Aegon will maintain capital above AA rating levels despite market turmoil

October 9, 2008

CEO Alex Wynaendts has told a conference in London that Aegon expects to maintain its capital above AA rating requirements through the remainder of this year, despite additional credit impairments in the third quarter.

Speaking to the Merrill Lynch Banking & Insurance conference, Mr. Wynaendts also said that Aegon is looking at further steps to maintain its strong capital base and protect the Group against possible further falls in world financial markets.

At the conference, Mr. Wynaendts told financial analysts and investors:

  • Aegon has maintained a strong liquidity position, with healthy cash flows and an availability of cash that clearly outweighs the Group’s requirements.
  • Aegon has hedged its US dollar cash flows through to the end of 2009, putting a floor under the present rate, but still retaining the full impact of any future strengthening of the US currency.
  • Aegon has taken steps to reduce its balance sheet risk, enhance its capital position and lower its exposure to equity and credit markets – and is continuing to do so.

 Mr. Wynaendts’ speech comes just four months after he unveiled Aegon’s new strategy, ‘Unlocking the Global Potential’, aimed at increasing earnings, improving returns and making better use of the Group’s expanding global resources.

Aegon’s CEO told the Merrill Lynch conference that in the current market environment he is “more convinced than ever that our strategy is the right one”. He also said that Aegon intends to accelerate implementation of its strategy and speed up measures designed to reduce risk and free up more of the Group’s capital.

In the interests of its shareholders, Aegon is also “working on a number of specific projects to enhance its capital position”.

Mr. Wynaendts made his speech amid an unprecedented global financial crisis which has sent share prices and credit markets tumbling.

As a result, Aegon estimates that – based on information currently available – it will report gross credit impairments on its investments of approximately EUR 420 million in the third quarter. The impact on net income is expected to be around EUR 275 million. Despite the impairments, Aegon expects its level of capital to remain above what it needs to maintain a AA rating through the remainder of the year.