Aegon’s U.S. COVID-related mortality entitlements smash its yield

Aegon (NYSE: AEG) announced a 16 percent drop in third-quarter operating profit on Thursday as a result of higher COVID-19 linked mortality claims in the United States, the Dutch insurer’s largest market.

The operational profit for the three months to the end of September was 443 million euros ($512 million), compared to 526 million euros in the same period of 2020 and an expectation of 490 million euros in an Aegon poll of analysts.

“Performance improvements across most of our businesses … were offset by elevated mortality in the United States,” Aegon Chief Executive Lard Friese in a statement.

“We expect the impact from COVID-19 to abate over time,” Friese said, without giving further detail. According to Friese, the death expenses more than offset rising fee income and business growth, demonstrating that Aegon was reaching other performance criteria.

Aegon shares, which were up 34% this year as of Wednesday’s close of 4.31 euro, were 0.7 percent lower at 4.82 percent at 0817 GMT.

The Dutch insurer has been hedging its $80-85 billion closed book U.S. annuity programme and providing buyouts to specific clients in order to free up additional money, which analysts expect would be utilised for dividends or share buybacks.

Friese stated that the offer’s take-up rate was 8% at the end of the third quarter, but 14 percent as of Thursday, and was projected to exceed Aegon’s 15% target.

The Solvency II ratio of Aegon increased to 209 percent, up from 208 percent at the end of July, with capital generation of 327 million euros.

Story by : Norvisi Mawunyegah