Aegon NV, the Netherlands giant insurer and financial services group, beat analysts’ expectations for the third quarter as it recorded a net profit 429 million Euros [the Euro is currently trading at parity with the dollar], a drop of 28 percent from the Euro 596 million it earned in the same period last year.
An earlier profit warning from the company had indicated that third quarter results might have been even lower. Net income for the first nine months of the year was off 32 percent at Euro 1.192 billion; the company earned Euro 1.757 billion in the same period last year.
Premium income during the third quarter declined by 4 percent from Euro 5.102 billion in 2001 to Euro 4.918 billion this year; while Aegon’s 9 month premium figures actually showed a small increase from Euro 16.06 billion in the first 9 months of 2001 to Euro 16.137 billion this year.
The company explained the downturn as being at least partially due to the need to strengthen its bond default provisions. It increased them by $138 million for the U.S. in the third quarter, making the total in the U.S. $555 million. Actual bond defaults totaled Euro 598 million for the first nine months. The company also charged off Euro 317 million in “accelerated amortization of deferred policy acquisition costs” and increased provisions for products with minimum benefit guarantees by Euro 326 million.
The company’s capital position was strengthened by a Euro 2.064 billion transfer of preferred share interests from Vereniging AEGON, its major shareholder.
Executive Board Chairman, Donald J. Shepard stated that, “Earnings for the third quarter were in line with our expectations. New business production increased in the US, while weak financial markets contributed to lower overall production levels in the Netherlands and the UK during the quarter. Our expense management initiatives continue to be on target.”
The announcement said that “subject to unforeseen developments in the financial markets and within the scope of the prior forecast, AEGON expects its full year 2002 earnings to be approximately 35% lower than 2001 earnings.”
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