Prudential Should Benefit From Higher Interest Rates 

Equity Analyst

Suryansh Sharma

Revenue segments as reported by the company.

Premiums

Policy charges and fee income

Net investment income

Asset management fees, commissions and other income

Revenue Segments

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

Operating Margin

Profit Margin

Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Insurance and annuity benefits

Interest credited to policyholders' account balances

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Amortization of acquisition costs

General and administrative

Change in estimates of liability for future policy benefits

Operating Expenses

Year over year growth in Revenue and Operating Expenses.

Revenue Y/Y

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Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Outstanding Shares

Market Cap

Also known as Price/Sales Ratio. Calculated using Average market cap for the quarter / Annualized quarterly revenue.

Revenue Multiple

Prudential Financial provides a variety of financial services products, including life insurance, annuities, retirement plan services, and investment management products in various countries. The investment management business has achieved adequate scale and is a source of stable earnings, strong operating margins, and maintained cash flows for the company. 

The U.S. businesses produce diversified earnings from fees, net investment spread, and underwriting income and benefits from the complementary mix of longevity (retirement products) and mortality (life insurance) businesses thereby creating a natural hedge. The international business segment which is mainly concentrated in Japan faces headwinds from low interest rates, but Japan’s aging population has led to a steady demand for retirement and health-related products. We like the company’s progress with regard to its 2019 cost-saving initiative as it's expected to achieve its target of $750 million of run-rate savings ahead of schedule. 

The company’s strategy is to transform itself into a higher-growth, less-market sensitive, and more nimble business by reallocating capital to increase earnings contribution from higher-growth businesses like group insurance, and investment management and reducing the earnings contribution from individual annuities business. We like the steps that the company has taken recently, including divesting its full-service retirement business and selling a portion of its traditional variable annuity portfolio. We believe that steps like this, have resulted in reducing the overall risk profile of the company thereby making it more resilient during periods of economic turbulence. The company weathered the low interest rates and high mortality environment during the pandemic partly due to its improved risk profile. 

Prudential, like other life insurers, has its financial results tied to interest rates. The interest rates are rising in the near term, but we do not expect long-term interest rates to return to pre-financial-crisis levels. Having said this, we expect midcycle interest rates to be higher than the average rate in the last decade, resulting in better probability.

Business Strategy & Outlook

None

Economic Moat

Prudential Financial

Prudential Financial, Inc. engages in the provision of insurance, investment management, and other financial products and services to both individual and institutional customers. It operates through the following segments: PGIM, U.S. Businesses, International Businesses, Closed Block, and Corporate and Others. The PGIM segment provides investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies, to institutional and retail clients globally, as well as the Company’s general account. The U.S. Businesses segment offers a range of products and solutions that cover protection, retirement, savings, income and investment needs. The U.S. Businesses are organized into five segments: Retirement, Group Insurance, Individual Annuities, Individual Life and Assurance IQ. The Retirement segment provides retirement investment and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors. The Group Insurance segment provides group life, long-term and short-term group disability, and group corporate bank, and trust-owned life insurance in the U.S., primarily to institutional clients for use in connection with employee plans and affinity groups. The Individual Annuities segment develops and distributes individual variable and fixed annuity products, primarily to the U.S. mass affluent and affluent markets. The Individual Life segment develops and distributes individual variable life, term life and universal life insurance products primarily to the U.S. mass middle, mass affluent and affluent markets. The Assurance IQ segment leverages data science and technology to primarily distribute third-party products and a proprietary term life product directly to retail shoppers, primarily through its digital and agent channels. The International Businesses segment develops and distributes life insurance, retirement, and related products to the mass affluent and affluent markets in Japan, Korea, and other foreign countries through its Life Planner operations. The Closed Block segment includes certain in force participating insurance and annuity products and corresponding assets that are used for the payment of benefits, expenses and policyholders’ dividends related to these products. The Corporate and Other Operations segment include corporate items and initiatives that are not allocated to business segments. The company was founded by John Fairfield Dryden in 1875 and is headquartered in Newark, NJ.

Earnings data Q3 2023

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Prudential Financial (PRU) stands to gain from higher emerging markets earnings, improved spread income, strategic acquisitions, effective capital deployment and a solid financial position.

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NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) has made a new strategic partnership with EvolutionIQ, a technology company with an artificial intelligence-driven platform that will enhance Prudential's disability claims ecosystem. With AI playing an increasingly crucial role in businesses today, the integration of this platform into Prudential's claims process augments the important work of the company's disability claims examiners. EvolutionIQ uses proprietary, next-gene.

