Aegon quarterly profit up 37%, aided by acquisitions

Dutch insurer seeking partnerships with banks

Earnings

March 10, 2000|By BLOOMBERG NEWS

THE HAGUE, Netherlands -- Aegon NV, the second-largest Dutch insurer, said yesterday that fourth-quarter profit rose 37 percent as acquisitions added to earnings. The company said it's seeking partnerships with banks to help sustain growth.

Net income rose to 471 million euros, equivalent to $453.5 million, or 0.72 euro a share, from 344 million euros, or 0.6 euro a share. Full-year profit rose 26 percent, in line with analysts' forecasts.

Aegon benefited from buying San Francisco-based Transamerica Corp. in July, and United Kingdom-based Guardian Royal Exchange Assurance Plc in October. Now it's seeking partnerships with banks to help maintain growth. "Aegon has been purchasing growth and was definitely helped by the purchase of Transamerica," said Roger Doig, an analyst at J. P. Morgan Securities, who rates the stock "market perform." "It won't be able to keep doing this in the future."

Although Aegon moved its U.S. headquarters to San Francisco after buying Transamerica, it retains major operations in Baltimore.

A 2-for-1 stock split in May is being proposed, the company said, to attract a broader range of investors. The stock has fallen 30 percent this year, making it the fourth-worst performer on the Bloomberg Europe insurance index, which has fallen 5.5 percent in the same period.

Its shares fell 0.10 euro, or 0.2 percent, to 67.15 euros in Europe yesterday while its American Depositary Receipts, which trade on the New York Stock Exchange, closed up 12.5 cents at $65,3125, well off its 52-week high of $103.75 last March.

Chief Executive Kees Storm said Aegon will focus on the United States, United Kingdom, the Netherlands, Spain, Poland and Italy for future acquisitions, though "our policy is first to focus on organic growth."

Partnerships are being sought with banks to expand distribution as Aegon seeks to sustain sales growth, although a merger is not in the planning. "We love to date banks, but we don't want to marry one," said Storm.

Like European rivals, Aegon is also looking for ways to use the Internet to support and expand its business. The insurer said it expects 5 percent of sales from the Internet in the coming years.

Aegon expects earnings to increase 18 percent to 23 percent in 2000, and earnings per share are forecast to increase 10 percent to 15 percent, the company said.

Aegon's $10.8-billion purchase of Transamerica helped boost earnings by 80 percent in North America, where it ranks as the third-largest life insurer. Pretax profit from the North American units rose to 429 million euros in the fourth quarter.

The Dutch insurer said it hopes to generate $150 million a year in cost savings over three years by integrating Transamerica's life insurance units with Aegon USA.

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