Aegon resilient despite market turmoil

November 11, 2008

Aegon’s core businesses held up well in the third quarter despite continued turmoil in world financial markets. Meanwhile, measures to strengthen the company’s capital position began to yield results.

CEO Alex Wynaendts said Aegon was “well positioned to withstand the current financial crisis and benefit from an upturn in market conditions”.

He said that last week’s agreement to access an extra EUR 3 billion in funds from the Dutch State would give Aegon “an additional buffer in what continued to be an extremely uncertain market environment”.

Faced with difficult market conditions, Aegon has been taking steps to reduce risk and release more capital from its businesses. In the third quarter, these steps freed up almost EUR 730 million, Mr. Wynaendts said. Another EUR 600 million to EUR 800 million is expected in the fourth quarter.

Aegon’s CEO said the company’s underlying business had “remained resilient” in the third quarter, despite a significant worsening in economic and market conditions. 

Fixed annuities in the United States enjoyed their best quarter since 2003, while Aegon’s pension business in Central & Eastern Europe continued to grow and sales in the United Kingdom came in broadly in line with last year – remarkable given current worries over the global economy.

Inevitably though, lower financial markets affected Aegon’s earnings. The company reported a net loss for the third quarter of EUR 329 million – the result of market turmoil and increased impairments linked to recent troubles at Lehman Brothers and the US insurer Washington Mutual. Underlying earnings before tax, meanwhile, were down 28% at EUR 500 million.

Both figures were in line with preliminary third quarter data Aegon released just over a week ago to coincide with the company’s agreement on extra capital from the Dutch State.

Despite difficult market conditions, Mr. Wynaendts said Aegon had maintained “strong positions” in each of its key markets. The company, he added, was “taking the right steps to improve returns and achieve future growth”.

Over the past few months, Aegon has continued to expand its international presence, launching new businesses in Turkey and India, as well as signing new partnerships in Brazil and Spain.