Source: Prudential Financial.
AfterPrudential Financialreported itssecond-quarter results, its management team shared some important information with investors during the subsequent conference call. Here are the key takeaways for long-term shareholders.
1. The core business is performing well despite an unfavorable interest rate and foreign exchange environment.
Prudential's more than 15% return on equity is particularity impressive, especially considering that historically low interest rates are making it difficult for the company to earn adequate returns on its fixed-income investment portfolios. And with the Federal Reserve appearing to be edging closer to raising rates here in the U.S., Prudential's profitability could be about to receive a boost.
2. Prudential's U.S. individual life insurance business is delivering solid growth.
Prudential delivered impressive performance in its individual life insurance business, with U.S. sales jumping 26% year over year to $130 million with increases across its universal, term, and variable life product lines.
3. Retirement solutions and asset management are also important growth drivers.
Prudential is successfully striking deals with large corporations that help to mitigate the risk in their pension plans, with "four significant pension risk transfer transactions" helping to contribute $5.7 billion of retirement net inflows in the second quarter. Institutional and retail assets under management also benefited from net inflows, to the tune of $6.4 billion during the quarter.
All told, retirement account values rose 13% year over year to $372.6 billion and institutional and retail assets under management increased 6% to $471.1 billion. Rising AUM leads to higher asset-based fees, which should help to propel Prudential's revenue and earnings in the years ahead.
4. Prudential has completed its integration of The Hartford Life.
With a demonstrated ability to successfully integrate acquisitions in its insurance operations as well as other areas of its business, expect Prudential to seek to acquire more complimentary businesses for which it can expand revenue via its powerful sales and marketing platform and boost profitability by streamlining operations.
5. Prudential's strong cash flow generation gives it multiple ways to create shareholder value.
In addition to the cash used to fund growth initiatives and acquisitions, Prudential is attempting to generate value for its shareholders through share repurchases and dividend payments. The company acquired 2.9 million of its shares during the second quarter and nearly 60 million since Prudential began its share repurchase program in July 2011, which has helped to significantly lower the company's share count and thereby boost earnings per share. And with its stock currently yielding more than 3%, Prudential's dividend will also be an important aspect of its total shareholder return in the years ahead.
The article 5 Things Prudential Financial Inc.'s Management Wants You to Know originally appeared on Fool.com.
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