AEGON earnings fall on bad loans, investments

Aug 08, 2008 (The Gazette - McClatchy-Tribune News Service via COMTEX) -- AEG | Quote | Chart | News | PowerRating -- Aug. 8--A combination of charge-offs for problem loans, losses on investments and a declining dollar slashed AEGON NV's second-quarter earnings.

The Netherlands-based corporate parent of AEGON USA in Cedar Rapids reported net income of $428 million for the quarter that ended June 30, down 58 percent from $1.01 billion in the same quarter of 2007.

The company's American depository receipts fell $1.22, or 9.52 percent, to close Thursday at $11.60 on the New York Stock Exchange.

AEGON said its total investment portfolio experienced $126 million of pretax impairments, of which $87 million were credit impairments, including $63 million of charge-offs related to 2006 vintage subprime mortgages.

AEGON, a provider of life insurance and pensions, joined other European insurers Allianz and Axa in posting lowerthan-expected earnings as falling stock markets eroded their investments and, consequently, their earnings.

The credit crunch, sparked by losses from traded securities linked to subprime mortgages, has affected insurers in particular since many of them hold large equity assets.

Despite ongoing turbulence in financial markets, Alex Wynaendts, AEGON chief executive officer, said the company was in a good position to go forward with a strong capital position and cash flows.

"We believe that momentum is going to continue," Wynaendts said. "We are building our businesses in new markets, in Central and Eastern Europe, in Asia. We have set the base for a very positive outlook on the longer term." Wynaendts said AEGON is pleased by the continued confidence of its customers.

"In the United States, we achieved especially strong fixed annuities deposits, a sixfold increase over the comparable period," he said. "In the Netherlands, new life sales were up significantly, and our business in the United Kingdom achieved strong sales growth across most lines of business."

-- Contact the writer: (319) 398-8366 or george.ford@gazcomm.com

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