Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
We have spent our lives buying insurance companies, so we say this with some authority: Prudential Financial is not the kind of insurance company we buy. It is an enormous, complicated, leveraged spread business whose best franchise — the Japanese Life Planner distribution system — has just been damaged by a misconduct scandal serious enough to force a nine-month suspension of all new sales in Japan. The stock looks cheap at roughly 8.5x adjusted operating earnings and 1.2x adjusted book value, and it pays a well-covered 4.6% dividend. But it has looked cheap for fifteen years, and the reason is that the underlying business earns mediocre returns on equity, requires heroic assumptions to value, and holds $335 billion of bonds against $32 billion of equity.
Recent filings analysed: 10-Q (2026-08-05), 8-K (2026-08-04), 8-K (2026-07-24), 8-K (2026-07-15).
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