Total annuity sales this quarter were again strong as we grew 14% sequentially with growth across all product categories for the second quarter in a row and a good mix of product sales.
In Retirement Plan Services we once again reported excellent results and remain well positioned with scale in our target markets of small and mid-case 401(k) healthcare, government and not-for-profit; a broad suite of products, a competitive cost structure and award winning digital technology.
Total deposits were up 21% and included double-digit growth in both first-year sales and recurring deposits.
Lastly, on Group Protection, where we have been driving toward our target margin range 5% to 7%.
Our selective price increases as well as our successful efforts to raise persistency led to a 2% increase in premiums over the prior year period.
Although sales and what is a seasonally smaller quarter were down versus the strong prior-year quarter we continue to have success expanding into higher margin employee paid products, which represented 56% of second-quarter sales.
Nearly 100,000 active producers, wholesalers, Group represented consultants and other distribution professionals sell our products and through strategic investments in technology and training we have positioned ourselves to influence where and how we engage with our active producers leading with a virtual first model for the long term.
Our general account portfolio is predominantly comprised of fixed income investments of which approximately 97% are investment grade and within that 59% are rated single A, single A equivalent or better examples of the underlying asset classes includes corporates, commercial mortgage loans and structured securities.
The commercial mortgage loan portfolio is high quality, well diversified and continues to perform well with nearly 100% of the loans and the two highest CML rating categories and within that 85% in the highest rating category and virtually no credit losses or loan modifications.
During the quarter we invested new money at an average yield of 2.7% with approximately 50% in shorter duration assets reflecting our shorter duration product sales.
60% of our purchases were in investments other than public corporates providing diversification and good relative value and adding approximately 100 basis points of yield over comparably rated public corporates.
Lastly, our alternative performance was once again strong, driven by portfolio construction that has emphasized buyout and growth equity strategies with a 10% return in the quarter, significantly exceeding our long-term target quarterly return of 2.5%.
In some low rates have already been with us for some time and going forward, we expect to continue to meet or surpass our 8% 10% long-term earnings per share growth target.
Last night we reported second quarter adjusted operating income of $608 million or $3.17 per share.
Additionally, this quarter's result was impacted by pandemic related claims, which reduced earnings by $43 million or $0.22 per share.
While results benefited from strong performance in the alternatives investment portfolio boosting earnings by $113 million or $0.59 per share above target.
Net income totaled $642 million or $3.34 per share, boosted by gains in the investment portfolio an excellent performance from the variable annuity hedge program.
This quarter's record bottom line result was driven by strong top line performance with adjusted operating revenue up 16% from the prior year which included growth in each of the four businesses.
And the solid expense management as our expense ratio came down 130 basis points.
Consistent with the record earnings key financial metrics were excellent as adjusted operating return on equity came in at 78.3% and book value per share excluding AOCI grew 9% and stands at $75.45, an all-time high.
Operating income for the quarter was $323 million compared to $237 million in the prior year quarter.
The quarter's earnings were driven by record average account values of $166 billion, up 24% over the past year and $12 million of favorable alternative investment income.
Base spreads excluding variable investment income decreased 7 basis points sequentially.
Expense ratio improved to 110 basis points compared to the prior year period as our focus on expenses continues to benefit the bottom line.
Return metrics remained solid with return on assets coming in at 78 basis points and return on equity at 25%.
Risk metrics on the VA book once again demonstrate the quality of our in-force with the net amount at risk at 47 basis points of account values for living benefits and at 33 basis points for death benefits.
Retirement Plan Services reported operating income of $62 million compared to $30 million in the prior year quarter.
This quarter's results were driven by higher fees on account values and included $7 million of favorable alternative investment results.
Total deposits of $2.8 billion helped drive $0.5 billion of net flows in the quarter.
Over the trailing 12 months net flows of $1.6 billion combined with favorable equity markets drove average account values up 28% to $94 billion.
The expense ratio improved 240 basis points over the prior year quarter a strong revenue growth combined with diligent expense management led to an increase in profitability.
Base spreads excluding variable investment income compressed 8 basis points versus the prior year quarter, better than our stated 10 to 15 basis point range as credit in rate actions continue to take hold.
Turning to Life Insurance; we reported operating income of $255 million versus a loss of $37 million in the prior year quarter.
This quarter's earnings included $83 million of favorable alternative investment experience and a return to pre-pandemic levels of mortality as pandemic related claims of $15 million were largely offset by favorable underlying mortality.
Earnings drivers, continue to grow with average account values up 12% and average life insurance in force of 7% over the prior year.
Base spreads excluding variable investment income declined 7 basis points compared to the prior year quarter, in line with our 5 to 10 basis point expectation.
Expense ratio improved 90 basis points over the prior year quarter as our efficiency efforts continue to benefit margins.
Group Protection reported operating income of $46 million compared to $39 million in the prior year quarter.
This quarter's earnings included $8 million of favorable alternative investment results.
Compared to the first quarter operating income rose from a loss of $26 million driven primarily by improved pandemic related claims of $28 million, down from $90 million sequentially.
As that just noted, excluding pandemic claims and favorable alternative investment income, the Group margin of 6.1% was in the middle of a 5% to 7% range, an improvement from the first quarter.
The loss ratio was 79% in the quarter, a 750 basis point sequential improvement.
Excluding pandemic related claims from both periods loss ratio improved 50 basis points to 76.1% due to better mortality results.
Group's expense ratio rose 30 basis points year-over-year as we make ongoing investments in our claims organization to address elevated claim volume due to the pandemic.
Turning to capital and capital management; we ended the quarter with $11.2 billion of statutory surplus and estimate our RBC ratio at 483%.
As a reminder our RBC ratio includes 26 percentage points from non-economic goodwill associated with the Liberty acquisition that we expect will go away by year-end.
We estimate C1 factor changes being implemented by the NAIC will negatively impact our year-end RBC ratio by approximately 15 percentage points.
Cash at the holding company stands at $762 million above our $450 million target as we have pre-funded our $300 million 2022 debt maturity.
We deployed $150 million toward buybacks in the second quarter, in line with our goal communicated last quarter to return to pre-pandemic quarterly buyback levels.
Supported by the strength of our balance sheet we intend to repurchase up to $200 million of stock in the third quarter.

Summary:
Last night we reported second quarter adjusted operating income of $608 million or $3.17 per share.
Net income totaled $642 million or $3.34 per share, boosted by gains in the investment portfolio an excellent performance from the variable annuity hedge program.