"The underlying performance of our businesses in both our established and emerging markets continues to be strong, resulting in better-than-expected progress toward the value of new business target we announced last year."
The strong increase in VNB, combined with a consistent improvement in the internal rate of return on new business and solid earnings growth provide a further indication of our commitment to growing our business profitably in both the near- and long-term.
Aegon today raised its 2010 value of new business target (VNB) by 14% to EUR 1.25 billion. The new target represents an average annual increase in the Group's VNB of approximately 18% over the period 2005 - 2010. In recent quarters, Aegon's businesses in the Americas, Europe and Asia have continued to make better-than-expected progress toward the Group's original 2010 target of EUR 1.1 billion. Further details on the new 2010 targets for each of Aegon's businesses are provided below.
"The underlying performance of our businesses in both our established and emerging markets continues to be strong, resulting in better-than-expected progress toward the value of new business target we announced last year," said Don Shepard, Chairman of the Executive Board. "As a result, we have increased the target to reflect the gains we are making across our businesses in the Americas, Europe and Asia. The strong increase in VNB, combined with a consistent improvement in the internal rate of return on new business and solid earnings growth provide a further indication of our commitment to growing our business profitably in both the near- and long-term."
Mr. Shepard will present the new VNB target at Aegon's Analyst and Investor Conference in New York on Monday, November 26, 2007 at 5 p.m. EST. He will be joined by other members of the Management Board and senior management in highlighting the progress of Aegon's businesses internationally. Alex Wynaendts, who will take over as Aegon's new Chairman of the Executive Board at the Annual General Meeting of Shareholders on April 23, 2008, will also make a presentation at the conference, outlining in general terms his view of the business opportunities opening up for Aegon in the coming years.
Alex Wynaendts said: "In both our established and developing markets, Aegon is in a strong position to capitalize on the opportunities that global trends are creating for the life insurance and pension sector. In the coming months, we will be looking at ways to more fully unlock Aegon's potential as a leading global provider of these products and services. We intend to drive growth by better transferring our broad capabilities across our markets, strengthening distribution, and by entering new markets."
In a separate presentation, Pat Baird, member of the Management Board and CEO of Aegon Americas, will highlight strategy, recent developments and updated targets for Aegon Americas.
Eric Goodman, CEO of Aegon USA Investments, will emphasize the Group's continued confidence with Aegon USA's investment portfolio, particularly in light of the current turmoil in the asset backed securities markets. Aegon reported no impairments to its investment portfolio of subprime backed assets when it announced its third quarter 2007 results on November 8.
The program for the conference will also include a number of separate smaller group meetings between analysts and members of Aegon's Management Board, senior management of various country units and Group Staff.
The VNB target for the entire Group has been increased to EUR 1.25 billion, up 14% from the original target of EUR 1.1 billion. This new VNB target implies an average annual increase of approximately 18% from the 2005 figure of EUR 550 million. Aegon expects the share of total VNB coming from Asia, Central and Eastern Europe and Other European Countries to reach 35%1) by 2010.
Aegon Americas aims to grow its VNB to USD 730 million (EUR 503 million) by 2010, an average annual growth rate of 17% from 2005, and an increase of 17% from the original target. The increase in VNB is expected to come from a combination of organic growth, margin improvements in the life business, rising sales of savings, retirement, pension and asset management products, as well as further expansion of Aegon Americas' international capabilities.
Aegon The Netherlands reiterates its target to more than double its value of new business by 2010 to EUR 82 million, by increasing the new production by 8% to 10% a year. In comparison with 2005, this implies an average annual VNB growth rate of 16% from 2005.
Aegon UK aims to triple its VNB between 2005 and 2010 to GBP 213 million (EUR 308 million), by achieving a VNB margin of at least 22%2) and increasing its overall share of the UK life and pensions market to at least 10% by 2010. This updated target translates into an average annual VNB growth rate of 26% from 2005. Aegon UK's strategy is to grow its business profitably by continuing to diversify into higher margin products, developing new distribution channels, building on its existing capabilities in life, pensions, asset management and distribution and by further strengthening lines of business that offer opportunities for Aegon to grow its presence in the UK market.
Aegon CEE has created an excellent platform for further expansion and growth. Aegon CEE aims to grow its VNB to EUR 100 million by 2010, an average annual growth rate of 30% from 2005, and up 33% from the original target. A number of factors will contribute to expected growth in the CEE region, including new distribution initiatives, the introduction of new products, rising life sales and a further expansion of Aegon's pension business - both organically and through new acquisitions. Aegon CEE aims to have 2.5 million pension fund members by 2010.
Aegon aims to grow its VNB in Asia to EUR 105 million by 2010, an average annual growth rate of 5% from 2005. The VNB and sales of Taiwan were exceptionally high in 2005. The new VNB target reflects the impact of the growth in China and of new distribution initiatives in both India and Japan, expected to begin in the first half of 2008.
Aegon aims to grow its VNB in Spain and France to EUR 147 million by 2010, an average annual growth rate of 37% from 2005. The growth in VNB will come primarily from existing and new bancassurance partnerships in Spain.
1) Including Aegon Americas International activities2) VNB margin targets are on a pre-tax and pre-solvency basis
The program for this conference is as follows (all times US EST):
MONDAY, NOVEMBER 26, 20075:00 pm Welcome Michiel van Katwijk, Executive Vice President Aegon N.V.5:05 pm Aegon USA InvestmentS Eric Goodman, CEO Aegon USA Investments6:00 pm Aegon Group - Growing the ValuE Don Shepard, Chairman of the Executive Board and CEO Aegon N.V.6:10 pm Aegon Group - Unlocking Aegon's Global Potential Alex Wynaendts, Member of the Executive Board and COO Aegon N.V.
TUESDAY, NOVEMBER 27, 20078:30 am Aegon Americas - Overview of the Americas Pat Baird, Member Management Board Aegon N.V., CEO Aegon USA9:30 am Small group meetings - remainder of the day
All targets and objectives mentioned are based on current economic and business assumptions and assume a neutral effect from currency movements.
The presentations will be audio web cast live and for slides of the presentations see related links.
Note: This press release includes a non-GAAP financial measure: value of new business. Value of new business is not based on IFRS, which are used to report Aegon’s financial statements and should not be viewed as a substitute for IFRS financial measures. Aegon believes the value of new business, together with the GAAP information, provides a meaningful measure for the investment community to evaluate Aegon’s business relative to the businesses of our peers.
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