Aegon’s completion of a
rights issue in February, in which it raised €903m, has taken the
Dutch life insurer another step closer to meeting its objective of
repaying the €2.25bn ($3.1bn) it owes to the Dutch
government.
The rights issue increased
Aegon’s issued share capital by about 10%.
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Aegon CEO Alexander Wynaendts
said: “Together with internal resources, including proceeds from
divestments, [the issue] will position us to repurchase all
remaining core capital securities provided by the Dutch State by
the end of June 2011.”
To prop up Aegon’s balance
sheet, the Dutch government extended €3bn in assistance to Aegon in
October 2008.
In August 2009, Aegon raised
€1bn through a rights issue which together with other actions taken
to free-up capital enabled it to repay €1bn of the assistance in
November 2009.
Full repayment of state aid
will remove certain restrictions imposed by the Dutch government on
Aegon and other recipients of aid.
Looking most likely to
provide the wherewithal to repay Aegon’s outstanding debt to the
Dutch government is the sale of Aegon’s life reinsurance business,
Transamerica Re. Aegon has stated it is in talks with a potential,
but unspecified, buyer.
Acquired by Aegon in 1999,
US-based Transamerica Re ranks third in the US life reinsurance
market, where it has a 20% market share, and seventh
globally.
At the end of 2009 Aegon,
reported that Transamerica Re had a book value of €1.6bn and an
embedded value of the same amount.
Outside the US, the reinsurer
has operations in Mexico, Chile, Bermuda, Ireland, France, Spain,
Korea, Japan, Taiwan and Hong Kong.
In its year to December 2010,
Aegon reported an underlying profit before tax of €1.972bn, a 66%
increase compared with 2009.
New life sales increased by 5% to €2.213bn based on
recurring premiums of €1.462bn and one 10th of single premiums of
€7.512bn.
