Prudential Financial, Inc. (NYSE: PRU):
- Net income attributable to Prudential
Financial of $932 million or $2.22 per Common share versus $1.363
billion or $3.14 per share for the year-ago quarter.
- After-tax adjusted operating income of
$1.259 billion or $3.00 per Common share versus $1.340 billion or
$3.08 per share for the year-ago quarter.
- Notable items for the current quarter
resulted in a net charge to net income and after-tax adjusted
operating income of $8 million or $0.02 per Common share, as
discussed later in this release.
- Net income and after-tax adjusted
operating income in the current quarter also included higher
deferred and long-term employee compensation expenses in Corporate
& Other Operations and PGIM, from market appreciation and
seasonal impacts, that resulted in a net charge of $95 million or
$0.22 per Common share.
Charles Lowrey, Chairman and CEO, commented on
results:
“The first quarter of 2019 marked a solid start to the year
for Prudential. We accelerated our strategy to bring greater
financial opportunity to more customers. We produced an adjusted
operating return on equity, at the higher end of our 12-13% target,
increased our book value per share, and generated good business
fundamentals.
With a foundation of a rock-solid balance sheet, we continued
to return capital totaling $915 million to shareholders via share
repurchases and dividends.”
OTHER FINANCIAL
HIGHLIGHTS
($ millions, except per share)
1Q:19 1Q:18 Book value per share of
Common Stock $132.83 $120.99 Adjusted book value per
share of Common Stock $96.76 $93.55 Common Stock
share repurchases $500 $375 Common Stock dividends
$415 $387 Common Stock dividends per share
$1.00 $0.90 Parent company highly liquid assets
$5,545 $5,123
NOTABLE
ITEMS ($ millions, pre-tax) 1Q:19
1Q:18 Notable Items included in Adjusted Operating Income:
Updated estimates of profitability
driven by market performance versus assumptions $70
$16 Variable investment income above / (below) long-term
expectations $(100) $(50) Underwriting experience
above / (below) average expected gains $20 $(25)
Total Notable Items included in Adjusted Operating Income
$(10) $(59)
Prudential Financial, Inc. (NYSE: PRU) today reported first
quarter results. Net income attributable to Prudential Financial,
Inc., was $932 million ($2.22 per Common share) for the first
quarter of 2019, compared to $1.363 billion ($3.14 per Common
share) for the first quarter of 2018. After-tax adjusted operating
income was $1.259 billion ($3.00 per Common share) for the first
quarter of 2019, compared to $1.340 billion ($3.08 per Common
share) for the first quarter of 2018.
Consolidated adjusted operating income, adjusted book value and
adjusted operating return on equity are non-GAAP measures. These
measures are discussed later in this press release under
“Forward-Looking Statements and Non-GAAP Measures” and
reconciliations to the most comparable GAAP measures are provided
in the tables that accompany this release.
RESULTS OF ONGOING OPERATIONS
The Company’s ongoing operations include PGIM, our U.S.
Financial Wellness Businesses represented by U.S. Workplace
Solutions and U.S. Individual Solutions Divisions, International
Insurance, and Corporate & Other Operations. In the following
segment-level discussion, adjusted operating income refers to
pre-tax results.
PGIM
PGIM, the Company’s global investment management
businesses, reported adjusted operating income of $214 million for
the current quarter, compared to $232 million in the year-ago
quarter.
PGIM ($ millions)
1Q:19 1Q:18 Adjusted operating income
$214 $232
The decrease of $18 million from the year-ago quarter reflects
higher expenses, partially offset by higher asset management fees,
reflecting an increase in average assets under management.
PGIM assets under management of $1.221 trillion were $66 billion
higher than the year-ago quarter driven by market appreciation and
fixed income inflows partially offset by equity outflows.
U.S. Workplace Solutions
U.S. Workplace Solutions, consisting of the Retirement
and Group Insurance segments, reported adjusted operating income of
$304 million for the first quarter of 2019, compared to $372
million in the year-ago quarter.
