Prudential Financial reported net income of $921 million in the second quarter of 2016, compared to $1.406 billion for the year-ago quarter (photo: ThinkStock).

Prudential Financial’s earnings dipped by 52 percent in the second quarter compared to the year-ago period, the company disclosed in its latest earnings statement.

Prudential reported net income of $921 million ($2.04 per common share) for the second quarter of 2016, compared to $1.406 billion ($3.03 per common share) for the year-ago quarter. After-tax adjusted operating income was $829 million ($1.84 per common share) for the second quarter of 2016, compared to $1.350 billion ($2.91 per common share) for the year-ago quarter.

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For the first half of 2016, Prudential’s net income totaled $2.257 billion ($4.97 per common share), compared to $3.442 billion ($7.40 per Common share) for the first half of 2015. After-tax adjusted operating income was $1.826 billion ($4.02 per common share) for the first half of 2016, compared to $2.648 billion ($5.69 per Common share) for the first half of 2015.

Results of ongoing operations

The company’s ongoing operations include the U.S. Retirement Solutions and Investment Management, U.S. Individual Life and Group Insurance, and International Insurance divisions, as well as corporate and other Operations.

The U.S. Retirement Solutions and Investment Management division reported adjusted operating income of $870 million for the second quarter of 2016, compared to $981 million in the year-ago quarter.

The Individual Annuities unit reported adjusted operating income of $427 million in the current quarter, compared to $548 million in the year-ago quarter. Current quarter results include a net benefit of $52 million from an updated estimate of profitability, including $4 million reflecting updates of actuarial assumptions based on an annual review and $48 million from the impact of market performance in relation to our assumptions.

Results for the year-ago quarter included a net benefit of $125 million to reflect an updated estimate of profitability, including $31 million reflecting updates of actuarial assumptions based on an annual review and $94 million from the impact of market performance in relation to our assumptions. Excluding the effect of the foregoing items, results for the Individual Annuities segment decreased $48 million from the year-ago quarter. This decrease came primarily from lower asset-based fees driven by a decline in average variable annuity account values.

The retirement segment reported adjusted operating income of $236 million for the current quarter, compared to $237 million in the year-ago quarter. Current quarter results include a net benefit of $6 million primarily to adjust amortization of deferred policy acquisition and other costs reflecting an annual review of actuarial assumptions. Excluding this item, results for the Retirement segment decreased $7 million from the year-ago quarter. This decrease reflected a less favorable contribution from pension risk transfer case experience and lower fees, partly offset by greater earnings from net investment results.

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The current quarter contribution to results from pension risk transfer case experience was approximately $20 million greater than our average quarterly expectations. The current quarter contribution from net investment results, which reflected increased full service account values and higher net prepayment fee income, included returns on non-coupon investments about $30 million below our average expectations.

The Asset Management segment reported adjusted operating income of $207 million for the current quarter, compared to $196 million in the year-ago quarter. The increase reflected a $9 million greater contribution from the segment’s incentive, transaction, strategic investing and commercial mortgage activities, which amounted to $33 million for the current quarter. Earnings driven by asset management fees were essentially unchanged from the year-ago quarter, as the impact of higher fees from management of third-party fixed income assets was largely offset by lower average equity assets under management.

 

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