04 September 2019Reading time: 3 minutes

The net income in the first half year of Aegon increased on an annual basis from 491 million euro to 618 million euro. This was partly due to higher investment profits of 275 million euro and lower costs. However, in this time period the underlying earnings dropped with 5 percent to more than 1 billion euro. The solvency ratio of Aegon was 197 percent, which is at the top of the intended level. This relatively strong solvency position is the result of Aegon’s own interest risk coverage program and helps Aegon to defend itself against the falling market interest rates. The normalized capital generation rose to 714 million euro. Thanks to a strong cash flow Aegon will increase the interim dividend with 7 percent to 0,15 euro per share. Investors, however, where unpleasantly surprised by the solvency ratio of Aegon Nederland, which has dropped in the first half year from 190 to 152 percent. Aegon itself maintains a minimum limit of 155 percent.

According to Aegon, the most important reason for the decreased solvency ratios is the unfavourable interest climate. Aegon Nederland invests policies for approximately 50 percent in Dutch mortgages. Because the market interest rates have declined more than the interest rates on mortgages, the ratios have come under pressure.

Aegon considers the option to sell a part of their life insurances portfolio, to somewhat restore their solvency ratios.

A few days before the publication of the half year results of Aegon, the current CEO Alex Wynaendts announced his new successor. Lard Friese will take over his positions as from March 1st 2020.

Friese comes from NN Group, which he led since 2014. The new CEO is actually an old friend of Aegon, because he already has worked there from 1993 until 2003. Wynaendts will stay with Aegon as an advisor till the end of September 2020.

Halfway August Aegon also announced that Aegon Bank and subsidiary Knab will continue under the name of Knab as of October 1st this year. The new combination will be led by Nadine Klokke and she therefor leaves ING. She succeeds Eric Rutten. According to Aegon the merger of both banks is primarily a strategic choice.

After the publication of the first half year results on August 15th, the stock price of Aegon dropped the same day with 7,5 percent to 3,50 euro. This is the lowest price since 2016. By now the stock price of Aegon has recovered a little to (20-08-2019) 3,63 euro. It remains to be seen if the stock price will recover again after the recent developments.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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05/08/2020 09:44:46