The decline is mainly due to impacts from lower interest rates in the Americas
Dutch insurance company Aegon has reported an underlying income before tax of €963m for the second half of 2019, down 5% from €1.01bn for the same period in 2018.
The company’s income before tax for the period was €1.1bn, compared to €136m in the second half of 2018.
Aegon’s net income was €910m in the second half compared to €253m in the same period a year earlier.. The net income had also resulted in gross financial leverage ratio of 28.5% and the return on equity was 9.5% for the second half of last year.
The company’s pretax profit decline was mainly due to impacts from lower interest rates in the Americas, and a change in the recognition of interest expenses related to debt refinancing.
The company’s earnings growth in other regions is from favorable claims experience and business growth
The company recorded net outflows of €22.5bn, due to contract discontinuances in US Retirement Plans and outflows in the US annuity businesses, the company said.
New life sales of Aegon went up by 15% in H2 2019
New life sales for the period were €456m, increasing by 15% compared to €398m for the second half of 2018. The growth has been attributed business growth in Asia and higher pension sales in the Netherlands.
Accident & Health insurance sales were also up by 19%, standing at €113m, from €95m in 2018. The increase has been led by a large disability contract win in the Americas.
Primarily driven by business growth in Spain, the new property and casualty premiums increased by 6% to €64m during the period July to December 2019. The increase was attributed to its business growth in Spain.
Aegon CEO Alex Wynaendts said: “In the second half of 2019 we continued to operate in a challenging environment. Our underlying earnings were impacted by low interest rates while we experienced net outflows in our US retirement and annuity businesses. As a result we achieved a return on equity of 9.5%, below our target of 10%.
“However, we increased our capital generation which, combined with a number of management actions, enabled us to maintain a strong capital position. This allows us to announce a final dividend of 16 eurocents, increasing our full-year dividend by 7%.
“We continue to execute on our strategy, simplifying Aegon’s structure and becoming more proactive in managing our businesses.”