Aegon advanced as much as 5 percent in Amsterdam trading, its biggest intraday gain in three months, after posting net income of 422 million euros ($565 million), above the 381 million-euro average estimate of analysts surveyed by Bloomberg. Underlying earnings, which exclude investment swings, were 447 million euros, compared with analysts’ 437 million-euro estimate.
The company and its largest shareholder, Vereniging Aegon, decided to simplify the insurer’s capital structure by canceling all preferred shares, which are valued at 1.1 billion euros. Under the agreement, the shares will be exchanged for cash and common stock, Aegon said. The insurer’s solvency ratio, a measure of financial strength, rose to 230 percent at the end of December from 222 percent at the end of September.
“Sales and solvency figures were better than expected, so in total” the results were “somewhat positive,” Cor Kluis, an Utrecht, Netherlands-based analyst at Rabobank, said in a note.
Aegon rose 4.4 percent to 5.14 euros by 1:06 p.m. in Amsterdam, valuing the company at 10.1 billion euros. The stock advanced 38 percent over the past 12 months, twice the increase in the 28-company Bloomberg Europe 500 Insurance Index.
Aegon said it plans a dividend of 11 cents a share, up from 10 cents in 2011.
“All shareholders are benefiting from the strong set of results, from strong capital and the higher dividend and also benefitting from the simplification of the capital and strengthening of the balance sheet,” Chief Executive Officer Alex Wynaendts said in an interview.
As a result of the capital transaction, the number of shares outstanding will increase by approximately 7 percent, Aegon said. The dilutive effect on earnings per share will be about 3 percent.
The company reported fair-value losses of 79 million euros compared with 20 million euros a year earlier due to lower credit spreads on the valuation of its bonds and the negative effect on the fair value of swaps.
Investment gains rose a quarterly 16 percent to 149 million euros from the previous three months, Aegon said.
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