UPDATE 1-NN Group's annual profit pips forecast on higher investment income

(Updates with details of earnings, quote from CEO)

AMSTERDAM, Feb 18 (Reuters) - NN Group NV, the largest Dutch insurance company, posted a better-than-expected 2020 operating profit of 1.89 billion euros ($2.28 billion), as investment margins improved while the impact of the pandemic eased in the second half of the year.

The company’s annual profit came in better than the 1.79 billion euros reported a year earlier, and was ahead of average analyst estimates, according to Refinitiv data, of 1.70 billion euros.

Chief Executive Officer David Knibbe said it had been a “strong financial and commercial performance, even though it clearly was an unprecedented year.”

Operating profit in the second half rose 9% on-year, with the company’s largest division - life insurance in the Netherlands - benefiting from investments in higher-yielding assets, he said.

NN Group’s second-half operating profit at the life insurance division surged 26% to 500 million, also benefiting from lower expenses.

The Dutch company also benefited from higher investment gains and lower impairments in its full-year group investment portfolio, which netted out to 472 million euros, up from 241 million euros in 2019.

The company proposed a final dividend of 2.33 euros per share, up 7.9% from 2019, and announced a new share buyback programme of 250 million euros.

$1 = 0.8303 euros Reporting by Toby Sterling; Editing by Himani Sarkar and Sherry Jacob-Phillips