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Prudential posts $1.24 billion profit as deals fuel growth

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(Bloomberg) — Prudential Financial Inc., the second- largest U.S. life insurer, posted a first-quarter profit after deals helped fuel growth in the U.S.

Net income of $1.24 billion compares with a $720 million loss a year earlier, Newark, New Jersey-based Prudential said today in a statement. Operating profit, which excludes some investments and results of policies sold before the company went public, was $2.40 a share, beating the $2.25 average estimate of 17 analysts surveyed by Bloomberg.

Chief Executive Officer John Strangfeld, 60, has used pension deals and corporate acquisitions in the U.S. and overseas to add to profits. Prudential purchased a life insurer from Hartford Financial Services Group Inc. last year, after adding Japanese units from American International Group Inc. in 2011.

“We are continuing to build our base of high quality business, and the integration of the individual life business we acquired from The Hartford remains well on track,” Strangfeld said in the statement.

The U.S. retirement solutions and investment management business posted operating profit of $945 million, up from $769 million a year earlier. Earnings climbed 60 percent to $364 million at theretirement segment, fueled by investments.

The individual annuities segment contributed $388 million, up from $372 million. Higher account values contributed to a 14 percent increase in earnings at the asset-management business to $193 million, Prudential said.

Book Value

Book value at Prudential’s main business rose to $78.87 a share on March 31. The measure of assets minus liabilities was $72.30 three months earlier.

The stock rose 1 percent to $80.90 at 4:01 p.m. in New York. The shares have dropped 12 percent this year, compared with the 7.1 percent decline of larger rival MetLife Inc.

Profit fell 10 percent at the U.S. individual life and group insurance division, to $131 million. Higher claims costs on policies sold to individuals and on disability policies for businesses contributed to the decline.

MetLife said last week that first-quarter profit missed analysts’ estimates as the New York-based insurer faced higher costs from life-insurance claims.

Prudential purchased Hartford’s individual-life business for $615 million in a reinsurance deal completed in January 2013, adding about 700,000 policies. General Motors Co. shifted more than $25 billion in pension obligations to Prudential and Verizon Communications Inc. offloaded about $7.5 billion.

The international insurance business recorded operating earnings of $837 million, down from $877 million a year earlier. Annualized new business premiums, a measure of sales, decreased to $772 million from $841 million a year earlier, excluding currency fluctuations. Prudential has raised prices for some products in Japan, and limited its offerings in the country.


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