International insurer Aegon has revealed pre-tax incomes of £320m for the first quarter of the year reflecting the “adverse mortality experience and impacts from lower interest rates in the Americas”.
Aegon said the underlying earnings in the Netherlands, United Kingdom, International and Asset Management included limited “unfavorable impacts” from the Covid-19 pandemic in the first quarter of this year.
It also revealed net income of €1.27bn (£1.1bn) driven by a reduction in the valuation of the liabilities in the Netherlands, reflecting wider credit spreads. It said this was partly offset by fair value losses in the US from “unhedged risks on variable annuities and underperformance of investments”.
In the United Kingdom, underlying earnings before tax was €44m (£38m). Fee income was strong in the first two months of the quarter and also benefited from the hedge program to partially protect fee income against declining equity markets. Furthermore, expenses reflect the benefit from cost synergies from the Cofunds integration.
Matt Rider, Aegon CFO, said: “Given the extraordinary circumstances due to the Covid-19 pandemic, we provide a condensed update of our results today. In the first quarter of 2020, underlying earnings in Europe, Asia and Asset Management held up well. However, earnings in the United States were negatively affected by the drop in interest rates as a result of the Covid-19 crisis, and unfavorable mortality experience, which was largely unrelated to Covid-19.
“This resulted in underlying earnings before tax of €366m euros for the Group. Net income of 1.3 billion euros benefited from effective hedge programs and the favorable impact of credit spread movements on the valuation of our liabilities.”
He added: “I am pleased that we have maintained a strong balance sheet and liquidity position at the Group and in our main units in these extraordinary times. We are taking management actions to protect the economic value of the balance sheet and our capital position, and are looking at opportunities to increase our cost efficiency.
“Our aim is to position the company well as we emerge from the Covid-19 crisis to ensure the best possible outcome for all our stakeholders.”