Dutch Insurer NN Group Plans $559 Million Share-Buyback

NN Group NV, the second-biggest Dutch insurer, said it will buy back as much as 500 million euros ($559 million) of shares over 12 months as it returns excess capital to investors.

First-quarter operating profit was little changed at 305 million euros compared with a year earlier, as the firm’s mortgage portfolio grew and fees from overseas businesses rose, The Hague-based company said in a statement on Thursday. Low interest rates and declining equity markets offset the growth.

The combined ratio at the Netherlands non-life unit rose to 104.3 percent from 100.2 percent a year earlier. A measure of more than 100 means the unit is paying out more in claims and costs than it’s collecting in premiums.

That “is extremely disappointing for what should be a turnaround story,” William Hawkins, an analyst at Keefe, Bruyette and Woods, said in a note to clients. It’s a “real shocker.”

NN Group was down 1.7 percent at 29.92 euros as of 10:29 a.m. in Amsterdam after rising as much as 2.2 percent earlier. The stock is down 8 percent this year, giving the company a market value of 10 billion euros.

ING Groep NV spun off NN through an initial public offering in July 2014 and sold its remaining stake last month. The share buyback will reduce the firm’s Solvency II ratio, a gauge of capital buffers, by about 9 percentage points. The measure rose to 241 percent at the end of the first quarter from 239 percent in December.

The Solvency II number is “higher and more stable than expected,” Bart Horsten, a senior research analyst at Kempen & Co. NV, said in a note to clients. Horsten has a buy rating on the stock.

Earnings from the asset-management business fell 20.3 percent to 29 million euros, while non-life profit in the Netherlands slumped 61.5 percent to 9 million euros, the insurer said.

“The results of the non-life business have been quite volatile and were impacted by an unfavorable claims experience in the individual disability portfolio in the first quarter,” Chief Executive Officer Lard Friese said in the statement. “We continue to implement our management actions aimed at improving underwriting performance and efficiency.”

The operating result of NN’s Japan Life unit fell to 67 million euros in the first quarter from 72 million euros a year earlier. Cost savings in the Netherlands in the period amounted to 11 million euros, the company said.

NN’s biggest Dutch competitor is Aegon NV.

(An earlier version of this story corrected an erroneous Solvency II ratio.)

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