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Low interest rates erode Prudential's new business profit

LONDON (Reuters) - Low interest rates hit investment returns at British insurer Prudential (PRU.L) and first-quarter new business profit fell in the United States and Britain, although it climbed in Asia, the firm said on Wednesday.

Overall new business profit fell 11 percent to 496 million pounds ($750 million) on a constant exchange rate basis in the quarter ending March 31 from a year earlier, Prudential said in a trading statement.

"Persistently low long-term rates still represent a significant headwind going forward, as evidenced by the impact on first quarter new business profit," chief executive Tidjane Thiam said in the statement.

Thiam will stand down at the end of the month to take the helm at Credit Suisse (CSGN.VX).

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He will be replaced by U.S. unit boss Mike Wells.

U.S. new business profit fell 28 percent to 153 million pounds.

UK retail new business profit dropped 11 percent to 34 million pounds, and Prudential wrote no new bulk annuity business in the quarter.

Insurers have been looking to bulk annuities, which transfer the risk of defined benefit, or final salary, pension schemes, from companies to insurers, to make up for a shortfall in individual annuity sales following recent UK pension reform.

Asian new business profit rose 22 percent, however, to 309 million pounds, and the Asian asset management arm saw third party net inflows of 2.3 billion pounds, up 106 percent.

JP Morgan analysts said the overall new business profit figure beat its expectations and "flags strong Asian growth".

M&G, the group's UK investment arm, saw net inflows of 700 million pounds, down from 1.4 billion the previous year. But the fund manager's external assets under management rose 8 percent to 139.5 billion pounds.

Prudential's shares were up 0.4 percent at 1,619.5 pence at 0851 GMT.

(Reporting by Carolyn Cohn; editing by Simon Jessop and Ruth Pitchford)