Aegon Reports 16% 2993 Profit Rise to $2.187 Billion

Aegon, the Netherlands’ insurer and financial services giant, reported fourth quarter net income rose 32 percent to 470 million euros ($573 million), while full year earnings rose 16 percent to 1.793 billion euros ($2.187 billion).

In 2002 Aegon earned 355 million euros ($433 million) in the fourth quarter and 1.547 billion ($1.887 billion) for the full year. In 2003 the company’s premium income fell by around 9 percent to 19.468 billion euros ($23.75 billion) due almost exclusively to the fall in the value of the dollar. It would have registered a small gain at last year’s exchange rates. “At constant currency exchange rates net income and income before tax increased by 30 percent and 29 percent respectively in 2003,” said the announcement.

The bulletin noted that “Transamerica Finance Corporation (TFC), most of which has been sold in line with Aegon’s strategy to concentrate on life insurance, pensions and related savings products, contributed 218 million euros [$266 million] to net income during 2003 compared to 51 million euros [$65.22 million] in 2002. Corporation tax was 219 million euros [$267 million] million higher in 2003 as the effective tax rate increased.”

Donald J. Shepard, Chairman of the Executive Board, commented: “We feel better about our business than a year ago. The profitability of our business has been strengthened by our actions to improve margins and has benefited from the improvements in the equity and credit markets. In some cases, the actions we have taken to focus on profitability have come at the expense of new production. Production has been particularly good in our traditional life business in the United States and pension business in the United Kingdom, and life production in Taiwan has been very strong. Through the joint venture with Caja de Ahorros del Mediterraneo in Spain as well as greenfield operations in China and Slovakia we are well-positioned to expand and strengthen our core activities in markets that offer opportunities for both growth and scale. Distribution remains key in our strategy as evidenced by the successful implementation of a multi-channel distribution strategy in Taiwan, the successful integration of the recent IFA acquisitions in the United Kingdom as well as the participation in Unirobe, a major broker in the Netherlands.”

Aegon said its outlook “remains positive,” but added that it expects “increased volatility of net income as a result of the discontinuance of the indirect income method.” As a result it said that it would not provide earnings forecasts after Jan. 1, 2004.

In a related development A.M. Best announced that it has affirmed the financial strength ratings of “A+” (Superior) of the primary life insurance entities of Aegon’s U.S. operations (AEGON USA) (Cedar Rapids, IA), but has revised the rating outlook to negative from stable.