Growing Dutch longevity takes a bite out of Aegon

12th May 2011, Comments 0 comments

Dutch insurer Aegon on Thursday published a 12 percent drop in net profit for first quarter 2011 from the same period last year, linking it to increasing life expectancy in the Netherlands.

The company showed a net profit of 327 million euros ($463 million), down from 372 million euros in the first quarter of 2010.

The result clocked in lower than predicted by analysts polled on the Dow Jones newswires, who banked on a net profit of 335 million euros.

"In the Netherlands we have observed a strong increase in life expectancy," Aegon's chief executive Alex Wynaendts said in a statement.

"A growth in life expectancy means we have to pay pensions for longer as part of our pension-saving schemes," Aegon spokesman Dick Schiethart told AFP.

Life expectancies in the Netherlands were 78.8 years for men and 82.2 years for women in 2010, according to the national Dutch statistics office.

By 2020, this is expected to climb to 80.64 years for men and 84.05 years for women, the statistics office added.

In the first quarter of this year Aegon took out a provision of 24 million euros for longevity in the Netherlands and planned to add an average of 20 million euros per quarter to the provision, it said.

"(We) are taking a prudent approach by now increasing our provisioning which will have an impact on the earnings of our Dutch business going forward," added Wynaendts.

Aegon, which received three billion euros from the Dutch government amid the global financial crisis in October 2008, hopes to repay the outstanding figure of 1,75 billion euros by the end of June.

The sale of Transamerica Reinsurance, the company's US-based division, in April for 630 million euros, "supported our aim" to repay the Dutch government "by the end of June," Wynaendts stressed.

Aegon's turnover in the first quarter came to 1,411 billion euros -- a two percent slide from the same time last year while new life insurance sales clocked in 501 million euros against 503 million euro last year.

Aegon has more than 40 million clients, mainly in the Netherlands, the United States and Britain. It holds the pensions of a quarter of Dutch citizens.

© 2011 AFP

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