Aegon gets £150m dividend boost from its UK arm
● First payment to Dutch parent in two decades as British profits leap ahead
Aegon UK is to pay a £150 million dividend to its Dutch parent group, it emerged yesterday – its first in 20 years – as the life and pensions provider revealed rocketing profits.
Adrian Grace, chief executive of the UK arm, which employs about 2,100 in Edinburgh, said: “Paying the dividend shows our financial strength. We have not paid a dividend to Aegon in 20 years.
“It’s the first since then and it will stick. We are clearly delighted. The long-term investment in the business by Aegon is paying off for them.” It came as Aegon UK announced a £25m profit for its third trading quarter, which after allowing for a €3m loss in the business in the Republic of Ireland meant an overall profit contribution from the region to the European division of €25m – up from €5m in the same period a year earlier.
Overall European earnings climbed to €177m, up 17 per cent, while Aegon’s earnings worldwide rose 20 per cent to €556m from €461m in the same quarter last year.
Grace said “buoyant” financial markets had also helped the latest UK performance, with assets on the platform hitting a record high of £110 billion in the quarter. There were net inflows of £1.4bn.
A key factor in markets’ resilience, he said, was that although there were concerns about a slowing UK economy “a lot of large UK companies have strong international earnings which translate positively back into weak sterling”.
He said there was uncertainty on whether the first rise in UK interest rates last week would squeeze consumer spending, but added: “Ours is not to question why, ours is to deal with the consequences.”
He also said that the UK division was “bang on track” to take £65m of costs out of the business from the integration of Blackrock’s UK platform and the Cofunds platform, both acquired last year.
“In September the transfer of £3bn of annuities to Legal & General completed, and this marks another milestone as we move from a business focused primarily on insurance contracts like annuities, to one that generates revenues mainly through fees for administering pensions and investments,” the UK chief said.
He added that he was confident that “if we stick to our task and focus on providing advisers with the tools and services that help them to manage their businesses more efficiently, both advisers and Aegon will be successful”.
The group said in its statement that the European division had seen higher fee revenue in the UK due to the favourable equity markets. It also benefited from better underwriting results in all regions, from the Netherlands to central and eastern Europe and Spain and Portugal.
Group boss Alex Wynaendts said: “I am pleased that our underlying earnings are up for the fifth consecutive quarter, reflecting growth across our businesses, expense savings and management actions taken to improve returns”.