Aegon has released details of its exposure to Lehman Brothers, following reports that the trading firm has filed a petition for Chapter 11 bankruptcy protection in the US:
Aegon does not hold common equity in Lehman Brothers.
During 2008, Aegon has actively lowered its exposure to Lehman Brothers by approximately 20%. As of September 12, 2008, Aegon had a total general account fixed income exposure of EUR 265 million. This amount includes Credit Default Swaps-related exposure to Lehman Brothers.
The ultimate effect of a default by Lehman Brothers on Aegon’s excess capital and net income will be substantially lower than EUR 265 million as a result of a variety of factors, including taxes and recovery values.
Aegon also has counter party exposure to Lehman Brothers through derivatives contracts and securities lending transactions. This exposure is either collateralized or on bankruptcy remote entities. The effect of unwinding these transactions is not expected to have a material impact on the Group’s earnings or capital position.
Aegon’s Chief Financial Officer Jos Streppel said: “Aegon continues to have a strong balance sheet and ample liquidity. Our financial flexibility of EUR 1.8 billion at the end of the second quarter provides additional assurance. We remain confident in Aegon’s ability to weather the challenging market environment and fulfill our obligations to our customers and many other key stakeholders.”