Delta Lloyd NV, the Dutch insurer that shored up its capital buffers in an April rights offer, returned to profit in the first half after the company cut costs and changed the way it values liabilities.
Profit climbed to 925 million euros ($1 billion) compared with a year-earlier loss of 533 million euros, Amsterdam-based Delta Lloyd said in a statement on Wednesday. The company’s Solvency II ratio, a measure of an insurer’s ability to absorb losses, grew to 173 percent in the first six months.
“Our business is solid, but it is clear that we need to further improve our operational performance,” Chief Executive Officer Hans van der Noordaa said in the statement. “We are taking steps to exit unprofitable market segments and reduce costs to drive profitable growth.”
Delta Lloyd raised 650 million euros in the rights offer to improve its capital levels after the European Union introduced stricter capital requirements for insurers in January. Shareholders’ funds rose 48 percent from the end of 2015 to 3.8 billion euros after the rights issue and the return to profitability. Gross written premiums in general insurance increased 7 percent to 834 million euros in the first half from the same period a year earlier.
The company needs to improve its margins at its defined contribution life business and is adjusting pricing and exiting unprofitable markets at its general insurance unit, according to the statement. The introduction and licensing of the general pension fund is taking longer than anticipated, the firm said.
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