Dutch insurer Aegon
Aegon, which missed fourth-quarter profit estimates after taking several one-off charges, expected the euro zone crisis to continue to affect the economy and financial markets, CEO Alex Wynaendts told reporters on Friday.
Probably the bottom of euro crisis is behind us. That is not surprising because effectively a lot of measures have been taken, Wynaendts said.
The question for me is what impact that will have on economies. Economic developments in Europe are going to be affected by the euro crisis. We still have to see that impact. There continues to be an impact on the financial markets.
Market volatility would quite likely continue for several more years because it would take time before confidence returned to consumers and financial markets, Wynaendts said.
Aegon shares rose 3.7 percent to 3.87 euros, compared with a 0.9 percent rise of the STOXX Europe 600 insurance index <.SXIP>, with analysts saying Aegon was doing well in cutting costs and restructuring, and noting charges were exceptional.
All in all a lot of one-offs but Aegon is definitely doing what is has to do ... I would definitely be a buyer of the stock, said AEK trader Hedy Talens.
Aegon, which last year fully repaid 3 billion euros of Dutch state aid received in 2008, is suffering from low interest rates, which contributed to a 59 percent fall of the value of new business in the fourth quarter.
The value of new business reflects the present value of future earnings from insurance products, such as pensions.
Margin pressure was also a problem for Aegon in all its markets, such its pension operations in the United States, where it is a top 10 insurer and owns life insurer Transamerica.
You see margin pressure in all our segments. I particularly, in this morning's presentation, referred to the margin pressure in pension business because that has been discussed recently in the U.S. We see margin pressure in the Netherlands, in the United Kingdom, Wynaendts said.
To remain competitive and protect margins, Aegon has been cutting operations and costs in the Netherlands and Britain, resulting in charges of 194 million euros, including other a goodwill charge and increased U.S. reserves.
Aegon reported a net profit of 81 million euros, missing the average forecast of 176 million euros in a Reuters poll of 15 estimates.
Aegon also resumed dividend payments after halting payments in 2008 due to the credit crisis, proposing a dividend of 0.10 euros. It announced this intention a year ago.
(Reporting by Gilbert Kreijger; Editing by Jodie Ginsberg)