As of 2007, Aegon will be reporting its operating earnings using a new line of business (LOB) format which more closely aligns with the way the business is managed within the geographical areas.
Today, Aegon published the previously issued 2005 and 2006 quarterly results using this new reporting format. On May 9, 2007, Aegon will publish its first quarter 2007 results in the new reporting format.
Until January 1, 2007, Aegon's segment reporting was based on product characteristics, such as traditional life and fixed annuities. The new LOB reporting format will more closely align with the way Aegon's businesses are managed within the geographical areas, and at the same time, highlight the performance of the key product groups: pensions, life insurance and investment products.
The following lines* have been established:
- Life and protection
- Individual savings and retirement products
- Pensions and asset management
- Institutional products
- Reinsurance
- Distribution
- General insurance
- Other
- Interest charges and other
* Please see below for details about the way products have been grouped in the new lines.
Some additional changes will be made to the information Aegon provides quarterly. As of May 9th, net operating earnings by geographical area as well as on a consolidated basis will be provided.
Please refer to the new LOB format tables for the previously issued 2005 and 2006 quarterly results using the new LOB reporting format. These reports contain no restatement.
Starting the first quarter 2007, Aegon will publish a financial supplement on a quarterly basis. This supplement includes more detailed quantitative financial information to facilitate more detailed analysis and will be published on Aegon's corporate website. Please refer to the financial supplement covering 2005 and 2006.
GLOSSARY ON NEW LINES OF BUSINESS
The description of each line of business provides general guidance to the reader but is not intended to be exhaustive and may change from time to time.
Life and protection
Included in the line life and protection are products with mortality, morbidity and longevity risks. Reported in life and protection are traditional life and universal life products, including endowment, term and whole life insurance products sold by Aegon Americas and Aegon The Netherlands. Also included are annuity products sold by Aegon The Netherlands and term insurance and annuity products sold by Aegon UK. Most of the business written by countries in the Other countries segment is also reported in this line with the exception of general insurance business sold by Hungary and pension business of the CEE countries and Spain.
Accident and health business comprises products with morbidity risk like accidental death and dismemberment insurance, critical illness, cancer treatment, disability, income protection and long-term care insurance in the Americas, the Netherlands, the UK and Spain. Also included are sick leave products sold by Aegon The Netherlands.
Individual savings and retirement products
The line individual savings and retirement products includes products with no or insignificant longevity risk, primarily fixed and variable annuity products sold by Aegon Americas. The products are primarily in the accumulation phase but also includes immediate and pay-out annuities. In addition, the (long-term) saving products sold by Aegon The Netherlands and retail mutual fund sold by Aegon Americas and Hungary are included. Also included in this line are investment products sold by the Czech Republic and Taiwan.
Pensions and asset management
The line pensions- and asset management includes both individual and group pension business and 401(k) and similar products, typically sponsored by or obtained through an employer. It comprises products in the accumulation phase as well as in the pay-out phase. This line includes products sold by Aegon Americas' divisions Diversified Investment Advisors and Transamerica Retirement Services, group pension products sold by Aegon The Netherlands, Aegon UK's individual and group pension business as well as the pension business of the CEE countries and Spain. In addition, asset management services provided to third parties are included in this line.
Institutional products
Institutional products includes earnings from spread-based products like Guaranteed Investment Contracts (GICs) and funding agreements sold by Aegon Americas which are marketed to institutional clients such as pension funds, retirement plans, college savings plans, money market funds. This line also includes synthetic GIC products. Institutional products also include bank- or corporate-owned life insurance (BOLI/COLI) sold to corporations as a method of funding employee benefit plans.
Reinsurance
The reinsurance line includes the business assumed by Transamerica Reinsurance of Aegon Americas. No changes have been made to what was previously reported in this line.
Distribution
Distribution includes commissions earned by independent financial advisors in the Netherlands (UnirobeMeeùs and Nedasco) and the UK (Positive Solutions, Origen).
General insurance
General insurance includes mainly automotive insurance, liability insurance, household insurance and fire protection. General insurance is sold in the Netherlands and Hungary. No changes have been made to what was previously reported in this line.
Other
Other is used to report any items which cannot be directly allocated to a specific line of business. No changes have been made to what was previously reported in this line.
Interest charges and other
Interest charges and other includes funding interest expenses and holding expenses. No changes have been made to what was previously reported in this line.
