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Aegon Ireland escapes cuts hitting UK-based business

International Adviser
By International Adviser  21-Jul-2010

Aegon’s Irish-domiciled international business will not be affected by the 25% cuts being imposed on its UK life and pensions business.

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A company spokesman said Aegon Ireland, which administers the company’s offshore bonds and variable annuity product, was a separate legal entity to the UK business and so it was “business as usual” for the firm.

The spokesman also revealed there were no reviews planned for the offshore business.

On Tuesday, Aegon announced considerable cost-cutting measures that may see up to 600 job losses at its Edinburgh headquarters. Savings to the tune of £80m a year are planned, an element of which will see the Dutch life insurer withdraw from the bulk annuity market due to ‘pricing pressures’.

It will continue to focus on what was termed ‘growth markets’ such as at retirement and company pension areas.

A US business, Transamerica Reinsurance, isalso likely to be offloaded on the basis that reinsurance is not a core activity of the company.

Aegon said the measures were designed to improve the company’s return on capital, from 2.7% in 2009 to between 8% and 10% by 2014, and generate cash flow of £600m to £650m between 2010 and 2014.

Aegon chief executive Alex Wynaendts said: “Consistent with our strategy, we are now taking further steps to focus on our core business and to continue to allocate our capital to businesses and markets that offer higher growth and returns over the long term. Over the next five years, we want to become a leader in all our chosen markets.”

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