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Aegon sees US$1.5b net loss on investment drop

AEGON NV, the Dutch insurer that owns the Transamerica business in the United States, said yesterday that it expects to post a net loss of around 1.2 billion euros (US$1.53 billion) for the fourth quarter due to a fall in the value of its investment portfolio.

The company, which is due to report earnings on March 12, did not say why it decided to release key figures ahead of schedule. However, it said that its capital position is strong and provided several measures to demonstrate it has excess cash.

Aegon said that it has 9 billion euros in core equity, of which 2.9 billion euros are "above AA ratings requirements."

"Last year, Aegon freed up a total of 1.7 billion euros in additional capital," it said in a statement, adding that it plans to add 1.9 billion euros in cash in 2009.

"These measures, alongside the 3 billion euros the company received last year from the Dutch State, will provide an important safeguard against any further declines in financial markets," Aegon said.

Analyst Ton Gietman of Petercam Securities said that Aegon's loss was larger than expected, and noted that the figures provided proof that the company had needed its bailout from the Dutch government to maintain its credit ratings.

In a note yesterday morning, Gietman said that Aegon would likely suffer from lower commissions and fees in 2009 and further losses on investments, notably its bond portfolio.

However, he said the company was unlikely to need further outside capital and shares appear undervalued at current levels. He repeated a "buy" recommendation on shares with a one-year price target of 5.50 euros.


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