Prudential Financial reports Q4 2024 loss as U.S. businesses and retirement strategies struggle

Prudential Financial, Inc. posted a net loss of $57 million for the fourth quarter of 2024, marking a significant downturn from the $1.32 billion profit it recorded in the same quarter of 2023. The company’s earnings were weighed down by weaker performance in its U.S. businesses and retirement strategies unit, as well as higher operating expenses.

Despite the earnings decline, Prudential Financial saw growth in its investment management business, with assets under management (AUM) increasing 6% year-over-year to $1.375 trillion. However, adjusted operating earnings fell short of expectations, coming in at $2.96 per share, below analysts’ projections of $3.24 per share, according to FactSet. Following the earnings announcement, the company’s stock fell 3.2% in post-market trading, reflecting investor concerns over declining profitability.

Why did Prudential Financial post a loss in Q4 2024?

Prudential Financial’s quarterly loss was primarily driven by weaker profitability in its U.S. businesses and retirement strategies unit. The company’s U.S. businesses segment, which includes insurance and annuities, reported adjusted operating income of $860 million, a decline from $964 million in Q4 2023. This drop was linked to higher expenses, including one-time transaction costs, as well as lower net fee income and unfavorable underwriting results.

The retirement strategies unit, which includes institutional and individual retirement accounts, also experienced weaker earnings. Adjusted operating income for this segment dropped to $851 million from $890 million in the previous year. Institutional retirement strategies saw a slight decline, with adjusted operating income slipping to $427 million from $432 million, while individual retirement strategies fell to $424 million from $458 million. The declines were attributed to lower fee income, higher expenses, and less favorable underwriting results, despite record-high net account values of $279 billion, an 8% increase year-over-year.

How did Prudential’s investment management business perform?

A positive highlight in Prudential Financial’s earnings report was the strong performance of its investment management business, PGIM. The division recorded adjusted operating income of $259 million, marking a 50% increase from the previous year’s $172 million. The growth was primarily driven by higher asset management fees and strong investment performance.

Prudential’s PGIM assets under management (AUM) rose to $1.375 trillion, reflecting strong equity market appreciation and net inflows. The company reported net inflows of $8.6 billion, with affiliated net inflows contributing $8.9 billion, partially offset by $0.3 billion in third-party net outflows. While some third-party institutional and real estate investments experienced outflows, the growth of Prudential’s investment management business underscores its ability to generate positive returns amid challenging market conditions.

How did Prudential Financial return capital to shareholders?

Prudential Financial continued its commitment to returning capital to shareholders, even amid weaker earnings. In Q4 2024, the company returned $720 million to shareholders, including $250 million in share repurchases and $470 million in dividends. The company also announced a 4% increase in its quarterly dividend to $1.35 per share, marking the 17th consecutive year of dividend increases.

Looking ahead, Prudential Financial’s Board of Directors authorized a $1 billion stock repurchase program for 2025, reinforcing confidence in the company’s long-term financial stability. Despite near-term challenges, the company remains focused on enhancing shareholder value through dividends and share buybacks.

What is Prudential’s outlook for 2025?

Prudential Financial Chairman and CEO Charles Lowrey emphasized that the company is executing a strategic transformation to drive future growth. He highlighted Prudential’s expansion into alternative investments, efforts to diversify its product mix, and ongoing initiatives to expand its distribution channels globally.

Lowrey underscored Prudential’s long-term vision, stating, “Our 2024 results reflect strong sales across our retirement and insurance businesses, as well as significant positive net flows in PGIM. We have made substantial progress in becoming a higher-growth, more capital-efficient company.” He reaffirmed the company’s focus on addressing the growing global retirement market while ensuring its businesses remain financially sustainable.

As Prudential Financial approaches its 150th anniversary in 2025, the company is positioning itself for long-term stability by leveraging its global scale and financial expertise. Despite the short-term earnings pressures, the strong performance of PGIM, continued capital returns, and strategic product diversification could support its recovery in 2025.

What factors are influencing Prudential’s stock performance?

Following the earnings announcement, Prudential Financial’s stock declined 3.2% in post-market trading, reflecting investor caution over the company’s lower-than-expected earnings per share. The stock reaction was influenced by several key factors, including declining profitability in its U.S. businesses and retirement strategies unit, concerns over higher expense management, and weaker-than-anticipated underwriting performance.

Despite these challenges, Prudential’s investment management business remains a strong growth driver, with record-high assets under management and steady inflows. Analysts suggest that improved expense control and stronger underwriting performance will be critical for boosting investor confidence and stabilizing the company’s stock performance in 2025.

Can Prudential Financial rebound in 2025?

While Prudential Financial faced a challenging fourth quarter in 2024, its long-term growth strategy remains intact. The company’s investment management business, shareholder returns, and product diversification efforts continue to provide stability amid near-term earnings pressures. As demand for retirement and investment products increases, Prudential’s ability to enhance profitability, improve expense management, and expand its investment management business will be key factors driving its financial recovery in 2025.