Aegon slides as earnings miss forecast
DISAPPOINTED market makers sold shares in Aegon yesterday after its third quarter pre-tax earnings missed consensus expectations.
Despite bouncing back into the black with a net profit of €145m (£130.4m) compared to last year’s loss of €329m, the insurer saw its shares fall 6.4 per cent to close at €5.1.
Pre-tax earnings fell year-on-year to €351m from €500m. Analysts had expected a figure of around €424m. The shortfall came from a one-off €66m charge for introducing a new customer records system to the UK operation. Aegon saw impairments fall but surprisingly wrote off €80m on bad UK corporate credit, against the background of improving conditions for fixed income.
The Dutch firm confirmed it would repay a third of the €3bn it owes the Dutch government in core capital if the macro-economic environment continues to stabilise. The money comes from €1bn capital the company raised by selling shares in August.
Chief executive Alex Wynaendts claimed the figures showed the actions the company took to deal with the financial crisis “were the right ones at the right time”.
Otto Thoresen, UK chief executive, added: “This is a sound underlying third quarter performance given the continuing challenging economic conditions affecting new business flows across the UK life sector.”
Nomura analyst Nicholas Holmes said he expected the company to pay back its full debt to the Dutch state by the end of 2010 from its own resources, avoiding equity dilution.
He added: “We continue to view Aegon as one of the top value stocks in the sector.”