Aegon targets average underlying earnings growth of at least 10% a year Aegon to increase return on equity to at least 15% by 2012.
Aegon Chief Executive Alex Wynaendts announces additional financial performance targets as part of an ambitious strategy to ensure sustainable profitable growth for the Group in the coming years. Aegon is committed to clear targets:
- Return on equity of at least 14% by 2010 and at least 15% by 2012 compared with 12% in 2007;
- Average net underlying earnings growth of at least 10% a year to 2012 from a 2007 base of EUR 2,033 million (at 2007 constant currency);
- Strong profitable growth with the reiterated value of new business target of EUR 1,250 million by 2010.
Opening Aegon’s Analyst & Investor Conference in London later today, Mr. Wynaendts will outline Aegon’s growth strategy, ‘Unlocking the Global Potential’, which has three strategic priorities:
- To reallocate capital toward businesses with higher growth and return prospects;
- To improve growth and returns from existing businesses;
- To manage Aegon as an international Group.
To achieve these priorities, Aegon’s strategy includes a number of specific measures:
1. Reallocate capital toward businesses with higher growth and return prospects
- Capture opportunities in the most attractive markets;
- Accelerate growth in new markets to achieve a more balanced international presence with an allocation of more than 50% of the Group’s capital to businesses outside the United States by 2012;
- Improve capital efficiency;
- Continue to pursue a disciplined, focused approach toward acquisitions;
- Divest underperforming assets to release capital for growth.
2. Improve growth and returns from existing businesses
Invest in higher growth, higher return businesses in the United States;
Accelerate diversification of both products and distribution in the United Kingdom;
Develop a new plan to deliver profitable growth in the Netherlands;
Build scale in new, growing markets in Europe, Asia and Latin America.
3. Manage Aegon as an international Group
- Create a global asset management business;
- Manage life reinsurance as a global business;
- Become a leader in variable annuities in Europe;
- Broaden the role of Aegon’s Management Board to provide a more effective management structure.
“Today’s global environment requires us to think and act differently. It's clear that we can and will do better with Aegon’s significant resources,” said Chief Executive Alex Wynaendts. “We will make better use of our capital, improve our financial performance and organize the management of Aegon to focus on the global opportunities for our businesses. We are determined to solidify Aegon’s leading position, to deliver sustainable profitable growth for our investors and to help millions of customers around the world secure their long-term financial futures.”
Aegon’s ambition is to be a global leader, helping customers around the world secure their financial futures and ensuring sustainable profitable growth by reallocating capital towards businesses with higher growth and return prospects, improving growth and returns from existing businesses and managing Aegon as an international Group.
Creating a global asset management business
In the coming months, Aegon will create a single, global organization for its asset management activities. Aegon Asset Management will group together Aegon’s current businesses in the United States, the United Kingdom, the Netherlands and elsewhere. Aegon Asset Management has a total of EUR 271 billion1) in assets under management. With this new organization, Aegon will:
- Implement a global framework for general account management;
- Support the Group’s pension and unit-linked activities by building a European third party capability;
- Develop increased flows of third party business.
Aegon Asset Management is expected to be operational by the beginning of January 2009. Erik van Houwelingen, currently a member of the Management Board of Aegon The Netherlands, has been appointed Chairman of the Executive Committee of Aegon Asset Management. Eric Goodman, Aegon’s Chief Investment Officer for the United States, will take charge of global general account management. Andrew Fleming, currently CEO of Aegon UK Asset Management, has been appointed Head of European Asset Management and will take charge of developing our European third party capability.
1) As per end of 2007
Manage life reinsurance as a global business
Aegon has recognized expertise in life reinsurance. Currently, the Group is the sixth largest life reinsurer in the world by premium income and the second largest in the United States. Aegon’s goal is to accelerate growth in global life reinsurance by:
- Expanding into new, growing markets in Asia, Europe and Latin America;
- Focusing on partnerships away from commodity products;
- Providing support to other areas of Aegon’s businesses.
Launching variable annuities across Europe
In the coming years, the variable annuities market is expected to grow significantly as millions of ‘baby boomers’ in Europe, North America and Asia enter retirement. Aegon already has a significant presence in the US variable annuities market. The Group’s ambition is to become a leader in the variable annuities market in Europe.
As part of this goal, Aegon intends to:
- Capitalize on US expertise in this area to support the Group’s variable annuities in Europe;
- Build on recent success in this area in the United Kingdom to expand into other markets in Europe, starting with Spain and France, where Aegon already has businesses;
- Expand elsewhere in Europe through distribution agreements with banks and brokers.
Broadening the role of Aegon’s Management Board
As part of the new strategy, Aegon will also make changes to the role and responsibilities of the Management Board. These changes will strengthen Aegon’s corporate governance and align the overall management of the Group with the emerging, global opportunities for Aegon’s businesses. Under the new structure, members of the Management Board will have the following responsibilities:
|Alex Wynaendts (Chief Executive Officer)|
|Jos Streppel (Chief Financial Officer)||Corporate Center|
|Pat Baird||Americas, Asia-Pacific, Global Life Reinsurance|
|Otto Thoresen||United Kingdom, Variable Annuities in Europe, India|
|Gábor Kepecs||Central & Eastern Europe|
Value of new business targets
|In millions||2005 actual||2007 actual||2010 target|
|Centraal- and Eastern Europe||EUR||27||72||100|
|Other European countries||EUR||30||71||147|
View the VNB targets and capital productivity tables.
Aegon’s Analyst & Investor Conference will take place in London on June 2 and 3. Mr. Wynaendts’ strategy presentation will be webcast live via this web site at 17:00 BST (16:00 CET) on Monday, June 2, 2008.
Slides from all the presentations will be available on the same site from 16:30 BST (17:30 CET) on Monday, June 2:
Alex Wynaendts, CEO Aegon N.V.
Erik van Houwelingen, Chairman of the Executive Committee of Aegon Asset Management
Jos Streppel, CFO Aegon N.V.
Michiel van Katwijk, Executive Vice President Aegon N.V.
Pat Baird, Member of the Aegon Management Board
Darryl Button, CFO Aegon USA
Otto Thoresen, Member of the Aegon Management Board
Mark Laidlaw, CFO Aegon UK
Gábor Kepecs, Member of the Aegon Management Board
Marc van Weede, Executive Vice President Strategy Aegon N.V.