Aegon boss claims recent restructuring paying off
The firm reported a 17 per cent rise in new business for the third quarter, driven by a 22 per cent jump in sales of pensions to £175 million. That leap offset a 21 per cent decline in sales of life insurance products.
Grace said the cost-cutting reshaping of the business in the past two years, including investment in technology, was now paying off and would pave the way to introduce new propositions next year. These will target those with less than £100,000 to invest who do not currently seek advice. “We are happy to support the advisers as we bring out a solution to address this market,” he said.
Operating expenses grew by 8 per cent to £78m as the company invested in technology, while underlying pre-tax profits rose 15 per cent to £23m.
Grace said the company was late into the platform market and got left behind. But this also worked in the firm’s favour.
“Technology costs fell and we were able to see what worked and didn’t work,” he said.
“Early movers also found themselves with older technology.”
He was less persuaded by the benefits of auto-enrolment than some peers, stating that it was not important to add customers for its own sake. “You have to look for value. Adding low-value customers without adding to profit is not what we are about.”
The business overall was now heading in the right direction following the move to slash £80m-a-year from operating costs and reduce the workforce from 4,700 to 2,200.
“It’s always pleasing to see a solid set of quarterly figures like these, but the part that really excites me is the future of the business. We are now seeing the strategy we have put in place beginning to pay off and we still have a lot more of our proposition to roll out early next year.”
He said the company’s Dutch owner was satisfied with the business’s progress and had shown no willingness to sell it.