Aegon posts 12% drop in 2nd-quarter profit


August 11, 2006|By BLOOMBERG NEWS

NEW YORK -- Dutch insurer Aegon NV yesterday reported that its second-quarter profit fell 12 percent after gains from investments in equities, bonds and real estate declined.

The company, which has its U.S. headquarters in Baltimore, said its net income dropped to 664 million euros ($855 million), or 34 cents a share, from 751 million euros, or 41 cents a share, for the second quarter of 2005, beating analysts' estimates of 518 million euros.

"Competition continues to be tough in all markets," Chief Executive Officer Donald J. Shepard said in a telephone interview.

Shepard, who has about 1.5 billion euros available for acquisitions, is expanding the company through purchases and joint ventures in faster-growing markets, such as India, Mexico and Spain. He also is adding products in more mature markets, including the United States, United Kingdom and the Netherlands.

This year's results include a gain of 150 million euros on investments, compared with a gain of 508 million euros in the second quarter last year.

The company raised its interim dividend 9 percent to 24 cents a share.

Aegon's pretax earnings rose 43 percent to 680 million euros, helped by higher profit from variable annuities, fixed annuities and accident and health insurance.

Aegon's results have been eroded by "significant swings in capital gains," said Michael van Wegen, an analyst at Fortis Bank who has a "buy" rating on Aegon stock.

Aegon shares lost 8 cents, or 0.6 percent, to 13.45 euros in Amsterdam. Aegon's U.S. shares climbed 26 cents to $17.24.

The insurer said in May that it wants to more than double the value of new business, a gauge of future income, in the Netherlands by 2010 and increase new business in central and eastern Europe by an average of 20 percent annually from 2006 to 2010.

The company said it had a 6.3 percent share of the British pensions and insurance market, which it wants to increase to 10 percent by 2010.

The value of new business rose 26 percent in the first half of the year, driven by the Americas, Britain and central and eastern Europe.

Pretax profit at the Americas unit fell 8 percent to 438 million euros, while revenue rose 12 percent to $4.9 billion euros helped by variable annuity sales.

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