August 16, 2018 / 7:51 AM / a year ago

Aegon first-half earnings ahead of estimates, eyes Vivat bid

AMSTERDAM (Reuters) - Aegon (AEGN.AS), the Dutch owner of U.S. insurer Transamerica Corp, reported a slightly better-than-expected underlying earnings of 1.06 billion euros ($1.21 billion) for the first half of 2018, helped by cost-cutting and better margins in the Netherlands.

Analysts polled by Reuters had expected the profit at 1.02 billion euros. The company’s underlying earnings in the first half of 2017 was 1.04 billion euros.

“The results demonstrate Aegon continued to execute on its plans of rationalizing the franchise, taking out cost, and improving investment returns,” analysts from Bernstein said.

CFO Matt Rider said the company was making progress toward finishing a set of financial goals set in 2016 to achieve by 2018: 10 percent return on equity, 350 million euros in cost cuts and a focus on growing its fee-based businesses in pension and asset management.

“We’re seeing record gross deposits for the first half of the year across all of our businesses,” he said in a telephone call, citing contract wins at its Dutch pension fund business and Chinese asset management business.

Aegon shares rose 1.3 percent to 5.53 euros by 0726 GMT.

Rider said the company has now cut costs by 325 million euros, including a move announced in January to outsource administration of its insurance and annuity business lines in the United States, where it does two-thirds of its business. That is expected to save 100 million euros annually.

Return on equity improved to 9.2 percent in the first half from 8.4 percent at year end. Rider said reaching the 10 percent goal has been made more difficult because the company’s equity has been increasing due to the disposal of operations.

“So we recognized we were going to be a little slower to get to the 10 percent on a full-year basis ... internally we think about it as a 10 percent return on equity by the fourth quarter (of 2018), and then we’ll move into 2019.”

He said the company will set new targets along with full year earnings.

Rider said Aegon would consider bidding for Anbang’s Dutch subsidiary Vivat if it is sold this autumn.

Anbang, advised by UBS and China’s CICC, began vetting investment banks to sell its overseas assets in June but has yet to give any a mandate. Analysts value Vivat at roughly 2 billion euros.

“We first have to get our heads around what the business is,” Rider said.

($1 = 0.8781 euros)

Reporting by Toby Sterling; Editing by Gopakumar Warrier; editing by David Evans

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