Aegon NV Posts 25% Increase in Net Income for 1998

Strategic Insights -

Dutch insurer Aegon NV reported a 25% increase in net income for 1998, driven by growth in core life insurance and pension activities in the Americas, the Netherlands, and the UK. The company's net income rose to 2.75 billion guilders, up from 2.21 billion guilders in 1997. Premium income grew 21% to reach 25.45 billion guilders, and net income for the Americas increased 38% to $1.36 billion guilders. The company also announced plans to acquire Transamerica Corp. for $9.7 billion, which will make it the third-largest life insurer in the US.

Key Takeaways:

  • Aegon NV reported a 25% increase in net income for 1998, reaching 2.75 billion guilders, up from 2.21 billion guilders in 1997.
  • Premium income grew 21% to reach 25.45 billion guilders, exceeding expectations.
  • Net income for the Americas increased 38% to $1.36 billion guilders, driven by growth in core life insurance and pension activities.
  • Aegon agreed to pay $9.7 billion in cash and stock to buy Transamerica Corp., which will make it the third-largest life insurer in the US.
  • The acquisition is expected to add 3% to Aegon's earnings per share for 1999 and 2000, and increase its 1999 earnings 18-20%, with earnings per share to increase 12-15%.
  • Aegon plans to sell Worldwide Insurance Co. and its property/casualty subsidiaries to American Financial Group for $162 million.

Statistics:

  • 25% increase in net income for 1998 (up from 2.21 billion guilders in 1997 to 2.75 billion guilders)
  • 21% growth in premium income to 25.45 billion guilders (up from 21 billion guilders in 1997)
  • 38% increase in net income for the Americas to $1.36 billion guilders
  • $9.7 billion cash and stock purchase price for Transamerica Corp.
  • $1.1 billion assumption of Transamerica's holding company debt by Aegon NV
  • 3% increase in earnings per share for 1999 and 2000, and 18-20% increase in earnings for 1999

Sources:

  • "Aegon NV Posts 25% Increase in Net Income for 1998," COMTEX (http://www.comtexnews.com), 1999
  • "Aegon to Buy Transamerica for $9.7 Billion," BestWeek, February 22, 1999
  • "Aegon Plans to Sell Nonlife Insurance Business," BestWeek, February 22, 1999