The embedded value 2008, as reported today, demonstrates both stable performance of the in-force book, as well as continued successful focus on profitable new business.
Management considers embedded value to be an additional measure for shareholders to value the existing business of the company.
Alex Wynaendts, CEO, said: “Despite the difficult operating environment in 2008, Aegon performed satisfactorily on the in-force book and well on new business. The decrease in embedded value primarily reflects equity market falls, an increase in the risk premium used to set the discount rate and the impact of widening credit spreads in combination with lower assumed fixed interest returns."
The embedded value life insurance (EVLI) was down to EUR 23 billion. The EVLI benefited from the increased value of new business of EUR 0.8 billion and the performance of the in-force book of EUR 0.9 billion. However, this was offset by lower than expected investment returns of EUR 3.2 billion, a change in economic assumptions of EUR 2 billion and negative currency translation effects of EUR 0.3 billion.
Free surplus on the life insurance business at year-end was up to EUR 2.3 billion with limited net capital injections of EUR 0.5 billion. Considering the economic turmoil in 2008, the embedded value operating margin remained fairly stable at 6.8%, driven by new business in the UK and Central & Eastern Europe.
At year-end 2008, the total embedded value amounted to EUR 18.5 billion, a decrease of 15% compared to 2007. Adjusted for the value of Aegon preferred shares, the total embedded value per common share amounted to EUR 11.35, a decrease of 16%.
As an international life insurance, pension and investment company based in The Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon companies employ just over 31,000 people and have over 40 million customers across the globe.
|Key figures||First quarter 2009||Full year 2008|
|Underlying earnings before tax||EUR (22) million||EUR 1.57 billion|
|New life sale||EUR 543 million||EUR 2.63 billion|
|Gross deposits||EUR 8.2 billion||EUR 40.75 billion|
|Revenue generating investments
(End of period)
|EUR 334 billion||EUR 332 billion|