RETIREMENT SEGMENT ($ millions)
1Q:19 1Q:18 Adjusted operating income
$251 $317 Notable items included above:
Variable investment income above / (below) long-term
expectations $(50) $(20) Underwriting experience
above / (below) average expected gains $50 $55
The Retirement segment reported adjusted operating income
of $251 million for the current quarter, compared to $317 million
in the year-ago quarter. Underwriting experience in the current
quarter was consistent with our seasonal expectation. Excluding the
notable items above, results decreased $31 million from the
year-ago quarter reflecting a lower contribution from net
investment spread results and higher expenses, partially offset by
higher reserve gains which includes the impact of business
growth.
Retirement account values were $454 billion as of March 31,
2019, up 6% from a year earlier, reflecting positive net flows and
market appreciation.
GROUP INSURANCE SEGMENT ($
millions) 1Q:19 1Q:18 Adjusted
operating income $53 $55 Notable items included
above: Variable investment income above
/ (below) long-term expectations $(5) $0
The Group Insurance segment reported adjusted operating
income of $53 million in the current quarter, compared to $55
million in the year-ago quarter. Excluding the notable item above,
results increased $3 million from the year-ago quarter reflecting
business growth.
Group Insurance reported earned premiums, policy charges and
fees of $1.3 billion in the current quarter, an increase of 2% from
the year-ago quarter.
U.S. Individual Solutions
U.S. Individual Solutions, consisting of the Individual
Annuities and Individual Life segments, reported adjusted operating
income of $577 million for the first quarter of 2019, compared to
$555 million in the year-ago quarter.
INDIVIDUAL ANNUITIES SEGMENT ($ millions)
1Q:19 1Q:18 Adjusted operating income
$472 $519 Notable items included above:
Impact from updated estimates of profitability driven by
market performance versus assumptions $14 $16
Variable investment income above / (below) long-term expectations
$(5) $(5)
The Individual Annuities segment reported adjusted
operating income of $472 million in the current quarter, compared
to $519 million in the year-ago quarter. Excluding the notable
items above, results decreased $45 million from the year-ago
quarter reflecting lower policy fees, net of associated risk
management and other related costs, driven by a decrease in average
variable annuity account values, and higher expenses. These
decreases were partially offset by a higher contribution from net
investment spread results.
Individual Annuities account values were $162 billion as of
March 31, 2019, down 2% from the year-ago quarter driven by net
outflows, partially offset by market appreciation over the year.
Individual Annuities gross sales were $2.3 billion in the current
quarter, up 34% from the year-ago quarter, reflecting our product
diversification strategy including sales momentum of our fixed
index annuity product.
INDIVIDUAL LIFE SEGMENT ($ millions) 1Q:19
1Q:18 Adjusted operating income $105
$36 Notable items included above:
Impact from updated estimates of profitability driven by market
performance versus assumptions $49 $0 Variable
investment income above / (below) long-term expectations
$(10) $(10) Underwriting experience above / (below) average
expected gains $(40) $(65)
The Individual Life segment reported adjusted operating
income of $105 million for the current quarter, compared to $36
million in the year-ago quarter. Underwriting experience in the
current quarter was consistent with our seasonal expectation.
Excluding the notable items above, results decreased $5 million
from the year-ago quarter primarily reflecting the effects of the
annual assumption review process on expected underwriting
experience.
Individual Life sales of $163 million in the current quarter
were up 30% from the year-ago quarter, primarily reflecting higher
variable life sales.
International Insurance
International Insurance, consisting of Life Planner
Operations and Gibraltar Life & Other Operations, reported
adjusted operating income of $922 million for the first quarter of
2019, compared to $856 million in the year-ago quarter.
