15 January 2019Reading time: 3 minutes

Just like many other shares, the stock price of Aegon was under pressure over the past few months. At this moment (07-01-2019) the stock price is 22 percent lower at 4,21 euro compared to a year ago. There are several possible causes for the stock price decline.

First of all, Aegon is vulnerable for the upcoming Brexit, especially if it will become a ‘hard Brexit’. In that case analysts of ING believe, that this could result in a downward risk for Aegon up to 30 percent decline. It remains to be seen how the Brexit will unfold in the coming months and to which extend this will effect Aegon.

The stress test of EIOPA, which took place mid-December, showed that Dutch insurance companies are in general more vulnerable for lower interest rates then their European peers. With the test of the EIOPA, insurance companies where subjected to scenario’s in which the interest rates had gone up and down significantly. According to the test, the Dutch insurance companies would be especially vulnerable because of the large amount of long-term life insurances in their customer portfolio.

According to some analysts, the stock price decline of Aegon is also caused by the American share and corporate bond market. These markets where under pressure in the past few months due to the fear of economic growth decrease. Because the subsidiary label of Aegon, Transamerica, has invested a relatively large amount of capital in corporate bunds, this could also affect the insurance company. Aegon still sees great opportunities in the US, despite the fear of economical headwinds. During an analyst meeting early December, the insurance company claimed that due to the beneficial positioning of the organisation in the coming years, the organic growth could accelerate. The sale of new life insurances plummeted in the first half year of 2018 with 2 percent to 422 million euro, because less life- and death risk insurances where sold in the US. If the unbeneficial exchange rates are taking into account, the decline is even 8 percent.

However, the underlying result of Aegon improved on annual basis with 2 percent to 1,064 billion euro and 10 percent based on constant exchange rates. This was mainly due to cost savings and growth in Asia. Eventually Aegon achieved a profit of 491 million euro. The important Solvency II ratio of Aegon improved during the first six months of 2018 with 14 percent points to a total of 215 percent. For now the insurance company still expects to achieve its own targets for 2018. On February 14th Aegon will present the second half-year results of 2018 and more information will follow about the expectations of the insurance company for 2019.

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.

Vontobel products on Aegon are tradable at DEGIRO.

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25/09/2023 12:36:38