05 December 2017Reading time: 2 minutes

Early November Aegon positively surprised the market with their third quarter results, especially due to their improved solvency. Early this year Aegon had to lower the Solvency II-ratio over 2016 to 157 percent, to add a risk margin for the cost inflation. Analysts were also concerned about the solvency of Aegon Netherlands which was at 141 percent by the end of 2016.

Due to a capital injection Aegon increased the Solvency II-ratio earlier this year to 185 percent. Thanks to favourable market conditions and the sale of, among other things, an annuity portfolio in the United Kingdom, the Solvency II-ratio rose to 195 percent during the past quarter, while the ratio for Aegon Netherlands improved to 190 percent.

The underlying result of Aegon increased during the third quarter on an annual basis with 20 percent to EUR 556 million, while the net profit increased with 31 percent to EUR 469 million. Both results surpassed the expectations of analysts and according to the insurance company this is partly due to a positive revaluation of American and Dutch real-estate. Also positive is that the gross deposits of Aegon increased on an annual basis with 65 percent to EUR 41 billion. However, the sales of new life insurances plummeted with 8 percent to EUR 202 million and the sales of damage and supplementary health insurances decreased on an annual basis with 17 percent to EUR 180 million.

Due to its strong capital position, Aegon maintains it target to return EUR 2.1 billion to the shareholders during the period between 2016 and 2018. It’s expected that the Solvency II-ratio will continue to improve by completing the sale of Unirobe Meeùs Group to Aon Netherlands for EUR 295 million, which will result in a book profit for Aegon of EUR 180 million.

It remains to be seen if Aegon succeeds in realizing its own objectives. Shareholders must be patient, because Aegon announced that it will no longer publish any quarter results or updates from next year. From then on the market will have to rely on half-year and year results of Aegon.

Since our most recent article from early August, the stock price of Aegon has rose to almost 9 percent to EUR 5.17 (end of November 2017). The highest stock price over the past months is EUR 5.49, while the current stock price have reached an all-time low for this period of EUR 4.26. The price to earnings ratio is 6.2 and the dividend yield is 5 percent.

Vontobel products on Aegon are tradable at DEGIRO, Lynx and Interactive Brokers.

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01/03/2021 03:05:55