Right on for Aegon UK but chief warns on BOE rate rises

● Insurer posts nearly doubled fullyear profits ● Q4 performance unchanged in life and pensions

The head of Dutch insurer Aegon’s UK arm has hailed nearly doubled annual earnings as “a very positive trajectory” – but voiced concern about the threat of higher interest rates to pension provision. Adrian Grace, chief executive of Aegon UK, which employs more than 2,200 in Scotland, said the group had not noticed any weakening of consumer sentiment since last November’s quarter-point rate rise by the Bank of England.

That was the first monetary tightening in ten years, and more hawkish minutes from the Bank’s monetary policy committee (MPC) last week suggested further rises would be faster and “somewhat greater in extent” than signalled in November.

Grace said: “No, we did not notice anything (last November). But we are concerned there will be an impact (from further rises) on people’s ability to have cash available for long-term pensions.”

He added that there was a “big unknown” of how millions of people currently paying the minimum auto-enrolment pension contributions will react when these rise in April from 1 per cent to 3 per cent for employees and 1 per cent to 2 per cent for employers.

“The government has been coy about what they’d consider a successful outcome but are surely hoping any significant spike in leavers and optouts is avoided,” Grace added.

“The timing of the stock market correction is unfortunate given the headlines it’s creating about investing, but for savers with a long-time horizon, there’s no cause for concern.”

It came as Aegon UK posted earnings up 94 per cent to £109 million in 2017, with fourthquarter earnings flat at £22m. The division’s single platform for both individual and workplace savings added £15 billion to a record £117bn last year, helped by the Cofunds acquisition and “exceptional” organic growth, Grace said.

He said Aegon UK planned to invest another £20m over the course of the coming year “to build on our workplace proposition with improved functionality”.

The division’s life business contributed fourth-quarter earnings of €15m, with pensions chipping in €9m, both unchanged from the same quarter of 2016.

Aegon’s group earnings over the year lifted 10 per cent to €2.1bn, while its Q4 earnings fell 5 per cent to €525m.

The group said the weakening performance in Q4 was driven by a weakening of the US dollar. Luxury label Burberry has teamed up with London-based online fashion platform Farfetch to sell its clothing around the world. Under the terms of the partnership, the trenchcoat-maker’s wares will be made available through Farfetch’s e-commerce platform in more than 150 countries. Hundreds of well-known fashion brands already sell their products using Farfetch and the firm last year launched a tie-up with Gucci which offers a 90-minute delivery service.