Aegon posts lower third-quarter profit, narrowly beats expectations

AMSTERDAM (Reuters) - Dutch insurer Aegon NV AEGN.AS reported a fall in third-quarter earnings on Thursday, as higher life insurance claims in the United States outweighed benefits from cost-cutting.

The logo of Dutch financial insurance company Aegon is seen in The Hague, October 28, 2008. REUTERS/Stringer

Analysts said the company’s performance was slightly better than expected after taking account of an unexpected change in the way it states its numbers.

The insurer, which does most of its business in the United States, reported underlying pre-tax profit of 461 million euros ($504 million), down 7 percent from 495 million euros in the same period a year ago.

That was much better than company-compiled estimates of 358 million euros, but KBW Research said the company had restated its reporting to remove some charges from the “underlying” figure.

“The approximate conclusion is that Aegon’s underlying earnings have roughly met consensus before the assumption changes,” said analyst William Hawkins in a note.

Shares rose 7.8 percent to 4.42 euros by 0808 GMT, also benefiting from Donald Trump’s victory in the U.S. presidential election, as analysts believe reforms to U.S. insurance accounting may now move more slowly.

For the second year in a row, the company reviewed its actuarial and other models, leading to an 81 million euro reduction in bottom line earnings -- down from a negative 204 million euro impact in the third quarter of 2015, which it had then considered part of “underlying” earnings.

“We think the assumption changes are surprisingly low, which is superficially a good thing, but may beg questions therefore about risks into the future,” Hawkins wrote.

The company’s solvency under Europe’s new Solvency II capital requirements regime, which is closely watched by analysts as a measure of an insurer’s ability to maintain dividends, came in at 156 percent, down from 158 percent at the end of June, but also better than the 153 percent analysts had forecast.

Capital generation was 300 million euros, in line with expectations. The company is targeting return on equity of 10 percent by 2018; ROE increased to 7.7 percent in the third quarter, up from 7.6 percent in the same period of 2015.

Reporting by Toby Sterling; Editing by Sunil Nair and Adrian Croft