Bloomberg News

SNS Reaal Drops Profit Target as Market Turmoil Hits Insurer

November 17, 2011

(Updates with CEO comment in third paragraph, shares in second, fourth.)

Nov. 17 (Bloomberg) -- SNS Reaal NV, the Dutch financial- services firm that must repay 565 million euros ($761 million) of state aid, dropped its earnings target after investment income at its insurance unit was hurt by market turmoil.

Shares of SNS dropped as much as 4.7 percent today after the Utrecht-based firm said its “medium to long-term normalized earnings ambition” of 400 million euros is under pressure. It refrained from giving a new target “in view of the volatile and challenging market environment.”

“The most important driver are the financial markets that are putting pressure on investment income at Reaal and Zwitserleven,” SNS’s insurance units, Chief Executive Officer Ronald Latenstein told investors today. “Also, costs related to large regulatory projects such as Basel III and Solvency II need to be digested.”

The shares dropped as much as 8.3 cents to 1.69 euros in Amsterdam trading today and were down 3.9 percent to 1.70 euros at noon local time, extending the decline so far this year to 47 percent. The company has a market value of 489 million euros.

Latenstein last year set out to wind down international businesses and some Dutch commercial real-estate loans to revive profit. The firm had 5 billion euros in property finance loans outstanding at the end of September. At the same time, the firm is taking steps to free up 700 million euros in capital by the middle of 2012 to help repay its bailout.

SNS last year cut its earnings goal to about 400 million euros from a range between 450 million euros and 500 million euros, citing low interest rates and the planned asset wind- downs. The company’s so-called normalized earnings exclude property finance and measures taken to free up capital.

The firm received 750 million euros from the Netherlands in 2008 and another 500 million euros from Foundation Beheer SNS Reaal, its largest shareholder. SNS sold shares in 2009 to help repay 250 million euros of aid.

--Editors: Keith Campbell, Francis Harris.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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