AEGON N.V.’s operating earnings for the second quarter of 2007 improved by 22 percent over the same period of 2006 to €570 million ($780 million), while net underlying operating earnings rose 9 percent, on pro forma basis, to €532 million ($728 million).
However the global credit crunch, set off by the meltdown among U.S. subprime mortgage lenders impacted net earnings for the second quarter, which declined by 22 percent to €655 million ($896.7 million) compared to Q2 2006.
AEGON said the decrease was “mainly in the Netherlands due to release of guarantee provisions in second quarter 2006 and declining fair value of derivatives in second quarter 2007.” It also indicated that a “recent change in Dutch hedging and investment strategy is expected to limit derivatives impact on net income going forward.”
Along with the earnings bulletin AEGON announced plans for €1 billion ($1.37 billion) share repurchase program.
Donald J. Shepard, Chairman of the Group’s Executive Board, assured shareholders that “the performance of AEGON’s businesses remains strong.” He noted that “given continuing concerns over investments backed by sub-prime mortgages in the United States, it is worth emphasizing that our portfolio has been structured to weather a stressful credit environment.
“The majority of our sub-prime exposure is backed by fixed-rate mortgages and is rated triple-A. None of our holdings was included in the recent rating agency downgrades. We have insignificant exposure to subprime Collateralized Debt Obligations (CDOs). AEGON will continue to closely monitor developments in this market, but does not expect material impairments to its holdings.”
Shepard also emphasized the growth AEGON had achieved during the period. “Our businesses in the Americas, Europe, and Asia achieved further progress toward the goal we outlined last year to double the value of new business by 2010,” he said in his conclusion to the report. “Improvements in earnings, sales and profitability indicate that the performance of AEGON’s businesses remains strong.”
The full report and a web cast of the investors and analysts’ presentation may be consulted on the Group’s web site at: www.aegon.com.
Source: Aegon N.V.
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