AEGON 2nd quarter profit slips on weak dollar, anticipated charges

Dutch insurer AEGON NV, corporate parent of Transamerica with significant operations in Cedar Rapids, on Thursday reported a 2 percent drop in second-quarter net income.

AEGON posted net income of $574.8 million for the quarter that ended June 30, down from $587.6 million in the same quarter last year. With 1.76 billion shares of stock outstanding, AEGON's recorded a net profit per share of 33 cents in the second quarter.

Revenues were $1.88 billion in the second quarter, down 15 percent from $2.1 billion in the same quarter of 2010.

Alex Wynaendts, AEGON chief executive officer, attributed the lower earnings and sales to several factors, including a weak dollar.

"The weakening of the U.S. dollar had a notable impact on AEGON's reported results," Wynaendts said in a statement accompanying the financial results. "Net income was strong for the quarter, however, underlying earnings were negatively affected by anticipated exceptional items in the United Kingdom and the Netherlands. 

"Clearly, the current economic environment poses considerable challenges. However, over the past years we have implemented measures to strengthen and protect AEGON's balance sheet by reducing our exposure to equity and credit markets, as well as interest rate risks.

"At the same time, we are restructuring our businesses in our key markets."

Wynaendts said the restructing of the company's North American business, rebranded recently as Transamerica, is producing the desired results.

"The particularly strong sales of variable annuities and pension and retirement products in the United States are a result of the successful repositioning of our business toward more fee-generating income," Wynaendts said.

AEGON reinterated specific goals as it restructures its financial services business. The company said it wants to increase its fee businesses to 30 percent to 35 percent of underlying earnings before tax by 2015 and it plans to achieve a return on equity of 10 percent to 12 percent by 2015.

In the most recent quarter, AEGON achieved a return on equity of 8.1 percent, up from 7.8 percent in the first quarter, but down from 8.5 percent in the second quarter of 2010.