Aegon boosts first-half profits 10%

August 27, 1994|By Patricia Horn | Patricia Horn,Sun Staff Writer

Aegon NV, the Dutch insurance giant whose U.S. operations are headquartered in Baltimore, announced yesterday that its first-half net profit rose more than 10 percent, to 550.7 million guilders ($317.7 million) from 497 million guilders a year earlier.

Earnings per share rose to 5.36 guilders ($3.09) from 4.91 guilders in the first half of 1993.

Analysts said that the strong results solidified the company's reputation as a market leader.

Aegon is the "best life insurance company in the world," said Michael J. Morrissey, chairman of the Firemark Group, an insurance investment firm based in Parsippany, N.J. Aegon's return on equity and its net income growth have "consistently done better than the life insurance industry on the whole."

Robert J. McGraw, treasurer of Aegon USA Inc. in Baltimore, said the company's projection had been for 8 percent to 12 percent growth in earnings in the period.

Besides Aegon's U.S. operations being headquartered in Baltimore, so are two of its divisions, Monumental Life and

Monumental General. Aegon's local operations employ about 800 people.

Aegon NV does not announce quarterly earnings for its U.S. division, said Mr. McGraw, but he said that the U.S. operation is doing very well this year.

Last year, Aegon's U.S. operations reported a 22 percent increase in earnings, and he said that he expects another double-digit increase this year.

Aegon's robust earnings growth is due in part to the company's expansion in the pensions market. Last year, the parent company purchased Scottish Equitable Life Assurance Society in the United Kingdom, and Aegon USA purchased Mutual Life Insurance Co. of New York's pension operations.

The company's premium income rose 46 percent in the first half of this year compared with last year, a rise that would have been only 8.5 percent without Scottish Equitable, said Aegon USA treasurer Mr. McGraw.

"The pension and annuities market is the fastest-growing market [in the United States and worldwide], so that is the market we want to be in," said Mr. McGraw. "It is more and more apparent that governments are going to be scaling back their government pension schemes in each country."

Firemark's Mr. Morrissey called Aegon a "very disciplined buyer."

"A lot of acquisitions buyers often stretch and overpay," he said. Aegon typically acquires companies that immediately improve its earnings.

Aegon will pay a first-half dividend of 1.3 guilders (75 cents) per share, up from 1.15 guilders in the first half of 1993.

Aegon is traded on the New York Stock Exchange, as well as on the Amsterdam, Geneva, London, Tokyo and Zurich exchanges. The company's American depositary receipts closed yesterday at $59.25, up 37.5 cents.

The company's core business is life insurance, annuities, and pension and investment products as well as other types of insurance. A smaller portion of its investments include a mortgage bank, a brokerage firm and family resorts in the Netherlands.

The company has 37 principal subsidiaries with operations concentrated in Europe and the United States. According to Aegon, 42 percent of its revenues are generated in the Netherlands, 30 percent in the United States and the Caribbean, and 28 percent in the rest of Europe.

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