AMSTERDAM, Feb 15 (Reuters) - Dutch insurer Aegon said it would cancel its preference shares to improve its capital structure after reporting better than expected fourth-quarter net profit on Friday.
Aegon said it had agreed with its largest shareholder, Vereniging Aegon, to cancel all Aegon's preference shares in exchange for cash and common shares. Vereniging Aegon is the sole owner of Aegon preference shares.
"We want to simplify the capital structure to qualify as Tier 1," said Chief Executive Alex Wynaendts, adding that the existing preference shares did not count as the top grade of capital.
The number of common shares will rise by about 7 percent, with a dilutive effect on earnings per share of about 3 percent, Aegon said.
Aegon's fourth-quarter net income rose more than five times to 422 million euros ($563 million), from 81 million euros a year ago. The figure was up nearly 13 percent on the third quarter's 374 million euros, thanks to higher underlying earnings, investment gains, disposals and lower impairments.
The group reported a 100 million euro book gain on the sale of its minority stake in Prisma Capital and reaped 35 million euros from the divestment of its 50 percent stake in a joint venture with Banca Civica.
Underlying earnings rose 29 percent to 447 million euros, lifted by growing business, cost cuts, the non-recurrence of exceptional charges in the UK and favourable equity markets and currency movements.
Analysts in a poll commissioned by Reuters had forecast net income of 331 million euros and underlying pretax profit of 443 million euros.
Aegon said total sales rose 29 percent to 1.8 billion euros, with new life sales up 36 percent to 677 million euros thanks to particularly strong sales in the UK, Netherlands and United States.
Shares in the company were up 3.1 percent at 0812 GMT.