Speaking to investors in New York Wednesday, Mr. Wynaendts said repaying the money would allow Aegon to focus on its efforts to redirect more of its capital to markets that offer growth and higher returns.
Mr. Wynaendts was speaking just two days after Aegon repaid an initial installment of EUR 1 billion – one third of the EUR 3 billion provided last year as part of a broader program of support for Dutch banks and insurers during the recent financial crisis.
“Two days ago, I was very pleased we were able to repay EUR 1 billion of the EUR 3 billion we received from the Dutch state,” Mr. Wynaendts told Aegon’s Analyst & Investor Day in New York.
“Completing this repayment at the earliest opportunity continues to be our top priority. Doing so will enable us to fully focus on executing on our strategy,” he added.
Mr. Wynaendts also said that the Dutch government had recently confirmed it is willing to renegotiate terms for amounts that remain outstanding under its support program, including the EUR 2 billion Aegon still owes.
But he added that Aegon would wait until the European Commission had completed its review process for the state support before entering into talks with the Dutch government.
Aegon first outlined plans to reallocate capital in June 2008 – as part of the company’s long-term strategy, ‘Unlocking the Global Potential’. Under those plans, Aegon will direct more of its resources over the next few years to growth markets in Central & Eastern Europe, Asia and Latin America, at the same time reducing its reliance on the United States and providing greater balance to its allocation of capital.
In his presentation, Mr. Wynaendts said efforts during the financial crisis to reduce risk, lower operating costs and free up additional capital had left Aegon “stronger, more efficient and better positioned for the opportunities ahead”.
He said reducing risk would help the company “achieve more stable earnings over time by reducing our exposure to the volatility of financial markets”. Mr. Wynaendts added that Aegon will continue to focus on improving capital efficiency, increasing underlying earnings and writing profitable new business.
Given the uncertain market conditions, Aegon’s aim will be to maintain excess capital substantially above the EUR 1.5 billion to EUR 2 billion the company would hold under normal circumstances. Aegon’s excess capital – capital over and above what the company would require to maintain a AA rating – currently stands at EUR 3.7 billion, including the company’s recent repayment to the Dutch state.
Mr. Wynaendts told the New York meeting that it was “time to look forward” after the recent financial crisis.
“We have taken decisive measures to deal effectively with the crisis,” he said. “We have strengthened our balance sheet, reduced our exposure to financial markets, improved operational and cost efficiencies, and we have been more efficient with our capital. Customers will continue to remain front and center; this is reflected in our continued strong deposits and sales, and the fact that our customers have stayed with us during these many challenging months. We look toward the opportunities ahead,” Mr. Wynaendts said.
Repaying Dutch state is “our top priority”
CEO Alex Wynaendts was speaking at Aegon’s Analyst & Investor Day in New York. Here are some of the highlights of his presentation:
- Repaying the Dutch state in full is Aegon’s “top priority”; repayment will allow Aegon to focus on efforts to direct more resources toward key growth markets.
- Aegon is “stronger, more efficient and better positioned for the opportunities ahead” because of measures taken to tackle effects of the recent financial crisis.
- Aegon also sees “significant opportunities” for its main businesses in the United States, the Netherlands and the United Kingdom.
- Aegon will not enter new countries, but will remain focused on further strengthening its position in markets where the company already has developing operations.
- Aegon will continue to focus on improving capital efficiency, growing its underlying earnings and writing profitable new business.
- Given current uncertain market conditions, Aegon’s aim is to maintain excess capital substantially above the EUR 1.5 billion to EUR 2 billion the company would hold under normal circumstances.
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