Prudential Posts Strong Q3 Fixed Annuity Sales Gains, Along With a Net Loss

Prudential Financial lost money in the third quarter, but U.S. sales of some products, including individual fixed annuities, increased.

Charles Lowrey, Prudential’s chairman, noted in a comment on the results that the company cut costs by $750 million one year ahead of schedule.

The company continues to move toward becoming “a higher growth and less market-sensitive company,” Lowrey said.

The Earnings

The third quarter ended Sept. 30.

Prudential is reporting a $284 million net loss for the quarter on $22 billion in revenue, compared with $1.5 billion in net income on $20 billion in revenue for the third quarter of 2020.

The Newark, New Jersey-based life insurer’s after-tax adjusted operating income, which excludes the performance of the derivatives used to manage annuity risk and some other gains and charges, fell to $803 million, from $1.5 billion.

Prudential has large operations in Japan, and one challenge the company faced in the third quarter was a surge in COVID-19 hospitalizations there.

Prudential executives will discuss the results during a conference call set to start at 11 a.m. Eastern Daylight Time Nov. 2.

Annuities

Prudential’s quarterly financial supplement shows that overall U.S. individual annuity sales fell to $1.4 billion, from $1.5 billion in the year-earlier quarter.

Sales of the FlexGuard variable annuities that Prudential has emphasized fell to $1.1 billion, from $1.3 billion, but sales of fixed annuities climbed to $249 million, from $37 million.

Prudential breaks out annuity sales by distribution channel.

Sales through independent financial planners fell 12%, to $668 million.

Insurance agents produced $563 million in sales, down just 2.6% from the year-earlier total.

The individual retirement strategies unit, which handles individual annuity sales, reported $445 million in adjusted operating income before income taxes for the third quarter on $1.1 billion in revenue, compared with $499 million in adjusted operating income before income taxes on $1.3 billion in revenue for the third quarter of 2021.

Other Sales

Sales of group life and disability increased to $103 million, from $68 million.

At the individual life business, term life sales fell to $24 million, from $26 million, and sales of whole life dropped to $103 million, from $144 million.

But universal life sales rose to $23 million, from $19 million.

People

Prudential last week announced the Andy Sullivan, who has been head of Prudential’s U.S. businesses, will become head of the company’s international businesses and its PGIM money management unit Jan. 1, 2023.

Sullivan succeeds Scott Sleyster, who is retiring after 35 years with Prudential.

Caroline Feeney, CEO of the U.S. retirement and insurance businesses, will become head of the U.S. businesses.

(Photo: Emile Wamsteker/Getty via Bloomberg Images)