Customer focus delivers robust performance - AEGON UK first year results 2006
- First three months underlying earnings increase by 33% to £44m
- First three months life and pensions new business increases by 51% to £217m
- Strong growth in retail funds, onshore bonds, annuities and protection
- Corporate and individual customer focus delivers results
Profits
AEGON UK’s underlying operating earnings for the first three months of 2006 were £44m, an increase of 33% on the same period 2005. 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 first quarter increased by 51% to £217m compared with the same period in 2005. This is the fourth consecutive quarter of new business growth. Compared with the fourth quarter 2005, new business rose by 11%.
This trend reflects continued momentum across all product areas. A-Day, as expected, has generated a significant need for advice for both corporate and individual clients. As a result of AEGON’s strong position in the IFA pensions sector across the board and the advance preparations put in place we have seen strong growth in pensions new business levels.
At the same time there was sustained growth in non-pensions areas. In quarter one 2006, non-pensions new business accounted for £57m compared with £42m in 2005. Within this, individual protection new business rose 59% and onshore bonds rose by 58% compared with first quarter 2005. Individual annuities single premium new business rose by 127% to £177m – with the launch into the open market for annuities accounting for the major part of this increase.
In asset management, the retail funds business saw significant growth, rising by 97% to £124m. Overall, off balance sheet asset management new business rose to £303m, an increase of £223m compared with 2005.
Overview
Commenting on the first quarter results, AEGON UK CEO Otto Thoresen says,
“AEGON UK has started the year strongly, with a continued rise in underlying earnings and impressive new business growth across all areas of the group.
“A-Day has had a positive impact on group and individual pensions, reflecting our strength and expertise in this area. But this was not achieved at the expense of growth in other areas. We have seen continued momentum in areas such as individual protection and onshore bonds. Our move into the individual annuities market, where we announced further investment in January, has enjoyed considerable success and gives encouragement for future development plans.
“In asset management the increase in new business for our retail funds team has been particularly pleasing.
“The restructuring of our life and pensions businesses, in October 2005, to centre around the corporate and individual customer has brought greater focus to our businesses and enabled us to respond more quickly to customer needs. AEGON UK will continue its strategy of increasing its presence in non-pensions markets such as individual protection and annuities. The reorientation or our business towards our customers has been fruitful and we believe that there are still significant benefits to come.”
First quarter 2006 results: 1 January - 31 March 2006 v 1 January – 31 March 2005
AEGON UK Financial performance
| 2006 £m | 2005 £m | % +/- | |
|---|---|---|---|
| Underlying earnings | 44 | 33 | 33% |
AEGON UK New premium production (API is AP+1/10 SP)
| 2006 £m | 2005 £m | % +/- | |
|---|---|---|---|
| Annual premiums | 110 | 81 | 36% |
| Single premiums | 1067 | 626 | 70% |
| API | 217 | 144 | 51% |
AEGON Asset Management off balance sheet production (SP)
| 2006£m | 2005 £m | % +/- | |
|---|---|---|---|
| Retail | 124 | 63 | 97% |
| Institutional | 179 | 17 | 952% |
| Total | 303 | 80 | 279% |
-Ends-
Notes to editors
- The reported earnings figure for the quarter, reflecting an exceptional charge of £7m relating to the acceleration of an incentive scheme in Positive Solutions, was £37m – a rise of 12% compared with 2005.
- AEGON UK launched into the individual annuities market with an open market option product in late 2005 and in January 2006 announced further investment in this market, creating 40 new jobs in its Edinburgh headquarters. Previously it only offered annuity products to its own pension customers.
- 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, Clarkson Hill and Park Row.
Lesley McPherson