Dutch insurer Aegon NV, which has the bulk of its operations in the US, yesterday reported a 173 million euro (US$235 million) loss for the first quarter, citing poor performance by its investments and US operations.
The loss compares with a profit of 153 million euros in the same period a year ago and a loss of 1.18 billion euros in the fourth quarter. First-quarter revenues fell 6 percent from year-ago levels to 8.64 billion euros.
“Excluding the impact from capital markets, the earnings were approximately 450 million euros,” Aegon said.
Aegon said it booked 386 million euros in impairment charges on investment losses, including US mortgage derivatives and corporate bonds.
It said it had reduced the amount of money it allows hedge funds to invest on its behalf and increased holdings of cash, treasury and government-backed bonds.
Aegon’s expenses also rose sharply, as it was forced to amortize the cost of acquiring new insurance contracts more quickly — a sign the insurance policies it has issued in the past won’t be as profitable as the company originally thought.
“We continue to focus on freeing up capital from our businesses, reducing costs and taking measures to counter the effects of the current environment,” chief executive Alex Wynaendts said in a statement.
He said new life insurance sales were “relatively stable” compared with the fourth quarter.
The company has cut around 275 jobs in the past year and employed 31,156 at the end of the quarter.
PRUDENTIAL
Separately, Prudential PLC, the UK’s biggest insurer by market value, said first-quarter revenue fell 5 percent as the global economic slowdown hurt sales in Asia.
Total insurance sales fell to £697 million (US$1.1 billion) compared with £732 million a year earlier, the London-based company said in a statement yesterday. That beat the average estimate of £647 million from 17 analysts surveyed by the company.
“We expected the business environment to be very challenging throughout 2009,” chief executive officer Mark Tucker said in the statement.
Sales in Asia, which accounts for more than half of Prudential’s profit, dropped 11 percent to £333 million. South Korea and Hong Kong, two of Prudential’s three biggest Asian markets, are bordering on recession, and China grew at the weakest pace in at least a decade in the first quarter.
The insurer estimated that it had a capital surplus of £2 billion, up from £1.6 billion at the end of March because of a hybrid debt sale this month. The surplus will increase by £800 million after its Taiwanese business is transferred to Taipei-based China Life Insurance Co (中國人壽).
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