ING, Aegon Report Higher Profit, Helped by U.S. Life Insurance

Nov. 10 (Bloomberg) -- ING Groep NV, the largest Dutch financial-services company, and smaller competitor Aegon NV reported unexpected gains in third-quarter profit, helped by sales of life insurance in the U.S. The shares of both companies rose.



Net income at ING rose 21 percent to 1.88 billion euros ($2.21 billion), the Amsterdam-based company said today. Profit at Aegon, based in The Hague, increased by 25 percent to 643 million euros. Both companies were expected to report lower earnings, according to surveys of analysts by Bloomberg News.



ING's insurance earnings from the Americas tripled on higher sales of U.S. life policies. The company, which gets about half its profit from insurance and half from lending, also benefited from online banking and a cut in bad-loan provisions. Aegon's profit from the Americas jumped 44 percent as the insurer sold more savings plans tied to stock-market performance.



Both companies ``were helped by higher life insurance results in markets like the U.S.,'' said Jan-Willem Nijkamp, a fund manager at Tielkemeijer & Partners in Rotterdam. ``The difference is that Aegon is more focused on more mature markets like the U.S. and the Netherlands, while ING is expanding more aggressively in growth markets.''



ING shares rose 2.7 percent to 25.90 euros at 10:37 a.m. in Amsterdam, valuing the company at 57 billion euros. Aegon's stock climbed 1.3 percent to 13.17 euros. Aegon shares have gained 31 percent this year and ING's have risen 16 percent.



Shares of Hannover Re, the world's fourth-largest reinsurer, dropped as much as 5 percent after the company cut its 2005 profit forecast for a second time on claims from U.S. hurricanes. Shares of Britain's Royal & Sun Alliance Insurance Group Plc were little changed after the company had a 183 million-pound ($319 million) profit in the third quarter on asset sales.



ING `Positive'



ING is ``positive'' about the rest of this year, Chief Executive Officer Michel Tilmant said in a statement. Savings from measures including job cuts in the Netherlands, Belgium and Luxembourg will amount to more than 460 million euros in coming years, ING said. Tilmant, 53, is expanding online banking and pensions in faster-growing markets including China and India.



Revenue rose 5.5 percent to 18.1 billion euros in the quarter. Profit from banking climbed 45 percent to 901 million euros, helped by a 57 percent increase in earnings at the phone and Internet-based bank ING Direct.



Earnings from insurance climbed 5 percent to 977 million euros in the third quarter. Insurance earnings in the year-earlier period included a 382 million-euro gain from the sale of part of ING's Dutch equity portfolio.



The company gets about 35 percent of pretax profit from the Netherlands, the largest single market, and 27 percent from North America. In North America, the company is one of the top five providers of retirement services and life insurance.



Aegon



Aegon Chief Executive Don Shepard, 59, is aiming to bolster profit by focusing on products such as variable annuities, stock- linked retirement plans, in the U.S.



``In the United States there were notable increases in life sales to institutional clients as well as in Aegon's variable annuity business sold to individuals,'' Shepard said today.



Aegon's pretax earnings from the Americas, its largest market, rose 44 percent to 638 million euros in the third quarter. Profit before tax in the Netherlands, its No. 2 market, rose 2 percent to 261 million euros. Earnings in the U.K. dropped 38 percent to 45 million euros.



The company is looking outside its main markets for growth. Last month, Aegon completed the acquisition of Nationwide Towarzystwo Ubezpieczen na Zycie SA, entering the Polish market as part of a plan to expand in Eastern Europe.



In August, Aegon said it plans to set up a fund management venture in China, as it seeks to sell corporate pensions in the world's most-populous nation.