Aegon has no need for additional core capital; agreement with Dutch State sufficient to maintain strong capital buffer

"Aegon has a sufficient capital buffer given our recent actions," said Jos Streppel, Aegon’s Chief Financial Officer.

Aegon, the owner of Transamerica, confirms that it is currently examining the possibility of acquiring a thrift in the United States. This would potentially allow the company to qualify for the US government’s Troubled Asset Relief Program (TARP).

The company has no need for additional core capital beyond the EUR 3 billion secured from the Dutch State. Aegon believes it is prudent, and possibly advantageous, to explore the terms and conditions under which financial support may be available under TARP.

At present, no decision has been taken either with regard to the acquisition of a thrift in the United States or to Aegon’s eventual participation in TARP. At this stage, it is unclear whether Aegon, as an insurance company domiciled in the Netherlands, would be eligible for the program. Ownership of a bank or a thrift institution is a necessary pre-requisite to any participation.

“Aegon has a sufficient capital buffer given our recent actions. The EUR 3 billion of core capital we secured last month from the Dutch State, combined with the measures we are taking ourselves, is more than adequate to ensure that we enter 2009 with a strong capital buffer,” said Jos Streppel, Aegon’s Chief Financial Officer.

“In the current market environment, we want to make sure that we carefully explore all possible financing options. And, as a company with sizable operations in the United States, it makes sense for us to examine the terms and conditions which may be available under the US government’s TARP program.”

In recent months, Aegon has taken measures to strengthen its capital position. These measures include:

  • Steps to reduce risk and release capital from the company’s businesses;
  • Foregoing payment of the final dividend to common shareholders for 2008;
  • Securing EUR 3 billion in additional core capital from the Dutch State, of which EUR 1 billion is repayable, at Aegon’s option, within one year.

As a result of these measures, Aegon has a capital buffer significantly in excess of AA rating requirements.

In the third quarter, Aegon released EUR 729 million in additional capital from its businesses. The company expects to free up another EUR 600 million to EUR 800 million in the fourth quarter.