THE HAGUE, Netherlands,
December 8, 2016 /PRNewswire/ --
Aegon provides update on plans to strengthen position in
attractive US market
At Aegon's Analyst and Investor Conference hosted in
New York, CEO Alex Wynaendts and Aegon's US management team
will today: reaffirm the company's 2018 financial targets; detail
additional management actions to accelerate the restructuring of
its US business; and demonstrate how Aegon is strongly positioned
to achieve growth.
"Today, we are announcing a number
of comprehensive measures in order
to further reduce expenses in our US
business and improve our operational
performance," said Alex Wynaendts.
"We will continue to build on our strong
franchises, which have a significant presence in some
of the world's largest insurance and
retirement markets. This gives me confidence in our ability
to achieve our objectives of
growing our business profitably,
reducing expenses, and returning
capital to shareholders."
Reaffirming 2018 group financial targets
- Return on equity of 10% through organic growth, expense savings
and capital return
- EUR 2.1 billion capital return to
shareholders in 2016-2018
- Expense reduction program significantly increased to
EUR 350 million
Aegon is on track to reach its financial targets for 2018, as
additional expense savings are implemented to offset the effects of
lower than anticipated interest rates, regulatory changes and lower
profitability of sales. The company now aims to reduce its annual
operating expenses by EUR 350 million
by year-end 2018, up from its original target of EUR 200 million. This will enable the company to
reach the 10% RoE target in 2018. Restructuring charges associated
with the expense savings target are expected to amount to
EUR 20 million in the fourth quarter
of 2016.
During 2016, Aegon has returned EUR 950
million to shareholders of the targeted EUR 2.1 billion of capital over the 2016-2018
period. Aegon aims to return the remainder through growing
dividends supported by Aegon's solid capital position and capital
generation in its businesses.
New management actions announced today to accelerate
restructuring in the US
- Doubling of the 2018 expense savings target to USD 300 million
- Further net reduction of over 500 positions
- First phase of location strategy implemented - closing 3
offices
- Strategic decision to exit the Affinity, Direct TV and Direct
Mail channels
- Invest in capabilities to create a differentiated digital
offering
The original USD 150 million
expense savings plan will be completed in 2017, one year ahead of
schedule, and the expense savings target to be achieved by year-end
2018 has now been doubled to USD 300
million. These additional savings will be realized through,
among other measures, further reduction of positions, closure of
locations, a more efficient use of technology and outsourcing
capabilities.
Aegon has also decided to exit the Affinity, Direct TV and
Direct Mail channels, which are part of its Accident & Health
line of business in the United
States. After reviewing these businesses, Aegon decided that
these no longer fit with its strategic objectives. As a result,
USD 100 million of capital will be
released over the next three years, while underlying earnings
before tax will be reduced by approximately USD 25 million per annum.
Strong strategic positioning to support growth
Aegon's US operations are well positioned across a number of key
business lines to capture the significant opportunities it sees in
the sizable US market. It has a diversified and growing profit pool
in the growing retirement market, as well as leading protection and
accident & health franchises. The Transamerica brand is
differentiated and has strong customer resonance, which management
is looking to build upon to develop a truly customer-centric model.
The key focus of the US management team to date has been to
transform Aegon's US operations from a business lines orientation
into one, functionally-organized business. The aim is to better
meet customers' needs and create a consistent, positive experience
for customers, business partners and employees.
The US management team will today highlight how it is executing
the accelerated five part plan to transform the customer experience
to facilitate growth in the target markets of wealth- and
health-related products and solutions. In addition, management will
detail how the company is leveraging its integrated worksite
strategy and market leading capabilities in key retirement markets
as a provider of over 40,000 institutional retirement plans, and
turn these into 5 million retail customer relationships over time.
Finally, management will also outline its plans to deliver an
innovative, digital front-end for retirement plans and employee
benefits to obtain one view of the customer and enable the company
to provide relevant and timely information, guidance and advice to
customers.
Additional information
The Analyst & Investor Conference presentations will be
published at 7.00 am EST /
1.00 pm CET on
http://www.aegon.com.The conference will commence at 8.30 am EST / 14.30 pm
CET and will be live streamed, also on the corporate
website. A replay of the webcast will be available later today.
About Aegon
Aegon's roots go back more than 170 years - to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in more than 20 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 achieve a lifetime of financial security. More
information on aegon.com/about.
For the Editor
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Disclaimer
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;
- Consequences of the anticipated exit of the United Kingdom from the European Union;
- 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,
taxation of Aegon companies, the products Aegon sells, and the
attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and
insurance industries in the jurisdictions in which Aegon
operates;
- Standard setting initiatives of supranational standard setting
bodies such as the Financial Stability Board and the International
Association of Insurance Supervisors or changes to such standards
that may have an impact on regional (such as EU), national or US
federal or state level financial regulation or the application
thereof to Aegon, including the designation of Aegon by the
Financial Stability Board as a Global Systemically Important
Insurer (G-SII).
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products 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, which may affect Aegon's reported results and
shareholders' equity;
- Aegon's projected results are highly sensitive to complex
mathematical models of financial markets, mortality, longevity, and
other dynamic systems subject to shocks and unpredictable
volatility. Should assumptions to these models later prove
incorrect, or should errors in those models escape the controls in
place to detect them, future performance will vary from projected
results;
- 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.
- This press release contains information that qualifies, or may
qualify, as inside information within the meaning of Article 7(1)
of the EU Market Abuse Regulation.
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.
Contacts:
Media relations
Debora de Laaf
+31-(0)-70-344-8730
gcc@aegon.com
Investor relations
Willem van den Berg
+31-(0)-70-344-8405
ir@aegon.com
SOURCE Aegon N.V.