LIFE PLANNER OPERATIONS ($
millions) 1Q:19 1Q:18 Adjusted
operating income $481 $416 Notable items included
above: Impact from updated estimates of
profitability driven by market performance versus assumptions
$7 $0 Variable investment income above / (below)
long-term expectations ($10) $(5) Underwriting
experience above / (below) average expected gains $10
$(15)
The Life Planner Operations reported adjusted operating
income of $481 million for the current quarter, compared to $416
million in the year-ago quarter. Excluding the notable items above,
results increased $38 million from the year-ago quarter reflecting
business growth and the timing of expenses, as well as the benefit
from foreign currency exchange rates.
Life Planner Operations constant dollar basis sales of $409
million in the current quarter were up 19% from the year-ago
quarter, driven by our Japanese operations reflecting a 6% growth
in Life Planner count and higher sales of U.S. dollar-denominated
products.
GIBRALTAR LIFE & OTHER
OPERATIONS ($ millions) 1Q:19 1Q:18
Adjusted operating income $441 $440 Notable items
included above: Variable investment
income above / (below) long-term expectations $(20)
$(10)
The Gibraltar Life & Other Operations reported
adjusted operating income of $441 million for the current quarter,
compared to $440 million in the year-ago quarter. Excluding the
notable item above, results increased $11 million from the year-ago
quarter reflecting business growth and a higher contribution from
investment spread results driven by U.S. dollar-denominated product
sales, partially offset by higher net expenses.
Gibraltar Life & Other Operations constant dollar basis
sales of $325 million in the current quarter were down 20% from the
year-ago quarter primarily attributable to competitive pressures in
the bank channel.
Corporate & Other Operations
Corporate & Other Operations reported a loss, on an
adjusted operating income basis, of $412 million in the first
quarter of 2019, compared to a loss of $294 million in the year-ago
quarter.
CORPORATE & OTHER
OPERATIONS ($ millions) 1Q:19 1Q:18
Adjusted operating income $(412) $(294)
The $118 million higher loss from the year-ago quarter reflects
higher net expenses in the current quarter, driven primarily by
higher costs for employee benefit and compensation plans tied to
Company stock and equity market returns and lower income from the
qualified pension plan.
ASSETS UNDER MANAGEMENT
Assets under management amounted to $1.456 trillion at
March 31, 2019, compared to $1.389 trillion a year earlier.
NET INCOME AND INVESTMENT PORTFOLIO
Net income attributable to Prudential Financial, Inc.
amounted to $932 million for the first quarter of 2019, compared to
$1.363 billion for the year-ago quarter.
Current quarter net income includes $638 million of pre-tax net
realized investment losses and related charges and adjustments. The
foregoing net losses include net pre-tax losses of $652 million
from products that contain embedded derivatives or guarantees and
associated hedging activities, largely driven by the impact of
tightening credit spreads on our risk of non-performance, net
pre-tax losses of $446 million primarily related to derivatives
used in our capital hedge program and other risk management
activities, and net pre-tax losses of $67 million from impairments
and sales of credit-impaired investments. The foregoing losses were
partially offset by net pre-tax gains of $527 million from general
portfolio and related activities.
Net income for the current quarter reflects a pre-tax increase
of $454 million in recorded asset values and $403 million in
recorded liabilities representing changes in value which are
generally expected to ultimately accrue to contractholders. These
changes primarily represent mark-to-market adjustments.
Net income for the year-ago quarter included $64 million of
pre-tax net realized investment gains and related charges and
adjustments. The foregoing net gains include net pre-tax gains of
$340 million from products that contain embedded derivatives or
guarantees and associated hedging activities, largely driven by the
impact of widening credit spreads on our risk of non-performance,
and net pre-tax gains of $28 million from general portfolio and
related activities. The foregoing gains were partially offset by
net pre-tax losses of $269 million primarily related to derivatives
used for risk management including foreign currency and asset and
liability duration management and other risk mitigation activities,
and $35 million from impairments and sales of credit-impaired
investments.
FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES
Certain of the statements included in this release constitute
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are made based on management’s current expectations and
beliefs concerning future developments and their potential effects
upon Prudential Financial, Inc. and its subsidiaries. Prudential
Financial, Inc.’s actual results may differ, possibly materially,
from expectations or estimates reflected in such forward-looking
statements. Certain important factors that could cause actual
results to differ, possibly materially, from expectations or
estimates reflected in such forward-looking statements can be found
in the “Risk Factors” and “Forward-Looking Statements” sections
included in Prudential Financial, Inc.’s Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q. Prudential Financial, Inc.
does not undertake to update any particular forward-looking
statement included in this document.
Consolidated adjusted operating income, adjusted book value and
adjusted operating return on equity are non-GAAP measures.
Reconciliations to the most directly comparable GAAP measures are
included in this release.
Adjusted operating income is the measure used by the Company to
evaluate segment performance and to allocate resources. Adjusted
operating income excludes “Realized investment gains (losses),
net,” as adjusted, and related charges and adjustments. A
significant element of realized investment gains and losses are
impairments and credit-related and interest rate-related gains and
losses. Impairments and losses from sales of credit-impaired
securities, the timing of which depends largely on market credit
cycles, can vary considerably across periods. The timing of other
sales that would result in gains or losses, such as interest
rate-related gains or losses, is largely subject to our discretion
and influenced by market opportunities as well as our tax and
capital profile.
Realized investment gains (losses) within certain of our
businesses for which such gains (losses) are a principal source of
earnings, and those associated with terminating hedges of foreign
currency earnings and current period yield adjustments are included
in adjusted operating income. Adjusted operating income generally
excludes realized investment gains and losses from products that
contain embedded derivatives, and from associated derivative
portfolios that are part of an asset-liability management program
related to the risk of those products. However, the effectiveness
of our hedging program will ultimately be reflected in adjusted
operating income over time. Adjusted operating income also excludes
gains and losses from changes in value of certain assets and
liabilities relating to foreign currency exchange movements that
have been economically hedged or considered part of our capital
funding strategies for our international subsidiaries, as well as
gains and losses on certain investments that are designated as
trading. Additionally, adjusted operating income excludes the
changes in fair value of equity securities that are recorded in net
income.
Adjusted operating income also excludes investment gains and
losses on assets supporting experience-rated contractholder
liabilities and changes in experience-rated contractholder
liabilities due to asset value changes, because these recorded
changes in asset and liability values are expected to ultimately
accrue to contractholders. In addition, adjusted operating income
excludes the results of Divested and Run-off Businesses, which are
not relevant to our ongoing operations. Discontinued operations and
earnings attributable to noncontrolling interests, each of which is
presented as a separate component of net income under GAAP, are
also excluded from adjusted operating income. The tax effect
associated with pre-tax adjusted operating income is based on
applicable IRS and foreign tax regulations inclusive of pertinent
adjustments.
Adjusted operating return on equity is equal to the annualized
year-to-date after-tax adjusted operating income divided by the
average adjusted book value. Return on equity based on GAAP
balances is calculated using after-tax net income and equity.
Adjusted book value is calculated as total equity (GAAP book
value) excluding accumulated other comprehensive income (loss) and
the cumulative effect of foreign currency exchange rate
remeasurements and currency translation adjustments corresponding
to realized investment gains and losses. These items are excluded
in order to highlight the book value attributable to our core
business operations separate from the portion attributable to
external and potentially volatile capital and currency market
conditions.
We believe that our use of these non-GAAP measures helps
investors understand and evaluate the Company’s performance and
financial position. The presentation of adjusted operating income
as we measure it for management purposes enhances the understanding
of the results of operations by highlighting the results from
ongoing operations and the underlying profitability of our
businesses. Trends in the underlying profitability of our
businesses can be more clearly identified without the fluctuating
effects of the items described above. Adjusted book value augments
the understanding of our financial position by providing a measure
of net worth that is primarily attributable to our business
operations separate from the portion that is affected by capital
and currency market conditions, and by isolating the accounting
impact associated with insurance liabilities that are generally not
marked to market and the supporting investments that are marked to
market through accumulated other comprehensive income under GAAP.
