Ageas SA, the majority owner of Belgium’s biggest life insurer, reported insurance profit that beat analyst estimates and announced a stock buyback as a lockup on 78.9 million shares held by BNP Paribas SA expires.

Second-quarter profit from insurance operations was 147.6 million euros ($182.8 million) compared with a loss of 23.6 million euros a year earlier, the Brussels-based company said today in a statement. Analysts had projected insurance profit of 133.5 million euros, the average of three estimates in a Bloomberg News survey.

Claim payments and other expenses as a percentage of premiums fell to less than 100 percent for the first time since 2008, indicating profitable underwriting after Ageas raised premium rates and claims fell. The insurer will spend as much as 200 million euros on buybacks, or half the amount it got last month from a settlement with ABN Amro Group NV. The buyback announcement coincides with the end of a six-month lockup, which barred BNP Paribas from selling the Ageas shares it got from the conversion of Fortis Bank SA’s hybrid bonds.

“Especially U.K. and Belgian non-life results were strong,” Albert Ploegh, an analyst at ING Groep NV in Amsterdam who recommends buying the shares, wrote in an investor note.

“Belgian life was weaker, explained by higher effective tax rate and lower reinvestment yields.”

Ageas rose as much as 4.1 percent to 1.716 euros on Euronext Brussels, the highest intraday value since March 27, and traded 5.8 cents higher at 1.706 euros by 10:51 a.m. local time. The shares have produced a return, including reinvested dividends, of 47 percent in the past 12 months.

The insurer said it held 1.5 billion euros of available cash at the end of June after the settlements with Fortis Bank, BNP Paribas and ABN Amro brought in almost 1.07 billion euros in the first half.

Shareholders’ equity, excluding the value of a call option on the BNP Paribas shares held by the Belgian government, rose to 8.69 billion euros from 8.1 billion euros at the end of March.

Unrealized gains on its sovereign bond holdings, which account for 53 percent of the insurer’s investments, increased by 293 million euros in the quarter to 1.25 billion euros at the end of June, driven by gains in Belgian, Austrian and French bonds. Paper losses on Portuguese debt also narrowed.

The insurer also said it agreed to buy as much as 2 billion euros of infrastructure loans in the next two to three years in a partnership with Natixis SA, seeking to restore investment yields after selling most of its higher-yielding Italian and Spanish government bonds.

“Given the large exposure to lower yielding sovereigns, the de-risked balance sheet and strong capital position, the decision to re-risk partly is understandable,” ING’s Ploegh wrote.

The overall investment yield in the first half has shrunk about 12 basis points from the same period a year earlier, Chief Executive Officer Bart De Smet told analysts and investors on a conference call.

Belgium’s AG Insurance SA is pricing life-insurance contracts to get an investment margin of about 90 basis points, he said. AG also started charging a management fee of 30 basis points on funds under management for Belgian life inflows to compensate for lower investment yields.

Ageas reduced the value of the BNP call option by an additional 87 million euros in the quarter to 117 million euros at the end of June. BNP Paribas shares are trading for less than half of the 66.672 euro-a-share strike price of the option. The insurer also took a 38 million-euro loss in the quarter on the value of its 44.7 percent stake in Royal Park Investments SA, the company set up in May 2009 to take over a pool of distressed debt securities from Fortis Bank.

Source: Bloomberg