(Bloomberg) — Prudential Plc, the U.K.’s largest insurer by market value, reported first-quarter profit and sales that beat analyst estimates, boosted by higher demand for annuities in the U.S.
Profit from new business jumped 29 percent to 529 million pounds ($898 million), the London-based insurer said in a statement today, beating the 495 million-pound average estimate of 13 analysts surveyed by the company. Sales, or annual premium equivalent, rose 13 percent to 1.18 billion pounds, also topping estimates. Profit at its U.S.-based Jackson National Life unit surged 67 percent as sales of variable annuities jumped 41 percent.
Today “continues the theme from 2013 where the U.S. is doing better than the market expects,” Farooq Hanif, an analyst at Citigroup Inc., wrote in a note to clients. “We expect this to continue in 2014 and see this as a very positive trend for earnings.”
Increased U.S. annuity sales contrasts with Britain, where insurers have reported lower sales of the product after the government in its 2014 budget scrapped rules that forced individual retirees to annuitize their pension savings.
Prudential still reported a 90 percent increase in profit for its U.K. unit, boosted by three bulk annuity deals with company pension plans. Sales of individual annuities slumped 35 percent in the quarter.
“The individual annuity market will continue, but it will be smaller in size,” Jackie Hunt, chief executive officer of Prudential’s U.K. and European business, said on a conference call with journalists. “We expect to see other product types like potentially variable annuities, which we obviously have a strong presence in the U.S.”