Prudential’s US Retirement Solutions Fall on Annuities
November 6, 2015 by Robert Karr
US Retirement Solutions
Prudential Financial’s (PRU) US Retirement Solutions and Investment Management division reported adjusted operating income of $732 million for 3Q15, compared to $823 million in 3Q14. The division forms 50% of the company’s total adjusted operating income.
Individual Annuities segment
The Individual Annuities segment posted a fall in operating income of 16% to $310 million in the third quarter. This fall was due to a net charge of $76 million driven by adjustments or reserves for guaranteed minimum death and income benefits to reflect market performance. It was also impacted by a charge of $28 million for estimated costs related to potential contract cancelations.
Retirement segment
Prudential Financial’s retirement segment also experienced a fall in its operations. This segment posted adjusted operating income of $242 million in 3Q15, compared with $256 million in 3Q14. This fall resulted from a lower contribution from investment results, lower fees on full-service business, and higher expenses in 3Q15. However, it was partly offset by more revenue from pension risk transfer as well as a benefit of $20 million resulting from reserve refinements.
Asset Management segment
The Asset Management segment’s posted adjusted operating income fell to $180 million in 3Q15 from $200 million reported in 3Q14. The fall in operating income was due to a $14 million lower contribution from the segment’s strategic investing, transaction, incentive, and commercial mortgage activities. This was partially offset by higher asset management fees.
Assets managed by other players
Below are some of Prudential’s peers in asset management that have considerable assets under management:
- The Carlyle Group (CG), managing $193 billion
- KKR & Co. (KKR), managing $98 billion
- BlackRock (BLK), managing $4.5 trillion
- Apollo Global Management (APO), managing $163 billion
Together, these companies form 0.63% of the iShares MSCI ACWI ETF (ACWI).
