‘Year of deals’ sees Aegon European profits rise

Insurance giant Aegon, which employs 2,000 staff at its Edinburgh Park UK headquarters and another 400 throughout Britian, has revealed that its European arm boosted earnings 11 per cent in the third quarter of this year to hit to € 151 million (£131m).

Following the announcement of the results, the firm’s UK boss hailed what he said was a “year of deals” that saw the £140 million acquisition of the Cofunds diversified investment platform from Legal & General in August, which followed Aegon’s earlier acquisition of Blackrock’s £12 billion UK platform and the sale of its £3 billion UK annuities portfolio to L&G.

Cofunds came with 750,000 customers and a massive £78 billion of assets under management.

Adrian Grace said that although the business may now take the foot of the acquisition pedal, he added that the firm has now successfully “set our stall out” to be one of the biggest players in the UK platform market and would “never say never” to further buying opportunities.

“2016 has been a year of deals that have set us up for the future,” he said. “But there’s little doubt that we need to integrate what we have got. These are big transformational industry deals.”

The UK business made €5m of underlying earnings in Q3, reversing a €10m loss in the same period of 2015.

Net income from Aegon’s businesses in Europe rose to €228m from €174m a year ago.

Grace also called on Chancellor Philip Hammond to discard the Pension ISA concept in his forthcoming Autumn Statement.

He said there had been a period of “extraordinary change” in the pensions industry in the last five years and it was now time “to bed down what we have got”.

Grace added: “Proposals such as the Pension ISA would be hugely disruptive to pension savers, requiring all existing pensions to be frozen with a new arrangement put in place for future contributions.

“This would add significant complexity for every existing pension saver without any guarantees that their pension income would not be taxed by a future government, creating a dangerous disincentive to saving.”

He said the insurance industry was operating amid the uncertainty created by events such as the UK’S Brexit vote and Donald Trump’s election as the new president of the United States, and would also benefit from a rise in near rock-bottom interest rates.

Mr Grace expressed his hope that the Trump administration will usher in a spell of economic buoyancy in the US, which Aegon relies on for 70 per cent of its business.

Mr Grace said: “A buoyant US economy and one that is doing well and rising interests are all good for our business globally.

“I don’t think anybody knows at this moment in time where Mr Trump is going to go – and I think there will be lots of twists and turns in the journey. But certainly if you look at the markets today there seems to be a very positive reaction to him and his announcement.

“If you compare it to the morning after Brexit, which was obviously very negative, they are diametrically opposite.”

The UK boss’s comments came as Aegon saw its group underlying earnings fall nearly 7 per cent to €461m in the third quarter.

Alex Wynaendts, group chief executive, said: “Earnings from our US life insurance business continued to be volatile as a result of higher than expected claims.”

However, Wynaendts added that the group was “particularly pleased” by gross deposits of €25 billion during the quarter, while in America the integration of Mercer’s defined contribution retirement plan business was on track.