Prudential Financial, Clear Upward Outlook for Corporate Value

[Asia Economy Reporter Park Jihwan] Hana Financial Investment forecasted on the 12th that the company value of Prudential Financial is showing a clear upward trend.

Researcher Lee Hongjae of Hana Financial Investment analyzed, "Last year's net profit was $4.11 billion (4.5498 trillion KRW), a 13.5% decrease compared to the previous year," and "The fourth quarter net profit recorded $1.18 billion, a 29.3% improvement year-on-year due to a decrease in insurance claim payments." Total operating profit by segment increased by 26.5% year-on-year, but the U.S. business division decreased by 21.5% compared to the previous year. The global business division also declined by 12.1%.

The slowdown in the U.S. and global insurance divisions last year was mainly attributed to the impact of COVID-19, including reduced underwriting margins and a slowdown in premium income. The annual return on invested assets recorded 2.69%, down 25 basis points year-on-year due to asset impairment losses and recognition of derivative losses caused by COVID-19.

It is evaluated that remodeling to strengthen profitability is currently ongoing. Prudential is diversifying its revenue by expanding not only life insurance but also asset management businesses. Due to the continued low interest rate environment, sales in the asset management sector are expected to expand in the future.

They announced a cost efficiency plan of $750 million by 2023, which accounts for 5.3% of last year's annual selling and administrative expenses. Last year, they successfully sold Korea Prudential, classified as a low-profit subsidiary within the global business division, and are currently proceeding with the sale of Taiwan Prudential.

Researcher Lee stated, "Considering the mid- to long-term profitability improvement through the sale of non-core subsidiaries and execution of cost efficiency, as well as the growth potential of the asset management sector, the current stock price is judged to be undervalued," and added, "The market interest rate direction following the U.S. Blue Wave is also seen as a positive factor in terms of defending the return on invested assets and the value of held contracts."

This content was produced with the assistance of AI translation services.