Aegon all quiet on UK cost cuts as sales soar

Aegon, the Dutch insurer, yesterday announced a further improvement in sales and profits but gave no further guidance on its plans to take £80 million in costs out of the UK business.

The company made a profit in the second quarter as its gains on investments improved and it experienced smaller losses and impairment charges than in any quarter in the past two years.

UK chief executive Otto Thoresen said there had been a fourth successive quarter of improved sales and he felt positive about the market.

But he was unable to say more about the proposed 25 per cent cutback in costs announced in June that could mean up to 600 job losses in Edinburgh alone. A review will conclude at the end of next month.

The growth in business is due to rising stock markets and demand in the product areas where Aegon is positioning itself.

"The combination of an ageing population and the shift towards defined contribution pension schemes creates an opportunity for Aegon's long-term sustainable growth in the UK," said Thoresen.

Group net income - total revenues less tax and one-off charges - for the period April to June was €413m (340m), following a loss of €161m in the same period a year earlier and up 11 per cent from the first quarter.

UK net income increased 41 per cent to 24m against the same quarter last year. UK life and pensions new business was 263m, up 25 per cent on last year. Underlying earnings rose 13 per cent to 18m.

Stripping out the impact of one-off costs and windfalls, group earnings or profits rose 26 per cent before taxes to €522m due to the recovery in the dollar and American financial markets. Aegon does two-thirds of its business in the US.

Group chief executive Alex Wynaendts said pension sales were strong in the US and Britain. "We are implementing a number of key measures, as announced in June, to sharpen our focus on our core activities and improve returns, particularly within our business in the United Kingdom," he said.

Aegon plans to sell its Transamerica reinsurance business in the US to help pay off support it received from the European Union to remain solvent during the financial crisis. There was further speculation yesterday that it may have to raise cash from investors to repay the remaining €2bn debt to the Dutch state.