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Bloomberg
Prudential Financial Inc. expects coronavirus deaths to cut earnings by about $200 million this year after it swung to a net loss in the first quarter.
The life insurer’s earnings will be hardest hit in the second quarter, by an estimated $135 million, company executives told analysts on a conference call. That assumes 100,000 fatalities in the US and 40,000 in Japan.
Prudential expressed a gloomy sales outlook. First-quarter operating income slid 39% at the US individual business that includes annuities and life, and its sales will probably drop further. The international division is likely to see a significant decline, and the market for pension risk transfer deals will slow down, too.
“While the severity and duration of the pandemic, and related economic impact remains unknown, we are confident about the strength of our company,†Chief Executive Officer Charles Lowrey said on the call, citing Prudential’s balance sheet and its playbook to handle operational and financial risks.
Earnings per share missed forecasts as turbulent markets hurt results. After-tax adjusted operating income was $2.32 a share, falling short of the $2.78 median estimate of 14 analysts in a Bloomberg survey. The adjusted profit decreased to $939 million, missing the $1.16 billion average estimate. The net loss was $271 million, compared with net income of $932 million a year earlier.
Investment-management unit PGIM reported a 23% drop in operating income as strategic investment earnings fell and expenses rose.
Prudential’s credit losses on its investments are forecast to reach about $2.4 billion, after taxes, over three years. Even still, the insurer said this was manageable. “We feel comfortable about our ability to manage equity-market fluctuations and continued low interest rates over time,†Lowrey said.