01—Abstract
Summary
Summary of the 10-Q filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Prudential Financial, Inc. reported net income attributable to Prudential Financial, Inc. of $1,198 milliona for the second quarter of 2024, compared to $511 million in the second quarter of 2023, and $2,336 million for the six months ended June 30, 2024, compared to $1,973 million a year earlier.
Diluted earnings per share were $3.28b for the quarter and $6.40 for the six months. Total revenues were $14.88 billion for the quarter and $38.39 billion for the six months. The filing attributes the quarter's increase mainly to a $885 million pre-tax favorable variance in realized investment gains (losses), net, and related charges, and a $160 million favorable variance in adjusted operating income from business segments, partially offset by a $313 million unfavorable change in the value of market risk benefits.
The company recorded two out-of-period adjustments in the second quarter totaling a $136 millionc pre-tax charge, which did not affect adjusted operating income. At June 30, 2024, total assets were $715.20 billion and total liabilities were $685.09 billion, versus $721.12 billion and $691.34 billion at December 31, 2023. Total Prudential Financial, Inc. equity rose to $28.01 billion from $27.82 billion.
The company repurchased $493 milliond of common stock in the first six months under a $1.0 billion authorization for 2024, and declared dividends of $1.30 per share in each quarter. Approximately $1.48 trillion of assets under management are reported as of June 30, 2024. Key transactions in 2024 include a reinsurance agreement with Somerset Re covering guaranteed universal life policies (approximately 30% of the in-force block), a $1.0 billion junior subordinated notes issuance, and the redemption of $500 million of junior subordinated notes.
The filing also discloses pending legal and regulatory matters, with management concluding that the ultimate outcome of pending litigation is not likely to have a material adverse effect on the financial statements, and an aggregate reasonably possible loss range in excess of accruals of less than $250 million. In July 2024, the company amended and restated its $4.0 billion credit facility, extending its term to July 2029. The company also reported that two federal district courts stayed the effective date of the DOL Retirement Security Rule in July 2024.
02—Key points
Key Highlights
- Net income attributable to Prudential Financial, Inc. rose to $1,198 million in Q2 2024 from $511 million in Q2 2023; six-month net income was $2,336 million versus $1,973 million.
- Diluted EPS was $3.28 for Q2 2024 (vs. $1.38) and $6.40 for the six months (vs. $5.31).
- Realized investment gains (losses) and related items produced an $885 million pre-tax favorable variance in Q2 2024, while the change in value of market risk benefits was an unfavorable $313 million variance.
- Two unrelated out-of-period adjustments recorded in Q2 2024 produced an aggregate $136 million pre-tax net charge, with no impact on adjusted operating income.
- Somerset Re reinsurance of certain guaranteed universal life policies (about 30% of the in-force block) closed in March 2024 with a $363 million deferred reinsurance gain.
- Total assets were $715.20 billion at June 30, 2024 (vs. $721.12 billion at year-end 2023), and total Prudential Financial equity was $28.01 billion.
- The company issued $1.0 billion of 6.50% junior subordinated notes in March 2024, redeemed $500 million of 5.20% notes, and extended its $4.0 billion credit facility to July 2029.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $14.88B$13.50B | +10.3% |
| Net Income | $1.20B$496.00M | +141.5% |
| EPS (Basic) | $3.30$1.38 | +139.1% |
| EPS (Diluted) | $3.28$1.38 | +137.7% |
| Shares Outstanding (Basic) | 358.80M364.80M | −1.6% |
| Shares Outstanding (Diluted) | 360.50M366.10M | −1.5% |
05—Questions
Frequently Asked Questions
How did Prudential's earnings change in the second quarter of 2024?
Net income attributable to Prudential Financial, Inc. was $1,198 million in Q2 2024 compared with $511 million in Q2 2023, an increase of $687 million. The filing attributes the increase mainly to an $885 million favorable variance in realized investment gains (losses), net, and related charges, and a $160 million favorable variance in adjusted operating income from the business segments. These were partly offset by a $313 million unfavorable change in the value of market risk benefits and a $141 million unfavorable variance in income taxes.
What were the out-of-period adjustments recorded in the second quarter of 2024?
The company recorded two unrelated out-of-period adjustments with an aggregate net pre-tax charge of $136 million in Q2 2024. These comprised an $86 million valuation-related charge from increased policyholder account balances on indexed variable annuity products and a $50 million charge from an increased allowance for credit losses on certain loan balances. The adjustments affected the previously issued Q1 2024 interim statements, did not affect adjusted operating income, and do not change the six-month 2024 results.
What is the status of the Retirement Security Rule and legal proceedings?
The Department of Labor adopted the Retirement Security Rule in April 2024, with a scheduled effective date of September 2024. In July 2024, two United States District Courts issued orders staying the effective date during the pendency of the lawsuits and any appeals, and the company anticipates increased compliance costs. For litigation, the company estimates the aggregate range of reasonably possible losses in excess of accruals is less than $250 million, and management believes the ultimate outcome of pending matters is not likely to have a material adverse effect on the financial statements.
How did capital and shareholder returns change in the first half of 2024?
Total capital was $48.90 billion at June 30, 2024, compared with $47.29 billion at December 31, 2023. The company repurchased $493 million of common stock in the first six months under a $1.0 billion authorization for calendar 2024, of which $500 million had been used as of June 30. Dividends declared were $1.30 per share in each quarter of 2024 (totaling $2.60 for six months), compared with $1.25 per share in Q2 2023.
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