Diversification pays dividends - AEGON UK full year results 2005
- Underlying operating earnings for 2005 increase by 32%
- Quarter 4 life and pensions new business rises by 16%
- Full year life and pensions new business increases by 4%
- Asset management new business increases six-fold to £1,032m
Profits
AEGON UK’s underlying operating earnings for 2005 were £144m, an increase of 32% on 2004. Over the fourth quarter underlying operating earnings rose by 21% to £40m.
The reported annual earnings figure, reflecting an exceptional charge of £33.5m relating to the acceleration of an incentive scheme in Positive Solutions made in the third and fourth quarters, was £111m – a rise of 2% compared with 2004.
The increase in earnings reflects ongoing higher stock market levels, continuing focus on expense management and increased business diversification.
New business
Based on the standard industry measure of new annual premiums plus one-tenth of new single premiums (API), new business for AEGON UK life assurance operations in the fourth quarter increased by 16% compared with the same period in 2004. New business during 2005 rose 4% to £687m compared with 2004.
During 2005 non-pensions business accounted for 32% of AEGON UK new business, compared with 24% in 2004. This reflects strong growth in developing areas, for example in individual protection, where new business rose by 38% compared with 2004; group risk, up 28% and onshore bonds, up 233%.
Off balance sheet asset management new business rose to £1,032m, an increase of £889m compared with 2004. This reflected continued strong demand for AEGON’s fixed income capability from the retail and institutional markets.
Overview
Commenting on the 2005 results, AEGON UK CEO Otto Thoresen says,
“AEGON UK has delivered a healthy financial performance and the results demonstrate that our strategy of diversification has paid dividends.
“In life and pensions we have seen substantial new business growth in areas such as group and individual protection, onshore bonds and importantly, individual annuities, where we recently announced further investment. Our two new business units, concentrating on corporate and individual customers will improve our insight into customer needs and make us more responsive to market opportunities.
“AEGON Asset Management has had an excellent year, winning a number of major institutional mandates and enjoying increased success in the retail market. This has been driven by growing recognition and appetite for AEGON’s fixed income expertise.
"Looking to the future, changing demographics will mean changing lifestyles and working patterns, and as a result changing customer needs. AEGON continues to position itself today to innovate and develop the new generation of products that will meet the needs of tomorrow’s customers.”
1 January - 31 December 2005 v 1 January – 31 December 2004
AEGON UK New premium production (API is AP+1/10 SP)
| 2005 £m | 2004 £m | % +/- | |
|---|---|---|---|
| Annual premiums | 368 | 378 | (3%) |
| Single premiums | 3,185 | 2,844 | 12% |
| API | 687 | 662 | 4% |
AEGON UK off balance sheet production (SP)
| 2005 £m | 2004 £m | % +/- | |
|---|---|---|---|
| Total | 1,032 | 143 | 622% |
-Ends-
Notes to editors
- In early October, 2005 AEGON UK broadly segmented its two target markets as individuals and corporates. It has reconfigured its life and pensions businesses putting the customer at the centre of strategy, and announced the creation of two new business units, AEGON Corporate and AEGON Individual, to better respond to the needs of these markets.
- AEGON UK announced the appointment of Andrew Fleming as Managing Director, AEGON Asset Management on 8 November 2005
- AEGON Asset Management UK has won several major fixed income institutional mandates including £300m to Nottingham County Council and £185m to Lloyds Superannuation fund.
- AEGON UK has distribution agreements for life and pensions products with Openwork, St James’s Place, Thinc Destini, Lighthouse Group, Principality Building Society, Burns Anderson and Park Row.
- AEGON UK has assets under administration of £44 billion and employs around 4,000 staff. AEGON UK is part of the AEGON Group, which is one of the world’s largest listed insurers and has assets under management of £200 billion.
Lesley McPherson