Prudential Financial earnings beat estimates, lifted by tax reform

By Suzanne Barlyn and Diptendu Lahiri

(Reuters) - Prudential Financial Inc (PRU.N), the largest U.S. life insurer by assets, on Wednesday reported a 7.6 percent rise in quarterly operating profit that topped analysts' estimates, helped by a $2.87 billion (2.07 billion pounds) benefit from U.S. tax reform.

Prudential's adjusted operating profit was $1.17 billion, or $2.69 per share, in the fourth quarter, up from $1.09 billion, or $2.46 per share, in the year-earlier period.

Analysts were expecting earnings per share of $2.65, according to Thomson Reuters I/B/E/S.

Adjusted operating income from the company's individual annuities business rose 28 percent to $541 million, driven in part by higher policy fees that were triggered by higher account values in variable annuities.

Newark, New Jersey-based Prudential's total assets under management rose to $1.39 trillion as of Dec. 31 from $1.26 trillion a year earlier.

Adjusted operating income for the investment management division surged 36.6 percent, to $306 million, from the prior year quarter in part because of rising stock market values.

The results come in a quarter in which financial services companies have revealed more details about the impact of U.S. tax reform on their businesses.

The Tax Cuts and Jobs Act, the most far-reaching tax reforms in the United States for 30 years, lowered the corporate income tax rate to 21 percent from 35 percent and imposes a repatriation tax on earnings from foreign subsidiaries.

Prudential booked a one-time gain of $2.87 billion in the quarter related to the tax law.

Adjusted operating income for Prudential's individual life insurance business sunk 29 percent to $98 million from the year-ago quarter. The decrease reflects more claims than expected and changes that Prudential made to actuarial assumptions as part of a yearly review, the insurer said.

Prudential's group insurance and retirement unit reported a 13.3 percent drop to $313 million from the year ago quarter, driven in part by higher expenses and weaker underwriting results in its group life insurance business.

Shares of the insurer were up 1.60 percent at $111.17 in extended trading.

(Reporting by Suzanne Barlyn in New York and Diptendu Lahiri in Bengaluru; Editing by Anil D'Silva and Leslie Adler)