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Aegon First-Quarter Profit Slumps 61% After Investment Losses

Aegon NV (AGN), the Dutch owner of U.S. insurer Transamerica Corp., said first-quarter profit fell 61 percent after investment losses related to hedging programs.

Net income dropped to 204 million euros ($267 million) from 525 million euros a year earlier, The Hague-based company said in a statement today. That missed the average 319 million-euro estimate of six analysts surveyed by Bloomberg.

Aegon is countering low interest rates and market turmoil by cutting costs and boosting the share of profit from fee-based businesses, including unit-linked pensions and variable annuities, to as much as 35 percent by 2015. Underlying pretax earnings, which exclude investment swings, were little changed at 445 million euros.

“Our solid results, in terms of underlying earnings, sales and our capital position confirm that our strategic priorities are the right ones,” Chief Executive Officer Alex Wynaendts said in a statement. “The gradual improvement of financial markets resulted in impairments reaching their lowest level since the start of the financial crisis in 2008.”

Aegon plans to increase underlying pretax profit by an average of 7 percent to 10 percent a year until 2015. The insurer missed that goal in the first quarter as equity market gains were offset by higher employee costs and Aegon’s exit from partnerships in Spain.

The company reported a loss of 286 million euros after the revaluation of hedging investments, compared with a gain of 148 million euros a year earlier.

Aegon is targeting return on equity of as much as 12 percent by 2015 from 7.1 percent in 2012.

Aegon, whose Pyramid building is a landmark in San Francisco’s financial district, declined 1.4 percent to 5.13 euros as of 9:12 a.m. in Amsterdam trading. That pared this year’s gain to 7 percent compared with the 12 percent advance in the 28-company Bloomberg Europe 500 Insurance Index.

To contact the reporters on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net; Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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