Prudential Reports Loss Fueled by Goodwill Charges, Investments

(Bloomberg) — Prudential Financial Inc. Chief Executive Officer Charlie Lowrey said the company will target more-mature firms in acquisitions after reporting a goodwill impairment charge of $713 million tied to a startup it purchased.

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“When we think about programmatic M&A, we’ll be focused more on established companies as we go forward, as opposed to initial startups,” Lowrey said Tuesday in an interview, after the life insurer reported that the charge contributed to a $558 million fourth-quarter loss. He said the company is still committed to Assurance IQ, an insurance-distribution platform acquired for $2.35 billion in 2019.

The charge resulted from a “decline in the fair value of Assurance IQ” driven by lower expected earnings growth, a higher discount rate applied to future cash flows, and lower peer valuations, Newark, New Jersey-based Prudential said in a statement. The Assurance unit reported operating income of $29 million, for its first quarter without a loss.

Investment losses at Prudential totaled $1 billion in the quarter. After-tax adjusted earnings fell to $2.42 a share from $3.18 a year earlier. That missed the $2.50 average estimate of 17 analysts in a Bloomberg survey.

The difficult showing comes even as the company continues to enact a multiyear strategy meant to streamline the business and increase growth.

“We’re actually very excited and confident about the year ahead, and that’s thanks to the benefit of higher rates and improved Covid mortality,” Lowrey said. “We’re continuing to make progress on our strategic priorities.”