Aegon, a provider of life insurance, pensions and asset management, has reported a 31% decrease in underlying earnings over the first half of 2020, caused by adverse mortality and impacts from lower interest rates in the US.
Underlying earnings were reduced to €700 million, from €1.01 billion for the same period last year, while net income similarly shrank to €202 million, from €617 million previously.
Earnings from Aegon’s business in the US were affected in particular by lower interest rates and unfavorable mortality, which was in part driven by the COVID-19 virus.
However, the company reported that earnings in our other businesses generally held up well, supported by lower expenses.
On the basis of the these results and in light of the uncertain economic outlook, Aegon has opted to withdraw its financial targets for 2019-2021.
“Commercially the lockdowns have been a challenge, in particular for our agency sales channels,” said Aegon CEO Lard Friese. “To serve our customers as best as we can, we are actively managing our product portfolio and increasingly doing business virtually.”
“It is my ambition and that of my management team to transform Aegon into a more focused, high-performing group with a balanced portfolio of businesses that is generating reliable free cash flows and delivering sustainable and attractive shareholder returns,” he continued. “I realize this is not where the company is today and it will take time to get there.”
“We are focusing on four areas to achieve this ambition: strengthening the balance sheet, creating a more disciplined management culture, improving efficiency, and increasing our strategic focus. We have started to take actions along these lines and more will follow in the period ahead.”
Friese added that, while Aegon’s capital position remains satisfactory, there is still significant uncertainty regarding the economic impact of the COVID-19 pandemic going forward.
At present, Aegon anticipates continued adverse mortality experience in the second half of 2020, as the number of daily infections in the US remains high.