Aegon The Netherlands improves the terms of KoersPlan and other spaarkas products.
The improvements of the terms relate to the life insurance component of KoersPlan. The premium of the life insurance will, retroactively, be capped at 17% of the deposit. In addition, the premium of the life insurance component will be reduced by 10%, effective from January 1, 2006. Comparable improvements will also be applied to other spaarkas products.
In 2005, the improvements involve an amount of approximately EUR 100 million (pre-tax), which will be offset directly by a release of a previously established provision and will therefore have no effect on the earnings of Aegon The Netherlands in 2005. The effect of the improvements on future earnings will also amount to approximately EUR 100 million (pre-tax) and will be spread over many years.
For your convenience, please find below a translation of the press release of Aegon The Netherlands issued this morning.
Aegon the Netherlands improves terms of KoersPlan and other spaarkas products
Aegon the Netherlands improves the terms of KoersPlan and other Spaarkas products. It has become evident that in some cases a relatively large part of the deposits was used to pay the premium of the embedded life insurance policy. Even though the premium is determined in line with the associated risk, Aegon is of the opinion that a product improvement is appropriate.
The product improvement entails the establishment of an upper limit (the cap) on the premium of the embedded life insurance policy. This cap has been set at 17% of the regular deposits. This product improvement will be applied retroactively. If the premiums that have been paid exceed the cap, the excess will be credited to the investment retroactively. In addition, the premium of the life insurance component of the KoersPlan product will be reduced by 10% effectively January 1, 2006. Aegon has decided to implement these improvements after intensive discussions with the insurance Ombudsman.
Spaarkas products are long-term life insurance products. The (monthly) deposits are used to participate in an investment fund, to cover expenses and to pay the premium for the embedded life insurance policy. Policyholders of a KoersPlan that has expired or which have surrendered their KoersPlan can also benefit from the improvement in the product terms.
Johan van der Werf, CEO of Aegon the Netherlands said that with these measures, Aegon the Netherlands is putting into practice its policy to monitor potential undesirable effects of these long-term products. “It has come to our attention that in a number of cases, a relatively large part of the deposit has been used to pay the premium of the insurance part of the product. Even though this is justified since it reflects higher mortality risk, it does not align with the purpose of the KoersPlan product. That is why we are addressing this now. Where appropriate, we will also apply these principles to other spaarkas products”.
The improvement in the terms of KoersPlan and other spaarkas products will cost Aegon The Netherlands approximately EUR 100 million now and a comparable amount spread over the coming years. For the effect of these improvements on the annual results we refer to Aegon N.V.’s press release issued this morning.
KoersPlan policyholders will be informed by mail in the coming weeks. The details of the improvements will be finalized in the coming months. For further information we refer our clients to our websites www.Aegon.nl.
© Aegon 2020