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August 07, 2014 at 07:08 AM
(Bloomberg) — Prudential Financial Inc., the No. 2 U.S. life insurer, reported second-quarter profit that beat analysts’ estimates as results improved at the company’s main units.
Operating earnings, which exclude some investments and the results of policies sold before the firm went public, were $2.49 a share, 14 cents more than the average estimate of analysts surveyed by Bloomberg. Net income was $1.09 billion, compared with a loss of $514 million a year earlier, Newark, New Jersey-based Prudential said today in a statement.
Chief Executive Officer John Strangfeld, 60, is counting on pension-transfer deals and acquisitions to help Prudential maintain a return on equity of at least 13 percent to 14 percent. The deals add to funds that Prudential oversees at its asset-management operation, which has hired more than 40 managers since last year.
Improvements in ROE were “driven by steady organic growth, accretion from recent M&A and pension closeout transactions, and ongoing share repurchases,” Jimmy Bhullar, an analyst at JPMorgan Chase & Co., said in a research note, using the company’s ticker symbol. “Our outlook for operating trends in PRU’s major businesses is positive.”
Prudential rose 1 percent to $86.57 at 4:15 p.m. in New York. The stock has declined 6.1 percent this year, compared with the 4.8 percent slump by larger rival MetLife Inc. Results were announced after the close of regular trading.
MetLife reported results last week that fell short of analysts’ estimates as operating profit slumped at the group benefits business.
Book Value
Book value at Prudential’s main business rose to $85.35 a share on June 30. The measure of assets minus liabilities was $78.87 three months earlier. Net investment income climbed 2.3 percent to $2.97 billion at the main unit.
Prudential gets about half its profits from international units, mainly in Japan. The company expanded in the country in 2011 with the acquisition of insurers Star and Edison from American International Group Inc.
