurance:
Annualized New Business Premiums (4):
Group life
$
189
$
162
Group disability
189
157
Total
$
378
$
319
Individual Life:
Annualized New Business Premiums (4):
Term life
$
31
$
23
Universal life
20
17
Variable life
116
109
Total
$
167
$
149
International Businesses:
International Businesses:
Annualized New Business Premiums
(4)(5):
Actual exchange rate basis
$
517
$
508
Constant exchange rate basis
$
520
$
497
See footnotes on last page.
Financial Highlights
(in billions, as of end of period,
unaudited)
March 31,
2024
2023
Assets and Assets Under Management and
Administration:
Total assets
$
725.8
$
709.3
Assets under management (at fair market
value):
PGIM
$
1,341.4
$
1,269.8
U.S. Businesses
126.3
123.0
International Businesses
18.2
15.3
Corporate and Other
10.4
8.9
Total assets under management
1,496.3
1,417.0
Assets under administration
182.6
158.6
Total assets under management and
administration
$
1,678.9
$
1,575.6
(1)
Adjusted operating income is a non-GAAP
measure of performance. See NON-GAAP MEASURES within the earnings
release for additional information. Adjusted operating income, when
presented at the segment level, is also a segment performance
measure. This segment performance measure, while not a traditional
U.S. GAAP measure, is required to be disclosed by U.S. GAAP in
accordance with FASB Accounting Standard Codification (ASC) 280 –
Segment Reporting. When presented by segment, we have prepared the
reconciliation of adjusted operating income to the corresponding
consolidated U.S. GAAP total in accordance with the disclosure
requirements as articulated in ASC 280.
(2)
Represents adjustments not included in the
above reconciling items, including certain components of
consideration for business acquisitions, which are recognized as
compensation expense over the requisite service periods.
(3)
Includes Prudential FlexGuard and
FlexGuard Income, Prudential Premier Investment, MyRock, Private
Placement Variable Annuity and all fixed annuity products. Excludes
discontinued traditional variable annuities and guaranteed living
benefits.
(4)
Premiums from new sales are expected to be
collected over a one-year period. Group insurance annualized new
business premiums exclude new premiums resulting from rate changes
on existing policies, from additional coverage issued under our
Servicemembers’ Group Life Insurance contract, and from excess
premiums on group universal life insurance that build cash value
but do not purchase face amounts. Group insurance annualized new
business premiums include premiums from the takeover of claim
liabilities. Excess (unscheduled) and single premium business for
the Company’s domestic individual life and international operations
are included in annualized new business premiums based on a 10%
credit.
(5)
Actual amounts reflect the impact of
currency fluctuations. Constant amounts reflect foreign denominated
activity translated to U.S. dollars at uniform exchange rates for
all periods presented, including Japanese yen 129 per U.S. dollar.
U.S. dollar-denominated activity is included based on the amounts
as transacted in U.S. dollars.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240430506083/en/
MEDIA CONTACT: YeaJin Kim, yeajin.kim@prudential.com
Prudential Financial (NYSE:PRU)
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