February 14, 2019 / 6:53 AM / 2 months ago

UPDATE 1-Aegon's H2 underlying profit drops, lags estimates

(Updates with details including new financial targets)

AMSTERDAM, Feb 14 (Reuters) - Aegon NV, the Dutch insurer which does most of its U.S. business under the Transamerica brand, on Thursday reported an 8.1 percent drop in underlying pretax profit for the second half of 2018, missing estimates.

The underlying pretax profit came in at 1.01 billion euros ($1.14 billion) for the six-month period ended Dec. 31.

Analysts polled by Reuters had expected underlying pretax profit at 1.08 billion euros, compared with 1.10 billion euros in the year-ago period.

The company’s volatile net income plunged to 253 million euros from 1.45 billion euros, reflecting losses and lower valuations on the investment portfolio it holds to pay claims.

“The second half of 2018 was challenging, as we experienced a significant decline in the markets towards the end of the year,” CEO Alex Wynaendts said in a statement.

“This affected the value of our customers’ investments, and thereby, the results of our administration and services businesses.”

Aegon set new financial targets for 2019-2021, including capital generation of 4.1 billion euros cumulatively, a dividend payout of about 50 percent, and return on equity of above 10 percent.

The company said it held 1.3 billion euros in excess cash at the year-end with a solvency ratio of 211 percent under Europe’s new Solvency II accounting regime. It expects to generate 1.5 billion euros in excess cash this year.

$1 = 0.8868 euros Reporting by Toby Sterling; Editing by Rashmi Aich and Sherry Jacob-Phillips

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