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Prudential Financial, Inc. (NYSE:PRU ) Barclays 21st Global Financial Services Conference September 13, 2023 9:45 AM ET Company Participants Charlie Lowrey - Chairman and CEO Conference Call Participants Tracy Benguigui - Barclays Tracy Benguigui Good morning, everyone. I'm Tracy Benguigui, insurance analyst at Barclays, and I'm pleased to host this fireside chat with Charlie Lowrey, Chairman and CEO of Prudential.

Prudential Financial, Inc. (PRU) Barclays 21st Global Financial Services Conference (Transcript)

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Prudential (PRU), Warburg Pincus and a group of investors form Prismic, which will have $10 billion initial reinsurance transaction and $1 billion equity capital investment.

Prudential (PRU), Warburg Pincus Form Prismic Life Reinsurance

Prudential Financial Inc. PRU, -0.04% said late Thursday it has teamed up with private-equity firm Warburg Pincus to lead a $1 billion equity investment in Prismic Life Reinsurance Ltd., a new Class E life and annuity reinsurance company based in Bermuda.

Prudential, Warburg Pincus lead $1B equity investment in Prismic Life Reinsurance

NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) (Prudential) and Warburg Pincus today announced the launch of Prismic Life Reinsurance, Ltd. (Prismic), a licensed Class E Bermuda-based life and annuity reinsurance company. Prudential and Warburg Pincus, together with a group of investors, have agreed to make equity investments in Prismic and will oversee its long-term strategy through participation on its board of directors. Prudential expects to reinsure to Prismic a bloc.

Prudential Financial, Inc. and Warburg Pincus announce launch of Prismic Life Re

NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) announced today that Kathleen Murphy has been elected to the Board of Directors as an independent director, effective September 11, 2023. Murphy brings to Prudential her extensive experience in the financial services and wealth management sectors, most notably at Fidelity Investments, where she recently retired. She was president of Fidelity's Personal Investing business from 2009 to 2021. During this time, she led the strate.

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NEWARK, N.J.--(BUSINESS WIRE)--PGIM, the $1.27 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU), has appointed Eric Adler as president and CEO of PGIM Private Alternatives, bringing together the firm's private alternatives capabilities in order to provide global investors with a cohesive set of investment solutions across private credit, real estate equity and debt, private equity, infrastructure, and agriculture. The appointment of Adler and formation of.

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Prudential Financial stock has defied the doomsday calls of bearish market prognosticators in March, given its remarkable rally through its August highs. The leading insurance company has continued to improve its core earnings performance. The expected peaking of interest rates should help normalize its GAAP metrics. Prudential's de-risking efforts and expansion into higher-growth regions, such as Latin America, are expected to drive further upside.

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NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) will participate in the 2023 Barclays Global Financial Services Conference on Wednesday, September 13, 2023. On that day at approximately 9:45 a.m. ET, Charles Lowrey, chairman and CEO, will participate in an analyst-led fireside chat. Interested parties may listen to the presentation through a live audio webcast on Prudential Financial's Investor Relations website at investor.prudential.com. Please log on at least 15 minutes.

Prudential Financial, Inc. to Participate in 2023 Barclays Global Financial Services Conference; Live Webcast Available

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Prudential Financial has experienced setbacks due to the regional bank meltdown, but now presents a good entry point with a solid dividend profile. The company has a strong asset base and a history of growing dividends, making it an attractive investment opportunity. PRU's expansion in Latin America and its position as the third largest life insurance company in Brazil suggest potential for future growth and a higher share price.

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NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial, Inc. (NYSE: PRU) announced today that four aspiring artists have been selected to receive an all-expenses-paid trip to NYC and perform with Broadway idols in front of an estimated 50,000 spectators in Times Square during the free Curtain Up: A Broadway Festival taking place Sept. 8-10. The Prudential Stages on Broadway Brought to You by Playbill concert – which will be held on Sept. 9 and hosted by Brittney Johnson, an acclaimed Broadway star.

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Prudential Financial (PRU) stands to gain from higher premiums, strategic acquisitions, favorable underwriting results and effective capital deployment.

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Prudential has strong cash flow to cover future dividend raises. The 5-year average dividend raise is 8%. The company has significant international exposure, with 46% of total sales coming from sources outside the US, particularly Japan. Prudential offers a high dividend yield of over 5% and has a strong track record of increasing dividend payouts for 15 consecutive years.

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News for Prudential Financial Stock (PRU)