(Bloomberg) – Prudential Financial Inc., the second- largest U.S. life insurer, reported second-quarter profit that beat analysts’ estimates as results improved at the U.S. unit that offers retirement products including annuities.
Net income rose 29 percent to $1.41 billion from $1.09 billion a year earlier, the Newark, New Jersey-based insurer said Wednesday in a statement. Operating profit, which excludes some investment results, was $2.91 a share, compared with the $2.47 average estimate of 19 analysts surveyed by Bloomberg.
Prudential has sought large pension buyouts as companies from General Motors Co. to Verizon Communications Inc. turn to the insurer to manage retirement obligations. The transfers allow employers to limit risks tied to interest rates and life expectancies while giving insurers more funds to manage.
“Assuming they’re priced correctly, they’re good things,” Steven Schwartz, an analyst at Raymond James & Associates Inc., said of the pension deals in a phone interview before results were announced. “It is a growing area. It is a good use for capital, but you don’t want to get too big in any one business.”
The insurer promoted Scott Kaplan in March to manage the pension-risk transfer unit that won more than $37 billion in deals last year, including transactions with Motorola Solutions Inc. and Bristol-Myers Squibb Co. The completion of four “significant” pension risk-transfer deals contributed to $5.7 billion of retirement net flows in the quarter, according to the statement.
Profit at Prudential’s U.S. retirement and investment management division increased 12 percent to $981 million from a year earlier. The individual annuity segment contributed $548 million, an increase of 41 percent, fueled by a gain tied to financial markets.