Aegon NV reported a 110% year-over-year increase in fourth-quarter 2017 profit thanks to a nonrecurring benefit from recent changes to U.S. corporate tax laws.
The Dutch insurer's net income for the quarter rose to €986 million from €470 million in the year-ago period. The result included a one-time benefit of €554 million in income taxes, driven by the reduction in Aegon's net deferred tax liabilities.
Net underlying earnings fell year over year to €392 million from €471 million.
Net impairments for the quarter reached €35 million, up from €1 million in the year-ago period. Other charges also increased to €132 million from €38 million, as the gain on the sale of Unirobe Meeùs Groep BV in the Netherlands was offset by integration expenses in relation to the group's platform business in the U.K. and charges in the U.S. and asset management. Aegon booked an €85 million provision for a potential settlement of the U.S. Securities and Exchange Commission's investigation into errors in the company's quantitative models and disclosures.
Aegon said it expects the investigation to conclude in 2018.
Net income from the Americas rose on a yearly basis to €797 million from €170 million, while net income from Europe also increased to €335 million from €306 million.
Return on equity fell to 8.4% in the quarter from 10.5% a year earlier.
For full year 2017, net income came in at €2.36 billion, up from €586 million in 2016.
Net underlying earnings for the year totaled €1.54 billion, compared to the year-ago €1.48 billion. Aegon said it expects the U.S. tax reforms to lead to an increase in net underlying earnings of approximately €120 million in 2018, which it said will have a positive impact on the return on capital invested in its U.S. business of approximately 75 basis points, and will lead to an improvement in the group's ROE of approximately 55 basis points.
Based on current projections, Aegon expects a benefit to capital generation of approximately $100 million, or roughly €85 million, on average per year going forward as a result of a lower effective tax rate in the U.S.
The group's Solvency II ratio rose to 201% from 195% during the fourth quarter.
Aegon's supervisory board will propose at the May 18 annual general meeting a final dividend of 14 cents per common share, which will take the full-year 2017 dividend to 27 cents per common share, up 4% from the 2016 dividend. Supervisory board member Dirk Verbeek will also step down at the annual general meeting.