May 7, 2008 Strong underlying performance (up 9%); net income affected by market conditions

 

  • Strong business performance results in a 9% rise in underlying earnings before tax

 

  • Operating earnings and net income affected by recent turmoil in world financial markets

 

  • AEGON reports no significant impairments, reflecting high quality of investment portfolio

 

  • AEGON confident it will meet 2010 value of new business target despite decline in first quarter

Chairman’s Statement
AEGON’s Chairman of the Executive Board and CEO Alexander Wynaendts stated:

"AEGON’s businesses continued to demonstrate strong underlying performance, despite the turbulent environment. Retail sales progressed well during the quarter, in particular in the US and the Netherlands. The downturn in financial markets and a weak US dollar resulted in AEGON reporting considerably lower operating earnings and net income for the first quarter. Since the end of the quarter we have seen a reversal of the widening of credit spreads, which would have reduced significantly the negative impact of fair value assets on AEGON's operating earnings and net income. The quality of our investment portfolio is again demonstrated by the fact that AEGON experienced no material impairments in the first quarter. In addition, our capital position and cash flows remain strong. We also remain confident in our progress toward our 2010 VNB target. Finally, in line with our international growth strategy, we successfully continued our international expansion in Central and Eastern Europe and Turkey.”

 

Strategic developments
AEGON has a focused strategy, aimed at creating long-term value for all its stakeholders. The Group's objectives are to expand its international presence, further strengthen its distribution networks and invest in its growing pension businesses. AEGON took a number of specific steps to meet these objectives:

 

  • AEGON strengthened its position in the developing pension and asset management markets in Central and Eastern Europe (CEE) by signing an agreement to acquire the UNIQA Asset Management Company and the Heller-Saldo 2000 Pension Fund Management Company in Hungary, with a total number of pension fund members of 140,000. Following the acquisition, AEGON Hungary's pension revenue generating investments will amount to EUR 1.9 billion.

 

  • As part of its ongoing efforts to expand in rapidly developing markets, AEGON also announced the acquisition of Turkish life and pension company Ankara Emeklilik. Turkey, with its population of 74 million people, has a low life insurance penetration and the private pensions market has significant growth potential. In addition, Ankara Emeklilik has a well-established presence in the Turkish life insurance and private pensions market, with more than 54,000 pension fund members and EUR 35 million in revenue generating investments. Ankara Emeklilik sells through a variety of different channels and has an agreement with Şekerbank to distribute products and services through a nationwide network of 236 branches.

 

  • In April, AEGON and Industrial Securities, one of China's leading securities firms, announced the establishment of a new asset management joint venture following final approval from the country's regulatory authorities. The joint venture will be named AEGON Industrial Fund Management Company. Under the agreement, AEGON will acquire a 49% interest in Industrial Fund Management Company (IFMC), a subsidiary of Industrial Securities. IFMC is a Chinese mutual fund manager with approximately EUR 3 billion in revenue generating investments. Industrial Securities will retain the remaining 51% of IFMC.

 
AEGON's value of new business (VNB) decreased to EUR 186 million. The decline was due primarily to the impact of a weaker US dollar and British pound and a lower contribution from the Group's life reinsurance and institutional businesses in the Americas. There was a decline in VNB from both Taiwan and the Netherlands, because of a recent change in business mix and the effect of markets on unit-linked sales in Taiwan, while in Spain new business volumes were also lower. AEGON's operations in CEE again reported strong growth in VNB, helped by the launch of a new mandatory pension fund in Romania at the start of 2008.

 

Internal rates of return, meanwhile, improved, rising to 18.4% as the Group continued to focus on writing profitable new business.

 

Use this link for the full press release.

 

ABOUT AEGON

AEGON is one of the world's largest life insurance and pension companies, and a strong provider of investment products. AEGON empowers local business units to identify and provide products and services that meet the evolving needs of customers, using distribution channels best suited to local markets. AEGON takes pride in balancing a local approach with the power of an expanding global operation.

With headquarters in The Hague, the Netherlands, AEGON companies employ approximately 30,000 people worldwide. AEGON's businesses serve millions of customers in over twenty markets throughout the Americas, Europe, and Asia, with major operations in the United States, the Netherlands and the United Kingdom.

Respect, quality, transparency and trust constitute AEGON's core values as the company continually strives to meet the expectations of customers, shareholders, employees and business partners. AEGON is driven to deliver new thinking with the ambition to be the best in the industry.

 

 

Group Corporate Communications & Investor Relations

 

Media relations                         
Phone:+ 31 (0)70 – 344 8344

E-mail:  gcc-ir@aegon.com

 

 

Investor relation                      
Phone:+ 31 (0)70 – 344 8305 or 1 877 548 9668 - toll free USA only

E-mail:  ir@aegon.com

 

Financial supplement

AEGON's 2008 Financial supplement is available on www.aegon.com

 

Media conference call

8:15 am CET

Audio webcast via www.aegon.com

 

Analyst & investor call

3:00 pm CET

Audio webcast on www.aegon.com

Call-in numbers:

USA +1 480 629 1990

UK + 44 208 515 2301

NL + 31 20 796 5332

                      

Website www.aegon.com

 

DISCLAIMERS

Cautionary note regarding non-GAAP measures

This press release includes certain non-GAAP financial measures: net operating earnings, operating earnings before tax, net underlying earnings, underlying earnings before tax and value of new business. The reconciliation of net operating earnings and operating earnings before tax to the most comparable IFRS measures is provided on page 34. A reconciliation of (net) underlying earnings to operating earnings before tax is provided on page 25. Value of new business is not based on IFRS, which are used to report AEGON’s quarterly statements and should not be viewed as a substitute for IFRS financial measures. AEGON believes that these non-GAAP measures, together with the IFRS information, provide a meaningful measure for the investment community to evaluate AEGON’s business relative to the businesses of our peers.

 

Local currencies and constant currency exchange rates

This press release contains certain information about our results and financial condition in USD for the Americas, GBP for the United Kingdom, HUF for Hungary and NTD for Taiwan because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about us presented in EUR, which is the currency of our primary financial statements.

 

Forward-looking statements


The statements contained in this press release that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, should, would, is confident, will, and similar expressions as they relate to our company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:
o Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;

  • Changes in the performance of financial markets, including emerging markets, such as with regard to:
    • The frequency and severity of defaults by issuers in our fixed income investment portfolios; and
    • The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities we hold;
  • The frequency and severity of insured loss events;
  • Changes affecting mortality, morbidity and other factors that may impact the profitability of our insurance products;
  • Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;
  • Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;
  • Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
  • Changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers;
  • Regulatory changes relating to the insurance industry in the jurisdictions in which we operate;
  • Acts of God, acts of terrorism, acts of war and pandemics;
  • Changes in the policies of central banks and/or governments;
  • Litigation or regulatory action that could require us to pay significant damages or change the way we do business;
  • Customer responsiveness to both new products and distribution channels;
  • Competitive, legal, regulatory, or tax changes that affect the distribution cost of or demand for our products;
  • Our failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives; and
  • The impact our adoption of the International Financial Reporting Standards may have on our reported financial results and financial condition.

 

 
Last update: May 15, 2008