) recently announced that it has made certain changes to its
accounting policies associated with deferred policy acquisition
costs and longevity reserves. These changes have come into effect
from Jan 1, 2014.
These changes are expected to improve the consistency,
transparency and comparability of the financial results of AEGON.
They will be reflected in the first-quarter 2014 financial
Per the revised accounting policy, deferred policy acquisition
costs will only include those costs that are directly related to
renewal of insurance or acquisition contracts. Under the previous
policy, the cost included additional sales support costs that
could be deferred.
Moreover, from Jan 1, 2014, the longevity reserves of AEGON have
been established on the prospective mortality tables in
Netherlands instead of observed mortality tables. This new
adoption ensures that AEGON's International Financial Reporting
Standards reserving for longevity is consistent with that of its
regulatory solvency calculations and internal economic framework.
The change in longevity reserves is expected to boost bottom-line
growth. However, growth will likely be partially offset by the
proposed new accounting policy. AEGON expects that both these
changes taken together will be accretive to its earnings before
tax which is expected to increase by €80 million for 2014.
The Zacks Consensus Estimate for 2014 increased 6.8% during
the last 30 days to 79 cents a share. However, the company
expects a decreased shareholder's equity going forward that might
lead to a debt-to-capital ratio deterioration due to the new
AEGON N V (AEG): Free Stock Analysis Report
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Moreover, AEGON announced $550 million redemption of junior
perpetual capital securities in order to improve its gross
financial leverage ratio and bring it within the range of 26% to
30%. Gross leverage ratio improved by 120 basis points and is
also expected to improve the future leverage costs.
AEGON presently carries a Zacks Rank #2 (Buy Other top-ranked
multi line insurers worth considering include
CNO Financial Group, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).