Underlying earnings before tax
AEGON's underlying earnings before tax increased 3% compared with the first quarter 2011 to EUR 425 million in the first quarter of 2012. This increase is the result of a strong delivery on cost reduction programs, higher fee-based earnings due to favorable equity markets and favorable currency movements. Earnings were negatively impacted by adverse mortality experience and lower fixed annuity earnings in the Americas, and in the Netherlands by poor morbidity experience.
Underlying earnings from the Americas amounted to EUR 292 million. The 13% decrease compared to the first quarter of 2011 is primarily due to unfavorable mortality results ( EUR 12 million) and lower fixed annuity earnings, as the product is de-emphasized, partly offset by higher fee-based earnings. In addition, earnings were impacted by recurring charges for Corporate Center expenses ( EUR 7 million) and an increase in employee benefit expenses ( EUR 10 million).
In the Netherlands, underlying earnings decreased 2% to EUR 79 million. The decline was mainly the result of adverse claim experience on disability products in the non-life business offset by a higher contribution from AEGON's growing Dutch mortgage loan portfolio.In the United Kingdom, underlying earnings more than doubled to EUR 29 million. The strong improvement in earnings was driven by the successful implementation of the cost reduction program in AEGON's businesses in the United Kingdom and the non-recurrence of exceptional charges recorded in the previous year. Underlying earnings from New Markets increased 29% to EUR 88 million. The increase was mainly the result of higher underlying earnings at AEGON Asset Management as a result of the effects of growth, increased fees and phasing of expenses, only partly offset by lower underlying earnings from Central & Eastern Europe and Variable Annuities Europe. Total holding costs decreased 24% to EUR 63 million as part of AEGON's Corporate Center expenses are now charged to the operating units. This change reflects the various services and support provided by the Corporate Center to operating units. The first quarter 2012 charge to operating units amounted to EUR 16 million. Net income