Adjusted return on equity is a useful measure of the operating
return the Company achieves in relation to the capital available to
our businesses. However, these non-GAAP measures are not
substitutes for income, equity and return on equity determined in
accordance with GAAP, and the adjustments made to derive these
measures are important to an understanding of our overall results
of operations and financial position. The schedules accompanying
this release provide reconciliations of non-GAAP measures with the
corresponding measures calculated using GAAP. Additional historic
information relating to our financial performance is located on our
website at www.investor.prudential.com.
EARNINGS CONFERENCE CALL
Members of Prudential’s senior management will host a conference
call on Thursday, May 2, 2019, at 11 a.m. ET, to discuss with the
investment community the Company’s first quarter results. The
conference call and an accompanying slide presentation will be
broadcast live over the Company’s Investor Relations website at
www.investor.prudential.com. Please log on 15 minutes early in the
event necessary software needs to be downloaded. The call will
remain on the Investor Relations website for replay through May 16.
Institutional investors, analysts, and other members of the
professional financial community are invited to listen to the call
and participate in Q&A by dialing (877) 777-1971 (domestic
callers) or (612) 332-0226 (international callers). All others are
encouraged to dial into the conference call in listen-only mode,
using the same numbers. To listen to a replay of the conference
call starting at 2 p.m. on May 2, through May 9, dial (800)
475-6701 (domestic callers) or (320) 365-3844 (international
callers). The access code for the replay is 458814.
Prudential Financial, Inc. (NYSE: PRU), a financial services
leader with more than $1 trillion of assets under management as of
March 31, 2019, has operations in the United States, Asia, Europe,
and Latin America. Prudential’s diverse and talented employees are
committed to helping individual and institutional customers grow
and protect their wealth through a variety of products and
services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. In the U.S.,
Prudential’s iconic Rock symbol has stood for strength, stability,
expertise and innovation for more than a century. For more
information, please visit news.prudential.com.
Financial Highlights (in millions,
unaudited) Three Months Ended March 31 2019 2018
Adjusted operating income (pre-tax) (1): PGIM Division $ 214
$ 232 U.S. Workplace Solutions Division 304 372 U.S. Individual
Solutions Division 577 555 International Insurance Division 922 856
Corporate and Other operations (412 ) (294 ) Total Adjusted
operating income (pre-tax) $ 1,605 $ 1,721
Reconciling Items: Realized investment gains (losses), net, and
related charges and adjustments $ (638 ) $ 64 Investment gains
(losses) on assets supporting experience-rated contractholder
liabilities, net 454 (403 ) Change in experience-rated
contractholder liabilities due to asset value changes (403 ) 418
Divested and Run-off Businesses: Closed Block Division (19 ) (9 )
Other Divested and Run-off Businesses 174 (72 ) Equity in earnings
of operating joint ventures and earnings attributable to
noncontrolling interests (33 ) (26 ) Total reconciling items,
before income taxes (465 ) (28 ) Income before income taxes and
equity in earnings of operating joint ventures for Prudential
Financial, Inc. $ 1,140 $ 1,693
Income
Statement Data: Net income attributable to Prudential
Financial, Inc. $ 932 $ 1,363 Income attributable to
noncontrolling interests 5 1
Net income 937
1,364 Less: Earnings attributable to noncontrolling
interests 5 1
Income attributable to Prudential
Financial, Inc. 932 1,363 Less: Equity in
earnings of operating joint ventures, net of taxes and earnings
attributable to noncontrolling interests 24 22
Income (after-tax) before equity in earnings of operating joint
ventures 908 1,341 Less: Total reconciling items,
before income taxes (465 ) (28 ) Less: Income taxes, not applicable
to adjusted operating income (114 ) (29 ) Total reconciling items,
after income taxes (351 ) 1
After-tax adjusted operating
income (1) 1,259 1,340 Income taxes, applicable
to adjusted operating income 346 381
Adjusted
operating income before income taxes (1) $ 1,605 $ 1,721
See footnotes on last page.
