Aegon’s profits rise as boss hails ‘year of deals’

Aegon UK boss Adrian Grace called on the Chancellor to scrap plans for the Pension ISA. Picture: Jane Barlow
Aegon UK boss Adrian Grace called on the Chancellor to scrap plans for the Pension ISA. Picture: Jane Barlow
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Insurance giant Aegon’s European arm boosted earnings 11 per cent to €151 million (£131m) in the third quarter, as its UK boss hailed a “year of deals” that has positioned it for the future.

Adrian Grace cited the £140m acquisition of the Cofunds diversified investment platform from Legal & General in August, following Aegon’s earlier acquisition of BlackRock’s UK platform and the sale of its £3bn UK annuities portfolio to L&G.

Proposals such as the Pension ISA would be hugely disruptive to pension savers

Adrian Grace

Grace said that he would “never say never” to further industry consolidation opportunities, but that the pace might slow from now.

“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.”

READ MORE: Aegon in £140m deal for Cofunds investment platform

Grace said Dutch-owned Aegon, which employs 2,000 in Edinburgh Park, had now successfully “set our stall out” to be one of the biggest players in the UK platform market, including ISAs, equities and general investments as well as pensions.

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.

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.

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