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Rothesay Life annuity deal dents Prudential PLC H1 results

Life insurer Prudential PLC's profit after tax in the first half fell 10% year over year, largely because of a £513 million pretax loss on the reinsurance of £12 billion of U.K. bulk annuities to Rothesay Life.

The London-listed company's profit after tax under International Financial Reporting Standards for the first half was £1.36 billion, down from £1.51 billion in the first half of 2017. The profit after tax was also hit by negative short-term investments variances, the company said.

EPS for the half was 52.6 pence, compared to the year-ago 58.6 pence.

However, IFRS operating profit based on longer-term investment returns increased 2% year over year to £2.41 billion from £2.36 billion. At constant exchange rates, the increase would have been 9%.

Prudential group CEO Mike Wells said the increase had been led by Asia, where IFRS operating profit increased to £1.02 billion from £953 million. U.S. operating profit was down to £1.00 billion from £1.07 billion, while U.K. and Europe profit rose to £778 million from £745 million.

Prudential also announced a first interim dividend of 15.67 pence per share, up from the 14.50 pence per share interim dividend it paid for the first half of 2017.

The group Solvency II capital ratio increased 7 percentage points on a yearly basis to 209% from 202%.

Wells said that the company is "making good progress" on the planned spinoff of the M&G Prudential U.K. and Europe business into a separately listed company.