AEGON UK today announces increased new business growth and a 27% increase in profitability for 2007, making it another record year of business performance. During the year, AEGON built important new distribution partnerships to enable it to reach new customers, and achieved significant progress in its product diversification strategy, building on its core pensions market with growth in annuities and protection and in the asset management business.

Increased profits

AEGON’s value of new business figure, which reflects the value attributed to new business volumes and is a key measure of profitability, rose by 27% to £157m. This indicates an improvement in new business margin of 19.1% to 21%. As a result of improved margins, in November AEGON UK announced that its target margin for 2010 would be increased from 20% to 22%.

New business growth driven by Individual business

AEGON’s life and pensions new business rose by 12% compared with 2006, making it another record year in terms of new business volumes. The Individual business saw 18% growth in new business levels. This reflects good growth in individual pensions – up 10% to £381m API. Individual protection new business rose by 15% to £47.1m API, and offshore bonds new business rose 33% to £81m API.

Annuities saw further strong growth, up 41% to £136m API. AEGON launched its individual annuities business in early 2006, and has already become a leading player in this market. During 2007 AEGON developed important new distribution partnerships enabling it to reach new customers with its product range, including with Barclays and extending its links with adviser network Openwork.

AEGON’s Corporate business experienced 2% growth in new business levels, seeing increased contribution levels and new entrants to existing group personal pension schemes. AEGON’s first full year in the bulk annuities market saw new business in line with targets, achieving £100m of premiums. The corporate business is well positioned offering a market leading range of services from third party pension administration through to final salary consultancy to full pension buyout.

After three strong quarters new business activity slowed in Q4 with individual pensions business falling relative to a particularly strong Q4 in 2006. Overall, AEGON continued its good progress in its strategy of product diversification with 30% of new business in 2007 coming from development areas.

AEGON Asset Management

AEGON Asset Management saw significant growth in new business over the year. In the retail fund business, new business rose by 30% to £566m. AEGON’s continued excellence in fixed income drove much of this growth but improved performance in equity funds led to growing demand, in particular for the Ethical equity fund. Equity funds accounted for 16% of retail sales. Institutional sales rose by 6% to £612m.

Commentary

AEGON UK chief executive Otto Thoresen says,

“AEGON has delivered another excellent year’s performance reaching new levels of profitability and record levels of new life and pensions business. We have made important progress in developing our business mix – building on our expertise in pensions but also underlining our position as a leading player in individual annuities and protection.

“I am particularly pleased with the new developments we are seeing in asset management where Andrew Fleming’s team is delivering good equity performance despite volatile market conditions and this has led to growth, particularly on the retail side. Our fixed income capability is still a fundamental strength.

“Last year we established our most significant bank distribution deal to date, with Barclays, bringing AEGON products to new customers. Our aim this year is to continue to diversify our distribution further with more new partnerships.

“With uncertainty over stockmarkets and the A-Day impact subsiding, we are looking at a different market landscape for the year ahead. However, we believe that as a life insurer, one of our roles is to help customers achieve certainty and we will look to develop more solutions to enable them to do so. With a diversified mix of products and using new distribution partners to reach new customers, AEGON UK is well positioned to meet the challenges ahead.”

Full year 2007 results

1 January – 31 December 2007 v 1 January – 31 December 2006

AEGON UK Financial Performance

Note: VNB post tax and cost of solvency

AEGON UK new premium production (API)

AEGON Asset Management

Notes to editors

• In September 2007 AEGON appointed Feilim Mackle, previously at RBS and Standard Life, as managing director of its Individual business, and Steve Clode, previously at Nationwide as Director of Marketing and Customer Strategy.
• AEGON Asset Management appointed AAA-rated Stuart Fraser in October 2007, and announced the appointment of the market-leading property team from Morley in August 2007.
• AEGON’s distribution partnership with Barclays was announced in May 2007 and brings its 5 for Life retirement solution and its market leading business protection proposition to Barclays customers.
• AEGON entered the bulk annuity market in November 2006 targeting the SME market and in May 2007 announced a partnership with UBS, targeting schemes upwards of £300m.
• AEGON has distribution agreements for life and pensions products with Barclays, UBS, Intrinsic, 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 £52.3 billion and employs around 4,500 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