Archive for February, 2011

Aegon net income falls 19 percent in Q4

Thursday, February 24th, 2011 | Finance News

AMSTERDAM – Aegon NV, the bailed-out life insurer that does most of its business in the U.S., said Thursday that fourth-quarter earnings fell 19 percent and it will issue new shares to raise capital needed to repay Dutch state aid.

Fourth-quarter net income was euro318 million ($438 million), down from euro393 million in the same period a year earlier, mostly due to impairment and restructuring charges. Aegon is owner of Transamerica and World Financial Group.

The company said it will issue 173.6 million new shares, representing about 10 percent of the present total, to help repay the remaining euro2.25 billion it owes the state from support it received during the 2008 financial crisis.

Aegon had a market capitalization of around euro9.4 billion ($12.9 billion) Thursday. Shares fell 3.8 percent to euro5.24 in early trading in Amsterdam.

The company said it plans to pay euro750 million back to the state as soon as the share issue is completed, and the balance in June "conditional upon financial markets not deteriorating materially."

The quarterly figures include a euro208 million charge to wind down businesses selling life insurance products to highly paid executives at smaller businesses and banks.

Aegon said its "underlying earnings" — a nonstandard measure that strips out the effect of investment gains and one-time charges — rose around 3 percent in the fourth quarter from year ago.

The company said it plans to pay a dividend for the first time since 2008, euro0.10 for the second half of 2011, payable in 2012.

Chief executive Alex Wynaendts said the results reflected a year of "improving our risk-return profile and executing significant cost reduction."

Aegon noted it has cut its exposure from "peripheral European sovereign bonds" — referring to bonds issued by countries such as Greece, Ireland and Portugal — to euro1.1 billion from euro1.5 billion.

It noted it expected further charges from winding down its executive life insurance programs and selling the reinsurance arm of its Transamerica business this year, but did not indicate how large those charges might be.

(This version Corrects previous year's net income in 2nd paragraph and percentage that earnings fell in headlines and 1st paragraph.)

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Obama administration says committed to helping homeowners

Thursday, February 24th, 2011 | Finance News

WASHINGTON (Reuters) – The Obama administration on Thursday pushed back against Republican moves to kill several of its foreclosure prevention programs, saying they would close the door on struggling homeowners facing the worst U.S. housing crisis in generations.

"The administration remains committed to reaching eligible homeowners to give them every opportunity to avoid foreclosure and will continue working to make our programs as effective as possible," an Obama administration spokesperson said on Thursday.

Republicans in the House of Representatives earlier announced they would consider four bills aimed at killing different administration efforts to keep borrowers in their homes.

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Eni: Libyan upheaval cuts 1.2M barrels from market

Thursday, February 24th, 2011 | Finance News

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ROME – Libya's violent upheaval has taken 1.2 million barrels of oil off the global market as energy plants and ports are shut down, according to Italy's Eni, the largest producer in Libya.

The figure represents most of Libya's total daily production, which before the crisis was about 1.6 million barrels of crude. The country sits on the biggest proven oil reserves in Africa.

More than the shortfall, which experts say could be made up for by increased output in other countries, it was the "sense of general insecurity that can be a trigger that sets off speculation" on prices, CEO Paolo Scaroni told reporters Thursday.

Crude prices have jumped 20 percent to two-year highs in just a week, since Libya's uprising against the embattled regime of Moammar Gadhafi escalated and turned violent. Investors worry that other bigger producers, such as Iran or Saudi Arabia, could be engulfed by similar chaos.

The impact of Libya's turmoil was that "there are 1.2 million barrels less" on the market, Scaroni said. "That's not a lot, but it's something."

Earlier this week, Eni suspended its Greenstream pipeline supply of natural gas from Libya into Italy because of the security conditions.

The suspension means Eni's normal daily production of both oil and gas from Libya has dipped from 280,000 barrels of oil equivalent to some 120,000 barrels, company officials said.

The International Energy Agency said later Thursday that between 500,000 and 750,000 barrels of crude oil per day — below Eni's figure — has been taken off the market in the wake of the uprising. The Paris-based agency cites "industry reports" for its estimate, which it says is less than 1 percent of global daily oil consumption.

Spanish energy company Repsol, which had earlier said production was suspended, said its output of oil in Libya was now slightly above 50 percent of capacity.

Repsol-YPF Chairman Antonio Brufau said the company is producing about 160,000 barrels of crude daily from fields it runs with partners. That's down from 300,000 barrels per day production for Repsol in Libya before the crisis started.

Brufau says the chaos in Libya will hurt Repsol financially but did not say by how much.

French oil giant Total said it started to wind down its operations, which average of 55,000 barrels per day last year, while Germany's Wintershall shut down operations that produced up to 100,000 barrels of oil per day.

Italy, which takes 12 percent of its natural gas from Libya, is having to import more from other countries, including Norway, Algeria and Russia, Eni said.

Italian government and energy officials have been reassuring Italians this week that the effects on Libyan energy production won't trigger shortages for consumers or a need to resort to strategic reserves of natural reserves.

Repsol's Brufau said several exploration projects that the company plans for Libya might have to be delayed until next year because of the chaos.

Repsol installations weren't damaged, said Brufau. Most of the workers operating the oil production facilities are Libyans. "The situation, without being good, is not disastrous," the Repsol chairman said.

He said he couldn't predict where oil prices will go.

"I'd prefer that crude goes back to $85 or $90 (a barrel), and that we don't have to work with $130 because of the conflict," Brufau said.

Eni's Scaroni indicated oil market watchers were caught off guard by price jumps.

"If the international political situation calms down, the price of petroleum should drop under $100 a barrel," the Italian news agency ANSA quoted Scaroni as saying. "Nobody expected that petroleum could have jumped to $120 suddenly."

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Alan Clendenning in Madrid and Greg Keller in Paris contributed to this report.

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