Aegon's FY'20 net income tumbles 97% YOY

Aegon NV reported a second-half 2020 net loss attributable to owners of the company of €157 million, compared to a net income of €908 million in the year-ago period, with CEO Lard Friese describing the period as "challenging."

The result was mainly due to fair value losses with an increased value of liabilities in the Netherlands due to tightening credit spreads.

Pretax underlying earnings grew by 7% on a yearly basis to €1.03 billion from €961 million, primarily driven by the benefit from higher equity markets in the U.S. and asset management and expense savings, which were only partly offset by the weakening of the U.S. dollar against the euro. COVID-19 had a manageable impact as it led to both adverse mortality and favorable morbidity in the U.S., which broadly offset each other.

Net deposits amounted to €15 billion of net outflows for the second half of 2020, which was the result of €16 billion net outflows in the Americas, largely attributable to retirement plans.

The insurer reported a loss on fair value items of €1.15 billion, compared to a gain of €168 million in the second half of 2019. Additionally, Aegon booked €135 million worth of gains on investments, up from €131 million a year earlier, reflecting normal trading activity and portfolio adjustments to lengthen the duration of the investment portfolio in Aegon International.

Underlying earnings from the Americas increased 1% year over year to €556 million from €548 million.

New life sales totaled €352 million on a total recurring plus 10% of single premiums basis, down from €456 million a year earlier. The market consistent value of new business dropped to €155 million from €194 million.

The return on equity for the second half of 2020 was 10.6%, compared to 9.5% in the year-ago period, as a result of a combination of higher net underlying earnings, lower cost of leverage and lower shareholders' equity.

For full year 2020, pretax underlying earnings came to €1.73 billion, compared to €1.97 billion a year earlier. Attributable net income for the year tumbled 97% to €44 million from €1.52 billion in 2019.

The group's Solvency II ratio was 196% at the end of 2020, compared to 195% as of June 30, 2020, and 201% as of Dec. 31, 2019.

Aegon's board will propose a final dividend for 2020 of 6 cents per common share, bringing the total dividend for the year to 12 cents per share. Pending approval at the June 3 annual general meeting, the dividend will be payable July 7, with a record date of June 8.

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