Profits

AEGON UK’s earnings for the first nine months of 2005 were £ 83 m, an increase of 8% compared with the same period in 2004. Earnings for quarter three 2005 were £16 m, including a charge of £23 m relating to an incentive plan within IFA business Positive Solutions. The sustained growth in underlying profits reflects a continued focus on a more profitable business mix, as well as ongoing expense management and positive stock market performance in 2005.

AEGON UK has accelerated  the acquisition of the remaining 40% of IFA business Positive Solutions, which will be completed in early 2006. AEGON has also accelerated an incentive plan for Positive Solutions advisers and staff. Earnings in the third quarter include a charge for this of £23 million. It is expected that further charges relating to this will total £19 million, most of which will be in two tranches of £8 million in each of the fourth quarter 2005 and first quarter 2006.

New business

Based on the standard industry measure of new annual premiums plus one-tenth of new single premiums (API), total new business for the quarter for AEGON UK life assurance operations rose 6% to £170 m, compared with the same period in 2004. This follows an increase of 7% in quarter two over the same period last year. Sales for the first nine months were flat at £491 m.

Off balance sheet asset management new business rose to £278 m for the quarter, an increase of over £250 m compared with 2004. This reflects a continued strong demand for fixed income capability from both the institutional and retail markets.

Aggregate new business growth for AEGON UK in the first nine months was 17%, to £586 m

Overview

Commenting on the results, AEGON UK CEO Otto Thoresen says,

“AEGON UK has delivered a successful third quarter. Our continued strong underlying earnings reflect a more profitable life and pensions business mix, with efficient pricing. Stock market levels and continued attention to expense management have also played an important part.

“At the same time we have put in place changes which take the AEGON UK group forward to the next stage in its development.

“We confirmed we have brought forward the completion of our acquisition of Positive Solutions, one of the UK’s leading IFA companies. Related charges linked to an incentive plan have had, and will have an impact on earnings in the short term. However we believe financial advice will remain a critical element in addressing the UK’s savings gap and we see significant opportunities in this arena.

“This quarter we have seen more strong flows of business into AEGON Asset Management as a result of its continued excellence in fixed income. We must now continue to build further capability in equities management. This week we appointed Andrew Fleming as managing director of AEGON Asset Management, and this marks the beginning of the next stage of development for Asset Management.

“We have also refocused our life and pensions businesses, putting our target customers at the centre of strategy. AEGON UK is now better placed to demonstrate our competitive advantage in the corporate market, where we see considerable potential growth. At the same time, we plan to create better propositions in the individual market.

“AEGON UK has a distinctive position as a group providing life and pensions solutions, asset management capability and financial advice. The changes we have put in place in recent weeks will build on these strengths and ensure AEGON plays a leading role in the UK long term savings market in the future.”

1 January - 30 September 2005 v 1 January – 30 September 2004

AEGON UK New premium production (API is AP+1/10 SP)

AEGON UK off balance sheet production (SP)

AEGON UK aggregate production

-Ends-

Notes to editors

• Earnings of £83 m refers to income before corporation tax excluding net gains and losses on investment and impairment charges
• In early October, AEGON UK identified 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 businesses, 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 in recent weeks including £300 m to Nottingham County Council and £185m to Lloyds Superannuation fund, although these mandates are not yet fully reflected in the figures.
• AEGON UK has distribution agreements for life and pensions products with Openwork, St James’s Place, Thinc Destini, Lighthouse Group, Principality Building Society and Burns Anderson.
• AEGON UK has assets under administration of £42 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.

For further information

Lesley McPherson
Head of Media
T. 0131 549 3782 | M. 07740 897 541
lesley.mcpherson@aegon.co.uk