Financial
Highlights (in millions, except per share
data, unaudited) Three Months Ended March 31 2019 2018
Earnings per share of Common Stock (diluted): Net
income attributable to Prudential Financial, Inc. $ 2.22 $ 3.14
Less: Reconciling Items: Realized investment gains (losses), net,
and related charges and adjustments (1.53 ) 0.15 Investment gains
(losses) on assets supporting experience-rated contractholder
liabilities, net 1.09 (0.94 ) Change in experience-rated
contractholder liabilities due to asset value changes (0.97 ) 0.97
Divested and Run-off Businesses: Closed Block Division (0.05 )
(0.02 ) Other Divested and Run-off Businesses 0.42 (0.17 )
Difference in earnings allocated to participating unvested
share-based payment awards 0.01 — Total reconciling
items, before income taxes (1.03 ) (0.01 ) Less: Income taxes, not
applicable to adjusted operating income (0.25 ) (0.07 ) Total
reconciling items, after income taxes (0.78 ) 0.06
After-tax adjusted operating income $ 3.00 $ 3.08
Weighted average number of outstanding Common shares
(basic) 409.2 422.0 Weighted average number of
outstanding Common shares (diluted) 417.6 430.9
Earnings calculation, per share of Common Stock:
Net income attributable to Prudential Financial, Inc.
$ 932 $ 1,363 Earnings related to interest, net of tax, on
exchangeable surplus notes 5 5 Less: Earnings allocated to
participating unvested share-based payment awards 10 16
Net income attributable to Prudential Financial, Inc. for
earnings per share of Common Stock calculation $ 927 $
1,352
After-tax adjusted operating income (1)
$ 1,259 $ 1,340 Earnings related to interest, net of tax, on
exchangeable surplus notes 5 5 Less: Earnings allocated to
participating unvested share-based payment awards 13 16
After-tax adjusted operating income for earnings per
share of Common Stock calculation (1) $ 1,251 $ 1,329
Prudential Financial, Inc. Equity (as of end of
period): GAAP book value (total PFI equity) at end of
period (6) $ 55,010 $ 51,830 Less: Accumulated other comprehensive
income (AOCI) 17,218 14,761 GAAP book value excluding
AOCI (6) 37,792 37,069 Less: Cumulative effect of foreign exchange
rate remeasurement and currency translation adjustments
corresponding to realized gains/losses (2,142 ) (2,892 ) Adjusted
book value (6) 39,934 39,961 Number of diluted shares at end
of period (2) 417.9 432.5 GAAP book value per
Common share - diluted (3)(6) 132.83 120.99 GAAP book value
excluding AOCI per share - diluted (3)(6) 91.63 86.86 Adjusted book
value per Common share - diluted (3)(6) 96.76 93.55 See
footnotes on last page.
Financial Highlights
(in millions, or as otherwise noted, unaudited) Three Months
Ended March 31 2019 2018
PGIM Division: PGIM
Segment: Assets managed by PGIM (in billions, as of end of period):
Institutional customers $ 524.0 $ 489.6 Retail customers 256.4
246.2 General account 441.0 420.0 Total PGIM $
1,221.4 $ 1,155.8 Institutional Customers -
Assets Under Management (in billions): Gross additions, other than
money market $ 15.1 $ 19.4 Net additions
(withdrawals), other than money market $ 1.0 $ (0.2 )
Retail Customers - Assets Under Management (in billions): Gross
additions, other than money market $ 14.1 $ 14.6
Net additions, other than money market $ 0.4 $ 1.0
U.S. Workplace Solutions Division:
Retirement Segment: Full Service: Deposits and sales
$ 9,567 $ 9,922 Net additions $ 462 $
1,768 Total account value at end of period $ 251,071
$ 236,120 Institutional Investment Products:
Gross additions $ 2,247 $ 688 Net
withdrawals $ (1,402 ) $ (4,201 ) Total account value at end
of period $ 203,101 $ 191,518 Group Insurance
Annualized New Business Premiums (4): Group life $ 174 $ 243 Group
disability 119 140 Total $ 293 $ 383
U.S. Individual Solutions Division: Fixed and
Variable Annuity Sales and Account Values: Gross sales $ 2,307
$ 1,724 Net redemptions $ (339 ) $ (1,171 )
Total account value at end of period $ 161,890 $
164,651 Individual Life Insurance Annualized New
Business Premiums (4): Term life $ 51 $ 49 Guaranteed universal
life 21 21 Other universal life 30 26 Variable life 61 29
Total $ 163 $ 125
International
Insurance Division: International Insurance Annualized
New Business Premiums (4)(5): Actual exchange rate basis $
727 $ 758 Constant exchange rate basis $ 734
$ 752 See footnotes on last page.
