Prudential Has Surprise Profit Jump on Faster Cost-Cutting Pace

Prudential Financial Inc. posted a surprise jump in profit and said it’s ahead of schedule on an effort to cut expenses.

  • The life insurer’s net income rose to $1.49 billion in the third quarter, compared with profit of $1.42 billion a year earlier. The company said it had already achieved more than 95% of the cost cuts it planned for 2020.

Key Insights

  • Chief Executive Officer Charles Lowrey has been looking for ways to battle low interest rates, which have weighed on results. “We continued to reprice products and pivot to less rate-sensitive products,” Lowrey said in a statement Tuesday.
  • The company’s asset-management unit PGIM, which has been a bright spot, posted record adjusted profit as clients assets jumped 11% from a year earlier to the highest ever.
  • Prudential said it now aims to cut $250 million more in expenses by the end of 2023, bringing the total to $750 million.

Market Reaction

  • Shares rose 1.1% to $68.50 at 4:34 p.m. in late trading in New York. They’re down 28% this year through Tuesday’s close.

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  • Earnings per share beat forecasts. After-tax adjusted operating income was $3.21 a share, surpassing the $2.71 median estimate of 11 analysts.
  • Prudential’s statement ishere. Its presentation ishere.

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