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May 06, 2020 at 07:43 AM
Prudential Financial Inc. recorded $947 million in negative market experience updates.
The experience updates, and investment market turmoil related to COVID-19, led to Prudential posting a loss for the first quarter.
(Related: Publicly Traded Life and Annuity Issuers Prepare to Talk About COVID-19 With Investors)
The Newark, New Jersey-based life insurer is reporting a $270 million net loss for the first quarter on $13.3 billion in revenue, compared with $937 million in net income on $13.6 billion in revenue for the first quarter of 2019.
The U.S. individual solutions division is reporting $353 million in adjusted operating income before income taxes on $2.7 billion in revenue, compared with $577 million in adjusted operating income before income taxes on $2.7 billion in revenue.
The company has $5.3 billion in cash and other liquid assets, compared with $5.5 billion a year earlier. It will be paying a dividend of $1.10 per common share.
Individual Life Insurance
Here’s what happened to sales of key life products at Prudential between the first quarter of 2019 and the latest quarter:
- Term Life: $40 million (down from $51 million)
- Guaranteed Universal Life: $29 million (up from $21 million)
- Other Universal Life: $30 million (flat)
- Variable Life: $88 million (up from $61 million)
Sales through Prudential’s own advisors increased to $35 million, from $34 million.
Sales through outside distributors increased to $152 million, from $129 million.
Individual Annuities
Variable annuity sales fell to $1.7 billion, from $2 billion.
Fixed annuity sales fell to $211 million, from $298 million.
Here’s what happened to sales through specific distribution channels between the first quarter of 2019 and the latest quarter:
- Insurance Agents: $674 million (down from $680 million)
- Wirehouses: $310 million (down from $452 million)
- Independent Marketing Organizations: $43 million (up from none)
- Independent Financial Planners: $767 million (down from $1 billion)
- Banks: $133 million ( down from $174 million)
In other earnings news:
Genworth Financial Inc., Richmond, Virginia (Stock symbol: GNW)
Genworth’s long-term care insurance (unit) produced a small operating in the first quarter, but financial market turmoil hurt the value of derivatives supporting the company’s annuities.
The company is reporting a $66 million net loss for the latest quarter on $1.8 billion in revenue, compared with $174 million in net income on $2 billion in revenue for the year-earlier quarter.
The LTCI unit produced $1 million in adjusted operating income for the quarter, up from a loss of $20 million for the year-earlier quarter.
The adjusted operating loss at Genworth’s life insurance unit increased to $77 million, from $2 million.
Genworth has $575 million in cash and liquid assets at the parent company level, up from $405 million a year earlier.
China Oceanwide Holdings Group Co. Ltd. of Beijing has been trying to acquire Genworth for years. The companies now have all needed U.S. approvals and reapprovals, and China Oceanwide is finalizing its funding arrangements Genworth says.
CNO Financial Group Inc., Carmel, Indiana (Stock symbol: CNO)
CNO posted a net loss for the first quarter partly because it adopted the new Current Expected Credit Losses (CECL) reporting standard early. Companies that use the CECL standard must estimate how the total value of anticipated credit losses on their bond holdings and other credit-related investments has changed each quarter.
