(Rewrites throughout)
By Ian Walker and Archie van Riemsdijk
Shares of Dutch life insurer and pension company Aegon N.V.
(AGN.AE) were trading lower on Thursday after the company lowered
its solvency guidance, which could hurt dividend growth.
The company estimates its solvency level at 140% and 170%,
lowering the midpoint of its guidance by 20 percentage points, from
a 150% to 200% range. Aegon recently submitted its internal risk
model for approval under the new regulatory framework known as
Solvency II, which will replace the current regulation next
year.
In return, the company received more clarity from Dutch
regulator DNB on remaining uncertainties in the regulations.
Shares of Aegon were down 8% in Amsterdam on Thursday. Aegon's
Dutch peer Delta Lloyd on Tuesday lost 20% of its market value,
after announcing its Solvency 2 estimate had dropped below
140%.
Belgian broker KBC Securities said the lowered guidance is
underwhelming and recommended investors to reduce their investment
in Aegon's shares.
Rabobank analyst Cor Kluis said that Aegon's solvency is at the
lower end of a peer group consisting of Ageas, Achmea, Delta Lloyd
and NN Group. A research note by ING stated that the insurance
company's new solvency guidance "will trigger many questions on
dividend upstream capacity in the Netherlands and the U.K. in the
coming years."
Aegon's Chief Financial Officer Darryl Button acknowledged the
potential impact on dividend, but said that the U.S. unit
Transamerica, from where Aegon derives most of its sales, won't
suffer any dividend restraints. For the Dutch and U.K. units, the
CFO will discuss the topic with Dutch regulators this year.
Earlier Thursday, Aegon reported a slight rise in net profit,
but missed the consensus forecast, partly due to an imperfect
interest rate hedge in the Netherlands. For the three months to
June 30, net profit was 350 million euros ($389 million), compared
with EUR343 million a year earlier and a consensus forecast of
EUR540 million.
Write to Ian Walker at ian.walker@wsj.com and Archie van
Riemsdijk at archie.vanriemsdijk@wsj.com
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