Prudential Beats Earnings Est, Lags Rev (AXS) (HIG) (MRH) (PRU)

Zacks

Prudential Financial Inc.’s (PRU) adjusted operating earnings for the first quarter of 2013 came in at $2.28 per share, higher than the Zacks Consensus Estimate of $1.89. Results also exceeded the year-ago earnings of $1.61 per share.

Including realized investment losses, net, and related charges and adjustments of $6.37, investment gains on trading account assets supporting insurance liabilities, net, of 20 cents, change in experience-rated contract holder liabilities due to asset value changes of 30 cents, income from divested business of 7 cents and difference in earnings allocated to participating unvested share-based payment awards of 2 cents, Prudential reported net loss of $1.55 per share in the first quarter of 2013. This was narrower than the prior-year loss of $2.03.

Quarterly Operational Update

Total revenue reported by Prudential was $11.8 billion, up 12.8% year over year, attributable to higher premiums (up 5.8% year over year), policy charges and fee income (up 32.2% year over year), net investment income (up 12.8% year over year), and asset management fees, commissions and other income (up 34.4% year over year). However, results were below the Zacks Consensus Estimate of $12.5 billion.

Total benefits and expenses were $10.4 billion in the quarter, up 9.6% year over year. Higher insurance and annuity benefits (up 15.5%), interest credited to policyholders' account balances (up 1.9%), interest expense (up 6.2%) and other expenses (up 0.7%) led to the upside.

Quarterly Segment Update

The U.S. Retirement Solutions and Investment Management division, which houses Individual Annuities, Retirement, and Asset Management, represents approximately 35.6% of Prudential’s total revenue. The segment reported adjusted operating income of $775 million, up 9.9% year over year.

Adjusted operating income at the U.S. Individual Life and Group Insurance division increased 102.8% year over year to $146 million.

The International Insurance division’s adjusted operating income increased 46.9% year over year to $877 million, attributable to higher contribution from both Gibraltar Life and Life Planners insurance operations.

The Corporate and Other operations’ adjusted loss was $314 million in the first quarter of 2013 narrower than the loss of $326 million the year-ago quarter.

Prudential’s Assets under management increased 0.1% to $1.061 trillion as of Mar 31, 2013 from $1.060 trillion at Dec 31, 2012.

Prudential’s Closed Block Business posted pretax operating income of $19 million, down 36.7% year over year.

Financial Position

As of Mar 31, 2013 Prudential had assets under management and administration worth $1.2 trillion, up 15.2% year over year.

Adjusted book value per share was $55.94, down 3.3% from $57.86 at year end 2012.

Acquisition

In Jan 2013, Prudential acquired the individual life insurance business of The Hartford Financial Services Group Inc. (HIG) for $615 million through a reinsurance transaction.

Performance of Other Stocks

AXIS Capital Holdings Limited (AXS) reported first-quarter 2013 net operating income of $1.92 per share, which breezed past the Zacks Consensus Estimate of $1.19. Earnings surged 79% year over year. Net operating income of $227 million improved nearly 70% year over year.

Montpelier Re Holdings Ltd. (MRH) reported first-quarter 2013 operating income of $1.18 per share, better than the Zacks Consensus Estimate of 89 cents. However, earnings were 4.1% lower than $1.23 per share in the year-ago quarter.

Zacks Rank

Prudential’s stock carries a Zacks Rank #2 (Buy).

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

HARTFORD FIN SV (HIG): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

PRUDENTIAL FINL (PRU): Free Stock Analysis Report

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