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TheStreet Open House

AEGON Delivers Strong Underlying Earnings And Sales Growth; Capital Position Further Strengthened

Stocks in this article: AEGAEGN

In recent years, AEGON has implemented a broad restructuring program to sharpen its focus on its core lines of business, reduce significantly its overall cost base, and create greater efficiencies across the organization. This has resulted in a better balance between spread-based and fee-generating business and a substantially improved risk-return profile, the divestment of non-core businesses, a lower cost base and an improved capital base ratio.

AEGON's ambition

AEGON's aim to be a leader in all of its chosen markets by 2015 is supported by four strategic objectives: Optimize Portfolio, Enhance Customer Loyalty, Deliver Operational Excellence and Empower Employees. These key objectives have been embedded in all AEGON businesses. They provide the strategic framework for the company's ambition to become the most-recommended life insurance and pension provider by customers and distributors, as well as the most-preferred employer in the sector.

Optimize portfolio

AEGON has indicated previously that the consolidation of Spanish savings banks might lead to exiting one or more of its joint ventures in Spain. Following the announced merger between Banca Cívica and CaixaBank, AEGON reached an agreement with CaixaBank to end the life, health and pension partnership with Banca Cívica and sell its 50% interest in the joint ventures to CaixaBank for a total consideration of EUR 190 million. The sale is expected to result in a book gain of approximately EUR 35 million before tax. In 2011, AEGON's share in underlying earnings before tax of the joint venture totaled EUR 16 million. The transaction is expected to close in the second half of 2012 and is subject to regulatory approvals.

In Spain, AEGON is also involved in an arbitration process to exit the joint venture with Caja Ahorros del Mediterráneo (CAM). This process is expected to be concluded in the first half of 2013. As of the second quarter of 2012, AEGON no longer includes results from this partnership. The second quarter of 2011 included underlying earnings of EUR 9 million from CAM.

AEGON Asset Management has reached an agreement with KKR to sell its minority stake in Prisma Capital Partners, a provider of hedge fund solutions, while continuing to be invested in Prisma's funds. The transaction is expected to close in the fourth quarter of 2012. Prisma's contribution to underlying earnings totaled EUR 5 million in the first half of 2012.

In November, AEGON launched its new platform proposition in the United Kingdom, AEGON Retirement Choices, to capture opportunities in the  At-Retirement market. Recently, the company added its Workplace Savings proposition to the platform. Pension reform and the Retail Distribution Review will transform pension products and services and how they are distributed. AEGON's platform offers a compelling solution to advisers, employers, and their employees.

AEGON is also focused on securing strategic distribution agreements in the United Kingdom and reached an agreement to supply corporate protection solutions to Barclays Corporate & Employer Solutions, confirming AEGON's position as one of the market leaders in business protection.

In India, AEGON Religare launched its online health plan, iHealth. The plan is targeted at customers who prefer a direct and convenient process while buying a financial product. Additionally, AEGON Religare is planning to expand its suit of online products with protection and traditional plans.

Deliver operational excellence

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