(Updates with details)
By Bart Meijer
AMSTERDAM, May 18 (Reuters) - Dutch insurer NN Group has reported an unexpected 33 percent rise in first-quarter core profits, buoyed by cost-cutting measures in the Netherlands as well as an improved performance at the divisional level.
Operating profits rose to 406 million euros ($452 million), from 305 million euros in the same quarter last year, beating the average of analysts' forecasts of 316 million euros.
"Whilst the operating result is always volatile from quarter to quarter, the beat was at least in part down to a strong underlying performance," analysts for Bernstein said in a note. "The stock has rallied strongly over the last month, but we still expect a positive reaction this morning."
NN's share price closed on Wednesday at 31.39 euros.
The company's closely-watched capital adequacy measure under Europe's new Solvency II rules for insurers slipped to 238 percent of the minimum requirement from 241 percent at the end of 2016.
NN said that on a pro-forma basis to take account of its 2.5 billion-euro deal to acquire smaller local rival Delta Lloyd , the combined Solvency II ratio would be 180 percent.
Chief Executive Lard Friese said the Delta Lloyd purchase would help by "expanding our product offering and further broadening our distribution network."
The benefits of scale would also lead to "a materially higher free cash flow available to shareholders over time."
In the first quarter, sales of new policies were up 29 percent in Europe and 31 percent in Japan, led by strong sales of corporate life insurance policies.
NN said that it would consolidate Delta Lloyd's results in its second-quarter results in August. ($1 = 0.8976 euros) (Reporting by Bart Meijer and Toby Sterling; Editing by Greg Mahlich)