Aegon insurance reports profit dip on weak dollar

11th August 2011, Comments 0 comments

Dutch insurer Aegon published a second-quarter 2.0-percent dip in net profit on Thursday, saying that a fall of the dollar and increased life expectancy in the Netherlands were the main factors.

The group reported net profit of 403 million euros ($574 million), exceeding forecasts of 310 million euros compiled by Dow Jones Newswires.

"The weakening of the US dollar had a notable impact on Aegon's reported results," said group chief executive Alex Wynaendts in a statement.

Unfavourable exchange rates weakened the outcome by 44 million euros.

In addition, Aegon provisioned for 23 million euros in the Netherlands where average life expectancy for men in 2010 stood at 78.8 years and 82.7 years for women.

The insurer previously said it expected to provision for about 20 million euros per quarter to offset the increase in Dutch life expectancy, which is forecast to reach 80.64 years and 84.05 respectively by 2020 according to the Dutch central statistics office.

Longer life expectancy means the group will have to pay more in pensions as part of its pension-saving schemes.

The group's turnover came to a total of 1.26 billion euros, a drop of 15 percent year-on-year from 1.47 billion euros. US and British-based sales of new life insurance also declined on the back of price increases.

Aegon said its exposure to sovereign debt of "peripheral European countries" (Greece, Spain, Italy, Ireland and Portugal) was "limited" to 866 million euros, 745 million euros of which it held in Spanish state bonds.

The group said in June it paid back a final instalment of 1.1 billion euros to the Dutch state, which had provided it with three billion euros of support in October 2008 at the height of the financial crisis.

Aegon had now paid back a total amount of 4.1 billion euros, it said.

The Dutch insurer announced on Wednesday the completion of the sale of US-based firm Transamerica Reinsurance to French-based reinsurer Scor for $1.4 billion dollars after tax, which enabled it to raise funds for the repayment.

Aegon employs about 30,000 people and has 40 million customers worldwide, mainly in the Netherlands, United States and Britain.

The group's share price fell by 1.14 percent to 2.93 euros per share on the Amsterdam AEX index in morning trading.

© 2011 AFP

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