AEGON UK, the Edinburgh-based insurer reprieved from a possible sale or wind-down by its Dutch parent two years ago, has confirmed its return to financial health and promised future growth.
Aegon axed 600 of its 2500 jobs in Edinburgh in a major cost-cutting programme last year, as it battled to catch up with rivals in repositioning itself for the big changes ahead in workplace pensions and financial advice. It also had to pay out more than £170 million in redress to pension customers let down by past administration shortcomings, against an original estimate of £100m, alongside a £2.8m fine from the Financial Services Authority for the 30 different failings.
But yesterday Adrian Grace, who was installed as chief executive some 15 months ago, said costs were 37% lower than a year ago – well above the 25% target set from The Hague – and the group was in growth mode.
Aegon was reporting an increase in underlying earnings of 10% to €443 million (£349m) in its second quarter. It did not break down the UK performance but said there had been a "strong improvement in earnings" to €25m.
It said recovery had been driven by cost reductions and the disappearance of extraordinary charges. Since last November, Aegon has launched a twin assault on its two target markets, launching the Retirement Choices platform for "at retirement" customers and recently adding the Workplace Savings proposition to the same platform.
The group said: "Pension reform and the retail distribution review will transform pension products and services and how they are distributed – Aegon's platform offers a compelling solution to advisers, employers, and their employees."
Mr Grace told The Herald: "It was a business that needed a turnaround. We said we would take out costs and I think costs are 37% lower than at the same time last year."
The repayments to customers and improvements in administration were "something we had to do to clean the business up", he said.
"We had no platforms whatsoever in this business 18 months ago, and we now have platforms in both of our core operating markets. It is all about growth now and how we capitalise on the regulatory changes."
Mr Grace's whirlwind new broom in Edinburgh, following the exit of his predecessor Otto Thoresen to become director-general at the Association of British Insurers, has prompted recent talk in the capital that he is already the target of headhunters.
Mr Grace commented: "I have not finished the job here. We will start to see the fruits of our labours over the next 18 months to two years. I would like to see the job through. It is going to be an exciting time and an intellectual challenge."
Asked whether Aegon would be reviewing the charges on its historic pension policies, following pressure on the industry from the Government, politicians and consumer groups, Mr Grace said that there would be a review and action would be taken "if it is the right thing to do and if we can find the right way to do it".
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article