Aegon draws in record sums on back of pension shake-up

Published on Friday 11 August 2006 12:06

AEGON UK, the Edinburgh-based insurer, has become the latest industry heavyweight to cash in on the recent pensions shake-up with a record period for new business.

The owner of the Scottish Equitable brand, which employs around 3000 people in the Capital, said it had netted 212 million in group pensions business in the first half, a rise of 61 per cent on a year earlier.

Meanwhile, individual pensions new business leapt by 94 per cent to 148m, which included people taking out 71m worth of Self Invested Personal Pensions (SIPPS) - an area of business which more than doubled in the first six months of the year.

Life and pensions firms, as well as a number of leading wealth managers such as St James's Place Capital, have benefited from April's "A-Day" shake-up, when new pension rules aimed at encouraging workers to save more for their retirement were introduced by the Government.

Aegon UK chief executive Otto Thoresen described the firm's half-year performance as "very strong".

He said: "We have delivered a significant increase in earnings and importantly, the value of new business has risen sharply compared with last year.

"The second quarter saw exceptional volumes of new business, particularly in corporate and individual pensions. A proportion of this is a result of A-day and the changes businesses and individuals have made to their pension arrangements."

Underlying operating earnings in the period under review rose 26 per cent to 86m, the firm added.

The UK numbers emerged as Dutch parent Aegon NV said its core profit rose by two-thirds thanks to strong sales in its home market and the United States, as well as in Britain.

Operating profit, which excludes tax and the impact of investment gains or losses, climbed 67 per cent to the equivalent of 1.02 billion, although net profit dipped to 873m - a figure which still topped market hopes.

The group is also targeting growth in emerging markets such as central and eastern Europe.

Mr Thoresen said the UK arm was continuing to bolster its non-pensions business, and pointed to momentum in areas such as individual protection, onshore bonds and annuities.

Aegon UK launched into the individual annuities arena with an open market product in the second half of 2005. At the start of this year, it announced further investment creating 40 posts at its Edinburgh base. Previously, Aegon had only offered annuities to its own pension customers.

Mr Thoresen added: "Strong financial performance is an essential part of the ongoing transformation of our organisation towards a more customer oriented approach.

"Our achievements in the first six months mean we are well positioned for further developments in the second half of the year."

Earlier this month, Standard Life said strong demand for pension products in the UK had helped boost total first-half sales by 17 per cent to 745m. There was a 75 per cent rise in the sale of SIPPs.