Financial
Highlights (in billions, as of end of period,
unaudited) Three Months Ended March 31 2019 2018
Assets and Asset Under Management Information:
Total assets (6) $ 849.3 $ 829.7 Assets under management (at
fair market value): PGIM Division 1,221.4 1,155.8 U.S. Workplace
Solutions Division 89.4 86.2 U.S. Individual Solutions Division
113.3 115.7 International Insurance Division 31.4 30.8 Total
assets under management 1,455.5 1,388.5 Client assets under
administration 250.8 218.4 Total assets under management and
administration $ 1,706.3 $ 1,606.9 See footnotes on
last page. (1) Adjusted operating income is a non-GAAP
measure of performance. See FORWARD-LOOKING STATEMENTS AND NON-GAAP
MEASURES within the earnings release for additional information.
Adjusted operating income, when presented at the segment level, is
also a segment performance measure. This segment performance
measure, while not a traditional U.S. GAAP measure, is required to
be disclosed by U.S. GAAP in accordance with FASB Accounting
Standard Codification (ASC) 280 – Segment Reporting. When presented
by segment, we have prepared the reconciliation of adjusted
operating income to the corresponding consolidated U.S. GAAP total
in accordance with the disclosure requirements as articulated in
ASC 280. (2) Diluted shares as of March 31, 2019 and 2018
include 6.09 million shares and 5.88 million shares, respectively,
due to the dilutive impact of conversion of exchangeable surplus
notes (“ESNs”) when book value per common share (i.e., book value
per common share, book value excluding AOCI per common share, and
adjusted book value per common share) is greater than $82.16 and
$85.00, respectively. (3) The exchangeable surplus notes are
subject to customary antidilution adjustments and the exchange rate
is accordingly revalued in the fourth quarter of each year. In
order to calculate book value per common share as of March 31, 2019
and 2018, equity is increased by $500 million and diluted shares
include 6.09 million shares and 5.88 million shares, respectively,
reflecting the dilutive impact of ESNs when book value per common
share is greater than $82.16 and $85.00, respectively. (4)
Premiums from new sales are expected to be collected over a
one-year period. Group insurance annualized new business premiums
exclude new premiums resulting from rate changes on existing
policies, from additional coverage issued under our Servicemembers'
Group Life Insurance contract, and from excess premiums on group
universal life insurance that build cash value but do not purchase
face amounts. Group insurance annualized new business premiums
include premiums from the takeover of claim liabilities. Excess
(unscheduled) and single premium business for the company's
domestic individual life and international insurance operations are
included in annualized new business premiums based on a 10% credit.
(5) Actual amounts reflect the impact of currency
fluctuations. Constant amounts reflect foreign denominated activity
translated to U.S. dollars at uniform exchange rates for all
periods presented, including Japanese yen 105 per U.S. dollar and
Korean won 1,110 per U.S. dollar. U.S. dollar-denominated activity
is included based on the amounts as transacted in U.S. dollars.
(6) In the first quarter of 2018, the Company eliminated the
one-month reporting lag for balance sheet and results of operations
of Gibraltar Life Insurance Company, Ltd. (“Gibraltar Life”)
consolidated operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005920/en/
MEDIA: Bill Launder, (973) 802-8760,
bill.launder@prudential.com
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