(Adds share movement, analyst comment)
AMSTERDAM, May 11 (Reuters) - Aegon, the Dutch insurer that does most of its business in the United States, on Thursday reported first-quarter net income of 378 million euros ($411 million), helped by the performance of its investment portfolio.
The earnings were stronger than analysts had forecast, but concerns about the impact of Europe's new Solvency II regime for insurers hit Aegon's shares, which were down more than 5 percent.
The company said its solvency ratio, a gauge of financial strength, remained flat at 157 percent under Europe's new Solvency II regime. This is designed to ensure the insurance industry has enough capital to pay all claims even in difficult business circumstances.
Aegon said it was forced to move an extra 100 million euros to its Dutch life insurance subsidiary in order to bolster solvency, money it normally would have sent "upstream" to the group level.
That followed a proposal in April by the European Insurance and Occupational Pensions Authority (EIOPOA) to gradually lower the "Ultimate Forward Rate" at which insurers may discount liabilities in the distant future. The net effect will be to increase those liabilities, forcing insurers to hold more capital against potential claims.
"Aegon is committed to further increasing the capital buffer of its Dutch unit through decisive management actions, including improving the risk profile, optimising the portfolio and providing group capital support," Aegon said.
CEO Alex Wynaendts told reporters that shifting money to the Dutch life business resulted in an increase in its solvency from 135 percent at year-end, but he would not be more specific.
ING analyst Albert Ploegh, who has a "hold" rating on Aegon's shares, said the earnings were better than expected but uncertainty over solvency was continuing to plague the company. Insurers' ability to pay dividends are linked to solvency.
Aegon promised a more complete discussion of the Ultimate Forward Rate impact in the second quarter.
Analysts polled by the company had forecast net income at 159 million euros, up from 143 million euros in the same period a year earlier.
Fair value adjustments to Aegon's investment portfolio were a negative 50 million euros, compared with a negative 358 million euros in the same period a year ago.
On an operational basis, the company said it had benefited from higher interest rates in the United States, where it is known for the Transamerica brand.
Underlying U.S. pretax income rose to 313 million euros from 283 million in the same period a year ago.
Aegon said "benefits from expense savings and higher fee income as a result of favourable equity markets more than offset" higher costs at its U.S. life insurance business, where payouts were higher because more people died earlier than expected.
$1 = 0.9204 euros Reporting by Toby Sterling; Editing by Jane Merriman and Mark Potter