For many large companies, the pension promises that were made years ago to employees became a large and distracting headache. For Prudential Financial Inc., these retirement plans are a pathway to growth.

Account values at the retirement unit climbed by $17 billion in 2016 to $386 billion as of Dec. 31., the Newark, New Jersey-based company said Feb. 8 in a statement. That helped Prudential’s fourth-quarter operating profit climb 22 percent to $1.09 billion.

Prudential won retirement-contract deals in the fourth-quarter with United Technologies Corp. and Owens-Illinois Inc. The transactions add to growth at a business that established its dominance in the pension-risk transfer industry through 2012 deals involving plans initiated by Verizon Communications Inc. and General Motors Co. Retirement account values have almost doubled since the end of 2010.

“They haven’t been shy about going in, taking on some big liabilities and making this a core business even though it’s not a business, like selling annuities, where you can measure it month by month,” Jonathan Adams, an analyst at Bloomberg Intelligence, said in an interview. “It’s a little more lumpy, but they’ve made it sufficiently important to them and they’ve put enough resources behind it that I think it’s been beneficial.”

The obligations involve an element of risk, which is why employers are often eager to offload them. While Prudential Chief Executive Officer John Strangfeld adds to assets under management with the deals, the insurer takes on responsibility for decades of payments. And liabilities swell if bond yields are too low or beneficiaries live longer than expected.

Bond Yields

Markets went in the right direction for the business in the fourth quarter, however. The 10-year Treasury yield was 2.44 percent at the end of the year, up from 1.59 percent on Sept. 30, on speculation that President Donald Trump’s policies will stoke economic growth. Prudential’s stock has surged 19 percent since Trump’s surprise victory in November.

Operating profit was $2.46 a share, up from $1.94 a year earlier. That beat the $2.31 estimate of analysts surveyed by Bloomberg. The company lifted its quarterly dividend to 75 cents a share from 70 cents.

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