(Bloomberg) -- Aegon Ltd. booked charges tied to a higher mortality rate in the US related to clients failing to seek medical care during the pandemic years. Shares of the Dutch insurer sank.
The company recorded €403 million ($449 million) of charges for the first half of the year, driven by updated mortality assumptions for its life products in the US, the company said in its earnings report Thursday.
Over the past six to eight quarters, “we were getting elevated mortality as a consequence of the Covid years,” outgoing Chief Financial Officer Matt Rider said in an interview. “People had not sought medical care during the Covid years and now are dying at a greater rate.”
The company’s shares slumped as much as 6.7% in Amsterdam, their biggest intraday drop in almost a year and a half, and were down 4.9% to €5.53 at 10:25 a.m.
People are now seeking medical care and “you’re probably going to see the effect of that reduce year by year,” Rider said.
The mortality charge overshadowed otherwise strong underlying results for the period in the US, according to analysts. Operating profit fell short of estimates mainly due to “the unfavorable mortality” charge in the US, said KBC Securities analyst Thomas Couvreuer in a note to clients.
The US business “saw very strong inflows” otherwise, he said.
Aegon’s operating profit dropped 8.3% from a year earlier to €750 million. The operating net income in the Americas sank 12% in the same period to €550 million on the charge, missing the average estimate of €586.9 million in a Bloomberg survey of analysts.
Aegon’s China business was also weaker in the period. The unit was impacted by a lower interest-rate environment coupled with Chinese authorities “implementing new regulation which hampers the growth of the industry in general,” Chief Executive Officer Lard Friese said in an interview.
--With assistance from Joshua Gaunt-Warner.
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