A-day momentum continues at AEGON.

Profits

AEGON UK’s underlying operating earnings for the first nine months of 2006 were £127m, an increase of 22% on the same period in 2005. The increase in earnings reflects growth in the business, stock market levels and continued focus on expenses. It is also the result of the strong increase in new business levels across a profitable business mix.

The value of new business figure (VNB), which reflects the value attributed to new business volumes for AEGON UK for the first nine months of 2006, increased to £84m, a rise of 68% compared with the comparable period in 2005. The increase in VNB, which exceeds the increase in new life and pensions business, indicates an improvement in new business margins over the period.

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’s Individual and Corporate businesses increased by 56% to £768m in the first nine months of 2006, compared with the same period in 2005. New business in the third quarter rose by 58% compared with 2005 to £269m.

This builds on AEGON’s success in the first six months of 2006, which saw record sales volumes driven by our core strength in pensions and diversification into new product areas. A sustained increase in financial planning activity following A-Day has continued to have a positive effect, in particular on AEGON’s Individual business. New business volumes in individual pensions have risen by 106% from £119m API in the first nine months of 2005 to £246m API in 2006. This has been achieved without changes to AEGON’s pricing strategy. This figure includes an increase of 177% in Self Invested Personal Pensions (SIPPs) new business to £137m API, further reinforcing AEGON’s strong position in this developing market.

AEGON’s individual annuities business – launched in late 2005 – continued to gather momentum, with new business levels in the third quarter rising 23% to £28m API compared with the second quarter of 2006.

Individual protection sales for the first nine months rose by 38% to £31m API. Onshore bonds rose 39% to £30m API, while offshore bonds rose 46% to £44m API. Within the corporate business, group pensions sales rose 51% to £305m API.

AEGON Asset Management new business, reflected in the “Off balance sheet” figures in the table, saw further success in retail sales with first nine months sales up 42% to £329m.

AEGON’s UK Chief Executive, Otto Thoresen says,

“AEGON UK has performed strongly in the first nine months with significant growth in underlying earnings, and increased new business volumes across a profitable business mix, reflecting our continued strength in pensions and diversification into new markets.

“A-Day has continued to have a positive effect, and accounts for a proportion of the new business increase. Individual pensions new business volumes have been outstanding, and I am delighted we are gaining valuable ground in SIPPs. Our protection business has also seen considerable growth and our developing individual annuities business is going from strength to strength – further evidence of our successful move to increase our presence in non-pensions business.

“During the third quarter two important new AEGON developments have brought new thinking to the UK long term savings market, designed to meet real and emerging customer need. AEGON’s Five for Life investment product offers a guaranteed income for life in retirement – but with death benefits and the ability to benefit from stock market growth. Our launch into bulk annuities has brought added flexibility to the SME final salary pensions market. We believe our role as an insurer is to take on risk and provide more certainty for customers as they plan for the future, and these new propositions are a central part of that strategy.

“The Government’s pension reforms gather momentum, and the FSA’s Review of Retail Distribution will be a major catalyst for change. As the Government considers future plans it must be sure that it does not adversely affect existing pension and saving provision. The principal objective of any new initiative must be to reach new customers and to encourage more people to take responsibility for their financial well-being in the future.”

First nine months 2006 results

1 January – 30 September 2006 v 1 January – 30 September 2005

AEGON UK Financial performance

Note VNB post tax and cost of solvency. 2005 figure represents three quarters of full year figures.

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

AEGON Asset Management off balance sheet production (SP)

 -Ends-

Notes to editors

• The reported underlying earnings figure for the period excludes the impact of a charge relating to the acceleration of an incentive scheme in Positive Solutions, in Q3 2005.
• In September 2006, AEGON was the first insurer to offer a variable annuity style product in the UK market. Five for Life is a lump sum investment product offering a guaranteed income for life, the ability to benefit from stock market growth and the potential for death benefits.
• In October 2006, AEGON entered the bulk annuity market offering the Secured Benefits Strategy – which offers SME pensions scheme trustees a phased approach to wind-up, in addition to a standard buy-out product.
• AEGON UK launched into the individual annuities market with an open market option product in the second half of 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, Tenet and Park Row.
• AEGON UK has assets under administration of £45.2 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 £245 billion.

For further information

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