AEGON UK reports record first quarter 2007
- Value of new business increases by 77% to £39m
- Operating earnings increase by 19% to £44m
- Life and pensions new business increases by 37% to £297m
- Individual pensions and annuities are key growth drivers
AEGON UK today announces record profitability and new business volumes for the first quarter 2007. The group has seen ongoing momentum in the individual long-term savings market with good growth in individual pensions and annuities. In the corporate market, AEGON continues to successfully deliver strong customer propositions.
Profits
AEGON UK’s value of new business figure, which reflects the value attributed to new business volumes and is a key measure of profitability, rose by 77% to £39m, compared with the same period in 2006. This indicates an improvement in new business margins over the period. Operating earnings increased by 19% to £44m 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 life and pensions businesses reached £297m, an increase of 37% over the same period 2006.
The new simplified pensions regime continues to deliver momentum in individual pensions, where new business rose 69% to £106m API, compared with 2006. The individual annuity business saw new business increase by 72% to £30m API, and there was 79% growth in offshore bonds to £23m API.
On the corporate side, group pensions new business rose by 10% compared with 2006, and AEGON has seen an encouraging start to its move into the bulk annuity market.
AEGON Asset Management saw a successful first quarter with retail sales up 41% compared with 2006. While the majority of new business is attracted by AEGON’s fixed income expertise, retail equity sales rose significantly compared with 2006, indicating growing market recognition of good equity performance in specific areas such as ethical equities and UK equities.
AEGON’s advisory businesses continue to progress well. Positive Solutions delivered record turnover and recruitment and Origen’s recent partnership with Celtic FC demonstrates the development potential available in the market to financially strong independent financial advice companies.
AEGON UK chief executive Otto Thoresen says,
“AEGON has delivered a powerful start to the year across all areas of the group with increased new business volumes and growth in profitability.
“AEGON’s Individual business has seen the most striking growth with new business volumes up 60% compared with the first quarter 2006. Pensions new business is still strong but we are also seeing increased new business in annuities and asset decumulation, as the baby boomer generation approaches retirement.
“On the corporate side, we’ve seen an encouraging start to our bulk annuities business, with our proposition proving competitive within our target small to medium size business market. We are looking forward to seeing this key development area build over the months and years ahead.
“AEGON has an attractive and diverse range of businesses that meet the emerging needs of the individual and corporate customer. Our aim now is to make our products available to a wider range of customers by extending our distribution strategy and developing new partnerships in the months ahead.”
-Ends-
Notes to Editors
First quarter 2007 results 1 January – 31 March 2007 v 1 January – 31 March 2006
AEGON UK financial performance
| 2007 £m | 2006 £m | % +/- | |
|---|---|---|---|
| Operating earnings | 44 | 37 | 19% |
| Value of new business | 39 | 22 | 77% |
Note: VNB post tax and cost of solvency
AEGON UK New premium production (API is AP+1/10 SP)
| Annual premiums | 114 | 110 | 3% |
|---|---|---|---|
| Single premiums | 1,828 | 1,172 | 56% |
| API | 297 | 217 | 37% |
AEGON Asset Management off balance sheet production (SP)
| Retail | 175 | 124 | 41% |
|---|---|---|---|
| Institutional | 8 | 188 | (96%) |
- Earlier this week AEGON announced a new distribution deal with Dunfermline Building Society, offering life assurance and protection products in a new multi-tie arrangement through its branch network.
- On 4 May, AEGON and Openwork announced an extension of their partnership so that AEGON’s 5 for Life retirement planning product is now available via Openwork’s 2,500 advisers
- In April, AEGON’s IFA company Origen announced a partnership with
Celtic FC offering financial advice to its supporters with the launch of Celtic FC Money. - In November 2006, AEGON entered the bulk annuity market offering the Secured Benefits Strategy – which offers SME pension scheme trustees a more flexible solution, in addition to offering a standard buy-out product.
- AEGON 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, Park Row and Dunfermline Building Society.
- AEGON UK has assets under administration of £49.8 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.
Lesley McPherson