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Shares in Dutch insurer Aegon jumped more than 5 per cent after the company reported its net profits improved sharply in the first quarter compared with a year earlier, chiefly due to positive investment and tax developments, lower impairments and cost cuts.
Aegon reported net profit rose 59 per cent over a year earlier, to €521m. The biggest boost was a €142m gain from fair value items, especially from the higher value of a mineral rights fund in the US.
Profits also benefited from a €51m tax credit in Ireland.
Jan Nooitgedagt, chief financial officer, noted the success of cost-cutting officers, and said the company “delivered early on our target to generate a greater proportion of earnings from fee-based versus spread-based business”.
The company draws 35 per cent of its underlying earnings from fees rather than spreads, a target it had expected to reach in 2015.
The company also noted it was growing its US pension business. In Britain, underlying earnings improved because the company had completed compensation payments ordered by regulators to customers at its local arm, formerly known as Scottish Equitable.
The company continued to suffer from longer life expectancies, which drove pre-tax underlying earnings down 13 per cent in the US and 2 per cent in the Netherlands.
New sales of life insurance policies fell 11 per cent year on year, missing analysts’ consensus expectations.
But the results were “much better than expected”, said Lemer Salah of SNS Securities in a note.
Aegon reiterated its long-term targets of increasing return on equity to 7 to 10 per cent. The first-quarter results delivered ROE of 6.9 per cent, but hit 7.8 per cent after accounting for run-off capital, the company said.
Aegon shares were up 5.4 per cent to €3.49 in morning trading on the Amsterdam exchange, against a 0.5 per cent drop in the AEX index of shares.