THE HAGUE, The Netherlands,
October 16, 2014 /PRNewswire/ --
Aegon has reached an agreement with Wilton Re to sell its Canadian operations for
CAD 600 million (EUR 423 million). The net underlying earnings of
Aegon's Canadian operations were CAD 26
million over the trailing four quarters ending June 2014, while its shareholders' equity
excluding revaluation reserves on an IFRS basis amounted to
CAD 1.8 billion at the end of
June 2014. As a result, the sale
price represents a multiple of
23 times net underlying earnings. The transaction is expected to
result in a book loss of approximately CAD
1.2 billion (EUR 0.8
billion).
"We continually review the performance of our businesses to
ensure that they support our ambition to become a leader in our
chosen markets," said Alex Wynaendts, CEO of Aegon. "We have
concluded that our Canadian life insurance business does not
support that goal. The decision to divest these activities will
lead to an improvement in the group's return on equity of 40 basis
points. At the same time, we believe this is a good outcome for our
customers and employees, as the company will continue to offer
competitive choices for the middle market in Canada."
Aegon will earmark the proceeds of this transaction to further
reduce outstanding debt through the redemption of the USD 500 million 4.625% senior bond, due
December 2015. This is in addition to
the already planned redemption of the EUR
500 million 4.125% senior bond, due December 2014. The combination of the divestment
and the non-refinancing of the bond will improve Aegon's return on
equity by 40 basis points, while reducing net underlying earnings
by less than 1%. It will also keep Aegon's leverage ratio unchanged
on a pro forma basis, while its fixed charge cover ratio will
improve by 0.6 times.
The parties anticipate that the transaction will close in the
first quarter of 2015, subject to regulatory approval.
News releases, financial calendar and other corporate
publications can also be found in Aegon's Investor & Media
App.
About Wilton Re
Wilton Re specializes in the
acquisition and management of mortality and investment risk as well
as with assisting life insurance clients with product development,
underwriting, and new business strategies for the middle market.
Wilton Re focuses on the North
American life insurance market where the company provides risk
capital and related services including M&A, reinsurance and
longevity risk management. Wilton Re
also partners with companies to implement new business strategies
for middle market sales, with an emphasis on worksite, senior
market and simplified term products. The company offers fully
customized solutions that include private labeling with supporting
delivery and administrative systems. As of September 30, 2014, Wilton Re had USD 14.5
billion of total assets, USD 1.4
billion of annual operating revenues and USD 1.5 billion of US GAAP equity. More
information on wiltonre.com.
About Aegon
Aegon's roots go back more than 150 years - to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in more than 25 countries in
the Americas, Europe and
Asia. Today, Aegon is one of the
world's leading financial services organizations, providing life
insurance, pensions and asset management. Aegon's purpose is to
help people take responsibility for their financial future. More
information on aegon.com.
DISCLAIMERS
Forward-looking statements
The statements contained in this document that are not
historical facts are forward-looking statements as defined in the
US Private Securities Litigation Reform Act of 1995. The following
are words that identify such forward-looking statements: aim,
believe, estimate, target, intend, may, expect, anticipate,
predict, project, counting on, plan, continue, want, forecast,
goal, should, would, is confident, will, and similar expressions as
they relate to Aegon. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that
are difficult to predict. Aegon undertakes no obligation to
publicly update or revise any forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which merely reflect company expectations at the time
of writing. Actual results may differ materially from expectations
conveyed in forward-looking statements due to changes caused by
various risks and uncertainties. Such risks and uncertainties
include but are not limited to the following:
- Changes in general economic conditions, particularly in
the United States, the Netherlands and the United Kingdom;
- Changes in the performance of financial markets, including
emerging markets, such as with regard to:
- The frequency and severity of defaults by issuers in Aegon's
fixed income investment portfolios;
- The effects of corporate bankruptcies and/or accounting
restatements on the financial markets and the resulting decline in
the value of equity and debt securities Aegon holds; and
- The effects of declining creditworthiness of certain private
sector securities and the resulting decline in the value of
sovereign exposure that Aegon holds;
- Changes in the performance of Aegon's investment portfolio and
decline in ratings of Aegon's counterparties;
- Consequences of a potential (partial) break-up of the
euro;
- The frequency and severity of insured loss events;
- Changes affecting longevity, mortality, morbidity, persistence
and other factors that may impact the profitability of Aegon's
insurance products;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- Changes affecting interest rate levels and continuing low or
rapidly changing interest rate levels;
- Changes affecting currency exchange rates, in particular the
EUR/USD and EUR/GBP exchange rates;
- Changes in the availability of, and costs associated with,
liquidity sources such as bank and capital markets funding, as well
as conditions in the credit markets in general such as changes in
borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting
Aegon's operations, ability to hire and retain key personnel, the
products Aegon sells, and the attractiveness of certain products to
its consumers;
- Regulatory changes relating to the insurance industry in the
jurisdictions in which Aegon operates;
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products also Aegon
sells, including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or
governments;
- Lowering of one or more of Aegon's debt ratings issued by
recognized rating organizations and the adverse impact such action
may have on Aegon's ability to raise capital and on its liquidity
and financial condition;
- Lowering of one or more of insurer financial strength ratings
of Aegon's insurance subsidiaries and the adverse impact such
action may have on the premium writings, policy retention,
profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union's Solvency II requirements and
other regulations in other jurisdictions affecting the capital
Aegon is required to maintain;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- As Aegon's operations support complex transactions and are
highly dependent on the proper functioning of information
technology, a computer system failure or security breach may
disrupt Aegon's business, damage its reputation and adversely
affect its results of operations, financial condition and cash
flows;
- Customer responsiveness to both new products and distribution
channels;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon's
products;
- Changes in accounting regulations and policies or a change by
Aegon in applying such regulations and policies, voluntarily or
otherwise, may affect Aegon's reported results and shareholders'
equity;
- The impact of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items, including Aegon's
ability to integrate acquisitions and to obtain the anticipated
results and synergies from acquisitions;
- Catastrophic events, either manmade or by nature, could result
in material losses and significantly interrupt Aegon's business;
and
- Aegon's failure to achieve anticipated levels of earnings or
operational efficiencies as well as other cost saving and excess
capital and leverage ratio management initiatives.
Further details of potential risks and uncertainties affecting
Aegon are described in its filings with the Netherlands Authority
for the Financial Markets and the US Securities and Exchange
Commission, including the Annual Report. These forward-looking
statements speak only as of the date of this document. Except as
required by any applicable law or regulation, Aegon expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in Aegon's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based.
Media relations
Dick Schiethart
+31-(0)70-344-8821
gcc@aegon.com
Investor relations
Willem van den Berg
+31-(0)70-344-8305
ir@aegon.com